<PAGE>
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[_]
Check the Appropriate Box:
[X]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EVERGREEN VARIABLE TRUST
----------------
(NAME OF REGISTRANT AS SPECIFIED IN THEIR CHARTERS)
EVERGREEN VARIABLE TRUST
----------------
(NAME OF PERSON FILING PROXY STATEMENT)
Payment of filing fee (check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[_]Fee paid previously with preliminary material
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
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IMPORTANT NEWS
FOR PERSONS INVESTED IN THE FUNDS OF EVERGREEN VARIABLE TRUST
We encourage you to read the attached proxy statement in full; however, the
following questions and answers represent some typical concerns that persons
invested in the Funds might have regarding this proxy.
Q: WHY IS EVERGREEN VARIABLE TRUST SENDING ME THIS PROXY?
Mutual funds are required to obtain shareholders' votes for certain types of
changes. As a person invested in the Funds of Evergreen Variable Trust you
have a right to vote on major policy decisions, such as those included here.
Q: WHAT ARE THE ISSUES CONTAINED IN THIS PROXY?
There are several different proposals represented here and they are outlined
in the chart at the beginning of the proxy statement.
Q: HOW WILL THE PROPOSALS AFFECT ME?
THE REORGANIZATION OF EACH FUND OF THE TRUST INTO A CORRESPONDING SERIES OF
A DELAWARE BUSINESS TRUST will provide both consistency across the Evergreen
fund family and flexibility compared to their previous form of organization.
In addition, Delaware law offers certain advantages for business trusts and
some important protections for shareholders. See Part I of the proxy statement
for more information.
CHANGING THE FUNDAMENTAL INVESTMENT OBJECTIVE TO NON-FUNDAMENTAL AND
CHANGING CERTAIN FUNDAMENTAL RESTRICTIONS TO NON-FUNDAMENTAL gives each Fund's
investment adviser greater flexibility to respond to market, regulatory or
industry changes. These reclassifications are not intended to materially alter
any Fund's investment objective.
ADOPTING STANDARDIZED INVESTMENT RESTRICTIONS ACROSS ALL FUNDS will help
provide operational efficiencies and make it easier to monitor compliance with
these restrictions. Standardized investment restrictions will also make it
easier for the Funds to respond quickly to market, regulatory or industry
developments. These changes will not substantially affect the way the Funds
are currently managed.
Q: HOW DO THESE PROPOSALS AFFECT MY INVESTMENT?
These proposals will not affect your investment in the Funds.
<PAGE>
Q: WHY IS EVERGREEN PROPOSING THESE CHANGES?
These proposals represent some final steps we are undertaking to unify the
Evergreen and Keystone fund families. Shareholders can anticipate the
following benefits:
. A comprehensive fund family with a common risk/reward spectrum
. The elimination of any overlap or gaps in fund offerings
. A user-friendly product line for both shareholders and investment
professionals
. A single location for fund information, whether you're looking up funds
in the newspaper or locating a Morningstar report on the Internet
Q: HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
The Trustees of the Trust recommend that you vote in favor of or FOR all of
the proposals on the enclosed proxy card.
Q: WHOM DO I CALL FOR MORE INFORMATION OR TO PLACE MY VOTE?
You may call Evergreen Service Company at 800-343-2898 to ask any questions
about this proxy. If you have questions about your account, please contact
your financial advisor. Use the enclosed proxy card to record your vote of
either For, Against or Abstain for each proposal, then return the card in the
postpaid envelope provided.
Q: WHY ARE MULTIPLE CARDS ENCLOSED?
If you are invested in more than one Fund of Evergreen Variable Trust, you
will receive a proxy card for each Fund you own. Please sign, date and return
each proxy card you receive.
<PAGE>
[EVERGREEN FUNDS LOGO APPEARS HERE]
February 25, 1998
To Persons Invested in the Funds of Evergreen Variable Trust:
I am writing to persons invested in the Funds of Evergreen Variable Trust to
inform you of a special shareholder meeting to be held on April 22, 1998.
Before that meeting I would like your vote on the important issues affecting
your Fund(s) as described in the attached proxy statement.
The proxy statement includes proposals relating to the reorganization of
each Fund of the Trust as a series of a Delaware business trust and the
adoption of standardized investment restrictions for each of the funds. These
proposals are intended to provide consistency and increased flexibility
throughout the Evergreen fund family. More specific information about all of
the proposals is contained in the proxy statement.
THE TRUSTEES OF THE TRUST HAVE UNANIMOUSLY APPROVED THE PROPOSALS AND
RECOMMEND THAT YOU VOTE FOR ALL OF THE PROPOSALS DESCRIBED WITHIN THIS
DOCUMENT.
I realize that this proxy statement will take time to review, but your vote
is very important. Please familiarize yourself with the proposals presented
and sign and return your proxy card(s) in the enclosed postage-paid envelope
today. You may receive more than one proxy card if you own shares in more than
one Fund. Please sign and return each card you receive.
If we do not receive your completed proxy card(s) after several weeks, you
may be contacted by representatives of Evergreen Service Company. They will
remind you to vote your shares. You may call Evergreen Service Company
directly at 800-343-2898 to ask any questions about this proxy. If you have
questions about your account, please contact your financial advisor.
Thank you for taking this matter seriously and participating in this
important process.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
. 201 South College Street, Suite 600 . Charlotte, North Carolina 28288-1195 .
<PAGE>
EVERGREEN VARIABLE TRUST
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
----------------
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1998
----------------
Notice Is Hereby Given that a Joint Special Meeting (the "Meeting") of
Shareholders of each series (a "Fund") of Evergreen Variable Trust will be
held at 200 Berkeley Street, 26th Floor, Boston, Massachusetts on Thursday,
April 22, 1998 at 3:00 p.m., Eastern time, for the following purposes:
1. To approve an Agreement and Plan of Conversion and Termination (the
"Plan") for each Fund providing for the reorganization of the Fund as a
corresponding series (a "Successor Fund") of Evergreen Variable Annuity
Trust, a newly-formed Delaware business trust, and in connection
therewith, the acquisition of all of the assets of each Fund in exchange
for shares of the corresponding Successor Fund, and the assumption by
the Successor Fund of all of the liabilities of the Fund. Each Plan also
provides for the distribution of such shares of the Successor Fund to
shareholders of the Fund in liquidation and subsequent termination of
the Fund.
2. To approve the proposed reclassification of the investment objective of
each Fund from fundamental to nonfundamental.
3. To approve the adoption of standardized fundamental investment
restrictions by amending or reclassifying the current fundamental
investment restrictions of each Fund.
4. To transact any other business which may properly come before the
Meeting or any adjournments thereof.
The close of business on February 25, 1998 has been fixed as the record date
for the determination of shareholders of each Fund entitled to notice of and
to vote at the Meeting or any adjournments thereof.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN WITHOUT DELAY AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Boards
D'Ray Moore
Secretary
February 25, 1998
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for signing proxy cards may be of assistance to
you and may help to avoid the time and expense involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears on the proxy
card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the name on the proxy
card. For example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
Corporate Accounts
(1) ABC Corp. (1) ABC Corp.
John Doe, Treasurer
(2) ABC Corp. (2) John Doe, Treasurer
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan (3) John Doe, Trustee
Trust Accounts
(1) ABC Trust (1) Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee (2) Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust. (1) John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) Estate of John B. Smith (2) John B. Smith, Jr., Executor
</TABLE>
<PAGE>
EVERGREEN VARIABLE TRUST
EVERGREEN VA AGGRESSIVE GROWTH FUND, EVERGREEN VA FOUNDATION FUND,
EVERGREEN VA FUND, EVERGREEN VA GLOBAL LEADERS FUND,
EVERGREEN VA GROWTH AND INCOME FUND, EVERGREEN VA STRATEGIC INCOME FUND
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
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PROXY STATEMENT
JOINT SPECIAL MEETING OF SHAREHOLDERS
APRIL 22, 1998
----------------
This proxy statement is furnished in connection with the solicitation by the
Board of Trustees of Evergreen Variable Trust (the "Trust") and its above-
named Funds for the joint special meeting of shareholders to be held at 200
Berkeley Street, 26th Floor, Boston, Massachusetts on Thursday, April 22, 1998
at 3:00 p.m., Eastern time, and all adjournments thereof (the "Meeting").
Shareholders of record at the close of business on February 25, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting. This
proxy statement and the accompanying notice of meeting and proxy card(s) are
first being mailed to shareholders on or about March 2, 1998.
The shares of the Trust entitled to vote at the Meeting are issued in six
separate series representing one or more investment portfolios, each of which
is referred to herein as a "Fund." As used in this proxy statement, the
Trust's board of trustees is referred to as the "Board."
1
<PAGE>
SUMMARY OF PROPOSALS REQUIRING SHAREHOLDER VOTE
PROPOSAL 1. REORGANIZATION OF EACH FUND
<TABLE>
<CAPTION>
FUNDS FOR WHICH SHAREHOLDER VOTE IS
MATTER REQUIRING SHAREHOLDER VOTE REQUIRED
--------------------------------- -----------------------------------
<S> <C>
Approval of an Agreement and Plan of All Funds
Conversion and Termination (the "Plan") for
each Fund providing for the reorganization
of the Fund as a corresponding series (a
"Successor Fund") of the Evergreen Variable
Annuity Trust, a newly-formed Delaware
business trust, and in connection
therewith, the acquisition of all of the
assets of the Fund in exchange for shares
of the Successor Fund, and the assumption
by the Successor Fund of all of the
liabilities of the Fund. Each Plan also
provides for the distribution of such
shares of the Successor Fund to
shareholders of the Fund in liquidation and
subsequent termination of the Fund
</TABLE>
PROPOSAL 2. RECLASSIFICATION OF INVESTMENT OBJECTIVE OF THE FUNDS FROM
FUNDAMENTAL TO NONFUNDAMENTAL
<TABLE>
<CAPTION>
FUNDS FOR WHICH SHAREHOLDER VOTE IS
MATTER REQUIRING SHAREHOLDER VOTE REQUIRED
--------------------------------- -----------------------------------
<S> <C>
Reclassification of the Investment All Funds
Objective of Certain Funds from Fundamental
to Nonfundamental
</TABLE>
PROPOSAL 3. CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
Standardization of Fundamental Investment Restrictions (Proposals 3A-3H)
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUNDS FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- --------------------------------------------
<S> <C>
3A.Diversification of Investments All Funds
3B.Concentration of Fund's Assets in a Par- All Funds
ticular Industry
3C.Issuance of Senior Securities All Funds
3D.Borrowing All Funds
3E.Underwriting All Funds
3F.Investment in Real Estate All Funds
3G.Commodities All Funds
3H.Lending All Funds
</TABLE>
Reclassification of Other Fundamental Restrictions of the Funds as
Nonfundamental (Proposal 3I)
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUNDS FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- --------------------------------------------
<S> <C>
3I. (See current fundamental restrictions All Funds
shown by an "R" in Exhibit C)
</TABLE>
2
<PAGE>
PART I
PROPOSAL 1 -- THE PROPOSED REORGANIZATION
OF THE FUNDS AS SERIES OF A DELAWARE BUSINESS TRUST
OVERVIEW
At the Meeting, the shareholders of each Fund will be asked to approve an
Agreement and Plan of Conversion and Termination (the "Plan"), which provides
for the reorganization (the "Reorganization") of each Fund into a
corresponding series (each a "Successor Fund," and collectively the "Successor
Funds") of Evergreen Variable Annuity Trust, a newly formed Delaware business
trust (the "Successor Trust"). The Reorganizations are part of an overall
restructuring of the Evergreen Family of Funds. The restructuring involves,
among other components, the Reorganizations, the reclassification of the
Funds' investment objectives from "fundamental" (i.e., changeable by
shareholder vote only) to "nonfundamental" (i.e., changeable by vote of the
Trustees), the adoption of standardized fundamental investment restrictions,
the reclassification of certain investment restrictions from fundamental to
nonfundamental, and the amendment of fundamental investment objectives and
policies of the Funds. The reclassification of investment objectives, the
adoption of standardized investment restrictions and the reclassification of
certain investment restrictions are discussed in Part II of this proxy
statement. The amendment of fundamental investment objectives and policies of
the Funds are discussed in Part III of this proxy statement. The intended
result of the overall restructuring is to produce a more integrated mutual
fund complex with the potential for greater operational efficiencies.
THE FUNDS
Shares of the Funds are sold only to (a) separate accounts funding variable
annuity and variable life insurance contracts issued by life insurance
companies; and (b) qualified pension and retirement plans.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly-owned
subsidiary of First Union National Bank ("FUNB"), which in turn is a
subsidiary of First Union Corporation ("First Union"), the sixth largest bank
holding company in the United States, serves as investment adviser to
Evergreen VA Fund, Evergreen VA Growth and Income Fund, Evergreen VA
Foundation Fund and Evergreen VA Global Leaders Fund. The address of Evergreen
Asset is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
("Lieber"), as described below, provides certain investment subadvisory
services to Evergreen Asset in connection with its duties as investment
adviser to the above-named Funds.
Keystone Investment Management Company ("Keystone") serves as investment
adviser to Evergreen VA Strategic Income Fund. Keystone succeeded on December
11, 1996 to the advisory business of a corporation with the same name, but
under different ownership, which has provided investment advisory and
management services to investment companies and private accounts since it was
organized in 1932. Keystone is an indirect, wholly-owned subsidiary of FUNB.
The Capital Management Group of FUNB ("CMG") serves as investment adviser to
Evergreen VA Aggressive Growth Fund.
First Union is headquartered in Charlotte, North Carolina, and had over $140
billion in consolidated assets as of December 31, 1997. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. Evergreen Asset, Keystone and the CMG
manage or otherwise oversee the investment of over $75 billion in assets
belonging to a wide range of clients, including the Funds and the various
mutual funds in the Evergreen family of funds.
Evergreen Asset, Keystone and the CMG manage each Fund's investments,
provide various administrative services, and supervise each Fund's daily
business affairs, subject to the authority of the Trustees of the Trust.
Evergreen Asset has entered into sub-investment advisory arrangements with
Lieber & Company with respect to Evergreen VA Fund, Evergreen VA Growth and
Income Fund, Evergreen VA Foundation Fund
3
<PAGE>
and Evergreen VA Global Leaders Fund which arrangements provide that 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.
Evergreen Investment Services, Inc. ("EIS") serves as administrator to each
Fund and is entitled to receive a fee based on the average daily net assets of
the Funds at a rate based on the total assets of the mutual funds administered
by EIS for which Evergreen Asset, Keystone or the CMG also serve as investment
adviser. BISYS Fund Services, an affiliate of Evergreen Distributor, Inc.,
distributor for the Evergreen Family of Funds, serves as subadministrator 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 EIS for which FUNB affiliates also serve as
investment adviser. The rates at which the Funds pay administration and
subadministration fees will not change as a result of the Reorganization.
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 "Plans"). As
used herein, the term participants refers to persons holding the VA and VLI
contracts described above. Shares of each Fund are sold at net asset value to
the separate accounts of the Participating Insurance Companies and to the
Plans. All investments in the Trust are credited to the shareholder account in
the form of full or fractional shares of the designated Fund(s) (rounded to
the nearest 1/1000th of a share). The Participating Insurance Companies and
the Plans hold all of the shares of each Fund and will vote such shares in
accordance with instructions received in the same proportion as to which
instructions are received. Participants should consider themselves
shareholders of the Funds for purposes of this Proxy Statement.
SELECTION OF DELAWARE BUSINESS TRUST FORM OF ORGANIZATION
On September 16 and 17, 1997, the Board of the Trust unanimously approved a
proposal by Evergreen Asset, Keystone and the CMG to reorganize the Funds as
separate series of the Successor Trust. The Trust is currently organized as a
Massachusetts business trust. The principal reason for reorganizing the Funds
in Delaware is the availability of certain advantages of Delaware law with
respect to business trusts. The Delaware Business Trust Act (the "Delaware
Act") has been specifically drafted to accommodate the unique governance needs
of investment companies and provides that its policy is to give maximum
freedom of contract to the trust instrument of a Delaware business trust.
Under the Delaware Act, a shareholder of a Delaware business trust is
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. No similar statutory or other authority limiting
business trust shareholder liability exists in Massachusetts. As a result,
Delaware law is generally considered to afford additional protection against
potential shareholder liability to shareholders than Massachusetts trusts. See
"Certain Comparative Information About the Trust and the Successor Trust--
Shareholder Liability" below. Similarly, Delaware law provides that, should a
Delaware trust issue multiple series of shares, each series shall not be
liable for the debts of another series, another potential, though remote, risk
in the case of other business trusts.
Delaware has obtained a favorable national reputation for its business laws
and business environment. The Delaware courts, which may be called upon to
interpret the Delaware Act, are among the nation's most highly respected and
have an expertise in corporate matters which in part grew out of the fact that
Delaware legal issues are concentrated in the Court of Chancery where there
are no juries and where judges issue written opinions explaining their
decisions. Thus, there is a well established body of precedent which may be
relevant in deciding issues pertaining to a Delaware business trust.
There are other advantages that may be afforded by a Delaware business
trust. Under Delaware law, the Successor Funds will have the flexibility to
respond to future business contingencies. For example, the Trustees will have
the power to incorporate a Successor Trust, to merge or consolidate it with
another entity, to cause
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<PAGE>
each series to become a separate trust, and to change the Successor Trust's
domicile without a shareholder vote. This flexibility could help to assure
that the Successor Trust operates under the most advanced form of organization
and could reduce the expense and frequency of future shareholder meetings for
non-investment related issues.
DESCRIPTION OF THE REORGANIZATIONS
The detailed terms and conditions of each Reorganization are contained in
the Plan applicable to each Fund. The information in this proxy statement with
respect to each Plan is qualified in its entirety by reference to, and made
subject to, the complete text of the form of the Plan, a copy of which is
attached to this proxy statement as Exhibit A.
It is anticipated that each of the Funds will participate in the
Reorganization and that the Reorganization, if approved by the shareholders of
each Fund, will be effected contemporaneously as to each Fund. If shareholders
of one or more of the Funds do not approve the Reorganization, that Fund will
continue as currently organized, but each other Fund that has received
shareholder approval may nevertheless implement the Reorganization.
If the shareholders of a Fund approve the Reorganization and the conditions
of the Reorganization are satisfied, all of the assets and liabilities of that
Fund will be transferred to the corresponding Successor Fund and each
shareholder of the Fund will receive shares of the corresponding Successor
Fund (the "New Shares"). The New Shares of each Successor Fund will be issued
to the corresponding Fund in consideration of the transfer to the Successor
Fund by the corresponding Fund of all assets and liabilities of the
corresponding Fund. Immediately thereafter, each Fund will liquidate and
distribute the New Shares to its shareholders. New Shares will be issued on a
class by class basis, so that shareholders will receive New Shares of the same
class as the class of shares issued by the Fund. As a result of the
Reorganization, each shareholder will receive, in exchange for his or her Fund
shares, New Shares with a total net asset value equal to the total net asset
value of the shareholder's Fund shares immediately prior to the consummation
of the Reorganization.
If approved by shareholders of a Fund, it is currently contemplated that the
Reorganization will become effective as to that Fund on or about the opening
of business on May 1, 1998. However, a Reorganization may become effective at
another time and date should the Meeting be adjourned to a later date or
should any other condition to the Reorganization not be satisfied at that
time. Notwithstanding prior shareholder approval, the Plan of Reorganization
may be terminated as to any Fund at any time prior to its implementation by
the mutual agreement of the parties thereto.
THE SUCCESSOR TRUST
The Successor Trust was established pursuant to an Agreement and Declaration
of Trust (the "Master Trust Agreement") under the laws of the State of
Delaware. The Successor Trust is organized as a "series company" as that term
is used in Rule 18f-2 under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Successor Trust consists of Successor Funds of the same
asset class.
The Board of the Successor Trust is comprised of all of the individuals who
currently serve as trustees of the Trust and nine additional trustees.
Accordingly, different trustees will have ultimate responsibility for the
oversight and management of the Successor Funds subsequent to the
Reorganizations. The Trustees of the Successor Trust are Laurence B. Ashkin,
Charles A. Austin III, K. Dun Gifford, James S. Howell, Leroy Keith, Jr.,
Gerald M. McDonnell, Thomas L. McVerry, David M. Richardson, Russell A. Salton
III, Michael S. Scofield, Richard J. Shima, and William W. Pettit.
The Successor Trust is authorized to issue shares divisible into an
indefinite number of different series. The interests of investors in the
various series of the Successor Trust will be separate and distinct. All
consideration received for the sales of shares of a particular series of the
Successor Trust, all assets in which such consideration is invested, and all
income, earnings and profits derived from such investments, will be allocated
to that series. The Master Trust Agreement of the Successor Trust provides
that the Board of Trustees of the Successor Trust may: (i) establish one or
more additional series thereof; (ii) issue the shares of any series in any
number of classes; (iii) issue shares of a series to different groups of
investors; and (iv) convert a series into a pooled fund
5
<PAGE>
structure, without any further action by the shareholders of the Successor
Trust. The Successor Trust will not engage in any activities prior to the
Reorganization with respect to the Successor Funds, except as may be required
in connection with effecting the Reorganization.
The Master Trust Agreement of the Successor Trust provides for shareholder
voting only for the following matters: (a) the election or removal of Trustees
as provided in the Master Trust Agreement; and (b) with respect to such
additional matters relating to the Successor Trust as may be required by (i)
applicable law, (ii) any by-laws adopted by the Trustees, or (iii) as the
Trustees may consider necessary or desirable. Certain of the foregoing matters
will involve separate votes of one or more of the affected series (or affected
classes of a series) of the Successor Trust, while others will require a vote
of the Successor Trust's shareholders as a whole.
All shares of all series vote together as a single class for the election or
removal of Trustees of the Successor Trust with each having one vote for each
share, regardless of series. See "Certain Comparative Information About the
Trust and the Successor Trust--Voting Rights" below.
As required by the 1940 Act, shareholders of each series of the Successor
Trust, voting separately, will have the power to vote at special meetings for,
among other things, changes in fundamental investment restrictions applicable
to such series, approval of any new or amended investment advisory or
investment sub-advisory agreement, and certain other matters that affect the
shareholders of that series. If, at any time, less than a majority of the
Trustees holding office has been elected by the shareholders, the Trustees
then in office will call a shareholders' meeting for the purpose of electing
Trustees of the Successor Trust.
CERTAIN COMPARATIVE INFORMATION ABOUT THE TRUST AND THE SUCCESSOR TRUST
As a Delaware business trust, the Successor Trust's operations will be
governed by the Master Trust Agreement and applicable Delaware law, rather
than by the Trust's current Declaration of Trust (the "Charter"), and the law
of the Commonwealth of Massachusetts. As discussed below, certain of the
differences between the Trust and the Successor Trust derive from provisions
of the Successor Trust's Master Trust Agreement and By-laws. Shareholders
entitled to vote at the Meeting may obtain a copy of the Successor Trust's
Master Trust Agreement and By-laws, without charge, upon written request to
the Funds at the address on the cover page of this proxy statement.
Capitalization. The beneficial interests in each Successor Trust are issued
as transferable shares of beneficial interest, $.001 par value per share. The
Master Trust Agreement permits the Trustees to issue an unlimited number of
shares and to divide such shares into an unlimited number of series or classes
thereof, all without shareholder approval. Each share of a Successor Trust
series represents an equal proportionate interest in the assets and
liabilities belonging to that series (or class) as declared by the Board of
Trustees. The Trust is authorized to divide its shares into an unlimited
number of series, and the Trustees of the Trust are empowered to establish
other classes. The Trust has the authority to issue an unlimited number of
transferable shares of beneficial interest.
Amendments to Governing Instrument. Generally, the provisions of the Master
Trust Agreement of the Successor Trust may be amended without shareholder
approval so long as such amendment is not in contravention of applicable law,
by an instrument in writing signed by a majority of the then Trustees of the
Successor Trust (or by an officer of the Successor Trust pursuant to the vote
of a majority of such Trustees). Under the Master Trust Agreement of the
Successor Trust, except as provided by applicable law, a quorum is 25% of the
shares entitled to vote. The quorum requirement of the Trust is currently 50%
of the shares entitled to vote. The affirmative vote of a majority of the
shares entitled to be cast is generally required to amend the Charter (unless
otherwise specifically required by other law, including the 1940 Act).
Voting Rights. The Charter generally provides that a special meeting of
shareholders for the purpose of considering the removal of a person serving as
a Trustee of the Trust shall be called upon the written request of
shareholders representing 10% of the outstanding shares. The By-laws of the
Successor Trust provide that, to the
6
<PAGE>
extent required by the 1940 Act, meetings of the shareholders for the purpose
of voting on the removal of any Trustee shall be called promptly by the
Trustees upon the written request of Shareholders holding at least 10% of the
outstanding shares of the Successor Trust entitled to vote. Like the Trust, a
Successor Trust will not be required to hold annual meetings of its
shareholders and, at this time, does not intend to do so. The record date for
determining shareholders who are entitled to notice of, and to vote at, a
shareholders' meeting is subject to the discretion of the Board but may not be
more than 60 days preceding the scheduled meeting date under the Charter.
Under the By-laws of the Successor Trust the record date may not be more than
90 days nor less than 10 days preceding the scheduled meeting date.
The Master Trust Agreement provides for shareholder voting in certain
circumstances. See "The Successor Trust" above. Shareholders of the Trust
generally have the power to vote with respect to the election of Trustees, the
removal of Trustees, the approval or termination of any investment advisory or
management agreement, certain amendments to the Charter, whether or not a
court action, proceeding or claim should be brought or maintained derivatively
or as a class action on behalf of the Trust to the same extent as shareholders
of a corporation, and with respect to certain other actions, such as a
transfer of all or substantially all of the Trust's assets or the dissolution
of the Trust.
A Trustee of the Successor Trust may be removed at any meeting of
shareholders by a vote of at least two-thirds of the outstanding shares of the
Successor Trust. The Charter permits removal of a Trustee by action of at
least two-thirds of the other Trustees.
The Master Trust Agreement provides that a majority of the shares voted at a
meeting at which a quorum is present shall decide any questions and that a
plurality shall elect a Trustee, except when a different vote is required or
permitted by any provision of the 1940 Act or other applicable law or by the
Master Trust Agreement or the By-laws of the Successor Trust. Similar
requirements apply to the Trust. Shareholders of the Successor Trust are not
required to approve the termination or reorganization of the Successor Trust.
Unlike the Master Trust Agreement of the Successor Trust, the Charter requires
that any termination or reorganization of a Fund must be approved by the vote
of a majority of the outstanding voting shares of such Fund.
Under the Master Trust Agreement, each share of a Successor Fund is entitled
to one vote for each share of beneficial interest. Under the current voting
provisions governing the Funds each share of beneficial interest is entitled
to one vote, regardless of the specific Fund it represents. Under the Trust's
Charter and applicable law, a matter affecting only one Fund is voted on only
by that Fund. Generally, the Charter further provides that, where required by
law or applicable regulation, certain matters will be voted on separately by
each Fund. In all other matters, all Funds vote together as a group.
Shareholder Liability. Under Delaware law, shareholders of a Delaware
business trust are entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations. No similar statutory or
other authority limiting business trust shareholder liability exists in any
other state. As a result, to the extent that a Successor Trust or a
shareholder is subject to the jurisdiction of courts in those states, the
courts may not apply Delaware law, and may thereby subject shareholders of a
Delaware trust to liability. To guard against this risk, the Master Trust
Agreement: (i) provides that any written obligation of the Successor Trust may
contain a statement that such obligation may only be enforced against the
assets of the Successor Trust; however, the omission of such a disclaimer will
not operate to create personal liability for any shareholder; and (ii)
provides for indemnification out of trust property of any shareholder held
personally liable for the obligations of the Successor Trust. Accordingly, the
risk of a shareholder of the Successor Trust incurring financial loss beyond
that shareholder's investment because of shareholder liability is limited to
circumstances in which: (i) a court refuses to apply Delaware law; (ii) no
contractual limitation of liability was in effect; and (iii) the Successor
Trust itself would be unable to meet its obligations. In light of Delaware
law, the nature of the Successor Trust's business, and the nature of its
assets, the risk of personal liability to a shareholder of the Successor Trust
is remote.
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Shareholders of the Trust, as it is organized as a Massachusetts business
trust, may, under certain circumstances, be held personally liable under
Massachusetts law for the obligations of the trust. However, the Charter
contains an express disclaimer of shareholder liability and requires that
notice of such disclaimer be given in each agreement entered into or executed
by the Trust or the trustees of the Trust. The Charter also provides for
indemnification out of the property of the trust.
Liability and Indemnification of Trustees. Under the Master Trust Agreement
of each Successor Trust, a Trustee is liable to the Successor Trust and its
shareholders only for such Trustee's own willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of the
office of Trustee or the discharge of the duties of a Trustee. Trustees and
officers of the Successor Trust are entitled to be indemnified for the
expenses of litigation against them except with respect to any matter as to
which it has been determined that such person: (i) did not act in good faith
in the reasonable belief that his or her action was in or not opposed to the
best interests of the Successor Trust; or (ii) had acted with willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties; and (iii) for a criminal proceeding, had reasonable cause to believe
that his or her conduct was unlawful, such determination to be based upon the
outcome of a court action or administrative proceeding or a reasonable
determination, following a review of the facts, by (a) a vote of a majority of
those Trustees who are neither "interested persons" within the meaning of the
1940 Act nor parties to the proceeding, or (b) an independent legal counsel in
a written opinion. The Successor Trust may also advance money to any Trustee
or officer involved in a proceeding discussed above provided that the Trustee
or officer undertakes to repay the Successor Trust if his or her conduct is
later determined to preclude indemnification and certain other conditions are
met. It is currently the view of the staff of the Securities and Exchange
Commission ("SEC") that to the extent that any provisions such as those
described above are inconsistent with the 1940 Act, the provisions of the 1940
Act may preempt the foregoing provisions.
The Charter generally provides that its Trustees shall not be liable to the
Trust or its shareholders, except for the Trustees' acts of willful
misfeasance, bad faith, gross negligence, or reckless disregard of duties
involved in the conduct of their office. The Charter generally also provides
that Trustees and officers of the Trust will be indemnified against liability
and expenses of litigation against them unless their conduct constituted
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their office.
Right of Inspection. The By-laws of the Trust generally provide that no
shareholder shall have the right to inspect the books of account and stock
ledger of the Trust except as conferred by law, the By-laws, or as authorized
by the Board of the Trust or a resolution of shareholders. The By-laws of the
Successor Trust provide that no shareholder of the Successor Trust shall have
any right to inspect any account or book or document of the Successor Trust
except as conferred by law or otherwise by the Trustees or by resolution of
the shareholders.
The foregoing is only a summary of certain of the differences between the
governing instruments and laws generally applicable to the and the Successor
Trust. It is not a complete list of differences. Shareholders should refer
directly to the provisions of the governing instruments and applicable law for
more complete information.
CURRENT AND SUCCESSOR ADVISORY AND SUBADVISORY AGREEMENTS
As a result of the Reorganizations, each Successor Fund will be subject to a
new investment advisory agreement (the "Successor Advisory Agreement") between
the Successor Trust on behalf of the Successor Fund and the current investment
adviser of the corresponding Fund. Each Fund as to which Lieber provides
investment subadvisory services through Evergreen Asset will be subject to a
new investment subadvisory agreement (the "Successor Subadvisory Agreement")
between Evergreen Asset and Lieber. Since each Fund currently receives
substantially identical services, each Successor Advisory Agreement has been
standardized with the fee schedules being the only variant. The current
investment advisory agreement of each Fund (the "Current Advisory Agreement")
is similar in many respects to the Successor Advisory Agreement. Except as
noted below, the Successor Advisory Agreement contains the material terms of
the Current Advisory Agreement. Each Successor Subadvisory Agreement is
identical in all material respects to the current investment subadvisory
agreements between Evergreen Asset and Lieber. Most importantly, the rate at
which fees are required to be paid by each Fund for investment advisory and
investment subadvisory services, as a percentage of average daily net assets,
will remain the same.
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The following summarizes certain aspects of the Current Advisory Agreement
and the Successor Advisory Agreement of each Fund.
Brokerage Transactions. The Successor Advisory Agreement sets forth specific
terms as to brokerage transactions and the investment adviser's use of broker-
dealers. For example, the investment adviser will be obligated to use its best
efforts to seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being most favorable to the
Successor Funds. In assessing the best overall terms available for any
transaction, the investment adviser will consider all factors it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the broker
or dealer, research services provided and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. The Successor Advisory Agreement also specifically states that the
investment adviser is entitled to rely on the provisions of Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which
permits an investment adviser to have its client, including an investment
company, pay more than the lowest available commission for executing a
securities trade in return for research services and products. The Current
Advisory Agreement of each of the Funds does not specify the standards to be
used in the selection of brokers or refer to the provisions of Section 28(e)
of the 1934 Act.
Expenses. Each Successor Advisory Agreement provides that the investment
adviser is required to pay or reimburse the Successor Fund for (i) the
compensation (if any) of the Trustees who are affiliated with the investment
adviser or with its affiliates, or with any adviser retained by the investment
adviser, and of all officers of the Successor Fund, and (ii) all expenses of
the investment adviser incurred in connection with its services thereunder.
The substance of the Current Advisory Agreement of each Fund is the same as
the Successor Advisory Agreement, except that affiliated Trustees are not
required to serve at the investment adviser's cost.
Liability and Indemnification. Each Successor Advisory Agreement provides
that the investment adviser shall have no liability in connection with
rendering services thereunder, other than liabilities resulting from the
adviser's willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties. The Current Advisory Agreements for the Funds have
different provisions.
Neither the Current Advisory Agreement nor the Successor Advisory Agreement
provides for indemnification of the Adviser.
Amendments. The Current Advisory Agreement and each Successor Advisory
Agreement provides that only amendments of substance require shareholder
approval.
CURRENT AND SUCCESSOR ADMINISTRATIVE ARRANGEMENTS
The administrative arrangements described under "The Funds" above will in
all material respects remain the same. Most importantly, the rate at which
fees are required to be paid by each Fund for administrative services, as a
percentage of average daily net assets, will remain the same.
CERTAIN VOTES TO BE TAKEN PRIOR TO THE REORGANIZATIONS
Prior to the Reorganizations, it is anticipated that a Participating
Insurance Company will own a single outstanding share of the corresponding
Successor Fund. The purpose of the issuance by each Fund of this nominal share
prior to the effective time of the Reorganization is to enable the Successor
Trust to eliminate the need to incur the additional expense by a Successor
Trust of having to hold a separate meeting of shareholders of the Successor
Funds in order to comply with certain shareholder approval requirements of the
1940 Act.
INVESTMENT OBJECTIVES AND RESTRICTIONS
Each Successor Fund will have the same investment objective(s) as the
corresponding Fund except that, if Proposal 2 in this proxy statement is
approved by shareholders, the Successor Fund's investment objective(s) will
not be considered "fundamental". As a result, a Successor Fund's investment
objective(s) could be changed by its Trustees, without shareholder approval,
after prior notice to shareholders. The investment objective(s) of certain
Funds are proposed to be amended as described in Part III of this proxy
statement. The investment restrictions of each Fund are proposed to be changed
as described in Part II below.
Except as described in Parts II and III below, the investment advisers do
not presently intend to change in any material way for the Successor Funds the
investment strategy or operations employed for the Funds.
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FEDERAL INCOME TAX CONSEQUENCES
It is anticipated that the transactions contemplated by the Plan of
Reorganization will be tax-free. Sullivan & Worcester LLP, counsel to the
Funds, has informed the Board that if substantially all of the assets and
liabilities of the Funds are transferred to the corresponding Successor Funds,
it will issue an opinion that a Reorganization will not give rise to the
recognition of income, gain or loss to the Fund, the Successor Fund, or
shareholders of the Fund for federal income tax purposes pursuant to sections
361, 1032(a) and 354(a)(1), respectively, of the Internal Revenue Code of
1986, as amended. Such opinion will be based upon customary representations of
the Trust and the Successor Trust and certain customary assumptions. The
receipt of such an opinion is a condition to the consummation of each
Reorganization.
A shareholder's adjusted basis for tax purposes in shares of the Successor
Fund after the Reorganization will be the same as the shareholder's adjusted
basis for tax purposes in the shares of the Fund immediately before the
Reorganization. The holding period for the shares of the Successor Fund
received in the Reorganization will include a shareholder's holding period for
shares of the Fund (provided that the shares of the Fund were held as capital
assets on the date of the Reorganization). Shareholders should consult their
own tax advisers with respect to the state and local tax consequences of the
proposed transaction.
REORGANIZATION EXPENSES
The expenses of the Reorganization will be borne by the Funds. The current
Trustees of the Funds will retain their ability to make claims under their
existing directors and officers insurance policy for a period of three years
following the consummation of the Reorganization.
APPRAISAL RIGHTS
Neither the applicable Charter nor Massachusetts law grants shareholders of
any mutual fund organized as a Massachusetts business trust any rights in the
nature of appraisal or dissenters' rights with respect to any action upon
which such shareholders may be entitled to vote.
RECOMMENDATION OF TRUSTEES
The Trustees of the Trust requested, received and considered such
information as they deemed reasonably necessary to enable them to evaluate the
Plan of Reorganization. The Trustees reviewed the potential benefits
associated with the proposed Reorganization and adoption of the proposed
Master Trust Agreement. In this regard, the Trustees considered: (i) the
potential disadvantages which apply to operating the Funds under their current
form of organization; (ii) the advantages which apply to operating the
Successor Funds as series of Delaware business trusts; (iii) the advantages of
adopting the new Master Trust Agreements under Delaware law; and (iv) the
expected federal tax consequences to the Funds, the Successor Funds and
shareholders resulting from the proposed Reorganization, and the likelihood
that no recognition of income, gain or loss for shareholders will occur as a
result thereof.
At the meetings of the Board called for the purpose on September 16 and 17,
1997, the Board of each Registrant voted to approve the proposed Plan of
Reorganization and determined that participation in the Reorganization is in
the best interests of each Fund and that the interests of existing
shareholders will not be diluted as a result of the Reorganization.
REQUIRED VOTE TO BE REVISED
The affirmative vote of the holders of a majority of the shares of a Fund
issued and outstanding is required to approve the Reorganization. Under the
1940 Act, the affirmative vote of "a majority of the outstanding voting
securities" of a Fund is defined as the lesser of (a) 67% or more of the
voting securities of the Fund present or represented by proxy at the Meeting,
if the holders of more than 50% of the outstanding voting securities of the
Fund are presented or represented by Proxy, or (b) more than 50% of the
outstanding voting securities of the Fund.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 1.
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PART II
PROPOSAL 2 -- RECLASSIFICATION FROM FUNDAMENTAL TO NONFUNDAMENTAL OF THE
INVESTMENT OBJECTIVE OF EACH FUND
RECLASSIFICATION OF FUNDAMENTAL INVESTMENT OBJECTIVES AS NONFUNDAMENTAL
Under the 1940 Act, a Fund's investment objective is not required to be
classified as "fundamental." A fundamental investment objective may be changed
only by vote of a Fund's shareholders. In order to provide each Fund's
investment adviser with enhanced investment management flexibility to respond
to market, industry or regulatory changes, the Trustees of the Trust have
approved the reclassification from fundamental to nonfundamental of each
Fund's investment objective. A nonfundamental investment objective may be
changed at any time by the Trustees of a Fund without approval by the Fund's
shareholders.
For a complete description of the investment objective(s) of your Fund(s),
please consult your Fund(s)' prospectuses. The reclassification from
fundamental to nonfundamental will not alter any Fund's investment objective.
If at any time in the future, the Trustees of the Successor Trust approve a
change in a Successor Fund's nonfundamental investment objective, shareholders
of such Fund will be given notice of such change prior to its implementation;
however, if such a change were to occur, shareholders would not be asked to
approve such change.
If the reclassification of any Fund's investment objective from fundamental
to nonfundamental is not approved by shareholders of a particular Fund, such
Fund's investment objective will remain fundamental and shareholder approval
(and its attendant costs and delays) will continue to be required prior to any
change in investment objective.
RECOMMENDATION OF TRUSTEES
The Trustees of the Trust have considered the enhanced management
flexibility to respond to market, industry or regulatory changes that would
accrue to the Funds' investment advisers if each Fund's fundamental investment
objectives were reclassified as nonfundamental.
At the meeting of the Trustees called for the purpose on September 16 and
17, 1997, the Trustees of the Trust each voted to approve the reclassification
of the investment objective of each Fund currently classified as fundamental
to nonfundamental.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding voting
securities of a Fund is required to approve the reclassification of a Fund's
investment objective from fundamental to nonfundamental. Under the 1940 Act,
the affirmative vote of "a majority of the outstanding voting securities" of a
Fund is defined as the lesser of (a) 67% or more of the voting securities of
the Fund present or represented by proxy at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (b) more than 50% of the outstanding voting
securities of the Fund.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 2.
PROPOSAL 3 -- CHANGES TO FUNDAMENTAL
INVESTMENT RESTRICTIONS
ADOPTION OF STANDARDIZED INVESTMENT RESTRICTIONS (PROPOSALS 3A-3H)
The primary purpose of Proposals 3A through 3H is to revise and standardize
the Funds' fundamental investment restrictions (the "Restrictions"). The
Trustees have concurred with the Funds' investment advisers'
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efforts to analyze the fundamental and nonfundamental investment restrictions
of the Funds and, where practicable and appropriate to a Fund's investment
objective and policies, propose to shareholders adoption of standardized
Restrictions.
It is not anticipated that any of the changes will substantially affect the
way the Funds are currently managed. These proposals are being presented to
shareholders for approval because it is believed that increased
standardization will help to promote operational efficiencies and facilitate
monitoring of compliance with the Restrictions. Because the proposed
standardized fundamental Restrictions in general are phrased more broadly than
the Funds' current fundamental Restrictions, the Funds will be able to respond
more expeditiously to changed market, industry or regulatory developments. Set
forth below, as sub-sections of this Proposal, are general descriptions of
each of the proposed changes. You will be given the option to approve all,
some, or none of the proposed changes on the proxy card enclosed with this
proxy statement.
A listing of the proposed standardized fundamental Restrictions to be
adopted by each Fund is set forth in Exhibit B to this proxy statement. A
listing of the current fundamental Restrictions of each Fund is set forth in
Exhibit C. Exhibit C contains an index to assist you in locating the page(s)
at which your Fund(s)' current fundamental Restrictions are described. Those
fundamental Restrictions that you are being requested to vote to standardize
are shown in Exhibit C by an "S", which stands for "To be Standardized." If a
particular change is not approved by shareholders of a Fund, the current
fundamental Restriction will remain in place.
The discussions below are general. To compare your Fund's current
fundamental Restriction to the proposed changed fundamental Restriction,
please refer to Exhibit C.
Many of the Funds' current Restrictions are accompanied by descriptive
language. Such descriptive language should not be read as part of the
fundamental Restriction. To the extent such descriptive language in a current
Restriction does not conflict with the language in a proposed Restriction, the
language will be retained but will not be considered fundamental and, as such,
may be changed by the Trustees without a further shareholder vote.
If approved by shareholders, the revised fundamental Restrictions described
in Proposals 3A through 3H will remain fundamental and, as such, cannot be
changed without a further shareholder vote. If a proposed standardized
fundamental Restriction is not approved by shareholders of a particular Fund,
the current Restriction will remain fundamental and shareholder approval (and
its attendant costs and delays) will continue to be required prior to any
change in the Restriction.
RECLASSIFICATION OF FUNDAMENTAL RESTRICTIONS AS NONFUNDAMENTAL (PROPOSAL 3I)
The reclassification from fundamental to nonfundamental of certain of the
Funds' other current fundamental Restrictions will enhance the ability of the
Funds to achieve their respective investment objectives because of the greater
investment flexibility to respond to changed market, industry or regulatory
conditions without the delay and expense of the solicitation of shareholder
approval.
RECOMMENDATION OF TRUSTEES
The Trustees of the Trust have reviewed the potential benefits associated
with the proposed standardization of the Funds' fundamental Restrictions
(Proposals 3A through 3H below) as well as the potential benefits associated
with the reclassification of certain of the Funds' other fundamental
Restrictions to nonfundamental (Proposal 3I).
At the meeting of the Trustees called for the purpose on September 16 and
17, 1997, the Trustees of the Trust voted to approve the proposed
standardization of the Funds' fundamental Restrictions (Proposals 3A through
3H below) and the reclassification from fundamental to nonfundamental of
certain of the Funds' other fundamental Restrictions (Proposal 3I below).
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REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding voting
securities of a Fund is required to standardize the language of the Funds'
fundamental Restrictions (Proposals 3A through 3H) and to approve the
reclassification of other fundamental Restrictions to nonfundamental (Proposal
3I). Under the 1940 Act, the affirmative vote of "a majority of the
outstanding voting securities" of a Fund is defined as the lesser of (a) 67%
or more of the voting securities of the Fund present or represented by proxy
at the Meeting, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy, or (b) more than
50% of the outstanding voting securities of the Fund.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 3.
PROPOSAL 3A: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING DIVERSIFICATION
OF INVESTMENTS
DIVERSIFIED FUNDS
The current fundamental Restriction of the Funds concerning diversification
of investments provides generally that a Fund cannot purchase the securities
of an issuer if the purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities of such issuer,
except U.S. government securities, or if the purchase would cause more than
10% of the outstanding voting securities of any one issuer to be held in the
Fund's portfolio. Most Funds apply this limitation to 75% of their total
assets. It is proposed that shareholders approve new language standardizing
this Restriction.
The Funds have elected to be "diversified" open-end management investment
companies under the 1940 Act, which requires the 5% of assets and 10% of
outstanding voting securities tests described above to apply to 75% of the
total assets of the Fund.
The amendment of this fundamental Restriction will allow the Funds to
respond more quickly to changes of that standard, as well as to other legal,
regulatory, and market developments without the delay or expense of a
shareholder vote. Adoption of this change is not expected to materially affect
the operation of the Funds.
No Fund is changing its current classification. As proposed, each Fund's
fundamental Restriction regarding diversification will be replaced with the
following fundamental Restriction:
"The Fund may not make any investment inconsistent with the
Fund's classification as a diversified investment company
under the Investment Company Act of 1940."
PROPOSAL 3B: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING CONCENTRATION OF
A FUND'S ASSETS IN A PARTICULAR INDUSTRY
The Funds currently have a fundamental Restriction concerning the
concentration of investments in a particular industry. The staff of the SEC
takes the position that a mutual fund "concentrates" its investments in a
particular industry if more than 25% of the mutual fund's assets (exclusive of
cash and U.S. government securities) are invested in the securities of issuers
in such industry. The Restrictions generally embody the SEC staff
interpretation by stating that a Fund will not concentrate its investments in
a particular industry by investing more than 25% of its assets, exclusive of
cash and U.S. government securities, in securities of issuers in any one
industry.
Shareholders of the Funds are being requested to approve an amendment of the
foregoing fundamental Restriction. As proposed, each Fund's current
fundamental Restriction regarding concentration of the Fund's assets in a
particular industry will be replaced by the following fundamental Restriction:
"The Fund may not concentrate its investments in the
securities of issuers primarily engaged in any particular
industry (other than securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities)."
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The primary purpose of the proposed amendment is to adopt insofar as
possible a standardized Restriction regarding concentration.
PROPOSAL 3C: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING THE ISSUANCE OF
SENIOR SECURITIES
The Funds' current fundamental Restrictions regarding the issuance of senior
securities generally state that a Fund shall not issue any senior security or
state the criteria under which a security is deemed not to be a senior
security.
It is proposed that shareholders approve replacing the Funds' current
fundamental Restrictions concerning the issuance of senior securities with the
following fundamental Restriction governing the issuance of senior securities:
"Except as permitted under the Investment Company Act of 1940,
the Fund may not issue senior securities."
The primary purpose of this proposed change is to standardize the Funds'
fundamental Restriction regarding senior securities.
The proposed fundamental Restriction clarifies that the Funds may issue
senior securities to the full extent permitted under the 1940 Act. Although
the definition of a "senior security" involves complex statutory and
regulatory concepts, a senior security is generally an obligation of a Fund
which has a claim to the Fund's assets or earnings that takes precedence over
the claims of the Fund's shareholders. The 1940 Act generally prohibits open-
end investment companies (i.e., mutual funds) from issuing any senior
securities; however, under current SEC staff interpretations, mutual funds are
permitted to engage in certain types of transactions that might be considered
"senior securities" as long as certain conditions are satisfied. For example,
a transaction that obligates a Fund to pay money at a future date (e.g., the
purchase of securities to be settled on a date that is farther away than the
normal settlement period) may be considered a "senior security." A mutual fund
is permitted to enter into this type of transaction if it maintains a
segregated account containing liquid securities in an amount equal to its
obligation to pay cash for the securities at a future date. Funds would engage
in transactions that could be considered to involve "senior securities" only
in accordance with applicable regulatory requirements under the 1940 Act.
Adoption of the proposed fundamental Restriction concerning senior
securities is not expected to materially affect the operation of the Funds.
However, adoption of a standardized fundamental Restriction will facilitate
investment compliance efforts on behalf of the Funds and will allow the Funds
to respond to legal, regulatory and market developments which may make the use
of permissible senior securities advantageous to the Funds and their
shareholders.
PROPOSAL 3D: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING BORROWING
Generally, the Funds' current fundamental Restrictions concerning borrowing
state that a Fund shall not borrow money except in an amount not in excess of
5% of the total assets of the Fund, and then only for emergency and
extraordinary purposes, which shall not prohibit escrow and collateral
arrangements in connection with investment in financial futures contracts and
related options. Some Funds have more broad borrowing authority. When
reviewing your Fund(s)' policies on borrowings as set forth in Exhibit C, you
should also review your Fund(s)' policies on the issuance of senior securities
since the topics are interrelated.
In general, under the 1940 Act, a Fund may not borrow money, except that (i)
a Fund may borrow from banks (as defined in the 1940 Act) or enter into
reverse repurchase agreements, in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) a Fund may borrow up to an additional 5%
of its total assets for temporary purposes, (iii) a Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities, and (iv) a Fund may not pledge its assets other than
to secure such borrowings or, to the extent permitted by the Fund's investment
policies, as such policies may be set forth in its
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prospectus and statement of additional information, as they may be amended
from time to time, in connection with hedging transactions, short sales, when-
issued and forward commitment transactions and similar investment strategies.
It is proposed that shareholders approve replacing the Funds' current
fundamental Restrictions regarding borrowing with the following fundamental
Restriction:
"The Fund may not borrow money, except to the extent permitted
by applicable law."
If the proposal is approved, the Funds will disclose that they will not
engage in leveraging.
The primary purpose of the proposed change to the fundamental Restriction
concerning borrowing is to standardize the Restriction.
Adoption of the proposed Restriction is not currently expected to materially
affect the operations of the Funds. However, many of the Funds' current
Restrictions restrict borrowing to a lower percentage of total assets than the
33 1/3% permitted under the 1940 Act. The proposed Restriction therefore would
allow a Fund to purchase a security while borrowings representing more than 5%
of total assets are outstanding. While the Funds have no current intention to
purchase securities while borrowings representing more than 5% of total assets
are outstanding, the flexibility to do so may be beneficial to a Fund at a
future date.
PROPOSAL 3E: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING UNDERWRITING
Each Fund is currently subject to a fundamental Restriction concerning
underwriting. The Restrictions generally provide that a Fund shall not
underwrite any securities. It is proposed that shareholders approve replacing
the current fundamental Restriction with the following fundamental Restriction
concerning underwriting:
"The Fund may not underwrite securities of other issuers,
except insofar as the Fund may be deemed an underwriter in
connection with the disposition of its portfolio securities."
The primary purpose of the proposed change is to clarify that the Funds are
not prohibited from selling securities if, as a result of the sale, the Funds
would be considered underwriters under the federal securities laws. It is also
intended to standardize the Funds' fundamental Restrictions regarding
underwriting. While the proposed change will have no current impact on the
Funds, adoption of the proposed standardized fundamental Restriction will
advance the goals of standardization.
PROPOSAL 3F: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING INVESTMENT IN
REAL ESTATE
The Funds currently have a fundamental Restriction concerning the purchase
of real estate. In general, the Restrictions state that a Fund shall not
purchase or sell real estate. In the opinion of management, this Restriction
does not currently preclude investment in securities of issuers that deal in
real estate.
As proposed, the Funds' current fundamental Restrictions will be replaced by
the following fundamental Restriction which will govern future purchases and
sales of real estate:
"The Fund may not purchase or sell real estate, except that,
to the extent permitted by applicable law, the Fund may invest
in (a) securities directly or indirectly secured by real
estate, or (b) securities issued by issuers that invest in
real estate."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the Funds are authorized to invest and to standardize the
Funds' fundamental Restriction concerning real estate.
The proposed fundamental Restriction would make it explicit that each of the
Funds may acquire a security or other instrument whose payments of interest
and principal may be secured by a mortgage or other right to
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foreclose on real estate, in the event of default. Any investments in these
securities are, of course, subject to the Fund's investment objective and
policies and to other limitations regarding diversification and concentration.
To the extent that a Fund buys securities and instruments of companies in
the real estate business, the Fund's performance will be affected by the
condition of the real estate market. This industry is sensitive to factors
such as changes in real estate values and property taxes, overbuilding,
variations in rental income, and interest rates. Performance could also be
affected by the structure, cash flow, and management skill of real estate
companies.
While the proposed change will have no current impact on the Funds, adoption
of the proposed standardized fundamental Restriction will advance the goals of
standardization.
PROPOSAL 3G: TO AMEND THE FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
COMMODITIES
The Funds currently are subject to various fundamental Restrictions that
generally provide that a Fund shall not purchase or sell commodities or
commodity contracts, except that certain Funds may, for hedging purposes, buy
or sell financial futures contracts and related options.
It is proposed that shareholders approve replacing the current fundamental
Restrictions with the following fundamental Restriction concerning
commodities:
"The Fund may not purchase or sell commodities or contracts on
commodities except to the extent that the Fund may engage in
financial futures contracts and related options and currency
contracts and related options and may otherwise do so in
accordance with applicable law and without registering as a
commodity pool operator under the Commodity Exchange Act."
The proposed amendment is intended to allow appropriate Funds to have the
flexibility to invest in futures contracts and related options, including
financial futures such as interest rate and stock index futures. Certain Funds
currently have the ability to invest in financial futures. Under the proposed
amendment, these types of securities may be used for hedging or for investment
purposes and involve certain risks.
Investment in futures contracts and related options may not be appropriate
for all Funds. If the proposed amendment is approved, the Funds and their
investment advisers will determine the appropriateness of investment in
futures contracts (including financial futures) and related options on a Fund-
by-Fund basis.
While the proposed change will have no material impact on the operation of
the Funds, adoption of the proposed fundamental Restriction will advance the
goals of standardization.
PROPOSAL 3H: TO AMEND THE FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
LENDING
The Funds' current fundamental Restrictions concerning lending state
generally that a Fund shall not lend its portfolio securities except under
certain percentage and other limitations. In general, it is the Funds' current
policy that such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value
of the securities loaned, or by irrevocable letters of credit. During the
existence of the loan, a Fund must continue to receive the equivalent of the
interest and dividends paid by the issuer on the securities loaned and
interest on the investment of the collateral; the Fund must have the right to
call the loan and obtain the securities loaned at any time on five days'
notice, including the right to call the loan to enable the Fund to vote the
securities. To comply with previous (but as a result of federal legislation
passed last year, now superseded) requirements of certain state securities
administrators, such loans were not to exceed one-third of the Fund's net
assets taken at market value.
It is proposed that shareholders approve the replacement of the foregoing
fundamental Restriction with the following amended fundamental Restriction
concerning lending:
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"The Fund may not make loans to other persons, except that the
Fund may lends its portfolio securities in accordance with
applicable law. The acquisition of investment securities or
other investment instruments shall not be deemed to be the
making of a loan."
The proposal is not expected to materially affect the operation of the
Funds. However, the proposed Restriction would clarify the Funds' ability to
invest in direct debt instruments such as loans and loan participations, which
are interests in amounts owed to another party by a company, government or
other borrower. These types of securities may have additional risks beyond
conventional debt securities because they may provide less legal protection
for the Fund, or there may be a requirement that the Fund supply additional
cash to a borrower on demand.
The adoption of the proposed standardized fundamental Restriction will
advance the goals of standardization.
PROPOSAL 3I: RECLASSIFICATION AS NONFUNDAMENTAL OF ALL CURRENT FUNDAMENTAL
RESTRICTIONS OTHER THAN THE FUNDAMENTAL RESTRICTIONS DESCRIBED IN
THE FOREGOING PROPOSALS 3A THROUGH 3H.
Like all mutual funds, when the Funds were established the Trustees adopted
certain investment Restrictions that would govern the efforts of the Funds'
investment advisers in seeking the Funds' respective investment objectives.
Some of these Restrictions were designated as "fundamental" and, as such, may
not be changed unless the change has first been approved by the Trustees and
then by the shareholders of the relevant Fund. Many of the Funds' investment
restrictions were required to be classified as fundamental under the
securities laws of various states. Since October 1996, such state securities
laws and regulations regarding fundamental investment restrictions have been
preempted by federal law and no longer apply.
The Funds' fundamental Restrictions were established to reflect certain
regulatory, business or industry conditions as they existed at the time a Fund
was established. Many such conditions no longer exist. The 1940 Act requires
only that the Restrictions discussed in Proposals 3A through 3H above be
classified as fundamental. As a result, this Proposal 3I proposes to
reclassify as nonfundamental all current fundamental Restrictions of certain
Funds other than the fundamental Restrictions discussed in the foregoing
Proposals 3A through 3H.
Nonfundamental Restrictions may be changed or eliminated by a Fund's
Trustees at any time without approval of the Fund's shareholders. The current
fundamental Restrictions proposed to be reclassified as nonfundamental are
shown in Exhibit C by an "R", which stands for "To be Reclassified." You will
find the page(s) in which your Fund's(s') Restrictions are described in the
index at the beginning of Exhibit C.
None of the proposed changes will alter any Fund's investment objective.
Indeed, the Trustees believe that approval of the reclassification of
fundamental Restrictions to nonfundamental Restrictions will enhance the
ability of the Funds to achieve their respective investment objectives because
the Funds will have greater investment management flexibility to respond to
changed market, industry or regulatory conditions without the delay and
expense of the solicitation of shareholder approval.
VOTING INFORMATION CONCERNING THE MEETING
Only shareholders of record as of the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting or any adjournment
thereof. The holders of a majority of the shares outstanding at the close of
business on the Record Date present in person or represented by proxy will
constitute a quorum for the Meeting.
All shares of the Funds held by participants will be voted by the
Participating Insurance Companies in accordance with voting instructions
received from such participants. Proxies that reflect abstentions by persons
entitled to vote will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum, but will have no
effect on the outcome of the vote to approve any proposal requiring a vote
based on
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the percentage of shares actually voted. The Participating Insurance Companies
and the Plans are entitled to vote shares for which no proxy is received and
will vote such shares in the same proportion as the votes cast by the
participants on the proxy issues presented. A proxy may be revoked at any time
on or before the Meeting by written notice to the Secretary of the appropriate
Fund, 200 Berkeley Street, Boston, Massachusetts 02116. Unless revoked, all
valid proxies will be voted in accordance with the specifications thereon or,
in the absence of such specifications, in the same proportion as the votes
cast by participants on the proxy issues presented.
Each full share outstanding as of the Record Date is entitled to one vote
and each fractional share outstanding is entitled to a proportionate share of
one vote. The number of shares of each Fund outstanding as of the close of
business on the Record Date is set forth in Exhibit D.
Proxy solicitations will be made primarily by mail, but proxy solicitations
may also be made by telephone, telegraph or personal solicitations conducted
by officers and employees of FUNB, its affiliates or other representatives of
the Funds (who will not be paid for their solicitation activities). Any proxy
given by you is revocable.
In the event that sufficient votes to approve a proposal are not received,
the persons named as proxies may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. In determining whether to
adjourn the Meeting, the following factors may be considered: the percentage
of votes actually cast, the percentage of negative votes actually cast, the
nature of any further solicitation and the information to be provided to
shareholders with respect to the reasons for the solicitation. Any such
adjournment will require an affirmative vote by the holders of a majority of
the shares present in person or by proxy and entitled to vote at the Meeting.
The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn
the Meeting.
No Fund is required or intends to hold annual or other periodic meetings of
shareholders except as may be required by the 1940 Act. If the Reorganization
is not approved by shareholders of a Fund, the next meeting of the
shareholders of such Fund will be held at such time as the Board may determine
or as may be legally required. If any change proposed in Part II of this proxy
statement is not approved by shareholders of a Fund, the current restriction,
limitation or policy will remain in place as to such Fund. Shareholders
wishing to submit proposals for consideration for inclusion in a proxy
statement for a subsequent shareholder meeting should send their written
proposals to the Secretary of the Fund at the address set forth on the cover
of this proxy statement such that they will be received by the Fund in a
reasonable period of time prior to any such meeting.
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ADDITIONAL INFORMATION
PAYMENT OF EXPENSES
Each Fund will pay its proportionate share of expenses of the preparation,
printing and mailing to its shareholders of the proxy, accompanying notice of
meeting and this proxy statement and any supplementary solicitation of its
shareholders.
BENEFICIAL OWNERSHIP
Exhibit E contains information about the beneficial ownership by
shareholders of five percent or more of each Fund's outstanding Shares, as of
the Record Date. On that date, the existing Trustees and officers of the
Funds, together as a group, "beneficially owned" less than one percent of each
Fund's outstanding Shares.
The term "beneficial ownership" is as defined under Section 13(d) of the
1934 Act. The information as to beneficial ownership is based on statements
furnished to each Fund by the existing Trustees, officers of such Fund, and/or
on records of Evergreen Service Company.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS
Each of the Funds will furnish, without charge, a copy of its most recent
annual report (and most recent semi-annual report succeeding the annual
report, if any) to a shareholder of the Fund upon request. Any such request
should be directed to Evergreen Service Company at 200 Berkeley Street,
Boston, Massachusetts 02116-5034 or (800) 343-2898.
OTHER BUSINESS
The Trustees of the Trust do not intend to present any other business at the
Meeting. If, however, any other matters are properly brought before the
Meeting, the persons named in the accompanying proxy card(s) will vote thereon
in accordance with their judgment.
THE TRUSTEES, INCLUDING THE TRUST'S INDEPENDENT TRUSTEES, RECOMMEND APPROVAL
OF EACH PROPOSAL.
February 25, 1998
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EXHIBIT A
[FORM OF AGREEMENT AND PLAN OF CONVERSION AND TERMINATION]
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION dated as of February 23,
1998 (the "Agreement"), between Evergreen Variable Trust, a Massachusetts
business trust having an office at 200 Berkeley Street, Boston, Massachusetts
02116 (the "Original Fund") and Evergreen Variable Annuity Trust, a Delaware
business trust having an office at 200 Berkeley Street, Boston, Massachusetts
02116.
WHEREAS, the Board of Trustees of the Original Fund and the Board of
Trustees of the Successor Trust have determined that it is in the best
interests of the Original Fund and the Successor Trust, respectively, that the
assets of the Original Fund be acquired by the Successor Trust pursuant to
this Agreement and in accordance with the applicable laws of the state of
organization of the Original Fund and the State of Delaware; and
WHEREAS, the parties desire to enter into a plan of exchange which would
constitute a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended:
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. PLAN OF EXCHANGE.
(a) Subject to the terms and conditions set forth herein, on the Exchange
Date (as defined herein), the Original Fund shall assign, transfer and convey
the assets of each of its series (collectively, the "Funds" and each
individually, a "Fund"), including all securities and cash held by each Fund
(subject to the liabilities of each such Fund) to a corresponding series of
the Successor Trust (collectively, the "Successor Funds" and each
individually, a "Successor Fund"), and each such Successor Fund shall acquire
all of the assets of each corresponding Fund (subject to the liabilities of
each such Fund) in exchange for full and fractional shares of beneficial
interest of such Successor Fund, $.001 par value per share (the "Fund
Shares"), to be issued by the Successor Trust, having, in the case of each
Successor Fund, an aggregate net asset value equal to the value of the net
assets of the corresponding Fund acquired. The value of the assets of each of
the Funds and the net asset value per share of the Fund Shares of each of the
Successor Funds shall be determined as of the Valuation Date (as defined
herein) in accordance with the procedures for determining the value of each
Fund's assets set forth in the Successor Fund's organizational document and
the then-current prospectus and statement of additional information for each
Fund that forms a part of the Successor Fund's Registration Statement on Form
N-1A (the "Registration Statement"). In lieu of delivering certificates for
the Fund Shares, the Successor Trust shall credit the Fund Shares to the
Original Fund's account on the share record books of the Successor Trust and
shall deliver a confirmation thereof to the Original Fund. The Original Fund
shall then deliver written instructions to the Successor Trust's transfer
agent to establish accounts for the shareholders on the share record books
relating to each of the Funds. With respect to any Fund that offers more than
one class of shares as of the Exchange Date, the exchange transaction
described above will involve the delivery of shares of classes relative to the
corresponding class of each such class, respectively. Fund Shares of each such
class shall have the same aggregate net asset value as the aggregate net asset
value of the corresponding class of the Fund. Notwithstanding anything
expressly or by implication set forth herein (but without limiting the rights
of the governing Boards of the Original Fund and Successor Trust under Section
8 hereof), this Agreement, and the transactions contemplated herein, shall be
deemed to apply to each Fund as to which the condition precedent set forth in
Section 6(a) hereof shall have been satisfied and its corresponding Successor
Fund, and shall not apply to any Fund (or its corresponding Successor Fund) as
to which such condition precedent shall not have been satisfied.
(b) Delivery of the assets of each of the Funds to be transferred shall be
made not later than the next business day following the Valuation Date (the
"Exchange Date"). Assets transferred shall be delivered to State Street Bank
and Trust Company, the Successor Trust's custodian (the "Custodian"), for the
account of the
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Successor Trust and the Successor Funds, with all securities not in bearer or
book entry form duly endorsed, or accompanied by duly executed separate
assignments or stock powers, in proper form for transfer, with signatures
guaranteed, and with all necessary stock transfer stamps, sufficient to
transfer good and marketable title thereto (including all accrued interest and
dividends and rights pertaining thereto) to the Custodian for the account of
the Successor Trust and the Successor Funds free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall be in
the form of immediately available funds payable to the order of the Custodian
for the account of the Successor Trust and the Successor Funds. All assets
delivered to the Custodian as provided herein shall be allocated by the
Successor Trust to each Successor Fund corresponding to the Fund from which,
or on the account of which, the assets were transferred.
(c) The Original Fund will pay or cause to be paid to the Successor Trust
any interest received on or after the Exchange Date with respect to assets
transferred from any Fund to the corresponding Successor Fund hereunder and to
the Successor Trust any distributions, rights or other assets received by the
Original Fund after the Exchange Date as distributions on or with respect to
the securities transferred from any Fund to the corresponding Successor Fund
hereunder, and the Successor Trust shall allocate any such distributions,
rights or other assets to the appropriate Successor Fund. All such assets
shall be deemed included in assets transferred to the Funds on the Exchange
Date and shall not be separately valued.
(d) The Valuation Date shall be April 29, 1998, or such earlier or later
date as may be mutually agreed upon by the parties.
(e) As soon as practicable after the Exchange Date, the Original Fund shall
distribute all of the Fund Shares of each of the Successor Funds received by
it among the shareholders of each corresponding Fund in proportion to the
number of shares each such shareholder holds in each such Fund and, upon the
effecting of such a distribution on behalf of all of the Funds, the Original
Fund will dissolve and terminate. After an Exchange Date, a Fund which has
been the subject of the exchange transactions on such Exchange Date shall not
conduct any business except in connection with its dissolution and
termination.
2. THE ORIGINAL FUND'S REPRESENTATIONS AND WARRANTIES. The Original Fund
represents and warrants to and agrees with the Successor Trust as follows:
(a) The Original Fund is duly organized, validly existing and in good
standing under the laws of the state of its organization and has power to own
all of its properties and assets and, subject to the approval of its
shareholders as contemplated hereby, to carry out this Agreement.
(b) The Original Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company, and such registration has not been revoked or rescinded and is in
full force and effect.
(c) Except as shown on the audited financial statements of each Original
Fund for its most recently completed fiscal period and as incurred in the
ordinary course of the Original Fund's and each Fund's business since then,
neither the Original Fund nor any Fund has any known liabilities of a material
amount, contingent or otherwise, and there are no material legal,
administrative or other proceedings pending or threatened against the Original
Fund or any Fund.
(d) On the Exchange Date, the Original Fund will have full right, power and
authority to sell, assign, transfer and deliver the assets to be transferred
by it hereunder.
3. THE SUCCESSOR TRUST'S REPRESENTATIONS AND WARRANTIES. The Successor Trust
represents and warrants to and agrees with the Original Fund as follows:
(a) The Successor Trust is a business trust duly organized, validly existing
and in good standing under the laws of the State of Delaware and has power to
carry on its business as it is now being conducted and to carry out this
Agreement.
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(b) The Successor Trust is registered or will register as an open-end
management investment company and adopt the Registration Statement of the
Original Fund, for purposes of the Securities Act of 1933, as amended, (the
"1933 Act") and the 1940 Act.
(c) Neither the Successor Trust nor any Successor Fund has any known
liabilities of a material amount, contingent or otherwise, and there are no
material legal, administrative or other proceedings pending or threatened
against the Successor Trust or any Successor Fund.
(d) At the Exchange Date, the Fund Shares to be issued to the Original Fund
(the only Fund Shares to be issued as of the Exchange Date, except for the
initial capital, if any, of the Successor Trust) will have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
legally and validly issued and will be fully paid and non-assessable by the
Successor Trust. No Successor Trust or Successor Fund shareholder will have
any preemptive right of subscription or purchase in respect thereof.
4. THE SUCCESSOR TRUST'S CONDITIONS PRECEDENT. The obligations of the
Successor Trust hereunder shall be subject to the following conditions:
(a) The Original Fund shall have furnished to the Successor Trust a
statement of the Original Fund's assets, including a list of securities owned
by the Original Fund with their respective tax costs and values determined as
provided in Section 1 hereof, all as of the Valuation Date.
(b) As of the Exchange Date, all representations and warranties of the
Original Fund made in this Agreement shall be true and correct as if made at
and as of such date, and the Original Fund shall have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
(c) For each Fund, a vote approving this Agreement and the transactions and
exchange contemplated hereby shall have been adopted by the vote required by
applicable law.
5. THE ORIGINAL FUND'S CONDITIONS PRECEDENT. The obligations of the Original
Fund hereunder shall be subject to the condition that as of the Exchange Date
all representations and warranties of the Successor Trust made in the
Agreement shall be true and correct as if made at and as of such date, and
that the Successor Trust shall have complied with all of the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date.
6. THE SUCCESSOR TRUST'S AND THE ORIGINAL FUND'S CONDITIONS PRECEDENT. The
obligations of both the Successor Trust and the Original Fund hereunder as to
any particular Fund and its corresponding Successor Fund shall be subject to
the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have been
approved by the vote required by applicable law.
(b) The receipt of such authority, including "no-action" letters and orders
from the Securities and Exchange Commission (the "Commission") or state
securities commissions, as may be necessary to permit the parties to carry out
the transaction contemplated by this Agreement shall have been received.
(c) The Successor Trust's adoption of the Registration Statement on Form N-
1A under the 1933 Act and the 1940 Act shall have become effective, and any
post-effective amendments to such Registration Statement as are determined by
the Trustees to be necessary and appropriate, shall have been filed with the
Commission and shall have become effective.
(d) The Commission shall not have issued an unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted nor threatened to institute
any proceeding seeking to enjoin consummation of the reorganization
transactions contemplated hereby under Section 25(c) of the 1940 Act and no
other action, suit or
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other proceeding shall be threatened or pending before any court or
governmental agency which seeks to restrain or prohibit, or obtain damages or
other relief in connection with, this Agreement or the transactions
contemplated herein.
Provided, however, that at any time prior to the Exchange Date, any of the
foregoing conditions in this Section 6 may be waived by the parties if, in the
judgment of the parties, such waiver will not have a material adverse effect
on the benefits intended under this Agreement to the shareholders of the
Original Fund.
7. INDEMNIFICATION. The Successor Trust hereby agrees with the Original Fund
and each Trustee or Director of the Original Fund: (i) to indemnify each
Trustee or Director of the Original Fund against all liabilities and expenses
referred to in the indemnification provisions of the Original Fund's
organizational documents, to the extent provided therein, incurred by any
Trustee or Director of the Original Fund; and (ii) in addition to the
indemnification provided in (i) above, to indemnify each Trustee or Director
of the Original Fund against all liabilities and expenses and pay the same as
they arise and become due, without any exception, limitation or requirement of
approval by any person, and without any right to require repayment thereof by
any such Trustee (unless such Trustee has had the same repaid to him or her)
based upon any subsequent or final disposition or findings made in connection
therewith or otherwise, if such action, suit or other proceeding involves such
Trustee's participation in authorizing or permitting or acquiescing in,
directly or indirectly, by action or inaction, the making of any distribution
in any manner of all or any assets of the Original Fund without making
provision for the payment of any liabilities of any kind, fixed or contingent,
of the Original Fund, which liabilities were not actually and consciously
personally known to such Trustee to exist at the time of such Trustee's
participation in so authorizing or permitting or acquiescing in the making of
any such distribution.
8. TERMINATION OF AGREEMENT. As to any Fund and its corresponding Successor
Fund, this Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of the Original Fund or
the Board of the Successor Trust, at any time prior to the Exchange Date (and
notwithstanding any vote of the shareholders of the Fund) if circumstances
should develop that, in the opinion of either the Board of Trustees of the
Original Fund or the Board of the Successor Trust, make proceeding with this
Agreement inadvisable. In making any such determination as to any Fund and its
corresponding Successor Fund, the respective Boards may consider, among other
factors, whether approval has been rendered by shareholders of all (or only
some) of the Funds.
As to any Fund and its corresponding Successor Fund, if this Agreement is
terminated and the exchange contemplated hereby is abandoned pursuant to the
provisions of this Section 8, this Agreement shall become void and have no
effect, without any liability on the part of any party hereto or the Trustees,
officers or shareholders of the Successor Trust or the Trustees, officers or
shareholders of the Original Fund, in respect of this Agreement.
9. WAIVER AND AMENDMENTS. At any time prior to the Exchange Date, any of the
conditions set forth in Section 4 may be waived by the Board of the Original
Fund, and any of the conditions set forth in Section 5 may be waived by the
Board of the Successor Trust, if, in the judgment of the waiving party, such
waiver will not have a material adverse effect on the benefits intended under
this Agreement to the shareholders of the Original Fund or the shareholders of
the Successor Trust, as the case may be. In addition, prior to the Exchange
Date, any provision of this Agreement may be amended or modified by the Boards
of the Original Fund and Successor Trust if such amendment or modification
would not have a material adverse effect upon the benefits intended under this
Agreement and would be consistent with the best interests of shareholders.
10. NO SURVIVAL OF REPRESENTATIONS. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
11. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of Delaware, without giving effect to principles of
conflict of laws; provided, however, that the due authorization, execution and
delivery of this Agreement, in the case of the Original Fund, shall be
governed and construed in
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accordance with the laws of the state of organization of the Original Fund
without giving effect to principles of conflict of laws.
12. CAPACITY OF TRUSTEES, ETC. With respect to the Original Fund, if
organized as a trust, the names refer respectively to the trust created and,
as the case may be, the Trustees, as trustees but not individually or
personally, acting from time to time under organizational documents filed in
the Original Fund's state of organization, which is hereby referred to and is
also on file at the principal office of the Original Fund. The obligations of
the Original Fund entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Original Fund personally, but bind only the trust
property, and all persons dealing with any Fund of the Original Fund must look
solely to the trust property belonging to such Fund for the enforcement of any
claims against the Original Fund.
13. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, the Original Fund and the Successor Trust have caused
this Agreement and Plan of Conversion and Termination to be executed as of the
date above first written.
[Original Fund]
ATTEST: _____________________________ By: _________________________________
Title:
[Successor Trust]
ATTEST: _____________________________ By: _________________________________
Title:
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EXHIBIT B
PROPOSED STANDARDIZED FUNDAMENTAL RESTRICTIONS
1.DIVERSIFICATION OF INVESTMENTS
The Fund may not make any investment inconsistent with the Fund's
classification as a diversified investment company under the Investment
Company Act of 1940.
2.CONCENTRATION OF A FUND'S ASSETS IN A PARTICULAR INDUSTRY
The Fund may not concentrate its investments in the securities of issuers
primarily engaged in any particular industry (other than securities issued
or guaranteed by the U.S. government or its agencies or instrumentalities).
3.ISSUANCE OF SENIOR SECURITIES
Except as permitted under the Investment Company Act of 1940, the Fund may
not issue senior securities.
4.BORROWING
The Fund may not borrow money, except to the extent permitted by applicable
law.
5.UNDERWRITING
The Fund may not underwrite securities of other issuers, except insofar as
the Fund may be deemed an underwriter in connection with the disposition of
its portfolio securities.
6.INVESTMENT IN REAL ESTATE
The Fund may not purchase or sell real estate, except that, to the extent
permitted by applicable law, the Fund may invest in (a) securities directly
or indirectly secured by real estate, or (b) securities issued by issuers
that invest in real estate.
7.COMMODITIES
The Fund may not purchase or sell commodities or contracts on commodities
except to the extent that the Fund may engage in financial futures
contracts and related options and currency contracts and related options
and may otherwise do so in accordance with applicable law and without
registering as a commodity pool operator under the Commodity Exchange Act.
8.LENDING
The Fund may not make loans to other persons, except that the Fund may lend
its portfolio securities in accordance with applicable law. The acquisition
of investment securities or other investment instruments shall not be
deemed to be the making of a loan.
B-1
<PAGE>
EXHIBIT C
INDEX
EVERGREEN FUNDS
<TABLE>
<CAPTION>
PAGE C-
-------
<S> <C>
Evergreen VA Fund..................................................... 2
Evergreen VA Aggressive Growth Fund................................... 4
Evergreen VA Growth and Income Fund................................... 6
Evergreen VA Foundation Fund.......................................... 8
Evergreen VA Global Leaders Fund...................................... 10
Evergreen VA Strategic Income Fund.................................... 12
</TABLE>
C-1
<PAGE>
EVERGREEN VA FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC EVERGREEN VA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its net
(S) 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.
The Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the 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.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing"
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
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 the Fund's total assets at the time
of such borrowing. The Fund will not enter into
reverse repurchase agreements exceeding 5% of
the value of its total assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with its investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
TOPIC EVERGREEN VA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(S) 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.
The Fund may not lend its funds to other
persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by the Fund
of initial or variation margin in connection
with financial futures contracts or related
options transactions or forward transactions is
not considered the purchase of a security on
margin.
</TABLE>
C-3
<PAGE>
EVERGREEN VA FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC VA AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its total
(S) 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 the Fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- --------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the 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.
- --------------------------------------------------------------------------------
3. ISSUING SENIOR N/A
SECURITIES
(S)
- --------------------------------------------------------------------------------
4. BORROWING (REVERSE The Fund may not borrow money, including entering
REPURCHASE AGREEMENTS) into reverse repurchase agreements, except from
(S) banks for temporary or emergency purposes,
provided that immediately after any such
borrowing there is asset coverage of at least
300% for all such borrowings and the Fund may
enter into reverse repurchase agreements.
- --------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with its investment objectives,
policies and limitations.
- --------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in real
(S) estate or interests in real estate, except that
the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- --------------------------------------------------------------------------------
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
TOPIC VA AGGRESSIVE GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts except that
the Fund may purchase and sell currency futures
contracts, enter into forward foreign currency
contracts and enter into financial futures
contracts and options thereon for hedging
purposes and enter into forward contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(S) 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.
The Fund may not lend its funds to other
persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
</TABLE>
C-5
<PAGE>
EVERGREEN VA FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
TOPIC VA GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may invest more than 5% of its net
(S) 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.
The Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its
(S) total assets in the securities of issuers
conducting their principal business activities
in any one industry; provided that this
limitation shall not apply 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.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR SECURITIES See "Borrowing".
(S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging and then in
amounts not in excess of 10% of the value of
the Fund's total 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 the Fund's
total assets at the time of borrowing. The Fund
will not enter into reverse repurchase
agreements exceeding 5% of the value of its
total assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with its investment objective,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
- -------------------------------------------------------------------------------
</TABLE>
C-6
<PAGE>
<TABLE>
TOPIC VA GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(S) 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.
The Fund may not lend its funds to other
persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by of Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions or forward transactions is not
considered the purchase of a security on margin.
- -------------------------------------------------------------------------------
</TABLE>
C-7
<PAGE>
EVERGREEN VA FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC VA FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its net
(S) 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 the Fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply 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.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing".
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing. The Fund will not enter into reverse
repurchase agreements exceeding 5% of the value
of its total assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with its investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
- -------------------------------------------------------------------------------
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
TOPIC VA FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(S) 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.
The Fund may not lend its funds to other
persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) 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 or forward transactions is not
considered the purchase of a security on margin.
- -------------------------------------------------------------------------------
</TABLE>
C-9
<PAGE>
EVERGREEN VA FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC VA GLOBAL LEADERS FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) 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 the Fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the 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.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing."
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (REPURCHASE The Fund may not borrow money, issue senior
AGREEMENTS) securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
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 the Fund's total assets at the time
of such borrowing. The Fund will not enter into
reverse repurchase agreements exceeding 5% of
the value of its total assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with its investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate including
real estate investment trusts.
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
TOPIC VA GLOBAL LEADERS FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts except that
the Fund may purchase and sell currency futures
contracts, enter into forward foreign currency
contracts and enter into financial futures
contracts and options thereon for hedging
purposes and enter into forward contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(S) 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.
The Fund may not lend its funds to other
persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
</TABLE>
C-11
<PAGE>
EVERGREEN VA FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC VA STRATEGIC INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) 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 the Fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the 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.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR N/A
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING The Fund may not borrow money, including
(REVERSE REPURCHASE entering into reverse repurchase agreements,
AGREEMENTS) except from banks for temporary or emergency
(S) purposes, provided that immediately after any
such borrowing there is asset coverage of at
least 300% for all such borrowings and the Fund
may enter into reverse repurchase agreements.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with its investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts except that
the Fund may purchase and sell currency futures
contracts, enter into forward foreign currency
contracts and enter into financial futures
contracts and options thereon for hedging
purposes and enter into forward contracts.
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
TOPIC VA STRATEGIC INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(S) 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.
The Fund may not lend its funds to other
persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
</TABLE>
C-13
<PAGE>
EXHIBIT D
NUMBER OF SHARES OF EACH FUND
OUTSTANDING AS OF THE CLOSE OF BUSINESS ON
FEBRUARY 25, 1998
<TABLE>
<S> <C>
Evergreen VA Fund............................................... 1,636,067.714
Evergreen VA Aggressive Growth Fund............................. 198,253.614
Evergreen VA Growth and Income Fund............................. 2,325,328.785
Evergreen VA Foundation Fund.................................... 2,743,587.303
Evergreen VA Global Leaders Fund................................ 311,760.168
Evergreen VA Strategic Income Fund.............................. 306,899.512
</TABLE>
D-1
<PAGE>
EXHIBIT E
PRINCIPAL HOLDERS OF VOTING SECURITIES
AS OF THE CLOSE OF BUSINESS ON FEBRUARY 25, 1998
EVERGREEN FUNDS
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
FUND NAME/ADDRESS SHARES OWNED SHARES
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Foundation Security Equity Life 250,206.626 9%
Insurance Company
84 Business Park Drive
Suite 303
Armonk, NY 10504
Nationwide Life Insurance 2,493,380.677 91%
Company
Variable Account 6
P.O. Box 182029
Columbus, Ohio 43218
2. Strategic Income Nationwide Variable Account 6 306,899.512 100%
3. Evergreen Security Equity 287,999.225 21%
Nationwide Variable Account 6 1,348,068.489 79%
4. Global Leaders Nationwide Variable Account 6 311,760.168 100%
5. Growth and Income Security Equity 281,832.248 14%
Nationwide Variable Account 6 2,043,496.337 86%
6. Aggressive Growth Nationwide Variable Account 6 198,253.614 100%
</TABLE>
E-1
<PAGE>
[EVERGREEN FUNDS LOGO APPEARS HERE]
<PAGE>
YOUR VOTE IS IMPORTANT! PLEASE OPEN - IMMEDIATELY!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR VOTING INSTRUCTIONS IN THE ENCLOSED ENVELOPE TODAY!
Please fold and detach at perforation before mailing.
- ---------- ---------- ---------- ---------- ----------
PROXY PROXY
JOINT SPECIAL MEETING OF SHAREHOLDERS - April 22, 1998 The
undersigned hereby appoints Dorothy E. Bourassa, Douglas C. Miller and Jane B.
Maxwell and each of them, attorneys and proxies for the undersigned, with full
powers of substitution and revocation, to represent the undersigned and to vote
on behalf of the undersigned all shares of the Fund referenced hereon (the
"Fund"), which the undersigned is entitled to vote at a Joint Special Meeting of
Shareholders of the Fund to be held at 200 Berkeley Street, 26th Floor, Boston,
Massachusetts 02116 on April 22, 1998, at 3:00 p.m. and any adjournments thereof
(the "Meeting"). The undersigned hereby acknowledges receipt of the Notice of
Meeting and Proxy Statement, and hereby instructs said attorneys and proxies to
vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other matters as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the powers and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY. IF JOINT OWNERS,
EITHER MAY SIGN THIS PROXY. WHEN SIGNING
AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, OR CORPORATE OFFICER,
PLEASE GIVE YOUR FULL TITLE.
DATE_______________________________,1998
________________________________________
________________________________________
________________________________________
________________________________________
SIGNATURE(S) TITLE(S), IF APPLICABLE
EV
<PAGE>
Please detach at perforation before mailing.
- ---------- ---------- ---------- ---------- ----------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THIS PROXY WILL BE
VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE TAKEN ON THE FOLLOWING
PROPOSALS.
Please vote by filling in the boxes below.
FOR AGAINST ABSTAIN
1. To approve the proposed Plan of Reorganization [_] [_] [_]
with the Successor Fund of the Successor Trust.
2. To approve the proposed reclassification of the [_] [_] [_]
investment objective of each Fund from
fundamental to nonfundamental.
FOR
EXCEPT AS AGAINST ABSTAIN
MARKED BELOW ALL ALL
3. To approve the proposed changes to the Fund's [_] [_] [_]
fundamental investment restrictions.
a. Diversification f. Real Estate
b. Concentration g. Commodities
c. Senior Securities h. Loans
d. Borrowing i. Control or Management
e. Underwriting j. Margin Purchases
To vote against a particular proposed
change applicable to your Fund, write the
sub-proposal number on the line below.
_____________________________________________
4. To transact any other business as may properly
come before the meeting or any adjournment
thereof.
EV
