<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP ADVISER FUNDS, INC.
----------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP CASH RESERVE, INC.
---------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP EQUITY FUNDS I, INC.
-----------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP EQUITY FUNDS II, INC.
------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP EQUITY FUNDS III, INC.
-------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP EQUITY FUNDS IV, INC.
------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP EQUITY FUNDS V, INC.
-----------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP FOUNDATION FUNDS
-------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
-------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP GOVERNMENT FUND, INC.
------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP INCOME FUNDS, INC.
---------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP PREMIUM FUND, INC.
---------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
----------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE GROUP TAX-FREE FUND, INC.
----------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE POOLED TRUST, INC.
---------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
LOGO
January 8, 1998
Dear Shareholder:
A Joint Meeting of Shareholders of certain funds within the Delaware Investments
family of funds is being held in Philadelphia on March 17, 1999. We ask that you
take the time to review the enclosed proxy statement and provide us with your
vote on the important issues affecting your fund.
The enclosed proxy statement describes seven separate proposals that affect some
or all of the funds. In addition to the election of Board members and
ratification of the selection of auditors, the proposals include a change in the
designation of investment objectives from "fundamental" to "non-fundamental",
approval of new, standardized investment management agreements which contain fee
increases, fee decreases or potential fee decreases, and approval of new,
standardized sub-advisory agreements. Also, new standardized "fundamental"
investment restrictions are proposed for the funds and the current restrictions
are proposed to be redesignated as "non-fundamental". The proposed changes will
allow the Boards to modify the objectives and "non-fundamental" restrictions in
the future without the delay and expense of holding a shareholder meeting.
Finally, shareholders are asked to approve management's proposal to reorganize
the funds into Delaware business trusts to take advantage of various advantages
under Delaware law.
We realize that this proxy statement will take time to review, but your vote is
very important. Please familiarize yourself with the proposals presented and
mark, sign and return your proxy card (or cards) in the enclosed postage-paid
envelope. You may also call toll-free to vote by telephone, or you may vote
using the Internet. The insert accompanying this proxy statement describes how
to vote using these methods.
If we do not receive your completed proxy card(s) after several weeks, you may
be contacted by our proxy solicitor, Shareholder Communications Corporation, who
will remind you to vote your shares and will review with you the various ways in
which you can register your vote.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
LOGO
Jeffrey J. Nick, Chariman, President and
Chief Executive Officer
<PAGE>
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
We encourage you to read the attached proxy statement in full; however, the
following are some typical questions that shareholders might have regarding this
proxy statement.
Q: WHY IS DELAWARE INVESTMENTS SENDING ME THIS PROXY STATEMENT?
Investment companies are required to obtain shareholders' votes for certain
types of action. As a shareholder, you have a right to vote on certain major
policy decisions, such as those included here.
Q: WHAT ARE THE ISSUES CONTAINED IN THIS PROXY STATEMENT?
There are seven different proposals presented here and they are outlined in the
Notice at the beginning of the proxy statement. The Notice describes which
proposals apply to which funds.
Q: HOW WOULD THE BROAD-BASED PROPOSALS AFFECT ME AS A FUND SHAREHOLDER?
o Changing the designation of a fund's investment objective from
"fundamental" to "non-fundamental" would allow a Fund's Board of Directors,
without additional shareholder approval, to make future adjustments to
the investment objective to give greater flexibility to respond to market,
regulatory or industry changes. Approval of this change would not alter any
fund's current investment objective.
o Adopting a standardized list of "fundamental" investment restrictions
across all funds would help provide operational efficiencies and make it
easier to monitor compliance with these restrictions.
o Converting all existing investment restrictions to "non-fundamental" would
allow a fund's Board of Directors to analyze and approve changes to the
fund's existing investment restrictions, without additional shareholder
approval, to further the goal of standardization of investment
restrictions.
o Approval of the proposed fee increases, fee decreases or fee breakpoints
for certain funds would ensure management fee levels that will enable those
funds to continue to receive high quality investment management services.
o Approval of new standardized investment management agreements for each fund
(and standardized sub-advisory agreements where applicable) would help
provide operational efficiencies.
o The restructuring of funds from their current form of organization into
Delaware business trusts would provide both consistency across the Delaware
Investments fund family and flexibility of fund operations.
Q: HOW DO THE BOARD MEMBERS FOR MY FUND RECOMMEND THAT I VOTE?
The Board members for all the funds recommend that you vote in favor of, or FOR,
all of the proposals described above.
Q: WHOM DO I CALL FOR MORE INFORMATION ON HOW TO PLACE MY VOTE?
Please call your fund at 1-800-523-1918 or call Shareholder Communications at
1-800-858-0073 for additional information on how to place your vote.
PLEASE VOTE
YOUR VOTE IS IMPORTANT
<PAGE>
LOGO
1818 Market Street
Philadelphia, PA 19103
Combined Proxy Statement and
Notice of Joint Annual/Special Meeting of Shareholders
to be Held on March 17, 1999
To the Shareholders of:
Delaware Group Adviser Funds, Inc.
New Pacific Fund
Overseas Equity Fund
U.S. Growth Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund)
Devon Fund
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Decatur Income Fund
Decatur Total Return Fund
Diversified Value Fund
Social Awareness Fund
Delaware Group Equity Funds III, Inc.
Trend Fund
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund
DelCap Fund
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund
Retirement Income Fund
Delaware Group Foundation Funds
Balanced Portfolio
Growth Portfolio
Income Portfolio
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund
Global Equity Fund (formerly Global Assets Fund)
Global Bond Fund
Global Opportunities Fund (formerly Global Equity Fund)
International Equity Fund
International Small Cap Fund
Delaware Group Government Fund, Inc.
U.S. Government Fund
<PAGE>
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Delchester Fund
Extended Duration Bond Fund
High-Yield Opportunities Fund
Strategic Income Fund
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series
Decatur Total Return Series
Delaware Series
DelCap Series
Delchester Series
Devon Series
Emerging Markets Series
Global Bond Series
International Equity Series
REIT Series
Small Cap Value Series
Social Awareness Series
Strategic Income Series
Trend Series
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund
Tax-Free Ohio Fund
Tax-Free Pennsylvania Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
<PAGE>
This is your official Notice that a Joint Annual/Special Meeting of
Shareholders of each open-end registered investment company within the Delaware
Investments family listed in bold faced type above (each a "Company") will be
held on Wednesday, March 17, 1999 at 10:00 a.m. at the Union League, 140 South
Broad Street, Philadelphia, Pennsylvania. Each separate fund within a Company
may be referred to as a "Fund." The purpose of the meeting is to consider and
act upon the following Proposals and Sub-Proposals that apply either to
particular Companies or Funds, and to transact any other business that properly
comes before the meeting and any adjournments thereof.
<PAGE>
Proposal One: To Elect a Board of Directors or Trustees for the Company
Proposal One applies to all Companies.
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective
from Fundamental to Non-Fundamental
Proposal Two applies to all Funds except the following, because the
following Funds' investment objectives are already non-fundamental:
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Decatur Total Return Fund
Diversified Value Fund
Social Awareness Fund
Delaware Group Equity Funds III, Inc.
Capital Appreciation Fund
Delaware Group Equity Funds V, Inc.
Retirement Income Fund
Delaware Group Foundation Funds
Balanced Portfolio
Growth Portfolio
Income Portfolio
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Extended Duration Bond Fund
High-Yield Opportunities Fund
Delaware Group Premium Fund, Inc.
REIT Series
Proposal Three: To Approve Standardized Fundamental Investment Restrictions for
the Fund (Includes Seven Sub-Proposals)
3A: Industry Concentration
3B: Borrowing Money and Issuing Senior Securities
3C: Underwriting of Securities
3D: Investing in Real Estate
3E: Investing in Commodities
3F: Making Loans
3G: Redesignation of all Current Fundamental Investment
Restrictions as Non-Fundamental
Proposal Three applies to all Funds except the following, because the
following Funds already have the proposed standardized restrictions:
Delaware Group Equity Funds II, Inc.
Diversified Value Fund
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Extended Duration Bond Fund
Proposal Four: To Approve a New Investment Management Agreement for the Fund
Proposal Four applies to all Funds except the Diversified Value Fund
(of Delaware Group Equity Funds II, Inc.), which already adopted a
standardized Investment Management Agreement.
Proposal Five: To Approve a New Sub-Advisory Agreement for the Fund
Proposal Five only applies to the following Funds:
Delaware Group Adviser Funds, Inc.
New Pacific Fund
Overseas Equity Fund
U.S. Growth Fund
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Social Awareness Fund
Delaware Group Global & International
Funds, Inc.
Global Equity Fund (formerly Global Assets Fund)
Global Opportunities Fund (formerly Global Equity Fund)
Delaware Group Income Funds, Inc.
Strategic Income Funds, Inc.
Delaware Group Premium Fund, Inc.
REIT Series
Social Awareness Series
Strategic Income Series
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
<PAGE>
Proposal Six: To Ratify the Selection of Ernst & Young LLP as Independent
Auditors for the Company
Proposal Six applies to all Companies.
Proposal Seven: To Approve the Restructuring of the Company from its Current
Form of Organization into a Delaware Business Trust
Proposal Seven applies to all Companies except Delaware Group
Foundation Funds, and its Balanced, Growth and Income Portfolios,
because that Company is already organized as a Delaware business trust.
Please note that a separate vote is required for each Proposal or Sub-Proposal
that applies to your Company or Fund. Please vote your Proxy promptly to avoid
the need for further mailings. Your vote is important.
LOGO
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
NOTICE OF JOINT ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
Proposal One: To Elect a Board of Directors or Trustees for the Company 2
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective from 6
Fundamental to Non-Fundamental
Proposal Three: To Approve Standardized Fundamental Investment Restrictions for the 7
Fund (Includes Seven Sub-Proposals)
3A: Industry Concentration 8
3B: Borrowing Money and Issuing Senior Securities 9
3C: Underwriting of Securities 10
3D: Investing in Real Estate 10
3E: Investing in Commodities 10
3F: Making Loans 11
3G: Redesignation of all Current Fundamental Investment Restrictions 11
as Non-Fundamental
Proposal Four: To Approve a New Investment Management Agreement for the Fund 12
Proposal Five: To Approve a New Sub-Advisory Agreement for the Fund 18
Proposal Six: To Ratify the Selection of Ernst & Young LLP as Independent Auditors
for the Company 21
Proposal Seven: To Approve the Restructuring of the Company from its Current Form of 21
Organization Into a Delaware Business Trust
EXHIBITS
Exhibit A: Outstanding Shares as of Record Date A-1
Exhibit B: Shareholders Owning 5% or More of a Fund as of October 31, 1998 B-1
Exhibit C: Years That Directors or Trustees First Took Office C-1
Exhibit D: Executive Officers of the Companies D-1
Exhibit E: Shareholdings by Directors or Trustees and Nominees in the Delaware
Investments Funds as of October 31, 1998 E-1
Exhibit F: Lists of Current Fundamental Investment Restrictions F-1
Exhibit G: Information Relating to Investment Management and
Sub-Advisory Agreements G-1
Exhibit H: Actual and Hypothetical Expense Tables H-1
Exhibit I: Similar Funds Managed by Investment Managers and Sub-Advisors I-1
Exhibit J: Form of Investment Management Agreement J-1
Exhibit K: Form of Sub-Advisory Agreement K-1
Exhibit L: Form of Agreement and Plan of Reorganization L-1
Exhibit M: Differences in Legal Structures M-1
</TABLE>
<PAGE>
LOGO
1818 Market Street
Philadelphia, PA 19103
1-800-523-1918
PROXY STATEMENT
JOINT ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1999
Meeting Information. The Board of Directors or Trustees (hereafter referred to
as the "Board of Directors") of each open-end registered investment company
within the Delaware Investments family listed on the accompanying Notice (each a
"Company") is soliciting your proxy to be voted at the Joint Annual/Special
Meeting of Shareholders to be held on Wednesday, March 17, 1999 at 10:00 a.m. at
the Union League, 140 South Broad Street, Philadelphia, Pennsylvania or any
adjournments of the meeting (hereafter, the "Meeting").
Purpose of Meeting. The purpose of the Meeting is to consider a number of
Proposals and Sub-Proposals that either apply to particular Companies, or to
individual funds within the Companies (each a "Fund"). The Proposals and
Sub-Proposals, as well as the Companies or Funds to which they apply, are listed
in the accompanying Notice.
The Board of Directors for each Fund urges you to complete, sign and return the
Proxy Card (or Cards) included with this Proxy Statement, or use one of the
other voting methods described in the insert accompanying this Proxy Statement,
whether or not you intend to be present at the Meeting. It is important that you
return the signed Proxy Card(s) or use one of the other voting methods described
in the insert accompanying this Proxy Statement, promptly to help assure a
quorum for the Meeting.
General Voting Information. The persons designated on the Proxy Card as proxies
will vote your shares as you instruct on each Proxy Card. If your signed Proxy
Card is returned without any voting instructions, your shares will be voted
"FOR" each of the nominees for election as Director or Trustee and "FOR" each
other Proposal or Sub-Proposal concerning your Company or Fund. The persons
designated as proxies will also be authorized to vote in their discretion on any
other matters which may come before the Meeting. If you sign and return a Proxy
Card, you may still attend the Meeting to vote your shares in person. If your
shares are held of record by a broker-dealer and you wish to vote in person at
the Meeting, you should obtain a Legal Proxy from your broker of record and
present it at the Meeting. You may also revoke your proxy at any time before the
Meeting: (i) by notifying Delaware Investments in writing; (ii) by submitting a
later signed Proxy Card; or (iii) by voting your shares in person at the
Meeting.
Each shareholder may cast one vote for each full share and a partial vote for
each partial share of a Fund or Company that they own on the record date, which
is December 21, 1998. Exhibit A shows the number of shares of each Fund and
Company that were outstanding on the record date and Exhibit B lists the
shareholders who own 5% or more of each Fund. It is expected that this Proxy
Statement and the accompanying Proxy Card(s) will be mailed to shareholders of
record on or about January 8,1999.
This proxy solicitation is being made largely by mail, but may also be made by
officers or employees of the Companies or their investment managers or
affiliates, through telephone, facsimile, oral or other communications.
Shareholders may provide proxy instructions by returning their Proxy Card by
mail or fax and may also communicate proxy instructions through the Internet or
by telephone via touch-tone voting. Delaware Management Company ("DMC") and
Delaware International Advisers Ltd. ("DIAL"), the investment managers for the
Funds, on behalf of themselves and the Companies, have engaged Shareholder
Communications Corporation ("SCC") to assist in the solicitation. The estimated
cost of engaging SCC, which will be shared by DMC, DIAL and the Companies, is
set forth below:
Range
-----
Delaware Group Adviser Funds, Inc.............................$_____ to $_____
Delaware Group Cash Reserve, Inc..............................$_____ to $_____
Delaware Group Equity Funds I, Inc............................$_____ to $_____
Delaware Group Equity Funds II, Inc...........................$_____ to $_____
Delaware Group Equity Funds III, Inc..........................$_____ to $_____
Delaware Group Equity Funds IV, Inc...........................$_____ to $_____
Delaware Group Equity Funds V, Inc............................$_____ to $_____
Delaware Group Foundation Funds...............................$_____ to $_____
Delaware Group Global & International Funds, Inc..............$_____ to $_____
Delaware Group Government Fund, Inc...........................$_____ to $_____
Delaware Group Income Funds, Inc..............................$_____ to $_____
Delaware Group Limited-Term Government Funds, Inc.............$_____ to $_____
Delaware Group Premium Fund, Inc..............................$_____ to $_____
Delaware Group State Tax-Free Income Trust ...................$_____ to $_____
Delaware Group Tax-Free Money Fund, Inc.......................$_____ to $_____
Delaware Group Tax-Free Fund, Inc.............................$_____ to $_____
Delaware Pooled Trust, Inc....................................$_____ to $_____
<PAGE>
Votes Required to Approve each Proposal or Sub-Proposal. Three Proposals within
this Proxy Statement affect all shareholders of a Company as a whole, regardless
of whether or not the Company consists of a number of individual Funds. These
Proposals are the election of Directors, the ratification of the selection of
the independent auditors and the reorganization of the Company from its current
structure to a Delaware business trust. All shareholders of a Company vote
together on these Proposals. The remaining Proposals or Sub-Proposals contained
in this Proxy Statement only affect particular Funds and, therefore, only
shareholders of those Funds are permitted to vote on those Proposals or
Sub-Proposals. The amount of votes of a Company or Fund that are needed to
approve the different Proposals or Sub-Proposals varies. The voting requirements
are described within each Proposal or Sub-Proposal.
Delaware Pooled Trust, Inc. ("Pooled Trust") is comprised of The Real Estate
Investment Trust Portfolio and several other funds. With regard to the Proposals
that apply to all Pooled Trust funds, shareholders of those other funds have
received a separate proxy statement relating to the same Proposals and their
votes will be combined with shareholders of The Real Estate Investment Trust
Portfolio.
Abstentions and broker non-votes will be included for purposes of determining
whether a quorum is present at the Meeting. They will be treated as votes
present at the Meeting, but will not be treated as votes cast. They therefore
would have no effect on Proposals which require a plurality or majority of votes
cast for approval, but would have the same effect as a vote "AGAINST" on
Proposals requiring a majority of votes present or a majority of outstanding
voting securities for approval. (These different voting standards are explained
in the various Proposals.) DMC or DIAL will reimburse banks, brokers or dealers
for their reasonable expenses in forwarding soliciting materials to
shareholders.
Each Fund's most recent Annual Report and Semi-Annual Report to Shareholders
were previously mailed to shareholders. Copies of these reports are available
upon request, without charge, by writing or calling the Funds at the address and
telephone number shown on the top of the previous page of the Proxy Statement.
Proposal One: To Elect a Board of Directors or Trustees for the Company
This Proposal applies to all Companies.
You are being asked to vote to elect each of the following nominees to the Board
of Directors or Trustees for your Company (hereafter referred to as "Board of
Directors"). The nominees are: Jeffrey J. Nick, Walter P. Babich, John H.
Durham, Anthony D. Knerr, Ann R. Leven, Thomas F. Madison, Charles E. Peck,
Wayne A. Stork and Jan R. Yeomans. With the exception of Jan R. Yeomans, each
nominee is currently a member of the Board of Directors for each Company. If
elected, these persons will serve as Directors until the next Annual or Special
Meeting of Shareholders called for the purpose of electing Directors, and/or
until their successors have been elected and qualify for office. It is not
expected that any nominee will withdraw or become unavailable for election, but
in such a case, the power given by you in the Proxy Card may be used to vote for
a substitute nominee or nominees as recommended by the existing Boards of
Directors.
Directors and Nominees. Presented below is information about the age, position
with the Companies, principal occupation and past business experience of each
current Director/Trustee and nominee. Exhibit C lists the year in which each
individual became a Director of each Company.
- ---------------
* This nominee is considered to be an "interested person" of each Company, as
that term is defined in the Investment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
2
<PAGE>
Jeffrey J. Nick* (45), Chairman, President, Chief Executive Officer and Director
and/or Trustee of each of the 34 investment companies in the Delaware
Investments family; President and Director of Delaware Management Holdings,
Inc., 1997 to present; President, Chief Executive Officer and Director of
Lincoln National Investment Companies, Inc., 1996 to present; Director of
Delaware International Advisers Ltd., 1998 to present; Director of Vantage
Global Advisors, Inc., 1996 to present; Director of Lynch & Mayer Inc.
(investment adviser), 1997 to present; Managing Director of Lincoln National UK
plc, 1992-1996; Senior Vice President of Lincoln National Corporation
responsible for corporate planning and development, 1989-1992.
Walter P. Babich (71), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Board Chairman of Citadel
Constructors, Inc. (commercial building construction), 1988 to present; Partner
of I&L Investors, 1988-1991; Partner of Irwin & Leighton Partnership (building
construction), 1986-1988.
John H. Durham (61), Director and/or Trustee of 19 investment companies in the
Delaware Investments family. Consultant to Delaware Investments, 1991-1997;
Partner of Complete Care Services, 1995 to present; Chairman of the Board of
each investment company in the Delaware Investments family from 1986 to 1991;
Director Emeritus from 1995 through 1998, at which time he was reappointed to
the Boards; President of each company from 1977 to 1990; and Chief Executive
Officer of each company from 1984 to 1990. Prior to 1992, with respect to
Delaware Management Holdings, Inc., Delaware Management Company, Delaware
Distributors, Inc. and Delaware Service Company, Inc., Mr. Durham served as a
director and in various executive capacities at different times within the
Delaware Investments organization.
Anthony D. Knerr (59), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Founder and Managing Director,
Anthony Knerr & Associates (strategic consulting company to major non-profit
institutions and organizations), 1991 to present; Founder and Chairman of the
Publishing Group, Inc. 1988-1990; Executive Vice President/Finance and Treasurer
of Columbia University, 1982-1988; Lecturer of English at Columbia University,
1987-1989.
Ann R. Leven (57), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Treasurer, National Gallery of
Art, 1994 to present; Director of four investment companies sponsored by Acquila
Management Corporation, 1985 to February, 1998; Deputy Treasurer of the National
Gallery of Art, 1990 to 1994; Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, 1984-1990; Adjunct Professor at Columbia Business
School, 1975-1992.
W. Thacher Longstreth** (77), Director and/or Trustee of each of the 34
investment companies in the Delaware Investments family; Philadelphia City
Councilman, 1984 to present; Consultant20 , Packard Press, 1988 to present;
Senior Partner, MLW Associates (business consulting), 1983 to present; Director,
Healthcare Services Group, 1983 to present; Director Emeritus, Tasty Baking
Company, 1991 to present; Director, MicroLeague Micromedia, Inc. (computer game
publisher), 1996 to present; Director, Tasty Baking Company, 1968-1991; Vice
Chairman, The Winchell Company (financial printing), 1983-1988.
- ---------------
* This nominee is considered to be an "interested person" of each Company, as
that term is defined in the Investment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
<PAGE>
Thomas F. Madison (62), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; President and Chief Executive
Officer of MLM Partners, Inc., 1993 to present; Chairman of the Board of
Communications Holdings, Inc., 1996 to present; Vice Chairman--Office of the CEO
of The Minnesota Mutual Life Insurance Company, February to September, 1994;
Director of Valmont Industries (irrigation systems and steel manufacturing),
1987 to present; Director of Eltrax Systems, Inc. (data communications
integration), 1993 to present; Director of Minnegasco, Span Link Communications
(software), 1995 to present; Director of ACI Telecentrics (outbound
telemarketing and telecommunications), 1997 to present; Director of Aon Risk
Services, 1996 to present; Director of Digital River, 1997 to present.
Charles E. Peck (72), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Retired; Secretary/Treasurer,
Enterprise Homes, Inc., 1992 to present; Chairman and Chief Executive Officer of
The Ryland Group, Inc., 1981 to 1990.
Wayne A. Stork* (61), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and Delaware Capital Management,
Inc.; Chairman, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman, President,
Chief Executive Officer, Chief Investment Officer and Director/Trustee of
Delaware Management Company, Inc. and Delaware Management Business Trust;
Chairman, President, Chief Executive Officer and Chief Investment Officer of
Delaware Management Company (a series of Delaware Management Business Trust);
Chairman, Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Chairman,
Chief Executive Officer and Director of Delaware International Advisers Ltd.,
Delaware International Holdings Ltd. and Delaware Management Holdings, Inc.;
President and Chief Executive Officer of Delvoy, Inc.; Chairman of Delaware
Distributors, L.P.; Director of Delaware Service Company, Inc. and Retirement
Financial Services, Inc. During the past five years, Mr. Stork has served in
various executive capacities at different times within the Delaware Investments
organization.
- ---------------
* This nominee is considered to be an "interested person" of each Company, as
that term is defined in the Investment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
** This Director is retiring from service on the Board of Directors for each
Company on ____, and, therefore, is not a nominee.
3
<PAGE>
Jan R. Yeomans (50), Vice President and Treasurer of the 3M Corporation, 1994 to
Present; Director of Benefit Funds and Financial Markets for the 3M Corporation,
1987-1994; Manager of Benefit Fund Investments for the 3M Corporation,
1985-1987; Manager of Pension Funds for the 3M Corporation, 1983-1985;
Consultant - Investment Technology Group of Chase Econometrics, 1982-1983;
Consultant for Data Resources, 1980-1982; Programmer for the Federal Reserve
Bank of Chicago, 1970-1974.
Board and Committee Meetings. During the twelve months ended October 31, 1998,
each Company held [(Delaware to advise:) _________] Board meetings.
Each Board of Directors has an Audit Committee for the purpose of meeting, at
least annually, with the Company's independent auditors and officers to oversee
the quality of financial reporting and the internal controls of the Company, and
for such purposes as the Board of Directors may from time to time direct. The
Audit Committee of each Company consists of the following four Directors
appointed by the Board, all of whom are considered to be independent because
they are not "interested persons" as defined in the Investment Company Act of
1940, as amended (the "1940 Act"): Ann R. Leven, Chairperson, Walter P. Babich,
Anthony D. Knerr and Thomas F. Madison. Members of the Audit Committee serve for
three years or until their successors have been appointed and qualified. The
Audit Committee held [(Delaware to advise:) ________] meetings for each Company
during the twelve months ended October 31, 1998.
Each Board of Directors also has a Nominating Committee, which meets for the
purpose of proposing nominees to serve as Directors. Nominees are considered by
the full Board of Directors for each Fund and, when appropriate, by shareholders
at annual or special shareholder meetings. The Nominating Committee of each
Company consists of the following three Directors appointed by the Boards, two
of whom are considered to be independent Directors: Wayne A. Stork, Anthony D.
Knerr and W. Thacher Longstreth. [(Please confirm:) This Committee met once
during the past year for the purpose of determining the proposed list of
nominees for this Meeting.] The selection and nomination of the independent
Director nominees is committed to the discretion of the present independent
Directors. Each Nominating Committee will consider suggestions for Board of
Directors nominations from shareholders. Shareholders who wish to suggest
candidates for nomination to the Boards of Directors at any future annual
meeting should identify the candidate and furnish a written statement of the
person's qualifications to the Nominating Committee at the principal executive
offices of the Companies.
Board Compensation. Each independent Director receives compensation from each
Company of which he/she is a member of the Board of Directors. The interested
Directors are compensated by the investment manager and do not receive
compensation from the Companies. Each independent Director (other than John H.
Durham) currently receives a total annual retainer fee of $38,500 for serving as
a Director for all 34 Companies within the Delaware Investments family, plus
$3,145 for each set of Board meetings attended (seven regular meetings). John H.
Durham currently receives a total annual retainer fee of $31,000 for serving as
a Director for 19 Companies within the Delaware Investments family, plus
$1,757.50 for each set of Board meetings attended. Members of the Audit
Committee currently receive additional annual compensation of $5,000 from all
Companies, in the aggregate, with the exception of the chairperson, who receives
$6,000.
Under the terms of each Company's retirement plan for Directors, each
independent Director who, at the time of his or her retirement from the Board of
Directors, has attained the age of 70 and served on the Board of Directors for
at least five continuous years, is entitled to receive payments from the Company
for a period of time equal to the lesser of the number of years that such person
served as a Director or the remainder of such person's life. The annual amount
of such payments will be equal to the amount of the annual retainer that is paid
to Directors of the Company at the time of such person's retirement. If an
eligible Director of each Company within the Delaware Investments family had
retired as of October 31, 1998, he or she would have been entitled to annual
payments in an amount equal to the annual retainer fee noted in the previous
paragraph. The following table identifies the amount each Director received from
each Company during its last fiscal year.
4
<PAGE>
<TABLE>
<CAPTION>
Wayne A. Jeffrey J. Walter P. John H. Anthony D. Ann R. W. Thacher Thomas F. Charles E.
Company Name Stork Nick Babich Durham(1) Knerr Leven Longstreth Madison(2) Peck
------------- ----- ---- ------ -------- ----- ----- ---------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delaware Group Adviser Funds,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Cash Reserve,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Equity Funds, I,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Equity Funds II,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Equity Funds
III, Inc. None None $ N/A $ $ $ $ $
Delaware Group Equity Funds IV,
Inc. None None N/A $ $ $ $ $
Delaware Group Equity Funds V,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Foundation Funds None None $ N/A $ $ $ $ $
Delaware Group Global &
International Funds, Inc. None None $ N/A $ $ $ $ $
Delaware Group Government Fund,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Income Funds,
Inc. None None $ N/A $ $ $ $ $
Delaware Group Limited-Term
Government Funds, Inc. None None $ N/A $ $ $ $ $
Delaware Group Premium Fund,
Inc. None None $ N/A $ $ $ $ $
Delaware Group State Tax-Free
Income Trust None None $ N/A $ $ $ $ $
Delaware Group Tax-Free Money
Fund, Inc. None None $ N/A $ $ $ $ $
Delaware Group Tax-Free Fund,
Inc. None None $ N/A $ $ $ $ $
Delaware Pooled Trust, Inc. None None $ N/A $ $ $ $ $
Total Compensation From All
Companies in the Delaware
Investments Family for the 12
months ended October 31, 1998 None None $ $ $ $ $ $ $
</TABLE>
- ---------------
(1) Mr. Durham re-joined the Boards of Directors of most of the Companies in the
Delaware Investments family on April 16, 1998.
(2) Mr. Madison joined the Boards of Directors of the Companies on May 1, 1997.
Officers. Each Board of Directors and the senior management of the Companies
appoint officers each year, and from time to time as necessary. The following
individuals are executive officers of one or more of the Companies: Wayne A.
Stork, Jeffrey J. Nick, David K. Downes, Richard G. Unruh, Paul E. Suckow,
Michael P. Bishof, George M. Chamberlain, Jr., Joseph H. Hastings, Patrick P.
Coyne, Mitchell L. Conery, Paul A. Matlack, Gary A. Reed, Babak Zenouzi, Gerald
T. Nichols, Christopher S. Beck, George H. Burwell, Robert L. Arnold, Gerald S.
Frey, Roger A. Early, John B. Fields, Paul Grillo, Cynthia L. Isom, Frank X.
Morris, James F. Stanley and Paul Dokas. Exhibit D includes biographical
information and the past business experience of such officers, except for Mr.
Stork and Mr. Nick, whose information is set forth above along with the other
Directors and nominees. The Exhibit also identifies which officers are also
officers of DMC or DIAL. The above officers of the Companies own shares of
common stock and/or options to purchase shares of common stock of Lincoln
National Corporation ("LNC"), the ultimate parent of DMC and DIAL.
While in the employ of Oppenheimer Management Corporation, Mr. Paul E. Suckow
was the subject of an Administrative Proceeding brought by the U.S. Securities
and Exchange Commission ("SEC"). As a result of this proceeding, Mr. Suckow was
found to have violated Section 34(b) of the 1940 Act by failing properly to
disclose material facts in certain books and records by order of the SEC dated
December 1, 1992. Mr. Suckow was suspended from the business for 120 days.
Management's Ownership of the Funds. Attached to this Proxy Statement as Exhibit
E is a list of the Directors' and nominees' shareholdings of the various Funds
within the Delaware Investments family on an individual basis. Exhibit A lists
the aggregate holdings by all of the Directors, nominees and executive officers
as a group.
Required Vote. With the exception of Delaware Group Adviser Funds, Inc., each
Director of a Company shall be elected by a plurality of votes cast by
shareholders of the Company, regardless of the votes of individual Funds within
the Company. This means that the nominees receiving the largest number of votes
will be elected to fill the available Board positions. For Delaware Group
Adviser Funds, Inc., each Director shall be elected by a majority of votes cast
by shareholders of the Company, regardless of the votes of individual Funds
within the Company.
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective
from Fundamental to Non-Fundamental
5
<PAGE>
This Proposal applies all Funds except the following, because the following
Funds' investment objectives are already designated as non-fundamental:
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Decatur Total Return Fund
Diversified Value Fund
Social Awareness Fund
Delaware Group Equity Funds III, Inc.
Capital Appreciation Fund
Delaware Group Equity Funds V, Inc.
Retirement Income Fund
Delaware Group Foundation Funds
Balanced Portfolio
Growth Portfolio
Income Portfolio
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Extended Duration Bond Fund
High-Yield Opportunities Fund
Delaware Group Premium Fund, Inc.
REIT Series
The investment objective of each Fund to which this Proposal applies, like many
of the older Delaware Investments Funds, is designated as "fundamental," which
means that any changes, even those not resulting in significant changes in the
way a fund is managed or the risks to which it is subject, require shareholder
approval. Under the 1940 Act, a Fund's investment objective is not required to
be fundamental. However, many investment companies have elected to classify
their investment objectives as fundamental. This practice arose largely as a
result of comments provided by state securities regulators in their review of
Fund registration statements during the state registration process, as well as
because of historical drafting conventions.
In light of the enactment of National Securities Markets Improvement Act of
1996, which eliminated state securities administrative review of investment
company registration statements, and in order to provide the Boards of Directors
with enhanced flexibility to respond to market, industry or regulatory changes,
the Directors have approved the redesignation from fundamental to
non-fundamental of each Fund's investment objective. A non-fundamental
investment objective may be changed at any time by the Directors without the
delay and expense of soliciting proxies and holding a shareholder meeting.
For a complete description of the investment objective of your Fund, please
consult your Fund's prospectus. The redesignation from fundamental to
non-fundamental will not alter any Fund's current investment objective. If this
Proposal is approved, however, Fund management intends to request that the
Directors consider a number of modifications to the language used to describe
certain Funds' investment objectives. The requested modifications are designed
to modernize and standardize the expression of such investment objectives, but
if these modifications are implemented, neither the principal investment design
nor the day-to-day management of the Funds would be materially altered. If at
any time in the future, the Directors approve a change in a Fund's
non-fundamental investment objective, either in connection with the currently
anticipated modernization and standardization or otherwise, shareholders will be
given notice of the change prior to its implementation.
Required Vote. Approval of this proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less. If the redesignation of any Fund's
investment objective from fundamental to non-fundamental is not approved by
shareholders of a particular Fund, that 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.
At meetings of the Directors held in July and September, 1998, the Directors
considered the enhanced management flexibility to respond to market, industry or
regulatory changes that would accrue to the Board of Directors if each relevant
Fund's fundamental investment objective were redesignated as non-fundamental and
the Board unanimously approved the proposed change.
The Board of Directors unanimously recommends that you vote FOR the
redesignation of the investment objective of your Fund as non-fundamental.
6
<PAGE>
Proposal Three: To Approve Standardized Fundamental Investment Restrictions for
the Fund (This Proposal involves separate votes on Sub-Proposals 3A through 3G)
This Proposal applies to all Funds except the following, which already are
subject to the proposed standardized investment restrictions:
Delaware Group Equity Funds II, Inc.
Diversified Value Fund
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Extended Duration Bond Fund
Proposal Overview
Each Fund is subject to investment restrictions which establish percentage and
other limits that govern the Fund's investment activities. Under the 1940 Act,
investment restrictions relating to certain activities are required to be
"fundamental," which means that any changes require shareholder approval. Funds,
in their descretion, are permitted to deem other restrictions fundamental, and
they may also adopt "non-fundamental" restrictions, which can be changed by the
Board of Directors without shareholder approval. Of course, any change in a
Fund's investment restrictions, whether fundamental or not, would be approved by
the Board and reflected in the Fund's prospectus or other offering documents.
Unlike investment objectives and policies, which are often different for each
Fund, investment restrictions for Funds tend to be the same or similar, because
they are based on legal or regulatory requirements that apply to all Funds. Over
the years, however, as new Funds were created or added to the Delaware
Investments family, investment restrictions relating to the same activities were
expressed in a variety of different ways. Many older Funds are subject to
investment restrictions that were adopted in response to regulatory, business or
industry conditions that no longer exist. In addition, a number of Funds adopted
fundamental restrictions in response to state laws and regulations that no
longer apply because they were preempted by the National Securities Markets
Improvement Act of 1996. As a result, a number of fundamental restrictions are
no longer required to be fundamental, and some previously required restrictions
are no longer required at all.
The Directors, together with Fund management and the investment managers and
sub-advisers, have analyzed the current fundamental investment restrictions of
each Fund, and have concluded that six new standardized fundamental investment
restrictions should be adopted for each Fund. The proposed investment
restrictions relate only to activities that are required under the 1940 Act to
be the subject of fundamental policies and restrictions. Management believes
that a modern, standardized list of restrictions will enhance the ability of the
Funds to achieve their objectives because the Funds will have greater investment
management flexibility to respond to changes in market, industry or regulatory
conditions. In addition, standardized restrictions are expected to enable the
Funds to operate more efficiently and to more easily monitor compliance with
investment restrictions.
Each Fund currently has fundamental investment restrictions that govern the same
activities covered by the proposed fundamental investment restrictions, and a
number of Funds currently have other fundamental investment restrictions
governing additional activities. Management is recommending that all current
fundamental investment restrictions of each Fund be re-classified as
non-fundamental, at the same time that the six new standardized fundamental
investment restrictions are adopted for each Fund. If the current fundamental
restrictions are made non-fundamental, the Directors would be able to modify or
eliminate the current restrictions without the costs or delays associated with a
shareholder vote.
The proposed changes will not affect any Fund's investment objective and will
not change the way any Fund is currently being managed or operated, since all
current investment restrictions will remain in place as non-fundamental
restrictions. If, as proposed, the current fundamental investment restrictions
are reclassified as non-fundamental, management intends in the future to
recommend that the Board of Directors approve certain modifications designed to
result in a more modern and standardized list of investment restrictions for the
various Delaware Investments Funds. The recommendations by management will
likely involve the modification or elimination of current restrictions. The
Board of Directors for each Fund will determine separately whether elimination
or modification of a common investment restriction is appropriate for that Fund.
The fundamental investment restrictions are generally found in each Fund's
Statement of Additional Information ("SAI"). Accordingly, if shareholders
approve the proposed fundamental investment restrictions for each Fund, then
Fund management will update each Fund's SAI to reflect the standardized
investment restrictions.
7
<PAGE>
The fundamental investment restrictions for the Delaware Group State Tax-Free
Income Trust, a Pennsylvania common law trust, are found both in the Fund's SAI
and its Procedural Guidelines (the functional equivalent of Bylaws for a
corporation). Funds are not required to have fundamental investment restrictions
in their Procedural Guidelines or Bylaws. Therefore, in addition to
standardizing the fundamental investment restrictions for Delaware Group State
Tax-Free Income Trust, management also proposes to amend that Fund's Procedural
Guidelines to remove the fundamental investment restrictions from that document.
Hence, any shareholder of that Fund who votes to adopt the standardized
fundamental investment restrictions will simultaneously be voting to remove the
investment restrictions from the Fund's Procedural Guidelines.
The six new proposed fundamental investment restrictions are described below
within the relevant Sub-Proposals. In addition, Exhibit F contains a list of the
current fundamental investment restrictions for each Fund which are proposed to
be reclassified as non-fundamental. Unless all of the Sub-Proposals are approved
by shareholders of a particular Fund, none of the Sub-Proposals will be adopted
for that Fund.
Required Vote. Approval of each Sub-Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less. With regard to the Delaware Group State
Tax-Free Income Trust, the same vote that is required to standardize the
fundamental investment restrictions is also sufficient to amend the Fund's
Procedural Guidelines.
The Directors of each Fund have voted to adopt each of the proposed standardized
fundamental investment restrictions for the Funds, as well as to approve the
reclassification of the existing fundamental investment restrictions as
non-fundamental, and unanimously recommend that you vote FOR each Sub-Proposal
3A through 3G for your Fund.
Sub-Proposal 3A: To adopt a new fundamental investment restriction concerning
the concentration of the Fund's investments in the same industry.
Under the 1940 Act, a fund's policy of concentrating its investments in
securities of companies in the same industry must be fundamental. A mutual fund
concentrates its investments, for purposes of the SEC, if it invests more than
25% of its "net" assets (exclusive of cash, U.S. government securities and
tax-exempt securities) in a particular industry or group of industries. Having
the concentration policy apply to "net" assets represents a recent change by the
SEC staff from its previous concentration standard which applied to 25% of a
fund's "total" assets. The change would slightly reduce a fund's ability to
concentrate, since the "net" assets figure is lower than "total" assets of a
fund because liabilities are subtracted.
Most Funds currently have a fundamental investment restriction prohibiting them
from concentrating their investments in the same industry. There are, however,
numerous variations in the way that the investment restriction is described in
the Funds' offering documents. In addition, most restrictions define
concentration in terms of a percentage of "total assets," rather than in
accordance with the new "net assets" standard.
The Board of Directors recommends that the shareholders of each Fund approve the
standardized fundamental investment restriction set forth below. In approving
the proposed investment restriction and concluding that it would recommend the
investment restriction to Fund shareholders, the Directors considered that the
proposed investment restriction will standardize the concentration restriction
for the Funds and is intended to provide flexibility for Funds to respond to
changes in the SEC staff's position on concentration of investments or to other
relevant legal, regulatory or market developments without the delay or expense
of a shareholder vote.
<PAGE>
Adoption of the proposed fundamental restriction will not materially affect the
way the Funds are currently managed or operated because the existing
concentration restrictions will remain in place as non-fundamental policies
unless and until a Fund's Board of Directors modifies such policies in the
future.
Proposed Concentration Restriction: The Fund will not make investments
that will result in the concentration (as that term may be defined in
the 1940 Act, any rule or order thereunder, or SEC staff interpretation
thereof) of its investments in the securities of issuers primarily
engaged in the same industry, provided that this restriction does not
limit the Fund from investing in obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities, or in
tax-exempt securities or certificates of deposit.
Each Fund's Board of Directors has also approved a related non-fundamental
policy, which will be adopted for each Fund if the new fundamental restriction
is approved and which provides that, in applying the concentration restriction:
(i) utility companies will be divided according to their services, for example,
gas, gas transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii) asset
backed securities will be classified according to the underlying assets securing
such securities. This non-fundamental policy is intended to keep the
concentration restriction from unnecessarily limiting a Fund's investments.
8
<PAGE>
Sub-Proposal 3B: To adopt a new fundamental investment restriction concerning
borrowing money and issuing senior securities.
Introduction to Sub-Proposal. The 1940 Act imposes certain limits on investment
companies with respect to borrowing money and issuing senior securities. A
"senior security" is defined as an obligation of a fund with respect to its
earnings or assets that takes precedence over the claims of the fund's
shareholders with respect to the same earnings or assets. The 1940 Act generally
prohibits funds from issuing senior securities, in order to limit their ability
to use leveraging. In general, a fund uses leveraging when it enters into
securities transactions with borrowed money or money to which it has only a
temporary entitlement.
The limitations on borrowing and issuing senior securities are generally
designed to protect shareholders and their investments by restricting a fund's
ability to subject its assets to any claims of creditors or senior security
holders who would be entitled to dividends or rights on liquidation of the fund
that take precedence over the rights of shareholders. Borrowing money and
issuing senior securities are related activities under the 1940 Act in that, if
a fund fails to adhere to the restrictions applicable to borrowing, the fund
will be considered to have issued an impermissible senior security. Under the
1940 Act, a fund's investment restrictions relating to borrowing and senior
securities must be fundamental.
The current investment restrictions concerning borrowing and senior securities
vary considerably from Fund to Fund and are set forth in Exhibit F. Shareholders
of each Fund are being asked to approve the following new standardized
fundamental restriction that covers both borrowing and senior securities and
which is designed to reflect all current regulatory requirements.
Proposed Borrowing and Senior Securities Restriction: The Fund may not
borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may
permit.
Senior Securities. SEC staff interpretations under the 1940 Act allow open-end
funds to engage in a number of types of transactions which might be considered
to raise "senior securities" or "leveraging" concerns, so long as the funds meet
certain collateral requirements set by the SEC staff. These collateral
requirements are designed to protect shareholders. For example, some of the
transactions that may raise senior security concerns include short sales,
certain options and futures transactions, reverse repurchase agreements and
securities transactions that obligate the fund to pay money at a future date
(these transactions may be referred to collectively as "Leveraging-Type
Transactions"). Funds that engage in Leveraging-Type Transactions must set aside
money or securities or engage in certain offsetting securities transactions, to
meet the SEC staff's collateralization requirements. Consistent with SEC staff
positions, the senior security restrictions for Funds formed by Delaware
Investments in recent years specifically permit the Funds to engage in
Leveraging -Type transactions. Most of the older Funds, however, have
fundamental restrictions that simply prohibit Funds from issuing senior
securities, except for notes to banks.
Borrowing. Under the 1940 Act, an open-end fund is permitted to borrow up to 5%
of its total assets for temporary purposes from any person so long as the
borrowing is privately arranged, and to also borrow from banks, provided that if
such bank borrowings exceed 5%, the fund must have assets totaling at least 300%
of the borrowing when the amount of the borrowing is added to the fund's other
assets. The effect of this latter provision is to allow an open-end fund to
borrow from banks amounts up to one-third (33 1/3%)) of its total assets
(including the amount borrowed). Open-end funds typically borrow money to meet
redemptions to avoid being forced to sell portfolio securities before they would
have otherwise been sold. This technique allows open-end funds greater
flexibility to buy and sell portfolio securities for investment or tax
considerations, rather than for cash flow considerations.
The borrowing restrictions for Funds formed by Delaware Investments in recent
years permit borrowing to the extent allowed under the 1940 Act, while other
Funds limit borrowings to 10% or 5% of assets, rather than the 33 1/3% allowed
by law. Further, a number of older Funds only permit borrowing "as a temporary
measure for extraordinary purposes" and others provide that the Fund may not
borrow for leveraging purposes or purchase securities while borrowings are
outstanding.
Effects of the Proposed Investment Restrictions. Since the proposed investment
restriction would provide greater flexibility for such Funds to engage in
borrowing and to engage in Leveraging-Type Transactions, the Funds may be
subject to additional costs and risks. For example, the costs of borrowing can
reduce a Fund's total return. Further, upon engaging in Leveraging-Type
Transactions, such Funds could experience increased risks due to the effects of
leveraging. The SEC staff's collateralization requirements are designed to
address such risks.
9
<PAGE>
Board Recommendation. The Board of Directors recommends that the shareholders of
each Fund approve the proposed fundamental investment restriction for each Fund.
The proposed investment restriction will establish a standardized borrowing and
senior securities restriction which is written to provide flexibility for Funds
to respond to changes in legal, regulatory or market developments. Adoption of
the new restriction, however, will not affect the way such Funds are currently
managed or operated because the existing restrictions will remain as
non-fundamental policies unless and until a Fund's Board of Directors modifies
these policies in the future.
Sub-Proposal 3C: To adopt a new fundamental investment restriction concerning
underwriting.
Each Fund is currently subject to a fundamental investment restriction
prohibiting it from acting as an underwriter of the securities of other issuers.
Under the 1940 Act, a Fund's policy or restriction relating to underwriting must
be fundamental. A person or company is generally considered an underwriter under
the federal securities laws if it participates in the public distribution of
securities of other issuers, usually by purchasing the securities from the
issuer and re-selling the securities to the public. Underwriters are subject to
stringent regulatory requirements and often are exposed to substantial
liability. Thus, virtually all mutual funds operate in a manner that allows them
to avoid acting as underwriters.
From time to time, a mutual fund may purchase a security for investment purposes
which it later sells or re-distributes to institutional investors or others
under circumstances where the Fund could possibly be considered to be an
underwriter under the technical definition of underwriter contained in the
securities laws. The current underwriting restriction for most Funds
specifically permits such re-sales. Management, consistent with SEC staff
interpretations, believes that the Funds legally would not be regulated as
underwriters in these circumstances.
The Board of Directors recommends that the shareholders of each Fund approve the
standardized fundamental investment restriction regarding underwriting set forth
below. The proposed restriction is substantially similar to the current
restriction for most Funds. The new restriction is proposed for each Fund
because it will help to achieve the goal of standardization of the language of
the investment restrictions among all Funds. Adoption of the proposed
restriction will not affect the way the Funds are currently managed or operated.
Proposed Underwriting Restriction: The Fund may not underwrite the
securities of other issuers, except that the Fund may engage in
transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to
be an underwriter under the Securities Act of 1933.
Sub-Proposal 3D: To adopt a new fundamental investment restriction concerning
investments in real estate.
Most of the Funds currently have a fundamental investment restriction
prohibiting the purchase or sale of real estate. The Real Estate Investment
Trust Portfolio of Pooled Trust and the REIT Series of Delaware Group Premium
Fund, Inc., however, may own real estate directly as a result of a default on
securities it owns. Most Funds' restrictions allow the Funds to invest in
companies that deal in real estate, or to invest in securities that are secured
by real estate. Under the 1940 Act, a Fund's policy or restrictions regarding
investment in real estate must be fundamental.
<PAGE>
The Board of Directors recommends that the shareholders of each Fund approve the
fundamental investment restriction concerning real estate set forth below. The
proposed investment restriction is designed to standardize the language of the
real estate restriction among the various Funds. The proposed investment
restriction will permit Funds to purchase securities whose payments of interest
or principal are secured by mortgages or other rights to real estate in the
event of default. The investment restriction will also enable the Funds to
invest in companies within the real estate industry, provided such investments
are consistent with the Fund's investment objectives and policies. Adoption of
the proposed restriction will not affect the way the Funds are managed or
operated because the current restrictions will remain as non-fundamental
policies unless and until a Fund's Board of Directors modifies them in the
future.
Proposed Real Estate Restriction: The Fund may not purchase or sell
real estate unless acquired as a result of ownership of securities or
other instruments and provided that this restriction does not prevent
the Fund from investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests
therein.
Sub-Proposal 3E: To adopt a new fundamental investment restriction concerning
investments in commodities.
Most of the Funds are currently subject to fundamental restrictions prohibiting
the purchase or sale of commodities or commodity contracts. Under the 1940 Act,
policies and restrictions regarding commodities must be fundamental. The most
common types of commodities are physical commodities such as wheat, cotton, rice
and corn. However, under federal law, futures contracts are considered to be
commodities and, therefore, financial futures contracts, such as futures
contracts related to currencies, stock indices or interest rates are considered
to be commodities. If a Fund buys a financial futures contract, it obtains the
right to receive (or, if the Fund sells the contract, the Fund is obligated to
pay) the cash difference between the contract price for an underlying asset or
index and the future market price, if the market price is higher. If the future
price is lower, the Fund is obligated to pay (or, if the Fund sold the contract,
the Fund is entitled to receive) the amount of the decrease. Funds often desire
to invest in financial futures contracts and options related to such contracts
for hedging or other investment reasons.
10
<PAGE>
The Board of Directors recommends that the shareholders of each Fund approve the
fundamental investment restriction concerning commodities set forth below for
each Fund. The proposed restriction would standardize the language of the
restriction among the various Funds and provide appropriate flexibility for the
Funds to invest in financial futures contracts and related options. As proposed,
the restriction is broad enough to permit investment in financial futures
instruments for either investment or hedging purposes, and, thus is broader than
many Funds' current restrictions. Using financial futures instruments can
involve substantial risks, and will be utilized only if the investment manager
determines that such investments are advisable and such practices are later
affirmatively authorized by the Board. Adoption of the restriction will not
affect the way the Funds are currently managed or operated because the existing
commodities restrictions will remain as non-fundamental policies unless and
until a Fund's Board of Directors modifies the policies in the future.
Proposed Commodities Restriction: The Fund may not purchase or sell
physical commodities, unless acquired as a result of ownership of
securities or other instruments and provided that this restriction does
not prevent the Fund from engaging in transactions involving futures
contracts and options thereon or investing in securities that are
secured by physical commodities.
Sub-Proposal 3F: To adopt a new fundamental investment restriction concerning
lending by the Fund.
Most of the Funds are currently subject to a fundamental investment restriction
limiting their ability to make loans. In order to ensure that the Funds may
invest in certain debt securities or repurchase agreements, which could be
characterized as the making of loans, most current fundamental restrictions
specifically permit such investments. In addition, a number of the Funds'
lending restrictions explicitly permit Funds to lend their portfolio securities
to broker-dealers or institutional investors. Securities lending is a practice
that has become common in the mutual fund industry and involves the temporary
loan of portfolio securities to parties who use the securities for the
settlement of securities transactions. The collateral delivered to a Fund in
connection with such a transaction is then invested to provide the Fund with
additional income.
The Board of Directors recommends that the shareholders of each Fund approve the
standardized fundamental investment restriction concerning lending described
below for each Fund. The proposed restriction prohibits loans by the Funds
except in the circumstances described above and, in some cases, would provide
more flexibility than the current lending restriction because of the authority
to engage in securities lending. Although securities lending involves certain
risks if the borrower fails to return the securities, management believes that
increased flexibility to engage in securities lending does not materially
increase the risk to which the Funds are currently subject. Also, the adoption
of the restriction will not affect the way the Funds are currently managed or
operated, because the existing lending restrictions will remain in place as
non-fundamental policies unless and until a Fund's Board of Directors modifies
such policies in the future.
Proposed Lending Restriction: The Fund may not make loans, provided
that this restriction does not prevent the Fund from purchasing debt
obligations, entering into repurchase agreements, loaning its assets to
broker/dealers or institutional investors and investing in loans,
including assignments and participation interests.
Sub-Proposal 3G: To redesignate all current fundamental investment restrictions
as non-fundamental.
Each Fund currently is subject to its own list of fundamental investment
restrictions. Exhibit F lists the current fundamental investment restrictions of
each Fund. Most of the Funds are also subject to certain non-fundamental
investment restrictions. As described in the previous Sub-Proposals, most Funds
have a fundamental investment restriction governing concentration, borrowing and
senior securities, underwriting, real estate, commodities and lending. Many of
the Funds, especially the older Funds, have additional fundamental investment
restrictions governing activities that are no longer required to be subject to
fundamental investment restrictions.
The Directors and Fund management recognize that many of the current fundamental
investment restrictions cover the same activities as the proposed, standardized
fundamental investment restrictions so that there will be overlapping
restrictions. However, rather than asking shareholders for approval to eliminate
the current restrictions at this time in favor of the new standardized
restrictions, the Board of Directors is recommending that all current
fundamental restrictions be redesignated as non-fundamental. After the current
investment restrictions are made non-fundamental, Fund management and the
Directors will analyze and evaluate each Fund's investment restrictions on an
individual basis while considering the particular investment objective and
policies of the Fund. Over time, the Funds' investment restrictions can be
standardized, if appropriate. With the exception of a Fund's classification as a
diversified fund for purposes of the 1940 Act, the proposed redesignation of the
current investment restrictions as non-fundamental will provide the Directors
with the authority and ability to make such changes without being required to
seek an additional shareholder vote.
11
<PAGE>
The conversion of investment restrictions to non-fundamental will provide
management of the Funds with the flexibility to respond to industry changes and
also to take advantage of unique pricing and distribution structures that have
developed over the past ten years. For example, eliminating certain fundamental
restrictions and converting them to non-fundamental would permit the Funds to
operate in a "master-feeder" structure at some point in the future should
management determine that such a structure were appropriate.
In a "master-feeder" structure, investors purchase shares of one or more feeder
funds which, in turn, invest all of their assets in corresponding master funds
which have identical investment objectives, policies and restrictions as the
feeder funds. The assets are collectively managed at the master fund level and
the different feeder funds can have varying distribution and expense structures.
The principal advantage of the master-feeder structure is the consolidation of
investment management of multiple identical investment pools into one investment
pool. The structure is also sufficiently flexible to permit offshore feeder
funds' assets to be managed at the master fund level.
By making the investment restrictions non-fundamental, management will have the
flexibility to ensure that the investment restrictions of a Fund will not limit
the Fund's ability to operate in a master-feeder structure. Before any existing
Fund would convert to a master-feeder structure, shareholders would be notified
of such a change and the prospectus of the particular Fund would be amended to
disclose the ability to operate in a master-feeder structure.
Proposal Four: To Approve a New Investment Management Agreement for the Fund
This Proposal applies to all Funds except the Diversified Value Fund (of
Delaware Group Equity Funds II, Inc.), which has already adopted an Investment
Management Agreement which conforms to the standardized form being proposed for
the other funds.
Proposal Overview
Shareholders of most of the Funds are being asked to approve a new Investment
Management Agreement with either Delaware Management Company (previously defined
as "DMC") or Delaware International Advisers Ltd. (previously defined as
"DIAL"), one of which currently manages each Fund. The New Investment Management
Agreements will reflect one or more of the following changes, all of which are
explained in further detail below.
o Management fee increase or management fee decrease, together with the
addition or restructuring of fee "breakpoints," which reduce fee rates
as Fund assets grow.
o Potential management fee decrease due to the introduction or
restructuring of breakpoints which would result in lower fees as Fund
assets grow.
o Elimination of a provision concerning shareholder approval of amendments.
o Elimination of a provision concerning a Fund trading desk.
o Addition of a provision concerning the use of a sub-adviser.
To determine which proposed changes apply to your Fund, please check the table
at the end of this Proposal.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
If shareholders approve the new Agreements, any modified management fees will
take effect on [(Delaware to advise:) ____________], or at a later date if the
Meeting is postponed or adjourned. If a new Agreement is not approved for a
particular Fund, the current Agreement will continue in effect.
The Board of Directors for each Fund has unanimously approved the proposed
Agreements and recommends that you vote FOR the new Investment Management
Agreement for your Fund.
12
<PAGE>
Proposed Changes in Management Fees
Purpose of Management Fees. Each Fund has hired either DMC or DIAL to serve as
its investment manager. Under the current Investment Management Agreements, the
portfolio management team for each Fund regularly decides which securities or
instruments to buy or sell for the Fund and the investment manager directly or
indirectly arranges for the placement and execution of orders for the purchase
or sale of such securities and instruments. The investment manager is also
responsible for each Fund's regulatory compliance and general administrative
operations and provides regular reports to the Board of Directors. The
management fees paid by a Fund are used by its investment manager to pay for the
personnel, equipment, office space and facilities that are needed to manage the
assets of the Fund and to administer its affairs.
Reasons for Proposed Changes in Management Fees. At the request of the Boards,
management recently undertook a complete review of the level and structure of
the management fees for each Fund within the Delaware Investments family. The
extensive review process was performed with the guidance of an outside
consultant to help ensure the accuracy of the results and conclusions. The
process involved the comparison of each Fund with its own universe of
"competing" funds, which were identified based on investment objective, asset
type and distribution channel. Once competing funds were identified, management
compared fee rates at various asset sizes to evaluate both fee rates and
breakpoint structures. Management's goal was to establish a consistent fee
structure for the various Delaware Investments Funds that would be competitive
with funds with a similar investment objective and size in the current
marketplace.
Management believes that a competitive management fee structure is needed to
ensure that Delaware Investments will continue to be able to deliver Funds with
competitive expense ratios and provide the increased investment opportunities
and service options that are now available to shareholders. Also, in recent
years, management has noticed increased competition for talented investment and
service professionals along with growing expenses in order to recruit and retain
such personnel. By establishing fee levels at competitive market rates,
management believes it can continue to attract talented professionals and
support high-quality, long-term investment management and shareholder services
to help maintain solid investment performance.
Description of Proposed Changes in Management Fees. As a result of its analysis,
Fund management has identified a number of different management fee pricing
levels to be established for the Funds in the Delaware Investments family, each
reflecting the dynamics and complexity of managing the assets of particular
categories of Funds based on asset type (such as equity or fixed-income),
sub-divisions within asset type (such as "insured" or "non-insured" fixed-income
securities) and geography (such as domestic or international). In addition, Fund
management identified a standardized schedule of breakpoints for Funds at each
of the management fee level categories, so that management fees will be reduced
if a Fund's assets grow to certain levels, in order to allow the Funds to
benefit from economies of scale. The meetings described in this Proxy Statement
are part of a series of shareholder meetings to be held at which the
standardized management fee pricing levels and schedules of breakpoints will be
put into place for many of the Delaware Investments Funds.
The chart included in Exhibit G shows the current and proposed management fee
rates for each Fund and the dollar amounts paid to the investment manager and
its affiliates during the last fiscal year. If a management fee increase is
proposed, the chart shows the dollar amount that the Fund would have paid to DMC
or DIAL if the proposed management fees had been in effect. The chart also shows
whether DMC or DIAL has waived any management fees and the effect that such
waivers would have had on the amounts paid under the proposed Agreement. In
addition, in order to demonstrate the effect that the proposed management fee
changes are expected to have on the overall expenses of the Funds, Exhibit H
contains a Fee Table for each Fund for which a management fee increase is
proposed, showing the actual expense levels under the current management fees
and the projected expense levels following implementation of the proposed
management fees.
<PAGE>
Board Consideration of Proposed Management Agreement Changes. In considering the
proposed management fee changes, the Directors reviewed extensive materials
concerning the methodology used by management to identify competitive peer
groups for comparison and to develop proposed management fee pricing and
breakpoint levels for the various categories of Funds. The Directors reviewed
separate reports for each Fund containing detailed comparative management fee
and expense information of each Fund and other funds in the relevant peer group,
as well as expense ratio comparisons with relevant mutual fund indices. The
Directors assessed how the management fee changes would position each Fund
within its peer group. The Directors also reviewed and considered performance
and ranking data for each Fund along with other comparative funds within the
investment objective category, as well as a performance comparison to a relevant
securities index for each Fund. In addition to the expense and performance
information, the Directors reviewed the investment manager's historical
profitability with respect to each Fund and the anticipated effects of any
management fee changes.
The Directors also considered the reasons presented by management with respect
to each proposed management fee change, including the anticipated impact of
management fee increases or decreases on shareholders of the Funds. In support
of fee increases for particular Funds, the Directors considered various factors
including the enhanced service options and investment opportunities that are
made available to shareholders, the growing expense associated with recruiting
and retaining qualified investment and service professionals in an increasingly
competitive industry and the importance of supporting quality, long-term service
by investment managers to help achieve solid investment performance.
13
<PAGE>
Following consideration of all of the information and factors discussed above,
the Directors for each Fund, including all of the independent Directors,
unanimously approved the proposed management fee changes.
Other Proposed Changes to Investment Management Agreements
In addition to modifications to the management fee structure, certain other
changes to the Investment Management Agreements are proposed, one or more of
which may apply to a particular Fund. The proposed changes are designed to
eliminate provisions that appear in certain older Funds' Agreements and to
standardize the form of Agreement among all Funds within the Delaware
Investments family. Please refer to the table below to determine whether the
changes are proposed for your Fund's Agreement.
Shareholder Approval of Amendments to Investment Management Agreements. Under
the 1940 Act, shareholder approval is normally required before any fund
investment management agreement can be materially amended. The purpose of this
requirement is to allow shareholders to make decisions concerning provisions of
an investment management agreement that could affect their investment.
Funds are, however, permitted to amend such agreements without shareholder
approval if the change involves a decrease in management fee rates or a
potential decrease due to the introduction or restructuring of breakpoints. In
such cases, the SEC staff believes that mutual funds should not be required to
experience the delay and costs of seeking shareholder approval, since
shareholders are generally assumed to be in favor of management fee decreases.
Certain current Investment Management Agreements require shareholder approval of
any amendment to the Agreement, regardless of whether shareholder approval would
be required under federal law. Management proposes to change the Agreements to
permit amendments without shareholder approval in appropriate circumstances like
those described above.
Elimination of Fund Trading Desk. In order for the Funds to buy and sell
securities, written instructions must be provided to brokers or dealers who
execute portfolio transactions. Although most investment management agreements
in the mutual fund industry provide that the investment manager is responsible
for selecting brokers or dealers to effect such transactions, the Agreements for
certain Funds provide that the Funds' employees are responsible for providing
instructions to brokers or dealers relating to the execution of portfolio
transactions. As a result, these Funds maintain a Fund trading desk staffed by
Fund personnel. Management currently believes that the investment manager or
sub-adviser should be responsible for placing portfolio transactions rather than
Fund employees and has concluded that the Agreements should be modified
accordingly.
Authority to Use Sub-Advisers. As the investment management industry has grown
increasingly specialized, it has become increasingly common for mutual funds
whose portfolios include investments in a particular specialized asset class to
utilize the services of sub-investment advisers ("sub-advisers") with particular
expertise in managing the asset class. Typically, such sub-advisory arrangements
are established with contracts between the investment manager and the
sub-adviser, with the investment manager retaining supervision over the
portfolio. For example, DMC utilizes sub-advisers in managing Funds that engage
in socially conscious investing and that invest primarily in foreign securities
or real estate investment trusts.
The Investment Management Agreement for certain Funds do not contain a provision
authorizing the use of a sub-adviser. Therefore, Fund management is proposing
that the new Agreements for these Funds contain the sub-adviser provision, in
order to standardize the Agreement with the other Delaware Investments Funds and
authorize the use of sub-advisers if the Board desires to approve the use of a
sub-adviser in the future. Any future use of a sub-adviser would also require
approval by shareholders.
Miscellaneous Changes. In addition to the changes discussed above, there are
certain miscellaneous changes designed to standardize the form of Agreement
among all Delaware Investments Funds. First, the Agreements for the Funds will
reflect non-material language and structural changes to conform to the standard
Delaware Investments model Agreement. Second, each new Agreement will contain a
provision permitting the names "Delaware," "Delaware Investments" or "Delaware
Group" to be used by other Funds, series or classes, whether already existing or
to be created in the future, which are, or may be, sponsored or advised by DMC
or DIAL. The first Delaware Investments Fund to use the word "Delaware" in its
name was the Delaware Balanced Fund (formerly Delaware Fund) series of Delaware
Group Equity Funds I, Inc., which was originally established in 1938. DMC
understands that the Delaware Balanced Fund may have a claim to the use of the
name "Delaware." Without reaching any conclusion as to such claim, each
Agreement will recognize the ability of multiple Funds to use the words
described above in their names.
14
<PAGE>
Summary of Changes to Investment Management Agreements
The following table lists all of the Funds for which new Investment Management
Agreements are proposed, as well as the types of changes that are proposed for
each Agreement.
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Approval for of Fund to Use
Company/Fund Name Management Fee Change Amendments Trading Desk Sub-Adviser
----------------- --------------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Delaware Group Adviser Funds, Inc.
New Pacific Fund 0.05% increase/add breakpoints
Overseas Equity Fund 0.15% decrease/add breakpoints
U.S. Growth Fund 0.05% decrease/add breakpoints
Delaware Group Cash Reserve, Inc. 0.075% decrease/change breakpoints(1,2) X X
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly
Delaware Fund) 0.125% increase/change breakpoints(1,3) X X X
Devon Fund 0.05% increase/change breakpoints X X X
Delaware Group Equity Funds II, Inc.
Blue Chip Fund Potential decrease due to change in
breakpoints
Decatur Income Fund 0.075% increase/change breakpoints(1,4) X X X
Decatur Total Return Fund 0.05% increase/change breakpoints(1,5) X X X
Social Awareness Fund Potential decrease due to change in
breakpoints
Delaware Group Equity Funds III, Inc.
Trend Fund 0.05% decrease/add breakpoints(1,6) X X X
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund Potential decrease due to change in
breakpoints X X
DelCap Fund 0.05% decrease/add breakpoints(1,6) X X X
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund Potential decrease due to addition of
breakpoints(1) X X X
Retirement Income Fund Potential decrease due to change in
breakpoints X X
Delaware Group Foundation Funds
Balanced Portfolio None X
Growth Portfolio None X
Income Portfolio None X
Delaware Group Global & International
Funds, Inc.
Emerging Markets Fund Potential decrease due to addition of
breakpoints X
Global Equity Fund (formerly
Global Assets Fund) 0.10% increase/add breakpoints(1) X X
</TABLE>
<PAGE>
- ---------------
(1) The current management agreement provides that the fees paid by the Fund
will be reduced by the amount of the independent director fees. The proposed
agreement does not provide for such a reduction. This change increases the
amount paid by the fund, but has virtually no impact on reportable expenses.
(2) Under the proposed management agreement, the initial management fee rate for
the Fund is 0.05% lower than the initial management fee rate under the
current agreement; however, the breakpoints have changed so that the
applicable fee rate at the current asset size will result in an actual fee
decrease of 0.075%.
(3) Under the proposed management agreement, the initial management fee rate for
the Fund is 0.05% higher than the initial management fee rate under the
current agreement; however, the breakpoints have changed so that the
applicable management fee rate at the current asset size will result in an
actual fee increase of 0.125%, with the exception of independent
directors'/trustees' fees (see footnote 1).
(4) Under the proposed management agreement, the initial management fee rate for
the fund is 0.05% higher than the initial management fee rate under the
current agreement; however, the breakpoints have changed so that the
applicable management fee rate at the current asset size will result in an
actual fee increase of 0.075%, with the exception of independent
directors'/trustees' fees (see footnote 1).
(5) Under the proposed management agreement, the initial management fee rate for
the fund is 0.05% higher than the initial management fee rate under the
current agreement; however, at the Fund's current asset level, the
applicable management fee rate under the proposed agreement is equal to the
applicable management fee rate under the current agreement, with the
exception of independent directors'/trustees' fees (see footnote 1).
(6) The current management agreement provides that the Fund will pay a flat
management fee while the proposed agreement introduces a breakpoint
structure. The initial management fee rate under the proposed agreement is
equal to the management fee rate under the current agreement; however, at
the Fund's current asset level, the applicable management fee rate is 0.05%
lower than the rate under the current agreement, with the exception of
independent directors'/trustees' fees (see footnote 1).
15
<PAGE>
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Approval for of Fund to Use
Company/Fund Name Management Fee Change Amendments Trading Desk Sub-Adviser
----------------- --------------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Global Bond Fund Potential decrease due to addition of
breakpoints(1) X X
Global Opportunities Fund
(formerly Global Equity Fund) 0.05% increase/add breakpoints
International Equity Fund 0.10% increase/add breakpoints(1) X X
International Small Cap Fund Potential decrease due to addition of
breakpoints X
Delaware Group Government Fund, Inc.
U.S. Government Fund 0.05% decrease/add breakpoints(1) X X X
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Delchester Fund 0.05% increase/change breakpoints(1,2) X X X
Extended Duration Bond Fund
High-Yield Opportunities Fund Potential decrease due to change in
breakpoints X X
Strategic Income Fund Potential decrease due to change in
breakpoints X
Delaware Group Limited-Term
Government Funds, Inc.
Limited-Term Government Fund Potential decrease due to addition of
breakpoints(1) X X
Delaware Group Premium Fund, Inc.
Capital Reserves Series 0.10% decrease/add breakpoints(1) X X X
Cash Reserve Series 0.05% decrease/add breakpoints(1) X X X
Convertible Securities Series Potential decrease due to addition of
breakpoints X
Decatur Total Return Series 0.05% increase/add breakpoints(1) X X X
Delaware Series 0.05% increase/add breakpoints(1) X X X
DelCap Series Potential decrease due to addition of
breakpoints(1) X X X
Delchester Series 0.05% increase/add breakpoints(1) X X X
Devon Series 0.05% increase/add breakpoints X
Emerging Markets Series Potential decrease due to addition of
breakpoints X
Global Bond Series Potential decrease due to addition of
breakpoints X
International Equity Series 0.10% increase/add breakpoints(1) X X
REIT Series
Small Cap Value Series Potential decrease due to addition of
breakpoints X X X
Social Awareness Series Potential decrease due to addition of
breakpoints X
Strategic Income Series Potential decrease due to addition of
breakpoints X
Trend Series Potential decrease due to addition of
breakpoints X X X
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Delaware Group State Tax-Free Income
Trust
Tax-Free New Jersey Fund Potential decrease due to change in
breakpoints X X
Tax-Free Ohio Fund Potential decrease due to change in
breakpoints X X
Tax-Free Pennsylvania Fund 0.05% decrease/change breakpoints(1) X X X
Delaware Group Tax-Free Money Fund,
Inc. 0.05% decrease/add breakpoints(1) X X X
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund 0.10% decrease/add breakpoints(1) X X
</TABLE>
- ---------------
(1) The current management agreement provides that the fees paid by the Fund
will be reduced by the amount of the independent director fees. The proposed
agreement does not provide for such a reduction. This change increases the
amount paid by the Fund, but has virtually no impact on reportable expenses.
(2) Under the proposed management agreement, the initial management fee rate for
the Fund is 0.05% higher than the initial management fee rate under the
current agreement; however, at the Fund's current asset level, the
applicable management fee rate under the proposed agreement is equal to the
applicable management fee rate under the current agreement, with the
exception of independent directors'/trustees' fees (see footnote 1).
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Tax-Free USA Fund 0.075% decrease/change breakpoints(1,2) X X X
Tax-Free USA Intermediate Fund Potential decrease due to addition of
breakpoints(1) X X X
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Potential decrease due to addition of
Portfolio breakpoints X X
</TABLE>
- ---------------
(1) The current management agreement provides that the fees paid by the Fund
will be reduced by the amount of the independent director fees. The proposed
agreement does not provide for such a reduction. This change increases the
amount paid by the Fund, but has virtually no impact on reportable expenses.
(2) Under the proposed management agreement, the initial management fee rate for
the Fund is 0.05% lower than the initial management fee rate under the
current agreement; however, the breakpoints have changed so that the
applicable fee rate at the current asset size will result in an actual
decrease of 0.075%, with the exception of independent directors'/trustees'
fees (see footnote 1).
17
<PAGE>
Information About the Investment Managers
DMC serves as investment manager for many of the Funds that are participating in
this meeting. DMC is registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act") and, together with its predecessors,
has been managing funds within the Delaware Investments family since 1938. DMC
is located at One Commerce Square, Philadelphia, Pennsylvania 19103.
DIAL serves as investment manager for some of the Funds that are participating
in this meeting and as sub-adviser for others. DIAL is a United Kingdom
affiliate of DMC, is an investment adviser registered in the United States under
the Advisers Act and is a member of the Investment Management Regulatory
Organisation (IMRO) in the United Kingdom. Since 1990, DIAL has managed the
overseas assets of the Funds within the Delaware Investments family. DIAL is
located at Third Floor, 80 Cheapside, London, England EC2V 6EE.
On November 1, 1998, DMC was managing approximately $15.8 billion in assets in
various open-end and closed-end mutual fund accounts. DIAL was managing
approximately $10.5 billion in institutional or separately managed accounts
(approximately $8.5 billion) and mutual fund accounts (approximately $2 billion)
on the same date. Other affiliates of DMC and DIAL were managing additional
institutional and separate account assets in the amount of $17.3 billion on that
date.
Both DMC and DIAL are indirect, wholly owned subsidiaries of Lincoln National
Corporation, also known as Lincoln Financial Group. Lincoln National
Corporation, with headquarters in Fort Wayne, Indiana, is a diversified
organization involved in many aspects of the financial services industry,
including insurance and investment management.
DMC and DIAL also provide investment management or sub-advisory services to
other Funds within the Delaware Investments family which have investment
objectives that are similar to those of the Funds to which this Proxy Statement
applies. For the names of such other Funds, together with the current (and
proposed, in some cases) management or sub-advisory fee rates for such Funds,
see Exhibit I.
DMC is a series of Delaware Management Business Trust. The Trustees who operate
the business and their principal occupations (which are positions with DMC) are
as follows: Wayne A. Stork, Chairman, President, Chief Executive Officer and
Chief Investment Officer; Richard G. Unruh, Jr., Executive Vice President; David
K. Downes, Executive Vice President, Chief Operating Officer and Chief Financial
Officer; and George M. Chamberlain, Jr., Senior Vice President and Secretary;
and John B. Fields, Vice President/Senior Portfolio Manager.
Wayne A. Stork is the Chairman, Chief Executive Officer and a Director of DIAL.
David G. Tilles is the Managing Director, Chief Investment Officer and a
Director of DIAL. In addition to Mr. Stork and Mr. Tilles, the present directors
of DIAL and their principal occupations (unless noted in the paragraph above
relating to DMC) are as follows: Jeffrey J. Nick, President of Delaware
Management Holdings, Inc. and President and Chief Executive Officer of each of
the Companies comprising the Delaware Investments family of funds; G. Roger H.
Kitson, Vice Chairman of DIAL; Richard G. Unruh; David K. Downes; Richard J.
Flannery, Executive Vice President and General Counsel of DMC; George M.
Chamberlain, Jr.; John C. E. Campbell, Executive Vice President of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Hamish O.
Parker, Director of DIAL; Timothy W. Sanderson, Chief Investment Officer,
Equities of DIAL; Clive A. Gillmore, Regional Research Director of DIAL; Ian G.
Sims, Deputy Managing Director/Chief Investment Officer/Global Fixed Income of
DIAL; George E. Deming, Vice President/Senior Portfolio Manager of Delaware
Investment Advisers (a series of Delaware Management Business Trust); John
Emberson, Company Secretary and Finance Director of DIAL; Nigel G. May, Regional
Research Director of DIAL; Elizabeth A. Desmond, Regional Research Director of
DIAL.
Other Information Relevant to Approval of
Investment Management Agreements
The form of proposed Investment Management Agreement for the Funds is attached
as Exhibit J. Each Current and Proposed Agreement has an initial term of two
years and provides that it will thereafter continue in effect from year to year
only if such continuation is specifically approved at least annually with
respect to each Fund by (i) a vote of a majority of the Board of Directors, or
(ii) a vote of a majority of the outstanding voting securities of the Fund, and
(iii) in either case, separately by a majority of the Directors who are not
"interested persons" (as defined in the 1940 Act). Each current and proposed
Agreement may be terminated without penalty by (i) the Fund, by a vote of a
majority of the Board of Directors, or (ii) by a vote of a majority of the
outstanding voting securities of a Fund, or (iii) by DMC or DIAL, as relevant,
at any time on 60 days' written notice. Each Agreement will also terminate
automatically upon its "assignment," as that term is defined in the 1940 Act.
18
<PAGE>
Under each of the current and proposed Agreements, best efforts are used to
obtain the best available price and most favorable execution for portfolio
transactions. Orders may be placed with brokers or dealers who provide brokerage
and research services to the investment manager or their advisory clients. To
the extent consistent with the requirements of the rules of the SEC and the
National Association of Securities Dealers, Inc., these orders may be placed
with brokers who sell shares of the Funds. The services provided may include
advice, either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or industries;
providing information on economic factors and trends; assisting in determining
portfolio strategy; providing computer software and hardware used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. Such services are used by the investment manager in connection with
their investment decision-making process with respect to one or more Funds or
accounts that they manage, and need not be used exclusively with respect to the
Fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In some
instances, services provided constitute in some part brokerage and research
services used in connection with the investment decision-making process and
constitute in some part services used in connection with administrative or other
functions not related to the investment decision-making process. In such cases,
the investment manager will make a good faith allocation of brokerage and
research services and will pay out of their own resources for services used by
them in connection with administrative or other functions not related to the
investment decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the investment manager or sub-adviser shall
not be liable to the Fund or any shareholder of the Fund for any action or
omission in the course of, or in connection with, rendering services under a
current or proposed Agreement, or for any losses that may be sustained in the
purchase, holding or sale of any security or otherwise.
Other Agreements with the Funds
Each Company is currently party to a Distribution Agreement relating to the
Funds with Delaware Distributors, L.P. (the "Distributor"), an affiliate of DMC
and DIAL. The Distributor's principal address is 1818 Market Street,
Philadelphia, PA 19103. Pursuant to the Distribution Agreement, the Distributor
provides underwriting, distribution and marketing services to the Funds. The
Agreement includes references to distribution plans adopted pursuant to Rule
12b-1 under the 1940 Act. The Companies are also parties to a Shareholders
Services Agreement and a Fund Accounting Agreement with Delaware Service
Company, Inc. ("DSC"), an affiliate of DMC and DIAL, pursuant to which DSC
provides fund accounting, shareholder servicing, dividend disbursing and
transfer agency services. Exhibit G to this Proxy Statement lists the amount of
any payments made to the Distributor pursuant to Rule 12b-1 Plans and to DSC
pursuant to service agreements, for each Fund's most recently completed fiscal
year.
Proposal Five: To Approve a New Sub-Advisory Agreement for the Fund
This Proposal only applies to the following Funds:
<TABLE>
<CAPTION>
<S> <C>
Delaware Group Adviser Funds, Inc. Delaware Group Income Funds, Inc.
New Pacific Fund Strategic Income Fund
Overseas Equity Fund Delaware Group Premium Fund, Inc.
U.S. Growth Fund REIT Series
Delaware Group Equity Funds II, Inc. Social Awareness Series
Blue Chip Fund Strategic Income Series
Social Awareness Fund Delaware Pooled Trust, Inc.
Delaware Group Global & International Fund, Inc. The Real Estate Investment Trust Portfolio
Global Equity Fund (formerly Global Assets Fund)
Global Opportunities Fund (formerly Global Equity Fund)
</TABLE>
Shareholders of each of the Funds listed above are being asked to approve a new
Sub-Advisory Agreement with their Fund's existing sub-adviser. Exhibit G to this
Proxy Statement lists the current sub-adviser for each Fund, along with the
sub-advisory fee rates and other information about the current sub-advisory
agreements. New Agreements are required at this time because the existing
Agreements will terminate if new Investment Management Agreements are approved
as described in Proposal Four.
19
<PAGE>
The proposed Sub-Advisory Agreements do not contain any changes in sub-advisory
fee rates and are largely identical to the current Sub-Advisory Agreements.
There are a number of minor changes in language in the form of the Agreement,
which are designed to result in a single, standardized Agreement among all
Delaware Investments Funds that utilize sub-advisers.
One new provision is proposed for Funds which have Sub-Advisory Agreements that
provide for the calculation of the sub-advisory fees based on a percentage of
assets of the Fund. The new provision would require the sub-adviser to share in
any fee waiver or expense limitation arrangement entered into by the Fund's
investment manager. This provision does not affect the amounts to be paid by the
Fund, but the sub-adviser may receive less, depending on management fee waivers
or expense limitations.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
The proposed Sub-Advisory Agreement for any Fund will not take effect until
shareholders approve a new Investment Management Agreement for the Fund.
[(Delaware to confirm:)] If a proposed Sub-Advisory Agreement is not approved
for a Fund, the investment manager will take responsibility for all aspects of
investment management until such time as a new sub-advisory arrangement is
approved by the Board and by shareholders.
The Board of Directors for each Fund has unanimously approved the proposed
Sub-Advisory Agreements and recommends that you vote FOR the new Sub-Advisory
Agreement for your Fund.
Information About the Sub-Advisers
DMC and DIAL. Both DMC and DIAL serve in a sub-adviser capacity for certain
Funds within the Delaware Investments family. The background of each firm, along
with the professionals responsible for operating each business, are described
above in connection with the proposed new Investment Management Agreements.
Please refer to the prior Proposal for that information.
AIB Govett, Inc. AIB Govett is the sub-adviser for the New Pacific Fund of
Delaware Group Adviser Funds, Inc. The firm is registered as an investment
adviser under the Advisers Act and, together with its predecessor firm, has been
providing advisory services to the New Pacific Fund since May 4, 1996. AIB
Govett is located at 250 Montgomery Street, Suite 1200, San Francisco, CA 94104.
On November 30, 1998, AIB Govett was managing approximately $13.9 billion in
assets for various investment trusts, investment companies and pension funds.
The names and fee rates for other similar funds managed or sub-advised by AIB
Govett are set forth in Exhibit I.
AIB Govett is a wholly-owned subsidiary of AIB Asset Management Holdings
Limited, which is itself a majority owned subsidiary of Allied Irish Banks plc.
Keith Mitchell is the President and Managing Director of AIB Govett. John
Murray, Kevin Pakenham, Brian Lee, Eileen Fitzpatrick and Maurice Harte each
serve as Joint Chief Investment Officers and Directors of AIB Govett and Colin
Kreidwolf is the firm's Chief Financial/Operating Officer.
Lynch & Mayer, Inc. ("L&M"). L&M serves as sub-adviser for the U.S. Growth Fund
of Delaware Group Adviser Funds, Inc. L&M is registered as an investment adviser
under the Advisers Act and has served as the sub-adviser to the U.S. Growth Fund
since October 27, 1997. L&M is located at 520 Madison Avenue, New York, New York
10022.
On November 30, 1998, L&M was managing approximately $4.2 billion in assets for
various pension funds, foundations, endowments, trusts, high net worth
individuals and investment companies.
L&M is an indirect, wholly-owned subsidiary of Lincoln National Corporation and
an affiliate of DMC and DIAL. Edward J. Petner serves as L&M's Chief Executive
Officer and also as a Portfolio Manager and member of the Board of Directors. In
addition to Mr. Petner, the present directors of L&M and their principal
occupations are as follows: Robert R. Coby, Chief Operating Officer; David K.
Downes, Chief Operating Officer; Dennis P. Lynch, Portfolio Manager; and Jeffrey
J. Nick, Chief Executive Officer. David K. Downes also serves as the Executive
Vice President, Chief Operating Officer and Chief Financial Officer of the U.S.
Growth Fund. Jeffrey J. Nick serves as President, Chief Executive Officer and
Director of the U.S. Growth Fund.
Vantage Global Advisors, Inc. ("VGA"). VGA serves as sub-adviser for the Blue
Chip Fund of Delaware Group Equity Funds II, Inc., the Strategic Income Fund of
Delaware Group Income Funds, Inc. and the Strategic Income Series of Delaware
Group Premium Fund, Inc. The firm is registered as an investment adviser under
the Advisers Act. VGA is located at 630 Fifth Avenue, New York, New York 10111.
20
<PAGE>
On November 30, 1998, VGA was managing $8.8 billion in assets for pension plans,
endowments, insurance and commingled products and investment companies. VGA is
an indirect, wholly-owned subsidiary of Lincoln National Corporation and an
affiliate of DMC and DIAL. T. Scott Wittman is the President, Chief Executive
Officer and a Director of VGA. In addition to T. Scott Wittman, the present
directors of VGA and their principal occupations are as follows: Jeffrey Nick,
President and Chief Executive Officer of Delaware Management Holdings; Bruce
Barton, President and Chief Executive Officer of Delaware Distributors, LLP; Tom
McMeekin, Chief Investment Officer, Lincoln Investment Management; and Dennis
Blume, Senior Vice President, Lincoln Investment Management. In addition to
serving on the Board of Directors for VGA, Jeffrey Nick is also the President,
Chief Executive Officer and Director of each of the Blue Chip Fund, the
Strategic Income Fund and the Strategic Income Series.
Lincoln Investment Management, Inc.("LIM"). LIM serves as sub-adviser for the
Real Estate Investment Trust Portfolio of Delaware Pooled Trust, Inc and the
REIT Series of Delaware Group Premium Fund, Inc. LIM is registered as an
investment adviser under the Advisers Act and is located at 200 E. Berry Street,
Fort Wayne, Indiana 46802.
LIM's primary activity is institutional fixed-income investment management and
consulting. Such activity includes fixed-income portfolios, private placements,
real estate debt and equity and asset/liability management. On November 30,
1998, LIM was managing approximately $40,966,661,373 in assets.
LIM is a wholly owned subsidiary of Lincoln National Corporation and an
affiliate of DMC and DIAL. H. Thomas McMeekin serves as President, Chief
Investment Officer and a Board Member of LIM. In addition to Mr. McMeekin, the
present directors of LIM and their principal occupations are as follows: J.
Michael Keeter, Vice President and General Counsel; and Steven R. Brody, Vice
President.
Other Information Relevant to Approval of
Sub-Advisory Agreements
The form of proposed Sub-Advisory Agreement for the Funds is attached as Exhibit
K. Each Current and Proposed Agreement has an initial term of two years and
provides that it will thereafter continue in effect from year to year only if
such continuation is specifically approved at least annually with respect to
each Fund by (i) a vote of a majority of the Board of Directors, or (ii) a vote
of a majority of the outstanding voting securities of the Fund, and (iii) in
either case, separately by a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act). Each current and proposed Agreement may
be terminated without penalty by (i) the Fund, by a vote of a majority of the
Board of Directors, or (ii) by a vote of a majority of the outstanding voting
securities of a Fund, or (iii) by the sub-adviser at any time on 60 days'
written notice. Each Agreement will also terminate automatically upon its
"assignment," as that term is defined in the 1940 Act.
Under each of the current and proposed sub-advisory agreements, best efforts are
used to obtain the best available price and most favorable execution for
portfolio transactions. Orders may be placed with brokers or dealers who provide
brokerage and research services to the investment manager, sub-adviser or their
advisory clients. To the extent consistent with the requirements of the rules of
the SEC and the National Association of Securities Dealers, Inc., these orders
may be placed with brokers who sell shares of the Funds. The services provided
may include advice, either directly or through publications or writings, as to
the value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software and hardware used in
security analyses; and providing portfolio performance evaluation and technical
market analyses. Such services are used by the investment manager or sub-adviser
in connection with their investment decision-making process with respect to one
or more Funds or accounts that they manage, and need not be used exclusively
with respect to the Fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In some
instances, services provided constitute in some part brokerage and research
services used in connection with the investment decision-making process and
constitute in some part services used in connection with administrative or other
functions not related to the investment decision-making process. In such cases,
the sub-adviser will make a good faith allocation of brokerage and research
services and will pay out of their own resources for services used by them in
connection with administrative or other functions not related to the investment
decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the sub-adviser shall not be liable to the
Fund or any shareholder of the Fund
21
<PAGE>
for any action or omission in the course of, or in connection with, rendering
services under a current or proposed Agreement, or for any losses that may be
sustained in the purchase, holding or sale of any security or otherwise.
Proposal Six: To Ratify the Selection of Ernst & Young LLP as Independent
Auditors for the Company
This Proposal applies to all Companies.
The Boards of Directors have selected Ernst & Young LLP as independent auditors
of each Company for the current fiscal year and shareholders are asked to ratify
this selection. Ernst & Young LLP's principal address is Two Commerce Square,
Philadelphia, PA 19103. A representative from Ernst & Young LLP is expected to
be present at the meeting. The representative of Ernst & Young LLP will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions. Each Companies' Audit Committee
meets periodically with the representatives of Ernst & Young LLP to receive
reports from Ernst & Young LLP and plan for the Companies' audits.
Required Vote. A simple majority (more than 50%) of the outstanding voting
securities of each Company, regardless of individual Funds within a Company, is
required to ratify the selection of Ernst & Young LLP as independent auditor for
each such Company, except that the shareholders of Delaware Group Adviser Funds,
Inc., Delaware Group Foundation Funds and Delaware Group State Tax-Free Income
Trust may ratify the auditor selection with a majority of "votes cast," which
could be less than 50% of a Company's outstanding voting securities.
The Board of Directors of each Company unanimously recommends that you ratify
the selection of Ernst & Young LLP as independent auditors for such Company for
the current fiscal year.
Proposal Seven: To Approve the Restructuring of the Company from its Current
Form of Organization into a Delaware Business Trust
This Proposal applies to all Companies except for Delaware Group Foundation
Funds, and its Balanced, Growth and Income Portfolios.
The Boards of Directors and Trustees of each Company (except Delaware Group
Foundation Funds) (the "Current Boards") have approved separate Agreements and
Plans of Reorganization (a "Plan" or the "Plans") substantially in the form
attached to this Proxy Statement as Exhibit L. Each Plan provides for a
reorganization (a "Reorganization") pursuant to which each Company will change
its state and form of organization from a Maryland corporation, or a
Pennsylvania common law trust in the case of Delaware Group State Tax-Free
Income Trust, into a Delaware business trust. Each Company may be referred to in
this Proposal as a "Current Fund" or the "Current Funds." For those Companies
that currently issue series of shares, the Series are referred to in this
Proposal as the "Current Series."
For each Current Fund, the Reorganization involves the continuation of the
Current Fund in the form of a newly created Delaware business trust. The newly
created Delaware business trusts are referred to in this Proposal as the "New
Funds." Separate classes and series of shares of each Delaware business trust
that correspond to the classes and series of each Current Fund will carry on the
business of the Current Fund. Delaware Group Cash Reserve, Inc. ("Cash Reserve")
and Delaware Group Tax-Free Money Fund, Inc. ("Tax-Free Money Fund") do not
currently issue series of shares. These Companies will be reorganized as a
series of a corresponding Delaware business trust. The series of shares of the
New Funds that correspond to the Current Series of shares of the Current Funds
and Cash Reserve and Tax-Free Money Fund are referred to in this Proposal as the
"New Series." Each New Fund and New Series will have substantially the same name
as its corresponding Current Fund and Current Series.
Under the Reorganization, the investment objectives of each New Series will be
the same as those of its corresponding Current Fund and Current Series, as
applicable; the portfolio securities of each Current Fund and Current Series
will be transferred to its corresponding New Series; and shareholders will own
interests in each New Fund that are equivalent to their interests in the Current
Fund on the closing date of the Reorganization. The directors or trustees, and
the officers and employees of each Current Fund on the effective date of the
Reorganization will become the trustees, officers and employees, respectively,
of the corresponding New Fund and will operate the New Fund in the same manner
as they previously operated the Current Fund. The investment manager responsible
for the investment management of each New Series will be the same as the
investment manager to the Current Fund and Current Series, as applicable. For
those Current Series with sub-advisory arrangements, the sub-adviser for each
New Series will be the same as the sub-adviser to the Current Series. In
essence, a shareholder's investment in a Current
22
<PAGE>
Fund will not change for all practical purposes. The investment manager of each
Current Fund and Current Series is referred to as the "Current Adviser" and, for
those Current Series with sub-advisory arrangements, the sub-adviser to each
Current Series is referred to as the "Current Sub-Adviser."
Background and Reasons for the Reorganizations. The Current Boards unanimously
recommend conversion of the Current Funds into Delaware business trusts because
they have determined that the Delaware business trust form of organization is an
inherently flexible form of organization and provides certain administrative
advantages to the Companies. Delaware trust law contains provisions specifically
designed for mutual funds. Those provisions take into account the unique
structure and operation of mutual funds, and allow mutual funds to simplify
their operations by reducing administrative burdens so that, in general, they
may operate more efficiently. For example, mutual funds organized as Delaware
business trusts are not required to hold annual shareholders' meetings and may
create new series or classes of shares without obtaining the approval of
shareholders at a meeting.
Under Delaware business trust law, the New Funds will have the flexibility to
respond to future business contingencies. For example, a New Fund will have the
power to consolidate with another entity, to cause each New Series to become a
separate trust and to change the New Fund's domicile all without a shareholder
vote, unless such vote is required under the 1940 Act or other applicable law.
This flexibility could help to assure that the New Fund operates under the most
advanced form of organization and could help reduce the expense and frequency of
future shareholders' meetings for non-investment related issues.
The Reorganizations also will increase uniformity among the mutual funds within
the Delaware Investments family. Increased uniformity among the mutual funds,
many of which share common directors, trustees, officers and service providers,
is expected to reduce the costs and resources devoted to compliance with varying
state corporate or trust laws and also reduce administrative burdens.
Another advantage that is afforded to a mutual fund organized as a Delaware
business trust is that there is a well established body of corporate precedent
that may be relevant in deciding issues pertaining to the trust.
For these reasons, the Current Boards believe it is in the interests of the
shareholders of the Current Funds to reorganize the Current Funds into Delaware
business trusts. At present, it appears that the most advantageous time to
consummate the Reorganizations is on or before ________________, 1999. This
date, however, may be modified by the Current Fund and the New Fund. The Current
Boards reserve the right to abandon the Reorganizations if they determine that
such action is in the best interests of the Current Funds.
The following discussion applies to the Reorganization of each Current Fund,
except where otherwise specifically noted.
Consequences and Procedures of the Reorganization. Upon consummation of the
Reorganization, the New Fund will continue the Current Fund's business with the
same investment objectives, policies and restrictions that are in effect for the
Current Fund and Current Series, as applicable, at the time of the consummation
of the Reorganization (see the discussion under "Investment Policies and
Restrictions" below). The net asset value of the shares of each class of each
Current Series, as well as the net asset value of the shares of each class of
Cash Reserve and Tax-Free Money Fund, will not be affected by the
Reorganization. The New Fund has been organized specifically for the purpose of
effecting the Reorganization. Immediately prior to the effective date of the
Reorganization (as defined in the Plan), each New Fund will have outstanding
only one share of each class of beneficial interest of each New Series
corresponding to the shares of each class of each Current Series. Immediately
prior to the effective date of the Reorganization, the New Series corresponding
to Cash Reserve and Tax-Free Money Fund will have outstanding only one share of
each class of beneficial interest corresponding to the shares of each class of
Cash Reserve and Tax-Free Money Fund, respectively. The Current Fund will be the
sole holder of the shares of beneficial interest. The Plan contemplates that the
directors and trustees serving at the time of the Reorganization will serve as
the trustees of the New Fund, with comparable responsibilities. The officers of
the Current Fund will become officers of the New Fund with comparable
responsibilities. The Reorganization will not result in the recognition of
income, gain or loss for Federal income tax purposes to the Current Fund, the
New Fund or the holders of shares of the Current Fund. (See "Federal Income Tax
Consequences of the Plan.")
To accomplish the Reorganization, the Plan provides that the Current Fund will
transfer all of its assets or the assets of the Current Series, as applicable,
subject to its related liabilities, to the corresponding New Fund and to each of
its corresponding New Series. The New Fund will establish an account for each
shareholder and will credit to that account the exact number of full and
fractional shares of the class of the New Series that such shareholder
previously held in the same class of the corresponding Current Series or Current
Fund, as applicable, on the effective date of the Reorganization. Each
shareholder will retain the right to any declared but undistributed dividends or
other distributions payable on the shares of the Current Fund and Current
Series, as applicable, that he or she owned. On the date of the Reorganization,
the net asset value per share of each class of shares of each Current Series,
and the net asset value per share of each class of shares of Cash Reserve and
Tax-Free Money Fund, will be the
23
<PAGE>
same as the net asset value per share of the corresponding class of shares of
the New Series. The New Fund will assume all liabilities and obligations of its
corresponding Current Fund. As soon as practicable after the effective date of
the Reorganization, the Current Fund will be dissolved and its existence
terminated.
On the effective date of the Reorganization, each certificate representing
shares of a class of a Current Fund or Current Series, as applicable, will
represent an identical number of shares of the same class of the corresponding
New Series. Shareholders will have the right to exchange their certificates of
the Current Fund for certificates of the New Fund. A shareholder, however, is
not required to make this exchange of certificates.
The Plan provides that the effective date of the Reorganization will be (i) the
next business day after the later of the receipt of all necessary regulatory
approvals and the final adjournment of the meeting of shareholders of the
Current Fund at which the Plan will be considered, or (ii) such later date as
the Current Fund and the New Fund may mutually agree. It is expected that this
will be on ________________, 1999, or such earlier time as the Current Board
deems advisable and in the best interests of the Current Fund and its
shareholders. The Plan may be terminated and the Reorganization abandoned at any
time prior to the effective date of the Reorganization by the Current Board. If
the Reorganization is not so approved or if the Current Board determines to
terminate or abandon the Reorganization, the Current Fund will continue to
operate as a Maryland corporation or a Pennsylvania common law trust, as
applicable.
Capitalization and Structure. Each New Fund was established pursuant to a
substantially identical Agreement and Declaration of Trust ("Trust Document")
under the laws of the State of Delaware. Each New Fund is organized as a series
company. The Trust Document permits the Trustees to issue an unlimited number of
shares of beneficial interest, with no par value. The Board of Trustees of the
New Fund has the power to divide such shares into an unlimited number of series
or classes of beneficial interest without shareholder approval. Cash Reserve and
Tax-Free Money Fund will be reorganized as a New Series of a corresponding New
Fund. Each of the other New Funds has designated the same number of series and
classes as its corresponding Current Fund. Each share of a New Series represents
an equal proportionate interest in the assets and liabilities belonging to that
series (or class) as declared by the Board of Trustees.
Shares of the respective classes of the New Series have substantially the same
dividend, redemption, voting, exchange and liquidation rights, and terms of
conversion as the shares of the corresponding Current Fund or Current Series, as
applicable. Please see Exhibit M, "Comparison and Significant Differences for
Delaware Business Trusts and Maryland Corporations" and "Comparison and
Significant Differences for Delaware Business Trusts and Pennsylvania Common Law
Trusts." Shares of the respective classes of both the Current Fund and the
Current Series and the corresponding New Series are fully paid, non-assessable,
and freely transferable and have no preemptive or subscription rights.
Prior to the Reorganization, the New Fund will have nominal assets and no
liabilities. The sole shareholder of the New Fund will be the corresponding
Current Fund. Each New Fund and New Series will have the same investment
objective and policies as its corresponding Current Fund and Current Series, as
applicable, at the time of the Reorganization. (See the discussion under
"Investment Policies and Restrictions" below.) The Current Adviser will provide
investment management services to the New Fund and the New Series as it does to
the Current Fund and the Current Series, as applicable. For the New Series that
have sub-advisory arrangements, the Current Sub-Adviser will provide
sub-advisory services to the New Series as it does to the Current Series. The
New Fund will have the same fiscal year as the Current Fund.
Subsequent to the closing of the Reorganization, shares of the respective
classes of the Current Fund and Current Series will be exchanged for an
identical number of shares of the same class of the corresponding New Series.
Thereafter, shares of each class of the New Series will be available for
issuance at their net asset value applicable at the time of sale. The New Fund
will adopt the Current Fund's existing registration statement under the
Securities Act of 1933 and the 1940 Act.
Effects of Shareholder Approval of the Reorganization. An investment company
registered under the 1940 Act is required to: (1) submit the selection of the
company's independent auditors to all shareholders for their ratification; (2)
call a special meeting to elect directors (trustees) within 60 days if, at any
time, less than one half of the directors (trustees) holding office have been
elected by all shareholders; and (3) submit any proposed investment management
agreement and sub-advisory agreement relating to a particular series of the
investment company to the shareholders of that series for approval.
The Current Board believes that it is in the best interest of the shareholders
of the Current Fund (who will become the shareholders of the corresponding New
Fund if the Reorganization is approved) to avoid the considerable expense of
another shareholders' meeting to obtain the shareholder approvals described
above shortly after the closing of the Reorganization. The Current Board also
believes that it is not in the best interest of the shareholders to carry out
the Reorganization if the surviving New Fund would not have a Board of Trustees,
independent auditors, and investment management agreements or sub-advisory
agreements complying with the 1940 Act.
24
<PAGE>
The Current Board will, therefore, consider approval of the Reorganization by
the requisite vote of the shareholders of the Current Fund to constitute the
approval of the Plan contained in Exhibit L, and also to constitute, for the
purposes of the 1940 Act: (1) ratification of the independent auditors for each
Current Fund at the time of the Reorganization as the New Fund's independent
auditors (please see Proposal Six); (2) election of the Directors (Trustees) of
the Current Fund who are in office at the time of the Reorganization as the
trustees of the New Fund after the closing of the Reorganization (please see
Proposal One); (3) approval by the shareholders of each Current Fund or Current
Series of the investment management agreement between the New Fund on behalf of
the New Series and the Current Adviser, which will be substantially identical to
the agreement that is in place between the Current Fund and the Current Adviser
for the corresponding Current Fund or Current Series on the effective date of
the Reorganization (please see Proposal Four); and (4) for those Current Series
subject to a sub-advisory agreement, approval by the shareholders of the Current
Series of the sub-advisory agreement between the Current Adviser and the Current
Sub-Adviser, which will be substantially identical to the agreement that is in
place between the Current Adviser and the Current Sub-Adviser on the effective
date of the Reorganization (please see Proposal Five).
The New Fund will issue a single share of each class of each New Series to the
Current Fund, and, assuming approval of the Reorganization by shareholders of
the Current Fund, the officers of the Current Fund, prior to the Reorganization,
will cause the Current Fund, as the sole shareholder of the New Fund, to vote
such shares "FOR" the matters specified in the above paragraph. The Current Fund
will then consider the requirements of the 1940 Act referred to above to have
been satisfied.
The mailing address and telephone number of the principal executive offices of
both the Current Fund and the New Fund are 1818 Market Street, Philadelphia, PA
19103, and 1-800-523-1918, respectively.
Investment Policies and Restrictions. If the investment policies and
restrictions for the Current Fund and Current Series as proposed and set forth
in Proposal Two and Sub-Proposals 3A-3G are approved by the shareholders, the
investment policies and restrictions of the corresponding New Series will be the
policies and restrictions of the Current Fund and Current Series as amended by
the provisions set forth in such Proposals. For each Current Fund and Current
Series for which the investment policies and restrictions set forth in Proposal
Two and Sub-Proposals 3A-3G are not approved, the investment policies and
restrictions of the corresponding New Series after the Reorganization will be
the investment policies and restrictions of that Current Fund and Current Series
immediately prior to the Reorganization.
Investment Management Agreements. If the proposed new investment management
agreement relating to the Current Fund and Current Series, as applicable, and as
proposed and described in Proposal Four (a "New Agreement"), is approved by the
shareholders of the Current Fund and Current Series, the terms of the investment
management agreement for the corresponding New Series will be substantially
identical to the New Agreement for the Current Fund and Current Series. For each
Current Fund and Current Series for which the New Agreement described in
Proposal Four is not approved, if any, the investment management agreement for
the corresponding New Series will be substantially identical to the existing
investment management agreement currently in place for that Current Fund and
Current Series, as applicable.
Sub-Advisory Agreements. For the Current Series with sub-advisory arrangements,
if the proposed new sub-advisory agreement relating to the Current Series, as
proposed and described in Proposal Five (a "New Sub-Advisory Agreement"), is
approved by the shareholders of the Current Series, the terms of the
sub-advisory agreement for the corresponding New Series will be substantially
identical to the New Sub-Advisory Agreement for the Current Series. For each
Current Series for which the New Sub-Advisory Agreement described in Proposal
Five is not approved, if any, the sub-advisory agreement for the corresponding
New Series will be substantially identical to the existing sub-advisory
agreement currently in place for that Current Series.
Federal and State Income Tax Consequences of the Plan. It is anticipated that
the transactions contemplated by the Plan will be tax-free for federal income
tax purposes. Consummation of the Reorganization is subject to receipt of a
legal opinion from the law firm of Stradley, Ronon, Stevens & Young, LLP,
counsel to the Current Fund and the New Fund, that, under the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"), the exchange of assets
of the Current Fund for the shares of the corresponding New Fund, the transfer
of such shares to the holders of shares of the Current Fund, and the liquidation
and dissolution of the Current Fund pursuant to the Plan will not give rise to
the recognition of a gain or loss for federal income tax purposes to the Current
Fund, the New Fund, or shareholders of the Current Fund or the New Fund. A
shareholder's adjusted basis for tax purposes in the shares of the New Fund
after the exchange and transfer will be the same as his adjusted basis for tax
purposes in the shares of the corresponding Current Fund immediately before the
exchange. Each shareholder should consult his or her own tax adviser with
respect to the details of these tax consequences and with respect to state and
local tax consequences of the proposed transaction.
Distribution Plans and Shareholder Servicing Arrangements. The New Fund will
enter into agreements with DSC for transfer agency, dividend disbursing and
shareholder servicing and fund accounting services that are substantially
25
<PAGE>
identical to the agreements currently in effect for each corresponding Current
Fund for such services. Delaware Distributors, L.P. ("DDLP") will
serve as the national distributor for the shares of the New Series under a
separate distribution agreement between DDLP and the New Fund that is
substantially identical to the distribution agreement currently in effect for
the Current Fund and Current Series, as applicable.
The Current Fund has adopted distribution plans under Rule 12b-1 of the 1940 Act
(each a "Distribution Plan") relating to certain classes of shares of the
Current Fund or Current Series. For each class of shares of the Current Fund
that is subject to a Distribution Plan, the corresponding New Fund also has
adopted a distribution plan that is substantially identical to the Distribution
Plan currently in place for the same class of shares of that Current Fund or
Current Series.
Requests for Redemption of the Current Fund. Any request to redeem shares of the
Current Fund that is received and processed prior to the Reorganization will be
treated as a redemption of shares of the Current Fund. Any request to redeem
shares of the Current Fund received or processed after the Reorganization will
be treated as a request for the redemption of shares of the corresponding New
Fund.
Expenses of the Reorganization. Because the Reorganization will benefit solely
the Current Fund and its shareholders, the Current Board has authorized that the
expenses incurred by the Current Fund in the Reorganization or arising out of
the Reorganization shall be paid by the Current Fund, whether or not the
Reorganization is approved by the shareholders.
Comparison of Legal Structures. A comparison of the Delaware Business Trust Act
with the Maryland General Corporation Law, and a comparison of the legal
structure of a Delaware Business Trust with a Pennsylvania common law trust,
including a comparison of relevant provisions of the governing documents of the
Current Funds and the New Funds, is included in Exhibit M, which is entitled
"Comparison and Significant Differences for Delaware Business Trusts and
Maryland Corporations" and "Comparison and Significant Differences for Delaware
Business Trusts and Pennsylvania Common Law Trusts."
Required Vote. The Plans and the transactions contemplated thereby, including
the liquidation and dissolution of the Current Funds, requires the approval of
the shareholders as set forth below:
o All Companies except for Delaware Group Adviser Funds, Inc. and Delaware
Group State Tax-Free Income Trust - a majority of all votes entitled to be
cast.
o Delaware Group Adviser Funds, Inc. - two-thirds of all votes entitled to be
cast.
o Delaware Group State Tax-Free Income Trust - a majority of the outstanding
shares.
The Current Board unanimously recommends that you vote FOR the Reorganization.
26
<PAGE>
EXHIBIT A
OUTSTANDING SHARES AS OF RECORD DATE (December 21, 1998)
<TABLE>
<CAPTION>
Shares Outstanding Shares Owned by Fund Directors and
on Executive Officers as a Group as of
Record Date* October 31, 1998
------------------ -----------------------------------
<S> <C> <C>
Delaware Group Adviser Funds, Inc.
New Pacific Fund
Overseas Equity Fund
U.S. Growth Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund)
Devon Fund
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Decatur Income Fund
Decatur Total Return Fund
Diversified Value Fund
Social Awareness Fund
Delaware Group Equity Funds III, Inc.
Trend Fund
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund
DelCap Fund
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund
Retirement Income Fund
Delaware Group Foundation Funds
Balanced Portfolio
Growth Portfolio
Income Portfolio
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund
Global Equity Fund (formerly Global Assets Fund)
Global Bond Fund
Global Opportunities Fund (formerly Global
Equity Fund)
International Equity Fund
International Small Cap Fund
Delaware Group Government Fund, Inc.
U.S. Government Fund
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Delchester Fund
Extended Duration Bond Fund
High-Yield Opportunities Fund
Strategic Income Fund
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
Delaware Group Premium Fund, Inc.
</TABLE>
A-1
*The Shares outstanding on the record date included all shares purchased in
transactions that have settled by the record date.
<PAGE>
<TABLE>
<CAPTION>
Shares Outstanding Shares Owned by Fund Directors and
on Executive Officers as a Group as of
Record Date* October 31, 1998
------------------ -----------------------------------
<S> <C> <C>
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series
Decatur Total Return Series
Delaware Series
DelCap Series
Delchester Series
Devon Series
Emerging Markets Series
Global Bond Series
International Equity Series
REIT Series
Small Cap Value Series
Social Awareness Series
Strategic Income Series
Trend Series
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund
Tax-Free Ohio Fund
Tax-Free Pennsylvania Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
</TABLE>
A-2
*The Shares outstanding on the record date included all shares purchased in
transactions that have settled by the record date.
<PAGE>
EXHIBIT B
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Number of Percent of Percent of
Name and Address Shares Fund Company
---------------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Delaware Group Adviser Funds, Inc.
New Pacific Fund
Overseas Equity Fund
U.S. Growth Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly
Delaware Fund)
Devon Fund
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Decatur Income Fund
Decatur Total Return Fund
Diversified Value Fund
Social Awareness Fund
Delaware Group Equity Funds III, Inc.
Trend Fund
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund
DelCap Fund
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund
Retirement Income Fund
Delaware Group Foundation Funds
Balanced Portfolio
Growth Portfolio
Income Portfolio
Delaware Group Global & International
Funds, Inc.
Emerging Markets Fund
Global Equity Fund (formerly Global
Assets Fund)
Global Bond Fund
Global Opportunities Fund (formerly
Global Equity Fund)
International Equity Fund
International Small Cap Fund
Delaware Group Government Fund, Inc.
U.S. Government Fund
Delaware Group Income Funds, Inc.
Corporate Bond Fund
Delchester Fund
Extended Duration Bond Fund
High-Yield Opportunities Fund
Strategic Income Fund
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
Number of Percent of Percent of
Name and Address Shares Fund Company
---------------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Delaware Group Limited-Term Government
Funds, Inc.
Limited-Term Government Fund
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series
Decatur Total Return Series
Delaware Series
DelCap Series
Delchester Series
Devon Series
Emerging Markets Series
Global Bond Series
International Equity Series
REIT Series
Small Cap Value Series
Social Awareness Series
Strategic Income Series
Trend Series
Delaware Group State Tax-Free Income
Trust
Tax-Free New Jersey Fund
Tax-Free Ohio Fund
Tax-Free Pennsylvania Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust
Portfolio
</TABLE>
B-2
<PAGE>
EXHIBIT C
YEARS THAT DIRECTORS OR TRUSTEES FIRST TOOK OFFICE
<TABLE>
<CAPTION>
Wayne A. Walter P. John H. Anthony Ann R. Thomas F. Jeffrey Charles W. Thacher
Stork Babich Durham D. Knerr Leven Madison J. Nick E. Peck Longstreth
-------- -------- ------ -------- ----- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delaware Group Equity Funds I, Inc. 1991 1988 1977 1990 1989 1997 1997 1990 1977
Delaware Group Equity Funds II, Inc. 1991 1988 1977 1990 1989 1997 1997 1990 1977
Delaware Group Equity Funds III, Inc. 1991 1988 1977 1990 1989 1997 1997 1990 1977
Delaware Group Equity Funds IV, Inc. 1991 1988 1985 1990 1989 1997 1997 1990 1985
Delaware Group Equity Funds V, Inc. 1991 1988 1987 1990 1989 1997 1997 1990 1987
Delaware Group Income Funds, Inc. 1991 1988 1977 1990 1989 1997 1997 1990 1977
Delaware Group Government Fund, Inc. 1991 1988 1985 1990 1989 1997 1997 1990 1985
Delaware Group Limited-Term Government 1991 1988 1981 1990 1989 1997 1997 1990 1988
Funds, Inc.
Delaware Group Cash Reserve, Inc. 1991 1988 1978 1990 1989 1997 1997 1990 1978
Delaware Group Tax-Free Money 1991 1988 1981 1990 1989 1997 1997 1990 1981
Fund, Inc.
Delaware Group State Tax-Free 1991 1988 1977 1990 1989 1997 1997 1990 1977
Income Trust
Delaware Group Tax-Free Fund, Inc. 1991 1988 1983 1990 1989 1997 1997 1990 1983
Delaware Group Premium Fund, Inc. 1991 1988 1988 1990 1989 1997 1997 1990 1988
Delaware Group Global & International 1991 1991 1991 1991 1991 1997 1997 1991 1991
Funds, Inc.
Delaware Group Adviser Funds, Inc. 1996 1996 1998 1996 1996 1997 1997 1996 1996
Delaware Group Foundation Funds 1997 1997 1998 1997 1997 1997 1997 1997 1997
Delaware Pooled Trust, Inc 1991 1991 1991 1991 1991 1997 1997 1991 1991
</TABLE>
C-1
<PAGE>
EXHIBIT D
EXECUTIVE OFFICERS OF THE COMPANIES
David K. Downes (58) Executive Vice President, Chief Operating Officer, Chief
Financial Officer of each of the 34 investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc, Founders CBO Corporation,
Delaware Capital Management, Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware Distributors, L.P.; Executive
Vice President, Chief Operating Officer, Chief Financial Officer and Trustee of
Delaware Management Business Trust; Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware Management Company,
Inc., DMH Corp., Delaware Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.; President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.; President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware International Holdings Ltd.;
Chairman and Director of Delaware Management Trust Company; Chairman, Chief
Executive Officer and Director of Retirement Financial Services, Inc. During the
past five years, Mr. Downes has served in various executive capacities at
different times in the Delaware Investments organization.
Richard G. Unruh (59) Executive Vice President of each of the 34 investment
companies in the Delaware Investments family, Delaware Management Holdings,
Inc., Delaware Management Company (a series of Delaware Management Business
Trust) and Delaware Capital Management, Inc.; President of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Executive Vice
President and Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust; Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive capacities
at different times within the Delaware Investments organization.
Paul E. Suckow (51) Executive Vice President/Chief Investment Officer, Fixed
Income of each of the 34 investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Management Business Trust,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc.; Executive Vice President and Director of
Founders Holdings, Inc.; Executive Vice President of Delaware Capital
Management, Inc.; Director of Founders CBO Corporation; Director of HYPPCO
Finance Company Ltd. During the past five years, Mr. Suckow has served in
various executive capacities at different times within the Delaware Investments
organization.
Michael P. Bishof (36) Senior Vice President/Treasurer of each of the 34
investment companies in the Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust) and Delaware Service Company,
Inc.; Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series of
Delaware Management Business Trust); Senior Vice President and Manager of
Investment Accounting of Delaware International Holdings Ltd.; Senior Vice
President and Assistant Treasurer of Founders CBO Corporation. Before joining
Delaware Investments in 1995, Mr. Bishof was a Vice President for Bankers Trust,
New York, NY, from 1994 to 1995, a Vice President for CS First Boston Investment
Management, New York, NY, from 1993 to 1994, and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY, from 1987 to 1993.
George M. Chamberlain, Jr. (51) Senior Vice President, Secretary and General
Counsel of each of the 34 investment companies in the Delaware Investments
family; Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc.; Senior Vice President, Secretary and
Director/Trustee of DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Retirement Financial Services Inc., Delaware Capital Management, Inc., Delvoy,
Inc. and Delaware Management Business Trust; Executive Vice President, Secretary
and Director of Delaware Management Trust Company.
D-1
<PAGE>
Joseph H. Hastings (48) Senior Vice President/Corporate Controller of each of
the 34 investment companies in the Delaware Investments family and Founders
Holdings, Inc.; Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Management Business Trust, Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital Management,
Inc., Delaware International Holdings Ltd. and Delvoy, Inc.; Chief Financial
Officer/Treasurer of Retirement Financial Services, Inc.; Executive Vice
President/Chief Financial Officer/Treasurer of Delaware Management Trust
Company; Senior Vice President/Assistant Treasurer of Founders CBO Corporation.
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware Investments organization.
Patrick P. Coyne (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), Delaware
Capital Management, Inc., and of the fixed-income funds in the Delaware
Investments family. During the past five years, Mr. Coyne has served in various
capacities at different times within the Delaware Investments organization.
Mitchell L. Conery (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and of the
fixed-income funds in the Delaware Investments family. Before joining Delaware
Investments in 1997, Mr. Conery was an investment officer with Travelers
Insurance from 1995 through 1996, and a research analyst with CS First Boston
from 1992 to 1995.
Paul A. Matlack (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and of the
fixed-income funds in the Delaware Investments family; Vice President of
Founders Holdings, Inc.; President and Director of Founders CBO Corporation.
During the past five years, Mr. Matlack has served in various capacities at
different times within the Delaware Investments organization.
Gary A. Reed (43) Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), and Delaware Capital
Management, Inc.; and an officer of the fixed-income funds in the Delaware
Investments family. During the past five years, Mr. Reed has served in various
capacities at different times within the Delaware Investments organization.
Babak Zenouzi (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and of the
equity funds in the Delaware Investments family. During the past five years, Mr.
Zenouzi has served in various capacities at different times within the Delaware
Investments organization.
Gerald T. Nichols (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 23
investment companies in the Delaware Investments family and of Delaware
Management Company, Inc.; Vice President of Founders Holdings, Inc.; Assistant
Secretary, Treasurer and Director of Founders CBO Corporation. During the past
five years, Mr. Nichols has served in various capacities at different times
within the Delaware organization.
Christopher S. Beck (40) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 10
investment companies in the Delaware Investments family and of Delaware
Management Company, Inc. Before joining the Delaware Investments in 1997, Mr.
Beck managed the small cap value fund for two years at Pitcairn Trust Company.
Prior to 1995, he was Director of Research at Cypress Capital Management in
Wilmington and Chief Investment Officer of the University of Delaware Endowment
Fund.
George H. Burwell (36)Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 8
investment companies in the Delaware Investments and of Delaware Management
Company. Before joining Delaware Investments in 1992, Mr. Burwell was a
portfolio manager for Midlantic Bank, New Jersey. In addition, he was a security
analyst for Balis & Zorn, New York and for First Fidelity Bank, New Jersey.
D-2
<PAGE>
Robert L. Arnold (34) Vice President/Portfolio Manager Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), of 3 investment companies in
the Delaware Group. During the past five years, Mr. Arnold has served in various
capacities at different times within the Delaware organization.
Gerald S. Frey (52) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 8
investment companies in the Delaware Group and of Delaware Management Company,
Inc. Before joining the Delaware Group in 1996, Mr. Frey was a Senior Director
with Morgan Grenfell Capital Management, New York, NY from 1986 to 1995.
Roger A. Early (43) Vice President and Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and each
of the tax-exempt and the fixed income funds in the Delaware Group and Delaware
Management Company, Inc. Before joining The Delaware Group, Mr. Early was a
portfolio manager for Federated Investment Counseling's fixed-income group, with
over $1 billion in assets.
John B. Fields (52) Vice President and Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 10
equity investment companies in the Delaware Group and of Delaware Management
Company, Inc. Before joining the Delaware Group in 1992, Mr. Fields served as a
director of domestic equity risk management for Dupont, Wilmington, DE.
Paul Grillo (38) Vice President and Portfolio Manager of Income Funds, Inc.
Delaware Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 12
investment companies in the Delaware Group. During the last five years, Mr.
Grillo has served in various capacities at different times within the Delaware
organization.
Cynthia I. Isom (44) Vice President and Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), and 18 investment companies in
the Delaware Investments family, Delaware Management Company, Inc. and Delaware
Management Company (a series of Delaware Management Business Trust).
Frank X. Morris (37) Vice President and Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), and Delaware Pooled Trust,
Inc. Before joining the Delaware Group in 1997, he served as vice president and
director of equity research at PNC asset Management. Mr. Morris is president of
the Financial Analysis Society of Philadelphia and is a member of the
Association of Investment Management and Research and the National Association
of Petroleum Investment Analysts.
James F. Stanley (30) Vice President and Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and
Delaware Pooled Trust, Inc. Before joining the Delaware Group in 1997, Mr.
Stanley served as a senior managing equity analyst covering the chemical,
building products, and housing industries at Dreyfus Corporation.
Paul Dokas (39) Vice President and Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), Delaware Pooled Trust, Inc and
Delaware Group Foundation Funds. Before joining the Delaware Group in 1997, he
was Director of Trust Investments for Bell Atlantic Corporation in Philadelphia.
D-3
<PAGE>
EXHIBIT E
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
<S> <C> <C> <C>
WAYNE A. STORK
Delaware Group Equity Funds I, Inc.
Devon Fund ................................................ 65,720.574 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund........................................ 1,125.446 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund....................................... 142,009,027 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund............................................ 619,259.389 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
High-Yield Opportunities Fund.............................. 1,091,608.340 /Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund....................................... 5,322.055 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 3,706,011.960 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc..................... 1,081.950 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund................................. 887,532.832 /
Delaware Group Global & International Funds, Inc.
International Equity Fund.................................. 11,838.599 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund..................................... 9,273.539 Less than 1%/Less than 1%
JEFFREY J. NICK
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 1,270.806 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 31,403.410 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund................................ 19,012.257 /
WALTER P. BABICH
Delaware Group Cash Reserve, Inc............................ 7,896.800 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund.................................. 9,651.044 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 4,314.040 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund..................................... 6,938.292 Less than 1%/Less than 1%
JOHN H. DURHAM
Delaware Group Cash Reserve, Inc............................ 63,271.060 Less than 1%/Less than 1%
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio................. 1,971.351 Less than 1%/Less than 1%
ANTHONY D. KNERR
None
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
<S> <C> <C>
ANN R. LEVEN
Delaware Group Equity Funds I, Inc.
Delaware Fund........................................... 750.665 Less than 1%/Less than 1%
Delaware Group Equity Funds I, Inc.
Devon Fund.............................................. 254.789 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund..................................... 2,025.428 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 2,036.432 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund............................................... 2,527.037 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 994.566 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund............................... 1,174.926 Less than 1%/Less than 1%
W. THACHER LONGSTRETH
Delaware Group Equity Funds I, Inc.
Delaware Fund .......................................... 40,815.95 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund..................................... 67,652.453 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 4,161.893 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund.............................................. 5,296.988 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund............................................. 1,942.898 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 934.814 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund......................................... 60,197.084 Less than 1%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Fund Government Fund............................... 96.057 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
U.S. Government Money Fund.............................. 90.100 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................ 25,648.646 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 40,105.860 Less than 1%/Less than 1%
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund....................................... 40,050.721 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund.............................. 221.143 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc..................... 470.830 Less than 1%/Less than 1%
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
<S> <C> <C>
THOMAS F. MADISON
Delaware Group Equity Funds I, Inc.
Devon Fund............................................... 246.327 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund................................ 159.373 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund................................... 132.162 Less than 1%/Less than 1%
CHARLES E. PECK
Delaware Group Equity Funds I, Inc.
Delaware Fund............................................ 16,151.178 Less than 1%/Less than 1%
Delaware Group Equity Funds I, Inc.
Devon Fund............................................... 12,876.107 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund................................ 9,633.481 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund............................................... 21,771.736 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund.............................................. 7,583.990 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund..................................... 7,248.518 Less than 1%/Less than 1%
` Delaware Group Adviser Funds, Inc.
U.S. Growth Fund......................................... 17,898.466 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund.......................................... 67,477.705 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................. 16,939.372 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund................................ 8,691.150 Less than 1%/Less than 1%
</TABLE>
E-3
<PAGE>
EXHIBIT F
LISTS OF CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
Table of Contents
Delaware Group Adviser Funds, Inc.
New Pacific Fund.........................................................F3
Overseas Equity Fund.....................................................F3
U.S. Growth Fund.........................................................F3
Delaware Group Cash Reserve, Inc..............................................F5
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund)..........................F7
Devon Fund...............................................................F9
Delaware Group Equity Funds II, Inc.
Blue Chip Fund..........................................................F11
Decatur Income Fund.....................................................F13
Decatur Total Return Fund...............................................F15
Social Awareness Fund...................................................F17
Delaware Group Equity Funds III, Inc.
Trend Fund..............................................................F19
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund...............................................F21
DelCap Fund.............................................................F23
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund....................................................F25
Retirement Income Fund..................................................F27
Delaware Group Foundation Funds
Balanced Portfolio......................................................F29
Growth Portfolio........................................................F29
Income Portfolio........................................................F29
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund...................................................F31
Global Equity Fund (formerly Global Assets Fund)........................F33
Global Bond Fund........................................................F33
Global Opportunities Fund (formerly Global Equity Fund).................F35
International Equity Fund...............................................F37
International Small Cap Fund............................................F39
Delaware Group Government Fund, Inc.
U.S. Government Fund....................................................F41
Delaware Group Income Fund, Inc.
Delchester Fund.........................................................F43
High-Yield Opportunities Fund...........................................F45
Strategic Income Fund...................................................F47
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................................F49
F-1
<PAGE>
Delaware Group Premium Fund, Inc.
Capital Reserves Series.................................................F51
Cash Reserve Series.....................................................F51
Convertible Securities Series...........................................F54
Decatur Total Return Series.............................................F51
Delaware Series.........................................................F51
DelCap Series...........................................................F51
Delchester Series.......................................................F51
Devon Series............................................................F54
Emerging Markets Series.................................................F56
Global Bond Series......................................................F58
International Equity Series.............................................F60
REIT Series.............................................................F62
Small Cap Value Series..................................................F64
Social Awareness Series.................................................F54
Strategic Income Series.................................................F54
Trend Series............................................................F64
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund................................................F66
Tax-Free Ohio Fund......................................................F68
Tax-Free Pennsylvania Fund..............................................F70
Delaware Group Tax-Free Money Fund, Inc......................................F72
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund...................................................F74
Tax-Free USA Fund.......................................................F76
Tax-Free USA Intermediate Fund..........................................F78
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio..............................F80
- -------------------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-2
<PAGE>
New Pacific Fund
Overseas Equity Fund
U.S. Growth Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not purchase any security (other
than obligations of the U.S. government, its
agencies or instrumentalities) if as a result,
with respect to 75% of the Fund's total assets,
more than 5% of the Fund's assets (determined at
the time of investment) would then be invested in
securities of a single issuer.
Concentration The Fund shall not purchase any securities (other
than obligations of the U.S. government, its
agencies and instrumentalities) if as a result 25%
or more of the value of the Fund's total assets
(determined at the time of investment) would be
invested in the securities of one or more issuers
conducting their principal business activities in
the same industry, provided that there is no
limitation with respect to money market
instruments of domestic banks, U.S. branches of
foreign banks that are subject to the same
regulations as U.S. banks and foreign branches of
domestic banks (provided that the domestic bank is
unconditionally liable in the event of the failure
of the foreign branch to make payment on its
instruments for any reason). Foreign governments,
including agencies and instrumentalities thereof,
and each of the electric utility, natural gas
distribution, natural gas pipeline, combined
electric and natural gas utility, and telephone
industries shall be considered as a separate
industry for this purpose.
Borrowing* The Fund shall not borrow money, except from banks
for temporary or emergency purposes not in excess
of one-third of the value of the Fund's assets,
and except that the Fund may enter into reverse
repurchase agreements and engage in "roll"
transactions, provided that reverse repurchase
agreements, "roll" transactions and any other
transactions constituting borrowing by the Fund
may not exceed one-third of the Fund's total
assets.
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not make short sales of securities
or maintain a short position if, when added
together, more than 25% of the value of the Fund's
net assets would be (i) deposited as collateral
for the obligation to replace securities borrowed
to effect short sales and (ii) allocated to
segregated accounts in connection with short
sales.
Underwriting The Fund shall not engage in the business of
underwriting securities of other issuers, except
to the extent that the disposal of an investment
position may technically cause Delaware Group
Adviser Funds, Inc. to be considered an
underwriter as that term is defined under the 1933
Act, as amended.
Real Estate The Fund shall not buy or sell real estate,
interests in real estate or commodities or
commodity contracts; however, the Fund may invest
in debt securities secured by real estate or
interests therein, or issued by companies which
invest in real estate or interests therein,
including real estate investment trusts, and may
purchase or sell currencies (including forward
currency contracts) and financial futures
contracts and options thereon.
Commodities See "Real Estate."
Lending The Fund shall not make loans in an aggregate
amount in excess of one-third of its
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-3
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
total assets, taken at the time any loan is made,
provided that entering into certain repurchase
agreements and purchasing debt securities shall
not be deemed loans for the purposes of this
restriction.
Illiquid Securities The Fund shall not purchase illiquid securities or
other securities that are not readily marketable
if more than 10% of the total assets of the Fund
would be invested in such securities.
Investment Companies The Fund shall not invest in securities of other
investment companies except as may be acquired as
part of a merger, consolidation, reorganization or
acquisition of assets and except that the Fund may
invest up to 5% of its total assets in the
securities of any one investment company, but may
not own more than 3% of the securities of any
investment company or invest more than 10% of its
total assets in the securities of other investment
companies provided that the Fund may not invest in
securities issued by other investment companies
without waiving the advisory fee on that portion
of its assets invested in such securities.
Control or Management The Fund shall not make investments for the
purpose of exercising control or management.
Options The Fund shall not purchase puts, calls,
straddles, spreads, and any combination thereof if
by reason thereof the value of its aggregate
investment in such classes of securities will
exceed 5% of its total assets.
Futures See "Real Estate."
Unseasoned Issuers The Fund normally shall not purchase any security
if as a result, it would then have more than 5% of
its total assets (determined at the time of
investment) invested in securities of companies
(including predecessors) less than three years
old.
Warrants The Fund shall not purchase warrants if as a
result the Fund would then have more than 5% of
its net assets (determined at the time of
investment) invested in warrants. Warrants will be
valued at the lower of cost or market and
investment in warrants which are not listed on the
New York Stock Exchange or American Stock Exchange
will be limited to 2% of the net assets of
Delaware Group Adviser Funds, Inc. (determined at
the time of investment). For the purpose of this
limitation, warrants acquired in units or attached
to securities are deemed to be without value.
Holdings by Affiliates The Fund shall not invest in securities of any
issuer if, to the knowledge of Delaware Group
Adviser Funds, Inc., any officer or director of
Delaware Group Adviser Funds, Inc. or the
investment manager or any sub-adviser owns more
than 1/2 of 1% of the outstanding securities of
such issuer, and such officers and directors who
own more than 1/2 of 1% own in the aggregate more
than 5% of the outstanding securities of such
issuer.
Oil or Gas The Fund shall not invest in oil, gas and mineral
leases or programs.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-4
<PAGE>
Delaware Group Cash Reserve, Inc.
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 20% of its
assets in securities other than money market
instruments as defined in the Statement of
Additional Information.
Concentration The Fund shall not invest more than 5% of the
value of its assets in the securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government or federal
agencies) or acquire more than 10% of the voting
securities of such an issuer. Where securities are
issued by one entity but are guaranteed by
another, "issuer" shall not be deemed to include
the guarantor so long as the value of all
securities owned by the Fund which have been
issued or guaranteed by that guarantor does not
exceed 10% of the value of the Fund's assets.
The Fund shall not invest more than 25% of its
total assets in any particular industry, except
that the Fund may invest more than 25% of the
value of its total assets in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, certificates of deposit and
bankers' acceptances of banks with over one
billion dollars in assets or bank holding
companies whose securities are rated A-2 or better
by S&P or P-2 or better by Moody's.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell securities short or
purchase securities on margin.
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may acquire
portfolio securities under circumstances where, if
the securities are later publicly offered or sold
by the Fund, it might be deemed an underwriter for
purposes of the Securities Act of 1933. Not more
than 10% of the value of the Fund's net assets at
the time of acquisition will be invested in such
securities.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in securities secured by real estate or interests
therein, or securities issued by companies which
invest in real estate or interests therein.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-5
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Commodities The Fund shall not purchase or sell commodities or
commodity contracts.
Lending The Fund shall not make loans to other persons
except by the purchase of obligations in which the
Fund is authorized to invest and to enter into
repurchase agreements. Not more than 10% of the
Fund's total assets will be invested in repurchase
agreements maturing in more than seven days and in
other illiquid assets.
Illiquid Securities See "Lending."
Investment Companies The Fund shall not invest in securities of other
investment companies, except as they may be
acquired as part of a merger, consolidation or
acquisition of assets.
Control or Management The Fund shall not purchase more than 10% of the
outstanding securities of any issuer or invest in
companies for the purpose of exercising control.
Options The Fund shall not write or purchase put or call
options.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-6
<PAGE>
Delaware Balanced Fund (formerly Delaware Fund)
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
company (except U.S. government bonds) or purchase
more than 10% of the voting or nonvoting
securities of any one company.
Concentration None.
Borrowing* The Fund shall not borrow, except as a temporary
measure for extraordinary or emergency purposes
and then not in excess of 10% of gross assets
taken at cost or market, whichever is lower, and
not to pledge more than 15% of gross assets taken
at cost. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5%
of the value of Delaware Group Equity Funds I,
Inc.'s assets, asset coverage of at least 300% is
required. In the event that such asset coverage
shall at any time fall below 300%, Delaware Group
Equity Funds I, Inc. shall, within three days
thereafter (not including Sunday and holidays) or
such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to an extent
that the asset coverage of such borrowings shall
be at least 300%. Delaware Group Equity Funds I,
Inc. shall not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that Delaware
Group Equity Funds I, Inc. may acquire restricted
securities and securities which are not readily
marketable under circumstances where, if such
securities are sold, Delaware Group Equity Funds
I, Inc. may be deemed an underwriter for purposes
of the Securities Act of 1933.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude Delaware Group
Equity Funds I, Inc.'s purchase of securities
issued by real estate investment trusts.)
Commodities The Fund shall not deal in commodities.
Lending The Fund shall not make loans. However, the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
whether or not the purchase was made upon the
original issuance of the securities, and the entry
into "repurchase agreements" are not to be
considered the making of a loan by Delaware Group
Equity Funds I, Inc. and Delaware Group Equity
Funds I, Inc. may loan up to 25% of its assets to
qualified broker/dealers or institutional
investors for their use relating to short sales or
other security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
investment companies except at customary brokerage
commission rates or in connection with mergers,
consolidations or offers of exchange.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-7
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
The Fund shall not purchase any security issued by
any other investment company if after such
purchase it would: (a) own more than 3% of the
voting stock of such company, (b) own securities
of such company having a value in excess of 5% of
Delaware Group Equity Funds I, Inc.'s assets or
(c) own securities of investment companies having
an aggregate value in excess of 10% of Delaware
Group Equity Funds I, Inc.'s assets.
Control or Management The Fund shall not acquire control of any company.
(Delaware Group Equity Funds I, Inc.'s Certificate
of Incorporation permits control of companies to
protect investments already made, but its policy
is not to acquire control.)
Options None.
Futures None.
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of Delaware Group Equity
Funds I, Inc. or an officer, director or partner
of its investment manager if, to the knowledge of
Delaware Group Equity Funds I, Inc., one or more
of such persons own beneficially more than 1/2 of
1% of the shares of the company, and in the
aggregate more than 5% thereof.
Oil or Gas None.
Miscellaneous No long or short positions on shares of Delaware
Group Equity Funds I, Inc. may be taken by its
officers, directors or any of its affiliated
persons. Such persons may buy shares of Delaware
Group Equity Funds I, Inc. for investment
purposes, however.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-8
<PAGE>
Devon Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
company (except U.S. government bonds) or purchase
more than 10% of the voting or nonvoting
securities of any one company.
Concentration None.
Borrowing* The Fund shall not borrow, except as a temporary
measure for extraordinary or emergency purposes
and then not in excess of 10% of gross assets
taken at cost or market, whichever is lower, and
not to pledge more than 15% of gross assets taken
at cost. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5%
of the value of Delaware Group Equity Funds I,
Inc.'s assets, asset coverage of at least 300% is
required. In the event that such asset coverage
shall at any time fall below 300%, Delaware Group
Equity Funds I, Inc. shall, within three days
thereafter (not including Sunday and holidays) or
such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to an extent
that the asset coverage of such borrowings shall
be at least 300%. Delaware Group Equity Funds I,
Inc. shall not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that Delaware
Group Equity Funds I, Inc. may acquire restricted
securities and securities which are not readily
marketable under circumstances where, if such
securities are sold, Delaware Group Equity Funds
I, Inc. may be deemed an underwriter for purposes
of the Securities Act of 1933.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude Delaware Group
Equity Funds I, Inc.'s purchase of securities
issued by real estate investment trusts.)
Commodities The Fund shall not deal in commodities, except
that the Fund may invest in financial futures,
including futures contracts on stocks and stock
indices, interest rates, and foreign currencies,
and other types of financial futures that may be
developed in the future, and may purchase or sell
options on such futures, and enter into closing
transactions with respect to those activities.
Lending The Fund shall not make loans. However, the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
whether or not the purchase was made upon the
original issuance of the securities, and the entry
into "repurchase agreements" are not to be
considered the making of a loan by Delaware Group
Equity Funds I, Inc. and Delaware Group Equity
Funds I, Inc. may loan up to 25% of its assets to
qualified broker/dealers or institutional
investors for their use relating to short sales or
other security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
investment companies except at
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-9
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
customary brokerage commission rates or in
connection with mergers, consolidations or offers
of exchange.
The Fund shall not purchase any security issued by
any other investment company if after such
purchase it would: (a) own more than 3% of the
voting stock of such company, (b) own securities
of such company having a value in excess of 5% of
Equity Funds I, Inc.'s assets or (c) own
securities of investment companies having an
aggregate value in excess of 10% of Delaware Group
Equity Funds I, Inc.'s assets.
Control or Management The Fund shall not acquire control of any company.
(Delaware Group Equity Funds I, Inc.'s Certificate
of Incorporation permits control of companies to
protect investments already made, but its policy
is not to acquire control.)
Options None.
Futures See "Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of Delaware Group Equity
Funds I, Inc. or an officer, director or partner
of its investment manager if, to the knowledge of
Delaware Group Equity Funds I, Inc., one or more
of such persons own beneficially more than 1/2 of
1% of the shares of the company, and in the
aggregate more than 5% thereof.
Oil or Gas None.
Miscellaneous No long or short positions on shares of Delaware
Group Equity Funds I, Inc. may be taken by its
officers, directors or any of its affiliated
persons. Such persons may buy shares of Delaware
Group Equity Funds I, Inc. for investment
purposes, however.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-10
<PAGE>
Blue Chip Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not with respect to 75% of its
total assets, Fund will not invest more than 5% of
its total assets in the securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities or certificates of deposit for
any such securities and cash and cash items) or
purchase more than 10% of the voting securities of
any one company.
Concentration The Fund shall not invest more than 25% of its
total assets in securities of issuers all of which
conduct their principal business activities in the
same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets. Any
borrowing will be done in accordance with the
rules and regulations prescribed from time to time
by the Securities and Exchange Commission with
respect to open-end investment companies. The Fund
shall not issue senior securities as defined in
the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund may be deemed to be
an underwriter for purposes of the Securities Act
of 1933.
Real Estate The Fund shall not make any investment in real
estate. This restriction does preclude the Fund's
purchase of securities issued by real estate
investment trusts, the purchase of securities
issued by companies that deal in real estate, or
the investment in securities secured by real
estate or interests therein.
Commodities The Fund shall not buy or sell commodities or
commodity contracts except that the Fund may enter
into futures contracts and options thereon.
Lending The Fund shall not make loans. However, (i) the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
or of other securities authorized to be purchased
by the Fund's investment policies, whether or not
the purchase was made upon the original issuance
of the securities, and the entry into "repurchase
agreements" are not to be considered the making of
a loan by the Fund; and (ii) the Fund may loan
securities to qualified broker/dealers or
institutional investors for their use relating to
short sales and other security transactions.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-11
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-12
<PAGE>
Decatur Income Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
company (except U.S. government bonds) or purchase
more than 10% of the voting or nonvoting
securities of any one company.
Concentration None.
Borrowing* The Fund shall not borrow, except as a temporary
measure for extraordinary or emergency purposes,
and then not in excess of 10% of gross assets
taken at cost or market, whichever is lower, and
not to pledge more than 15% of gross assets taken
at cost. Any borrowing will be done from a bank,
and to the extent that such borrowing exceeds 5%
of the value of the Fund's assets, asset coverage
of at least 300% is required. In the event that
such asset coverage shall at any time fall below
300%, the Fund shall, within three days thereafter
(not including Sunday and holidays) or such longer
period as the Securities and Exchange Commission
(the "SEC") may prescribe by rules and
regulations, reduce the amount of its borrowings
to an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund shall
not issue senior securities as defined in the
Investment Company Act of 1940 except for notes to
banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund may act as an underwriter of securities
of other issuers, but its present policy is not to
do so.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude the Fund's purchase
of securities issued by real estate investment
trusts.)
Commodities The Fund shall not deal in commodities, except
that the Fund may invest in financial futures,
including futures contracts on stocks and stock
indices, interest rates and foreign currencies and
other types of financial futures that may be
developed in the future, and may purchase or sell
options on such futures, and enter into closing
transactions with respect to those activities.
Lending The Fund shall not make loans. However, the
purchase of a portion of an issue of publicly
distributed bonds, debentures, or other
securities, whether or not the purchase was made
upon the original issuance of the securities, and
the entry into "repurchase agreements" are not to
be considered the making of a loan by the Fund and
the Fund may loan up to 25% of its assets to
qualified broker/dealers or institutional
investors for their use relating to short sales or
other transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
value of its total assets in illiquid assets.
Investment Companies The Fund shall not purchase any security issued by
any other investment company if after such
purchase it would: (a) own more than 3% of the
voting stock of such investment company, (b) own
securities of such company having a value in
excess of 5% of the Fund's assets or (c) own
securities of investment companies having an
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-13
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
aggregate value in excess of 10% of the Fund's
assets.
The Fund shall not invest in securities of other
investment companies except at customary brokerage
commission rates or in connection with mergers,
consolidations or offers of exchange.
Control or Management The Fund shall not acquire control of any company.
(Delaware Group Equity Funds II, Inc.'s
Certificate of Incorporation permits control of
companies to protect investments already made, but
its policy is not to acquire control.)
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of Delaware Group Equity
Funds II, Inc., or an officer, director or partner
of its investment manager if, to the knowledge of
Delaware Group Equity Funds II, Inc., one or more
of such persons own beneficially more than 1/2 of
1% of the shares of the company, and in the
aggregate more than 5% thereof.
Oil or Gas None.
Miscellaneous The Fund shall not allow long or short positions
on shares of the Fund to be taken by Delaware
Group Equity Funds II, Inc.'s officers, directors
or any of its affiliated persons. Such persons may
buy shares of the Fund for investment purposes,
however.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-14
<PAGE>
Decatur Total Return Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
market or other fair value of its assets in the
securities of any one issuer (other than
obligations of, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in the
securities of issuers all of which conduct their
principal business activities in the same
industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for the purposes of the
Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate
but this shall not prevent the Fund from investing
in companies which own real estate or in
securities secured by real estate or interests
therein.
Commodities The Fund shall not deal in commodities, except
that the Fund may invest in financial futures,
including futures contracts on stocks and stock
indices, interest rates and foreign currencies and
other types of financial futures that may be
developed in the future, and may purchase or sell
options on such futures, and enter into closing
transactions with respect to those activities.
Lending The Fund shall not make loans. However, (i) the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
or of other securities authorized to be purchased
by the Fund's investment policies, whether or not
the purchase was made upon the original issuance
of the securities, and the entry into "repurchase
agreements" are not to be considered the making of
a loan by the Fund; and (ii) the Fund may loan up
to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating
to short sales or other security
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-15
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
value of the Fund's net assets in repurchase
agreements maturing in more than seven days and in
other illiquid assets.
Investment Companies The Fund shall not invest in securities of other
investment companies except as part of a merger,
consolidation or other acquisition.
Control or Management The Fund shall not purchase more than 10% of the
outstanding voting or nonvoting securities of any
issuer, or invest in companies for the purpose of
exercising control or management.
Options None.
Futures See "Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants The Fund shall not invest in warrants valued at
the lower of cost or market exceeding 5% of the
Fund's net assets. Included in that amount, but
not to exceed 2% of the Fund's net assets, may be
warrants not listed on the New York Stock Exchange
or American Stock Exchange.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer which has an officer,
director or security holder who is a director or
officer of Delaware Group Equity Funds II, Inc. or
of its investment manager if or so long as the
directors and officers of Delaware Group Equity
Funds II, Inc. and of its investment manager
together own beneficially more than 5% of any
class of securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-16
<PAGE>
Social Awareness Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not with respect to 75% of its
total assets, Fund shall not invest more than 5%
of its total assets in the securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities or certificates of deposit for
any such securities and cash and cash items) or
purchase more than 10% of the voting securities of
any one company.
Concentration The Fund shall not invest more than 25% of its
total assets in securities of issuers all of which
conduct their principal business activities in the
same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets. Any
borrowing will be done in accordance with the
rules and regulations prescribed from time to time
by the Securities and Exchange Commission with
respect to open-end investment companies. The Fund
shall not issue senior securities as defined in
the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund may be deemed to be
an underwriter for purposes of the Securities Act
of 1933.
Real Estate The Fund shall not make any investment in real
estate. This restriction does preclude the Fund's
purchase of securities issued by real estate
investment trusts, the purchase of securities
issued by companies that deal in real estate, or
the investment in securities secured by real
estate or interests therein.
Commodities The Fund shall not buy or sell commodities or
commodity contracts except that the Fund may enter
into futures contracts and options thereon.
Lending The Fund shall not make loans. However, (i) the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
or of other securities authorized to be purchased
by the Fund's investment policies, whether or not
the purchase was made upon the original issuance
of the securities, and the entry into "repurchase
agreements" are not to be considered the making of
a loan by the Fund; and (ii) the Fund may loan
securities to qualified broker/dealers or
institutional investors for their use relating to
short sales and other security transactions.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-17
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-18
<PAGE>
Trend Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
company (except U.S. government bonds) or purchase
more than 10% of the voting or nonvoting
securities of any one company.
Concentration The Fund shall not invest more than 25% of its
assets in any one particular industry.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets, and then only as a
temporary measure for extraordinary or emergency
purposes. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5%
of the value of the Fund's assets, asset coverage
of at least 300% is required. In the event that
such asset coverage shall at any time fall below
300%, the Fund shall, within three days thereafter
(not including Sunday and holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to an extent that the
asset coverage of such borrowings shall be at
least 300%. The Fund shall not issue senior
securities as defined in the Investment Company
Act of 1940, except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude the Fund's purchase
of securities issued by real estate investment
trusts.) Any investment in real estate together
with any investment in illiquid assets cannot
exceed 10% of the value of the Fund's assets.
Commodities The Fund shall not deal in commodities.
Lending The Fund shall not make loans. However, the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
whether or not the purchase was made upon the
original issuance of the securities, and the entry
into "repurchase agreements" are not to be
considered the making of a loan by the Fund and
the Fund may loan up to 25% of its assets to
qualified broker/dealers or institutional
investors for their use relating to short sales or
other security transactions.
Illiquid Securities See "Real Estate."
Investment Companies The Fund shall not invest in securities of other
investment companies except at customary brokerage
commissions rates or in connection with mergers,
consolidations or offers of exchange.
The Fund shall not purchase any security issued by
any other investment company if after such
purchase it would: (a) own more than 3% of the
voting stock of such company, (b) own securities
of such company having a value in excess of 5% of
the Fund's assets or (c) own securities of
investment companies having an aggregate value in
excess of 10% of the Fund's assets.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-19
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management The Fund shall not acquire control of any company.
Options None.
Futures None.
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of any company which has an officer or director
who is an officer or director of the Fund, or an
officer, director or partner of its investment
manager if, to the knowledge of the Fund, one or
more of such persons own beneficially more than
1/2 of 1% of the shares of the company, and in the
aggregate more than 5% thereof.
Oil or Gas None.
Miscellaneous The Fund shall not permit long or short positions
on shares of the Fund to be taken by its officers,
directors or any of its affiliated persons. Such
persons may buy shares of the Fund for investment
purposes, however, as described in the Statement
of Additional Information.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-20
<PAGE>
Capital Appreciation Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not with respect to 75% of its
assets, invest more than 5% of the value of its
total assets in the securities of any one issuer
(except obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities
or certificates of deposit for any such
securities, and cash and cash items).
Concentration The Fund shall not make any investment which would
cause more than 25% of the market value of its
total assets to be invested in the securities of
issuers all of which conduct their principal
business activities in the same industry. This
restriction does not apply to obligations issued
or guaranteed by the U.S. Government, its agencies
or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sundays or
holidays) or such longer period as the Securities
and Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not issue senior securities as defined in the
Investment Company Act of 1940, except for notes
to banks. Investment securities will not normally
be purchased while the Fund has an outstanding
borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin
or make short sales of securities except that the
Fund may obtain such short-term credits as may be
necessary for the clearance of purchases and sales
of portfolio securities and may engage in futures
and related options transactions and may satisfy
margin requirements relating thereto.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund may be deemed to be
an "underwriter" as that term is defined in the
Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in securities by companies that deal in real
estate or securities secured by real estate or
interests therein (including securities issued by
real estate investment trusts).
Commodities The Fund shall not buy or sell commodities or
commodity contracts, except that the Fund may
engage into futures and related option
transactions.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations or other
securities (including repurchase agreements), in
accordance with the Fund's investment objective
and policies, are considered loans and except that
the Fund may loan up to 25% of its assets to
qualified broker/dealers or institutional
investors for their use relating to short sales or
other security transactions.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-21
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Illiquid Securities None.
Investment Companies None.
Control or Management The Fund shall not purchase more than 10% of the
outstanding voting securities of any one company.
Options See "Short Sales/Margin."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-22
<PAGE>
DelCap Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
market or other fair value of its assets in the
securities of any one issuer (other than
obligations of, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in the
securities of issuers all of which conduct their
principal business activities in the same
industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks. Investment securities will not
normally be purchased while the Fund has an
outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in securities secured by real estate or interests
therein.
Commodities None.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements), in accordance
with the Fund's investment objective and policies,
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
Fund's total assets in repurchase agreements
maturing in more than seven days and other
illiquid assets.
Investment Companies The Fund shall not invest in securities of other
investment companies except as part of a merger,
consolidation or other acquisition.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-23
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management The Fund shall not purchase more than 10% of the
outstanding voting and nonvoting securities of any
issuer, or invest in companies for the purpose of
exercising control or management.
Options The Fund shall not write or purchase puts, calls
or combinations thereof, except that the Fund may
write covered call options with respect to any or
all parts of its portfolio securities and purchase
put options if the Fund owns the security covered
by the put option at the time of purchase, and
that premiums paid on all put options outstanding
do not exceed 2% of its total assets. The Fund may
sell put options previously purchased and enter
into closing transactions with respect to covered
call and put options. In addition, the Fund may
write call options and purchase put options on
stock indices and enter into closing transactions
with respect to such options.
Futures None.
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants The Fund shall not invest in warrants valued at
lower of cost or market exceeding 5% of its net
assets. Included in that amount, but not to exceed
2% of its net assets, may be warrants not listed
on the New York Stock Exchange or American Stock
Exchange.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer which has an officer,
director or security holder who is a director or
officer of Delaware Group Equity Funds IV, Inc. or
of its investment manager if or so long as the
directors and officers of Delaware Group Equity
Funds IV, Inc. and of its investment manager
together own beneficially more than 5% of any
class of securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-24
<PAGE>
Small Cap Value Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
market or other fair value of its assets in the
securities of any one issuer (other than
obligations of, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in the
securities of issuers all of which conduct their
principal business activities in the same
industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks. Investment securities will not
normally be purchased while the Fund has an
outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate
but this shall not prevent the Fund from investing
in securities secured by real estate or interests
therein.
Commodities The Fund shall not with regards to one of its
policies, which may not be changed without
shareholder approval, invest in commodities;
however, the Fund reserves the right to invest in
financial futures and options thereon, including
stock index futures, to the extent these
instruments are considered commodities.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements), in accordance
with the Fund's investment objective and policies,
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
Fund's net assets in repurchase agreements
maturing in more than seven days and other
illiquid assets.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-25
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies The Fund shall not invest in securities of other
investment companies except as part of a merger,
consolidation or other acquisition.
Control or Management The Fund shall not purchase more than 10% of the
outstanding voting and nonvoting securities of any
issuer, or invest in companies for the purpose of
exercising control or management.
Options The Fund shall not write or purchase puts, calls
or combinations thereof, except that the Fund may
write covered call options with respect to any or
all parts of its portfolio securities and purchase
put options if the Fund owns the security covered
by the put option at the time of purchase, and
that premiums paid on all put options outstanding
do not exceed 2% of its total assets. The Fund may
sell put options previously purchased and enter
into closing transactions with respect to covered
call and put options. In addition, the Fund may
write call options and purchase put options on
stock indices and enter into closing transactions
with respect to such options.
Futures See "Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants The Fund shall not invest in warrants valued at
lower of cost or market exceeding 5% of the Fund's
net assets. Included in that amount, but not to
exceed 2% of the Fund's net assets, may be
warrants not listed on the New York Stock Exchange
or American Stock Exchange.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer which has an officer,
director or security holder who is a director or
officer of the Fund or of its investment manager
if or so long as the directors and officers of the
Fund and of its investment manager together own
beneficially more than 5% of any class of
securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-26
<PAGE>
Retirement Income Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not with respect to 75% of its
total assets, invest more than 5% of the value of
its assets in securities of any one issuer (except
obligations issued, or guaranteed by, the U.S.
government, its agencies or instrumentalities or
certificates of deposit for any such securities,
and cash and cash items) or purchase more than 10%
of the outstanding voting securities of any one
company.
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in
securities of issuers all of which conduct their
principal business activities in the same
industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund shall
not issue senior securities as defined by the
Investment Company Act of 1940, except for notes
to banks. Investment securities will not normally
be purchased while the Fund has an outstanding
borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
except that the Fund may satisfy margin
requirements with respect to futures transactions.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for purposes of the Securities
Act of 1933.
Real Estate The Fund shall not purchase or sell real estate.
This restriction shall not preclude the Fund's
purchase of securities issued by real estate
investment trusts, the purchase of securities
issued by companies that deal in real estate, or
the investment in securities secured by real
estate or interests therein.
Commodities The Fund shall not buy or sell commodities or
commodity contracts, except that the Fund may
invest in financial futures and options thereon,
including stock index futures, to the extent these
instruments are considered commodities.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements), in accordance
with the Fund's investment objectives and
policies, are considered loans and except that the
Fund
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-27
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
may loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
investment companies, except that the Fund may
invest in securities of open-end, closed-end and
unregistered investment companies, in accordance
with the limitations contained in the Investment
Company Act of 1940.
Control or Management The Fund shall not invest in companies for the
purpose of exercising control or management.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-28
<PAGE>
Balanced Portfolio
Growth Portfolio
Income Portfolio
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest more than 25% of its
total assets in any one industry (including
investments in Underlying Funds that concentrate
in that industry) provided that there is no
limitation with respect to investments in
obligations issued or guaranteed as to principal
or interest by the U.S. Government, its agencies
or instrumentalities. For purposes of this
restriction, investments in the Underlying Funds
will not be deemed to be investments in
"investment company" industry
Borrowing* The Fund shall not borrow money or issue senior
securities, except to the extent permitted by the
Investment Company Act of 1940 Act or any rule or
order thereunder or interpretation thereof.
Subject to the foregoing, the Fund may engage in
short sales, purchase securities on margin, and
write put and call options.
Issuing Senior Securities* None.
Short Sales/Margin* See "Borrowing."
Underwriting The Fund shall not engage in underwriting of
securities of other issuers, except that portfolio
securities, including securities purchased in
private placements, may be acquired under
circumstances where, if sold, the Fund might be
deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion
of the Portfolio's assets which may be invested in
such securities
Real Estate The Fund shall not purchase or sell real estate;
provided that the Fund may invest in securities
secured by real estate or interests therein or
issued by companies which invest in real estate or
interests therein.
Commodities The Fund shall not purchase or sell physical
commodities or physical commodity contracts,
including physical commodity option or futures
contracts in a contract market or other futures
market.
Lending The Fund shall not make loans other than by the
purchase of all or a portion of a publicly or
privately distributed issue of bonds, debentures
or other debt securities of the types commonly
offered publicly or privately and purchased by
financial institutions (including repurchase
agreements and loan participations), whether or
not the purchase was made upon the original
issuance of the securities, and except that each
Portfolio may loan its assets (other than shares
of the Underlying Funds) to qualified
broker/dealers or institutional investors.
Illiquid Securities None.
Control or Management None.
Options See "Borrowing."
Futures None.
Unseasoned Issuers None.
Warrants None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-29
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-30
<PAGE>
Emerging Markets Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, as to 50% of its respective
total assets, invest more than 5% of its
respective total assets in the securities of any
one issuer (other than obligations issued, or
guaranteed by, the U.S. government, its agencies
or instrumentalities).
Concentration The Fund shall not make any investment which would
cause 25% or more of its total assets to be
invested in the securities of issuers all of which
conduct their principal business activities in the
same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such
asset coverage shall at any time fall below 300%,
the Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
(the "SEC") may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not make short sales of securities,
or purchase securities on margin, except that a
Fund may satisfy margin requirements with respect
to futures transactions.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that, in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate or
real estate limited partnerships, but this shall
not prevent the Fund from investing in securities
secured by real estate or interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts, except that each Fund may
enter into futures contracts and options on
futures contracts in accordance with its
respective prospectuses, subject to the investment
restriction under "Futures."
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations Fund's
(including repurchase agreements) in accordance
with a investment objective and policies, are
considered loans and except that the Fund may loan
up to 25% of its assets to qualified
broker/dealers or institutional investors their
for use relating to short sales or other security
transactions.
Illiquid Securities None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-31
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies None.
Control or Management None.
Options None.
Futures The Fund shall not enter into futures contracts or
options thereon, except that a Fund may enter into
futures contracts and options thereon to the
extent that not more than 5% of the Fund's assets
are required as futures contract margin deposits
and premiums on options and only to the extent
that obligations under such contracts and
transactions represent not more than 20% of the
Fund's assets.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-32
<PAGE>
Global Equity Fund (formerly Global Assets Fund)
Global Bond Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not as to 50% of its total assets,
invest more than 5% of its total assets in the
securities of any one issuer (other than
obligations issued, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not make any investment which would
cause 25% or more of its total assets to be
invested in the securities of issuers all of which
conduct their principal business activities in the
same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such
asset coverage shall at any time fall below 300%,
the Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not pledge more than 10%
of its net assets. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940, except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not make short sales of securities,
or purchase securities on margin, except that the
Fund may satisfy margin requirements with respect
to futures transactions.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that, in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate or
real estate limited partnerships, but this shall
not prevent the Fund from investing in securities
secured by real estate or interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts, except that the Fund may
enter into futures contracts and options on
futures contracts in accordance with its
prospectus, subject to the investment restriction
concerning "Futures."
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies,
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
open-end investment companies,
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-33
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
except as part of a merger, consolidation or other
acquisition. This limitation does not prohibit the
Fund from investing in the securities of
closed-end investment companies at customary
brokerage commission rates.
Control or Management None.
Options See "Futures."
Futures The Fund shall not enter into futures contracts or
options thereon, except that the Fund may enter
into futures contracts and options thereon to the
extent that not more than 5% of the Fund's assets
are required as futures contract margin deposits
and premiums on options and only to the extent
that obligations under such contracts and
transactions represent not more than 20% of the
Fund's assets.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-34
<PAGE>
Global Opportunities Fund
(formerly Global Equity Fund)
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not as to 75% of its total assets,
invest more than 5% of its total assets in the
securities of any one issuer (other than
obligations issued, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not invest 25% or more of its total
assets in any one industry provided that there is
no limitation with respect to investments in
obligations issued or guaranteed as to principal
or interest by the U.S. Government, its agencies
or instrumentalities.
Borrowing* The Fund shall not borrow money or issue senior
securities, except to the extent permitted by the
Investment Company Act of 1940 or any rule or
order thereunder or interpretation thereof.
Subject to the foregoing, the Fund may engage in
short sales, purchase securities on margin, and
write put and call options.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Fund shall not engage in underwriting of
securities of other issuers, except that portfolio
securities, including securities purchased in
private placements, may be acquired under
circumstances where, if sold, the Fund might be
deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion
of the Fund's assets which may be invested in such
securities.
Real Estate The Fund shall not purchase or sell real estate;
provided that the Fund may invest in securities
secured by real estate or interests therein or
issued by companies which invest in real estate or
interests therein.
Commodities The Fund shall not purchase or sell physical
commodities or physical commodity contracts,
including physical commodity options or futures
contracts in a contract market or other futures
market.
Lending The Fund shall not make loans other than by the
purchase of all or a portion of a publicly or
privately distributed issue of bonds, debentures
or other debt securities of the types commonly
offered publicly or privately and purchased by
financial institutions (including repurchase
agreements), whether or not the purchase was made
upon the original issuance of the securities, and
except that the Fund may loan its assets to
qualified broker/dealers or institutional
investors.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Borrowing" and "Commodities."
Futures See "Commodities."
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-35
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-36
<PAGE>
International Equity Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, as to 75% of its respective
total assets, invest more than 5% of their
respective total assets in the securities of any
one issuer (other than obligations issued, or
guaranteed by, the U.S. government, its agencies
or instrumentalities).
Concentration The Fund shall not make any investment which would
cause 25% or more of its total assets to be
invested in the securities of issuers all of which
conduct their principal business activities in the
same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such
asset coverage shall at any time fall below 300%,
the Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
(the "SEC") may prescribe by rules and
regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not make short sales of securities,
or purchase securities on margin, except that the
Fund may satisfy margin requirements with respect
to futures transactions.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that, in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate or
real estate limited partnerships, but this shall
not prevent the Fund from investing in securities
secured by real estate or interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts, except that each Fund may
enter into futures contracts and options on
futures contracts in accordance with its
respective prospectuses subject to the investment
restriction under "Futures" below.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies,
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
Fund's total assets in repurchase agreements
maturing in more than seven days and other
illiquid assets.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-37
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies The Fund shall not invest in securities of other
open-end investment companies, except as part of a
merger, consolidation or other acquisition. This
limitation does not prohibit the Fund from
investing in the securities of closed-end
investment companies at customary brokerage
commission rates.
Control or Management The Fund shall not purchase more than 10% of the
outstanding voting securities of any issuer, or
invest in companies for the purpose of exercising
control or management.
Options The Fund shall not write, purchase or sell
options, puts, calls or combinations thereof,
except that such Fund may: (a) purchase call
options to the extent that the premiums paid on
all outstanding call options do not exceed 2% of
such Fund's total assets; (b) write secured put
options; (c) write covered call options; and (d)
purchase put options if such Fund owns the
security covered by the put option at the time of
purchase, and provided that premiums paid on all
put options outstanding do not exceed 2% of its
total assets. Such Fund may sell put or call
options previously purchased and enter into
closing transactions with respect to the
activities noted above.
Futures The Fund shall not enter into futures contracts or
options thereon, except that a Fund may enter into
futures contracts and options thereon to the
extent that not more than 5% of the Fund's assets
are required as futures contract margin deposits
and premiums on options and only to the extent
that obligations under such contracts and
transactions represent not more than 20% of the
Fund's assets.
See "Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer which has an officer,
director or security holder who is a director or
officer of Global Funds, Inc. or of its investment
manager if or so long as the directors and
officers of Global Funds, Inc. and of its
investment manager together own beneficially more
than 5% of any class of securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs or leases.
Miscellaneous None.
- ---------------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-38
<PAGE>
International Small Cap Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not as to 75% of its total assets,
invest more than 5% of its total assets in the
securities of any one issuer (other than
obligations issued, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not invest 25% or more of its total
assets in any one industry provided that there is
no limitation with respect to investments in
obligations issued or guaranteed as to principal
or interest by the U.S. Government, its agencies
or instrumentalities.
Borrowing* The Fund shall not borrow money or issue senior
securities, except to the extent permitted by the
Investment Company Act of 1940 or any rule or
order thereunder or interpretation thereof.
Subject to the foregoing, the Fund may engage in
short sales, purchase securities on margin, and
write put and call options.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Fund shall not engage in underwriting of
securities of other issuers, except that portfolio
securities, including securities purchased in
private placements, may be acquired under
circumstances where, if sold, the Fund might be
deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion
of the Fund's assets which may be invested in such
securities.
Real Estate The Fund shall not purchase or sell real
estate; provided that the Fund may invest in
securities secured by real estate or interests
therein or issued by companies which invest in
real estate or interests therein.
Commodities The Fund shall not purchase or sell physical
commodities or physical commodity contracts,
including physical commodity options or futures
contracts in a contract market or other futures
market.
Lending The Fund shall not make loans other than by the
purchase of all or a portion of a publicly or
privately distributed issue of bonds, debentures
or other debt securities of the types commonly
offered publicly or privately and purchased by
financial institutions (including repurchase
agreements), whether or not the purchase was made
upon the original issuance of the securities, and
except that the Fund may loan its assets to
qualified broker/dealers or institutional
investors.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-39
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-40
<PAGE>
U.S. Government Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
market or other fair value of its assets in the
securities of any one issuer (other than
obligations of, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in the
securities of issuers all of which conduct their
principal business activities in the same
industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission (the "Commission") may
prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not pledge more than 10%
of its net assets. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to
banks. No investment securities will be purchased
while the Fund has an outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate
but this shall not prevent the Fund from investing
in securities secured by real estate or interests
therein.
Commodities None.
Lending The Fund shall not make loans, except to the
extent the purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
Fund's net assets in repurchase agreements
maturing in more than seven days or in other
illiquid assets.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-41
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies The Fund shall not invest in securities of other
investment companies except as part of a merger,
consolidation or other acquisition, and except to
the extent that an issuer of mortgage-backed
securities may be deemed to be an investment
company, provided that any such investment in
securities of an issuer of a mortgage-backed
security which is deemed to be an investment
company will be subject to the limits set forth in
Section 12(d)(1)(A) of the 1940 Act.
The Fund as been advised by the staff of the
Commission that it is the staff's position that,
under the 1940 Act, the Fund may invest (a) no
more than 10% of its assets in the aggregate in
certain CMOs and REMICs which are deemed to be
investment companies under the 1940 Act and
issue their securities pursuant to an exemptive
order from the Commission, and (b) no more than
5% of its assets in any single issue of such
CMOs or REMICs.
Control or Management The Fund shall not purchase more than 10% of the
voting securities of any issuer, or invest in
companies for the purpose of exercising control or
management.
Options The Fund shall not write, purchase or sell
options, puts, calls or combinations thereof,
except that the Fund may: (a) write covered call
options with respect to any part or all of its
portfolio securities; (b) purchase call options to
the extent that the premiums paid on all
outstanding call options do not exceed 2% of the
Fund's total assets; (c) write secured put
options; (d) purchase put options to the extent
that the premiums paid on all outstanding put
options do not exceed 2% of the Fund's total
assets and only if the Fund owns the security
covered by the put option at the time of purchase.
The Fund may sell put options or call options
previously purchased or enter into closing
transactions with respect to such options.
Futures The Fund shall not enter into futures contracts or
options thereon, except that the Fund may enter
into futures contracts to the extent that not more
than 5% of the Fund's assets are required as
futures contract margin deposits and only to the
extent that obligations under such contracts or
transactions represent not more than 20% of the
Fund's assets.
Unseasoned Issuers None.
Warrants The Fund shall not invest in warrants or rights
except where acquired in units or attached to
other securities.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer any of whose officers,
directors or security holders is a director or
officer of the Fund or of its investment manager
if or so long as the directors and officers of the
Fund and of its investment manager together own
beneficially more than 5% of any class of
securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-42
<PAGE>
Delchester Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
company (except U.S. government bonds) or purchase
more than 10% of the voting or nonvoting
securities of any one company.
Concentration The Fund shall not invest more than 25% of its
assets in any one particular industry.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary or emergency
purposes. Any borrowing will be done from a bank
and to the extent that such borrowing exceeds 5%
of the value of the Fund's assets, asset coverage
of at least 300% is required. In the event that
such asset coverage shall at any time fall below
300%, the Fund shall, within three days thereafter
(not including Sundays and holidays) or such
longer period as the Securities and Exchange
Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to an extent
that the asset coverage of such borrowings shall
be at least 300%. The Fund shall not issue senior
securities as defined in the Investment Company
Act of 1940, except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for purposes of the Securities
Act of 1933.
Real Estate The Fund shall not make any investment in real
estate. This restriction does not preclude the
Fund's purchase of securities issued by real
estate investment trusts.
Commodities The Fund shall not buy or sell commodities or
commodity contracts.
Lending The Fund shall not make loans. However, (i) the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
or of other securities authorized to be purchased
by the Fund's investment policies, whether or not
the purchase was made upon the original issuance
of the securities, and the entry into "repurchase
agreements" are not to be considered the making of
a loan by the Fund; and (ii) the Fund may loan up
to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating
to short sales and other security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
investment companies.
Control or Management The Fund shall not invest for the purpose of
acquiring control of any company.
Options None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-43
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Futures None.
Unseasoned Issuers The Fund shall not invest in the securities
of companies which have a record of less
than three years' continuous operation,
including any predecessor company or companies, if
such purchase at the time thereof would cause more
than 5% of the total Fund assets to be invested in
the securities of such company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of Delaware Group Income
Funds, Inc., or an officer, director or partner of
the Manager if, to the knowledge of the Fund, one
or more of such persons owns beneficially more
than 1/2 of 1% of the shares of the company, and
in the aggregate more than 5% thereof.
Oil or Gas None.
Miscellaneous No long or short positions on shares of the Fund
may be taken by Delaware Group Income Funds,
Inc.'s officers, directors or any of its
affiliated persons. Such persons may buy shares of
the Fund for investment purposes, however, as
described under Purchasing Shares in the Statement
of Additional Information.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-44
<PAGE>
High-Yield Opportunities Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, with respect to 75% of its
total assets, invest more than 5% of its total
assets in the securities of any one issuer (other
than obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities or
certificates of deposit for any such securities
and cash and cash items) or purchase more than 10%
of the voting securities of any one company.
Concentration The Fund shall not invest more than 25% of its
total assets in securities of issuers all of which
conduct their principal business activities in the
same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets. Any
borrowing will be done in accordance with the
rules and regulations prescribed from time to time
by the Securities and Exchange Commission with
respect to open-end investment companies. The Fund
shall not issue senior securities as defined in
the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund may be deemed to be
an underwriter for purposes of the Securities Act
of 1933.
Real Estate The Fund shall not make any investment in real
estate. This restriction does preclude the Fund's
purchase of securities issued by real estate
investment trusts, the purchase of securities
issued by companies that deal in real estate, or
the investment in securities secured by real
estate or interests therein.
Commodities The Fund shall not buy or sell commodities or
commodity contracts except that the Fund may enter
into futures contracts and options thereon.
Lending The Fund shall not make loans. However, (i) the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
or of other securities authorized to be purchased
by the Fund's investment policies, whether or not
the purchase was made upon the original issuance
of the securities, and the entry into "repurchase
agreements" are not to be considered the making of
a loan by the Fund; and (ii) the Fund may loan
securities to qualified broker/dealers or
institutional investors for their use relating to
short sales and other security transactions.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-45
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-46
<PAGE>
Strategic Income Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, with respect to 75% of its
total assets invest more than 5% of the value of
its total assets in securities of any one issuer
(except obligations issued, or guaranteed by, the
U.S. government, its agencies or instrumentalities
or certificates of deposit for any such
securities, and cash and cash items) or purchase
more than 10% of the voting securities of any one
company.
Concentration The Fund shall not invest more than 25% of the
value of its total assets in securities of issuers
all of which conduct their principal business
activities in the same industry. This restriction
does not apply to obligations issued or guaranteed
by the U.S. government, its agencies or
instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets. Any
borrowing will be done in accordance with the
rules and regulations prescribed from time to time
by the Securities and Exchange Commission with
respect to open-end investment companies.
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not sell short any security or
property.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for purposes of the Securities
Act of 1933.
Real Estate The Fund shall not make any investment in real
estate. This restriction does not preclude the
Fund's purchase of securities issued by real
estate investment trusts, the purchase of
securities issued by companies that deal in real
estate, or the investment in securities secured by
real estate or interests therein.
Commodities The Fund shall not buy or sell commodities or
commodity contracts, except that the Fund may
enter into futures contracts and options thereon.
Lending The Fund shall not make loans. However, (i) the
purchase of a portion of an issue of publicly
distributed bonds, debentures or other securities,
or of other securities authorized to be purchased
by the Fund's investment policies, whether or not
the purchase was made upon the original issuance
of the securities, and the entry into "repurchase
agreements" are not to be considered the making of
a loan by the Fund; and (ii) the Fund may loan
securities to qualified broker/dealers or
institutional investors for their use relating to
short sales and other security transactions.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-47
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-48
<PAGE>
Limited-Term Government Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
market or other fair value of its assets in the
securities of any one issuer (other than
obligations of, or guaranteed by, the U.S.
government, its agencies or instrumentalities).
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in the
securities of issuers all of which conduct their
principal business activities in the same
industry. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's net assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday or holidays)
or such longer period as the Securities and
Exchange Commission (the "Commission") may
prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not pledge more than 10%
of its net assets. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to
banks. Securities will not be purchased while the
Fund has an outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate
but this shall not prevent the Fund from investing
in securities secured by real estate or interests
therein.
Commodities None.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities The Fund shall not invest more than 10% of the
Fund's total assets in repurchase agreements
maturing in more than seven days and other
illiquid assets.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-49
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies The Fund shall not invest in securities of other
investment companies except as part of a merger,
consolidation or other acquisition, and except to
the extent that an issuer of mortgage-backed
securities may be deemed to be an investment
company, provided that any such investment in
securities of an issuer of a mortgage-backed
security which is deemed to be an investment
company will be subject to the limits set forth in
Section 12(d)(1)(A) of the 1940 Act.
The Fund has been advised by the staff of the
Commission that it is the staff's position that,
under the 1940 Act, the Fund may invest (a) no
more than 10% of its assets in the aggregate in
certain CMOs and REMICs which are deemed to be
investment companies under the 1940 Act and issue
their securities pursuant to an exemptive order
from the Commission, and (b) no more than 5% of
its assets in any single issue of such CMOs or
REMICs.
Control or Management The Fund shall not purchase more than 10% of the
outstanding voting or nonvoting securities of any
issuer, or invest in companies for the purpose of
exercising control or management.
Options The Fund shall not write, purchase or sell
options, puts, calls or combinations thereof,
except that the Fund may: (a) write covered call
options with respect to any part or all of its
portfolio securities; (b) purchase call options to
the extent that the premiums paid on all
outstanding call options do not exceed 2% of the
Fund's total assets; (c) write secured put
options; (d) purchase put options to the extent
that the premiums on all outstanding put options
do not exceed 2% of the Fund's total assets and
only if the Fund owns the security covered by the
put option at the time of purchase. The Fund may
sell put options or call options previously
purchased or enter into closing transactions with
respect to such options.
Futures The Fund shall not enter into futures contracts or
options thereon, except that the Fund may enter
into futures contracts to the extent that not more
than 5% of the Fund's assets are required as
futures contract margin deposits and only to the
extent that obligations under such contracts or
transactions represent not more than 20% of the
Fund's assets.
Unseasoned Issuers None.
Warrants The Fund shall not invest in warrants or rights
except where acquired in units or attached to
other securities.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer any of whose officers,
directors or security holders is a director or
officer of the Fund or of its investment manager
if or so long as the directors and officers of the
Fund and of its investment manager together own
beneficially more than 5% of any class of
securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-50
<PAGE>
Capital Reserves Series
Cash Reserve Series
Decatur Total Return Series
Delaware Series
DelCap Series
Delchester Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities).
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry, except
that the Fund may invest more than 25% of the
value of its total assets in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, certificates of deposit and
bankers' acceptances of banks with over one
billion dollars in assets or bank holding
companies whose securities are rated A-2 or better
by Standard & Poor's Ratings Group ("S&P") or P-2
or better by Moody's Investors Service, Inc.
("Moody's").
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing their net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday and
holidays) or such longer period as the Securities
and Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 15% of its net assets. The
Fund shall not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position (except that the Fund may obtain
such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio
securities). This restriction shall not prohibit
the Fund from satisfying margin requirements with
respect to futures transactions.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily-marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for the purposes of the
Securities Act of 1933.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-51
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude the Fund's purchase
of securities secured by real estate or interests
therein, or securities issued by companies which
invest in real estate or interests therein,
including real estate investment trusts.)
Commodities See "Oil and Gas."
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with each Fund's investment objective and policies
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not purchase any security issued by
any other investment company (except in connection
with a merger, consolidation or offer of exchange)
if after such purchase it would: (a) own more than
3% of the voting stock of such company, (b) own
securities of such company having a value in
excess of 5% of the Fund's assets or (c) own
securities of investment companies having an
aggregate value in excess of 10% of the Fund's
assets. Any such purchase shall be at the
customary brokerage commission.
Control or Management The Fund shall not purchase more than 10% of the
voting securities of any company, or invest in any
company for the purpose of exercising control or
management.
Options None.
Futures See "Short Sales/Margin."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-52
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of the Fund, or an
officer or director of its investment manager if
such persons, each owning beneficially more than
1/2 of 1% of the shares of the company, own in the
aggregate more than 5% thereof.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs, commodities or commodities contracts.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-53
<PAGE>
Convertible Securities Series
Devon Series
Social Awareness Series
Strategic Income Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not with respect to 75% of its
total assets, purchase the securities of any
issuer (other than those of other investment
companies or of the U.S. Government or its
agencies or instrumentalities), if immediately
thereafter the Fund would (a) have more than 5% of
the value of its total assets in the securities of
such issuer or (b) own more than 10% of the
outstanding voting securities of such issuer.
Concentration The Fund shall not invest 25% or more of its total
assets in any one industry provided that there is
no limitation with respect to investments in
obligations issued or guaranteed as to principal
or interest by the U.S. Government, its agencies
or instrumentalities.
Borrowing* The Fund shall not borrow money or issue senior
securities, except to the extent permitted by the
Investment Company Act of 1940 or any rule or
order thereunder or interpretation thereof.
Subject to the foregoing, the Fund may engage in
short sales, purchase securities on margin, and
write put and call options.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Fund shall not engage in underwriting of
securities of other issuers, except that portfolio
securities, including securities purchased in
private placements, may be acquired under
circumstances where, if sold, the Fund might be
deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion
of the Fund's assets which may be invested in such
securities.
Real Estate The Fund shall not purchase or sell real estate;
provided that the Fund may invest in securities
secured by real estate or interests therein or
issued by companies which invest in real estate or
interests therein.
Commodities The Fund shall not purchase or sell physical
commodities or physical commodity contracts,
including physical commodity option or futures
contracts in a contract market or other futures
market.
Lending The Fund shall not make loans other than by the
purchase of all or a portion of a publicly or
privately distributed issue of bonds, debentures
or other debt securities of the types commonly
offered publicly or privately and purchased by
financial institutions (including repurchase
agreements), whether or not the purchase was made
upon the original issuance of the securities, and
except that the Fund may loan its assets to
qualified broker/dealers or institutional
investors.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-54
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Illiquid Securities None.
Investment Companies See "Diversification."
Control or Management None.
Options See "Borrowing."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-55
<PAGE>
Emerging Markets Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not as to 50% of its respective
total assets, invest more than 5% of its
respective total assets in the securities of any
one issuer (other than obligations issued, or
guaranteed by, the U.S. government, its agencies
or instrumentalities).
Concentration The Fund shall not invest 25% or more of its total
assets in any one industry provided that there is
no limitation with respect to investments in
obligations issued or guaranteed as to principal
or interest by the U.S. Government, its agencies
or instrumentalities.
Borrowing* The Fund shall not borrow money or issue senior
securities, except to the extent permitted by the
Investment Company Act of 1940 or any rule or
order thereunder or interpretation thereof.
Subject to the foregoing, the Fund may engage in
short sales, purchase securities on margin, and
write put and call options.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Fund shall not engage in underwriting of
securities of other issuers, except that portfolio
securities, including securities purchased in
private placements, may be acquired under
circumstances where, if sold, the Fund might be
deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion
of the Fund's assets which may be invested in such
securities.
Real Estate The Fund shall not purchase or sell real estate;
provided that the Fund may invest in securities
secured by real estate or interests therein or
issued by companies which invest in real estate or
interests therein.
Commodities The Fund shall not purchase or sell physical
commodities or physical commodity contracts,
including physical commodity option or futures
contracts in a contract market or other futures
market.
Lending The Fund shall not make loans other than by the
purchase of all or a portion of a publicly or
privately distributed issue of bonds, debentures
or other debt securities of the types commonly
offered publicly or privately and purchased by
financial institutions (including repurchase
agreements), whether or not the purchase was made
upon the original issuance of the securities, and
except that the Fund may loan its assets to
qualified broker/dealers or institutional
investors.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Borrowing."
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-56
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-57
<PAGE>
Global Bond Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities). This restriction shall apply
to only 50% of the assets of the Fund.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry, except
that the Fund may invest more than 25% of the
value of its total assets in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, certificates of deposit and
bankers' acceptances of banks with over one
billion dollars in assets or bank holding
companies whose securities are rated A-2 or better
by Standard & Poor's Ratings Group ("S&P") or P-2
or better by Moody's Investors Service, Inc.
("Moody's").
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing its net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday and
holidays) or such longer period as the Securities
Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 15% of its net assets. The
Fund shall not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position (except that the Fund may obtain
such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio
securities). This restriction shall not prohibit
the Fund from satisfying margin requirements with
respect to futures transactions.
Underwriting The Funds shall not act as an underwriter of
securities of other issuers, except that a Fund
may acquire restricted or not readily-marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for the purposes of the
Securities Act of 1933.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude the Fund's purchase
of securities secured by real estate or interests
therein, or securities issued by companies which
invest in real estate or interests therein,
including real estate investment trusts.)
Commodities None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-58
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not purchase any security issued
by any other investment company (except in
connection with a merger, consolidation or offer
of exchange) if after such purchase it would: (a)
own more than 3% of the voting stock of such
company, (b) own securities of such company having
a value in excess of 5% of the Fund's assets or
(c) own securities of investment companies having
an aggregate value in excess of 10% of the Fund's
assets. Any such purchase shall be at the
customary brokerage commission.
Control or Management None.
Options None.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-59
<PAGE>
International Equity Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities). This restriction shall apply
to only 75% of the assets of the Fund.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry, except
that the Fund may invest more than 25% of the
value of its total assets in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, certificates of deposit and
bankers' acceptances of banks with over one
billion dollars in assets or bank holding
companies whose securities are rated A-2 or better
by Standard & Poor's Ratings Group ("S&P") or P-2
or better by Moody's Investors Service, Inc.
("Moody's").
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing their net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday and
holidays) or such longer period as the Securities
and Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 15% of its net assets. The
Fund shall not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position (except that the Fund may obtain
such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio
securities). This restriction shall not prohibit
the Fund from satisfying margin requirements with
respect to futures transactions.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that a Fund
may acquire restricted or not readily-marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for the purposes of the
Securities Act of 1933.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude the Fund's purchase
of securities secured by real estate or interests
therein, or securities issued by companies which
invest in real estate or interests therein,
including real estate investment trusts.)
Commodities See "Oil and Gas."
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-60
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not purchase any security issued by
any other investment company (except in connection
with a merger, consolidation or offer of exchange)
if after such purchase it would: (a) own more than
3% of the voting stock of such company, (b) own
securities of such company having a value in
excess of 5% of the Fund's assets or (c) own
securities of investment companies having an
aggregate value in excess of 10% of the Fund's
assets. Any such purchase shall be at the
customary brokerage commission. The limitations
set forth in this restriction do not apply to
purchases by the Fund of securities issued by
closed-end investment companies, all of which must
be at the customary brokerage commission.
Control or Management The Fund shall not purchase more than 10% of the
voting securities of any company, or invest in any
company for the purpose of exercising control or
management.
Options See "Oil and Gas."
Futures See "Oil and Gas."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of the Fund, or an
officer or director of its investment manager if
such persons, each owning beneficially more than
1/2 of 1% of the shares of the company, own in the
aggregate more than 5% thereof.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs, commodities or commodities contracts.
This restriction shall not prohibit the Fund from
entering into futures contracts or options
thereon, to the extent that not more than 5% of
its assets are required as futures contract margin
deposits and premiums on options and only to the
extent that obligations under such contracts and
transactions represent not more than 20% of the
Fund's assets.
Miscellaneous None.
- ----------
*These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-61
<PAGE>
REIT Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not concentrate its investments in
the real estate industry. Invest more than 25% of
its total assets in any other single industry,
provided that there is no limitation with respect
to investments in obligations issued of guaranteed
as to principal or interest by the U.S.
Government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money or issue senior
securities, except to the extent permitted by the
Investment Company Act of 1940 or any rule or
order thereunder or interpretation thereof.
Subject to the foregoing, the Fund may engage in
short sales, purchase securities on margin, and
write put and call options
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Fund shall not engage in underwriting of
securities of other issuers, except that portfolio
securities, including securities purchased in
private placements, may be acquired under
circumstances where, if sold, the Series might be
deemed to be an underwriter under the Securities
Act of 1933. No limit is placed on the proportion
of the Fund's assets which may be invested in such
securities.
Real Estate The Fund shall not purchase or sell real estate,
provided, that the Fund may invest in securities
secured by real estate or interests therein or
issued by companies which invest in real estate or
interests therein; provided further, that the Fund
may own real estate directly as a result of a
default on securities the Fund owns.
Commodities The Fund shall not purchase or sell physical
commodities or physical commodity contracts,
including physical commodity option or futures
contracts in a contract market or other futures
market.
Lending The Fund shall not make loans other than by the
purchase of all or a portion of a publicly or
privately distributed issue of bonds, debentures
or other debt securities of the types commonly
offered publicly or privately and purchased by
financial institutions (including repurchase
agreements and loan participations), whether or
not the purchase was made upon the original
issuance of the securities, and except that the
Fund may loan its assets to qualified
broker/dealers or institutional investors.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-62
<PAGE>
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Borrowing."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-63
<PAGE>
Small Cap Value Series
Trend Series
Category Current Fundamental Investment Restriction
- -------- -------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its assets in securities of any one
issuer (other than obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities). This restriction shall apply
to only 75% of the assets of the Fund.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry, except
that the Fund may invest more than 25% of the
value of its total assets in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, certificates of deposit and
bankers' acceptances of banks with over one
billion dollars in assets or bank holding
companies whose securities are rated A-2 or better
by Standard & Poor's Ratings Group ("S&P") or P-2
or better by Moody's Investors Service, Inc.
("Moody's").
Borrowing* The Fund shall not borrow money in excess of
one-third of the value of its net assets and then
only as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund
has no intention of increasing their net income
through borrowing. Any borrowing will be done from
a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's assets,
asset coverage of at least 300% is required. In
the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three
days thereafter (not including Sunday and
holidays) or such longer period as the Securities
and Exchange Commission may prescribe by rules and
regulations, reduce the amount of its borrowings
to an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will
not pledge more than 15% of its net assets. The
Fund shall not issue senior securities as defined
in the Investment Company Act of 1940, except for
notes to banks.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-64
<PAGE>
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not purchase securities on margin,
make short sales of securities or maintain a net
short position (except that the Fund may obtain
such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio
securities). This restriction shall not prohibit
the Fund from satisfying margin requirements with
respect to futures transactions.
Underwriting The Fund shall not act as an underwriter of
securities of other issuers, except that the Fund
may acquire restricted or not readily-marketable
securities under circumstances where, if such
securities are sold, the Fund might be deemed to
be an underwriter for the purposes of the
Securities Act of 1933.
Real Estate The Fund shall not make any investment in real
estate unless necessary for office space or the
protection of investments already made. (This
restriction does not preclude the Fund's purchase
of securities secured by real estate or interests
therein, or securities issued by companies which
invest in real estate or interests therein,
including real estate investment trusts.)
Commodities See "Oil and Gas."
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans and except that the Fund may
loan up to 25% of its assets to qualified
broker/dealers or institutional investors for
their use relating to short sales or other
security transactions.
Illiquid Securities None.
Investment Companies The Fund shall not purchase any security issued by
any other investment company (except in connection
with a merger, consolidation or offer of exchange)
if after such purchase it would: (a) own more than
3% of the voting stock of such company, (b) own
securities of such company having a value in
excess of 5% of the Fund's assets or (c) own
securities of investment companies having an
aggregate value in excess of 10% of the Fund's
assets. Any such purchase shall be at the
customary brokerage commission.
Control or Management The Fund shall not purchase more than 10% of the
voting securities of any company, or invest in any
company for the purpose of exercising control or
management.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-65
<PAGE>
Options See "Oil and Gas."
Futures See "Short Sales/Margins" and "Oil and Gas."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in securities of
companies less than three years old. Such
three-year period shall include the operation of
any predecessor company or companies.
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain securities
of a company which has an officer or director who
is an officer or director of the Fund, or an
officer or director of its investment manager if
such persons, each owning beneficially more than
1/2 of 1% of the shares of the company, own in the
aggregate more than 5% thereof.
Oil or Gas The Fund shall not invest in interests in oil, gas
or other mineral exploration or development
programs, commodities or commodities contracts.
This restriction shall not prohibit the Fund from
entering into futures contracts or options
thereon, to the extent that not more than 5% of
its assets are required as futures contract margin
deposits and premiums on options and only to the
extent that obligations under such contracts and
transactions represent not more than 20% of the
Fund's assets.
Miscellaneous None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-66
<PAGE>
Tax-Free New Jersey Fund
Category Current Fundamental Investment Restriction
- -------- -------------------------------------------
Diversification The Fund shall not, with respect to 50% of the
value of the assets of the Fund, invest more than
5% of its assets in the securities of any one
issuer or invest in more than 10% of the
outstanding voting securities of any one issuer,
except that U.S. government and government agency
securities backed by the U.S. government or its
agencies or instrumentalities may be purchased
without limitation. For the purposes of this
limitation, the Fund will regard the state and
each political subdivision, agency or
instrumentality of the state, and each multistate
agency of which the state is a member as a
separate issuer.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry or
industries, except that the Fund may invest more
than 25% of the value of its total assets in
municipal bonds, including industrial development
and pollution control bonds, and in obligations
issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary purposes. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset
coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not issue senior
securities as defined in the Investment Company of
1940 (the "1940 Act"), except for notes to banks.
Investment securities will not normally be
purchased while there is an outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not make short sales of securities,
or purchase securities on margin, except that the
Fund may satisfy margin requirements with respect
to futures transactions.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-67
<PAGE>
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may
participate as part of a group in bidding for the
purchase of municipal bonds directly from an
issuer for its own portfolio in order to take
advantage of the lower purchase price available to
members of such a group.
Real Estate None.
Commodities None.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
investment companies, except as part of a merger,
consolidation or other acquisition, or in
accordance with the limitations contained in the
1940 Act.
Control or Management None.
Options None.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous The Fund shall not purchase securities other than
municipal bonds and taxable short-term
investments.
From time to time, more than 10% of the Fund's
assets may be invested in municipal bonds insured
as to payment of principal and interest by a
single insurance company. The Fund believes such
investments are consistent with the foregoing
restrictions.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-68
<PAGE>
Tax-Free Ohio Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, with respect to 50% of the
value of the assets of the Fund, invest more than
5% of its assets in the securities of any one
issuer or invest in more than 10% of the
outstanding voting securities of any one issuer,
except that U.S. government and government agency
securities backed by the U.S. government or its
agencies or instrumentalities may be purchased
without limitation. For the purposes of this
limitation, the Fund will regard the state and
each political subdivision, agency or
instrumentality of the state, and each multistate
agency of which the state is a member as a
separate issuer.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry or
industries, except that the Fund may invest more
than 25% of the value of its total assets in
municipal bonds, including industrial development
and pollution control bonds, and in obligations
issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary purposes. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset
coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to
banks. Investment securities will not normally be
purchased while there is an outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not make short sales of securities,
or purchase securities on margin, except that the
Fund may satisfy margin requirements with respect
to futures transactions.
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may
participate as part of a group in bidding for the
purchase of municipal bonds directly from an
issuer for its own portfolio in order to take
advantage of the lower purchase price available to
members of such a group.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-69
<PAGE>
Real Estate None.
Commodities None.
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements) in accordance
with the Fund's investment objective and policies
are considered loans.
Illiquid Securities None.
Investment Companies The Fund shall not invest in securities of other
investment companies, except as part of a merger,
consolidation or other acquisition, or in
accordance with the limitations contained in the
1940 Act.
Control or Management None.
Options None.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous The Fund shall not purchase securities other than
municipal bonds and taxable short-term
investments.
From time to time, more than 10% of the Fund's
assets may be invested in municipal bonds insured
as to payment of principal and interest by a
single insurance company. The Fund believes such
investments are consistent with the foregoing
restrictions.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-70
<PAGE>
Tax-Free Pennsylvania Fund
Category Current Fundamental Investment Restriction
- -------- -------------------------------------------
Diversification The Fund shall not, with respect to 50% of the
value of the assets of the Fund, invest more than
5% of its assets in the securities of any one
issuer or invest in more than 10% of the
outstanding voting securities of any one issuer,
except that U.S. government and government agency
securities backed by the U.S. government or its
agencies or instrumentalities may be purchased
without limitation. For the purposes of this
limitation, the Fund will regard the state and
each political subdivision, agency or
instrumentality of the state, and each multistate
agency of which the state is a member as a
separate issuer. In addition, where securities are
issued by one agency or authority but are
guaranteed by another governmental body, "issuer"
shall not be deemed to include the guarantor so
long as the value of all securities owned by the
Fund which have been guaranteed by that guarantor
does not exceed 10% of the value of the Fund's
assets.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry or
industries, except that the Fund may invest more
than 25% of the value of its total assets in
municipal bonds, including industrial development
and pollution control bonds, and in obligations
issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary purposes. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset
coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940, except for notes to banks. Investment
securities will not normally be purchased while
there is an outstanding borrowing.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-71
<PAGE>
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell securities short.
Underwriting The Fund shall not underwrite the securities of
other issuers or purchase securities that are
subject to restrictions on disposition under the
Securities Act of 1933 ("restricted securities"),
except that the Fund may participate as part of a
group in bidding for the purchase of municipal
bonds directly from an issuer for its own
portfolio in order to take advantage of the lower
purchase price available to members of such a
group; nor invest more than 10% of the value of
the Fund's net assets in illiquid securities.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in municipal bonds secured by real estate or
interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts.
Lending The Fund shall not make loans to other persons
except through the use of repurchase agreements or
the purchase of commercial paper. For these
purposes the purchase of a portion of debt
securities which is part of an issue to the public
shall not be considered the making of a loan. Not
more than 10% of the Fund's total assets will be
invested in repurchase agreements and other assets
maturing in more than seven days.
Illiquid Securities See "Underwriting" and "Lending."
Investment Companies The Fund shall not invest in securities of other
investment companies, except as they may be
acquired as part of a merger, consolidation or
acquisition of assets and except for the purchase
of shares of registered unit investment trusts
whose assets consist substantially of municipal
bonds.
Control or Management The Fund shall not purchase more than 10% of the
outstanding debt obligations of any issuer or
invest in companies for the purpose of exercising
control.
Options The Fund shall not write or purchase put or call
options.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous The Fund shall not purchase securities other than
municipal bonds and taxable short-term investments
as defined in its Statement of Additional
Information.
From time to time, more than 10% of the Fund's
assets may be invested in municipal bonds insured
as to payment of principal and interest by a
single insurance company. The Fund believes such
investments are consistent with the foregoing
restrictions.
See "Real Estate."
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-72
<PAGE>
Delaware Group Tax-Free Money Fund, Inc.
Category Current Fundamental Investment Restriction
- -------- -------------------------------------------
Diversification The Fund shall not purchase securities of any
issuer (except the U.S. government, its agencies
or instrumentalities or securities which are
backed by the full faith and credit of the United
States) if, as a result, more than 5% of its total
assets would be invested in the securities of such
issuer.
The Fund shall not purchase securities if, as a
result of such purchase, more than 25% of the
value of its assets would be invested in the
securities of government subdivisions located in
any one state, territory or possession of the
United States. The Fund may invest more than 25%
of the value of its assets in short-term
tax-exempt project notes which are guaranteed by
the U.S. government, regardless of the location of
the issuing municipality.
Concentration None.
Borrowing* The Fund shall not borrow an amount in excess of
5% of the value of its net assets and then only as
a temporary measure for extraordinary purposes or
to facilitate redemptions. Any outstanding
borrowings shall be repaid before additional
securities are purchased.
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not sell securities short or
purchase securities on margin.
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may acquire
portfolio securities under circumstances where, if
the securities are later publicly offered or sold
by the Fund, it might be deemed an underwriter for
purposes of the Securities Act of 1933. Not more
than 10% of the value of the Fund's net assets at
the time of acquisition will be invested in such
securities.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in securities secured by real estate or interests
therein, or securities issued by companies which
invest in real estate or interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts.
Lending The Fund shall not make loans to other persons
except by the purchase of obligations in which the
Fund is authorized to invest and to enter into
repurchase agreements. Not more than 10% of the
Fund's total assets will be invested in repurchase
agreements maturing in more than seven days and in
other illiquid assets.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-73
<PAGE>
Illiquid Securities See "Lending."
Investment Companies The Fund shall not invest in securities of other
investment companies, except as they may be
acquired as part of a merger, consolidation or
acquisition of assets.
Control or Management The Fund shall not invest in issuers for the
purpose of exercising control.
Options The Fund shall not write or purchase put or call
options.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
The Fund shall not invest more than 20% of its
assets in securities other than tax-free money
market instruments as defined under Investment
Objective and Policy in the Statement of
Additional Information, unless extraordinary
circumstances dictate a more defensive posture.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-74
<PAGE>
Tax-Free Insured Fund
Category Current Fundamental Investment Restriction
- -------- -------------------------------------------
Diversification The Fund shall not, with respect to 50% of the
value of its assets, invest more than 5% of its
assets in the securities of any one issuer or
invest in more than 10% of the outstanding voting
securities of any one issuer, except that U.S.
government and government agency securities backed
by the U.S. government, or its agencies or
instrumentalities may be purchased without
limitation. For the purpose of this limitation,
the Fund will regard each state and political
subdivision, agency or instrumentality of a state
and each multistate agency of which a state is a
member as a separate issuer.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry or
industries, except that the Fund may invest more
than 25% of the value of its total assets in
municipal bonds and in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary purposes. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset
coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to
banks. (The issuance of three series of shares is
not deemed to be the issuance of senior securities
so long as such series comply with the appropriate
provisions of the 1940 Act.) Investment securities
will not normally be purchased while there is an
outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-75
<PAGE>
Short Sales/Margin* The Fund shall not sell securities short.
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may
participate as part of a group in bidding for the
purchase of municipal bonds directly from an
issuer for its own portfolio in order to take
advantage of the lower purchase price available to
members of such a group; nor invest more than 10%
of the value of the Fund's net assets in illiquid
assets.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in municipal bonds secured by real estate or
interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts.
Lending The Fund shall not make loans to other persons
except through the use of repurchase agreements or
the purchase of commercial paper. For these
purposes, the purchase of a portion of debt
securities which is part of an issue to the public
shall not be considered the making of a loan.
Illiquid Securities See "Underwriting."
Investment Companies The Fund shall not invest in securities of other
investment companies, except as they are acquired
as part of a merger, consolidation or acquisition
of assets.
Control or Management The Fund shall not invest in companies for the
purpose of exercising control.
Options The Fund shall not write or purchase put or call
options.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous The Fund shall not invest more than 20% of its
assets in securities whose interest is subject to
federal income tax.
The Fund shall not invest more than 20% of its
assets in securities (other than U.S. government
securities, securities of agencies of the U.S.
government and securities backed by the U.S.
government or its agencies or instrumentalities)
which are not covered by insurance guaranteeing
the payment, when due, of interest on and the
principal of such securities, except for defensive
purposes.
Tax-Free Fund, Inc. also has determined that, from
time to time, more than 10% of a Fund's assets may
be invested in municipal bonds insured as to
principal and interest by a single insurance
company. Tax-Free Fund, Inc. believes such
investments are consistent with the foregoing
restrictions.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-76
<PAGE>
Tax Free USA Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, with respect to 50% of the
value of its assets, invest more than 5% of its
assets in the securities of any one issuer or
invest in more than 10% of the outstanding voting
securities of any one issuer, except that U.S.
government and government agency securities backed
by the U.S. government, or its agencies or
instrumentalities may be purchased without
limitation. For the purpose of this limitation,
the Fund will regard each state and political
subdivision, agency or instrumentality of a state
and each multistate agency of which a state is a
member as a separate issuer.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry or
industries, except that the Fund may invest more
than 25% of the value of its total assets in
municipal bonds and in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary purposes. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset
coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to
banks. (The issuance of three series of shares is
not deemed to be the issuance of senior securities
so long as such series comply with the appropriate
provisions of the 1940 Act.) Investment securities
will not normally be purchased while there is an
outstanding borrowing.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-77
<PAGE>
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell securities short.
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may
participate as part of a group in bidding for the
purchase of municipal bonds directly from an
issuer for its own portfolio in order to take
advantage of the lower purchase price available to
members of such a group; nor invest more than 10%
of the value of the Fund's net assets in illiquid
assets.
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in municipal bonds secured by real estate or
interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts.
Lending The Fund shall not make loans to other persons
except through the use of repurchase agreements or
the purchase of commercial paper. For these
purposes, the purchase of a portion of debt
securities which is part of an issue to the public
shall not be considered the making of a loan.
Illiquid Securities See "Underwriting."
Investment Companies The Fund shall not invest in securities of other
investment companies, except as they are acquired
as part of a merger, consolidation or acquisition
of assets.
Control or Management The Fund shall not invest in companies for the
purpose of exercising control.
Options The Fund shall not write or purchase put or call
options.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous The Fund shall not invest more than 20% of its
assets in securities whose interest is subject to
federal income tax.
Tax-Free Fund, Inc. also has determined that, from
time to time, more than 10% of a Fund's assets may
be invested in municipal bonds insured as to
principal and interest by a single insurance
company. Tax-Free Fund, Inc. believes such
investments are consistent with the foregoing
restrictions.
See "Real Estate."
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-78
<PAGE>
Tax-Free USA Intermediate Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not, with respect to 50% of the
value of its assets, invest more than 5% of its
assets in the securities of any one issuer or
invest in more than 10% of the outstanding voting
securities of any one issuer, except that U.S.
government and government agency securities backed
by the U.S. government, or its agencies or
instrumentalities may be purchased without
limitation. For the purpose of this limitation,
the Fund will regard each state and political
subdivision, agency or instrumentality of a state
and each multistate agency of which a state is a
member as a separate issuer.
Concentration The Fund shall not invest more than 25% of its
total assets in any particular industry or
industries, except that the Fund may invest more
than 25% of the value of its total assets in
municipal bonds and in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities.
Borrowing* The Fund shall not borrow money in excess of 10%
of the value of its assets and then only as a
temporary measure for extraordinary purposes. Any
borrowing will be done from a bank and to the
extent that such borrowing exceeds 5% of the value
of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset
coverage shall at any time fall below 300%, the
Fund shall, within three days thereafter (not
including Sunday or holidays) or such longer
period as the Securities and Exchange Commission
may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that
the asset coverage of such borrowings shall be at
least 300%. The Fund will not issue senior
securities as defined in the Investment Company
Act of 1940 (the "1940 Act"), except for notes to
banks. (The issuance of three series of shares is
not deemed to be the issuance of senior securities
so long as such series comply with the appropriate
provisions of the 1940 Act.) Investment securities
will not normally be purchased while there is an
outstanding borrowing.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not sell securities short.
Underwriting The Fund shall not underwrite the securities of
other issuers, except that the Fund may
participate as part of a group in bidding for the
purchase of municipal bonds directly from an
issuer for its own portfolio in order to take
advantage of the lower purchase price available to
members of such a group; nor invest more than 10%
of the value of the Fund's net assets in illiquid
assets.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-79
<PAGE>
Real Estate The Fund shall not purchase or sell real estate,
but this shall not prevent the Fund from investing
in municipal bonds secured by real estate or
interests therein.
Commodities None.
Lending None.
Illiquid Securities See "Underwriting."
Investment Companies The Fund shall not invest in securities of other
investment companies, except as they are acquired
as part of a merger, consolidation or acquisition
of assets.
Control or Management The Fund shall not invest in companies for the
purpose of exercising control.
Options None.
Futures None.
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous The Fund shall not invest more than 20% of its
assets in securities whose interest is subject to
federal income tax.
Tax-Free Fund, Inc. also has determined that, from
time to time, more than 10% of a Fund's assets may
be invested in municipal bonds insured as to
principal and interest by a single insurance
company. Tax-Free Fund, Inc. believes such
investments are consistent with the foregoing
restrictions.
See "Real Estate."
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-80
<PAGE>
The Real Estate Investment Trust Portfolio
Category Current Fundamental Investment Restriction
- -------- -------------------------------------------
Diversification None.
Concentration The Fund shall not make any investment which would
cause more than 25% of the market or other fair
value of its total assets to be invested in the
securities of issuers all of which conduct their
principal business activities in the same industry
except that the Real Estate Investment Trust
Portfolios shall invest in excess of 25% of its
total assets in securities of issuers in the real
estate industry. This restriction does not apply
to obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Borrowing* The Fund shall not borrow money, except as a
temporary measure for extraordinary purposes or to
facilitate redemptions. Any borrowing will be done
from a bank and to the extent that such borrowing
exceeds 5% of the value of its respective net
assets, asset coverage of at least 300% is
required. In the event that such asset coverage
shall at any time fall below 300%, the Fund shall,
within three days thereafter (not including Sunday
or holidays) or such longer period as the
Securities and Exchange Commission may prescribe
by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset
coverage of such borrowings shall be at least
300%. No investment securities will be purchased
while a Fund has an outstanding borrowing. The
Fund will not pledge more than 10% of its
respective net assets. The Fund will not issue
senior securities as defined in the Investment
Company Act of 1940, except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Fund shall not make short sales of securities,
or purchase securities on margin. The Fund may
satisfy margin requirements with respect to
futures transactions.
Underwriting The Fund shall not engage in the underwriting of
securities of other issuers, except that in
connection with the disposition of a security, the
Fund may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933.
Real Estate The Fund shall not purchase or sell real estate or
real estate limited partnerships, but this shall
not otherwise prevent the Fund from investing in
securities secured by real estate or interests
therein, except that the Real Estate Investment
Trust Portfolios may each own real estate directly
as a result of a default on securities the Fund
owns.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-81
<PAGE>
Commodities The Fund shall not purchase or sell commodities or
commodity contracts. The Fund may enter into
futures contracts and may purchase and sell
options on futures contracts in accordance with
the related prospectus subject to the investment
restrictions listed under "Futures."
Lending The Fund shall not make loans, except to the
extent that purchases of debt obligations
(including repurchase agreements), in accordance
with the Fund's investment objective and policies,
are considered loans, and except that the Fund may
loan up to 25% of its respective assets to
qualified broker/dealers or institutional
investors for their use relating to short sales or
other security transactions.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options None.
Futures The Fund may enter into futures contracts and
options thereon to the extent that not more than
5% of its assets are required as futures contract
margin deposits and premiums on options and only
to the extent that obligations under such
contracts and transactions represent not more than
20% of its total assets.
See also "Short Sales/Margin" and "Commodities."
Unseasoned Issuers None.
Warrants The Fund shall not in addition to the restrictions
set forth above, in connection with the
qualification of its shares for sale in certain
states, the Fund may not invest in warrants if
such warrants, valued at the lower of cost or
market, would exceed 5% of the value of the Fund's
net assets. Included within such amount, but not
to exceed 2% of the Fund's net assets may be
warrants which are not listed on the New York
Stock Exchange or American Stock Exchange.
Warrants acquired by the Fund in units or attached
to securities may be deemed to be without value.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer which has an officer,
director or security holder who is a director or
officer of Delaware Pooled Trust, Inc. or of
either of the investment advisers if or so long as
the directors and officers of Delaware Pooled
Trust, Inc. and of the investment advisers
together own beneficially more than 5% of any
class of securities of such issuer.
Oil or Gas The Fund shall not invest in interests in oil, gas
and other mineral leases or other mineral
exploration or development programs.
Miscellaneous None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
F-82
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Adviser Funds,Inc.
- ----------------------------------------------------------------------------------------------------
New Pacific Fund Delaware 5/4/96(1) 0.80% per year
(Investment Management) Management
Company,
Inc. ("DMC")
- ----------------------------------------------------------------------------------------------------
New Pacific Fund AIB Govett, 1/1/98(2) 0.50% per year
(Sub-Advisory) Inc. ("AIBG")
- ----------------------------------------------------------------------------------------------------
Overseas Equity Fund DMC 5/4/96(1) 1.00% per year
(Investment Management)
- ----------------------------------------------------------------------------------------------------
Overseas Equity Fund Delaware 9/15/97(3) 80% of fees paid to DMC
(Sub-Advisory) International
Advisers
Ltd.
("DIAL")
- ----------------------------------------------------------------------------------------------------
U.S. Growth Fund DMC 5/4/96(1) 0.70% per year
(Investment Management)
- ----------------------------------------------------------------------------------------------------
U.S. Growth Fund Lynch & 5/4/96(1) 0.40% per year
(Sub-Advisory) Mayer, Inc.
("L&M")
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delaware Group Adviser Funds,Inc.
- ----------------------------------------------------------------------------------------------------------------------
New Pacific Fund 0.85% on first $500 million
(Investment Management) 0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- ----------------------------------------------------------------------------------------------------------------------
New Pacific Fund No Change N/A N/A
(Sub-Advisory)
- ----------------------------------------------------------------------------------------------------------------------
Overseas Equity Fund 0.85% on first $500 million
(Investment Management) 0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- ----------------------------------------------------------------------------------------------------------------------
Overseas Equity Fund No Change N/A N/A
(Sub-Advisory)
- ----------------------------------------------------------------------------------------------------------------------
U.S. Growth Fund 0.65% on first $500 million
(Investment Management) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- ----------------------------------------------------------------------------------------------------------------------
U.S. Growth Fund SRSY investigating No
(Sub-Advisory) Change
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
(1) Last submitted to shareholders for approval on May 3, 1996 in connection
with the replacement of Lincoln Investment Management, Inc. as the Fund's
investment manager.
(2) Last submitted to shareholders for approval on January 1, 1998 in connection
with the internal restructuring of the previous sub-adviser (resulted in the
transfer of the previous sub-adviser's personnel and services to the current
sub-adviser).
(3) Last submitted to shareholders on ______ in connection with _________.
G-1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Cash Reserve, Inc. DMC 4/3/95(1) 0.50% on first $500 million
0.475% on next $250 million
0.45% on next $250 million
0.425% on next $250 million
0.375% on next $250 million
0.325% on next $250 million
0.30% on next $250 million
0.275% on assets in excess
of $2,000; all per year
less directors' fees
- ------------------------------------------------------------------------------------------------------
Delaware Group Equity Funds I,
Inc.
- ------------------------------------------------------------------------------------------------------
Delaware Balanced Fund DMC 4/3/95(1) 0.60% on first $100 million
(formerly Delaware Fund) 0.525% on next $150 million
0.50% on next $250 million
0.475% on assets in
excess of $500 million;
all per year less
directors' fees
- ------------------------------------------------------------------------------------------------------
Devon Fund DMC 4/3/95(1) 0.60% on first $500 million
0.50% on assets in
excess of $500 million;
all per year
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delaware Group Cash Reserve, Inc. 0.45% on first $500 million
0.40% on next $500 million
0.35% on next $1,500 million
0.30% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------
Delaware Group Equity Funds I,
Inc.
- ---------------------------------------------------------------------------------------------------------------
Delaware Balanced Fund 0.65% on first $500 million
(formerly Delaware Fund) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess
of $2,500 million;
all per year
- ---------------------------------------------------------------------------------------------------------------
Devon Fund 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in
excess of $2,500
million; all per year
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
G-2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Equity Funds II,
Inc.
- ---------------------------------------------------------------------------------------------------------
Blue Chip Fund DMC 2/24/97(1) 0.65% on first $500 million
(Investment Management) 0.625% on next $500 million
0.60% on assets in excess of
$1,000 million; all per year
- ---------------------------------------------------------------------------------------------------------
Blue Chip Fund Vantage 2/24/97(1) 0.15% on average daily net
(Sub-Advisory) Global assets averaging one year old
Advisors, or less
Inc. ("VGA") 0.20% on average daily net
assets averaging two years
old or less, but greater than
one year old
0.35% on average daily net
assets averaging over two
years old; all per year
- ---------------------------------------------------------------------------------------------------------
Decatur Income Fund DMC 4/3/95(2) 0.60% on first $100 million
0.525% on next $150 million
0.50% on next $250 million
0.475% on assets in excess of
$500 million; all per year less
directors' fees
- ---------------------------------------------------------------------------------------------------------
Decatur Total Return Fund DMC 4/3/95(2) 0.60% on first $500 million
0.575% on next $250 million
0.55% on assets in excess of
$750 million; all per year less
directors' fees
- ---------------------------------------------------------------------------------------------------------
Social Awareness Fund DMC 2/24/97(1) 0.75% on first $500 million
(Investment Management) 0.725% on next $500 million
0.70% on assets in excess of
$1,000; all per year
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delaware Group Equity Funds II,
Inc.
- ---------------------------------------------------------------------------------------------------------------------
Blue Chip Fund 0.65% on first $500 million
(Investment Management) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Blue Chip Fund No Change N/A N/A
(Sub-Advisory)
- ---------------------------------------------------------------------------------------------------------------------
Decatur Income Fund 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of $2,500
million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Decatur Total Return Fund 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Social Awareness Fund 0.75% on first $500 million
(Investment Management) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(1) Last submitted to shareholders for initial approval on [February 24, 1997].
(2) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
G-3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Current Management (or Proposed Management (or
Investment Asset Size Sub-Advisory) Fee Rate Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily Based on Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Social Awareness Fund VGA 2/24/97(1) 0.20% on average daily net No Change
(Sub-Advisory) assets averaging one year
old or less
0.25% on average daily net
assets averaging two years
old or less, but greater than
one year old
0.40% on average daily net
assets averaging over two
years old; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Group Equity Funds III,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Trend Fund DMC 4/3/95(2) 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Group Equity Funds IV,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund DMC 11/29/96(3) 0.75% on first $500 million 0.75% on first $500 million
0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
DelCap Fund DMC 4/3/95(2) 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in
excess of $2,500
million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(1) Last submitted to shareholders for initial approval on [February 24, 1997].
(2) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(3) Last submitted to shareholders for initial approval on [November 29, 1996].
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Last Proposed Percentage Last Fiscal
Fiscal Management Difference Year to
Year Fee Rate Between Affiliates of
Company/Fund A B A & B Manager
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Social Awareness Fund N/A N/A NA
(Sub-Advisory)
- -----------------------------------------------------------------------------------------
Delaware Group Equity Funds III,
Inc.
- -----------------------------------------------------------------------------------------
Trend Fund
- -----------------------------------------------------------------------------------------
Delaware Group Equity Funds IV,
Inc.
- -----------------------------------------------------------------------------------------
Capital Appreciation Fund
- -----------------------------------------------------------------------------------------
DelCap Fund
- -----------------------------------------------------------------------------------------
</TABLE>
G-4
<PAGE>
<TABLE>
<CAPTION>
Current Management (or Proposed Management (or
Investment Asset Size Sub-Advisory) Fee Rate Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily Based on Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Group Equity Funds V,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap Value Fund
DMC 4/3/95(1) 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Retirement Income Fund DMC 11/29/96(1) 0.65% on first $500 million 0.65% on first $500 million
0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000; all per year 0.50% on assets in excess of
$2,500; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Group Foundation Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio DMC 12/18/97(3) 0.25% per year (currently No Change
waived to 0.10%)
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio DMC 12/18/97(3) 0.25% per year (currently No Change
waived to 0.10%)
- ------------------------------------------------------------------------------------------------------------------------------------
Income Portfolio DMC 12/18/97(3) 0.25% per year (currently No Change
waived to 0.10%)
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Group Global &
International Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund DIAL 5/1/96(4) 1.25% per year 1.25% on first $500 million
1.20% on next $500 million
1.15% on next $1,500 million
1.10% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Global Equity Fund (formerly DIAL 4/3/95(1) 0.75% per year less 0.85% on first $500 million
Global Assets Series) directors' fees 0.80% on next $500 million
(Investment Management) 0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Last Proposed Percentage Last Fiscal
Fiscal Management Difference Year to
Year Fee Rate Between Affiliates of
Company/Fund A B A & B Manager
- ------------------------------------------------------------------------------------------
Delaware Group Equity Funds V,
Inc.
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap Value Fund
N/A N/A
- ------------------------------------------------------------------------------------------
Retirement Income Fund N/A N/A
- ------------------------------------------------------------------------------------------
Delaware Group Foundation Funds
- ------------------------------------------------------------------------------------------
Balanced Portfolio N/A N/A
- ------------------------------------------------------------------------------------------
Growth Portfolio N/A N/A
- ------------------------------------------------------------------------------------------
Income Portfolio N/A N/A
- ------------------------------------------------------------------------------------------
Delaware Group Global &
International Funds, Inc.
- ------------------------------------------------------------------------------------------
Emerging Markets Fund N/A N/A
- ------------------------------------------------------------------------------------------
Global Equity Fund (formerly
Global Assets Series)
(Investment Management)
- ------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National corporation's acquisition of DMC and DIAL.
(2) Last submitted to shareholders for initial approval on [November 29, 1996]
(3) Last submitted to shareholders for initial approval on [December 18, 1997].
(4) Last submitted to shareholders for initial approval on [May 1, 1996].
G-5
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Global Equity Fund (formerly DMC 4/3/95(1) 25% of fees paid to DIAL
Global Assets Series)
(Sub-Advisory)
- ----------------------------------------------------------------------------------------------------
Global Bond Fund DIAL 4/3/95(1) 0.75% per year less
directors' fees
- ----------------------------------------------------------------------------------------------------
Global Opportunities Fund DIAL 0.80% per year
(formerly Global Equity Series)
(Investment Management)
- ----------------------------------------------------------------------------------------------------
Global Opportunities Fund DMC 50% of fees paid to DIAL
(formerly Global Equity Series)
(Sub-Advisory)
- ----------------------------------------------------------------------------------------------------
International Equity Fund DIAL 4/3/95(1) 0.75% per year less
directors' fees
- ----------------------------------------------------------------------------------------------------
International Small Cap Fund DIAL 7/21/97(2) 1.25% per year
- ----------------------------------------------------------------------------------------------------
Delaware Group Government Fund,
Inc.
- ----------------------------------------------------------------------------------------------------
U.S. Government Fund DMC 4/3/95(1) 0.60% per year less
directors' fees
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Global Equity Fund (formerly No Change
Global Assets Series)
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------------------
Global Bond Fund 0.75% on first $500 million N/A N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Global Opportunities Fund 0.85% on first $500 million
(formerly Global Equity Series) 0.80% on next $500 million
(Investment Management) 0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Global Opportunities Fund No Change
(formerly Global Equity Series)
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------------------
International Equity Fund 0.85% on first $500 million
0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
International Small Cap Fund 1.25% on first $500 million N/A N/A
1.20% on next $500 million
1.15% on next $1,500 million
1.10% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Delaware Group Government Fund,
Inc.
- -------------------------------------------------------------------------------------------------------------------
U.S. Government Fund 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(2) Last submitted to shareholders for initial approval on [July 21, 1997].
G-6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Income Funds, Inc.
- -------------------------------------------------------------------------------------------------------
Corporate Bond Fund
- -------------------------------------------------------------------------------------------------------
Delchester Fund DMC 4/3/95(1) 0.60% on first $500 million
0.575% on next $250 million
0.55% on assets in excess of
$750 million; all per year
less director's fees
- -------------------------------------------------------------------------------------------------------
Extended Duration Bond Fund
- -------------------------------------------------------------------------------------------------------
High-Yield Opportunities Fund DMC 12/27/96(2) 0.65% on first $500 million
0.625% on next $500 million
0.60% on assets in excess of
$1,000 million; all per year
- -------------------------------------------------------------------------------------------------------
Strategic Income Fund DMC 9/30/96(3) 0.65% on first $500 million
(Investment Management) 0.625% on next $500 million
0.60% on assets in excess of
$1,000 million; all per year
- -------------------------------------------------------------------------------------------------------
Strategic Income Fund DIAL 9/30/96(3) 1/3 of management fees
(Sub-Advisory) paid to DMC
- -------------------------------------------------------------------------------------------------------
Delaware Group Limited-Term
Government Funds, Inc.
- -------------------------------------------------------------------------------------------------------
Limited-Term Government Fund DMC 4/3/95(1) 0.50% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delaware Group Income Funds, Inc.
- --------------------------------------------------------------------------------------------------------------------
Corporate Bond Fund
- --------------------------------------------------------------------------------------------------------------------
Delchester Fund 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Extended Duration Bond Fund
- --------------------------------------------------------------------------------------------------------------------
High-Yield Opportunities Fund 0.65% on first $500 million N/A N/A
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Strategic Income Fund 0.65% on first $500 million N/A N/A
(Investment Management) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Strategic Income Fund No Change N/A N/A
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------
Delaware Group Limited-Term
Government Funds, Inc.
- --------------------------------------------------------------------------------------------------------------------
Limited-Term Government Fund 0.50% on first $500 million N/A N/A
0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(2) Last submitted to shareholders for initial approval on [December 27, 1996].
(3) Last submitted to shareholders for initial approval on [September 30,
1996].
G-7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Premium Fund, Inc.
- -------------------------------------------------------------------------------------------------------
Capital Reserves Series DMC 4/3/95(1) 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
Cash Reserve Series DMC 4/3/95(1) 0.50% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
Convertible Securities Series DMC 5/1/97(2) 0.75% per year
- -------------------------------------------------------------------------------------------------------
Decatur Total Return Series DMC 4/3/95(1) 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
Delaware Series DMC 4/3/95(1) 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
DelCap Series DMC 4/3/95(1) 0.75% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
Delchester Series DMC 4/3/95(1) 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delaware Group Premium Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------
Capital Reserves Series 0.50% on first $500 million
0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Cash Reserve Series 0.45% on first $500 million
0.40% on next $500 million
0.35% on next $1,500 million
0.30% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Convertible Securities Series 0.75% on first $500 million N/A N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Decatur Total Return Series 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Delaware Series 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
DelCap Series 0.75% on first $500 million N/A N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Delchester Series 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(2) Last submitted to shareholders for initial approval on [May 1, 1997].
G-8
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Devon Series DMC 5/1/97(1) 0.60% per year
- ---------------------------------------------------------------------------------------------------------
Emerging Markets Series DIAL 5/1/96(2) 1.25% per year
- ---------------------------------------------------------------------------------------------------------
Global Bond Series DIAL 5/1/96(2) 0.75% per year
- ---------------------------------------------------------------------------------------------------------
International Equity Series DIAL 10/7/92(3) 0.75% per year less
directors' fees
- ---------------------------------------------------------------------------------------------------------
REIT Series
- ---------------------------------------------------------------------------------------------------------
Small Cap Value Series DMC 4/3/95(4) 0.75% per year
- ---------------------------------------------------------------------------------------------------------
Social Awareness Series DMC 5/1/97(1) 0.75% per year
(Investment Management)
- ---------------------------------------------------------------------------------------------------------
Social Awareness Series VGA 5/1/97(1) 0.25% on first $20 million
(Sub-Advisory) 0.35% on next $30 million
0.40% on assets in excess of
$50 million; all per year
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Devon Series 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Emerging Markets Series 1.25% on first $500 million N/A N/A
1.20% on next $500 million
1.15% on next $1,500 million
1.10% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Global Bond Series 0.75% on first $500 million N/A N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
International Equity Series 0.85% on first $500 million
0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
REIT Series No Change N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Small Cap Value Series 0.75% on first $500 million N/A N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Social Awareness Series 0.75% on first $500 million N/A N/A
(Investment Management) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Social Awareness Series No Change N/A N/A
(Sub-Advisory)
</TABLE>
- ---------------
(1) Last submitted to shareholders for initial approval on [May 1, 1997].
(2) Last submitted to shareholders for initial approval on [May 1, 1996].
(3) Last submitted to shareholders for initial approval on [October 7, 1992].
(4) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
G-9
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategic Income Series DMC 5/1/97(1) 0.65% per year
(Investment Management)
Strategic Income Series DIAL 5/1/97(1) 1/3 of management fees
(Sub-Advisory) paid to DMC
Trend Series DMC 4/3/95(2) 0.75% per year
Delaware Group State Tax-Free
Income Trust
Tax-Free New Jersey Fund DMC 9/2/97(3) 0.55% on first $500 million
0.525% on next $500 million
0.50% on assets in excess of
$1,000 million; all per year
Tax-Free Ohio Fund DMC 9/2/97(3) 0.55% on first $500 million
0.525% on next $500 million
0.50% on assets in excess of
$1,000 million all per year
Tax-Free Pennsylvania Fund DMC 4/3/95(2) 0.60% on first $500 million
0.575% on next $250 million
0.55% on assets in excess of
$750 million; all per year
Delaware Group Tax-Free Money DMC 4/3/95(2) 0.50% per year less directors' fees
Fund, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Strategic Income Series 0.65% on first $500 million N/A N/A
(Investment Management) 0.60% on next $500 million
0.55% on next $1,500
million; per year
0.50% on assets in excess of
$2,500 million; all per year
Strategic Income Series No Change N/A N/A
(Sub-Advisory)
Trend Series 0.75% on first $500 million N/A N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Delaware Group State Tax-Free
Income Trust
Tax-Free New Jersey Fund 0.55% on first $500 million N/A N/A
0.50% on next $500 million
0.45% on next $1,500 million;
0.425% on assets in excess of
$2,500 million; all per year
Tax-Free Ohio Fund 0.55% on first $500 million N/A N/A
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Tax-Free Pennsylvania Fund 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware Group Tax-Free Money 0.45% on first $500 million
Fund, Inc. 0.40% on next $500 million
0.35% on next $1,500 million
0.30% on assets in excess of
$2,500 million; all per year
</TABLE>
- ---------------
(1) Last submitted to shareholders for initial approval on [May 1, 1997].
(2) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(3) Last submitted to shareholders for initial approval on [September 2, 1997].
G-10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Current Management (or
Investment Asset Size Sub-Advisory) Fee Rate
Manager or Date of as of Based On Average Daily
Company/Fund Sub-Adviser Agreement 11/30/98 Net Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Tax-Free Fund,
Inc.
- -------------------------------------------------------------------------------------------------------
Tax-Free Insured Fund DMC 4/3/95(1) 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
Tax-Free USA Fund DMC 4/3/95(1) 0.60% on first $500 million
0.575% on next $250 million
0.55% on assets in excess of
$750 million; all per year
less directors' fees
- -------------------------------------------------------------------------------------------------------
Tax-Free USA Intermediate Fund DMC 4/3/95(1) 0.50% per year less
directors' fees
- -------------------------------------------------------------------------------------------------------
Delaware Pooled Trust, Inc.
- -------------------------------------------------------------------------------------------------------
The Real Estate Investment Trust DMC 11/29/95(2) 0.75% per year
Portfolio
(Investment Management)
- -------------------------------------------------------------------------------------------------------
The Real Estate Investment Trust Lincoln 11/29/95(2) 30% of management fee
Portfolio Investment paid to DMC
(Sub-Advisory) Management,
Inc.
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Management
Fees that
Manage- Would Have
ment Been Due
Fees Due During The Servicing
and/or Last Fiscal /Distribution
Waived Year Under Fees Paid
Proposed Management (or Last Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Fiscal Management Difference Year to
Based on Average Daily Year Fee Rate Between Affiliates of
Company/Fund Net Assets A B A & B Manager
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delaware Group Tax-Free Fund,
Inc.
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Free Insured Fund 0.50% on first $500 million
0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Free USA Fund 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Free USA Intermediate Fund 0.50% on first $500 million
0.475% on next $500 million N/A N/A
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -----------------------------------------------------------------------------------------------------------------------------
Delaware Pooled Trust, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
The Real Estate Investment Trust 0.75% on first $500 million N/A N/A
Portfolio 0.70% on next $500 million
(Investment Management) 0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- -----------------------------------------------------------------------------------------------------------------------------
The Real Estate Investment Trust No Change N/A N/A
Portfolio
(Sub-Advisory)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(2) Last submitted to shareholders for initial approval on [November 29, 1995].
G-11
<PAGE>
EXHIBIT H
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares Other*
Names of Fund/Company Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------- ------ -------- ------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New Pacific Fund
(Delaware Group Adviser Funds, Inc.)
Management Fees........................ 0.80% 0.85% 0.80%` 0.85% 0.80% 0.85% N/A N/A
12b-1 Fees............................. 0.30% 0.30% 1.00% 1.00% None None N/A N/A
Other Expenses......................... 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses...... 2.85% 2.90% 3.55% 3.60% 2.55% 2.60% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**....... 2.00% ***% 2.70% ***% 1.70% ***% N/A N/A
==== === ==== === ==== === === ===
Delaware Balanced Fund (formerly Delaware Fund)
(Delaware Group Equity Funds I, Inc.)
Management Fees........................ 0.60% 0.65% 0.60%` 0.65% 0.60% 0.65% N/A N/A
12b-1 Fees............................. 0.19% 0.19% 0.00% 0.00% 0.00% 0.00% N/A N/A
Other Expenses......................... 0.27% 0.27% 0.00% 0.00% 0.00% 0.00% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses N/A N/A
=== ===
Total Operating Expenses
After Waiver**....... 0.00% ***% 0.00% ***% 0.00% ***% N/A N/A
==== === ==== === ==== === === ===
Devon Fund
(Delaware Group Equity Funds I, Inc.)
Management Fees........................ 0.60% 0.65% 0.60% 0.65% 0.60% 0.65% N/A N/A
12b-1 Fees............................. 0.30% 0.30% 1.00% 1.00% None None N/A N/A
Other Expenses........................ 0.82% 0.82% 1.52% 1.52% 0.52% 0.52% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses..... 1.72% 1.75% 3.12% 3.17% 1.12% 1.17% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**....... 1.30% ***% 2.00% ***% 1.00% ***% N/A N/A
==== === ==== === ==== === === ===
Decatur Income Fund
(Delaware Group Equity Funds II, Inc.)
Management Fees........................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
12b-1 Fees............................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
Other Expenses......................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses...... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**....... 0.00% ***% 0.00% ***% 0.00% ***% N/A N/A
==== === ==== === ==== === === ===
Decatur Total Return Fund
(Delaware Group Equity Funds II, Inc.)
Management Fees........................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
12b-1 Fees............................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
Other Expenses......................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses..... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**...... 0.00% ***% 0.00% ***% 0.00% ***% N/A N/A
==== === ==== === ==== === === ===
</TABLE>
H-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Global Equity Fund
(Delaware Group Global
& International Funds, Inc.)
Management Fees........................ 0.75% 0.85% 0.75% 0.85% 0.75% 0.85% N/A N/A
12b-1 Fees............................. 0.30% 0.30% 1.00% 1.00% None None N/A N/A
Other Expenses......................... 1.11% 1.11% 1.11% 1.11% 1.11% 1.11% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses..... 2.16% 2.26% 2.86% 2.96% 1.86% 1.96% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**...... 1.85% ***% 2.55% ***% 1.55% ***% N/A N/A
==== === ==== === ==== === === ===
Global Opportunities Fund (formerly Global Equity Fund)
(Delaware Group Global &
International Funds, Inc.)
Management Fees........................ 0.80% 0.85% 0.80% 0.85% 0.80% 0.85% N/A N/A
12b-1 Fees............................. 0.30% 0.30% 1.00% 1.00% None None N/A N/A
Other Expenses......................... 1.51% 1.51% 1.51% 1.51% 0.00% 0.00% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses..... 2.61% 2.66% 3.31% 3.36% 0.00% 0.00% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**...... 0.80% ***% 0.80% ***% 0.00% ***% N/A N/A
==== === ==== === ==== === === ===
International Equity Fund
(Delaware Group Global &
International Funds, Inc.)
Management Fees........................ 0.75% 0.85% 0.75% 0.85% 0.75% 0.85% N/A N/A
12b-1 Fees............................. 0.30% 0.30% 1.00% 1.00% None None N/A N/A
Other Expenses......................... 0.66% 0.66% 0.66% 0.66% 0.66% 0.66% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses..... 1.71% 1.81% 2.41% 0.00% 1.41% 1.51% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**...... 1.70% ***% 2.40% ***% 1.40% ***% N/A N/A
==== === ==== === ==== === === ===
Delchester Fund
(Delaware Group Income
Funds, Inc.)
Management Fees........................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
12b-1 Fees............................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00 N/A N/A
Other Expenses......................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
---- ---- ---- ---- ---- ---- --- ---
Total Operating Expenses..... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% N/A N/A
==== ==== ==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver**...... 0.00% ***% 0.00% ***% 0.00% ***% N/A N/A
==== === ==== === ==== === === ===
Decatur Total Return Series
(Delaware Group Premium Fund, Inc.)
Management Fees........................ N/A N/A N/A N/A N/A N/A 0.60% 0.65%
12b-1 Fees............................ N/A N/A N/A N/A N/A N/A None None
Other Expenses......................... N/A N/A N/A N/A N/A N/A 0.11% 0.11%
--- --- --- --- --- --- ---- ----
Total Operating Expenses..... N/A N/A N/A N/A N/A N/A 0.71% 0.76%
=== === === === === === ==== ====
Total Operating Expenses
After Waiver**...... N/A N/A N/A N/A N/A N/A 0.71% ***%
=== === === === === === ==== ===
</TABLE>
H-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Delaware Series
(Delaware Group Premium Fund, Inc.)
Management Fees........................ N/A N/A N/A N/A N/A N/A 0.60% 0.65%
12b-1 Fees............................. N/A N/A N/A N/A N/A N/A None None
Other Expenses......................... N/A N/A N/A N/A N/A N/A 0.07% 0.07%
--- --- --- --- --- --- ---- ----
Total Operating Expenses..... N/A N/A N/A N/A N/A N/A 0.67% 0.72%
=== === === === === === ==== ====
Total Operating Expenses
After Waiver**...... N/A N/A N/A N/A N/A N/A 0.67% ***%
=== === === === === === ==== ===
Delchester Series
(Delaware Group Premium Fund, Inc.)
Management Fees........................ N/A N/A N/A N/A N/A N/A 0.60% 0.65%
12b-1 Fees............................. N/A N/A N/A N/A N/A N/A None None
Other Expenses......................... N/A N/A N/A N/A N/A N/A 0.10% 0.10%
--- --- --- --- --- --- ---- ----
Total Operating Expenses..... N/A N/A N/A N/A N/A N/A 0.70% 0.75%
=== === === === === === ==== ====
Total Operating Expenses
After Waiver**...... N/A N/A N/A N/A N/A N/A 0.70% ***%
=== === === === === === ==== ===
Devon Series
(Delaware Group Premium Fund, Inc.)
Management Fees........................ N/A N/A N/A N/A N/A N/A 0.60% 0.65%
12b-1 Fees............................. N/A N/A N/A N/A N/A N/A None None
Other Expenses......................... N/A N/A N/A N/A N/A N/A 0.31% 0.31%
--- --- --- --- --- --- ---- ----
Total Operating Expenses..... N/A N/A N/A N/A N/A N/A 0.91% 0.96%
=== === === === === === ==== ====
Total Operating Expenses
After Waiver**...... N/A N/A N/A N/A N/A N/A 0.80% ***%
=== === === === === === ==== ===
International Equity Series
(Delaware Group Premium Fund, Inc.)
Management Fees........................ N/A N/A N/A N/A N/A N/A 0.75% 0.85%
12b-1 Fees............................. N/A N/A N/A N/A N/A N/A None None
Other Expenses......................... N/A N/A N/A N/A N/A N/A 0.20% 0.20%
--- --- --- --- --- --- ---- ----
Total Operating Expenses..... N/A N/A N/A N/A N/A N/A 0.95% 1.05%
=== === === === === === ==== ====
Total Operating Expenses
After Waiver**...... N/A N/A N/A N/A N/A N/A 0.95% ***%
=== === === === === === ==== ===
H-3
</TABLE>
<PAGE>
EXHIBIT I
FUNDS SIMILARLY MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
Domestic Equity Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* As of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets++
---- ----------- -------------- ------------------------ --------------------------
<S> <C> <C> <C> <C>
Aggressive Growth Fund DMC $____________ 1.00% per year 0.75% on the first $500 million
0.70% on the next $500 million
0.65% on the next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
The Growth and Income DMC $____________ 0.55% per year N/A
Portfolio**
Growth Stock Fund DMC $____________ 1.00% per year 0.65% on the first $500 million
(Investment Management) 0.60% on the next $500 million
0.55% on the next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Growth Stock Fund VAM $____________ 0.50% per year 0.325% per year
(Sub-Advisory)
Mid Cap Value Fund DMC $____________ 0.75% on first $500 million N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
The Large Cap Value Equity DMC $____________ 0.55% per year less 0.55% per year
Portfolio** directors' fees
The Mid-Cap Growth Equity DMC $____________ 0.80% per year less 0.75% per year
Portfolio** directors' fees
The Real Estate Investment DMC $____________ 0.75% per year N/A
Trust Portfolio II **
(Investment Management)
The Real Estate Investment LIM $____________ 30% of management fee paid N/A
Trust Portfolio II** to DMC
(Sub-Advisory)
Small Cap Contrarian Fund DMC $____________ 0.75% on first $500 million N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
The Small Cap Growth Equity DMC $____________ 0.75% per year N/A
Portfolio**
The Small/Mid Cap Value DMC $____________ 0.65% per year N/A
Equity Portfolio**
Tax-Efficient Equity Fund DMC $____________ 0.75% on first $500 million 0.75% on first $500 million
0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* As of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets++
---- ----------- -------------- ------------------------ --------------------------
<S> <C> <C> <C> <C>
Growth and Income Fund of VGA $4,004,488,483 0.20% per year N/A
Lincoln Multi-Funds
Special Opportunities Fund of VGA $ 885,491,436 0.20% per year N/A
Lincoln Multi-Funds
Social Awareness Fund of VGA $1,710,210,719 0.20% per year N/A
Lincoln Multi-Funds
Managed Fund of VGA $ 468,863,668 0.20% per year N/A
Lincoln Multi-Funds
Core Equity Fund of VGA $ 666,471,755 0.20% per year N/A
Lincoln Dirctor Funds
Lincoln National LIM $ 107,643,507 0.875% per year N/A
Convertible Securities
Fund, Inc.
Lincoln National LIM $ 300,098,000 0.75% on first $200 million N/A
Aggressive Growth 0.70% on next $200 million N/A
Fund 0.65% on assets in
excess of $400 million;
all per year
Lincoln National Capital LIM $ 636,124,000 0.80% per year N/A
Appreciation Fund
Lincoln National Equity LIM $ 945,271,000 0.95% N/A
Income Fund
Lincoln National Growth LIM $3,941,773,000 0.48% on first $200 million N/A
& Income Fund 0.40% on next $200 million
0.30% on assets in excess
of $400 million; all
per year
Lincoln National LIM $1,698,006,000 " " N/A
Social Awareness
Fund
Lincoln National LIM $ 844,084,000 " " N/A
Special Opportunities
Fund
</TABLE>
I-1
<PAGE>
Domestic Fixed-Income Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
The Aggregate Fixed Income DMC $____________ 0.40% per year N/A
Portfolio**
Delaware Group Dividend and DMC $____________ 0.55% per year N/A
Income Fund, Inc. ***
Delaware-Voyageur US DMC $____________ 0.50% per year 0.55% on first $500 million
Government Securities Fund 0.50% on next $500 million
(Investment Management) 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million per year
Delaware-Voyageur US VAM $____________ 0.25% per year N/A
Government Securities Fund
(Sub-Advisory)
The Diversified Core Fixed DMC $____________ 0.43% per year N/A
Income Portfolio**
(Investment Management)
The Diversified Core Fixed DIAL $____________ Fee equal to portion on N/A
Income Portfolio** management fee attributable
(Sub-Advisory) to foreign investments
The High Yield Bond DMC $____________ 0.45% per year N/A
Portfolio**
The Intermediate Fixed DMC $____________ 0.40% per year less 0.40% per year
Income Portfolio** directors' fees
The Limited Term Maturity DMC $____________ 0.30% per year N/A
Portfolio**
</TABLE>
I-2
<PAGE>
Global and International Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets
---- ----------- -------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Delaware Group Global DMC $____________ 0.70% per year N/A
Dividend and Income Fund,
Inc. ***
(Investment Management)
Delaware Group Global DIAL $____________ 40% of management fees paid N/A
Dividend and Income Fund, to DMC
Inc. ***
(Sub-Advisory)
The Emerging Markets DIAL $____________ 1.20% per year 1.00% per year
Portfolio**
The Global Equity Portfolio** DIAL $____________ 0.75% per year N/A
(Investment Management)
The Global Equity Portfolio** DMC $____________ 0.50% of management fee paid N/A
(Sub-Advisory) to DIAL
The Global Fixed-Income DIAL $____________ 0.50% per year less 0.50% per year
Portfolio** directors' fees
The International Equity DIAL $____________ 0.75% per year less 0.75% per year
Portfolio** directors' fees
The International DIAL $____________ 0.50% per year N/A
Fixed-Income Portfolio**
The International Mid Cap DIAL $____________ 0.70% per year N/A
Sub Portfolio**
The Labor Select DIAL $____________ 0.75% per year N/A
International Equity
Portfolio**
Latin America Fund DIAL $____________ 1.25% per year N/A
New Europe Fund DIAL $____________ 1.25% per year N/A
</TABLE>
I-3
<PAGE>
National Tax-Free Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets
---- ----------- -------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
National High-Yield DMC $____________ 0.65% per year 0.55% on first $500 million
Municipal Bond Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess
of $2,500 million; all per year
State Tax-Free Funds
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ------------------------ ------------------------
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
Arizona Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.50% on first $500 million
Arizona Insured Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Voyageur Arizona Municipal DMC $____________ 0.40% per year N/A
Income Fund, Inc. ***
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
California Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% on first $500 million N/A
California Insured Fund 0.475% on next $500 million
0.45% on next $1,500
million
0.425% on assets in excess
of $2,500 million;
all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
Colorado Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Voyageur Colorado Insured DMC $____________ 0.40% per year N/A
Municipal Income Fund,
Inc.***
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ------------------------ ------------------------
<S> <C> <C> <C>
Delaware-Voyageur Tax-Free DMC $____________ 0.55% on first $500 million N/A
Florida Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess
of $2,500 million; all per
year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% on first $500 million N/A
Florida Insured Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess
of $2,500 million; all per
year
Voyageur Florida Insured DMC $____________ 0.40% per year N/A
Municipal Income Fund***
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
Idaho Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
Iowa Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.55% on first $500 million N/A
Kansas Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess
of $2,500 million; all per
year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
Minnesota Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur DMC $____________ 0.50% per year 0.50% on first $500 million
Minnesota Insured Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.40% per year 0.50% on first $500 million
Minnesota Intermediate Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 11/30/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur DMC $____________ 0.65% per year 0.55% on first $500 million
Minnesota High Yield 0.50% on next $500 million
Municipal Bond Fund 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Voyageur Minnesota Municipal DMC $____________ 0.40% per year N/A
Income Fund,
Inc.***
Voyageur Minnesota Municipal DMC $____________ 0.40% per year N/A
Income Fund II, Inc. ***
Voyageur Minnesota Municipal DMC $____________ 0.40% per year N/A
Income Fund III, Inc.***
Delaware-Voyageur Tax-Free DMC $____________ 0.50% on first $500 million N/A
Missouri Insured Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.55% on first $500 million N/A
New Mexico Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
New York Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.50% on next $500 million
North Dakota Fund 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% on first $500 million N/A
Oregon Insured Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.55% on first $500 million N/A
Utah Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% on first $500 million N/A
Washington Insured Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $____________ 0.50% per year 0.55% on first $500 million
Wisconsin Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
</TABLE>
I-6
<PAGE>
EXHIBIT J
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [REGISTRANT], a[____________] ("Fund") on behalf
of the [SERIES] ("Series"), and [MANAGER NAME] , a ________________]
("Investment Manager").
WITNESSETH:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 and is currently comprised
of [_] series, including the Series; as a separate series of the Fund, each
series engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager is a registered investment adviser under the
Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and
WHEREAS, the Fund on behalf of the Series and the Investment Manager desire to
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment
and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Fund's Board of Directors and officers of
the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Investment Manager shall for all
purposes herein be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent
of the Fund. The Investment Manager shall regularly make decisions as to
what securities and other instruments to purchase and sell on behalf of the
Series and shall effect the purchase and sale of such investments in
furtherance of the Series' objectives and policies and shall furnish the
Board of Directors of the Fund with such information and reports regarding
the Series' investments as the Investment Manager deems appropriate or as
the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not
in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders;
calling and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and accounting fees;
taxes; and federal and state registration fees. Directors, officers and
employees of the Investment Manager may be directors, officers and
employees of any of the investment companies within the Delaware
Investments family (including the Fund). Directors, officers and employees
of the Investment Manager who are directors, officers and/or employees of
these investment companies shall not receive any compensation from such
companies for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and in
the performance of this Agreement, the Fund and Investment Manager may
share facilities common to each, which may include legal and accounting
personnel, with appropriate proration of expenses between them.
J-1
<PAGE>
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for
which the Investment Manager or any such Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or
who sell shares of any other fund for which the Investment Manager or any
such Sub-Adviser provides investment advisory services. Broker/dealers who
sell shares of the funds of which Delaware Management Company is investment
manager, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance
with the Rules of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board of Directors
and officers of the Fund, the Investment Manager may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would
have charged for effecting that transaction, in such instances where the
Fund and the Investment Manager have determined in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Manager's overall responsibilities with respect to the Fund and to other
funds and other advisory accounts for which the Investment Manager or any
Sub-Adviser, as defined in Paragraph 5 hereof, exercises investment
discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets, a fee based
on the average daily net assets of the Series during the month. Such fee
shall be calculated in accordance with the following schedule:
Monthly Annual Rate Average Daily Net Assets
------- ----------- ------------------------
If this Agreement is terminated prior to the end of any calendar month, the
management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The Investment Manager may, at its expense, select and contract with one
or more investment advisers registered under the Investment Advisers Act of
1940 ("Sub-Advisers") to perform some or all of the services for the Series
for which it is responsible under this Agreement. The Investment Manager
will compensate any Sub-Adviser for its services to the Series. The
Investment Manager may terminate the services of any Sub-Adviser at any
time in its sole discretion, and shall at such time assume the
responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected and the requisite approval of the Series'
shareholders is obtained. The Investment Manager will continue to have
responsibility for all advisory services furnished by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund under
the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different
services to others so long as its ability to render the services provided
for in this Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to
the Fund or to any other investment company, corporation, association, firm
or individual.
J-2
<PAGE>
8. It is understood and agreed that so long as the Investment Manager
and/or its advisory affiliates shall continue to serve as the Fund's
investment adviser, other mutual funds as may be sponsored or advised by
the Investment Manager or its affiliates shall have the right permanently
to adopt and to use the words "Delaware," "Delaware Investments" or
"Delaware Group" in their names and in the names of any series or class of
shares of such funds.
9. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as the Investment
Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security, or otherwise.
10. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period
of two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of
Directors or by the vote of a majority of the outstanding voting securities
of the Series and only if the terms and the renewal hereof have been
approved by the vote of a majority of the Directors of the Fund who are not
parties hereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement may be terminated by the Fund at any time,
without the payment of a penalty, on sixty days' written notice to the
Investment Manager of the Fund's intention to do so, pursuant to action by
the Board of Directors of the Fund or pursuant to the vote of a majority of
the outstanding voting securities of the Series. The Investment Manager may
terminate this Agreement at any time, without the payment of a penalty, on
sixty days' written notice to the Fund of its intention to do so. Upon
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for
any obligation to respond for a breach of this Agreement committed prior to
such termination, and except for the obligation of the Fund to pay to the
Investment Manager the fee provided in Paragraph 4 hereof, prorated to the
date of termination. This Agreement shall automatically terminate in the
event of its assignment.
11. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
12. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to be
affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , 19 .
J-3
<PAGE>
[MANAGER NAME] [REGISTRANT NAME]
for the [SERIES NAME]
By:_________________________________
Name:_______________________________
Title:______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
Attest:_____________________________
Name:_______________________________
Title:______________________________
Attest:______________________________
Name:________________________________
Title:_______________________________
J-4
EXHIBIT K
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between [MANAGER NAME] ("Investment Manager"), and
[SUB-ADVISER NAME] ("Sub-Adviser").
WITNESSETH:
WHEREAS, [REGISTRANT NAME], a [______________] ("Fund"), has been organized and
operates as an investment company registered under the Investment Company Act of
1940 and engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager and the Fund on behalf of the [Series]
("Series") have entered into an agreement of even date herewith ("Investment
Management Agreement") whereby the Investment Manager will provide investment
advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Management Agreement permits the Investment Manager to
hire one or more Sub-Adviser to assist the Investment Manager in providing
investment advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Manager and the Sub-Adviser are registered Investment
Advisers under the Investment Advisers Act of 1940 and engage in the business of
providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Investment Manager hereby employs the Sub-Adviser, subject always to
the Investment Manager's control and supervision, to manage the investment
and reinvestment of that portion of the Series' assets as the Investment
Manager shall designate from time to time and to furnish the Investment
Manager with investment recommendations, asset allocation advice, research,
economic analysis and other investment services with respect to securities
in which the Series may invest, subject to the direction of the Board and
officers of the Fund for the period and on the terms hereinafter set forth.
The Sub-Adviser hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent
of the Fund. The Sub-Adviser shall regularly make decisions as to what
securities to purchase and sell on behalf of the Series with respect to
that portion of the Series' assets designated by the Investment Manager,
shall effect the purchase and sale of such investments in furtherance of
the Series' objectives and policies and shall furnish the Board of
Directors of the Fund with such information and reports regarding its
activities as the Investment Manager deems appropriate or as the Directors
of the Fund may reasonably request in the performance of its duties and
obligations under this Agreement, the Sub-Adviser shall act in conformity
with the Articles of Incorporation, By-Laws and Prospectus of the Fund and
with the instructions and directions of the Investment Manager and of the
Board of Directors of the Fund and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986 and all
other applicable federal and state laws and regulations consistent with the
provisions of Section 15(c) of the Investment Company Act of 1940.
K-1
<PAGE>
2. Under the terms of the Investment Management Agreement, the Fund shall
conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation
of the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of
stock, including issuance and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and federal
and state registration fees. Without limiting the foregoing, except as the
Investment Manager and the Sub-Adviser may agree in writing from time to
time, the Sub-Adviser shall have no responsibility for record maintenance
and preservation obligations under Section 31 of the Investment Company Act
of 1940.
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser
as sub-adviser or investment manager. Directors, officers and employees of
the Sub-Adviser who are Directors, officers and/or employees of the Fund,
shall not receive any compensation from the Fund for acting in such dual
capacity. In the conduct of the respective business of the parties hereto
and in the performance of this Agreement, the Fund, the Investment Manager
and the Sub-Adviser may share facilities common to each, which may include
legal and accounting personnel, with appropriate proration of expenses
between and among them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Sub-Adviser will place orders for the purchase
and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, to the Sub-Adviser or
to any other Fund for which the Investment Manager or Sub-Adviser provides
investment advisory services and/or with broker/dealers who sell shares of
the Fund or who sell shares of any other Fund for which the Investment
Manager or Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the Funds for which the Investment
Manager or Sub-Adviser provides advisory services shall only receive orders
for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the rules of the Securities
and Exchange Commission and the National Association of Securities Dealers,
Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board of Directors
and officers of the Fund, the Sub-Adviser may ask the Fund and the Fund may
agree to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, in such instances where it and the
Sub-Adviser have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research
services provided by such member, broker or dealer, viewed in terms of
either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Fund and to other funds and other
advisory accounts for which the Investment Manager or the Sub-Adviser
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund for the
benefit of the Series by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser:
[(The following language is used for funds that do not have an asset-based
sub-advisory fee rate:) a monthly fee equal to [%] of the fees paid to the
Investment Manager under the Investment Management Agreement.]
[(The following language is used for funds that have an asset-based
sub-advisory fee rate:) a monthly fee equal to [insert asset-based fee
rate]; provided however, that the Sub-Adviser shall waive all or a portion
of the fees payable under this Agreement to the extent necessary to bear
its proportionate share of any management fee waiver undertaken by the
Investment Manager. The amount of such waiver by the Sub-Adviser shall be
calculated by multiplying the dollar amount of the management fees waived
by the investment manager by the percentage that the then-current
sub-advisory fee rate represents of the then-current investment management
fee rate.]
K-2
<PAGE>
If this Agreement is terminated prior to the end of any calendar month, the
Sub-Advisory fee shall be prorated for the portion of any month in which
this Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Series under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar
or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby;
provided, however, except for advisory arrangements implemented prior to
the date of this Agreement, during the term of this Agreement, the
Sub-Adviser, will not, without the written consent of the Investment
Manager, which consent will not be unreasonably withheld, render investment
company (or portfolio thereof) which the Investment manger reasonably
determines would be in competition with and which has investment policies
similar to those of the Portfolio.
6. Subject to the limitation set forth in Paragraph 5, the Sub-Adviser, its
directors, officers, employees, agents and shareholders may engage in other
businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual,
and may render underwriting services to the Fund or to any other investment
company, corporation, association, firm or individual.
The Investment Manager agrees that it shall not use the Sub-Adviser's name
or otherwise refer to the Sub-Adviser in any materials distributed to third
parties, including the Series' shareholders, without the prior written
consent of the Sub-Adviser.
7. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liability to the Fund, to the
Investment Manager or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security, or otherwise.
8. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period
of two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board of
Directors or by the vote of a majority of the outstanding voting securities
of the Series and only if the terms and the renewal hereof have been
approved by the vote of a majority of the Directors of the Fund who are not
parties hereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement may be terminated by the Investment Manager
or the Fund at any time, without the payment of a penalty, on sixty days'
written notice to the Sub-Adviser, of the Investment Manager's or the
Fund's intention to do so, in the case of the Fund pursuant to action by
the Board of Directors of the Fund or pursuant to the vote of a majority of
the outstanding voting securities of the Series. The Sub-Adviser may
terminate this Agreement at any time, without the payment of a penalty on
sixty days' written notice to the Investment Manager and the Fund of its
intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination, and except for the
obligation of the Investment Manager to pay to the Sub-Adviser the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
This Agreement shall automatically terminate upon the termination of the
Investment Management Agreement.
K-3
<PAGE>
9. This Agreement shall extend to and bind the successors of the parties
hereto.
10. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested person"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of [_____________], [______].
[MANAGER NAME]
By:
-----------------------------------
Name:
Title:
Attest:
--------------------------------
[SUB-ADVISER NAME]
By:
-----------------------------------
Name:
Title:
Attest:
--------------------------------
Agreed to and accepted as of the day and year first above written:
[REGISTRANT NAME]
on behalf of the [SERIES NAME]
By:
-----------------------------------
Chairman
Attest:
--------------------------------
K-4
<PAGE>
EXHIBIT L
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is
made as of this ___ day of ______________, 1998 by and between [name of Delaware
business trust], a Delaware business trust ("Fund"), and [name of Maryland
corporation/Delaware Group State Tax-Free Income Trust], a Maryland
corporation/Pennsylvania common law trust ("Corporation/Trust") (the Fund and
the Corporation/Trust are hereinafter collectively referred to as the
"parties").
In consideration of the mutual promises contained herein, and
intending to be legally bound, the parties hereto agree as follows:
1. Plan of Reorganization.
(a) Upon satisfaction of the conditions precedent described in
Section 3 hereof, the Corporation/Trust will convey, transfer and deliver to the
Fund at the closing provided for in Section 2 (hereinafter referred to as the
"Closing") all of the Corporation's/Trust's then-existing assets, the assets
belonging to each series of the Corporation/Trust to be conveyed, transferred
and delivered to the corresponding series of the Fund. In consideration thereof,
the Fund agrees at the Closing (1) to assume and pay, to the extent that they
exist on or after the Effective Date of the Reorganization (as defined in
Section 2 hereof), all of the Corporation's/Trust's obligations and liabilities,
whether absolute, accrued, contingent or otherwise, including all fees and
expenses in connection with the Agreement, which fees and expenses shall in turn
include, without limitation, costs of legal advice, accounting, printing,
mailing, proxy solicitation and transfer taxes, if any, the obligations and
liabilities allocated to each series of the Corporation/Trust to become the
obligations and liabilities of the corresponding series of the Fund, and (2) to
deliver, in accordance with paragraph (b) of this Section 1, full and fractional
shares of beneficial interest, $.01 par value, of each of the Fund's separate
series and the respective classes of those series, all as set forth in the
Appendix attached hereto (hereinafter, the series are individually and
collectively referred to as "Series of the Fund" and the classes are
individually referred to as a "Class of the Fund" and collectively as "Classes
of the Fund"), equal in number to the number of full and fractional shares of
common stock/beneficial interest, ______ par value, of, respectively, each of
the Corporation's/Trust's separate series and the respective classes of those
series, all as set forth in the Appendix attached hereto (hereinafter, the
series are referred to individually and collectively as "Series of the
Corporation/Trust" and the classes are referred to individually as a "Class of
the Corporation/Trust" and collectively, as "Classes of the Corporation/Trust")
outstanding immediately prior to the Effective Date of the Reorganization. The
transactions contemplated hereby are intended to qualify as a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended ("Code").
L-1
<PAGE>
(b) In order to effect such delivery, the Fund will establish
an open account for each shareholder of each Series of the Corporation/Trust
and, on the Effective Date of the Reorganization, will credit to such account
full and fractional shares of such Series and Class of the Fund equal to the
number of full and fractional shares such shareholder holds in the corresponding
Series and Class of the Corporation/Trust at the close of regular trading on the
New York Stock Exchange on the business day immediately preceding the Effective
Date of the Reorganization; fractional shares of each Class of the Fund will be
carried to the third decimal place. On the Effective Date of the Reorganization,
the net asset value per share of beneficial interest of each Class of the Fund
shall be deemed to be the same as the net asset value per share of the
corresponding Class of the Corporation/Trust at the close of regular trading on
the New York Stock Exchange on the business day immediately preceding the
Effective Date of the Reorganization. On the Effective Date of the
Reorganization, each certificate representing shares of a Series and Class of
the Corporation/Trust will represent the same number of shares of the
corresponding Series and Class of the Fund. Each shareholder of the
Corporation/Trust will have the right to exchange his (her) share certificates
for share certificates of the Fund. However, a shareholder need not make this
exchange of certificates unless he (she) so desires. Simultaneously with the
crediting of the shares of the Series and Classes of the Fund to the
shareholders of record of the Corporation/Trust, the shares of the Series and
Classes of the Corporation/Trust held by such shareholder shall be cancelled.
(c) As soon as practicable after the Effective Date of the
Reorganization, the Corporation/Trust shall take all necessary steps under
Maryland/Pennsylvania law to effect a complete dissolution of the
Corporation/Trust.
2. Closing and Effective Date of the Reorganization.
The Closing shall consist of (i) the conveyance, transfer and
delivery of the Corporation's/Trust's assets to the Fund, in exchange for the
assumption and payment by the Fund of the Corporation's/Trust's liabilities; and
(ii) the issuance and delivery of the Fund's shares in accordance with Section
1(b), together with related acts necessary to consummate such transactions. The
Closing shall occur either on (a) the business day immediately following the
later of receipt of all necessary regulatory approvals and the final adjournment
of the meeting of shareholders of the Corporation/Trust at which this Agreement
will be considered or (b) such later date as the parties may mutually agree
("Effective Date of the Reorganization").
3. Conditions Precedent.
The obligations of the Corporation/Trust and the Fund to
effectuate the reorganization hereunder shall be subject to the satisfaction of
each of the following conditions:
(a) Such authority and orders from the Securities and Exchange
Commission ("Commission") as may be necessary to permit the parties to carry out
the transactions contemplated by this Agreement shall have been received;
(b) (i) One or more post-effective amendments to the
Corporation's/Trust's Registration Statement on Form N-1A ("Registration
Statement") under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended ("1940 Act"), containing such amendments to the
Registration Statement as are determined by the Trustees of the Fund to be
necessary and appropriate as a result of this Agreement shall have been filed
with the Commission; (ii) the Fund shall have adopted as its own such
Registration Statement, as so amended; (iii) the most recent post-effective
amendment to the Registration Statement filed with the Commission relating to
the Fund shall have become effective, and no stop-order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceeding for that purpose shall have been initiated or threatened by the
Commission (other than any such stop-order, proceeding or threatened proceeding
that shall have been withdrawn or terminated); and (iv) an amendment of the Form
N-8A Notification of Registration filed pursuant to Section 8(a) of the 1940 Act
("Form N-8A") reflecting the change in legal form of the Corporation/Trust to a
Delaware business trust shall have been filed with the Commission and the Fund
shall have expressly adopted such amended Form N-8A as its own for purposes of
the 1940 Act;
L-2
<PAGE>
(c) Each party shall have received an opinion of Stradley,
Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania, to the effect that the
reorganization contemplated by this Agreement qualifies as a "reorganization"
under Section 368 of the Code, and thus will not give rise to the recognition of
income, gain or loss for federal income tax purposes to the Corporation/Trust,
the Fund or the shareholders of the Corporation/Trust or the Fund;
(d) The Corporation/Trust shall have received an opinion of
Stradley, Ronon, Stevens & Young, LLP, dated the Effective Date of the
Reorganization, addressed to and in form and substance satisfactory to the
Corporation, to the effect that (i) the Fund is duly formed as a business trust
under the laws of the State of Delaware; (ii) this Agreement and the
reorganization provided for herein and the execution and delivery of this
Agreement have been duly authorized and approved by all requisite action of the
Fund and this Agreement has been duly executed and delivered by the Fund and is
a legal, valid and binding agreement of the Fund in accordance with its terms;
and (iii) the shares of the Fund to be issued in the reorganization have been
duly authorized and, upon issuance thereof in accordance with this Agreement,
will have been validly issued and fully paid and will be non-assessable by the
Fund;
(e) The Fund shall have received the opinion of Stradley,
Ronon, Stevens & Young, LLP, dated the Effective Date of the Reorganization,
addressed to and in form and substance satisfactory to the Fund, to the effect
that: (i) the Corporation is a corporation duly organized and validly existing
under the laws of the State of Maryland/the Trust is a business trust organized
and subsisting under the laws of the Commonwealth of Pennsylvania; (ii) the
Corporation/Trust is an open-end investment company of the management type
registered under the 1940 Act; and (iii) this Agreement and the reorganization
provided for herein and the execution and delivery of this Agreement have been
duly authorized and approved by all requisite [corporate] action of the
Corporation/Trust and this Agreement has been duly executed and delivered by the
Corporation/Trust and is a legal, valid and binding agreement of the
Corporation/Trust in accordance with its terms;
L-3
<PAGE>
(f) The shares of each Series and Class of the Fund are
eligible for offering to the public in those states of the United States and
jurisdictions in which the shares of their corresponding Series and Class of the
Corporation/Trust are presently eligible for offering to the public so as to
permit the issuance and delivery of shares contemplated by this Agreement to be
consummated;
(g) This Agreement and the reorganization contemplated hereby
shall have been adopted and approved by the appropriate action of the
shareholders of the Corporation/Trust at an annual or special meeting or any
adjournment thereof;
(h) The shareholders of the Corporation/Trust shall have voted
to direct the Corporation/Trust to vote, and the Corporation/Trust shall have
voted, as sole shareholder of the Fund, to:
(i) Elect as Trustees of the Fund the following
individuals: Messrs. Walter P. Babich, Anthony D. Knerr, W. Thacher Longstreth,
Charles E. Peck, Wayne A. Stork, Thomas F. Madison, and Jeffrey J. Nick, and Ms.
Ann R. Leven;
(ii) Select Ernst & Young LLP as the independent
auditors for the Fund for the fiscal year ending [month and day], 1999/2000;
(iii) (A) With respect to each Series, if at the
annual or special meeting specified in paragraph (g) of this Section 3 (or any
adjournment thereof) the shareholders of a Series of the Corporation/Trust (x)
approve a proposal for a new investment management agreement ("New Investment
Management Agreement") between the current investment advisor to the Series (the
"Advisor") and the Corporation/Trust on behalf of such Series, approve an
investment management agreement between the Advisor and the Fund on behalf of
such Series that is substantially identical to the New Investment Management
Agreement, or (y) do not approve a proposal for a New Investment Management
Agreement between the Advisor and the Corporation/Trust on behalf of such
Series, approve an investment management agreement between the Advisor and the
Fund on behalf of such Series that is substantially identical to the
then-current investment management agreement between the Advisor and the
Corporation/Trust on behalf of such Series;
L-4
<PAGE>
(B) With respect to each Series that is subject to a
sub-advisory agreement, if any, if at the annual or special meeting specified in
paragraph (g) of this Section 3 (or any adjournment thereof) the shareholders of
such Series of the Corporation/Trust (x) approve a proposal for a new
sub-advisory agreement ("New Sub-Advisory Agreement") between the Advisor and
the current sub-advisor (the "Sub-Advisor") with respect to the assets of such
Series, approve a New Sub-Advisory Agreement between the Advisor and the
Sub-Advisor with respect to the assets of such Series that is substantially
identical to the New Sub-Advisory Agreement, or (y) do not approve a proposal
for a New Sub-Advisory Agreement between the Advisor and the Sub-Advisor,
approve a sub-advisory agreement between the Advisor and the Sub-Advisor with
respect to the assets of such Series that is substantially identical to the
then-current sub-advisory agreement between the Advisor and the Sub-Advisor with
respect to the assets of such Series;
(i) The Trustees of the Fund shall have taken the following
actions at a meeting duly called for such purposes:
(i) Approval of the investment management agreements
and the sub-advisory agreements, if any, described in paragraph (h) of this
Section 3 hereof for each Series of the Fund;
(ii) Approval of a distribution plan, if any, for
each Class of each Series of the Fund, as adopted pursuant to Rule 12b-1 under
the 1940 Act, that is substantially identical to the then-current distribution
plan, if any, as adopted pursuant to Rule 12b-1 under the 1940 Act for each
Class of each corresponding Series of the Corporation/Trust;
(iii) Approval of the assignment of the
Corporation's/Trust's Custodian Agreement with The Chase Manhattan Bank to the
Fund;
(iv) Selection of Ernst & Young LLP as the Fund's
independent auditors for the fiscal year ending [month and day], 2000;
(v) Approval of the Fund's Shareholders Services
Agreement with Delaware Service Company, Inc.;
(vi) Approval of the Fund Accounting Agreement
with Delaware Service Company, Inc. that covers the funds comprising the
Delaware Investments Family of Funds;
L-5
<PAGE>
(vii) Approval of the Distribution Agreement between
the Fund and Delaware Distributors, L.P. on behalf of the Series and Classes;
(viii) Authorization of the issuance by the Fund,
prior to the Effective Date of the Reorganization, of one share of each Series
and Class of the Fund to the Corporation/Trust in consideration for the payment
of $10.00 per share for the purpose of enabling the Corporation/Trust to vote on
the matters referred in paragraph (h) of this Section 3 hereof;
(ix) Submission of the matters referred to in
paragraph (h) of this Section 3 to the Corporation/Trust as sole shareholder of
each Series of the Fund; and
(x) Authorization of the issuance and delivery
by the Fund of shares of each Series and Class of the Fund on the Effective Date
of the Reorganization in exchange for the assets of the corresponding Series of
the Corporation/Trust pursuant to the terms and provisions of this Agreement.
At any time prior to the Closing, any of the foregoing
conditions may be waived by the Board of Directors/Trustees of the
Corporation/Trust if, in the judgment of such Board, such waiver will not affect
in a materially adverse way the benefits intended to be accorded the
shareholders of the Corporation/Trust under this Agreement.
4. Termination.
The Board of Directors/Trustees of the Corporation/Trust may
terminate this Agreement and abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the shareholders of the Corporation/Trust,
at any time prior to the Effective Date of the Reorganization if, in the
judgment of such Board, the facts and circumstances make proceeding with this
Agreement inadvisable.
5. Entire Agreement.
This Agreement embodies the entire agreement between the
parties and there are no agreements, understandings, restrictions or warranties
among the parties other than those set forth herein or herein provided for.
6. Further Assurances.
The Corporation/Trust and the Fund shall take such further
action as may be necessary or desirable and proper to consummate the
transactions contemplated hereby.
L-6
<PAGE>
7. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
8. Governing Law.
This Agreement and the transactions contemplated hereby shall
be governed by and construed and enforced in accordance with the laws of the
State of Maryland/ Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Fund and the Corporation/Trust have
each caused this Agreement and Plan of Reorganization to be executed on its
behalf by its Chairman, President or a Vice President and attested by its
Secretary or an Assistant Secretary, all as of the day and year first-above
written.
[Name of Maryland corporation/ Delaware Group
State Tax-Free Income Trust]
(a Maryland Corporation/Pennsylvania Common
Law Trust)
Attest:
By: /s/ George M. Chamberlain, Jr By: /s/ Jeffrey J. Nick
---------------------------------- -----------------------------------
George M. Chamberlain, Jr. Jeffrey J. Nick
Secretary President and Chief Executive
Officer
[Name of Delaware business trust]
(a Delaware business trust)
Attest:
By: /s/ Eric E. Miller By: /s/ Jeffrey J. Nick
------------------------------------- --------------------------
Eric E. Miller Jeffrey J. Nick
Assistant Secretary President and
Chief Executive
Officer
L-7
<PAGE>
Appendix
Series and Classes of [name of Maryland Corresponding Series and
corporation/ Delaware Group State Classes of [name of Delaware
Tax-Free Income Trust] business trust]
L-8
<PAGE>
EXHIBIT M
COMPARISON AND SIGNIFICANT DIFFERENCES
FOR DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
Unless otherwise defined in this Exhibit, capitalized terms have the meanings
set forth in Proposal Seven.
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Governing Documents -- Created by a governing instrument (which may -- A corporation's articles of incorporation
consist of one or more instruments, including an must be filed with the State Department of
agreement and declaration of trust and By-Laws) and a Assessments and Taxation of the State of
Certificate of Trust, which must be filed with the Maryland in order to form a Maryland
Delaware Secretary of State. The Delaware Business corporation.
Trust ("DBT") statutes found at Del. Code. Ann. title
12, S.3801, et seq. are referred to in this chart as -- Under Maryland law, the business and
the "Delaware Act." affairs of a corporation are governed by its
articles of incorporation and By-Laws (the
-- A DBT is an unincorporated association organized "charter documents"). A Board of Directors
under the Delaware Act which operates similar to a manages or directs the business and affairs
typical corporation. A DBT's operations are governed of a Maryland corporation.
by a trust instrument and By-Laws. The business and
affairs of a DBT are managed by or under the -- A Maryland corporation organized as an
direction of a Board of Trustees. open-end investment company is subject to the
1940 Act.
-- DBTs are organized as an open-end investment
company subject to the Investment Company Act of
1940, as amended (the "1940 Act"). Shareholders own
shares of "beneficial interest" as compared to the
shares of "common stock" issued by corporations.
There is however, no practical difference between the
two types of shares.
-- As described in this chart, DBTs are granted a
significant amount of organizational and operational
flexibility. The Delaware Act makes it easier to
obtain needed shareholder approvals, and also permits
management of a DBT to take various actions without
being required to make state filings or obtain
shareholder approval. The Delaware Act also contains
favorable limitations on shareholder and Trustee
liability, and provides for indemnification out of
trust property for any shareholder or Trustee that
may be held personally liable for the obligations of
a Delaware Trust.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
</TABLE>
M-1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Multiple Series and -- Under the Delaware Act, a declaration of trust may -- Maryland law permits a corporation to
Classes provide for classes, groups or series of shares, or issue one or more classes of stock and, if
classes, groups or series of trustees or the stock is divided into classes, the
shareholders, having such relative rights, powers and charter is required to describe each class,
duties as the declaration of trust may provide. The including any preferences, conversion or
series and classes of a DBT may be described in the other rights, voting powers, restrictions,
declaration of trust or in resolutions adopted by the limitations as to dividends, qualifications
board of trustees. Neither state filings nor and terms or conditions of redemption. The
shareholder approval is required to create series or charter documents which describe a new series
classes. The New Funds' Agreement and Declaration of or classes, or a change to an existing series
Trust (the "Declaration of Trust") permits the or class, are amendments to the fund's
creation of multiple series and classes and charter documents and must be filed with the
establishes the provisions relating to shares. State of Maryland. Although a charter
amendment is involved, Maryland law allows a
-- The Delaware Act explicitly provides for a fund's board to exchange, classify,
reciprocal limitation of interseries liability. The reclassify, cancel any of its issued or
debts, liabilities, obligations and expenses unissued stock, or increase or decrease the
incurred, contracted for or otherwise existing with aggregate number of shares of stock without
respect to a particular series of a multiple series shareholder approval by filing Articles
investment company registered under the 1940 Act are Supplementary in the State of Maryland.
enforceable only against the assets of such series, Maryland law also permits a board to change
and not against the assets of the trust, or any other the preferences, conversion and other rights,
series, generally, provided that: (i) the governing voting powers, restrictions, limitation as to
instrument creates one or more series; (ii) separate dividends, qualifications, and terms and
and distinct records are maintained for any such conditions of redemption of any of its issued
series; (iii) the series' assets are held and or unissued stock without shareholder
accounted for separately from the trust's other approval.
assets or any series thereof; (iv) notice of the
limitation on liabilities of the series is set forth -- Maryland law does not contain specific
in the certificate of trust; and (v) the governing statutory provisions addressing series
instrument so provides. The Declaration of Trust for liability with respect to a multiple series
the New Funds provides that each of its series shall investment company; however, if the stock of
not be charged with the liabilities of any other a corporation is divided into classes,
series. Further, it states that any general assets or Maryland law requires the corporation's
liabilities not readily identifiable as to a charter documents to set forth any
particular series will be allocated or charged by the preferences or restrictions relating to such
Trustees of the New Funds to and among any one or classes. As a result, the Current Funds'
more series in such manner, and on such basis, as the standard charter documents state that the
Trustees deem fair and equitable in their sole liabilities of any series shall be charged
discretion. As required by the Delaware Act, the New only to the assets of that particular series.
Funds' Certificate of Trust specifically limits the
debts, liabilities, obligations and expenses -- The Articles of Incorporation and By-Laws
incurred, contracted for or otherwise existing with of the Current Funds are consistent with
respect to a particular series of the New Fund as Maryland law.
enforceable against the assets of that series of the
New Fund, and not against the assets of the New Fund
generally.
-- Use of the DBT structure could potentially provide
greater flexibility with respect to a "fund of funds"
operating format as compared with the Maryland
corporate structure. Under Maryland law, when one
series of a fund purchases shares issued by another
series of the same fund, the shares of the purchased
series are retired. Thus, it is impractical for a
fund organized as a Maryland corporation to operate
as a fund of funds when one of its underlying funds
is a series of the same Maryland corporation. By
comparison, under Delaware law, shares of a series
purchased by another series of the same trust are not
similarly retired. Thus, a DBT could potentially
issue additional series to operate as separate mutual
funds which would serve as underlying investments for
the fund of funds series.
</TABLE>
M-2
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Shareholder Voting -- The governing instrument determines shareholders' -- The charter of the Current Funds,
Rights and Proxy rights. The Declaration of Trust for the New Funds consistent with Maryland law, provides that
Requirements provides that shareholders of record of each share the holder of each share of stock of a fund
are entitled to one vote for each full share, and a is entitled to one vote for each full share,
fractional vote for each fractional shares. In and a fractional vote for each fractional
addition, shareholders are not entitled to cumulative share of stock, irrespective of the series or
voting for electing a trustee(s) or for any other class. In addition, shareholders are not
matter. The Declaration of Trust further provides entitled to cumulative voting for electing
that voting by the New Funds will occur separately by director(s) or for any other matter. The
series, and if applicable, by class, subject to: (1) charters of the Current Funds further state
requirements of the 1940 Act where shares of the that, on any matter submitted to a vote of
Trust must be voted in the aggregate without shareholders, all shares of the corporation
reference to series or class, and (2) where the then issued and outstanding and entitled to
matter affects only a particular series or class. vote, irrespective of series or class, shall
be voted in the aggregate and not by series
-- The Delaware Act and By-Laws for the New Funds or class except when (1) otherwise expressly
also permit the New Funds to accept proxies by any required by Maryland law; (2) required by the
electronic, telephonic, computerized, 1940 Act; and/or (3) the matter does not
telecommunications or other reasonable alternative to affect any interest of the particular series
the execution of a written instrument authorizing the or class, then only shareholders of the
proxy to act, provided such authorization is received affected series or class shall be entitled to
within eleven (11) months before the meeting. vote thereon, unless otherwise expressly
provided in the corporation's charter.
-- Maryland law permits shareholders to vote
in person at the meeting or by proxy through
a signed writing. The signature may be
achieved through any reasonable means
including facsimile. Although Maryland law
permits certain telephone solicitations, it
currently does not provide the level of
flexibility available under the Delaware Act.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
- -------------------------- ------------------------------------------------------ ------------------------------------------------
Shareholders' Meetings -- The governing instrument determines beneficial -- Maryland law provides for a special
owners' rights to call meetings. The Declaration of meeting upon the written request of 25% or
Trust for the New Funds provides that the Board of more of all eligible votes, unless the
Trustees shall call shareholder meetings for the corporate charter or By-Laws contain a
purpose of (1) electing trustees, (2) matters provision setting a greater or lesser
prescribed by law, the Declaration of Trust or percentage (but not more than a majority) of
By-Laws, or (3) for taking action upon any other votes necessary to call the special meeting.
matter deemed necessary or desirable by the Board of The Current Funds' standard By-Laws are more
Trustees. An annual shareholders' meeting is not favorable to shareholders than Maryland law
required. because they require a special meeting upon
the written request of the holders of at
least ten percent (10%) of the capital stock
of the corporation entitled to vote at such
meeting. Thus, it is easier for the
shareholders of the Current Funds to call a
special meeting.
-- Under Maryland law, annual shareholder's
meetings of a registered investment company
are not required if the charter or By-Laws of
the company so provide; however, an annual
meeting is required to be held when the 1940
Act requires the election of directors to be
acted upon by shareholders. The By-Laws of
the Current Funds are consistent with
Maryland law.
- -------------------------- ------------------------------------------------------ -------------------------------------------------
- -------------------------- ------------------------------------------------------ -------------------------------------------------
</TABLE>
M-3
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Quorum Requirement -- The Declaration of Trust of the New Funds, -- Maryland law and the By-Laws of the
consistent with the Delaware Act, establishes a Current Funds provide that the presence in
quorum when thirty-three and one-third percent person or by proxy of the holders of record
(33-1/3%) of the shares entitled to vote are present of a majority of the outstanding shares of
in person or by proxy. For purposes of determining stock entitled to vote constitute a quorum.1
whether a quorum exists, the Declaration of Trust Maryland law provides that abstentions and
provides that abstentions and broker non-votes are broker non-votes are included and treated as
included and treated as votes present at the votes present at the meeting but are not
shareholders' meeting but are not treated as votes treated as votes cast.
cast.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
Action Without -- Delaware law permits the governing instrument to -- Under Maryland law, any action required to
Shareholders' Meeting set forth the procedure whereby action required to be be approved at a meeting of the shareholders
approved by shareholders at a meeting may be done by may also be approved by the unanimous written
consent. The Declaration of Trust for the New Funds consent of the shareholders entitled to vote
permits any action required to be approved at a at such meeting.
meeting of shareholders to be approved by the
unanimous written consent of the shareholders
entitled to vote at such meeting.
- -------------------------- ------------------------------------------------------ -------------------------------------------------
- ------------------------
(1) The Delaware Group Adviser Funds, Inc. provides for a lower quorum standard permitting one-third (1/3) of the issued
and outstanding common stock of the Corporation or series or class, as applicable, to establish a quorum.
M-4
<PAGE>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Matters Requiring -- The Delaware Act affords Trustees the ability to -- Consistent with Maryland law, the Current
Shareholder Approval easily adapt a DBT to future contingencies. For Funds' Articles of Incorporation require
example, Trustees have the authority to incorporate a shareholder approval by a majority of all
DBT to merge or consolidate with another entity, to votes entitled to be cast to approve the
cause multiple series of a DBT to become separate following: (1) amendments or restatements of
trusts, to change the domicile or to liquidate a DBT, the articles; (2) reduction of state capital;
all without having to obtain a shareholder vote. More (3) a consolidation, merger, share exchange
importantly, in cases where funds are required or do or transfer of assets, including a sale of
elect to seek shareholder approval for transactions, all or substantially all the assets of the
the Delaware Act provides great flexibility with corporation; (4) distribution in partial
respect to the quorum and voting requirements for liquidation; or (5) a voluntary dissolution.
approval of such transactions. Unless the charter provides for a lesser
standard, Maryland law by itself requires an
-- The Declaration of Trust for the New Funds, affirmative vote of two-thirds (2/3) of all
consistent with the Delaware Act, affords votes entitled to be cast when approving
shareholders the power to vote on the following these extraordinary corporate transactions.
matters: (1) the election of trustees (including the The Current Fund's By-Laws provide that a
filling of any vacancies; (2) as required by the majority of shares voting at the meeting is
Declaration of Trust, By-Laws, the 1940 Act or sufficient to approve other matters properly
registration statement; and (3) other matters deemed before shareholders except for an election of
by the Board of Trustees to be necessary or directors, which require a plurality.1
desirable.
-- The Declaration of Trust provides that when a
quorum is present, a majority of votes cast shall
decide any issues, and a plurality shall elect a
Trustee(s), unless a different vote is required by
the Declaration of Trust, By-Laws or under applicable
law.
- -------------------------- ------------------------------------------------------ -------------------------------------------------
- ------------------------
(1) The Delaware Group Adviser Funds, Inc. By-Laws provide that all elections and issues subject to a meeting of
shareholders are decided by a majority of votes cast at such meeting, unless a different vote is required by Maryland
law, Articles of Incorporation or By-Laws. Based on such By-Laws and Maryland law, the election of directors and other
matters properly at a meeting of shareholders (except as noted below) may be decided by a majority of votes cast at the
meeting. A different standard exists for certain extraordinary corporate transactions whereby Maryland law requires an
affirmative vote of two-thirds (2/3) of all votes entitled to be cast (unless the charter provides a different standard)
in order to approve: (1) amendments to the charter; (2) reduction of stated capital; (3) consolidation, merger, share
exchange or transfer of assets, including a sale of all or substantially all the assets of the corporation; (4) partial
liquidation; or (5) a voluntary dissolution. Accordingly, for these extraordinary corporate transactions, Delaware Group
Adviser Funds, Inc. is subject to the two-thirds (2/3) shareholder voting requirement found in Maryland law.
</TABLE>
M-5
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Amendments to Governing -- The Delaware Act provides broad flexibility with -- Under Maryland law, the charter of a
Documents respect to amendments of governing documents of a Maryland corporation may be amended only (i)
DBT. The New Funds' Declaration of Trust state that, upon adoption of a resolution by the
if shares have been issued, shareholder approval to Directors which sets forth the proposed
adopt amendments to the Declaration of Trust is only amendments; and (ii) approval of the proposed
required if such adoption would adversely affect to a amendment by the holders of a majority of the
material degree the rights and preferences of the corporation's outstanding shares entitled to
shares of any series (or class) already issued. vote. Maryland law does, however, permit
Before adopting any amendment to the Declaration of investment companies to amend their charter
Trust relating to shares without shareholder documents without shareholder approval in
approval, the Trustees are required to determine that order to create additional series or classes
the amendment is: (i) consistent with the fair and of shares, increase or decrease the aggregate
equitable treatment of all shareholders, and (ii) number of shares of stock that the
shareholder approval is not required by the 1940 Act corporation has authority to issue, or
or other applicable law. reflect changes in the names of the
corporation, its series or classes. The
-- The New Funds' By-Laws may be amended or repealed Current Funds' charter documents are
by the affirmative vote or written consent of a consistent with Maryland law. Because
majority of the outstanding shares entitled to vote. shareholder approval is required for most
Subject to the rights of the shareholders, those other amendments to charter documents,
By-Laws also may be adopted, amended or repealed by Maryland law is more restrictive than the
the Board of Trustees. Delaware Act.
-- The By-Laws of a Maryland corporation may
also be amended. Maryland law provides that,
after the organizational meeting of the board
of directors, the power to adopt, alter or
repeal the By-Laws is vested in the
shareholders, except to the extent that the
charter or By-Laws vest such power in the
board of directors. Consistent with Maryland
law, the Current Funds' By-Laws provide that
they may be amended, altered or repealed by
the affirmative vote of the holders of a
majority of shares entitled to vote thereon,
or by a majority of the Board of Directors,
as the case may be.
</TABLE>
M-6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Record Date -- The Delaware Act permits a governing instrument to -- Maryland law contains provisions by which
contain provisions that provide for the establishment a corporation may determine which
of record dates for determining voting rights. shareholders are entitled to notice of a
meeting, to vote at a meeting, or to any
-- The Declaration of Trust for the New Funds other rights. The Maryland law requires that
provides that the Board of Trustees may fix in the record date be not more than ninety (90)
advance a record date which shall not be more than days and not less than ten (10) days before
one hundred eighty (180) days, nor less than seven the date on which the action requiring
(7) days, before the date of any such meeting. determination will be taken. If a Maryland
corporation does not set a record date,
Maryland law requires that the date be the
later of: (1) thirty (30) days before the
meeting or (2) the close of business on the
day the notice was mailed. Consistent with
Maryland law, the Current Funds' By-Laws
allow the corporation to close the transfer
books twenty (20) days before a meeting or
set a date not more than ninety (90) days
before a meeting for determining such rights.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
- -------------------------- ------------------------------------------------------ ------------------------------------------------
Removal of Directors/ -- The Delaware Act is silent with respect to the -- Under Maryland law, shareholders may
Trustees removal of Trustees. However, the Declaration of remove a director with or without cause.
Trust states that the Board of Trustees, by action of Unless the charter provides otherwise,
a majority of the then Trustees at a duly constituted Maryland law requires the affirmative vote of
meeting, may fill vacancies in the Board of Trustees a majority of all votes entitled to be cast
or remove Trustees with or without cause. for the election of directors to remove a
director. Unless the charter provides
otherwise, if a class or series is entitled
to elect one or more directors separately,
such director may not be removed without
cause except by the affirmative vote of a
majority of all the votes of that series or
class. The Current Fund's Articles of
Incorporation and By-Laws (except for one)
are silent regarding the removal of
directors.(1)
- -----------------------
(1) The By-Laws of the Delaware Group Adviser Funds, Inc. provide for the removal of a director by two-thirds (2/3) of
the record holders of the corporation's common stock of all series. Removal may be achieved either by a declaration in
writing filed with the corporation's secretary or by votes cast in person or by proxy at a meeting called for the
purpose. The By-Laws further state that a meeting of stockholders is to be called for the purpose of removal of a
director when requested in writing by stockholders of ten percent or more of the corporation's common stock of all
series.
</TABLE>
M-7
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Shareholder Rights of -- The Delaware Act sets forth the rights of -- Maryland law provides that during usual
Inspection shareholders to gain access to and receive copies of business hours a shareholder may inspect and
certain Trust documents and records. This right is copy the following corporate documents:
qualified by the extent otherwise provided in the By-Laws; minutes of shareholders' meetings;
governing instrument of the Trust as well as a annual statements of affairs; and voting
reasonable demand standard related to the trust agreements. Moreover, one or more
shareholder's interest as an owner of the DBT. persons who together are, and for at least
six months have been, shareholders of record
-- Consistent with Delaware law, the By-Laws of the of at least five percent of the outstanding
New Funds provide that at reasonable times during stock of any class are entitled to inspect
office hours, a shareholder may inspect the share and copy the corporation's books of account
registry and By-Laws. The By-Laws further permit at and stock ledger and to review a statement of
any reasonable time during usual business hours for a affairs and a list of shareholders.
purpose reasonably related to the shareholder's
interests, that a shareholder inspect and copy
accounting books and records and minutes of
proceedings of the shareholders and the Board of
Trustees and any committee or committees of the Board
of Trustees.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
- -------------------------- ------------------------------------------------------ ------------------------------------------------
Dividends and Other -- The Delaware Act does not contain any statutory -- Maryland law allows the payment of a
Distributions limitations on the payment of dividends and other dividend or other distribution unless, after
distributions. giving effect to the dividend or other
distribution, (1) the corporation would not
-- The New Funds By-Laws specify that the declaration be able to pay its debts as they become due
of dividends is subject to the Declaration of Trust in the usual course of business or (2) the
and applicable law. In addition, the By-Laws provide corporation's total assets would be less than
that prior to payment of dividends, the New Funds may the corporation's total liabilities plus
set aside a reserve(s) to meet contingencies, (unless the corporation's charter provides
equalizing dividends, repairing or maintaining otherwise) the amount that would be needed,
property or for other purposes deemed by the Trustees if the corporation were to be dissolved at
to be in the best interest of the Fund. the time of the distribution, to satisfy the
preferential rights upon dissolution of
shareholders whose preferential rights upon
dissolution are superior to those receiving
the distribution.
-- Current Funds By-Laws provide that prior
to payment of dividends, the Funds may set
aside a reserve to meet contingencies,
equalizing dividends, repairing, or
maintaining property or for other purposes
deemed by the directors to be in the best
interest of the Fund.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
- -------------------------- ------------------------------------------------------ ------------------------------------------------
Shareholder/ Beneficial -- Personal liability is limited by the Delaware Act -- As a general matter, the shareholders of a
Owner Liability to the amount of investment in the trust and may be Maryland corporation are not personally
further limited or restricted by the governing liable for the obligations of the
instrument. corporation. Under Maryland law, a
shareholder of a Maryland corporation may,
-- Consistent with Delaware law, the Declaration of however, be liable in the amount of any
Trust for the New Funds provides that the DBT, its distribution he or she accepts knowing that
trustees, officers, employees, and agents do not have the distribution was made in violation of the
the power to personally bind a shareholder. corporation's charter or Maryland law. The
Shareholders of the DBT are entitled to the same charter for the Current Funds is consistent
limitation of personal liability extended to with Maryland law.
stockholders of a private corporation organized for
profit under the general corporation law of the State
of Delaware.
</TABLE>
M-8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ ------------------------------------------------
- -------------------------- ------------------------------------------------------ ------------------------------------------------
<S> <C> <C>
Director/ Trustee -- Subject to the declaration of trust, the Delaware -- Maryland law requires a director to
Liability Act provides that a trustee, when acting in such perform his or her duties in good faith, in a
capacity, may not be held personally liable to any manner he or she reasonably believes to be in
person other than the DBT or a beneficial owner for the best interests of the corporation and
any act, omission or obligation of the DBT or any with the care that an ordinarily prudent
trustee. A trustee's duties and liabilities to the person in a like position would use under
DBT and its beneficial owners may be expanded or similar circumstances. A director who
restricted by the provisions of the declaration of performs his or her duties in accordance with
trust. this standard has no liability by reason of
being or having been a director. If it is
-- The Declaration of Trust for the New Funds established that a director did not meet the
provides that the Trustees shall not be liable or foregoing standard, the director, for
responsible in any event for any neglect or example, may be personally liable to the
wrongdoing of any officer, agent, employee, manager corporation for (i) voting or assenting to a
or principal underwriter of the New Funds, nor shall distribution of assets to shareholders which
any Trustee be responsible for the act or omission of is in violation of either the Funds' charter
any other Trustee. In addition, the Declaration of documents or Maryland law; and (ii) voting or
Trust also provides that the Trustees acting in their assenting to a repurchase of the
capacity as Trustees, shall not be personally liable corporation's shares in violation of Maryland
for acts done by or on behalf of the New Fund. law. Maryland law as well as the applicable
Current Funds' charter document prohibit
limiting a director's liability if said
director would otherwise be subject by reason
of willful misfeasance, bad faith, gross
negligence or reckless disregard of one's
duties.
-- Seven of the Current Fund's charter
documents do not contain provisions regarding
director liability.(1) The other remaining
Current Funds that have this liability
provision state that to the fullest extent
that liability is limited under Maryland law,
no director or officer will be liable to the
corporation or its shareholders for damages.
- -----------------------
(1) These seven Current Funds include: Delaware Group Equity Funds I, Equity Funds II, Equity Funds III, Equity Funds V,
Government Funds, Income Funds and Tax-Free Fund.
</TABLE>
M-9
<PAGE>
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------------------------ -------------------------------------------------
Delaware Business Trust Maryland Corporation
- -------------------------- ------------------------------------------------------ -------------------------------------------------
<S> <C> <C>
Indemnification -- The Delaware Act permits a DBT to indemnify and -- Under Maryland law, a director or officer
hold harmless any trustee, beneficial owner or agent who is threatened or made a party to a
from and against any and all claims and demands. proceeding, may be indemnified against
Consistent with the Delaware Act, the Declaration of judgments, penalties, fines, settlements and
Trust for the New Funds provides for the reasonable expenses actually incurred by the
indemnification of officers and trustees from and director in connection with the proceeding.
against any and all claims and demands arising out of Indemnification will not be permitted if the
or related to the performance of duties as an officer act or omissions of the Director or officer:
or Trustee. The New Funds will not indemnify, hold (1) was material to the matter giving rise to
harmless or relieve from liability trustees or the proceeding and was committed in bad faith
officers for those acts or omissions for which they or the result of active and deliberate
are liable if such conduct constitutes willful dishonesty; (2) resulted in an improper
misfeasance, bad faith, gross negligence or reckless benefit to the individual; or (3) was
disregard of their duties. committed when the director or officer had
reasonable cause to believe that the act or
-- The Declaration of Trust also provides that any omission was unlawful.
shareholder or former shareholder that is exposed to
liability by reason of a claim or demand related to
having been a shareholder, and not because of his or
her acts or omissions, shall be entitled or beheld
harmless and indemnified out of the assets of the
DBT.
- -------------------------- ------------------------------------------------------ ------------------------------------------------
- -------------------------- ------------------------------------------------------ ------------------------------------------------
Insurance -- The Delaware Act does not contain a provision -- Under Maryland Law, a corporation may
specifically related to insurance. The Trust's purchase insurance on behalf of any director,
Declaration of Trust provides that the Trustees shall officer or employee against any liability
be entitled and have the authority to purchase with asserted against and incurred by such person
Trust assets insurance for liability and for all in any such capacity or arising out of such
expenses reasonably incurred or paid or expected to person's position, whether or not the
be paid by a Trustee or officer in connection with corporation would have the power to indemnify
any claim, or proceeding in which he or she becomes such person against such liability. Under
involved by virtue of his or her capacity (or former Maryland law, insurance also may be purchased
capacity) with the Trust. The Bylaws of the New Funds under the corporate by-laws on behalf of
permit such insurance coverage to extend to employees agents of a fund. The Current Funds' Bylaws
and other agents of the Trust. are silent with respect to this issue.
- -------------------------- ------------------------------------------------------ -------------------------------------------------
- -------------------------- ------------------------------------------------------ -------------------------------------------------
</TABLE>
M-10
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
FOR DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
Unless otherwise defined in this Exhibit, capitalized terms have
the meanings set forth in Proposal Seven.
M-11
<PAGE>
================================================================================
Delaware Business Trust
================================================================================
Governing -- Created by a governing instrument (which may consist of
Documents one or more instruments, including an agreement and
declaration of trust and By-Laws) and a Certificate of Trust,
which must be filed with the Delaware Secretary of State. The
Delaware Business Trust ("DBT") statutes found at Del. Code.
Ann. title 12, s.3801, et seq. are referred to in this chart
as the "Delaware Act."
-- A DBT is an unincorporated association organized under the
Delaware Act which operates similar to a typical corporation.
A DBT's operations are governed by a trust instrument and
By-Laws. The business and affairs of a DBT are managed by or
under the direction of a Board of Trustees.
-- DBTs are organized as an open-end investment company
subject to the Investment Company Act of 1940, as amended
(the "1940 Act"). Shareholders own shares of "beneficial
interest" as compared to the shares of "common stock" issued
by corporations. There is however, no practical difference
between the two types of shares.
-- As described in this chart, DBTs are granted a significant
amount of organizational and operational flexibility. The
Delaware Act makes it easier to obtain needed shareholder
approvals, and also permits management of a DBT to take
various actions without being required to make state filings
or obtain shareholder approval. The Delaware Act also
contains favorable limitations on shareholder and Trustee
liability, and provides for indemnification out of trust
property for any shareholder or Trustee that may be held
personally liable for the obligations of a DBT.
- --------------------------------------------------------------------------------
Multiple Series -- Under the Delaware Act, a declaration of trust may provide
and Classes for classes, groups or series of shares, or classes, groups
or series of shareholders, having such relative rights,
powers and duties as the declaration of trust may provide.
The series and classes of a DBT may be described in the
declaration of trust or in resolutions adopted by the board
of trustees. Neither state filings nor shareholder approval
is required to create series or classes. The New Fund's
Agreement and Declaration of Trust (the "Declaration of
Trust") permits the creation of multiple series and classes
and establishes the provisions relating to shares.
-- The Delaware Act explicitly provides for a reciprocal
limitation of interseries liability. The debts, liabilities,
obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series of a
multiple series investment company registered under the 1940
Act are enforceable only against the assets of such series,
and not against the assets of the trust, or any other series,
generally, provided that: (i) the governing instrument
creates one or more series;
<PAGE>
================================================================================
Delaware Business Trust
================================================================================
(ii) separate and distinct records are maintained for any
such series;
(iii) the series' assets are held and accounted for
separately from the trust's other assets or any series
thereof;
(iv) notice of the limitation on liabilities of the series
is set forth in the certificate of trust; and
(v) the governing instrument so provides.
-- The Declaration of Trust for the New Fund provides that
each of its series shall not be charged with the liabilities
of any other series. Further, it states that any general
assets or liabilities not readily identifiable as to a
particular series will be allocated or charged by the
Trustees of the New Fund to and among any one or more series
in such manner, and on such basis, as the Trustees deem fair
and equitable in their sole discretion. As required by the
Delaware Act, the New Fund's Certificate of Trust
specifically limits the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with
respect to a particular series of the New Fund as enforceable
against the assets of that series of the New Fund, and not
against the assets of the New Fund generally.
-- A court applying federal securities law may not respect
provisions that serve to limit the liability of one series of
an investment company's shares for the liabilities of another
series. Accordingly, provisions relating to series liability
contained in a Declaration of Trust may be preempted by the
way in which the courts interpret the 1940 Act.
- --------------------------------------------------------------------------------
Shareholder -- The governing instrument determines shareholders' rights.
Voting Rights The Declaration of Trust for the New Fund provides that
and Proxy shareholders of record of each share are entitled to one vote
Requirements for each full share, and a fractional vote for each
fractional shares. In addition, shareholders are not entitled
to cumulative voting for electing a trustee(s) or for any
other matter. The Declaration of Trust further provides that
voting by the New Fund will occur separately by series, and
if applicable, by class, subject to: (1) requirements of the
1940 Act where shares of the Trust must be voted in the
aggregate without reference to series or class, and (2) where
the matter affects only a particular series or class.
<PAGE>
================================================================================
Delaware Business Trust
================================================================================
-- The Delaware Act and By-Laws for the New Fund also permits
the New Fund to accept proxies by any electronic, telephonic,
computerized, telecommunications or other reasonable
alternative to the execution of a written instrument
authorizing the proxy to act, provided such authorization is
received within eleven (11) months before the meeting.
- --------------------------------------------------------------------------------
Shareholders' -- Delaware law permits special shareholder meetings to be
Meetings called for any purpose. However, the Declaration of Trust for
the New Funds provides that the Board of Trustees shall call
shareholder meetings for the purpose of (1) electing
trustees, (2) matters prescribed by law, the Declaration of
Trust or By-Laws, or (3) for taking action upon any other
matter deemed necessary or desirable by the Board of
Trustees. The By-Laws further provide that a shareholder
meeting may be called at any time by the Board of Trustees,
by the Chairperson of the Board, or by the President or any
Vice President or the Secretary and any two (2) Trustees. An
annual shareholders' meeting is not required by Delaware law,
the Declaration of Trust or By-Laws.
- --------------------------------------------------------------------------------
Quorum -- The Declaration of Trust of the New Fund, consistent with
Requirement the Delaware Act, establishes a quorum when thirty-three and
one-third percent (33-1/3%) of the shares entitled to vote
are present in person or by proxy. For purposes of
determining whether a quorum exists, the Declaration of Trust
provides that abstentions and broker non-votes are included
and treated as votes present at the shareholders' meeting but
are not treated as votes cast.
- --------------------------------------------------------------------------------
Action -- Delaware law permits the governing instrument to set forth
Without the procedure whereby action required to be approved by
Shareholders' shareholders at a meeting may be done by consent. The
Meeting Declaration of Trust for the New Fund allows an action to be
taken absent a shareholder meeting if the shareholders having
not less than the minimum number of votes that would be
necessary to authorize or take that action at a meeting at
which all shares entitled to vote on the matter were present
and voted, consent to be the action in writing.
- --------------------------------------------------------------------------------
Matters -- The Delaware Act affords Trustees the ability to easily
Requiring adapt a DBT to future contingencies. For example, Trustees
Shareholder have the authority to incorporate a DBT, to merge or
Approval consolidate with another entity, to cause multiple series of
a DBT to become separate trusts, to change the domicile or to
liquidate a DBT, all without having to obtain a shareholder
vote. More importantly, in cases where funds are required or
do elect to seek shareholder approval for transactions, the
Delaware Act provides great flexibility with respect to the
quorum and voting requirements for approval of such
transactions.
<PAGE>
================================================================================
Delaware Business Trust
================================================================================
-- The Declaration of Trust for the New Fund, consistent with
the Delaware Act, affords shareholders the power to vote on
the following matters:
(1) the election of trustees (including the filling of any
vacancies;
(2) as required by the Declaration of Trust, By-Laws, the
1940 Act or registration statement; and
(3) other matters deemed by the Board of Trustees to be
necessary or desirable.
-- The Declaration of Trust further provides that when a
quorum is present, a majority of votes cast shall decide any
issues, and a plurality shall elect a Trustee(s), unless a
different vote is required by the Declaration of Trust,
By-Laws or under applicable law.
- --------------------------------------------------------------------------------
Amendments -- The Delaware Act provides broad flexibility with respect
to Governing to amendments of governing documents of a DBT. The New Fund's
Documents Declaration of Trust state that, if shares have been issued,
shareholder approval to adopt amendments to the Declaration
of Trust is only required if such adoption would adversely
affect to a material degree the rights and preferences of the
shares of any series (or class) already issued. Before
adopting any amendment to the Declaration of Trust relating
to shares without shareholder approval, the Trustees are
required to determine that the amendment is: (i) consistent
with the fair and equitable treatment of all shareholders,
and (ii) shareholder approval is not required by the 1940 Act
or other applicable law.
-- The New Fund's By-Laws may be amended or repealed by the
affirmative vote or written consent of a majority of the
outstanding shares entitled to vote. Subject to the rights of
the shareholders, those By-Laws also may be adopted, amended
or repealed by the Board of Trustees.
- --------------------------------------------------------------------------------
Record -- Delaware law permits a governing instrument to contain
Date/Notice provisions that provide for the establishment of record dates
for determining voting rights.
-- The Declaration of Trust for the New Fund provides that
the Board of Trustees may fix in advance a record date which
shall not be more than one hundred eighty (180) days, nor
less than seven (7) days, before the date of any such
meeting. The Declaration of Trust for the New Fund also
establishes procedures by which a record date can be set if
the Board fails to establish a record date in accordance with
the above procedures. In such situations, the record date for
determining which shareholders are entitled to notice of or
to vote at any meeting, is set at the close of business on
the first business day that precedes the day on which notice
is given or, if notice is waived, at the close of business on
the business day which is five (5) days next preceding the
day on which the meeting is held. The Declaration of Trust
provides that the record date for determining shareholders
entitled to give consent to action in writing without a
meeting is determined in the following manner: (i) when the
Board of Trustees has not taken prior action, the record date
will be set on the day on which the first written consent is
given; or (ii) when the Board of Trustees has taken prior
action, the record date will be set at the close of business
on the day on which the Board of Trustees adopt the
resolution relating to that action or the seventy-fifth
(75th) day before the date of such other action, whichever is
later.
-- The By-Laws for the New Fund provides that all notices of
shareholder meetings shall be sent or otherwise given to
shareholders not less than seven (7) or more than
ninety-three (93) days before the date of the meeting.(2)
- --------------------------------------------------------------------------------
Removal of -- The Delaware Act is silent with respect to the removal of
Directors/ Trustees. However, the Declaration of Trust states that the
Trustees Board of Trustees, by action of a majority of the then
Trustees at a duly constituted meeting, may fill vacancies in
the Board of Trustees or remove Trustees with or without
cause.
Shareholder -- The Delaware Act sets forth the rights of shareholders to
Rights of gain access to and receive copies of certain Trust documents
Inspection and records. This right is qualified by the extent otherwise
provided in the governing instrument of the Trust as well as
a reasonable demand standard related to the shareholder's
interest as an owner of the DBT.
-- Consistent with Delaware law, the By-Laws of the New Fund
provides that at reasonable times during office hours, a
shareholder may inspect the share registry and By-Laws. The
By-Laws further permit at any reasonable time during usual
business hours for a purpose reasonably related to the
shareholder's interests, that a shareholder inspect and copy
accounting books and records and minutes of proceedings of
the shareholders and the Board of Trustees and any committee
or committees of the Board of Trustees.
<PAGE>
================================================================================
Delaware Business Trust
================================================================================
Dividends and -- The Delaware Act does not contain any statutory
Other limitations on the payment of dividends and other
Distributions distributions. The New Fund's By-Laws specify that the
declaration of dividends is subject to the Declaration of
Trust and applicable law. In addition, the By-Laws provide
that prior to payment of dividends, the New Funds may set
aside a reserve(s) to meet contingencies, equalizing
dividends, repairing or maintaining property or for other
purposes deemed by the Trustees to be in the best interest of
the Fund.
- --------------------------------------------------------------------------------
Shareholder/ -- Personal liability is limited by the Delaware Act to the
Beneficial amount of investment in the trust and may be further limited
Owner or restricted by the governing instrument. Consistent with
Liability Delaware law, the Declaration of Trust for the New Fund
provides that the DBT, its trustees, officers, employees, and
agents do not have the power to personally bind a
shareholder. Shareholders of the DBT are entitled to the same
limitation of personal liability extended to stockholders of
a private corporation organized for profit under the general
corporation law of the State of Delaware.
- --------------------------------------------------------------------------------
Director/ -- Subject to the declaration of trust, the Delaware Act
Trustee provides that a trustee, when acting in such capacity, may
Liability not be held personally liable to any person other than the
DBT or a beneficial owner for any act, omission or obligation
of the DBT or any trustee. A trustee's duties and liabilities
to the DBT and its beneficial owners may be expanded or
restricted by the provisions of the declaration of trust.
-- The Declaration of Trust for the New Fund provides that
the Trustees shall not be liable or responsible in any event
for any neglect or wrongdoing of any officer, agent,
employee, manager or principal underwriter of the New Fund,
nor shall any Trustee be responsible for the act or omission
of any other Trustee. In addition, the Declaration of Trust
also provides that the Trustees acting in their capacity as
Trustees, shall not be personally liable for acts done by or
on behalf of the New Fund.
- --------------------------------------------------------------------------------
Indemnification -- The Delaware Act permits a DBT to indemnify and hold
harmless any trustee, beneficial owner or agent from and
against any and all claims and demands. Consistent with the
Delaware Act, the Declaration of Trust for the New Fund
provides for the indemnification of officers and trustees
from and against any and all claims and demands arising out
of or related to the performance of duties as an officer or
Trustee. The New Fund will not indemnify, hold harmless or
relieve from liability trustees or officers for those acts or
omissions for which they are liable if such conduct
constitutes willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties.
<PAGE>
================================================================================
Delaware Business Trust
================================================================================
-- The Declaration of Trust also provides that any
shareholder or former shareholder that is exposed to
liability by reason of a claim or demand related to having
been a shareholder, and not because of his or her acts or
omissions, shall be entitled or beheld harmless and
indemnified out of the assets of the DBT.
- --------------------------------------------------------------------------------
Insurance -- The Delaware Act does not contain a provision specifically
related to insurance. The Trust's Declaration of Trust
provides that the Trustees shall be entitled and have the
authority to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee or officer in connection
with any claim, or proceeding in which he or she becomes
involved by virtue of his or her capacity (or former
capacity) with the Trust. The By-Laws of the New Fund permits
such insurance coverage to extend to employees and other
agents of the Trust.
================================================================================
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
Governing -- The Delaware Group State Tax-Free Income Trust (the "PA
Documents Trust") was created by a declaration of trust ("Declaration
of Trust"). The laws and statutes of the Commonwealth of
Pennsylvania are silent regarding the creation and operation
of the PA Trust. Accordingly, the PA Trust was created and
operates in accordance with the common law of the state. As a
common law trust, the PA Trust is not subject to any filing
requirements as is the case with DBTs in Delaware.
-- The PA Trust is a revocable common law trust with
shareholders permitted to revoke or redeem their interests
consistent with its Declaration of Trust. The PA Trust is
governed by its Declaration of Trust and Procedural
Guidelines (functional equivalent of By-Laws). The business
and affairs of the Trust are managed by and under the
direction of a Board of Trustees.
-- The PA Trust is organized as an open-end investment
company subject to the 1940 Act. Shareholders own shares of
"beneficial interest" as compared to the shares of "common
stock" issued by corporations. There is however, no practical
difference between the two types of shares.
-- As described in this chart, the PA Trust is granted a
significant amount of organizational and operational
flexibility. Pennsylvania law makes it easier to obtain
needed shareholder approvals for corporate actions, and also
permits management of the PA Trust to take various actions
without being required to make state filings or obtain
shareholder approval. The PA Trust also contains favorable
limitations on shareholder and Trustee liability, and
provides for indemnification out of trust property for any
shareholder or Trustee that may be held personally liable for
the obligations of the Trust.
- --------------------------------------------------------------------------------
Multiple Series -- The Declaration of Trust provides that the beneficial
and Classes interest of the PA Trust is divided into an unlimited number
of transferable beneficial shares. The Trustees are
authorized to divide the beneficial shares into separate
series and the series into separate classes or sub-series of
beneficial shares without making state filings or obtaining
shareholder approval subject to applicable rules, regulations
or orders of the U.S. Securities and Exchange Commission
("SEC") or other applicable laws or regulations. The
Declaration of Trust further provides that such series and
classes shall have such preferences, conversion or other
rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms and conditions of redemption
and other characteristics as the Trustees may determine,
provided that they are consistent with the Declaration of
Trust.
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
-- The Trust Documents do not contain provisions that
specifically provide that each series of the Trust shall not
be charged with the liabilities of another series of the
Trust or the liabilities of the Trust in general; however, as
stated above, the Trust's Declaration of Trust provides that
the Trustees may determine what preferences, restrictions or
other characteristics series and classes of the Trust may
have. Therefore, it is possible that the trustees could amend
the Trust's Declaration of Trust so that it would explicitly
provide that the debts, liabilities, obligations and expenses
incurred or contracted for with respect to a particular
series would be enforceable only against the assets of that
series and not the general assets, if any, of the Trust or
any other series of the Trust.
- --------------------------------------------------------------------------------
Shareholder -- The Declaration of Trust for the PA Trust provides that
Voting Rights each whole beneficial share is entitled to one vote regarding
and Proxy matters in which it is entitled to vote and a fractional vote
Requirements for each fractional share. In addition, shareholders are not
entitled to cumulative voting for electing a trustee(s). The
Declaration of Trust for the PA Trust calls for class voting
in certain limited circumstances. Specifically, with respect
to any matter relating to or arising from the distribution
plan of a particular class, only the shares of that
particular class are entitled to vote. Likewise, shares of a
particular class are not entitled to vote upon or with
respect to any matter relating to or arising from any
distribution plan relating to any other class.
-- The Declaration of Trust allows for in person and proxy
voting. Accordingly, the PA Trust's Procedural Guidelines
permit the Trust to accept proxies and votes by various
means, including telegram, telex, cablegram or datagram or
facsimile or other similar reproduction, in addition to a
signed written instrument.
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
Shareholders' -- The PA Trust's Declaration of Trust provides that the
Meetings trustees of the Fund are required to call a meeting of the
shareholders upon the written request of shareholders owning
at least twenty percent (20%) of the outstanding shares that
are entitled to vote. The Declaration of Trust and Procedural
Guidelines do not require an annual shareholders meeting.
- --------------------------------------------------------------------------------
Quorum -- The PA Trust's Declaration of Trust provides that a
Requirement majority of the shares of the Trust that are outstanding and
entitled to vote constitutes a quorum.
- --------------------------------------------------------------------------------
Action -- The PA Trust's Declaration of Trust and Procedural
Without Guidelines do not contain any provisions that authorize the
Shareholders' shareholders of the Trust to take action without a meeting.1
Meeting
- --------------------------------------------------------------------------------
Matters The Declaration of Trust provides shareholders of the Trust
Requiring with the right to vote: (i) for the election of trustees;
Shareholder (ii) with respect to the approval of any investment adviser
Approval to the Fund; (iii) with respect to such additional matters
relating to the Trust as may be required or authorized by
law, or the Procedural Guidelines of the Trust, or any
registration of the Trust with the SEC or any state; and (iv)
on such other matters that the trustees may consider
desirable.
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
-- Subject to applicable legal and regulatory requirements or
the Trust Documents, the Declaration of Trust further
provides that a majority of the beneficial shares voted shall
decide any question and a plurality shall elect a trustee,
subject to establishing a quorum for the meeting.
- --------------------------------------------------------------------------------
Amendments -- Trustees may amend the Declaration of Trust without
to Governing shareholder approval except for those provisions of the
Documents Declaration of Trust that contain fundamental investment
restrictions that require a "vote of a majority of the
outstanding voting securities" consistent with the 1940 Act.
- --------------------------------------------------------------------------------
Record -- The Declaration of Trust sets forth the procedure by which
Date/Notice the Trust may determine which shareholders are entitled to
notice of a meeting, to vote at a meeting or certain other
rights.
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
-- The PA Trust's Declaration of Trust provides that the
record date for determining which shareholders are entitled
to notice of a shareholders' meeting or to vote at a
shareholders' meeting may be set at any time from the
ninetieth day (90th day) before the meeting up to the day
before the meeting.
-- The Trust's Declaration of Trust further provides that
beneficial owners of the Trust are entitled to at least ten
(10) days' notice of a meeting.
- --------------------------------------------------------------------------------
Removal of -- The PA Trust's Declaration of Trust provides that a
Directors/ Trustee may be removed by a written instrument signed by at
Trustees least two-thirds (2/3) of the number of Trustees prior to
such removal, specifying the date when such removal shall
become effective.
- --------------------------------------------------------------------------------
Shareholder -- The Trust Documents do not contain any provision that
Rights of authorizes the shareholders to inspect any account, book, or
Inspection document of the Trust.
- --------------------------------------------------------------------------------
Dividends and -- The Declaration of Trust provides that Trustees may
Other declare dividends from time to time. The Declaration of Trust
Distributions also provides that Trustees may pay and declare such
dividends according to whatever formula they adopt (subject
to any applicable rule, regulation or order of the Securities
and Exchange Commission or any other applicable law or
regulation). The Trust has adopted a distribution plan under
Rule 12b-1 (the "Plan") for certain classes of its shares.
Pursuant to the terms of the various classes of the Trust,
dividends paid on the shares of a particular class (that is
subject to the Plan) shall reflect reductions for payments of
fees of the Plan, if any, relating to that class and shall
not reflect reductions for payments of fees under the Plan
that relate to any other class.
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
Shareholder/ -- The PA Trust's Declaration of Trust limits the personal
Beneficial liability of each shareholder to the amount invested in the
Owner Trust. Trustees are not authorized to personally bind any
Liability shareholder or demand payment of a shareholder in addition to
his or her investment unless agreed to by such shareholder.
-- The Declaration of Trust further states that all
obligations of the Trust shall include a recitation limiting
payment of such obligations to the Trust and its assets. The
absence of such a provision does not, however, operate to
bind any shareholder.
- --------------------------------------------------------------------------------
Director/ -- Under the Declaration of Trust, if the Trustees have acted
Trustee under the reasonable belief that their actions are in the
Liability best interest of the Trust, they can be held personally
liable only for willful misfeasance, bad faith or gross
negligence in the performance of their duties, or by reason
of reckless disregard of their obligations and duties as
Trustees. The Declaration of Trust further provides that
every written agreement, obligation or other undertaking made
or issued by the Trust may contain a provision, which states
that the Trustees will not be held personally liable under
said instrument. The absence of such a provision, however,
shall not operate to bind any Trustee.
- --------------------------------------------------------------------------------
Indemnification -- Shareholders held personally liable solely by reason of
being a shareholder of the PA Trust are entitled to
indemnification from all loss and expense arising from such
liability out of the assets of the Trust. Upon request of a
shareholder, the PA Trust will assume the defense of any
claim against such shareholder for any act or obligation of
the Trust and satisfy any judgment based on these claims.
-- The Declaration of Trust provides that Trustees and former
Trustees are entitled to indemnification for expenses and
liabilities (including settlements and related expenses) that
are reasonably incurred in connection with their duties as
Trustees. Trustees are entitled to indemnification where such
Trustee(s) has acted in good faith and with the reasonable
belief that his or her actions were in the best interests of
the Trust.
<PAGE>
================================================================================
Pennsylvania Common Law Trust
================================================================================
-- A Trustee will not be indemnified against liability (i)
which is the result of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of their office; (ii) with respect to any matter
which he or she has been adjudicated not to have acted in
good faith or in the reasonable belief that his or her action
was in the best interest of the Trust; and (iii) in the event
of a settlement, unless there has been a determination that
the Trustee did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of his office by: (a) the court or other body
approving the settlement; (b) the vote of a majority of the
outstanding beneficial shares of the Trust, not including any
beneficial shares of the Trust owned by any affiliated person
of the Trust; (c) the vote of two-thirds of those trustees of
the Trust, constituting at least a majority of such trustees,
who are not themselves involved in the claim, action, suit or
proceeding; or (d) by written opinion of independent counsel,
provided however, that any shareholder may, by appropriate
legal proceedings, challenge any such determination by the
Trustees or by independent counsel.
-- The Declaration of Trust also provides that the Trust may
make an advance to a Trustee for expenses incurred in
defending any proceeding before the final disposition of the
proceeding, provided the Trustee executes an undertaking that
he or she will repay the Trust. A Trustee is not required to
make such an undertaking if it is later determined that the
Trustee is entitled to indemnification.
- --------------------------------------------------------------------------------
Insurance -- The PA Trust's Declaration of Trust provides that any
rights of indemnification may be insured against by policies
maintained by the Trust. Any such policies: (i) shall be
severable; (ii) shall not affect any other rights to which
any Trustee may now or hereafter be entitled; (iii) shall
continue as to former Trustees; and (iv) shall inure to the
benefit of the heirs, executors and administrators of
Trustees and former Trustees.
==========================================================================
(1) The PA Trust's Declaration of Trust allows the Trustees to take action
without a meeting by unanimous written consent. Such consent must be filed with
the minutes of the proceedings of the Board of Trustees or the particular
committee, as applicable.
(2) Pursuant to the By-Laws of the New Fund, regular meetings of the Board of
Trustees may be held without notice. Special meetings of the Board of Trustees
require at least seven (7) days notice, if given by United States mail, and at
least forty-eight (48) hours notice, if notice is delivered personally, by
telephone, by courier, to the telegraph company, or by express mail, facsimile,
electronic mail or similar service.
