Evergreen Variable Annuity Trust
Evergreen VA Fund
Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund
Evergreen VA Growth and Income Fund
Evergreen VA International Growth Fund
Prospectus, May 1, 1999
The Securities and Exchange Commission has not determined that the information
in this prospectus is accurate or complete, nor has it approved or disapproved
these securities. Anyone who tells you otherwise is committing a crime.
<PAGE>
FUND SUMMARIES: In general, Funds included in
this prospectus seek to provide
investors with a selection of
Evergreen VA Fund 2 investment alternatives which
Evergreen VA Foundation Fund 4 seek to provide capital growth,
Evergreen VA Global Leaders income and diversification.
Fund 6 Shares of the Funds are sold
Evergreen VA Growth and only to separate accounts
Income Fund 8 funding variable annuity
Evergreen VA International contracts and variable life
Growth Fund 10 insurance policies issued by
life insurance companies. For
further information about these
contracts and policies, please
see the separate prospectuses
issued by the participating life
insurance companies.
GENERAL INFORMATION: Fund Summaries Key
The Funds' Investment Each Fund's summary is organized
Advisors 12 around the following basic
The Funds' Portfolio Managers 12 topics and questions:
Calculating the Share Price 13
Participating Insurance INVESTMENT GOAL
Companies 13 What is the Fund's financial
How to Buy and Redeem Shares 13 objective? You can find
Other Services 14 clarification on how the Fund
The Tax Consequences of seeks to achieve its objective
Investing in the Funds 14 by looking at the Fund's
Fees and Expenses of the strategy and investment
Funds 14 policies. The Fund's Board of
Financial Highlights 15 Trustees can change the
investment objective without a
Other Fund Practices 19 shareholder vote.
INVESTMENT STRATEGY
How does the Fund go about
trying to meet its goals? What
types of investments does it
contain? What style of investing
and investment philosophy does
it follow? Does it have limits
on the amount invested in any
particular type of security?
RISK FACTORS
What are the specific risks for
an investor in the Fund?
PERFORMANCE
How well has the Fund performed
in the past year? The past five years?
The past ten years? Since inception?
<PAGE>
OVERVIEW
Variable
Annuity Funds
Shares of the Funds are sold Interest Rate Risk
only to separate accounts When interest rates go up, the
funding variable annuity value of debt securities tends
contracts and variable life to fall. If your Fund invests a
insurance policies issued by significant portion of its
life insurance companies. portfolio in debt securities or
Evergreen Variable Annuity Funds dividend-paying stocks and interest rates
seek to provide investors with a rise, then the value of and total return
selection of investment earned on your investment may
alternatives which seek to decline. When interest rates go
provide capital growth, income down, interest earned by your
and diversification. Fund on its investments may also
decline, which could cause the
Following this overview, you Fund to reduce the dividends it
will find information on each pays.
Variable Annuity Fund's specific
investment strategies and risks. Credit Risk
The value of a debt security is
Risk Factors For All Mutual directly affected by the issuer's ability
Funds to repay principal and pay interest
Please remember that mutual fund on time. If your Fund invests in
shares are: debt securities, then the value
- not guaranteed to achieve of and total return earned on
their goal your investment may decline if
- not insured, endorsed or an issuer fails to pay an
guaranteed by the FDIC, a bank obligation on a timely basis.
or any government agency
subject to investment Small Company Risk
risks, including possible loss If your Fund invests in small
of your original investment. companies, your investment may
be subject to special risks
Like most investments, your associated with investing in
investment in an Evergreen such companies. Smaller, less
Variable Annuity Fund could established companies tend to be
fluctuate significantly in value more dependent on individual
over time and could result in a managers and limited products
loss of money. and product lines.
Additionally, securities issued
Here are the most important by small companies also tend to
factors that may affect the fluctuate in value more
value of your investment: dramatically than those of
larger companies.
Stock Market Risk
Your investment in a Fund that Foreign Investment Risk
invests in stocks will be If your Fund invests in non-U.S.
affected by general economic securities it could be exposed
conditions such as prevailing to certain unique risks of
economic growth, inflation and foreign investing. For example,
interest rates. When economic political turmoil and economic
growth slows, or interest or instability in the countries in
inflation rates increase, which the Fund invests could
securities tend to decline in adversely affect the value of
value. Such events also could your investment. In addition, if
cause companies to decrease the the value of any foreign
dividends they pay. If these currency in which the Fund's
events were to occur, the value investments are denominated
of and dividend yield and total declines relative to the U.S.
return earned on your investment dollar, the value of your
would likely decline. Even if investment in the Fund may
general economic conditions do decline as well. Certain foreign
not change, your investment may countries have less developed
decline in value if particular and less regulated securities
industries, issuers or sectors markets and accounting systems
your Fund invests in do not than the U.S. This may make it
perform well. harder to get accurate
information about a security or
company, and increase the
likelihood that an investment
will not perform as well as expected.
<PAGE>
VA Fund
INVESTMENT GOAL
The Fund seeks capital
appreciation.
FUND FACTS:
INVESTMENT STRATEGY
Goal: The Fund invests primarily in
Capital Appreciation common stocks of companies with
innovative and entrepreneurial
Principal Investments: management and that exhibit
Common Stocks sound financial business
Convertible Securities practices.
The Fund may invest in
securities of relatively well-
Investment Advisor: known and large companies as
Evergreen Asset Management well as small and medium-sized
Corp. specialty companies. The Fund
seeks long-term gains from
Portfolio Managers: the companies in which the
Stephen A. Lieber Fund invests. Securities are
Nola Maddox Falcone selected based on a combination
of comparative undervaluation
NASDAQ Symbol: relative to growth potential
EVEFX and/or merger/acquisition price.
The Fund may also invest to a
lesser extent in preferred
Dividend Payment Schedule: stocks that offer an opportunity
Annually for capital appreciation.
The Fund intends to sell a
portfolio investment when the
value of the investment reaches
or exceeds its estimated fair
value, when the issuer's
investment fundamentals begin to
deteriorate, when the investment
no longer appears to meet the
Fund's investment objective,
when the Fund must meet
redemptions, or for other
reasons which the portfolio
manager deems necessary.
The Fund may invest in high
quality money market instruments
in response to adverse economic,
political or market conditions.
This strategy is inconsistent
with the Fund's principal
investment strategy and
investment goal, and if employed
could result in a lower return
and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is
subject to the risks discussed
in the "Overview" on
page 1 under the headings:
- Stock Market Risk
- Small Company Risk
For further information regarding the
Fund's investment strategy and risks
factors, see "Other Fund Practices."
<PAGE>
PERFORMANCE
The following charts show how
the Fund has performed in the
past. Returns reflect
reinvestment of all dividends
and distributions and fees, but
do not reflect contract charges
assessed by participating
insurance companies. Past
performance is not an indication
of future results.
The chart below shows the
percentage gain or loss for the
Fund in each calendar year since
its inception on 3/1/96. It
should give you a general idea
of how the Fund's return has
varied from year-to-year and
give you some indication of the
risks of investing in the Fund.
Separate account fees charged
by participating insurance
companies are not reflected in
this chart. If those fees
were reflected, returns would
be less than those shown.
Year-by-Year Total Return (%)
1997 1998
37.16% 6.44%
Best Quarter: 4th Quarter 1998
+18.02%
Worst Quarter:3rd Quarter 1998
- -17.20%
The next table lists the Fund's
average annual total return over
the past year and since
inception (through 12/31/98).
This table is intended to
provide you with some indication
of the risks of investing in the
Fund. At the bottom of the
table you can compare this
performance with the Russell
2000 Index and the Nasdaq
Composite. The Russell 2000 is
an unmanaged index tracking the
performance of 2000 publicly-
traded U.S. stocks. It is often
used to indicate the performance
of smaller company stocks. The
Nasdaq Composite is market-value
weighted index that measures all
domestic and non-U.S.-based
common stocks listed on the
Nasdaq stock market. Neither
index is an actual investment.
Average Annual Total Return
(for the period ended 12/31/98)
Performance
Inception Since
Date 1 year 5 year 10 year 3/1/96
Fund 3/1/96 6.44% N/A N/A 20.00%
Russell 2000 -2.55% N/A N/A 11.13%
Nasdaq
Composite 39.63% N/A N/A 27.49%
<PAGE>
VA Foundation Fund
INVESTMENT GOAL
FUND FACTS: The Fund seeks, in order of
priority, reasonable income,
Goals: conservation of capital and
Reasonable Income capital appreciation.
Conservation of Capital
Capital Appreciation
INVESTMENT STRATEGY
Principal Investments: The Fund invests principally in
Common Stocks a combination of common stocks,
Fixed Income Securities securities convertible into or
Convertible securities exchangeable for common stocks
and fixed income securities.
Investments in commons stocks
focus on those that pay
dividends and have the potential
Investment Advisor: for capital appreciation.
Evergreen Asset Management Common stocks are selected based
Corp. on a combination of financial
strength and estimated growth
Portfolio Managers: potential. Fixed income
Stephen A. Lieber securities are selected based on
Irene D. O'Neill the projections of
interest rates, varying amounts
NASDAQ Symbol: and maturities in order to
EVFFX achieve capital protection and,
when possible, capital
appreciation. The Fund's
Dividend Payment Schedule: investment advisor will
Annually emphasize fixed income
securities that it believes will
not be subject to significant
fluctuations in value. Under
normal circumstances, the Fund
anticipates that at least 25% of
its net assets will consist of
fixed income securities. The
corporate debt obligations
purchased by the Fund will be
rated A or higher by Standard &
Poor's Ratings Services and
Moody Investor's Service, Inc.
The Fund is not managed with a
targeted maturity. The Fund may
invest up to 25% of its assets
in foreign securities.
The Fund intends to sell a
portfolio investment when the
value of the investment reaches
or exceeds its estimated fair
value, when the issuer's
investment fundamentals begin to
deteriorate, when the investment
no longer appears to meet the
Fund's investment objective,
when the Fund must meet
redemptions, or for other
reasons which the portfolio
manager deems necessary.
The Fund may invest in high
quality money market instruments
in response to adverse economic,
political or market conditions.
This strategy is inconsistent
with the Fund's principal
investment strategy and
investment goal, and if employed
could result in a lower return
and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is
subject to the risks discussed
in the "Overview" on
page 1 under the headings:
- Stock Market Risk
- Interest Rate Risk
- Credit Risk
- Foreign Investment Risk
For further information regarding
the Fund's investment strategy and
risk factors, see "Other Fund Practices."
<PAGE>
PERFORMANCE
The following charts shows how
the Fund has performed in the
past. Returns reflect
reinvestment of all dividends
and distributions and fees, but
do not reflect contract charges
assessed by participating
insurance companies. Past
performance is not an indication
of future results.
The chart below shows the
percentage gain or loss for the
Fund in each calendar year since
its inception on 3/1/96. It
should give you a general idea
of how the Fund's return has
varied from year-to-year and
give you some indication of the
risks of investing in the Fund.
Separate account fees charged by
participating insurance companies
are not reflected in this chart.
If those fees were reflected,
returns would be less than
those shown.
Year-by-Year Total Return (%)
1997 1998
27.80% 10.56%
Best Quarter: 2nd Quarter 1997
+13.26%
Worst Quarter:3rd Quarter 1998
- -7.37%
The next table lists the Fund's
average annual total return over
the past year and since
inception (through 12/31/98).
This table is intended to
provide you with some indication
of the risks of investing in the
Fund. At the bottom of the
table you can compare this
performance with the S&P 500
Composite Stock Index and the
Lipper Balanced Fund Average.
The S&P 500 is an unmanaged index
tracking the performance of 500 publicly-
traded U.S. stocks and is often
used to indicate the performance
of the overall stock market.
The Lipper Balanced Fund Average
reflects funds whose primary
objectives are to conserve
principal by maintaining at all
times a balanced portfolio of
both stocks and bonds. Neither
index is an actual investment.
Average Annual Total Return
(for the period ended 12/31/98)
Performance
Inception Since
Date 1 year 5 year 10 year 3/1/96
Fund 3/1/96 10.56% N/A N/A 18.77%
S&P 500 28.58% N/A N/A 28.09%
Lipper Balanced
Fund Average 13.48% N/A N/A 15.76%
<PAGE>
VA Global Leaders Fund
INVESTMENT GOAL
The Fund seeks to provide
investors with long-term capital
FUND FACTS: growth.
Goal:
Long-term Capital Growth
Principal Investments:
U.S. and Non-U.S. Equity INVESTMENT STRATEGY
Securities The Fund normally invests at
least 65% of its assets in a
Investment Advisor: diversified portfolio of U.S.
Evergreen Asset Management and non-U.S. equity securities
Corp. of companies located in the
world's major industrialized
Portfolio Managers: countries. The Fund will make
Stephen A. Lieber investments in no less than
Edwin D. Miska three countries, which may
include the U.S., but may invest
NASDAQ Symbol: more than 25% of its total
None assets in one country. The
Fund's investment advisor will screen
the largest companies
Dividend Payment Schedule: in major industrialized countries.
Annually The Fund invests only in the
best 100 companies which are selected
based on qualitative and quantitative
criteria such as high return on
equity, consistent earnings
growth and established market
presence. The Fund's managers visit
the countries that the Fund may invest
in or already invests in, to evaluate
the political, economic and social trends
that may affect investments in those
countries.
The Fund intends to sell a
portfolio investment when the
value of the investment reaches
or exceeds its estimated fair
value, when the issuer's
investment fundamentals begin to
deteriorate, when the investment
no longer appears to meet the
Fund's investment objective,
when the Fund must meet
redemptions, or for other
reasons which the portfolio
manager deems necessary.
The Fund may invest in high
quality money market instruments
in response to adverse economic,
political or market conditions.
This strategy is inconsistent
with the Fund's principal
investment strategy and
investment goal, and if employed
could result in a lower return
and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is
subject to the risks discussed
in the "Overview" on
page 1 under the headings:
- Stock Market Risk
- Foreign Investment Risk
In addition, if more than 25% of
the Fund's total assets is
invested in one country, the
value of the Fund's shares may
be subject to greater
fluctuation due to the lesser
degree of diversification across
countries and the fact that the
securities market of certain
countries may be subject to
greater risks and volatility
than that which exists in the
United States.
For further
information regarding the Fund's
investment strategy and risk factors,
see "Other Fund Practices."
<PAGE>
PERFORMANCE
The following charts show how the
Fund has performed in the past.
Returns reflect reinvestment of
all dividends and distributions
and fees, but do not reflect
contract charges assessed by
participating insurance
companies. Past performance is
not an indication of future
results.
The chart below shows the
percentage gain or loss for the
Fund in each calendar year since
its inception on 3/6/97. It
should give you a general idea of
how the Fund's return has varied
from year-to-year and give you
some indication of the risks of
investing in the Fund. Separate
account fees charged by participating
insurance companies are not reflected
in this chart. If those fees were
reflected, returns would be less
than those shown.
Year-by-Year Total Return (%)
1998
18.92%
Best Quarter: 4th Quarter 1998
+21.86%
Worst Quarter:3rd Quarter 1998
- -14.25%
The next table lists the Fund's
average annual total return over
the past year and since inception
(through 12/31/98). This table is
intended to provide you with some
indication of the risks of
investing in the Fund. At the
bottom of the table you can
compare this performance with the
Morgan Stanley Capital
International World Index
(MSCIWI). The MSCIWI is an
unmanaged market index that
represents the 23 developed
markets of the world in a variety
of industries. The MSCIWI is not an
actual investment.
Average Annual Total Return
(for the period ended 12/31/98)
Performance
Inception Since
Date 1 year 5 year 10 year 3/6/97
Fund 3/6/97 18.92% N/A N/A 15.19%
MSCIWI 24.34% N/A N/A 20.83%
<PAGE>
VA Growth and Income Fund
INVESTMENT GOAL
The Fund seeks capital growth in
the value of its shares and
FUND FACTS: current income.
Goals:
- - Capital Growth
- - Current Income
Principal Investment:
- - Common Stocks INVESTMENT STRATEGY
The Fund invests primarily in
Investment Advisor: common stocks of established
- - Evergreen Asset Management companies that the Fund
Corp. considers undervalued in the
marketplace and which have a
Portfolio Manager: trigger, or catalyst, that will
- - Philip M. Foreman bring the stock's price into
line with its actual or
NASDAQ Symbol: potential value. The catalysts
EVGIX may include new products, new
management, changes in
Dividend Payment Schedule: regulation and/or restructuring
Annually potential. The Fund may invest up
to 25% of its assets in foreign
securities.
The Fund intends to sell a
portfolio investment when the
value of the investment reaches
or exceeds its estimated fair
value, when the issuer's
investment fundamentals begin to
deteriorate, when the investment
no longer appears to meet the
Fund's investment objective,
when the Fund must meet
redemptions, or for other
reasons which the portfolio
manager deems necessary.
The Fund may invest in high
quality money market instruments
in response to adverse economic,
political or market conditions.
This strategy is inconsistent
with the Fund's principal
investment strategy and
investment goal, and if employed
could result in a lower return
and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is
subject to the risks discussed
in the "Overview" on
page 1 under the headings:
- Stock Market Risk
- Foreign Investment Risk
For further information regarding
the Fund's investment strategy and
risk factors, see "Other Fund Practices."
<PAGE>
PERFORMANCE
The following charts show how
the Fund has performed in the
past. Returns reflect
reinvestment of all dividends
and distributions and fees, but
do not reflect contract charges
assessed by participating
insurance companies. Past
performance is not indication of
future results.
The chart below shows the
percentage gain or loss of the
Fund in each calendar year since
its inception in 3/1/96. It
should give you a general idea
of how the Fund's return has
varied from year-to-year and
give you some indication of the
risks of investing in the Fund.
Separate account fees charged
by participating insurance
companies are not reflected
in this chart. If those fees
were reflected, returns would be
less than those shown.
Year-by-Year Total Return (%)
1997 1998
34.66% 4.77%
Best Quarter: 2nd Quarter 1997
+17.25%
Worst Quarter:3rd Quarter 1998
- -15.19%
The next table lists the Fund's
average annual total return over
the past year and since
inception (through 12/31/98).
This table is intended to
provide you with some indication
of the risks of investing in the
Fund. At the bottom of the
table you can compare this
performance with the S&P 500
Composite Stock Index and the
Lipper Growth and Income Fund Average.
The S&P 500 is an unmanaged index
tracking the performance of 500
publicly-traded U.S. stocks and
is often used to indicate the
performance of the overall stock
market. The Lipper Growth and
Income Fund Average reflects
funds that combine a growth-of-
earnings orientation and an
income requirement for level
and/or rising dividends.
Neither index is an actual
investment.
Average Annual Total Return
(for the period ended 12/31/98)
Performance
Inception Since
Date 1 year 5 year 10 year 3/1/96
Fund 3/1/96 4.77% N/A N/A 20.05%
S&P 500 28.58% N/A N/A 28.09%
Lipper Growth
& Income
Fund Average 15.61% N/A N/A 20.59%
<PAGE>
VA International Growth Fund
INVESTMENT GOAL
The Fund seeks long-term growth
of capital and secondarily,
modest income.
FUND FACTS:
Goals: INVESTMENT STRATEGY
- - Long-Term Capital Growth The Fund invests primarily in
- - Modest Income equity securities issued by
established, quality non-U.S.
Principal Investment: companies located in countries
- - Equity Securities with developed markets. The
Fund may also invest in emerging
Investment Advisor: markets and in securities of
- - Evergreen Investment companies in the formerly
Management Company communist countries of Eastern
Europe. The Fund normally
Portfolio Manager: invests at least 65% of its
- - Gilman C. Gunn total assets in the securities
of companies in at least three
NASDAQ Symbol: different countries (other than
None the U.S.). The Fund may also
invest in debt securities,
including up to 10% of its
Dividend Payment Schedule: assets in below investment grade
Annually debt securities. The Fund's managers
visit the countries that the Fund may
invest in or already invests in, to
evaluate the political, economic and
social trends that may affect investments
in those countries.
The Fund intends to sell a
portfolio investment when the
value of the investment reaches
or exceeds its estimated fair
value, when the issuer's
investment fundamentals begin to
deteriorate, when the investment
no longer appears to meet the
Fund's investment objective,
when the Fund must meet
redemptions, or for other
reasons which the portfolio
manager deems necessary.
The Fund may invest in high
quality money market instruments
in response to adverse economic,
political or market conditions.
This strategy is inconsistent
with the Fund's principal
investment strategy and
investment goal, and if employed
could result in a lower return
and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is
subject to the risks discussed
in the "Overview" on
page 1 under the headings:
- Stock Market Risk
- Interest Rate Risk
- Credit Risk
- Foreign Investment Risk
Below investment grade bonds are
commonly referred to as "junk
bonds" because they are usually
backed by issuers of less proven
or questionable financial
strength. Such issuers are more
vulnerable to financial setbacks
and less certain to pay interest
and principal than issuers of
bonds offering lower yields and
risk. Markets may react to
unfavorable news about issuers
of below investment grade bonds
causing sudden and steep
declines in value.
In addition, the Fund may also
be subject to an emerging
markets risk. An "emerging
market" is any country
considered to be emerging or
developing, has a relatively low
gross national product, but the
potential for rapid growth
(which can lead to instability).
Investing in securities of
emerging countries has many
risks. Emerging countries are
generally small and rely heavily
on international trade and could
be adversely effected by the
economic conditions in the
countries with which they trade.
There is also a possibility of a
change in the political climate,
nationalization, diplomatic
developments (including war),
and social instability. Such
countries may experience high
levels of inflation or deflation
and currency devaluation.
Investments in emerging markets
are considered to be
speculative.
For further information regarding the
Fund's investment strategy and risk
factors, see "Other Fund Practices."
<PAGE>
PERFORMANCE
Since the Fund commenced operations
on 8/17/98, total return information
is not yet available for a full
calendar year.
<PAGE>
THE FUNDS' INVESTMENT ADVISORS Under the terms of the various
The investment advisor manages a investment advisory agreements,
Fund's investments and the respective investments advisor
supervises its daily business is entitled to receive a fee as a
affairs. There are two percentage of each Fund's average
investment advisors for these daily net assets. Each Fund's current
Evergreen Variable Annuity contractual fee for advisory services
Funds. All investment advisors and effective advisory fee rates for
for the Evergreen Funds are the fiscal year ended December 31,
subsidiaries of First Union 1998 is set forth below.
Corporation, the sixth largest
bank holding company in the <TABLE>
United States, with over <CAPTION>
$223 billion in consolidated
assets as of March 31, 1999. Effective Rate
First Union Corporation is located at for Advisory
301 South College Street, Current Contractual Services For
Charlotte, North Carolina 28288- Advisory Fee Rate Year Ended
0013. 12/31/98
<S> <C> <C>
VA Fund 0.95% 0.95%
Evergreen Asset Management VA Foundation
Corp. (EAMC) is the investment Fund 0.825% 0.825%
advisor to:
- VA Fund VA Global Leaders
- VA Foundation Fund Fund 0.95% 0.95%
- VA Global Leaders Fund
- VA Growth and Income Fund VA Growth and
Income Fund 0.95% 0.95%
EAMC, with its predecessors, has VA International 0.75% first $200 million 0.75%
served as investment advisor to Growth Fund 0.65% next $200 million
the Evergreen Funds since 1971, 0.55% next $200 million
and currently manages over 0.45% over $600 million
$19 billion in assets for </TABLE>
21 of the Evergreen Funds. EAMC
is located at 2500 Westchester
Avenue, Purchase, New York
10577.
Evergreen Investment Management
Company (EIMC) is the investment Year 2000 Compliance
advisor to: The investment advisors and
other service providers for the
- VA International Growth Fund Evergreen Funds are taking steps
to address any potential Year
2000-related computer problems.
EIMC has been managing mutual However, there is some risk that
funds and private accounts since these problems could disrupt the
1932 and currently manages over Funds' operations or financial
$8 billion in investment markets generally.
assets for 25 of the Evergreen
Funds. EIMC is located at 200 European Currency Conversion
Berkeley Street, Boston, Risk
Massachusetts 02116-5034.
Certain countries in Europe
converted their different
currencies to a single, common
currency on January 1, 1999. In
connection with this change,
investment advisors, mutual
funds and their service
providers have modified their
accounting and recordkeeping
systems to handle the new
currency. If a Fund invests in
foreign securities, your
investment in the Fund may be
adversely affected if these
technical modifications have not
been implemented properly. Also
the conversion to a single
currency may impair the markets
for securities denominated in
the currencies being eliminated,
which may also adversely impact
your investment.
<PAGE>
THE FUNDS' PORTFOLIO MANAGERS
VA Fund VA Growth and Income Fund
The day-to-day management of the The day-to-day management of the
Fund is handled by Stephen A. Fund is handled by Philip M.
Lieber and Nola Maddox Falcone, Foreman. Mr. Foreman joined
CFA. Mr. Lieber is Chairman and EAMC in January 1999 as
Co-Chief Executive Officer of Portfolio Manager after seven
EAMC. He was a founding partner years as Senior Portfolio
of Lieber & Company, the Manager at WM Advisors, Inc.
original sponsor of the Mr. Foreman has managed the Fund
Evergreen Funds, when it was since January 1999.
established in 1969. He has
been with EAMC and its VA International Growth Fund
predecessor since 1971 and has The day-to-day management of the
been in the investment Fund is handled by Gilman C.
management profession since Gunn. Mr. Gunn joined EIMC in
1952. Mr. Lieber has also 1991 as Senior Vice President -
managed Evergreen Fund since its International and is currently
inception in 1970. Ms. Falcone Senior Vice President and Chief
is President and Co-Chief Investment Officer -
Executive Officer of EAMC. She International at EIMC. Mr. Gunn
joined Lieber & Company as has managed Evergreen
Senior Portfolio Manager in International Growth Fund since
1974, and was a General Partner 1991. As head of the
from January 1981 to June 1994. International Team, Mr. Gunn has
over 25 years of international
investment experience.
VA Foundation Fund
The day-to-day management of the
Fund is handled by Mr. Lieber
and Irene D. O'Neill, CFA. Ms.
O'Neill has over 19 years of
investment management experience
and has been associated with
EAMC and its predecessor since
1981. Mr. Lieber has managed
Evergreen Foundation Fund since
its inception in 1990.
VA Global Leaders Fund
The day-to-day management of the
Fund is handled by Mr. Lieber
and Edwin D. Miska. Mr. Miska
has been an analyst with EAMC
and its predecessor since 1986.
In 1995 he was named co-
portfolio manager, along with
Mr. Lieber, of Evergreen Global
Leaders Fund.
<PAGE>
CALCULATING THE SHARE PRICE
The value of one share of a
Fund, also known as the net
asset value, or NAV, is
calculated on each day the New
York Stock Exchange is open as
of the time the Exchange closes
(normally 4:00 p.m. Eastern
time). We calculate the share
price for each share by adding
up the total assets of the Fund,
subtracting all liabilities,
then dividing the result by the
total number of shares
outstanding. Each security held
by a Fund is valued using the
most recent market quote for
that security. If no market
quotation is available for a
given security, we will price
that security at fair value
according to policies
established by the Fund's Board
of Trustees. Short-term
securities with maturities of 60
days or less will be valued on
the basis of amortized cost.
The price per share for a Fund
purchase or the amount received
for a Fund redemption is based
on the next price calculated
after the order is received and
all required information is
provided. Certain Funds may invest
in foreign securities that are primarily
listed on foreign exchanges that trade
on weekends or other days when the Fund
does not price its shares. As a result,
the NAV of the Fund may change on days
when investors will not be able to
purchase or redeem the Fund's shares.
<PAGE>
PARTICIPATING INSURANCE
COMPANIES
The Funds were organized to
serve as investment vehicles for participating insurance
separate accounts funding companies place orders to
variable annuity contracts and purchase and redeem shares of
variable life insurance policies the funds based on, among other
issued by certain life insurance things, the amount of premium
companies. The Funds do not payments to be invested and the
currently foresee any amount of surrender and transfer
disadvantages to the holders of requests (as defined in the
the contracts or policies prospectus describing the
arising from the fact that the variable annuity contracts or
interests of holders of those variable life insurance policies
contracts or policies may differ issued by the participating
due to the difference of tax insurance companies) to be
treatment and other effected on that day pursuant to
considerations. Nevertheless, the contracts or policies.
the Trustees have established The Funds do not assess any fees
procedures for the purpose of upon purchase or redemption.
identifying any irreconcilable however, surrender charges,
material conflicts that may mortality and expense risk fees
arise and to determine what and other charges may be
action, if any, would be taken assessed by the participating
in response thereto. The insurance companies under the
variable annuity contracts and variable annuity contracts or
variable life insurance policies variable life insurance
are described in the separate policies. Such fees are
prospectuses issued by the described in the prospectus of
participating insurance such contracts or policies.
companies. The Evergreen
Variable Annuity Trust assumes
no responsibility for such Timing Of Proceeds
prospectuses. Normally, we will send
redemption proceeds on the next
business day after we receive a
request; however, we reserve the
HOW TO BUY AND REDEEM SHARES right to wait up to seven
Investors may not purchase or business days to redeem any
redeem shares of the funds investments.
directly, but only through
variable annuity contracts or
variable life insurance policies OTHER SERVICES
offered through separate Automatic Reinvestment of
accounts of participating Dividends
insurance companies. Investors For the convenience of
should refer to the prospectus investors, all dividends and
of the variable annuity capital gains are distributed to
contracts or variable life the separate accounts of
insurance policies for participating insurance
information on how to purchase companies and are automatically
such contracts or policies, how reinvested, unless requested
to select specific Evergreen otherwise.
Variable Annuity Funds as
investment options for the
contracts or policies and how to
redeem funds or change
investment options.
The separate accounts of the
<PAGE>
THE TAX CONSEQUENCES OF
INVESTING IN THE FUNDS
Fund Distributions
Each Fund passes along the net addition, a 10% penalty tax on
income or profits it receives distributions before age 59 1/2.
from its investments. The Only the portion of a
Evergreen Variable Annuity Funds distribution attributable to
expect that any distributions to income on the investment in the
separate accounts will be exempt contract is subject to federal
from current federal income income tax. Investors should
taxation to the extent that such consult with competent tax
distributions accumulate in a advisors for a more complete
variable annuity contract or discussion of possible tax
variable life insurance policy. consequences in a particular
situation.
- -Dividends. The Fund pays a
yearly dividend from the
dividends, interest and other
income on the securities in
which it invests.
- -Capital Gains. When a mutual
fund sells a security it owns
for a profit, the result is a
capital gain. Evergreen
Variable Annuity Funds
generally distribute capital
gains at least once a year.
For a discussion of the tax
consequences of variable annuity
contracts or variable life
insurance policies, refer to the
prospectus of the variable
annuity contract or variable
life insurance policies offered
by the participating insurance
company. Variable annuity
contracts or variable life
insurance policies purchased
through insurance company
separate accounts provide for
the accumulation of all earnings
from interest, dividends and
capital appreciation without
current federal income tax
liability to the owner.
Depending on the variable
annuity contract or variable
life insurance policies,
distributions from the contract
or policy may be subject to
ordinary income tax and, in
<PAGE>
FEES AND EXPENSES OF THE FUNDS investment category. There are
Every mutual fund has fees and three things to remember about
expenses that are assessed expense ratios: 1) your total
either directly or indirectly. return in the Fund is reduced in
This section describes each of direct proportion to the fees;
those fees. 2) expense ratios can vary
greatly between funds and fund
Management Fee families, from under 0.25 % to
The management fee pays for the over 3.0%; and 3) a Fund's
normal expenses of managing the advisor may waive a portion of
fund, including portfolio the Fund's expenses for a period
manager salaries, research of time, reducing its expense
costs, corporate overhead ratio.
expenses and related expenses.
Other Expenses
Other expenses include
miscellaneous fees from
affiliated and outside service
providers. These may include
legal, audit, custodial and
safekeeping fees, the printing
and mailing of reports and
statements, automatic
reinvestment of distributions
and other conveniences for which
the shareholder pays no
transaction fees.
Total Fund Operating Expenses
The total cost of running the
Fund is called the expense
ratio. As a shareholder, you are
not charged these fees directly;
instead they are taken out
before the Fund's net asset
value is calculated, and are
expressed as a percentage of the
Fund's average daily net assets.
The effect of these fees is
reflected in the performance
results for that share class.
Because these fees are
"invisible," investors should
examine them closely, especially
when comparing one fund with
another fund in the same
<PAGE>
FINANCIAL HIGHLIGHTS
This section looks in detail at
the results for one share in the
Funds - how much income it
earned, how much of this income
was passed along as a
distribution and how much the
return was reduced by expenses.
The tables for each Fund have
been derived from financial
information
audited by KPMG Peat Marwick
LLP, the Funds' independent
auditors. For a more complete
picture of the Funds' financial
statements, please see the
Funds' Annual Report as well as
the Statement of Additional
Information.
<PAGE>
Evergreen Variable Annuity Trust
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
VA Fund 1998 1997 1996*
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year.............. $ 14.89 $ 11.41 $ 10.00
------- ------- -------
Income from investment operations
Net investment income#......................... 0.07 0.06 0.05
Net realized and unrealized gains or losses on
securities.................................... 0.86 4.15 1.44
------- ------- -------
Total from investment operations................ 0.93 4.21 1.49
------- ------- -------
Less distributions from
Net investment income.......................... 0 (0.05) (0.05)
Net realized gains............................. (0.51) (0.68) (0.03)
------- ------- -------
Total distributions to shareholders............. (0.51) (0.73) (0.08)
------- ------- -------
Net asset value, end of year.................... $ 15.31 $ 14.89 $ 11.41
------- ------- -------
Total return (a)................................ 6.44% 37.16% 14.90%
Ratios/supplemental data
Net assets, end of year (thousands)............. $45,820 $21,600 $10,862
Ratios to average net assets:
Expenses....................................... 1.01% 1.01% 1.00%+
Net investment income.......................... 0.49% 0.42% 0.87%+
Portfolio turnover rate......................... 16% 32% 6%
</TABLE>
+ Annualized.
* For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
# Net investment income is based on average shares outstanding during the pe-
riod.
(a) Total return does not reflect charges of the separate accounts.
<PAGE>
Evergreen Variable Annuity Trust
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
VA Foundation Fund 1998 1997 1996*
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year................ $ 13.54 $ 11.31 $ 10.00
------- ------- -------
Income from investment operations
Net investment income#........................... 0.35 0.26 0.16
Net realized and unrealized gains or losses on
securities...................................... 1.07 2.86 1.37
------- ------- -------
Total from investment operations.................. 1.42 3.12 1.53
------- ------- -------
Less distributions from
Net investment income............................ (0.26) (0.24) (0.16)
Net realized gains............................... (0.23) (0.65) (0.06)
------- ------- -------
Total distributions to shareholders............... (0.49) (0.89) (0.22)
------- ------- -------
Net asset value, end of year...................... $ 14.47 $ 13.54 $ 11.31
------- ------- -------
Total return (a).................................. 10.56% 27.80% 15.30%
Ratios/supplemental data
Net assets, end of year (thousands)............... $78,371 $31,840 $15,812
Ratios to average net assets:
Expenses......................................... 1.00% 1.01% 1.00%+
Net investment income............................ 2.44% 2.15% 2.70%+
Portfolio turnover rate........................... 10% 26% 12%
+ Annualized.
* For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
# Net investment income is based on average shares outstanding during the pe-
riod.
(a) Total return does not reflect charges of the separate accounts.
<CAPTION>
Year Ended
December 31,
----------------
VA Global Leaders Fund 1998 1997*
- -------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year................ $ 10.79 $ 10.00
------- -------
Income from investment operations
Net investment income#........................... 0.10 0.11
Net realized and unrealized gains or losses on
securities and foreign currency related
transactions.................................... 1.94 0.77
------- -------
Total from investment operations.................. 2.04 0.88
------- -------
Less distributions from
Net investment income............................ (0.07) (0.06)
Net realized gains............................... 0 (0.03)
------- -------
Total distributions to shareholders............... (0.07) (0.09)
------- -------
Net asset value, end of year...................... $ 12.76 $ 10.79
------- -------
Total return (a).................................. 18.92% 8.80%
Ratios/supplemental data
Net assets, end of year (thousands)............... $ 9,583 $ 2,899
Ratios to average net assets:
Expenses......................................... 1.04% 1.05%+
Net investment income............................ 0.89% 1.15%+
Portfolio turnover rate........................... 12% 11%
</TABLE>
+ Annualized.
* For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
# Net investment income is based on average shares outstanding during the pe-
riod.
(a) Total return does not reflect charges of the separate accounts.
<PAGE>
Evergreen Variable Annuity Trust
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
VA Growth And Income Fund 1998 1997 1996*
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year....... $ 15.29 $ 11.83 $ 10.00
------- ------- -------
Income from investment operations
Net investment income#.................. 0.16 0.08 0.06
Net realized and unrealized gains or
losses on securities................... 0.56 4.01 1.84
------- ------- -------
Total from investment operations......... 0.72 4.09 1.90
------- ------- -------
Less distributions from
Net investment income................... (0.13) (0.07) (0.06)
Net realized gains...................... (0.30) (0.56) (0.01)
------- ------- -------
Total distributions to shareholders...... (0.43) (0.63) (0.07)
------- ------- -------
Net asset value, end of year............. $ 15.58 $ 15.29 $ 11.83
------- ------- -------
Total return (a)......................... 4.77% 34.66% 19.00%
Ratios/supplemental data
Net assets, end of year (thousands)...... $60,576 $31,088 $14,484
Ratios to average net assets:
Expenses................................ 1.01% 1.01% 1.00%+
Net investment income................... 1.02% 0.59% 1.00%+
Portfolio turnover rate.................. 13% 18% 2%
+ Annualized.
* For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
# Net investment income is based on average shares outstanding during the pe-
riod.
(a) Total return does not reflect charges of the separate accounts.
<CAPTION>
Period Ended
VA International Growth Fund December 31, 1998*
- ---------------------------------------------------------------
<S> <C>
Net asset value, beginning of period..... $ 10.00
-------
Income from investment operations
Net investment income#.................. 0.03
Net realized and unrealized gains or
losses on securities and foreign
currency related transactions.......... (0.64)
-------
Total from investment operations......... (0.61)
-------
Net asset value, end of period........... $ 9.39
-------
Total return (a)......................... (6.10)%
Ratios/supplemental data
Net assets, end of period (thousands).... $ 1,425
Ratios to average net assets:
Expenses................................ 1.02%+
Net investment income................... 1.05%+
Portfolio turnover rate.................. 59%
</TABLE>
+ Annualized.
* For the period from August 17, 1998 (commencement of operations) to December
31, 1998.
# Net investment income is based on average shares outstanding during the pe-
riod.
(a) Total return does not reflect charges of the separate accounts.
<PAGE>
OTHER FUND PRACTICES
The Funds may invest in futures and In addition, the Funds may borrow
options. The Funds may also engage in money and lend their securities.
short sales. Such practices are used Borrowing is a form of leverage that
to hedge a Fund's portfolio to protect may magnify a Fund's gain or loss.
against changes in interest rates and Lending securities may cause the Fund
to adjust the portfolio's duration. to lose the opportunity to sell these
Although this is intended to increase securities at the most desirable price
returns, these practices may actually and, therefore, lose money.
reduce returns or increase volatility.
The Funds generally do not take
If the Fund invests in foreign portfolio turnover into account in
securities, which may include foreign making investment decisions. This
currency transaction, means the Funds could experience a
the value of the Fund's shares will be high rate of portfolio turnover (100%
affected by changes in exchange rates. or more) in any given fiscal year,
To manage this risk, the Fund may resulting in greater brokerage and
enter into currency futures contracts other transactions costs which are
and forward currency exchange borne by the Funds and their
contracts. Although the Fund uses shareholders.
these contracts to hedge the U.S.
dollar value of a security it
already owns,the Fund could lose money
if it fails to predict accurately the
future exchange rates. The Fund may
engage in hedging and cross hedging
with respect to foreign currencies to
protect itself against a possible
decline in the value of another
foreign currency in which certain of
the Fund's investments are dominated.
A cross hedge cannot protect against
exchange rate risks perfectly, and if
a Fund is incorrect in its judgement
of future exchange rate relationships,
the Fund could be in a less
advantageous position than if such a
hedge had not been established.
Please consult the Statement of Additional Information for more
information regarding these and other investment practices used by the
Funds, including risks.
<PAGE>
Notes
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money
Market Fund
Florida Municipal Money Market
Fund
New Jersey Municipal Money
Market Fund
Municipal Bond
Short Intermediate Municipal
Fund
High Grade Municipal Bond Fund
Municipal Bond Fund
California Municipal Bond Fund
Connecticut Municipal Bond Fund
Florida High Income Municipal
Bond Fund
Florida Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
Massachusetts Municipal Bond
Fund
Missouri Municipal Bond Fund
New Jersey Municipal Bond Fund
New York Municipal Bond Fund
North Carolina Municipal Bond
Fund
Pennsylvania Municipal Bond Fund
South Carolina Municipal Bond
Fund
Virginia Municipal Bond Fund
Income
Capital Preservation and Income
Fund
Short Intermediate Bond Fund
Intermediate Term Government
Securities Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund
Balanced
American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
Growth & Income
Utility Fund
Fund for Total Return
Income and Growth Fund
Blue Chip Fund
Value Fund
Growth and Income Fund
Small Cap Value Fund
Domestic Growth
Evergreen Fund
Micro Cap Fund
Aggressive Growth Fund
Omega Fund
Small Company Growth Fund
Stock Selector Fund
Strategic Growth Fund
Tax Strategic Equity Fund
Masters Fund
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Variable Annuity
VA Aggressive Growth Fund
VA Fund
VA Foundation Fund
VA Global Leaders Fund
VA Growth and Income Fund
VA International Growth Fund
VA Masters Fund
VA Small Cap Value Fund
VA Strategic Income Fund
www.evergreen-funds.com
<PAGE>
Information Line for Hearing and For express, registered or
Speech Impaired (TTY/TDD) certified mail:
Call 1-800-343-2888 Evergreen Service Company
Each business day, 8 a.m. to 200 Berkeley Street
6 p.m. Eastern time Boston, MA 02116-5039
Write us a letter Contact us on-line:
Evergreen Service Company www.evergreen-funds.com
P.O. Box 2121
Boston, MA 02106-2121
for general correspondence
<PAGE>
For More Information About the Evergreen Variable Annuity Funds, Ask for:
The Funds' most recent Annual or Semi-annual Report, which contains a
complete financial accounting for each Fund and a complete list of the
Fund's holdings as of a specific date, as well as commentary from the
Fund's manager. This Report discusses the market conditions and investment
strategies that significantly affected the Fund's performance during the
most recent fiscal year or period.
The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the Funds. The SAI has
been filed with the Securities and Exchange Commission (SEC) and its
contents are legally considered to be part of this prospectus.
For questions, other information, or to request a copy, without charge, of
any of the documents, call 1-800-343-2898 or ask your investment
representative. We will mail material within three business days.
Information about these Funds (including the SAI) is also available on the
SEC's Internet web site at http://www.sec.gov, or, for a duplication fee,
by writing the SEC Public Reference Section, Washington DC 20549-6009. This
material can also be reviewed and copied at the SEC's Public Reference Room
in Washington, DC. For more information, call the SEC at 1-800-SEC-0330.
Evergreen Distribor, Inc.
90 Park Avenue
New York, New York, 10016
SEC File No.: 811-8716
