<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] 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>
DELAWARE(SM)
INVESTMENTS
- -----------
January 21, 1999
Dear Shareholder:
A Joint Annual/Special 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. Certain
proposals affect only some of the funds. Others affect each of the funds. In
addition to the election of Board members and ratification of the selection of
auditors, the proxy statement includes proposals to change the designation of
investment objectives and current investment restrictions for funds from
"fundamental" to "non-fundamental," as well as a proposal to adopt for the
funds new standardized "fundamental" investment restrictions. The proposed
changes will allow the Boards to modify the investment objectives and
"non-fundamental" restrictions in the future without the delay and expense of
holding a shareholder meeting.
The proxy statement also contains proposals to approve new, standardized
investment management agreements which contain fee increases for some funds
and, for others, fee decreases or potential fee decreases. Also, new
standardized sub-advisory agreements are proposed for the funds having those
arrangements. Finally, shareholders are being asked to approve management's
proposal to restructure the funds into Delaware business trusts to enable the
funds to benefit from 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,
/s/ Jeffrey J. Nick
- -------------------
Jeffrey J. Nick
Chairman, 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" will not alter any fund's current investment
objective, but it will allow a fund's Board to make future adjustments to
the investment objective without having to obtain shareholder approval.
Shareholders would, however, receive advance written notice of any proposed
changes. Management does not currently intend to recommend any material
changes to the investment objective of any fund.
o Adopting a standardized list of "fundamental" investment restrictions across
all funds would modernize the restrictions to meet all current regulatory
requirements and would provide operational efficiencies and make it easier
to monitor compliance with these restrictions.
o Designating all existing investment restrictions as "non-fundamental" would
not change the way a fund is currently managed or operated, but would allow
a fund's Board to analyze and approve changes to the fund's existing
investment restrictions, without having to obtain additional shareholder
approval. Over time, management expects to recommend that the Board
evaluate each fund's investment restrictions so that those restrictions can
be modernized and standardized, if appropriate.
o Approval of the proposed fee increases, fee decreases or potential fee
decreases through the introduction of breakpoints for certain funds would
ensure management fee levels that will enable those funds to have
competitive fee structures and 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 greater 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 for additional information on how to
place your vote.
PLEASE VOTE
YOUR VOTE IS IMPORTANT
<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 3
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective
from Fundamental to Non-Fundamental 7
Proposal Three: To Approve Standardized Fundamental Investment Restrictions
for the Fund (Includes Seven Sub-Proposals) 8
3A: Industry Concentration 10
3B: Borrowing Money and Issuing Senior Securities 11
3C: Underwriting of Securities 12
3D: Investing in Real Estate 12
3E: Investing in Commodities 13
3F: Making Loans 13
3G: Redesignation of all Current Fundamental Investment
Restrictions as Non-Fundamental 14
Proposal Four: To Approve a New Investment Management Agreement for the Fund 15
Proposal Five: To Approve a New Sub-Advisory Agreement for the Fund 25
Proposal Six: To Ratify the Selection of Ernst & Young LLP as Independent Auditors
for the Company 27
Proposal Seven: To Approve the Restructuring of the Company from its Current Form of
Organization into a Delaware Business Trust 27
EXHIBITS
Exhibit A: Outstanding Shares as of Record Date (December 21, 1998) 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 and Examples H-1
Exhibit I: Similar Funds Managed by the Investment Managers and Sub-Advisers 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: Comparison and Significant Differences Between Delaware
Business Trusts and Maryland Corporations M-1
Exhibit N: Comparison and Significant Differences Between Delaware
Business Trusts and Pennsylvania Common Law Trusts N-1
</TABLE>
<PAGE>
DELAWARE(SM)
INVESTMENTS
- ------------
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:
<TABLE>
<CAPTION>
<S> <C>
Delaware Group Adviser Funds, Inc. Delaware Group Government Fund, Inc.
New Pacific Fund U.S. Government Fund
Overseas Equity Fund Delaware Group Income Funds, Inc.
U.S. Growth Fund Corporate Bond Fund
Delaware Group Cash Reserve, Inc. Delchester Fund
Delaware Group Equity Funds I, Inc. Extended Duration Bond Fund
Delaware Balanced Fund (formerly High-Yield Opportunities Fund
Delaware Fund) Strategic Income Fund
Devon Fund Delaware Group Limited-Term Government
Delaware Group Equity Funds II, Inc. Funds, Inc.
Blue Chip Fund Limited-Term Government Fund
Decatur Income Fund* Delaware Group Premium Fund, Inc.
Decatur Total Return Fund* Capital Reserves Series
Diversified Value Fund Cash Reserve Series
Social Awareness Fund Convertible Securities Series
Delaware Group Equity Funds III, Inc. Decatur Total Return Series
Trend Fund Delaware Series
Delaware Group Equity Funds IV, Inc. DelCap Series
Capital Appreciation Fund Delchester Series
DelCap Fund Devon Series
Delaware Group Equity Funds V, Inc. Emerging Markets Series
Small Cap Value Fund Global Bond Series
Retirement Income Fund International Equity Series
Delaware Group Foundation Funds REIT Series
Balanced Portfolio Small Cap Value Series
Growth Portfolio Social Awareness Series
Income Portfolio Strategic Income Series
Delaware Group Global & International Trend Series
Funds, Inc. Delaware Group State Tax-Free Income Trust
Emerging Markets Fund Tax-Free New Jersey Fund
Global Equity Fund (formerly Global Tax-Free Ohio Fund
Assets Fund) Tax-Free Pennsylvania Fund
Global Bond Fund Delaware Group Tax-Free Money Fund, Inc.
Global Opportunities Fund (formerly Delaware Group Tax-Free Fund, Inc.
Global Equity Fund) Tax-Free Insured Fund
International Equity Fund Tax-Free USA Fund
International Small Cap Fund Tax-Free USA Intermediate Fund
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
</TABLE>
* Effective January 29, 1999, Decatur Income Fund will be known as Decatur
Equity Income Fund and Decatur Total Return Fund will be known as Growth and
Income Fund.
i
<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 of
Philadelphia, 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.
<TABLE>
<CAPTION>
<S> <C>
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.
Diversified Value Fund
Delaware Group Equity Funds IV, 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) ......... Each Sub-proposal applies to all Funds except the follow-
ing, because the following Funds already have the pro-
posed standardized restrictions:
3A: Industry Concentration Delaware Group Equity Funds II, Inc.
3B: Borrowing Money and Issuing Senior Diversified Value Fund
Securities Delaware Group Income Funds, Inc.
3C: Underwriting of Securities Corporate Bond Fund
3D: Investing in Real Estate Extended Duration Bond Fund
3E: Investing in Commodities
3F: Making Loans
3G: Redesignation of all Current Fundamental
Investment Restrictions as
Non-Fundamental
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Proposal Four: To Approve a New Investment
Management Agreement for the Fund ................... Proposal Four applies to all Funds.
Proposal Five: To Approve a New Sub-Advisory
Agreement for the Fund .............................. Proposal Five applies only 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 Fund
Delaware Group Premium Fund, Inc.
REIT Series
Social Awareness Series
Strategic Income Series
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
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 Dela-
ware Group Foundation Funds, because that Company
is already organized as a Delaware business trust.
</TABLE>
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.
/s/ Jeffrey J. Nick
- ------------------------
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
iii
<PAGE>
DELAWARE(SM)
INVESTMENTS
- -----------
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 of Philadelphia, 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(s) 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 at
1818 Market Street, Philadelphia, PA 19103; (ii) by submitting a later signed
Proxy Card; or (iii) by voting your shares in person at the Meeting. If your
shares are held in the name of your broker, you will have to make arrangements
with your broker to revoke a previously executed proxy.
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 21, 1999.
All of the outstanding shares of Delaware Group Premium Fund, Inc. are held by
separate accounts of insurance companies. Those accounts were established to
fund the benefits under variable annuity and variable life insurance contracts.
Representatives of such companies will solicit voting instructions from owners
of those contracts. Those companies will vote the shares of the Funds held in
the separate accounts based on such instructions. Shares for which no
instructions are received in time to be voted and shares held by the separate
accounts which are not attributable to any contract will be voted by the
appropriate insurance company in the same proportion as shares for which
instructions are received in time to be voted. The various insurance companies
have advised the Fund that they will mail these proxy materials to owners of
contracts on or about February 1, 1999.
<PAGE>
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(s) 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 for all
Companies, except Delaware Group Premium Fund, Inc., a variable annuity/life
funding vehicle whose shares are held exclusively by separate accounts
maintained by certain insurance companies. The costs of engaging SCC will be
shared by DMC, DIAL and the Companies. The portion of the costs that will be
borne by the Companies is set forth below:
<TABLE>
<CAPTION>
Range
---------------------
<S> <C>
Delaware Group Adviser Funds, Inc. .......................... $ 2,500 to $ 3,200
Delaware Group Cash Reserve, Inc. ........................... $ 25,400 to $ 31,700
Delaware Group Equity Funds I, Inc. ......................... $ 35,300 to $ 44,000
Delaware Group Equity Funds II, Inc. ........................ $128,000 to $159,300
Delaware Group Equity Funds III, Inc. ....................... $ 24,100 to $ 30,000
Delaware Group Equity Funds IV, Inc. ........................ $ 33,200 to $ 41,300
Delaware Group Equity Funds V, Inc. ......................... $ 21,300 to $ 26,500
Delaware Group Global & International Funds, Inc. ........... $ 11,600 to $ 14,500
Delaware Group Government Fund, Inc. ........................ $ 7,400 to $ 9,200
Delaware Group Income Funds, Inc. ........................... $ 47,600 to $ 59,200
Delaware Group Limited-Term Government Funds, Inc. .......... $ 14,500 to $ 18,000
Delaware Group State Tax-Free Income Trust .................. $ 37,400 to $ 46,500
Delaware Group Tax-Free Money Fund, Inc. .................... $ 1,400 to $ 1,700
Delaware Group Tax-Free Fund, Inc. .......................... $ 27,800 to $ 34,600
</TABLE>
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. is comprised of The Real Estate Investment Trust
Portfolio and several other funds. With regard to the Proposals that apply to
Delaware Pooled Trust, Inc. as a whole, shareholders of those other funds have
received a separate proxy statement relating to the same Proposals and their
votes will be combined with those of shareholders of The Real Estate Investment
Trust Portfolio.
Abstentions and broker non-votes will likely be included for purposes of
determining whether a quorum is present at the Meeting. They will likely be
treated as votes present at the Meeting, but will likely 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.
2
<PAGE>
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.
Jeffrey J. Nick* (45), Chairman (since 1998), President, Chief Executive
Officer and Director and/or Trustee (since 1997) of each of the 34 investment
companies in the Delaware Investments family. As of January 1, 1999, Chairman,
President, Chief Executive Officer and Director/Trustee of DMH Corp., Delvoy,
Inc., Delaware Management Company, Inc., Delaware Management Business Trust,
Founders Holdings, Inc.; Chairman, Chief Executive Officer and Director of
Delaware Distributors, Inc., Delaware International Holdings, Ltd., Delaware
International Advisers Ltd. (Director of Delaware International Advisers Ltd.
since 1998); Chairman and Chief Executive Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Chairman of Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors L.P.; Chairman and Director of Delaware Capital
Management, Inc. and Retirement Financial Services, Inc.; President, Chief
Executive Officer and Director of Delaware Management Holdings, Inc. (President
and Director of Delaware Management Holdings, Inc. since 1997); Director of
Delaware Service Company, Inc. President, Chief Executive Officer and Director
of Lincoln National Investment Companies, Inc., 1996 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 of all 34 investment companies in the
Delaware Investments family; reappointed to the Boards of the 19 investment
companies for which he currently serves as Director in 1998; President of each
company from 1977 to 1990; and Chief Executive Officer of each company in the
Delaware Investments family 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 (60), 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.
- ------------
* 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.
3
<PAGE>
Ann R. Leven (58), 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 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* (78), Director and/or Trustee of each of the 34
investment companies in the Delaware Investments family; Philadelphia City
Councilman, 1984 to present; Consultant, 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.
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, Chairman and Director of Delaware
Management Holdings, Inc. and Director of Delaware International Advisers Ltd.
In addition, until December 31, 1998, Chairman of each of the 34 investment
companies in the Delaware Investments family, Director of 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 and Chief Executive Officer of Delaware
International Advisers Ltd.; Chairman, Chief Executive Officer and Director of
Delaware International Holdings Ltd.; Chief Executive Officer of 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.
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.
- ------------
* This Director will be retiring from service on the Board of Directors for
each Company following election of the new Board and, therefore, is not a
nominee.
** 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.
Board and Committee Meetings. During the twelve months ended October 31, 1998,
each Company held seven Board meetings, except for Delaware Group Foundation
Funds, which held six meetings.
4
<PAGE>
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 six meetings for each Company during the twelve months
ended October 31, 1998, except that it held only five meetings for Delaware
Group Foundation Funds.
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 currently consists of the following three Directors
appointed by the Boards: Anthony D. Knerr and Charles E. Peck, both of whom are
independent, and Wayne A. Stork. W. Thacher Longstreth, whose term as a
Committee member would have have expired in November 1998, continued to serve
until the nominating process for this Meeting of Shareholders was completed.
This Committee met three times 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. The 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 $38,000 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 $31,180 for serving
as a Director for 19 Companies within the Delaware Investments family, plus
$1,810 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 and from the fund complex as a whole during
the last year.
5
<PAGE>
<TABLE>
<CAPTION>
Jeffrey J. Walter P. John H. Anthony D.
Company Name Nick Babich Durham1 Knerr
- --------------------------------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C>
Delaware Group Adviser
Funds, Inc. .................... None $ 786 $ 453 $ 786
Delaware Group Cash Reserve,
Inc. ........................... None $ 2,449 N/A $ 2,449
Delaware Group Equity Funds,
I, Inc. ........................ None $ 2,951 $ 1,582 $ 2,951
Delaware Group Equity Funds
II, Inc. ....................... None $ 9,925 $ 5,192 $ 9,925
Delaware Group Equity Funds
III, Inc. ...................... None $ 2,464 $ 524 $ 2,464
Delaware Group Equity Funds
IV, Inc. ....................... None $ 3,022 $ 1,362 $ 3,022
Delaware Group Equity Funds
V, Inc. ........................ None $ 1,586 $ 1,035 $ 1,586
Delaware Group Foundation
Funds(3) ....................... None $ 792 $ 777 $ 792
Delaware Group Global &
International Funds, Inc. ...... None $ 1,418 $ 933 $ 1,418
Delaware Group Government
Fund, Inc. ..................... None $ 1,212 $ 433 $ 1,212
Delaware Group Income
Funds, Inc. .................... None $ 4,558 $ 1,436 $ 4,558
Delaware Group Limited-Term
Government Funds, Inc. ......... None $ 1,767 $ 1,481 $ 1,767
Delaware Group Premium
Fund, Inc. ..................... None $ 3,975 $ 2,792 $ 3,975
Delaware Group State Tax-Free
Income Trust ................... None $ 3,231 N/A $ 3,231
Delaware Group Tax-Free
Money Fund, Inc. ............... None $ 850 $ 50 $ 850
Delaware Group Tax-Free
Fund, Inc. ..................... None $ 2,763 $ 1,031 $ 2,763
Delaware Pooled Trust, Inc. ..... None $ 4,127 $ 2,221 $ 4,127
Total Compensation From
All Companies in the
Delaware Investments
Family for the 12 months
ended October 31, 1998 ......... None $65,384 $25,935 $65,384
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ann R. W. Thacher Charles E. Thomas F. Wayne A.
Company Name Leven Longstreth Peck Madison2 Stork
- --------------------------------- ---------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Delaware Group Adviser
Funds, Inc. .................... $ 789 $ 773 $ 773 $ 778 None
Delaware Group Cash Reserve,
Inc. ........................... $ 2,603 $ 2,272 $ 2,175 $ 1,975 None
Delaware Group Equity Funds,
I, Inc. ........................ $ 3,051 $ 2,688 $ 2,798 $ 2,688 None
Delaware Group Equity Funds
II, Inc. ....................... $10,113 $ 8,860 $ 8,860 $ 9,393 None
Delaware Group Equity Funds
III, Inc. ...................... $ 2,503 $ 2,272 $ 2,272 $ 2,272 None
Delaware Group Equity Funds
IV, Inc. ....................... $ 3,074 $ 2,757 $ 2,757 $ 2,841 None
Delaware Group Equity Funds
V, Inc. ........................ $ 1,607 $ 1,481 $ 1,481 $ 1,534 None
Delaware Group Foundation
Funds(3) ....................... $ 795 $ 777 $ 777 $ 792 None
Delaware Group Global &
International Funds, Inc. ...... $ 1,435 $ 1,332 $ 1,332 $ 1,375 None
Delaware Group Government
Fund, Inc. ..................... $ 1,223 $ 1,161 $ 1,161 $ 1,161 None
Delaware Group Income
Funds, Inc. .................... $ 4,646 $ 4,126 $ 4,126 $ 4,126 None
Delaware Group Limited-Term
Government Funds, Inc. ......... $ 1,797 $ 1,641 $ 1,641 $ 1,714 None
Delaware Group Premium
Fund, Inc. ..................... $ 4,051 $ 3,595 $ 3,595 $ 3,817 None
Delaware Group State Tax-Free
Income Trust ................... $ 3,297 $ 2,937 $ 2,842 $ 2,357 None
Delaware Group Tax-Free
Money Fund, Inc. ............... $ 852 $ 840 $ 745 $ 840 None
Delaware Group Tax-Free
Fund, Inc. ..................... $ 2,809 $ 2,532 $ 2,532 $ 2,589 None
Delaware Pooled Trust, Inc. ..... $ 4,207 $ 3,729 $ 3,729 $ 3,898 None
Total Compensation From
All Companies in the
Delaware Investments
Family for the 12 months
ended October 31, 1998 ......... $66,545 $60,384 $ 60,384 $ 62,467 None
</TABLE>
- ------------
(1) Mr. Durham re-joined the Boards of Directors of most of the Companies on
April 16, 1998.
(2) Mr. Madison joined the Boards of Directors of the Companies on April 30,
1997.
(3) Delaware Group Foundation Funds commenced operations on December 31, 1997.
Amounts shown are estimated for the fiscal year ended September 30, 1998 and
are annualized.
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: Jeffrey J.
Nick, David K. Downes, Richard G. Unruh, Paul E. Suckow, Richard J. Flannery,
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, John B. Fields, Paul Grillo, Cynthia L. Isom, J. Paul Dokas, Steven R.
Cianci and Damon J. Andres. Exhibit D includes biographical information and the
past business experience of such officers, except for 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.
6
<PAGE>
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
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. Delaware Group Income Funds, Inc.
Diversified Value Fund Corporate Bond Fund
Delaware Group Equity Funds IV, Inc. Extended Duration Bond Fund
Capital Appreciation Fund High-Yield Opportunities Fund
Delaware Group Equity Funds V, Inc. Delaware Group Premium Fund, Inc.
Retirement Income Fund REIT Series
Delaware Group Foundation Funds
Balanced Portfolio
Growth Portfolio
Income Portfolio
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, may 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
designate 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 ("NSMIA"), 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 of each
Fund's investment objective from fundamental to non-fundamental. 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 expects 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
7
<PAGE>
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, to the extent mandated by applicable law, shareholder approval
(and its attendant costs and delays) will continue to be required prior to any
change.
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 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.
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. Delaware Group Income Funds, Inc.
Diversified Value Fund 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 discretion, 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 NSMIA. 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
8
<PAGE>
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 redesignated 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. If, as
proposed, the current fundamental investment restrictions are reclassified as
non-fundamental, management expects 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") although some Funds do make
reference to certain restrictions in their prospectuses. 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.
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. 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 and that Fund's current list of fundamental restrictions will
remain fundamental.
Exhibit F contains a list of the current fundamental investment restrictions
for each Fund which are proposed to be redesignated as non-fundamental. That
Exhibit includes the current restrictions relating to the activities which are
the subject of the new proposed restrictions and shareholders are encouraged to
compare the current and proposed restrictions.
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.
9
<PAGE>
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 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 Real Estate Investment Trust Portfolio of Delaware Pooled Trust, Inc. and
the REIT Series of Delaware Group Premium Fund, Inc. are two exceptions,
because both Funds have adopted fundamental investment policies requiring the
concentration of investments in the real estate industry. Also, the fundamental
concentration restriction of Delaware Cash Reserve, Inc. and Cash Reserve
Series of Delaware Group Premium Fund, Inc., both of which are money market
funds, specifically permits such Funds to invest more than 25% of their assets
in certain bank instruments. The proposed fundamental concentration restriction
for each Fund discussed in this paragraph would include language that would
preserve its current concentration policy as described above, but otherwise
would be consistent with the standardized restriction set forth below.
With the variations noted above, the Board of Directors recommends that the
shareholders of each Fund vote FOR the approval of 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.
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.
10
<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 money and issuing
senior securities vary considerably from Fund to Fund. Shareholders of each
Fund are being asked to approve a new standardized fundamental restriction that
covers both borrowing and senior securities and which is designed to reflect
all current regulatory requirements.
Senior Securities. SEC staff interpretations under the 1940 Act allow open-end
funds such as the 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 established 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, but express the authority in various
ways. 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 also to 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 a fund to borrow
from banks amounts up to one-third (33 1/3%) of its total assets (including the
amount borrowed). 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 a fund 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.
11
<PAGE>
The Board of Directors recommends that the shareholders of each Fund vote FOR
the approval of the proposed fundamental investment restriction concerning
borrowing money and issuing senior securities set forth below. 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
such policies in the future.
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.
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 vote FOR
the approval of 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 Delaware Pooled Trust, Inc. 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.
The Board of Directors recommends that the shareholders of each Fund vote FOR
the approval of 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
12
<PAGE>
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 such policies 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 investment 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.
The Board of Directors recommends that the shareholders of each Fund vote FOR
the approval of the fundamental investment restriction concerning commodities
set forth below. 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 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 such 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 vote FOR
the approval of the standardized fundamental investment restriction concerning
lending set forth. 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,
13
<PAGE>
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. Approval
of the proposed redesignation will not change any of the current restrictions.
If the current investment restrictions are made non-fundamental, however, Fund
management and the Directors expect to evaluate each Fund's investment
restrictions on an individual basis given 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. Even if a Fund does not
designate its status as a diversified fund as fundamental, the 1940 Act would
require shareholder approval of any proposal to convert it to a non-diversified
fund.
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.
The Board of Directors recommends that the shareholders of each Fund vote FOR
the approval of the proposal to redesignate all current fundamental investment
restrictions as non-fundamental.
14
<PAGE>
Proposal Four: To Approve a New Investment Management Agreement for the Fund
This Proposal applies to all Funds.
Proposal Overview
Shareholders of each Fund are being asked to approve a new Investment
Management Agreement with their Fund's current investment manager -- either
Delaware Management Company (previously defined as "DMC") or Delaware
International Advisers Ltd. (previously defined as "DIAL"). Exhibit G to this
Proxy Statement lists the current investment manager for 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 Increases or decreases in the maximum management fee rate, together with
the addition or restructuring of Management fee "breakpoints." The term
"breakpoints" refers to point in a fee schedule where the fee rate charged
on a certain amount of assets declines. The reduced rate applies only to
Fund assets within the range described for that breakpoint.
o Potential decreases in management fee rates due to the addition or
restructuring of fee breakpoints which reduce rates 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.
o Miscellaneous changes to the form of the Agreement designed to
standardize the language of the Agreements among all Delaware Investments
funds.
To determine which proposed changes apply to your Fund, please check the table
beginning on page 18.
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 April 1, 1999, 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.
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 from DMC or DIAL 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, in part, 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.
15
<PAGE>
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, 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, 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 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. 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
and Expense Example for each Fund for which an increase in the fee rate is
proposed that would have a material impact on reportable expenses. The Fee
Table and Expense Examples reflect the actual expense levels under the current
management fees and the projected expense levels following implementation of
the proposed management fees. Excluded from Exhibit H are Fee Tables and
Expense Examples for those Funds as to which a proposed increase in the maximum
fee rate is limited to the elimination of a reduction in the management fee for
amounts representing independent directors' fees. Those reductions would have
virtually no impact on reportable expenses. The table beginning on page 18
identifies those Funds.
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.
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
16
<PAGE>
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 beginning on page 18 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's
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, for example, 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 those instructions to brokers or dealers. As a result, these Funds
maintain a Fund trading desk staffed by Fund personnel. Management 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 in foreign securities.
The Investment Management Agreements for certain Funds do not contain a
provision authorizing the use of a sub-adviser. While Fund management has no
current intention to propose new sub-advisers for any of the Funds, it would
like to be in a position to do so in the future without first having to obtain
shareholder approval to amend the Investment Management Agreement. 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. Under current federal securities law, the selection
of a sub-adviser and the approval of a Sub-Advisory Agreement would still
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 Delaware Investments 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. Although management has reached no conclusion
as to whether the Delaware Balanced Fund may have a claim to the use of the
name "Delaware," each Agreement will recognize the ability of multiple Funds to
use the words described above in their names.
17
<PAGE>
Summary of Proposed Changes to Investment Management Agreements
The following table lists each Fund and summarizes the types of changes
that are proposed for each Fund's Investment Management Agreement. While the
table generally describes the type of proposed changes in management fees,
shareholders are directed to Exhibit G, which sets forth in detail the current
and proposed management fee schedules, including proposed changes in
breakpoints. Shareholders are also directed to Exhibit H, which contains
information comparing expenses under a Fund's current Agreement with those that
would be borne by the Fund under its Proposal Agreement. These Exhibits are
important to a complete understanding of the proposed changes and shareholders
are encouraged to review them.
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Proposed Changes to Approval for of Fund to Use Miscellaneous
Company/Fund Name Management Fee Amendments Trading Desk Sub-Adviser Changes
- ------------------------------------- ------------------------------ -------------- -------------- ------------- --------------
Delaware Group Adviser Funds, Inc.
<S> <C> <C> <C> <C> <C>
New Pacific Fund Increase/Add Breakpoints X
Overseas Equity Fund Decrease/Add Breakpoints X
U.S. Growth Fund Decrease/Add Breakpoints X
Delaware Group Cash Reserve, Inc. Decrease/Change Breakpoints(1,2) X X X
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund
(formerly Delaware Fund) Increase/Change Breakpoints(1) X X X X
Devon Fund Increase/Change Breakpoints X X X X
Delaware Group Equity Funds II, Inc.
Blue Chip Fund Potential Decrease due to
change in Breakpoints X
Decatur Income Fund Increase/Change Breakpoints(1) X X X X
</TABLE>
- ------------
1 The current Agreement provides that the fees paid by the Fund will be reduced
by the amount of the independent directors fees. The proposed Agreement
would eliminate such a reduction. This change would modestly increase fees
paid by the Fund, but would have virtually no impact on reportable expenses.
2 Under the proposed Agreement, the maximum fee rate for the Fund would be
lower than the maximum fee rate under the current Agreement. However, at
certain asset levels, the management fee rate applicable under the proposed
Agreement would be higher than the applicable rate under the current
Agreement.
18
<PAGE>
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Proposed Changes to Approval for of Fund to Use Miscellaneous
Company/Fund Name Management Fee Amendments Trading Desk Sub-Adviser Changes
- -------------------------------------- ------------------------------ ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Decatur Total Return Fund Increase/Change Breakpoints(1) X X X X
Diversified Value Fund None X
Social Awareness Fund Potential Decrease due to
Change in Breakpoints X
Delaware Group Equity Funds III, Inc.
Trend Fund Decrease due to Addition
of Breakpoints(1) X X X X
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund Potential Decrease due to
Change in Breakpoints X X X
DelCap Fund Decrease due to Addition
of Breakpoints(1) X X X X
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund Decrease due to Addition
of Breakpoints(1) X X X X
Retirement Income Fund Potential Decrease due to
Change in Breakpoints X X X
Delaware Group Foundation Funds
Balanced Portfolio None X X
Growth Portfolio None X X
Income Portfolio None X X
</TABLE>
- ------------
1 The current Agreement provides that the fees paid by the Fund will be reduced
by the amount of the independent directors fees. The proposed Agreement
would eliminate such a reduction. This change would modestly increase fees
paid by the Fund, but would have virtually no impact on reportable expenses.
19
<PAGE>
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Proposed Changes to Approval for of Fund to Use Miscellaneous
Company/Fund Name Management Fee Amendments Trading Desk Sub-Adviser Changes
- ---------------------------------- ------------------------------ -------------- -------------- ------------- --------------
Delaware Group Global &
International Funds, Inc.
<S> <C> <C> <C> <C> <C>
Emerging Markets Fund Potential Decrease due to
Addition of Breakpoints X X
Global Equity Fund (formerly
Global Assets Fund) Increase/Add Breakpoints(1) X X X
Global Bond Fund Potential Decrease due to
Addition of Breakpoints(1) X X X
Global Opportunities Fund
(formerly Global Equity Fund) Increase/Add Breakpoints X
International Equity Fund Increase/Add Breakpoints(1) X X X
International Small Cap Fund Potential Decrease due to
Addition of Breakpoints X X
Delaware Group Government
Fund, Inc.
U.S. Government Fund Decrease/Add Breakpoints(1) X X X X
Delaware Group Income Funds, Inc.
Corporate Bond Fund None X
Delchester Fund Increase/Change Breakpoints(1) X X X X
Extended Duration Bond Fund None X
High-Yield Opportunities Fund Potential Decrease due to
Change in Breakpoints X X X
Strategic Income Fund Potential Decrease due to
Change in Breakpoints X X
</TABLE>
- ------------
1 The current Agreement provides that the fees paid by the Fund will be reduced
by the amount of the independent directors fees. The proposed Agreement
would eliminate such a reduction. This change would modestly increase fees
paid by the Fund, but would have virtually no impact on reportable expenses.
20
<PAGE>
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Proposed Changes to Approval for of Fund to Use Miscellaneous
Company/Fund Name Management Fee Amendments Trading Desk Sub-Adviser Changes
- ---------------------------------- ------------------------------ -------------- -------------- ------------- --------------
Delaware Group Limited-Term
Government Funds, Inc.
<S> <C> <C> <C> <C> <C>
Limited-Term Government Fund Potential Decrease due to
Addition of Breakpoints(1) X X X
Delaware Group Premium Fund, Inc.
Capital Reserves Series Decrease/Add Breakpoints(1) X X X X
Cash Reserve Series Decrease/Change Breakpoints(1) X X X X
Convertible Securities Series Potential Decrease due to
Addition of Breakpoints X X
Decatur Total Return Series Increase/Add Breakpoints(1) X X X X
Delaware Series Increase/Add Breakpoints(1) X X X X
DelCap Series Potential Decrease due to
Addition of Breakpoints(1) X X X X
Delchester Series Increase/Add Breakpoints(1) X X X X
Devon Series Increase/Add Breakpoints X X
Emerging Markets Series Potential Decrease due to
Addition of Breakpoints X X
Global Bond Series Potential Decrease due to
Addition of Breakpoints X X
International Equity Series Increase/Add Breakpoints(1) X X X
REIT Series None X
Small Cap Value Series Potential Decrease due to
Addition of Breakpoints X X X X
Social Awareness Series Potential Decrease due to
Addition of Breakpoints X X
Strategic Income Series Potential Decrease due to
Addition of Breakpoints X X
Trend Series Potential Decrease due to
Addition of Breakpoints X X X X
</TABLE>
- ------------
1 The current Agreement provides that the fees paid by the Fund will be reduced
by the amount of the independent directors fees. The proposed Agreement
would eliminate such a reduction. This change would modestly increase fees
paid by the Fund, but would have virtually no impact on reportable expenses.
21
<PAGE>
<TABLE>
<CAPTION>
Elimination
of
Shareholder Elimination Authority
Proposed Changes to Approval for of Fund to Use Miscellaneous
Company/Fund Name Management Fee Amendments Trading Desk Sub-Adviser Changes
- ----------------------------------- ---------------------------- -------------- -------------- ------------- --------------
Delaware Group State Tax-Free
Income Trust
<S> <C> <C> <C> <C> <C>
Tax-Free New Jersey Fund Potential Decrease due to
Change in Breakpoints X X X
Tax-Free Ohio Fund Potential Decrease due to
Change in Breakpoints X X X
Tax-Free Pennsylvania Fund Decrease/Change Breakpoints(1) X X X X
Delaware Group Tax-Free Money
Fund, Inc. Decrease/Add Breakpoints(1) X X X X
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund Decrease/Add Breakpoints(1) X X X
Tax-Free USA Fund Decrease/Change Breakpoints(1) X X X X
Tax-Free USA Intermediate Fund Potential Decrease due to
Addition of Breakpoints(1) X X X X
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Potential Decrease due to
Portfolio Addition of Breakpoints X X X
</TABLE>
- ------------
1 The current Agreement provides that the fees paid by the Fund will be reduced
by the amount of the independent directors fees. The proposed Agreement
would eliminate such a reduction. This change would modestly increase fees
paid by the Fund, but would have virtually no impact on reportable expenses.
22
<PAGE>
Information About the Investment Managers
DMC serves as investment manager for many of the Funds that are participating
in this meeting and as sub-adviser for others. DMC is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended (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
Organization (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 investment company 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 currently 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 their current (and
proposed, in some cases) management or sub-advisory fee rates, 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: Jeffrey J. Nick, Chairman and Chief Executive Officer; Richard G.
Unruh, Jr., Executive Vice President; David K. Downes, Executive Vice
President, Chief Operating Officer and Chief Financial Officer; Richard J.
Flannery, Executive Vice President and General Counsel; and John B. Fields,
Vice President/Senior Portfolio Manager.
Jeffrey J. Nick 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. Nick and Mr. Tilles, the present directors
of DIAL and their principal occupations (unless noted in the paragraph above
relating to DMC) are as follows: Wayne A Stork, Chairman of Delaware Management
Holdings, Inc.; G. Roger H. Kitson, Vice Chairman of DIAL; Richard G. Unruh;
David K. Downes; Richard J. Flannery; John C. E. Campbell, Executive Vice
President of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Hamish O. Parker, Senior Portfolio Manager/Director of DIAL;
Timothy W. Sanderson, Chief Investment Officer, Equities of DIAL; Clive A.
Gillmore, Senior Portfolio Manager/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, Senior Portfolio
Manager/Director of DIAL; and Elizabeth A. Desmond, Senior Portfolio Manager,
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
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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.
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, the 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 they
use 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 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
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.
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Proposal Five: To Approve a New Sub-Advisory Agreement for the Fund
This Proposal only applies to the following Funds:
<TABLE>
<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 the new Investment Management Agreements described
in Proposal Four are approved.
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 and 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.
If approved by shareholders, the proposed Sub-Advisory Agreement for a Fund
will take effect following such approval. If a proposed Sub-Advisory Agreement
is not approved for a Fund, but the proposed Investment Management Agreement is
approved, 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. If neither the proposed Investment
Management Agreement nor the proposed Sub-Advisory Agreement for a Fund is
approved by shareholders, the current Agreements will remain in place for the
remainder of their current term.
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 currently serve in a sub-advisory capacity for
certain Funds listed above. The background of each firm, along with the
professionals responsible for operating each business, are described above in
connection with the proposed Investment Management Agreements. Please refer to
Proposal Four for that information.
25
<PAGE>
AIB Govett, Inc. AIB Govett is the sub-adviser for the New Pacific Fund of
Delaware Group Adviser Funds, Inc. The firm is a registered investment adviser
under the Advisers Act and 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 of 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. Lynch & Mayer serves as sub-adviser for the U.S. Growth
Fund of Delaware Group Adviser Funds, Inc. The firm is a registered investment
adviser under the Advisers Act and is located at 520 Madison Avenue, New York,
New York 10022.
On November 30, 1998, Lynch & Mayer was managing approximately $4.2 billion in
assets for various pension funds, foundations, endowments, trusts, high net
worth individuals and investment companies.
Lynch & Mayer is an indirect, wholly-owned subsidiary of Lincoln National
Corporation and an affiliate of DMC and DIAL. Edward J. Petner serves as Chief
Executive Officer and also as a Portfolio Manager and member of the Board of
Directors. In addition to Mr. Petner, the present directors and their principal
occupations are as follows: Robert R. Coby, President; David K. Downes,
Executive Vice President, Chief Operating Officer and Chief Financial Officer
of Delaware Holdings, Inc.; Dennis P. Lynch, Portfolio Manager; and Jeffrey J.
Nick, President and Chief Executive Officer of Delaware Management Holdings,
Inc. Jeffrey J. Nick and David K. Downes serve as executives of Delaware Group
Adviser Funds, Inc. and other Delaware Investments companies.
Vantage Investment Advisors. Vantage Investment Advisors serves as sub-adviser
for the Blue Chip Fund and Social Awareness Fund of Delaware Group Equity Funds
II, Inc. and the Social Awareness Series of Delaware Group Premium Fund, Inc.
The firm is a registered investment adviser under the Advisers Act, and is
located at 630 Fifth Avenue, New York, New York 10111.
On November 30, 1998, Vantage Investment Advisors was managing $8.8 billion in
assets for pension plans, endowments, insurance and commingled products and
investment companies. The firm 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. The other present
directors and their principal occupations are as follows: Jeffrey J. Nick,
President and Chief Executive Officer of Delaware Management Holdings, Inc.;
Bruce D. Barton, President and Chief Executive Officer of Delaware
Distributors, LP; H. Thomas 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
Vantage Global Advisors, Jeffrey Nick is also the Chairman, President and Chief
Executive Officer of each investment company within the Delaware Investments
family.
Lincoln Investment Management, Inc. Lincoln Investment Management 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. The firm
is registered as an investment adviser under the Advisers Act and is located at
200 E. Berry Street, Fort Wayne, Indiana 46802.
Lincoln Investment Management'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, the firm was managing approximately $41
billion in assets.
Lincoln Investment Management is a wholly owned subsidiary of Lincoln National
Corporation and an affiliate of DMC and DIAL. H. Thomas McMeekin serves as its
President, Chief Investment Officer and as a Director. The other directors, who
also serve as officers, are: J. Michael Keefer, Vice President and General
Counsel and Steven R. Brody, Vice President.
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<PAGE>
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 Sub-Advisory 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 Company, 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
and upon the termination of the Investment Management Agreement to which it
relates.
The specific terms of the current and proposed Sub-Advisory Agreements that
relate to the provision of advisory services are virtually identical to the
terms of the corresponding Investment Management Agreements, which are
described in Proposal Four under "Other Information Relevant to Approval of
Investment Management Agreements."
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 and 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 Company's Audit Committee meets periodically with
representatives of Ernst & Young LLP to receive reports and to plan for the
Company's audits.
Required Vote. A simple majority (more than 50%) of the outstanding voting
securities of a Company, regardless of individual Funds within the Company, is
required to ratify the selection of Ernst & Young LLP as independent auditors
for the 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 such Companies' voting securities.
The Board of Directors of each Company unanimously recommends that you vote FOR
the ratification of 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 because that Company is already organized as a Delaware business trust.
The Boards of Directors of each Company 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. For each Company, the
Reorganization involves the continuation of the Company in the form of a
corresponding newly created Delaware business trust. These corresponding new
Delaware business trusts will be referred to as "New Companies." The Funds in
each of the Companies will become corresponding new Funds ("New Funds") of the
New Companies.
27
<PAGE>
Delaware Group Cash Reserve, Inc. ("Cash Reserve") and Delaware Group Tax-Free
Money Fund, Inc. ("Tax-Free Money Fund") do not currently issue multiple series
of shares. These Companies also will be reorganized into New Companies, and
their existing shares will be designated as the first series, or New Funds, of
such New Companies.
Under the Reorganization, the investment objective of each New Fund will be the
same as those of its corresponding Fund; the portfolio securities of each Fund
will be transferred to its corresponding New Fund; and shareholders will own
interests in each New Company that are equivalent to their interests in the
corresponding Company on the closing date of the Reorganization. The directors
or trustees, and the officers and employees of each Company on the effective
date of the Reorganization will become the trustees, officers and employees,
respectively, of the corresponding New Company and will operate each New
Company in the same manner as they previously operated the corresponding
Company. The investment manager responsible for the investment management of
each New Fund will be the same as the investment manager for the corresponding
Fund. For those Funds with sub-advisory arrangements, the sub-adviser for each
New Fund will be the same as the sub-adviser for the corresponding Fund. Each
New Company and New Fund will have substantially the same name as its
corresponding Company and Fund. The New Company will have the same fiscal year
as the corresponding Company, and the mailing address and telephone number of
the principal executive offices of each New Company will be the same as its
corresponding Company. For all practical purposes, a shareholder's investment
in a Fund will not change.
Background and Reasons for the Reorganizations. The Boards unanimously
recommend conversion of the Companies into Delaware business trusts because
they have determined that the Delaware business trust form of organization is
an inherently flexible form of organization and would provide certain
administrative advantages to the Companies. Delaware business 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.
Under Delaware business trust law, the New Companies will have the enhanced
flexibility to respond to future business contingencies. For example, a New
Company will have the power to cause each New Fund to become a separate trust
and to change the New Company'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 Company 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
applicable law 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 Boards believe it is in the interests of the
shareholders to reorganize the Companies into Delaware business trusts. At
present, it appears that it would be most advantageous to stagger the
Reorganizations of the Companies over approximately a one year period following
the Meeting. The Boards reserve the right to abandon a Reorganization if they
determine that such action is in the best interests of a Company.
The following discussion applies to the Reorganization of each Company, except
where otherwise specifically noted.
Consequences and Procedures of the Reorganization. The net asset value of the
shares of each class of each Fund will not be affected by the Reorganization.
Each New Company and each New Fund have been organzied specifically for the
purpose of effecting the Reorganization. The Reorganization will not result in
the recognition of income, gain or loss for Federal income tax purposes to a
Company or its shareholders, or to any New Company. (See "Certain Federal
Income and State Tax Consequences of the Plan," below.)
To accomplish the Reorganization, the Plan provides that each Company will
transfer all of the assets of each of its Funds, subject to its related
liabilities, to the corresponding New Company and to each of its corresponding
New Funds. The New Company will establish an account for each shareholder and
will credit to that account
28
<PAGE>
the exact number of full and fractional shares of the class of the New Fund
that such shareholder previously held in the same class of the corresponding
Fund 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 Fund that he or she owned as of the effective date
of the Reorganization. On the date of the Reorganization, the net asset value
per share of each class of shares of each Fund will be the same as the net
asset value per share of the corresponding class of shares of the New Fund. The
New Company will assume all liabilities and obligations of the Company.
On the effective date of the Reorganization, each certificate representing
shares of a class of a Fund will represent an identical number of shares of the
same class of the corresponding New Fund. Shareholders will have the right to
exchange their certificates of the Company for certificates of the New Company.
The Plan may be terminated and the Reorganization abandoned at any time prior
to the effective date of the Reorganization by the Board. If the Reorganization
is not approved by shareholders or if the Board determines to terminate or
abandon the Reorganization, the Company will continue to operate as a Maryland
corporation or a Pennsylvania common law trust, as applicable.
Capitalization and Structure. Each New Company was established pursuant to a
substantially identical Agreement and Declaration of Trust ("Trust Document")
under the laws of the State of Delaware. Each New Company 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 each New Company has the power to divide such shares into an
unlimited number of series or classes of beneficial interest without
shareholder approval. Both Cash Reserve and Tax-Free Money Fund separately will
be reorganized as a New Fund of a corresponding New Company. Each of the other
New Companies has designated the same number of series and classes as its
corresponding Company. Each share of a New Fund represents an equal
proportionate interest in the assets and liabilities belonging to that series
(or class).
Shares of the respective classes of the New Funds have substantially the same
dividend, redemption, voting, exchange and liquidation rights, and terms of
conversion as the shares of the corresponding Funds. Please see Exhibit M,
"Comparison and Significant Differences Between Delaware Business Trusts and
Maryland Corporations" and "Comparison and Significant Differences Between
Delaware Business Trusts And Pennsylvania Common Law Trusts." Shares of the
respective classes of each Fund are, and, when issued, shares of each
corresponding New Fund will be, fully paid, non-assessable, and freely
transferable and have no preemptive or subscription rights.
In the Reorganization, shares of the respective classes of a Fund will be
exchanged for an identical number of shares of the same class of the
corresponding New Fund. Thereafter, shares of each class of the New Fund will
be available for issuance at their net asset value applicable at the time of
sale. Each New Company will adopt the corresponding Company'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: (i) submit the selection of the
company's independent auditors to all shareholders for their ratification; (ii)
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 (iii) 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 Board believes that it is in the best interest of the shareholders of each
Company (who will become the shareholders of a corresponding New Company if the
Reorganization is approved) to avoid the considerable expense of another
shareholders' meeting for the New Company to obtain the shareholder approvals
described above shortly after the closing of the Reorganization. The Board also
believes that it is not in the best interest of the shareholders to carry out
the Reorganization if the surviving New Company would not have a Board of
Trustees, independent auditors, and investment management agreements or
sub-advisory agreements complying with the 1940 Act.
The Board will, therefore, consider approval of the Reorganization by the
requisite vote of the shareholders of the Company to constitute the approval of
the Plan contained in Exhibit L, and also to constitute, for the purposes of
the 1940 Act: (i) ratification of the independent auditors for each Company as
the New Company's
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independent auditors (please see Proposal Six); (ii) election of the Directors
(Trustees) of the Company as the trustees of the New Company after the closing
of the Reorganization (please see Proposal One); (iii) approval by the
shareholders of each Fund of the investment management agreement between the
New Company on behalf of the New Fund and the current investment manager, which
will be substantially identical to the agreement that is in place between the
Company and the current investment manager (please see Proposal Four); and (iv)
for those Funds subject to a sub-advisory agreement, approval by the
shareholders of the Fund of the sub-advisory agreement between the current
investment manager and the current sub-adviser relating to the New Fund, which
will be substantially identical to the agreement that is in place between the
current investment manager and the current sub-adviser (please see Proposal
Five).
The New Company will issue a single share of each class of each New Fund to the
Company, and, assuming approval of the Reorganization by shareholders of the
Company, the officers of the Company, prior to the Reorganization, will cause
the Company, as the sole shareholder of the New Company, to vote such shares
"FOR" the matters specified in the above paragraph. The New Company will then
consider the requirements of the 1940 Act referred to above to have been
satisfied.
Investment Objectives, Policies and Restrictions. The investment objective,
policies and restrictions for each New Fund will be the investment policies and
restrictions of the corresponding Fund immediately prior to the Reorganization.
That is, each New Fund's investment objective policies and restrictions will
reflect the results of the shareholders' votes on Proposal Two and
Sub-Proposals 3A-3G.
Investment Management Agreements. If the proposed new investment management
agreement relating to a Fund, and as proposed and described in Proposal Four (a
"New Agreement"), is approved by the shareholders of the Fund, the terms of the
investment management agreement for the corresponding New Fund will be
substantially identical to the New Agreement for the Fund. For each Fund for
which the New Agreement described in Proposal Four is not approved, if any, the
investment management agreement for the corresponding New Fund will be
substantially identical to the existing investment management agreement
currently in place for that Fund.
Sub-Advisory Agreements. For a Fund with sub-advisory arrangements, if the
proposed new sub-advisory agreement relating to the Fund, as proposed and
described in Proposal Five (a "New Sub-Advisory Agreement"), is approved by the
shareholders of the Fund, the terms of the sub-advisory agreement for the
corresponding New Fund will be substantially identical to the New Sub-Advisory
Agreement for the Fund. For each Fund for which the New Sub-Advisory Agreement
described in Proposal Five is not approved, if any, the sub-advisory agreement
for the corresponding New Fund will be substantially identical to the existing
sub-advisory agreement currently in place for that Fund, unless the Investment
Management Agreement to which it relates is approved. In that instance, 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.
Certain Federal Income and State 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 Company and the New Company, that, under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the
exchange of assets of the Company for the shares of the corresponding New
Company, the transfer of such shares to the holders of shares of the Company,
and the liquidation and dissolution of the Company pursuant to the Plan will
not give rise to the recognition of a gain or loss for federal income tax
purposes to the Company, the New Company, or shareholders of the Company or the
New Company. A shareholder's adjusted basis for tax purposes in the shares of
the New Company after the exchange and transfer will be the same as his or her
adjusted basis for tax purposes in the shares of the corresponding Company
immediately before the exchange.
As a business trust, the New Company (or, in certain circumstances, its
shareholders who are Pennsylvania residents) would be subject to the
Pennsylvania county personal property tax. However, at present, Pennsylvania
counties generally have stopped assessing personal property taxes. This is due,
in part, to ongoing litigation challenging the validity of the tax. However, if
the personal property tax were reinstituted, or any similar state or local tax
were imposed, the New Company's options would be reevaluated at that time.
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<PAGE>
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.
Shareholder Servicing Arrangements and Distribution Plans. The New Company will
enter into agreements with DSC for transfer agency, dividend disbursing,
shareholder servicing and fund accounting services that are substantially
identical to the agreements currently in effect for each corresponding Company
for such services. Delaware Distributors, L.P. will serve as the national
distributor for the shares of the New Fund under a separate distribution
agreement that is substantially identical to the distribution agreement
currently in effect for the Fund.
The New Company has adopted distribution plans under Rule 12b-1 of the 1940 Act
relating to the distribution of certain classes of shares that are
substantially identical to the distribution plans currently in place for the
same classes of shares of the corresponding Company.
Requests for Redemption of the Company. Any request to redeem shares of the
Company that is received and processed prior to the Reorganization will be
treated as a redemption of shares of the Company. Any request to redeem shares
of the Company received or processed after the Reorganization will be treated
as a request for the redemption of shares of the corresponding New Company.
Expenses of the Reorganization. Because the Reorganization will benefit the
Company and its shareholders, the Board has authorized that the expenses
incurred by the Company in the Reorganization or arising out of the
Reorganization shall be paid by the Company, whether or not the Reorganization
is approved by the shareholders.
Comparison of Legal Structures. Comparisons of the Delaware Business Trust Act
with the Maryland General Corporation Law, and the Pennsylvania law applicable
to trusts, including a comparison of relevant provisions of the governing
documents of the Companies and the New Companies, is included in Exhibit M,
which is entitled "Comparison And Significant Differences For Delaware Business
Trusts and Maryland Corporations" and in Exhibit N, "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 Companies, 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 Board unanimously recommends that you vote FOR the Reorganization.
31
<PAGE>
EXHIBIT A
OUTSTANDING SHARES AS OF RECORD DATE (December 21, 1998)
<TABLE>
<CAPTION>
Shares Owned by
Fund Directors
Shares and
Outstanding Executive Officers
on as a Group as of Percent of Fund/
Record Date* October 31, 1998 Company Owned
------------------ ------------------- --------------------
<S> <C> <C> <C>
Delaware Group Adviser Funds, Inc.
New Pacific Fund ........................ 1,907,851.323 2,725.988 0.15%/0.04%
Overseas Equity Fund .................... 538,411.894 116.323 0.03%/0.0018%
U.S. Growth Fund ........................ 4,490,408.620 14,417.178 0.34%/0.22%
Delaware Group Cash Reserve, Inc. .......... 618,283,330.190 4,509,902.950 0.75%/0.75%
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund
(formerly Delaware Fund) ............... 42,175,073.099 61,446.903 0.15%/0.11%
Devon Fund .............................. 13,017,209.450 120,098.836 1.03%/0.22%
Delaware Group Equity Funds II, Inc.
Blue Chip Fund .......................... 1,448,447.814 1,215.859 0.09%/0.0006%
Decatur Income Fund ..................... 111,839,463.758 115,254.551 0.10%/0.06%
Decatur Total Return Fund ............... 72,459,793.743 57,081.699 0.08%/0.03%
Diversified Value Fund .................. 235,296.118
Social Awareness Fund ................... 7,095,975.621 304.264 0.0045%/0.0002%
Delaware Group Equity Funds III, Inc.
Trend Fund .............................. 37,764,642.980 122,727.814 0.32%/0.32%
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund ............... 251,183.859
DelCap Fund ............................. 34,628,655.917 32,726.613 0.11%/0.11%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................... 19,627,328.389 171,455.060 0.88%/0.87%
Retirement Income Fund .................. 281,928.671
Delaware Group Foundation Funds
Balanced Portfolio ...................... 415,975.682
Growth Portfolio ........................ 382,943.176
Income Portfolio ........................ 138,364.004
Delaware Group Global & International Funds,
Inc.
Emerging Markets Fund ................... 1,533,815.889 8,011.700 0.51%/0.03%
Global Equity Fund
(formerly Global Assets Fund) .......... 1,376,888.136 8,531.170 0.62%/0.03%
Global Bond Fund ........................ 1,826,088.965 17,149.455 0.47%/0.06%
Global Opportunities Fund
(formerly Global Equity Fund) .......... 359,123.691
International Equity Fund ............... 22,826,427.997 67,519.204 0.31%/0.25%
International Small Cap Fund ............ 352,943.176
Delaware Group Government Fund, Inc.
U.S. Government Fund .................... 23,291,408.880 26,947.947 0.11%/0.11%
Delaware Group Income Funds, Inc.
Corporate Bond Fund ..................... 3,574,164.617
Delchester Fund ......................... 234,228,573.388 859,831.488 0.38%/0.36%
Extended Duration Bond Fund ............. 3,301,764.030
High-Yield Opportunities Fund ........... 3,824,210.479 1,181,617.167 36.05%/0.49%
Strategic Income Fund ................... 9,049,344.246 15,000.348 0.17%/0.01%
* The shares outstanding on the record dateinclude all shares purchased in transactions that have settled by
the record date.
</TABLE>
A-1
<PAGE>
OUTSTANDING SHARES AS OF RECORD DATE (December 21, 1998)
<TABLE>
<CAPTION>
Shares Owned by
Fund Directors
Shares and
Outstanding Executive Officers
on as a Group as of Percent of Fund/
Record Date* October 31, 1998 Company Owned
------------------- ------------------- -----------------
<S> <C> <C> <C>
Delaware Group Limited-Term Government
Funds, Inc.
Limited-Term Government Fund .............. 41,352,827.462 56,611.175 0.14%/0.14%
Delaware Group Premium Fund, Inc.
Capital Reserves Series ................... 4,180,014.713
Cash Reserve Series ....................... 4,368,873.064
Convertible Securities Series ............. 722,441.794
Decatur Total Return Series ............... 29,748,026.624
Delaware Series ........................... 9,971,907.670
DelCap Series ............................. 7,036,185.224
Delchester Series ......................... 14,060,425.565
Devon Series .............................. 4,330,405.043
Emerging Markets Series ................... 918,725.775
Global Bond Series ........................ 2,008,768.648
International Equity Series ............... 14,865,581.905
REIT Series ............................... 577,289.402
Small Cap Value Series .................... 6,309,321.497
Social Awareness Series ................... 1,808,681.456
Strategic Income Series ................... 1,908,796.448
Trend Series .............................. 8,501,639.644
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund .................. 561,224.709 19,012.257 4.32%/0.02%
Tax-Free Ohio Fund ........................ 255,147.696
Tax-Free Pennsylvania Fund ................ 110,858,721.886 889,083.269 0.81%/0.80%
Delaware Group Tax-Free Money Fund, Inc. ..... 30,230,645.680 193,033.460 0.56%/0.56%
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund ..................... 7,208,378.354
Tax-Free USA Fund ......................... 51,938,806.870 45,096.735 0.09%/0.07%
Tax-Free USA Intermediate Fund ............ 2,635,075.434 5,070.214 0.20%/0.01%
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust
Portfolio ................................ 5,344,331.328 40,604.332 0.74%/0.03%
</TABLE>
* The shares outstanding on the record date include all shares purchased in
transactions that have settled by the record date.
A-2
<PAGE>
EXHIBIT B
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
The following accounts held of record 5% or more of the outstanding shares
of the Funds listed below as of October 31, 1998. Management does not have
knowledge of beneficial owners.
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- ------------------------------------- --------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Delaware Group Adviser Funds, Inc.
Overseas Equity Fund ............... Merrill Lynch, Pierce, Fenner & Smith 20,616 5.11% 0.30%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
U.S. Growth Fund .................... Federated Life Insurance Company 2,253,551 52.43% 34.45%
Separate Account A - Attn: Tom Koch
P.O. Box 328
Owatonna, MN 55060
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund
(formerly Delaware Fund) ......... Price Waterhouse LLP 4,382,314 10.46% 8.18%
Savings Plan
P.O. Box 30004
Tampa, FL 33630
Bankers Trust as Trustee for 3,866,787 9.23% 7.22%
Coopers & Lybrand Map Savings Plan
100 Plaza One - MS 3048
Jersey City, NJ 07311
Delaware Group Equity Funds II, Inc.
Blue Chip Fund ..................... James Roy Fitzpatrick and 94,919 7.34% 0.05%
Janice C. Fitzpatrick JT WROS
6295 Whitmar Place, South
Memphis, TN 38120
Aero Corporation 401(k) Plan 2,732 5.62% 0.04%
Attn: Retirement Plans
1818 Market Street
Philadelphia, PA 19103
Diversified Value Fund .............. Lincoln National Life Insurance Co. 235,294 99.99% 0.12%
1300 South Clinton Street
Fort Wayne, IN 46802
Delaware Group Equity Funds IV, Inc.
DelCap Fund ........................ Merrill Lynch, Pierce, Fenner & Smith 3,492,946 11.51% 11.42%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Price Waterhouse LLP 2,041,396 6.73% 6.67%
Savings Plan
P.O. Box 30004
Tampa, FL 33630
</TABLE>
B-1
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- ------------------------------------ ------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Capital Appreciation Fund .......... Chicago Trust Company 247,789 99.46% 0.81%
For the Benefit of Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Company
P.O. Box 2977
Milwaukee, WI 53201
Delaware Group Equity Funds V, Inc.
Retirement Income Fund ............ Chicago Trust Company 278,617 98.83% 1.41%
For the Benefit of Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Company
P.O. Box 2977
Milwaukee, WI 53201
Small Cap Value Fund ............... Bankers Trust as Trustee for 4,016,645 20.56% 20.26%
Coopers & Lybrand Map Savings Plan
100 Plaza One - MS 3048
Jersey City, NJ 07311
Delaware Group Foundation Funds
Income Portfolio .................. Richard Scott 9,236 12.62% 1.40%
Profit Sharing Plan
For the Benefit of Richard Scott
P.O. Box 80845 - College Station
Fairbanks, AK 99708
Richard Scott 8,081 11.05% 1.23%
Pension Plan
For the Benefit of Richard Scott
P.O. Box 80845 - College Station
Fairbanks, AK 99708
Florence Wiseman 6,910 9.44% 1.05%
904 East King Street
Owosso, MI 48867
Delaware Management Business Trust 5,972 8.17% 0.91%
Attn: Joseph Hastings
1818 Market Street
Philadelphia, PA 19103
Anna M. Garber 5,251 7.18% 0.80%
92 Strasburg Pike
Lancaster, PA 17602
J. Mark Waltz 4,151 5.67% 0.63%
1833 West Crescent
Park Ridge, IL 60068
</TABLE>
B-2
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- --------------------------------------------------- --------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Cappy E. Sumler 4,120 5.63% 0.62%
1510 East 81st Street
Kansas, MO 64131
M. Pauline Wissler 3,697 5.05% 0.56%
227 Millwood Road
Lancaster, PA 17602
Balanced Portfolio ................................ Glenn A. Shively and 28,350 8.39% 4.30%
Deborah Z. Shively, JT WROS
1401 Le Boutillier Road
Malvern, PA 19355
Growth Portfolio .................................. DMTC for the Rollover IRA of 15,391 6.19% 2.33%
Louis E. Meador
1301 Camden Place
Lawrenceville, GA 30043
Delaware Group Global & International Funds, Inc.
Global Bond Fund ................................... Lincoln National Life Insurance Co. 488,135 27.49% 1.81%
Attn: Karen Gerke
1300 South Clinton Street
Fort Wayne, IN 46802
Global Equity Fund (formerly
Global Assets Fund) ............................. Merrill Lynch, Pierce, Fenner & Smith 163,960 11.93% 0.61%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Merrill Lynch, Pierce, Fenner & Smith 116,730 8.50% 0.43%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Delaware Management Business Trust 102,059 7.43% 0.38%
c/o Joseph Hastings
1818 Market Street - 16th Floor
Philadelphia, PA 19103
</TABLE>
B-3
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- ---------------------------------------- ------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
International Equity Fund .............. Bankers Trust as Trustee for 3,275,328 15.24% 12.17%
Coopers & Lybrand Map Savings Plan
100 Plaza One - MS 3048
Jersey City, NJ 07311
County of Los Angeles 2,461,273 11.45% 9.15%
Def. Comp. and Thrift Plan
c/o Great West Life & Annuity
8515 East Orchard Road - #2T2
Englewood, CA 80111
Northern Telecom, Inc. 1,481,212 6.89% 5.50%
Long Term Investment Plan
c/o BTNY Service - Attn: G. Anzalone
34 Exchange Place - MS 3064
Jersey City, NJ 07302
Price Waterhouse LLP 1,156,797 5.38% 4.30%
Savings Plan
P.O. Box 30004
Tampa, FL 33630
International Small Cap Fund ........... Lincoln National Life Insurance Company 354,721 99.99% 1.32%
1300 South Clinton Street
Fort Wayne, IN 46802
Delaware Group Income Funds, Inc.
Strategic Income Fund ................. Chicago Trust Company 656,085 7.56% 0.27%
For the Benefit of Lincoln National Corp.
Employees Retirement Trust
1000 North Water Street - TR14
Milwaukee, WI 53202
High-Yield Opportunities Fund .......... Wayne A. Stork 1,091,608 33.26% 0.45%
5727 Twin Silo Road
Doylestown, PA 18901
Chicago Trust Company 664,647 20.25% 0.28%
For the Benefit of Lincoln National Corp.
Employees Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201
Merrill Lynch, Pierce, Fenner & Smith 208,752 6.36% 0.09%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
</TABLE>
B-4
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- --------------------------------------- ----------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Coporate Bond Fund .................... Lincoln National Life Insurance Company 181,818 52.12% 0.08%
1300 South Clinton Street
Fort Wayne, IN 46802
Christopher W. Hobler 29,528 8.47% 0.01%
P.O. Box 388
Jug Hill Road - Deerwood Farm
Milton Hills, NH 03852
Nannette Glaxon 21,815 6.25% 0.01%
454 Prospect Avenue - Unit 231
West Orange, NJ 07052
Seymour S. Glaxon 17,687 5.07% 0.01%
454 Prospect Avenue - Unit 231
West Orange, NJ 07052
Extended Duration Bond Fund ........... Lincoln National Life Insurance Company 181,818 62.90% 0.08%
1300 South Clinton Street
Fort Wayne, IN 46802
Christopher W. Hobler 29,528 10.22% 0.01%
P.O. Box 388
Jug Hill Road - Deerwood Farm
Milton Hills, NH 03852
Delaware Group Limited-Term
Government Funds, Inc.
Limited-Term Government Fund ......... Merrill Lynch, Pierce, Fenner & Smith 2,710,143 6.57% 6.57%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Delaware Pooled Trust, Inc.
The Real Estate Investment
Trust Porfolio ...................... Lincoln National Life Insurance Co. 1,269,763 23.37% 0.90%
1300 South Clinton Street
Fort Wayne, IN 46802
Lincoln National Life Insurance Co. 1,245,460 22.82% 0.89%
1300 South Clinton Street
Fort Wayne, IN 46802
American States Insurance Company 625,797 11.47% 0.45%
500 Meridian Street
Indianapolis, IN 46204
</TABLE>
B-5
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- -------------------------------------- ------------------------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Delaware Group Premium Fund, Inc.
Decatur Total Return Series ......... SMA Life Assurance Company 19,622,497 67.59% 18.15%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Lincoln National Life Company 7,849,099 27.04% 7.26%
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801
Delchester Series ................... SMA Life Assurance Company 12,950,590 97.70% 11.98%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Capital Reserves Series ............. SMA Life Assurance Company 3,671,927 89.36% 3.40%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Delaware Series ..................... SMA Life Assurance Company 9,205,741 95.75% 8.51%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Cash Reserve Series ................. SMA Life Assurance Company 4,295,652 86.10% 3.97%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
DelCap Series ....................... SMA Life Assurance Company 6,695,209 96.14% 6.19%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
International Equity Series ......... SMA Life Assurance Company 14,098,796 96.87% 13.04%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
</TABLE>
B-6
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- --------------------------------- ------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Trend Series .................... Lincoln National Life Company 4,473,309 53.13% 4.14%
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801
SMA Life Assurance Company 3,877,988 46.06% 3.59%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Small Cap Value Series .......... SMA Life Assurance Company 6,040,978 98.21% 5.59%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Global Bond Series .............. Lincoln National Life Company 1,431,277 73.41% 1.32%
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801
SMA Life Assurance Company 516,264 26.47% 0.48%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Strategic Income Series ......... SMA Life Assurance Company 1,600,653 91.42% 1.48%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
SMA Life Assurance Company 166,847 9.53% 0.15%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Devon Series .................... SMA Life Assurance Company 3,636,111 99.83% 3.36%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
</TABLE>
B-7
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- --------------------------------------- -------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Emerging Markets Series ............... SMA Life Assurance Company 669,453 74.63% 0.62%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Lincoln National Life Company 206,394 23.01% 0.19%
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801
Convertible Securities Series ......... SMA Life Assurance Company 446,464 69.78% 0.41%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
Chicago Trust Company 36,418 5.69% 0.03%
For the Benefit of Lincoln National
Corporation Employee Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201
Social Awareness Series ............... SMA Life Assurance Company 1,634,862 97.80% 1.51%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
REIT Series ........................... Lincoln National Life Company 200,000 42.62% 0.18%
Separate Account - C
1300 South Clinton Street
P.O. Box 2340
Fort Wayne, IN 46801
The Travelers Separate Account TM2 135,337 28.84% 0.13%
For Variable Annuities of
The Travelers Insurance Company
One Tower Square 5MS
Hartford, CT 06183
SMA Life Assurance Company 87,396 20.08% 0.08%
Separate Account VA-K
Attn: Jay Burke
440 Lincoln Street
Worcester, MA 01653
The Travelers Separate Account ABD2 37,175 8.54% 0.03%
For Variable Annuities of
The Travelers Insurance Company
One Tower Square 5MS
Hartford, CT 06183
</TABLE>
B-8
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- ------------------------------------- ----------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Delaware Group Tax-Free
Money Fund, Inc. ................... Judith D. Ludwig and 3,076,594 8.93% 8.93%
Bruce A. Grassfields TTEES
2650 South Main Street
Erie, CO 80516
Delaware Group State Tax-Free
Income Trust
Tax-Free Pennsylvania Fund ......... Merrill Lynch, Pierce, Fenner & Smith 6,409,033 5.81% 5.77%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Tax-Free New Jersey Fund ........... Lincoln National Life Insurance Co. 191,929 38.34% 1.73%
c/o Lincoln Investment Management, Inc.
Attn: Carol A. Schmidt
200 East Berry Street
Fort Wayne, IN 46802
Wheat First Securities, Inc. 44,263 10.06% 0.04%
Theodore W. Gruber, Jr.
P.O. Box 615
Elmer, NJ 08318
Ellen Jones, Trustee 26,802 6.09% 0.02%
Mildred Gale Trust
140 Renaissance Drive
Cherry Hill, NJ 08003
Tax-Free Ohio Fund ................. Lincoln National Life Insurance Co. 192,360 83.35% 0.17%
c/o Lincoln Investment Management, Inc.
Attn: Carol A. Schmidt
200 East Berry Street
Fort Wayne, IN 46802
David J. Littell and 13,383 5.80% 0.01%
Mary Ann Littell JT WROS
3804 Long Road
Avon, OH 44011
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free
New York Fund ..................... Wheat First Securities, Inc. 93,546 8.51% 0.30%
Anthony A. Pugliese and
Carole D. Pugliese JT TEN
109 Eastwoods Road
Pound Ridge, NY 10576
</TABLE>
B-9
<PAGE>
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Company/Fund Name and Address of Shares of Fund of Company
- --------------------------------- ----------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free
Wisconsin Fund ................ Salomon Smith Barney 348,710 8.91% 1.11%
388 Greenwich Street
New York, NY 10013
Paine Webber 332,520 8.49% 1.06%
For the Benefit of Bayban
c/o First State Bank of Bayport
Attn: Barb Monteith
950 North Highway 95
Bayport, MN 55003
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ......... Merrill Lynch, Pierce, Fenner & Smith 406,551 6.73% 3.44%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Merrill Lynch, Pierce, Fenner & Smith 397,062 6.57% 3.36%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Growth Stock Fund .............. Charles Schwab & Co. Inc. 112,321 7.70% 0.95%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free
Minnesota Fund ................. Merrill Lynch, Pierce, Fenner & Smith 2,064,394 6.20% 5.73%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Delaware-Voyageur Tax-Free
North Dakota Fund .............. Wilkota and Company 254,898 9.30% 0.70%
1st Nat'l Bank & Trust Co. of Williston
P.O. Box 1827
Williston, ND 58802
</TABLE>
B-10
<PAGE>
EXHIBIT C
YEARS THAT DIRECTORS OR TRUSTEES FIRST TOOK OFFICE
<TABLE>
<CAPTION>
Jeffrey Walter P. John H. Anthony Ann R. W. Thacher Thomas F. Charles Wayne A.
J. Nick Babich Durham D. Knerr Leven Longstreth Madison E. Peck Stork
--------- ----------- --------- ---------- -------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delaware Group Equity
Funds I, Inc. ........... 1997 1988 1977 1990 1989 1977 1997 1990 1991
Delaware Group Equity
Funds II, Inc. .......... 1997 1988 1977 1990 1989 1977 1997 1990 1991
Delaware Group Equity
Funds III, Inc. ......... 1997 1988 1977 1990 1989 1977 1997 1990 1991
Delaware Group Equity
Funds IV, Inc. .......... 1997 1988 1985 1990 1989 1985 1997 1990 1991
Delaware Group Equity
Funds V, Inc. ........... 1997 1988 1987 1990 1989 1987 1997 1990 1991
Delaware Group
Income Funds, Inc. ...... 1997 1988 1977 1990 1989 1977 1997 1990 1991
Delaware Group
Government Fund,
Inc. .................... 1997 1988 1985 1990 1989 1985 1997 1990 1991
Delaware Group
Limited-Term
Government Funds,
Inc. .................... 1997 1988 1981 1990 1989 1988 1997 1990 1991
Delaware Group Cash
Reserve, Inc. ........... 1997 1988 1978 1990 1989 1978 1997 1990 1991
Delaware Group
Tax-Free Money
Fund, Inc. .............. 1997 1988 1981 1990 1989 1981 1997 1990 1991
Delaware Group State
Tax-Free Income
Trust ................... 1997 1988 1977 1990 1989 1977 1997 1990 1991
Delaware Group
Tax-Free Fund, Inc. ..... 1997 1988 1983 1990 1989 1983 1997 1990 1991
Delaware Group
Premium Fund, Inc. ...... 1997 1988 1988 1990 1989 1988 1997 1990 1991
Delaware Group
Global &
International Funds,
Inc. .................... 1997 1991 1991 1991 1991 1991 1997 1991 1991
Delaware Group
Adviser Funds, Inc....... 1997 1996 1998 1996 1996 1996 1997 1996 1996
Delaware Group
Foundation Funds ........ 1997 1997 1998 1997 1997 1997 1997 1997 1997
Delaware Pooled Trust,
Inc ..................... 1997 1991 1991 1991 1991 1991 1997 1991 1991
</TABLE>
C-1
<PAGE>
EXHIBIT D
EXECUTIVE OFFICERS OF THE COMPANIES
David K. Downes (59) Executive Vice President, Chief Operating Officer and
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 Financial Officer, Chief Administrative 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.; Director of Delaware International Advisers Ltd.; Vice
President of Lincoln Funds Corporation. 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/Chief Investment Officer,
Equities of each of the 34 investment companies in the Delaware Investments
family and Delaware Management Company (a series of Delaware Management
Business Trust); Executive Vice President of Delaware Management Holdings,
Inc., Delaware Capital Management, Inc. and Delaware Management Business Trust;
Executive Vice President/Chief Investment Officer, Equities and
Director/Trustee of Delaware Management Company, Inc.; 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 Company (a
series of Delaware Management Business Trust) and Delaware Investment Advisers
(a series of Delaware Management Business Trust); Executive Vice President and
Director of Founders Holdings, Inc.; Executive Vice President of Delaware
Capital Management, Inc., Delaware Management Business Trust and Delaware
Management Holdings, 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.
Richard J. Flannery (41) Senior Vice President of each of the 34 investment
companies in the Delaware Investments family; Executive Vice President and
General Counsel of Delaware Management Holdings, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust), Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Distributors, L.P., Founders CBO Corporation; Executive Vice President/General
Counsel and Director/Trustee of DMH Corp., Delaware Management Company, Inc.,
Delaware Management Business Trust, Delaware Service Company, Inc., Delaware
Capital Management, Inc., Retirement Financial Services, Inc., Delaware
Management Trust Company, Delaware Distributors, Inc., Delaware International
Holdings Ltd., Founders Holdings, Inc., and Delvoy, Inc.; Director of Delaware
International Advisers Ltd. and Hyppco Finance Company Ltd. During the last
five years, Mr. Flannery 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 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/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.
D-1
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANIES
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., DMH Corp., Delaware Management Company,
Inc., Delaware Distributors, Inc., Delaware Service Company, Inc., Retirement
Financial Services Inc., Delaware Capital Management, Inc. and Delvoy, Inc.;
Executive Vice President, Secretary and Director of Delaware Management Trust
Company; Senior Vice President and Director of Founders Holdings, Inc. Senior
Vice President and Director of Delaware International Holdings Ltd.; Director
of Delaware International Advisers Ltd. During the past five years, Mr.
Chamberlain has served in various executive capacities at different times
within the Delaware Investments organization.
Joseph H. Hastings (49) 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 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 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 investment companies 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 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 investment companies 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 and MBIA Corporation.
Paul A. Matlack (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., 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 investment companies 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 (44) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., 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 the
fixed-income investment companies 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 Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and of the equity investment companies 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.
D-2
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANIES
Gerald T. Nichols (40) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and the fixed-income investment companies in the
Delaware Investments family; Vice President of Founders Holdings, Inc.;
Treasurer, Assistant Secretary and Director of Founders CBO Corporation. During
the past five years, Mr. Nichols has served in various capacities at different
times within the Delaware Investments organization.
Christopher S. Beck (40) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and each of the equity investment companies in the
Delaware Investments family. Before joining the Delaware Investments in 1997,
Mr. Beck managed the Small Cap 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 (37) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), and each of the equity investment companies in the
Delaware Investments family. During the past five years, Mr. Burwell has served
in various capacities at different times within the Delaware Investments
organization.
Robert L. Arnold (34) Vice President/Portfolio Manager of the equity investment
companies in the Delaware Investments family and Delaware Investment Advisers
(a series of Delaware Management Business Trust). During the past five years,
Mr. Arnold has served in various capacities at different times within the
Delaware Investments organization.
Gerald S. Frey (52) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and the equity investment companies in the Delaware
Investments family. 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.
John B. Fields (53) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., 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 the equity
investment companies in the Delaware Investments family; Trustee of Delaware
Management Business Trust. During the past five years, Mr. Fields has served in
various capacities at different times within the Delaware Investments
organization.
Paul Grillo (39) Vice President/Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust), and the fixed-income investment companies in the Delaware
Investments family. During the last five years, Mr. Grillo has served in
various capacities at different times within the Delaware Investments
organization.
Cynthia I. Isom (44) Vice President/Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware Management
Business Trust) and the fixed-income investment companies in the Delaware
Investments family; Vice President/Senior Trader of Delaware Investment
Advisers (a series of Delaware Management Business Trust). During the past five
years, Ms. Isom has served in various capacities at different times within the
Delaware Investments organization.
J. Paul Dokas (38) Vice President/Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust), and the equity investment companies in the Delaware
Investments family. Before joining the Delaware Investments organization in
1997, he was Director of Trust Investments for Bell Atlantic Corporation in
Philadelphia.
D-3
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANIES
Steven R. Cianci(29) Vice President/Portfolio Manager of the fixed income
investment companies in the Delaware Investments family, Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of Delaware Management Business Trust). During
the past five years, Mr. Cianci has served in various capacities at different
times within the Delaware Investments organization.
Damon J. Andres(29) Assistant Vice President/Portfolio Manager of the equity
investment companies in the Delaware Investments family, Delaware Management
Company a series of Delaware Management Business Trust) and Delaware Investment
Advisers (a series of Delaware Management Business Trust). Prior to joining
Delaware Investments in 1994, Mr. Andres performed investment consulting
services as a Consulting Associate with Cambridge Associates, Inc. in
Arlington, Virgina.
D-4
<PAGE>
EXHIBIT E
SHAREHOLDINGS BY DIRECTORS OR TRUSTEES 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>
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 4.32%/Less than 1%
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
ANN R. LEVEN
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly 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%
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%
</TABLE>
E-1
<PAGE>
SHAREHOLDINGS BY DIRECTORS OR TRUSTEES 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>
W. THACHER LONGSTRETH
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ........ 40,815.950 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund .................................... 67,652.453 Less than 1%/Less than 1%
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. Government Fund ................................... 96.057 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 ...................................... 41,050.721 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%
Delaware Group Dividend and Income Fund, Inc. ........... 1,000.000 Less than 1%/Less than 1%
Delaware Group Global Dividend and Income Fund, Inc...... 1,274.000 Less than 1%/Less than 1%
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%
</TABLE>
E-2
<PAGE>
SHAREHOLDINGS BY DIRECTORS OR TRUSTEES 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>
CHARLES E. PECK
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ......... 16,151.178 Less than 1%/Less than 1%
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 ........................................ 14,417.178 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%
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%
High-Yield Opportunities Fund ........................... 1,091,608.340 33.30%/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. ........................ 3,760,011.960 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 Less than 1%/Less than 1%
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%
</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 ............................................. F12
Decatur Total Return Fund ....................................... F14
Social Awareness Fund ........................................... F16
Delaware Group Equity Funds III, Inc.
Trend Fund ...................................................... F17
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund ....................................... F19
DelCap Fund ..................................................... F21
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund ............................................ F23
Retirement Income Fund .......................................... F25
Delaware Group Foundation Funds
Balanced Portfolio .............................................. F27
Growth Portfolio ................................................ F27
Income Portfolio ................................................ F27
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund ........................................... F28
Global Equity Fund (formerly Global Assets Fund) ................ F30
Global Bond Fund ................................................ F30
Global Opportunities Fund (formerly Global Equity Fund) ......... F32
International Equity Fund ....................................... F33
International Small Cap Fund .................................... F35
Delaware Group Government Fund, Inc.
U.S. Government Fund ............................................ F36
Delaware Group Income Fund, Inc.
Delchester Fund ................................................. F38
High-Yield Opportunities Fund ................................... F40
Strategic Income Fund ........................................... F41
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund .................................... F42
F-1
<PAGE>
Delaware Group Premium Fund, Inc.
Capital Reserves Series ............................ F44
Cash Reserve Series ................................ F44
Decatur Total Return Series ........................ F44
Delaware Series .................................... F44
DelCap Series ...................................... F44
Delchester Series .................................. F44
Convertible Securities Series ...................... F46
Devon Series ....................................... F46
Social Awareness Series ............................ F46
Strategic Income Series ............................ F46
Emerging Markets Series ............................ F47
Global Bond Series ................................. F48
International Equity Series ........................ F50
REIT Series ........................................ F52
Small Cap Value Series ............................. F53
Trend Series ....................................... F53
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund ........................... F55
Tax-Free Ohio Fund ................................. F57
Tax-Free Pennsylvania Fund ......................... F59
Delaware Group Tax-Free Money Fund, Inc. .............. F61
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund .............................. F62
Tax-Free USA Fund .................................. F64
Tax-Free USA Intermediate Fund ..................... F66
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio ......... F68
F-2
<PAGE>
New Pacific Fund
Overseas Equity Fund
U.S. Growth Fund
<TABLE>
<CAPTION>
<S> <C>
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."
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Lending The Fund shall not make loans in an aggregate amount in excess of one-third
of its 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.
</TABLE>
F-4
<PAGE>
Delaware Group Cash Reserve, Inc.
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment
- -------- ------------------------------
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. 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.
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 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.
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.
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-6
<PAGE>
Delaware Balanced Fund (formerly Delaware Fund)
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-8
<PAGE>
Devon Fund
<TABLE>
<CAPTION>
<S> <C>
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
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.
</TABLE>
F-10
<PAGE>
Blue Chip Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-11
<PAGE>
Decatur Income Fund
<TABLE>
<CAPTION>
<S> <C>
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 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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-13
<PAGE>
Decatur Total Return Fund
<TABLE>
<CAPTION>
<S> <C>
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 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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 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.
</TABLE>
F-15
<PAGE>
Social Awareness Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-16
<PAGE>
Trend Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-18
<PAGE>
Capital Appreciation Fund
<TABLE>
<CAPTION>
<S> <C>
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.
Illiquid Securities None.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-20
<PAGE>
DelCap Fund
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-21
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-22
<PAGE>
Small Cap Value
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-23
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 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.
</TABLE>
F-24
<PAGE>
Retirement Income Fund
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment
- -------- ------------------------------
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 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.
</TABLE>
F-25
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-26
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-27
<PAGE>
Emerging Markets Fund
<TABLE>
<CAPTION>
<S> <C>
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.
Investment Companies None.
Control or Management None.
Options None.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-28
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-29
<PAGE>
Global Equity Fund (formerly Global Assets Fund)
Global Bond Fund
<TABLE>
<CAPTION>
<S> <C>
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-30
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 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.
</TABLE>
F-31
<PAGE>
Global Opportunities Fund
(formerly Global Equity Fund)
<TABLE>
<CAPTION>
<S> <C>
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."
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.
</TABLE>
F-32
<PAGE>
International Equity Fund
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-33
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-34
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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."
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.
</TABLE>
F-35
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-36
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-37
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-38
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 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.
</TABLE>
F-39
<PAGE>
High-Yield Opportunities Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-40
<PAGE>
Strategic Income Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-41
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-42
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
F-43
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-44
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 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.
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.
</TABLE>
F-45
<PAGE>
Convertible Securities Series
Devon Series
Social Awareness Series
Strategic Income Series
<TABLE>
<CAPTION>
<S> <C>
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.
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.
</TABLE>
F-46
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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."
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.
</TABLE>
F-47
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-48
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-49
<PAGE>
International Equity Series
<TABLE>
<CAPTION>
<S> <C>
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."
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.
- ------------
*These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-50
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-51
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
REIT Series
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund concentrates its investments in the real estate industry, but shall
not 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.
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.
</TABLE>
F-52
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-53
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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 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.
</TABLE>
F-54
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-55
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-56
<PAGE>
Tax-Free Ohio Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-57
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-58
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-59
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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."
</TABLE>
F-60
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
Concentration 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.
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.
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.
</TABLE>
F-61
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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."
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-62
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-63
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-64
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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."
</TABLE>
F-65
<PAGE>
Tax-Free USA Intermediate Fund
<TABLE>
<CAPTION>
<S> <C>
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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-66
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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."
</TABLE>
F-67
<PAGE>
The Real Estate Investment Trust Portfolio
<TABLE>
<CAPTION>
<S> <C>
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 Portfolio 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.
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.
- ------------
* These activities will be covered by the proposed standard restriction concerning Senior Securities and
Borrowing.
</TABLE>
F-68
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
</TABLE>
F-69
<PAGE>
EXHIBIT G
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- --------------------- ------------------ ----------- ------------ ---------------------
<S> <C> <C> <C> <C>
Delaware Group Adviser Funds, Inc.
- -------------------------------------------------------------------------------------------
New Pacific Fund Delaware 5/4/96(1) 9,712,287 0.80% per year
(Investment Management
Management) Company, Inc.
("DMC")
- -------------------------------------------------------------------------------------------
New Pacific Fund AIB Govett, Inc. 1/1/98(2) 9,712,287 0.50% per year
(Sub-Advisory) ("AIBG")
- -------------------------------------------------------------------------------------------
Overseas Equity DMC 5/4/96(1) 3,542,665 1.00% per year
Fund (Investment
Management)
- -------------------------------------------------------------------------------------------
Overseas Equity Delaware 9/15/97(3) 3,542,665 80% of fees paid to
Fund (Sub-Advisory) International DMC
Advisers Ltd.
("DIAL")
- -------------------------------------------------------------------------------------------
U.S. Growth Fund DMC 5/4/96(1) 62,656,068 0.70% per year
(Investment
Management)
- -------------------------------------------------------------------------------------------
U.S. Growth Fund Lynch & Mayer, 5/4/96(1) 62,656,068 0.40% per year
(Sub-Advisory) Inc. ("L&M")
- -------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 $50,696 due $75,772 due 49% $108,811
(Investment 0.80% on next $500 million All waived
Management) 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 $ 36,841 N/A N/A N/A
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------
Overseas Equity 0.85% on first $500 million $46,051 due $43,005 due --7% $ 58,956
Fund (Investment 0.80% on next $500 million All waived
Management) 0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Overseas Equity No Change $ 44,612 N/A N/A N/A
Fund (Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------
U.S. Growth Fund 0.65% on first $500 million $277,028 due $251,942 due --9% $161,998
(Investment 0.60% on next $500 million $667 waived
Management) 0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
U.S. Growth Fund No Change $154,888 N/A N/A
(Sub-Advisory) Inc. ("L&M")
- --------------------------------------------------------------------------------------------------------------------
</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 November 18, 1997 in connection with
DIAL replacing Walter Scott & Partners Limited as the Fund's sub-adviser.
G-1
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ---------------- ------------- ----------- ---------------- -------------------------------------
<S> <C> <C> <C> <C>
Delaware Group DMC 4/3/95(1) 626,911,619 0.50% on first $500 million
Cash Reserve, 0.475% on next $250 million
Inc. 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 million; all per year less
directors' fees
- -----------------------------------------------------------------------------------------------------
Delaware Group Equity Funds I, Inc.
- -----------------------------------------------------------------------------------------------------
Delaware DMC 4/3/95(1) 1,045,205,203 0.60% on first $100 million
Balanced Fund 0.525% on next $150 million
(formerly 0.50% on next $250 million
Delaware Fund) 0.475% on assets in
excess of $500 million;
all per year less
directors' fees
- -----------------------------------------------------------------------------------------------------
Devon Fund DMC 4/3/95(1) 302,046,021 0.60% on first $500 million
0.50% on assets in
excess of $500 million;
all per year
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 0.45% on first $500 million $2,904,636 due $2,606,814 due --10% $1,864,301
Cash Reserve, 0.40% on next $500 million $0 waived
Inc. 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 0.65% on first $500 million $4,178,981 due $5,217,454 due 25% $3,078,545
Balanced Fund 0.60% on next $500 million $0 waived
(formerly 0.55% on next $1,500 million
Delaware Fund) 0.50% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Devon Fund 0.65% on first $500 million $951,036 due $1,032,012 due 9% $1,566,519
0.60% on next $500 million $ 178,141
0.55% on next $1,500 million waived
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 the Lincoln National Corporation's acquisition of DMC and DIAL.
G-2
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ------------------- --------------- ----------- ---------------- -----------------------------
<S> <C> <C> <C> <C>
Delaware Group Equity Funds II, Inc.
- --------------------------------------------------------------------------------------------------
Blue Chip Fund DMC 2/24/97(1) 17,847,453 0.65% on first $500 million
(Investment 0.625% on next $500 million
Management) 0.60% on assets in excess
of $1,000 million; all
per year
- --------------------------------------------------------------------------------------------------
Blue Chip Fund Vantage 2/24/97(1) 17,847,453 0.15% on average daily net
(Sub-Advisory) Investment assets averaging one year
Advisors old or less
("Vantage") 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 DMC 4/3/95(2) 2,384,398,634 0.60% on first $100 million
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
- --------------------------------------------------------------------------------------------------
Decatur Total DMC 4/3/95(2) 1,402,172,696 0.60% on first $500 million
Return Fund 0.575% on next $250 million
0.55% on assets in excess
of $750 million; all per
year less directors' fees
- --------------------------------------------------------------------------------------------------
Diversified Value DMC 9/14/98(3) 2,316,078 0.65% on first $500 million
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
- --------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 $65,355 due $49,996 due --24% $ 132,831
(Investment 0.60% on next $500 million $53,192
Management) 0.55% on next $1,500 million waived
0.50% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------
Blue Chip Fund No Change $16,822 N/A N/A N/A
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------------------------
Decatur Income 0.65% on first $500 million $11,709,268 due $14,052,969 due 20% $9,104,707
Fund 0.60% on next $500 million $0 waived
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------
Decatur Total 0.65% on first $500 million $7,389,923 due $7,850,736 due 6% $7,444,876
Return Fund 0.60% on next $500 million $0 waived
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------
Diversified Value No Change N/A N/A N/A N/A
Fund
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(1) Approved by the Fund's initial shareholder 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) Approved by the Fund's initial shareholder on September 14, 1998.
G-3
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Social Awareness DMC 2/24/97(1) 87,050,940 0.75% on first $500 million
Fund (Investment 0.725% on next $500 million
Management) 0.70% on assets in excess
of $1,000 million; all per year
- ------------------------------------------------------------------------------------------------
Social Awareness Vantage 2/24/97(1) 87,050,940 0.20% on average daily net
Fund assets averaging one year
(Sub-Advisory) 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) 594,971,007 0.75% per year less
directors' fees
- ------------------------------------------------------------------------------------------------
Delaware Group Equity Funds IV, Inc.
- ------------------------------------------------------------------------------------------------
Capital DMC 11/29/96(3) 2,563,644 0.75% on first $500 million
Appreciation 0.725% on next $500 million
Fund 0.70% on assets in excess
of $1,000 million, all
per year
- ------------------------------------------------------------------------------------------------
DelCap Fund DMC 4/3/95(2) 817,570,752 0.75% per year less
directors' fees
- ------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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>
Social Awareness 0.75% on first $500 million $345,435 due $264,338 due --23% $ 435,223
Fund (Investment 0.70% on next $500 million $29,874
Management) 0.65% on next $1,500 million waived
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Social Awareness No Change $96,165 N/A N/A N/A
Fund
(Sub-Advisory)
- ---------------------------------------------------------------------------------------------------------------------
Delaware Group Equity Funds III, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Trend Fund 0.75% on first $500 million $4,849,848 due $4,792,530 due --1% $3,534,257
0.70% on next $500 million $0 waived
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 0.75% on first $500 million $18,019 due $14,893 due --17% $ 4,498
Appreciation 0.70% on next $500 million $29,444
Fund 0.65% on next $1,500 million waived
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
DelCap Fund 0.75% on first $500 million $6,278,318 due $6,126,895 due --2% $4,177,566
0.70% on next $500 million $0 waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(1) Approved by the Fund's initial shareholder 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) Approved by the Fund's initial shareholder on November 29, 1996.
G-4
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Equity Funds V, Inc.
- -----------------------------------------------------------------------------------------
Small Cap Value DMC 4/3/95(1) 525,102,443 0.75% per year less
Fund directors' fees
- -----------------------------------------------------------------------------------------
Retirement DMC 11/29/96(2) 2,911,467 0.65% on first $500 million
Income Fund 0.625% on next $500 million
0.60% on assets in excess
of $1,000 million; all per year
- -----------------------------------------------------------------------------------------
Delaware Group Foundation Funds
- -----------------------------------------------------------------------------------------
Balanced DMC 12/18/97(3) 3,797,225 0.25% per year (currently
Portfolio waived to 0.10%)
- -----------------------------------------------------------------------------------------
Growth Portfolio DMC 12/18/97(3) 3,675,290 0.25% per year (currently
waived to 0.10%)
- -----------------------------------------------------------------------------------------
Income Portfolio DMC 12/18/97(3) 1,355,481 0.25% per year (currently
waived to 0.10%)
- -----------------------------------------------------------------------------------------
Delaware Group Global & International Funds, Inc.
- -----------------------------------------------------------------------------------------
Emerging DIAL 5/1/96(4) 9,134,933 1.25% per year
Markets Fund
- -----------------------------------------------------------------------------------------
Global Equity DIAL 4/3/95(1) 17,242,495 0.75% per year less
Fund directors' fees
(formerly Global
Assets Fund)
(Investment
Management)
- -----------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 V, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Small Cap Value 0.75% on first $500 million $3,170,471 due N/A N/A $2,883,700
Fund 0.70% on next $500 million $0 waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Retirement 0.65% on first $500 million $18,686 due N/A N/A $ 2,274
Income Fund 0.60% on next $500 million $16,702
0.55% on next $1,500 million waived
0.50% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Delaware Group Foundation Funds
- ---------------------------------------------------------------------------------------------------------------------
Balanced No Change $623 due N/A N/A $ 5,484
Portfolio All waived
- ---------------------------------------------------------------------------------------------------------------------
Growth Portfolio No Change $522 due N/A N/A $ 4,493
All waived
- ---------------------------------------------------------------------------------------------------------------------
Income Portfolio No Change $244 due N/A N/A $ 1,938
All waived
- ---------------------------------------------------------------------------------------------------------------------
Delaware Group Global & International Funds, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Emerging 1.25% on first $500 million $172,141 due N/A N/A $ 186,849
Markets Fund 1.20% on next $500 million $262,517
1.15% on next $1,500 million waived
1.10% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Global Equity 0.85% on first $500 million $132,982 due $151,943 due 14% $ 209,662
Fund 0.80% on next $500 million $77,754
(formerly Global 0.75% on next $1,500 million waived
Assets Fund) 0.70% on assets in excess of
(Investment $2,500 million; all per year
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) Approved by the Fund's initial shareholder on November 29, 1996.
(3) Approved by the Fund's initial shareholder on December 31, 1997.
(4) Approved by the Fund's initial shareholder on April 30, 1996.
G-5
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Global Equity DMC 4/3/95(1) 17,242,495 25% of fees paid to
Fund (formerly DIAL
Global Assets
Fund)
(Sub-Advisory)
- ----------------------------------------------------------------------------------------
Global Bond Fund DIAL 4/3/95(1) 19,560,849 0.75% per year less
directors' fees
- ----------------------------------------------------------------------------------------
Global DIAL 7/21/97(2) 3,308,258 0.80% per year
Opportunities Fund
(formerly Global
Equity Fund)
(Investment
Management)
- ----------------------------------------------------------------------------------------
Global DMC 7/21/97(2) 3,308,258 50% of fees paid to
Opportunities Fund DIAL
(formerly Global
Equity Fund)
(Sub-Advisory)
- ----------------------------------------------------------------------------------------
International DIAL 4/3/95(1) 343,751,257 0.75% per year less
Equity Fund directors' fees
- ----------------------------------------------------------------------------------------
International Small DIAL 7/21/97(3) 3,205,799 1.25% per year
Cap Fund
- ----------------------------------------------------------------------------------------
Delaware Group Government Fund, Inc.
- ----------------------------------------------------------------------------------------
U.S. Government DMC 4/3/95(1) 181,655,118 0.60% per year less
Fund directors' fees
- ----------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 No Change $33,246 N/A N/A N/A
Fund (formerly
Global Assets
Fund)
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------------
Global Bond Fund 0.75% on first $500 million $137,275 due N/A N/A $ 65,481
0.70% on next $500 million $63,250
0.65% on next $1,500 million waived
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
Global 0.85% on first $500 million $25,114 due $26,683 due 7% $ 1,418
Opportunities Fund 0.80% on next $500 million $14,237
(formerly Global 0.75% on next $1,500 million waived
Equity Fund) 0.70% on assets in excess of
(Investment $2,500 million; all per year
Management)
- --------------------------------------------------------------------------------------------------------------------------
Global No Change $12,557 N/A N/A N/A
Opportunities Fund
(formerly Global
Equity Fund)
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------------
International 0.85% on first $500 million $2,084,553 due $2,369,165 due 14% $2,212,282
Equity Fund 0.80% on next $500 million $0 waived
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
International Small 1.25% on first $500 million $37,005 due N/A N/A $ 782
Cap Fund 1.20% on next $500 million $23,551
1.15% on next $1,500 million waived
1.10% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
Delaware Group Government Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
U.S. Government 0.55% on first $500 million $991,089 due $916,813 due --7% $ 903,503
Fund 0.50% on next $500 million $0 waived
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) Approved by Fund's initial shareholder on July 18, 1997.
(3) Approved by Fund's initial shareholder on July 21, 1997.
G-6
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Group Income Funds, Inc.
- -------------------------------------------------------------------------------------------------------
Corporate Bond Fund DMC 9/14/98(1) 38,399,310 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
- -------------------------------------------------------------------------------------------------------
Delchester Fund DMC 4/3/95(2) 1,382,947,497 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 DMC 9/14/98(1) 32,255,272 0.55% on first $500 million
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
- -------------------------------------------------------------------------------------------------------
High-Yield DMC 12/27/96(3) 20,748,401 0.65% on first $500 million
Opportunities Fund 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(4) 48,014,522 0.65% on first $500 million
(Investment 0.625% on next $500 million
Management) 0.60% on assets in excess of
$1,000 million; all per year
- -------------------------------------------------------------------------------------------------------
Strategic Income Fund DIAL 9/30/96(4) 48,014,522 1/3 of management fees
(Sub-Advisory) paid to DMC
- -------------------------------------------------------------------------------------------------------
Delaware Group Limited-Term Government Funds, Inc.
- -------------------------------------------------------------------------------------------------------
Limited-Term DMC 4/3/95(2) 357,445,604 0.50% per year less
Government Fund directors' fees
- -------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 No Change N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Delchester Fund 0.65% on first $500 million $8,245,496 $8,688,419 due 5% $8,255,298
0.60% on next $500 million due
0.55% on next $1,500 million $0 waived
0.50% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------------
Extended Duration Bond No Change N/A N/A N/A N/A
Fund
- ---------------------------------------------------------------------------------------------------------------------------
High-Yield 0.65% on first $500 million $70,555 N/A N/A $ 29,730
Opportunities Fund 0.60% on next $500 million due
0.55% on next $1,500 million $42,498
0.50% on assets in excess of waived
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund 0.65% on first $500 million $212,472 N/A N/A $ 279,020
(Investment 0.60% on next $500 million due
Management) 0.55% on next $1,500 million All waived
0.50% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund No Change N/A N/A N/A N/A
(Sub-Advisory)
- ---------------------------------------------------------------------------------------------------------------------------
Delaware Group Limited-Term Government Funds, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
Limited-Term 0.50% on first $500 million $2,233,564 N/A N/A $1,817,243
Government Fund 0.475% on next $500 million due
0.45% on next 1,500 million $0 waived
0.425% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(1) Approved by the Fund's initial shareholder on September 14, 1998.
(2) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(3) Approved by the Fund's initial shareholder on December 27, 1996.
(4) Approved by the Fund's initial shareholder on September 30, 1996.
G-7
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ------------------------ ------------- ----------- -------------- ---------------------
<S> <C> <C> <C> <C>
Delaware Group Premium Fund, Inc.
- -------------------------------------------------------------------------------------------
Capital Reserves Series DMC 4/3/95(1) 41,740,772 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------
Cash Reserve Series DMC 4/3/95(1) 42,848,258 0.50% per year less
directors' fees
- -------------------------------------------------------------------------------------------
Convertible Securities DMC 5/1/97(2) 8,133,077 0.75% per year
Series
- -------------------------------------------------------------------------------------------
Decatur Total Return DMC 4/3/95(1) 577,896,429 0.60% per year less
Series directors' fees
- -------------------------------------------------------------------------------------------
Delaware Series DMC 4/3/95(1) 201,539,215 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------
DelCap Series DMC 4/3/95(1) 130,546,133 0.75% per year less
directors' fees
- -------------------------------------------------------------------------------------------
Delchester Series DMC 4/3/95(1) 120,628,573 0.60% per year less
directors' fees
- -------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 $166,300 due $ 139,411 due --16% $ 3,044
0.475% on next $500 million $0 waived
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 $149,023 due $ 135,154 due --9% $ 2,110
0.40% on next $500 million $0 waived
0.35% on next $1,500 million
0.30% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------------
Convertible Securities 0.75% on first $500 million $14,026 due N/A N/A $ 4,143
Series 0.70% on next $500 million All waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------------
Decatur Total Return 0.65% on first $500 million $1,640,377 due $1,785,444 due 6% $15,556
Series 0.60% on next $500 million $0 waived
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 $595,126 due $ 647,687 due 9% $ 2,110
0.60% on next $500 million $0 waived
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 $716,228 due N/A N/A $ 6,504
0.70% on next $500 million $69,320 waived
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 $483,877 due $ 526,583 due 9% $ 4,089
0.60% on next $500 million $0 waived
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) Approved by the Fund's initial shareholder on May 1, 1997.
G-8
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Devon Series DMC 5/1/97(1) 68,595,698 0.60% per year
- -------------------------------------------------------------------------------------------------------
Emerging Markets DIAL 5/1/97(1) 5,351,369 1.25% per year
Series
- -------------------------------------------------------------------------------------------------------
Global Bond Series DIAL 5/1/96(2) 21,711,261 0.75% per year
- -------------------------------------------------------------------------------------------------------
International Equity DIAL 4/3/95(3) 243,531,042 0.75% per year less
Series directors' fees
- -------------------------------------------------------------------------------------------------------
REIT Series DMC 5/1/98(4) 5,519,384 0.75% on first $500 million
(Investment 0.70% on next $500 million
Management) 0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------
REIT Series Lincoln 5/1/98(4) 5,519,384 30% of fees paid to DMC
(Sub-Advisory) Investment
Management, Inc.
("LIM")
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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 $31,110 due $33,927 due 9% $ 250
0.60% on next $500 million $5,874 waived
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
Emerging Markets 1.25% on first $500 million $36,327 due N/A N/A $ 570
Series 1.20% on next $500 million $27,740 waived
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 $109,310 due N/A N/A $186,849
0.70% on next $500 million $41,234 waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
International Equity 0.85% on first $500 million $1,304,340 due $1,483,702 due 14% $ 9,906
Series 0.80% on next $500 million $96,663 waived
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 N/A N/A
(Investment
Management)
- --------------------------------------------------------------------------------------------------------------------------
REIT Series No Change N/A N/A N/A N/A
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(1) Approved by the Fund's initial shareholder on May 1, 1997.
(2) Approved by the Fund's initial shareholder on May 1, 1996.
(3) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(4) Approved by the Fund's initial shareholder on May 1, 1998.
G-9
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap Value DMC 4/3/95(1) 103,942,295 0.75% per year
Series
- ----------------------------------------------------------------------------------------------
Social Awareness DMC 5/1/97(2) 26,942,787 0.75% per year
Series (Investment
Management)
- ----------------------------------------------------------------------------------------------
Social Awareness Vantage 5/1/97(2) 26,942,787 0.25% on first $20 million
Series (Sub- 0.35% on next $30 million
Advisory) 0.40% on assets in excess of
$50 million; all per year
- ----------------------------------------------------------------------------------------------
Strategic Income DMC 5/1/97(2) 20,496,651 0.65% per year
Series
(Investment
Management)
- ----------------------------------------------------------------------------------------------
Strategic Income DIAL 5/1/97(2) 20,496,651 1/3 of management fees
Series paid to DMC
(Sub-Advisory)
- ----------------------------------------------------------------------------------------------
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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>
Small Cap Value 0.75% on first $500 million $380,405 due N/A N/A $3,280
Series 0.70% on next $500 million $52,349 waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Social Awareness 0.75% on first $500 million $20,293 due N/A N/A $1,606
Series (Investment 0.70% on next $500 million $16,601 waived
Management) 0.65% on next 1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Social Awareness No Change N/A N/A
Series (Sub-
Advisory)
- ---------------------------------------------------------------------------------------------------------------------
Strategic Income 0.65% on first $500 million $21,320 due N/A N/A $ 250
Series 0.60% on next $500 million $14,049 waived
(Investment 0.55% on next $1,500
Management) million; per year
0.50% on assets in excess of
$2,500 million; all per year
- ---------------------------------------------------------------------------------------------------------------------
Strategic Income No Change $7,036 N/A N/A N/A
Series
(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) Approved by the Fund's initial shareholder on May 1, 1997.
G-10
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trend Series DMC 4/3/95(1) 170,364,972 0.75% per year
- -----------------------------------------------------------------------------------------------
Delaware Group State Tax-Free Income Trust
- -----------------------------------------------------------------------------------------------
Tax-Free New Jersey DMC 9/2/97(2) 3,297,937 0.55% on first 500 million
Fund 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(2) 1,453,742 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 DMC 4/3/95(1) 921,717,539 0.60% on first $500 million
Pennsylvania Fund 0.575% on next $250 million
0.55% on assets in excess of
$750 million; all per year
- -----------------------------------------------------------------------------------------------
Delaware Group DMC 4/3/95(1) 33,702,928 0.50% per year less
Tax-Free Money directors' fees
Fund, Inc.
- -----------------------------------------------------------------------------------------------
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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>
Trend Series 0.75% on first $500 million $622,149 due N/A N/A $ 6,676
0.70% on next $500 million $63,818 waived
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 0.55% on first $500 million $3,235 due N/A N/A $ 2,266
Fund 0.50% on next $500 million All waived
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 $2,856 due N/A N/A $ 1,592
0.50% on next $500 million All waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
Tax-Free 0.55% on first $500 million $5,604,856 due $5,081,686 due --9% $2,826,715
Pennsylvania Fund 0.50% on next $500 million $0 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------------
Delaware Group 0.45% on first $500 million $164,249 due $153,722 due --6% $ 65,097
Tax-Free Money 0.40% on next $500 million $0 waived
Fund, Inc. 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 approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(2) Approved by the Fund's initial shareholder on September 2, 1997.
G-11
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Company/Fund Sub-Adviser Agreement 12/31/98 Net Assets
- ---------------------------------------------------------------------------------------------------
Delaware Group Tax-Free Fund, Inc.
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Free Insured DMC 4/3/95(1) 79,399,125 0.60% per year less
Fund directors' fees
- ---------------------------------------------------------------------------------------------------
Tax-Free USA Fund DMC 4/3/95(1) 606,574,863 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 DMC 4/3/95(1) 28,530,417 0.50% per year less
Intermediate Fund directors' fees
- ---------------------------------------------------------------------------------------------------
Delaware Pooled Trust, Inc.
- ---------------------------------------------------------------------------------------------------
The Real Estate DMC 11/29/95(2) 71,589,077 0.75% per year
Investment Trust
Portfolio (Investment
Management)
- ---------------------------------------------------------------------------------------------------
The Real Estate LIM 11/29/95(2) 71,589,077 30% of management fee
Investment Trust paid to DMC
Portfolio
(Sub-Advisory)
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Fees Paid
Proposed Management (or and/or Waived Proposed Percentage Last Fiscal
Sub-Advisory) Fee Rate Last 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>
Tax-Free Insured 0.50% on first $500 million $476,167 due $400,002 due --16% $ 264,992
Fund 0.475% on next 500 million $0 waived
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 $3,772,773 due $3,433,314 due --9% $1,989,919
0.50% on next $500 million $0 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Free USA 0.50% on first $500 million $125,100 due N/A N/A $ 105,657
Intermediate Fund 0.475% on next $500 million All waived
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 0.75% on first $500 million $277,028 due N/A N/A $ 84,252
Investment Trust 0.70% on next $500 million $118,126 waived
Portfolio (Investment 0.65% on next $1,500 million
Management) 0.60% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------
The Real Estate No Change $83,108 N/A N/A N/A
Investment Trust
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) Approved by Fund's initial shareholder on November 30, 1995.
G-12
<PAGE>
EXHIBIT H
ACTUAL AND HYPOTHETICAL EXPENSE TABLES AND EXAMPLES
New Pacific Fund
(Delaware Group Adviser Funds, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.80% 0.85% 0.80% 0.85% 0.80% 0.85%
12b-1 Fees ........................................ 0.30% 0.30% 1.00% 1.00% None None
Other Expenses .................................... 2.13% 2.13% 2.13% 2.13% 2.13% 2.13%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 3.23% 3.28% 3.93% 3.98% 2.93% 2.98%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 2.00% ***% 2.70% ***% 1.70% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A .......................... $882 $887 $1,513 $1,527 $2,166 $2,189 $3,903 $3,946
Class B
- --Assuming Redemption ............ $895 $900 $1,498 $1,512 $2,218 $2,241 $3,998 $4,041
- --Assuming No Redemption ......... $395 $400 $1,198 $1,212 $2,018 $2,041 $3,998 $4,041
Class C
- --Assuming Redemption ............ $495 $500 $1,198 $1,212 $2,018 $2,041 $4,147 $4,189
- --Assuming No Redemption ......... $395 $400 $1,198 $1,212 $2,018 $2,041 $4,147 $4,189
Institutional Class .............. $296 $301 $ 907 $ 921 $1,543 $1,567 $3,252 $3,299
</TABLE>
Delaware Balanced Fund (formerly Delaware Fund)
(Delaware Group Equity Funds I, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.50% 0.63% 0.50% 0.63% 0.50% 0.63%
12b-1 Fees ........................................ 0.21% 0.21% 1.00% 1.00% None None
Other Expenses .................................... 0.27% 0.27% 0.27% 0.27% 0.27% 0.27%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 0.98% 1.11% 1.77% 1.90% 0.77% 0.90%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 0.98% ***% 1.77% ***% 0.77% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $669 $682 $869 $908 $1,086 $1,157 $1,707 $1,849
Class B
- --Assuming Redemption ........... $680 $693 $857 $897 $1,159 $1,226 $1,875 $2,016
- --Assuming No Redemption ........ $180 $193 $557 $597 $ 959 $1,026 $1,875 $2,016
Class C
- --Assuming Redemption ........... $280 $293 $557 $597 $ 959 $1,026 $2,084 $2,222
- --Assuming No Redemption ........ $180 $193 $557 $597 $ 959 $1,026 $2,084 $2,222
Institutional Class ............. $ 79 $ 92 $246 $287 $ 428 $ 498 $ 954 $1,108
</TABLE>
- ------------
1 The Fund's investment adviser voluntarily waived its management fee and/or
paid expenses to the extent necessary to limit total operating expenses to
certain amounts during the past fiscal year. The Fund's investment adviser
may end its voluntary waiver commitments at any time. Hypothetical expense
figures after waivers are not shown along with the proposed fee rates,
because fee waivers have not been determined for future fiscal years.
H-1
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES AND EXAMPLES
Devon Fund
(Delaware Group Equity Funds I, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.60% 0.65% 0.60% 0.65% 0.60% 0.65%
12b-1 Fees ........................................ 0.30% 0.30% 1.00% 1.00% None None
Other Expenses .................................... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 1.40% 1.45% 2.10% 2.15% 1.10% 1.15%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 1.30% ***% 2.00% ***% 1.00% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $709 $714 $993 $1,007 $1,297 $1,322 $2,158 $2,210
Class B
- --Assuming Redemption ........... $713 $718 $958 $ 973 $1,329 $1,354 $2,252 $2,305
- --Assuming No Redemption ........ $213 $218 $658 $ 673 $1,129 $1,154 $2,252 $2,305
Class C
- --Assuming Redemption ........... $313 $318 $658 $ 673 $1,129 $1,154 $2,431 $2,483
- --Assuming No Redemption ........ $213 $218 $658 $ 673 $1,129 $1,154 $2,431 $2,483
Institutional Class ............. $112 $117 $350 $ 365 $ 606 $ 633 $1,340 $1,398
</TABLE>
Decatur Income Fund
(Delaware Group Equity Funds II, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.48% 0.58% 0.48% 0.58% 0.48% 0.58%
12b-1 Fees ........................................ 0.20% 0.20% 1.00% 1.00% None None
Other Expenses .................................... 0.22% 0.22% 0.22% 0.22% 0.22% 0.22%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 0.90% 1.00% 1.70% 1.80% 0.70% 0.80%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 0.90% ***% 1.70% ***% 0.70% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $662 $671 $845 $875 $1,045 $1,096 $1,619 $1,729
Class B
- --Assuming Redemption ........... $673 $683 $836 $866 $1,123 $1,175 $1,796 $1,906
- --Assuming No Redemption ........ $173 $183 $536 $566 $ 923 $ 975 $1,796 $1,906
Class C
- --Assuming Redemption ........... $273 $283 $536 $566 $ 923 $ 975 $2,009 $2,116
- --Assuming No Redemption ........ $173 $183 $536 $566 $ 923 $ 975 $2,009 $2,116
Institutional Class ............. $ 72 $ 82 $224 $255 $ 390 $ 444 $ 871 $ 990
</TABLE>
Decatur Total Return Fund
(Delaware Group Equity Funds II, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.57% 0.61% 0.57% 0.61% 0.57% 0.61%
12b-1 Fees ........................................ 0.30% 0.30% 1.00% 1.00% None None
Other Expenses .................................... 0.26% 0.26% 0.26% 0.26% 0.26% 0.26%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 1.13% 1.17% 1.83% 1.87% 0.83% 0.87%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 1.13% ***% 1.83% ***% 0.83% ***%
==== ==== ==== ==== ===== =====
</TABLE>
- ------------
(1) The Fund's investment adviser voluntarily waived its management fee and/or
paid expenses to the extent necessary to limit total operating expenses to
certain amounts during the past fiscal year. The Fund's investment adviser
may end its voluntary waiver commitments at any time. Hypothetical expense
figures after waivers are not shown along with the proposed fee rates,
because fee waivers have not been determined for future fiscal years.
H-2
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES AND EXAMPLES
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $684 $687 $913 $925 $1,161 $1,182 $1,871 $1,914
Class B
- --Assuming Redemption ........... $686 $690 $876 $888 $1,190 $1,211 $1,965 $2,008
- --Assuming No Redemption ........ $186 $190 $576 $588 $ 990 $1,011 $1,965 $2,008
Class C
- --Assuming Redemption ........... $286 $290 $576 $588 $ 990 $1,011 $2,148 $2,190
- --Assuming No Redemption ........ $186 $190 $576 $588 $ 990 $1,011 $2,148 $2,190
Institutional Class ............. $ 85 $ 89 $265 $278 $ 460 $ 482 $1,025 $1,073
</TABLE>
Global Equity Fund (formerly Global Assets Fund)
(Delaware Group Global & International Funds, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.74% 0.85% 0.74% 0.85% 0.74% 0.85%
12b-1 Fees ........................................ 0.30% 0.30% 1.00% 1.00% None None
Other Expenses .................................... 0.95% 0.95% 0.95% 0.95% 0.95% 0.95%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 1.99% 2.10% 2.69% 2.80% 1.69% 1.80%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 1.95% ***% 2.55% ***% 1.55% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A .......................... $765 $776 $1,164 $1,195 $1,586 $1,639 $2,759 $2,866
Class B
- --Assuming Redemption ............ $772 $783 $1,135 $1,168 $1,625 $1,679 $2,853 $2,961
- --Assuming No Redemption ......... $272 $283 $ 835 $ 868 $1,425 $1,479 $2,853 $2,961
Class C
- --Assuming Redemption ............ $372 $383 $ 835 $ 868 $1,425 $1,479 $3,022 $3,128
- --Assuming No Redemption ......... $272 $283 $ 835 $ 868 $1,425 $1,479 $3,022 $3,128
Institutional Class .............. $172 $183 $ 533 $ 566 $ 918 $ 975 $1,998 $2,116
</TABLE>
Global Opportunities Fund (formerly Global Equity Fund)
(Delaware Group Global & International Funds, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.80% 0.85% 0.80% 0.85% 0.80% 0.85%
12b-1 Fees ........................................ 0.30% 0.30% 1.00% 1.00% None None
Other Expenses .................................... 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 1.55% 1.60% 2.25% 2.30% 1.25% 1.30%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 0.80% ***% 0.80% ***% 0.80% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A .......................... $724 $728 $1,036 $1,051 $1,371 $1,396 $2,314 $2,366
Class B
- --Assuming Redemption ............ $728 $733 $1,003 $1,018 $1,405 $1,430 $2,409 $2,461
- --Assuming No Redemption ......... $228 $233 $ 703 $ 718 $1,205 $1,230 $2,409 $2,461
Class C
- --Assuming Redemption ............ $328 $333 $ 703 $ 718 $1,205 $1,230 $2,585 $2,636
- --Assuming No Redemption ......... $228 $233 $ 703 $ 718 $1,205 $1,230 $2,585 $2,636
Institutional Class .............. $127 $132 $ 397 $ 412 $ 686 $ 713 $1,511 $1,568
</TABLE>
- ------------
1 The Fund's investment adviser voluntarily waived its management fee and/or
paid expenses to the extent necessary to limit total operating expenses to
certain amounts during the past fiscal year. The Fund's investment adviser
may end its voluntary waiver commitments at any time. Hypothetical expense
figures after waivers are not shown along with the proposed fee rates,
because fee waivers have not been determined for future fiscal years.
H-3
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES AND EXAMPLES
International Equity Fund
(Delaware Group Global & International Funds, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.75% 0.85% 0.75% 0.85% 0.75% 0.85%
12b-1 Fees ........................................ 0.30% 0.30% 1.00% 1.00% None None
Other Expenses .................................... 0.65% 0.65% 0.65% 0.65% 0.65% 0.65%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 1.70% 1.80% 2.40% 2.50% 1.40% 1.50%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 1.70% ***% 2.40% ***% 1.40% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A .......................... $738 $747 $1,080 $1,109 $1,445 $1,494 $2,468 $2,569
Class B
- --Assuming Redemption ............ $743 $753 $1,048 $1,079 $1,480 $1,531 $2,563 $2,664
- --Assuming No Redemption ......... $243 $253 $ 748 $ 779 $1,280 $1,331 $2,563 $2,664
Class C
- --Assuming Redemption ............ $343 $353 $ 748 $ 779 $1,280 $1,331 $2,736 $2,836
- --Assuming No Redemption ......... $243 $253 $ 748 $ 779 $1,280 $1,331 $2,736 $2,836
Institutional Class .............. $143 $153 $ 443 $ 474 $ 766 $ 818 $1,680 $1,791
</TABLE>
Delchester Fund
(Delaware Group Income Funds, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Class A Shares Class B & C Shares Institutional Shares
Actual Proposed Actual Proposed Actual Proposed
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees ................................... 0.57% 0.60% 0.57% 0.60% 0.57% 0.60%
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% None None
Other Expenses .................................... 0.24% 0.24% 0.24% 0.24% 0.24% 0.24%
---- ---- ---- ---- ----- -----
Total Operating Expenses ....................... 1.06% 1.09% 1.81% 1.84% 0.81% 0.84%
==== ==== ==== ==== ===== =====
Total Operating Expenses After Waiver(1)........ 1.06% ***% 1.81% ***% 0.81% ***%
==== ==== ==== ==== ===== =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $677 $680 $893 $902 $1,126 $1,141 $1,795 $1,827
Class B
- --Assuming Redemption ........... $684 $687 $869 $879 $1,180 $1,196 $1,930 $1,962
- --Assuming No Redemption ........ $184 $187 $569 $579 $ 980 $ 996 $1,930 $1,962
Class C
- --Assuming Redemption ........... $284 $287 $569 $579 $ 980 $ 996 $2,127 $2,159
- --Assuming No Redemption ........ $184 $187 $569 $579 $ 980 $ 996 $2,127 $2,159
Institutional Class ............. $ 83 $ 86 $259 $268 $ 450 $ 466 $1,002 $1,037
</TABLE>
Decatur Total Return Series
(Delaware Group Premium Fund, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Shares
Actual Proposed
------------ ------------
<S> <C> <C>
Management Fees ................................... 0.60% 0.65%
12b-1 Fees ........................................ None None
Other Expenses .................................... 0.11% 0.11%
----- -----
Total Operating Expenses ....................... 0.71% 0.76%
===== =====
Total Operating Expenses After Waiver(1)........ 0.71% ***%
===== =====
</TABLE>
- ------------
1 The Fund's investment adviser voluntarily waived its management fee and/or
paid expenses to the extent necessary to limit total operating expenses to
certain amounts during the past fiscal year. The Fund's investment adviser
may end its voluntary waiver commitments at any time. Hypothetical expense
figures after waivers are not shown along with the proposed fee rates,
because fee waivers have not been determined for future fiscal years.
H-4
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES AND EXAMPLES
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXPENSE EXAMPLES $73 $78 $227 $243 $395 $422 $883 $942
</TABLE>
Delaware Series
(Delaware Group Premium Fund, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Shares
Actual Proposed
------------ ------------
<S> <C> <C>
Management Fees ................................... 0.60% 0.65%
12b-1 Fees ........................................ None None
Other Expenses .................................... 0.07% 0.07%
----- -----
Total Operating Expenses ....................... 0.67% 0.72%
===== =====
Total Operating Expenses After Waiver(1)........ 0.67% ***%
===== =====
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXPENSE EXAMPLES $68 $74 $214 $230 $373 $401 $835 $894
</TABLE>
<PAGE>
Delchester Series
(Delaware Group Premium Fund, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Shares
Actual Proposed
------------ ------------
<S> <C> <C>
Management Fees ................................... 0.60% 0.65%
12b-1 Fees ........................................ None None
Other Expenses .................................... 0.10% 0.10%
----- -----
Total Operating Expenses ....................... 0.70% 0.75%
===== =====
Total Operating Expenses After Waiver(1)........ 0.70% ***%
===== =====
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXPENSE EXAMPLES $72 $77 $224 $240 $390 $417 $871 $930
</TABLE>
Devon Series
(Delaware Group Premium Fund, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Shares
Actual Proposed
------------ ------------
<S> <C> <C>
Management Fees ................................... 0.60% 0.65%
12b-1 Fees ........................................ None None
Other Expenses .................................... 0.31% 0.31%
----- -----
Total Operating Expenses ....................... 0.91% 0.96%
===== =====
Total Operating Expenses After Waiver(1)........ 0.80% ***%
===== =====
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXPENSE EXAMPLES $93 $98 $290 $306 $504 $531 $1,120 $1,178
</TABLE>
- ------------
(1) The Fund's investment adviser voluntarily waived its management fee and/or
paid expenses to the extent necessary to limit total operating expenses to
certain amounts during the past fiscal year. The Fund's investment adviser
may end its voluntary waiver commitments at any time. Hypothetical expense
figures after waivers are not shown along with the proposed fee rates,
because fee waivers have not been determined for future fiscal years.
H-5
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES AND EXAMPLES
International Equity Series
(Delaware Group Premium Fund, Inc.)
<TABLE>
<CAPTION>
EXPENSE TABLE Shares
Actual Proposed
------------ ------------
<S> <C> <C>
Management Fees ................................... 0.75% 0.85%
12b-1 Fees ........................................ None None
Other Expenses .................................... 0.15% 0.15%
----- -----
Total Operating Expenses ....................... 0.90% 1.00%
===== =====
Total Operating Expenses After Waiver(1) ....... 0.90% ***%
===== =====
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Actual Proposed Actual Proposed Actual Proposed Actual Proposed
-------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXPENSE EXAMPLES $92 $102 $287 $318 $498 $552 $1,108 $1,225
</TABLE>
- ------------
(1) The Fund's investment adviser voluntarily waived its management fee and/or
paid expenses to the extent necessary to limit total operating expenses to
certain amounts during the past fiscal year. The Fund's investment adviser
may end its voluntary waiver commitments at any time. Hypothetical expense
figures after waivers are not shown along with the proposed fee rates,
because fee waivers have not been determined for future fiscal years.
H-6
<PAGE>
EXHIBIT I
SIMILAR FUNDS 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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Aggressive Growth Fund DMC $150,863,196 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 $ 2,373,603 0.55% per per year N/A
Portfolio**
Growth Stock Fund DMC $ 48,755,899 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 $ 48,755,899 0.50% per year 0.325% per year
(Sub-Advisory)
Mid-Cap Value Fund DMC $ 2,095,163 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 $124,365,131 0.55% per year less 0.55% per year
Portfolio** directors' fees
The Mid-Cap Growth Equity DMC $ 6,284,704 0.80% per year less 0.75% per year
Portfolio** directors' fees
The Real Estate Investment DMC $ 5,942,731 0.75% per year N/A
Trust Portfolio II**
(Investment Management)
The Real Estate Investment LIM $ 5,942,731 30% management fee paid N/A
Trust Portfolio II** to DMC
(Sub-Advisory)
Small Cap Contrarian Fund DMC $ 2,084,138 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 $ 4,009,987 0.75% per year N/A
Portfolio**
The Mid-Cap Value Equity DMC $ 2,901,624 0.75% per year N/A
Portfolio**
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who invest a minimum of $1,000,000.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to
shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-1
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS AND SUB-ADVISERS
<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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Tax-Efficient Equity Fund DMC $ 66,275,684 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
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 Convertible LIM $ 107,643,507 0.875% per year N/A
Securities Fund, Inc.
Lincoln National Aggressive LIM $ 300,098,000 0.75% on first $200 million N/A
Growth Fund 0.70% on next $200 million
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% per year 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 Social LIM $1,698,006,000 0.48% on first $200 million N/A
Awareness Fund 0.40% on next $200 million
0.30% on assets in excess of
$400 million; all per year
Lincoln National Special LIM $ 844,084,000 0.48% on first $200 million N/A
Opportunities Fund 0.40% on next $200 million
0.30% on assets in excess of
$400 million; all per year
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to
shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-2
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS AND SUB-ADVISERS
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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
The Aggregate Fixed Income DMC $ 6,492,082 0.40% per year N/A
Portfolio**
Delaware Group Dividend and DMC $221,141,149 0.55% per year N/A
Income Fund, Inc.***
Delaware-Voyageur US DMC $ 88,356,711 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; all per year
Delaware-Voyageur US VAM $ 88,356,711 0.25% per year N/A
Government Securities Fund
(Sub-Advisory)
The Diversified Core Fixed DMC $ 3,303,897 0.43% per year N/A
Income Portfolio**
(Investment Management)
The Diversified Core Fixed DIAL $ 3,303,897 Fee equal to portion on N/A
Income Portfolio** management fee attributable
(Sub-Advisory) to foreign investments
The High-Yield Bond Portfolio** DMC $ 21,560,283 0.45% per year N/A
The Intermediate Fixed Income DMC $ 26,571,322 0.40% per year less 0.40% per year
Portfolio** directors' fees
The Limited-Term Maturity DMC $ 21,000 0.30% per year N/A
Portfolio**
</TABLE>
<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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware Group Global Dividend DMC $103,589,183 0.70% per year N/A
and Income Fund, Inc. ***
(Investment Management)
Delaware Group Global Dividend DIAL $103,589,183 40% of management fees N/A
and Income Fund, Inc. *** paid to DMC
(Sub-Advisory)
The Emerging Markets DIAL $ 33,444,254 1.20% per year 1.00% per year
Portfolio**
The Global Equity Portfolio** DIAL $ 3,277,674 0.75% per year N/A
(Investment Management)
The Global Equity Portfolio** DMC $ 3,277,674 0.50% of management fee N/A
(Sub-Advisory) paid to DIAL
The Global Fixed-Income DIAL $659,129,865 0.50% per year less 0.50% per year
Portfolio** directors' fees
The International Equity DIAL $661,187,674 0.75% per year less 0.75% per year
Portfolio** directors' fees
The International Fixed-Income DIAL $ 88,295,317 0.50% per year N/A
Portfolio**
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the
management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented
to shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-3
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS AND SUB-ADVISERS
<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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
The Labor Select International DIAL $105,776,536 0.75% per year N/A
Equity Portfolio**
Latin America Fund DIAL $ 2,487,419 1.25% per year N/A
New Europe Fund DIAL $ 2,488,362 1.25% per year N/A
</TABLE>
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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
National High-Yield Municipal DMC $98,170,371 0.65% per year 0.55% on first $500 million
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
</TABLE>
<PAGE>
State 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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free DMC $ 19,037,987 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 $186,251,126 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 $ 45,751,660 0.40% per year N/A
Income Fund, Inc.***
Delaware-Voyageur Tax-Free DMC $ 30,167,681 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 $ 35,916,466 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
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the
management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented
to shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-4
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS AND SUB-ADVISERS
<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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free DMC $377,892,520 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 $ 73,869,200 0.40% per year N/A
Municipal Income Fund, Inc.***
Delaware-Voyageur Tax-Free DMC $ 17,442,694 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 $148,131,828 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 $ 38,113,552 0.40% per year N/A
Municipal Income Fund***
Delaware-Voyageur Tax-Free DMC $ 52,746,716 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 $ 45,069,185 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 $ 17,697,388 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 $435,349,501 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 Minnesota DMC $300,984,781 0.50% per year 0.50% on first $500 million
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
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the
management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented
to shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-5
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS AND SUB-ADVISERS
<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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free DMC $ 61,384,558 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
Delaware-Voyageur Minnesota High DMC $ 57,064,481 0.65% per year 0.55% on first $500 million
Yield 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
Voyageur Minnesota Municipal DMC $ 40,237,567 0.40% per year N/A
Income Fund, Inc.***
Voyageur Minnesota Municipal DMC $109,015,281 0.40% per year N/A
Income Fund II, Inc.***
Voyageur Minnesota Municipal DMC $ 25,839,781 0.40% per year N/A
Income Fund III, Inc.***
Delaware-Voyageur Tax-Free DMC $ 56,368,954 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 $ 24,083,040 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 $ 11,675,670 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 North DMC $ 31,109,297 0.50% per year 0.50% on next $500 million
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 $ 36,669,973 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
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the
management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented
to shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-6
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS AND SUB-ADVISERS
<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 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------ ------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free DMC $ 3,300,312 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 $ 4,159,209 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 $39,897,096 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
*Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisors Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented
to shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
I-7
<PAGE>
EXHIBIT J
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [COMPANY], a[ ] ("Fund") on behalf of the
[SERIES] ("Series"), and [MANAGER NAME] , a ] ("Investment Manager").
W I T N E S S E T H:
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.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager may 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
J-1
<PAGE>
Manager or any such Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the funds of which the Investment
Manager or Sub-Adviser provide investment 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 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.
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.
J-2
<PAGE>
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 .
[MANAGER NAME] [COMPANY NAME]
for the [SERIES NAME]
By:_____________________________
Name:___________________________
Title:__________________________
By:___________________________________
Name:_________________________________
Title:________________________________
Attest:_________________________
Name:___________________________
Title:__________________________
Attest:_______________________________
Name:_________________________________
Title:________________________________
J-3
<PAGE>
EXHIBIT K
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between [MANAGER NAME] ("Investment Manager"), and
[SUB-ADVISER NAME] ("Sub-Adviser").
W I T N E S S E T H:
WHEREAS, [COMPANY NAME], a [ ] ("Fund"), has been organized and operates as
an investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") 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 1940 Act.
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;
K-1
<PAGE>
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 1940 Act.
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 may 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.]
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.
K-2
<PAGE>
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 advisory services (or portfolio thereof) which the
Investment Manager reasonably determines would be in competition with and
which has investment policies similar to those of the Fund.
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.
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.
K-3
<PAGE>
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:
[COMPANY NAME]
on behalf of the [SERIES NAME]
By:___________________________________
Chairman
Attest:_______________________________
K-4
<PAGE>
EXHIBIT L
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of this
___ day of ______________, 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").
(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.
L-1
<PAGE>
(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;
(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
L-2
<PAGE>
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;
(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;
(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;
L-3
<PAGE>
(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;
(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 to 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.
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.
L-4
<PAGE>
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:_____________________________ By:_____________________________________
George M. Chamberlain, Jr. Jeffrey J. Nick
Secretary President and Chief Executive Officer
[Name of Delaware business trust]
(a Delaware business trust)
Attest:
By:_____________________________ By:_____________________________________
Eric E. Miller Jeffrey J. Nick
Assistant Secretary President and Chief Executive Officer
L-5
<PAGE>
APPENDIX
<TABLE>
<CAPTION>
Series and Classes of [name of Maryland
corporation/Delaware Group State Tax-Free Income Trust] Corresponding Series and Classes of [name of Delaware business trust]
- --------------------------------------------------------- ----------------------------------------------------------------------
<S> <C>
</TABLE>
L-6
<PAGE>
EXHIBIT M
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN 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 must be
consist of one or more instruments, including an filed with the State Department of Assessments and
agreement and declaration of trust and By-Laws) and Taxation of the State of Maryland in order to form a
a Certificate of Trust, which must be filed with Maryland corporation.
the Delaware Secretary of State. The Delaware
Business Trust ("DBT") statutes found at Del. Code. -- Under Maryland law, the business and articles of
Ann. title 12, S.3801, et seq. are referred to in incorporation and By-Laws (the "charter documents"). A
this chart as the "Delaware Act." Board of Directors a manages or directs the business and
affairs of a Maryland corporation.
-- A DBT is an unincorporated association organized
under the Delaware Act which operates similar to -- A Maryland corporation organized as an open-end
typical corporation. A DBT's operations are investment company is subject to the 1940 Act.
governed by a trust instrument and By-Laws. The
business and affairs of a corporation are governed
by its 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 Delaware Trust.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
M-1
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- -------------------- --------------------------------------------------- ---------------------------------------------------
<S> <C> <C>
Multiple Series and -- Under the Delaware Act, a declaration of trust -- Maryland law permits a corporation to issue one
Classes may provide for classes, groups or series of Trust or more classes of stock and, if the stock is
may be preempted by the way in which thelaration of divided into classes, the charter is required to
shareholders, having such relative rights, powers describe each class, including any preferences,
and duties as the declaration of trust may provide. conversion or other rights, voting powers,
The series and classes of a DBT may be described in restrictions, limitations as to dividends,
the declaration of trust or in resolutions adopted qualifications and terms or conditions of
by the board of trustees. Neither state filings nor redemption. The charter documents which describe a
shareholder approval is required to create series new series or classes, or a change to an existing
or classes. The New Companies' Agreement and series or class, are amendments to the fund's
Declaration of Trust (the "Declaration of Trust") charter documents and must be filed with the State
permits the creation of multiple series and classes of Maryland. Although a charter amendment is
and establishes the provisions relating to shares. involved, Maryland law allows a fund's board to
exchange, classify, reclassify, cancel any of its
-- The Delaware Act explicitly provides for a issued or unissued stock, or increase or decrease
reciprocal limitation of interseries liability. The the aggregate number of shares of stock without
debts, liabilities, obligations and expenses shareholder approval by filing Articles
incurred, contracted for or otherwise existing with Supplementary in the State of Maryland. Maryland
respect to a particular series of a multiple series law also permits a board to change the preferences,
investment company registered under the 1940 Act conversion and other rights, voting powers,
are enforceable only against the assets of such restrictions, limitation as to dividends,
series, and not against the assets of the trust, or qualifications, and terms and conditions of
any other series, generally, provided that: (i) the redemption of any of its issued or unissued stock
governing instrument creates one or more series; without shareholder approval.
(ii) separate and distinct records are maintained
for any such series; (iii) the series' assets are -- Maryland law does not contain specific statutory
held and accounted for separately from the trust's provisions addressing series liability with respect
other assets or any series thereof; (iv) notice of to a multiple series investment company; however,
the limitation on liabilities of the series is set if the stock of a corporation is divided into
forth in the certificate of trust; and (v) the classes, Maryland law requires the corporation's
governing instrument so provides. The Declaration charter documents to set forth any preferences or
of Trust for the New Companies provides that each restrictions relating to such classes. As a result,
of its series shall not be charged with the the Companies' standard charter documents state
liabilities of any other series. Further, it states that the liabilities of any series shall be charged
that any general assets or liabilities not readily only to the assets of that particular series.
identifiable as to a particular series will be
allocated or charged by the Trustees of the New -- The Articles of Incorporation and By-Laws of the
Companies to and among any one or more series in Companies are consistent with Maryland law.
such manner, and on such basis, as the Trustees
deem fair and equitable in their sole discretion. -- A court applying federal securities law may not
As required by the Delaware Act, each New Company's respect provisions that serve to limit the
Certificate of Trust specifically limits the debts, liability of one series of an investment company's
liabilities, obligations and expenses incurred, shares for the liabilities of another series.
contracted for or otherwise existing with respect Accordingly, provisions relating to series
to a particular series of a New Company as liability contained in a Companies' charter
enforceable against the assets of that series of documents may be preempted by the way in which the
the New Company, and not against the assets of the courts interpret the 1940 Act.
New Company 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 the New
Companies' Declaration of Trust, as permitted by
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.
-- 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.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
M-2
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- ------------------------- ------------------------------------------------- --------------------------------------------------
<S> <C> <C>
Shareholder Voting Rights -- The governing instrument determines -- The charter of the Companies, consistent with
and Proxy Requirements shareholders' rights. The Declaration of Trust Maryland law, provides that the holder of each
for the New Companies provides that shareholders share of stock of a fund is entitled to one vote
of record of each share are entitled to one for each full share, and a fractional vote for
vote for each full share, and a fractional each fractional share of stock, irrespective of
vote for each fractional shares. In the series or class. In addition, shareholders are
addition, shareholders are not entitled to not entitled to cumulative voting for electing
cumulative voting for electing a trustee(s) director(s) or for any other matter. The charters
or for any other matter. The Declaration of of the Companies further state that, on any matter
Trust further provides that voting by the submitted to a vote of shareholders, all shares of
New Companies will occur separately by the corporation then issued and outstanding and
series, and if applicable, by class, subject entitled to vote, irrespective of series or class,
to: (1) requirements of the 1940 Act where shall be voted in the aggregate and not by series
shares of the Trust must be voted in the or class except when (1) otherwise expressly
aggregate without reference to series or required by Maryland law; (2) required by the 1940
class, and (2) where the matter affects only Act; and/or (3) the matter does not affect any
a particular series or class. interest of the particular series or class, then
only shareholders of the affected series or class
-- The Delaware Act and By-Laws for the New shall be entitled to vote thereon, unless
Companies also permit the New Companies to otherwise expressly provided in the corporation's
accept proxies by any electronic, charter.
telephonic, computerized, telecommunications
or other reasonable alternative to the -- Maryland law permits shareholders to vote in
execution of a written instrument person at the meeting or by proxy through a signed
authorizing the proxy to act, provided such writing. The signature may be achieved through any
authorization is received within eleven (11) reasonable means including facsimile. Although
months before the meeting. 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 -- Maryland law provides for a special meeting
beneficial owners' rights to call meetings. upon the written request of 25% or more of all
The Declaration of Trust for the New eligible votes, unless the corporate charter or
Companies provides that the Board of By-Laws contain a provision setting a greater or
Trustees shall call shareholder meetings for lesser percentage (but not more than a majority)
the purpose of (1) electing trustees, (2) of votes necessary to call the special meeting.
taking action upon matters prescribed by The Companies' standard By-Laws are more favorable
law, the Declaration of Trust or By-Laws, or to shareholders than Maryland law because they
(3) taking action upon any other matter require a special meeting upon the written request
deemed necessary or desirable by the Board of the holders of at least ten percent (10%) of
of Trustees. An annual shareholders' meeting the capital stock of the corporation entitled to
is not required. vote at such meeting. Thus, it is easier for the
shareholders of the Companies 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 Companies are
consistent with Maryland law.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
M-3
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- -------------------------- --------------------------------------------- ---------------------------------------------------
<S> <C> <C>
Quorum Requirement -- The Declaration of Trust of the New -- Maryland law and the By-Laws of the Companies
Companies, consistent with the Delaware Act, provide that the presence in person or by proxy of
establishes a quorum when thirty-three and the holders of record of a majority of the
one-third percent (33 1/3%) of the shares outstanding shares of stock entitled to vote
entitled to vote are present in person or by constitute a quorum.(1) Maryland law provides that
proxy. For purposes of determining whether a abstentions and broker non-votes are included and
quorum exists, the Declaration of Trust treated as votes present at the meeting but are not
provides that abstentions and broker treated as votes cast.
non-votes are included and treated as votes
present at the shareholders' meeting but are
not treated as votes cast.
- ----------------------------------------------------------------------------------------------------------------------------------
Action Without -- Delaware law permits the governing -- Under Maryland law, any action required to be
Shareholders' Meeting instrument to set forth the procedure approved at a meeting of the shareholders may also
whereby action required to be approved by be approved by the unanimous written consent of the
shareholders at a meeting may be done by shareholders entitled to vote at such meeting.
consent. The Declaration of Trust for the
New Companies permits any action required to
be approved at a meeting of shareholders to
be approved by the unanimous written consent
of the shareholders entitled to vote at such
meeting.
- ----------------------------------------------------------------------------------------------------------------------------------
Matters Requiring -- The Delaware Act affords Trustees the -- Consistent with Maryland law, the Companies'
Shareholder Approval ability to easily adapt a DBT to future Articles of Incorporation require shareholder
contingencies. For example, Trustees may be approval by a majority of all votes entitled to be
authorized to incorporate a DBT to merge or cast to approve the following: (1) amendments or
consolidate with another entity, to cause restatements of the articles; (2) reduction of
multiple series of a DBT to become separate state capital; (3) a consolidation, merger, share
trusts, to change the domicile or to exchange or transfer of assets, including a sale of
liquidate a DBT, all without having to all or substantially all the assets of the
obtain a shareholder vote. More importantly, corporation; (4) distribution in partial
in cases where funds are required or do liquidation; or (5) a voluntary dissolution. Unless
elect to seek shareholder approval for the charter provides for a lesser standard,
transactions, the Delaware Act provides Maryland law by itself requires an affirmative vote
great flexibility with respect to the quorum of two-thirds (2/3) of all votes entitled to be
and voting requirements for approval of such cast when approving these extraordinary corporate
transactions. transactions. The Companies' By-Laws provide that a
majority of shares voting at the meeting is
-- The Declaration of Trust for the New sufficient to approve other matters properly before
Companies, consistent with the Delaware Act, shareholders except for an election of directors,
affords shareholders the power to vote on which require a plurality.(2)
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 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. 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.
(2) 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-4
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- -------------------- ----------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
Amendments to -- The Delaware Act provides broad flexibility with -- Under Maryland law, the charter of a Maryland
Governing Documents respect to amendments of governing documents of a corporation may be amended only (i) upon adoption of
DBT. The New Companies' Declaration of Trust states a resolution by the Directors which sets forth the
that, if shares have been issued, shareholder proposed amendments; and (ii) approval of the
approval to adopt amendments to the Declaration of proposed amendment by the holders of a majority of
Trust is only required if such adoption would the corporation's outstanding shares entitled to
adversely affect to a material degree the rights vote. Maryland law does, however, permit investment
and preferences of the shares of any series (or companies to amend their charter documents without
class) already issued. Before adopting any shareholder approval in order to create additional
amendment to the Declaration of Trust relating to series or classes of shares, increase or decrease the
shares without shareholder approval, the Trustees aggregate number of shares of stock that the
are required to determine that the amendment is: corporation has authority to issue, or reflect
(i) consistent with the fair and equitable changes in the names of the corporation, its series
treatment of all shareholders, and (ii) shareholder or classes. The Companies' charter documents are
approval is not required by the 1940 Act or other consistent with Maryland law. Because shareholder
applicable law. approval is required for most other amendments to
charter documents, Maryland law is more restrictive
-- The New Companies' By-Laws may be adopted, than the Delaware Act.
amended or repealed by the Board of Trustees.
-- 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
Companies' 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.
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</TABLE>
M-5
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- ------------ -------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Record Date -- The Delaware Act permits a governing instrument -- Maryland law contains provisions by which a
to contain provisions that provide for the corporation may determine which shareholders are
establishment of record dates for determining entitled to notice of a meeting, to vote at a
voting rights. meeting, or to any other rights. The Maryland law
requires that the record date be not more than
-- The Declaration of Trust for the New Companies ninety (90) days and not less than ten (10) days
provides that the Board of Trustees may fix in before the date on which the action requiring
advance a record date which shall not be more than determination will be taken. If a Maryland
one hundred eighty (180) days, nor less than seven corporation does not set a record date, Maryland law
(7) days, before the date of any such meeting. The requires that the date be the later of: (1) thirty
Declaration of Trust for the New Companies also (30) days before the meeting or (2) the close of
establishes procedures by which a record date can business on the day the notice was mailed.
be set if the Board fails to establish a record Consistent with Maryland law, the Companies' By-Laws
date in accordance with the above procedures. In allow the corporation to close the transfer books
such situations, the record date for determining twenty (20) days before a meeting or set a date not
which shareholders are entitled to notice of or to more than ninety (90) days before a meeting for
vote at any meeting, is set at the close of determining such rights.
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 Companies provide 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.(3)
- ------------
(3) Pursuant to the By-Laws of the New Companies, 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.
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</TABLE>
M-6
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- -------------------- -------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
Removal of -- The Delaware Act is silent with respect to the -- Under Maryland law, shareholders may remove
Directors/Trustees removal of Trustees. However, the Declaration of a director with or without cause. Unless the
Trust states that the Board of Trustees, by action charter provides otherwise, Maryland law requires
of a majority of the then Trustees at a duly the affirmative vote of a majority of all votes
constituted meeting, may fill vacancies in the entitled to be cast for the election of directors to
Board of Trustees or remove Trustees with or remove a director. Unless the charter provides
without cause. 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 Companies' Articles of
Incorporation and By-Laws (except for one) are
silent regarding the removal of directors.(4)
- ------------------------------------------------------------------------------------------------------------------------------------
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 business hours a shareholder may inspect and copy
of certain Trust documents and records. This right the following corporate documents: By-Laws;
is qualified by the extent otherwise provided in the minutes of shareholders' meetings; annual
governing instrument of the Trust as well as a statements of affairs; and voting trust agreements.
reasonable demand standard related to the Moreover, one or more persons who together are,
shareholder's interest as an owner of the DBT. and for at least six months have been,
shareholders of record of at least five percent of
-- Consistent with Delaware law, the By-Laws of the outstanding stock of any class are entitled to
the New Companies provide that at reasonable inspect and copy the corporation's books of
times during office hours, a shareholder may account and stock ledger and to review a
inspect the share registry and By-Laws. The statement of affairs and a list of shareholders.
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.
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Other -- The Delaware Act does not contain any -- Maryland law allows the payment of a
Distributions statutory limitations on the payment of dividends dividend or other distribution unless, after giving
and other distributions. effect to the dividend or other distribution, (1) the
corporation would not be able to pay its debts as
-- The New Companies' By-Laws specify that the they become due in the usual course of business
declaration of dividends is subject to the or (2) the corporation's total assets would be less
Declaration of Trust and applicable law. In than the corporation's total liabilities plus (unless
addition, the By-Laws provide that prior to the corporation's charter provides otherwise) the
payment of dividends, the New Companies may amount that would be needed, if the corporation
set aside a reserve(s) to meet contingencies, were to be dissolved at the time of the
equalizing dividends, repairing or maintaining distribution, to satisfy the preferential rights upon
property or for other purposes deemed by the dissolution of shareholders whose preferential
Trustees to be in the best interest of the Company. rights upon dissolution are superior to those
receiving the distribution.
-- The Companies' By-Laws provide that prior to
payment of dividends, the Companies 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 Company.
- ------------
(4) 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>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- ------------------------- --------------------------------------------- --------------------------------------------------
<S> <C> <C>
Shareholder/ Beneficial -- Personal liability is limited by the -- As a general matter, the shareholders of a
Owner Liability Delaware Act to the amount of investment in Maryland corporation are not personally liable for
the trust and may be further limited or the obligations of the corporation. Under Maryland
restricted by the governing instrument. law, a shareholder of a Maryland corporation may,
however, be liable in the amount of any
-- Consistent with Delaware law, the distribution he or she accepts knowing that the
Declaration of Trust for the New Companies distribution was made in violation of the
provides that the DBT, its trustees, corporation's charter or Maryland law. The charter
officers, employees, and agents do not have for the Companies is consistent with Maryland
the power to personally bind a shareholder. law.
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/ Trustee Liability -- Subject to the declaration of trust, the -- Maryland law requires a director to perform his
Delaware Act provides that a trustee, when or her duties in good faith, in a manner he or she
acting in such capacity, may not be held reasonably believes to be in the best interests of
personally liable to any person other than the corporation and with the care that an ordinarily
the DBT or a beneficial owner for any act, prudent person in a like position would use under
omission or obligation of the DBT or any similar circumstances. A director who performs his
trustee. A trustee's duties and liabilities or her duties in accordance with this standard has
to the DBT and its beneficial owners may be no liability by reason of being or having been a
expanded or restricted by the provisions of director. If it is established that a director did no
the declaration of trust. meet the foregoing standard, the director, for
example, may be personally liable to the
-- The Declaration of Trust for the New corporation for (i) voting or assenting to a
Companies provides that the Trustees shall distribution of assets to shareholders which is in
not be liable or responsible in any event violation of either the Companies' charter
for any neglect or wrongdoing of any documents or Maryland law; and (ii) voting or
officer, agent, employee, manager or assenting to a repurchase of the corporation's
principal underwriter of the New Companies, shares in violation of Maryland law. Maryland law
nor shall any Trustee be responsible for as well as the applicable Company's charter
the act or omission of any other Trustee. document prohibit limiting a director's liability if
In addition, the Declaration of Trust also said director would otherwise be subject by reason
provides that the Trustees acting in their of willful misfeasance, bad faith, gross negligence
capacity as Trustees, shall not be or reckless disregard of one's duties.
personally liable for acts done by or on
behalf of the New Company. -- Seven of the Companies' charter documents do
not contain provisions regarding director
liability.(5) The other remaining Companies 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.
- ------------
(5) These seven Companies 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-8
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MARYLAND CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Maryland Corporation
- ---------------- --------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Indemnification -- The Delaware Act permits a DBT to indemnify -- Under Maryland law, a director or officer who
and hold harmless any trustee, beneficial owner or is threatened or made a party to a proceeding, may
agent from and against any and all claims and be indemnified against judgments, penalties, fines,
demands. Consistent with the Delaware Act, both settlements and reasonable expenses actually
the Declaration of Trust and By-Laws for the New incurred by the director in connection with the
Companies provides for the indemnification of proceeding. Indemnification will not be permitted
officers and trustees from and against any and all if the act or omissions of the Director or officer:
claims and demands arising out of or related to the (1) was material to the matter giving rise to the
performance of duties as an officer or Trustee. The proceeding and was committed in bad faith or the
New Companies will not indemnify, hold harmless result of active and deliberate dishonesty; (2)
or relieve from liability trustees or officers for resulted in an improper benefit to the individual;
those acts or omissions for which they or (3) was committed when the director or officer
misfeasance, bad faith, gross negligence or had reasonable cause to believe that the act or
reckless disregard of their duties. In addition, the omission was unlawful.
New Companies' By-Laws provide that a trustee is
not entitled to indemnification from liability: (i)
with respect to any claim, issue or matter as to
which such trustee shall have been adjudged to be
liable in the performance of his or her duty to the
Company, unless the court in which that action
was brought shall determine that the trustee is
fairly and reasonably entitled to indemnity; or (ii)
with respect to any claim, issue or matter as to
which the trustee shall have been adjudged to be
liable on the basis that personal benefit was
improperly received by the trustee, whether or not
the benefit resulted from an action taken in the
trustee's official capacity; or (iii) with respect to
amounts paid in settling or otherwise disposing of
a threatened or pending action with or without
court approval, or of expenses incurred in
defending a threatened or pending action which
settled or was otherwise disposed of without court
approval, unless the Company's Board of Trustees
has found that the trustee has acted in accordance
with the appropriate standard of conduct.
-- 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 -- Under Maryland Law, a corporation may
specifically related to insurance. Each New purchase insurance on behalf of any director,
Company's Declarations of Trust provides that the officer or employee against any liability asserted
Trustees shall be entitled and have the authority to against and incurred by such person in any such
purchase with Company assets insurance for capacity or arising out of such person's position,
liability and for all expenses reasonably incurred whether or not the corporation would have the
or paid or expected to be paid by a Trustee or power to indemnify such person against such
officer in connection with any claim, or liability. Under Maryland law, insurance also may
proceeding in which he or she becomes involved be purchased under the corporate By-Laws on
by virtue of his or her capacity (or former behalf of agents of a fund. The Companies'
capacity) with the Company. The By-Laws of the By-Laws are silent with respect to this issue.
New Companies permit such insurance coverage
to extend to employees and other agents of the
Company.
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</TABLE>
M-9
<PAGE>
EXHIBIT N
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
Unless otherwise defined in this Exhibit, capitalized terms have
the meanings set forth in Proposal Seven.
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- ----------------------- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Governing Documents -- Created by a governing instrument (which may -- The Delaware Group State Tax-Free Income
consist of one or more instruments, including an Trust (the "Company") was created by a
agreement and declaration of trust and By-Laws) declaration of trust ("Declaration of Trust"). The
and a Certificate of Trust, which must be filed laws and statutes of the Commonwealth of
with the Delaware Secretary of State. The Pennsylvania are silent regarding the creation and
Delaware Business Trust ("DBT") statutes found operation of the Company. Accordingly, the
at Del. Code. Ann. title 12, Section.3801, et seq. Company was created and operates in accordance
are referred to in this chart as the "Delaware Act." with the common law of the state. As a common
law trust, the Company is not subject to any filin
-- A DBT is an unincorporated association requirements as is the case with DBTs in
organized under the Delaware Act which operates Delaware.
similar to a typical corporation. A DBT's
operations are governed by a trust instrument and -- The Company is a revocable common law trust
By-Laws. The business and affairs of a DBT are with shareholders permitted to revoke or redeem
managed by or under the direction of a Board of their interests consistent with its Declaration of
Trustees. Trust. The Company is governed by its
Declaration of Trust and Procedural Guidelines
-- DBTs are organized as an open-end investment (functional equivalent of By-Laws). The business
company subject to the Investment Company Act and affairs of the Trust are managed by and under
of 1940, as amended (the "1940 Act"). the direction of a Board of Trustees.
Shareholders own shares of "beneficial interest" as
compared to the shares of "common stock" issued -- The Company is organized as an open-end
by corporations. There is however, no practical investment company subject to the 1940 Act.
difference between the two types of shares. Shareholders own shares of "beneficial interest" as
compared to the shares of "common stock" issued
-- As described in this chart, DBTs are granted a by corporations. There is however, no practical
significant amount of organizational and difference between the two types of shares.
operational flexibility. The Delaware Act makes it
easier to obtain needed shareholder approvals, and -- As described in this chart, the Company is
also permits management of a DBT to take granted a significant amount of organizational and
various actions without being required to make operational flexibility. Pennsylvania law makes it
state filings or obtain shareholder approval. The easier to obtain needed shareholder approvals for
Delaware Act also contains favorable limitations corporate actions, and also permits management of
on shareholder and Trustee liability, and provides the Company to take various actions without being
for indemnification out of trust property for any required to make state filings or obtain shareholder
shareholder or Trustee that may be held personally approval. The Company also contains favorable
liable for the obligations of a DBT. 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
Company.
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</TABLE>
N-1
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- ----------------------- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Multiple Series
and Classes -- Under the Delaware Act, a declaration of trust -- The Declaration of Trust provides that the
may provide for classes, groups or series of beneficial interest of the Company is divided
shares, or classes, groups or series of into an unlimited number of transferable
shareholders, having such relative rights, powers beneficial shares. The Trustees are authorized
and duties as the declaration of trust may to divide the beneficial shares into separate
provide. The series and classes of a DBT may be series and the series into separate classes or
described in the declaration of trust or in sub-series of beneficial shares without making
resolutions adopted by the board of trustees. state filings or obtaining shareholder approval
Neither state filings nor shareholder approval is subject to applicable rules, regulations or
required to create series or classes. The New orders of the U.S. Securities and Exchange
Company's Agreement and Declaration of Trust (the Commission ("SEC") or other applicable laws or
"Declaration of Trust") permits the creation of regulations. The Declaration of Trust further
multiple series and classes and establishes the provides that such series and classes shall have
provisions relating to shares. such preferences, conversion or other rights,
voting powers, restrictions, limitations as to
-- The Delaware Act explicitly provides for a dividends, qualifications, terms and conditions
reciprocal limitation of interseries liability. of redemption and other characteristics as the
The debts, liabilities, obligations and expenses Trustees may determine, provided that they are
incurred, contracted for or otherwise existing consistent with the Declaration of Trust.
with respect to a particular series of a multiple
series investment company registered under the -- The Company documents do not contain
1940 Act are enforceable only against the assets provisions that specifically provide that each
of such series, and not against the assets of the series of the Company shall not be charged with
trust, or any other series, generally, provided the liabilities of another series of the Company
that: (i) the governing instrument creates one or or the liabilities of the Company in general;
more series; (ii) separate and distinct records however, as stated above, the Company's
are maintained for any such series; (iii) the Declaration of Trust provides that the Trustees
series' assets are held and accounted for may determine what preferences, restrictions or
separately from the trust's other assets or any other characteristics series and classes of the
series thereof; (iv) notice of the limitation on Company may have. Therefore, it is possible that
liabilities of the series is set forth in the the trustees could amend the Company's
certificate of trust; and (v) the governing Declaration of Trust so that it would explicitly
instrument so provides. provide that the debts, liabilities, obligations
and expenses incurred or contracted for with
-- The Declaration of Trust for the New Company respect to a particular series would be
provides that each of its series shall not be enforceable only against the assets of that
charged with the liabilities of any other series. series and not the general assets, if any, of
Further, it states that any general assets or the Company or any other series of the Company.
liabilities not readily identifiable as to a
particular series will be allocated or charged by
the Trustees of the New Company 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 Company'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 Company as enforceable against
the assets of that series of the New Company, and
not against the assets of the New Company
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.
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</TABLE>
N-2
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- --------------------------- ----------------------------------------------------- --------------------------------------------
<S> <C> <C>
Shareholder Voting Rights -- The governing instrument determines -- The Declaration of Trust provides that
and Proxy Requirements shareholders' rights. The Declaration of Trust for each whole beneficial share is entitled to
the New Company provides that shareholders of one vote regarding matters in which it is
record of each share are entitled to one vote for entitled to vote and a fractional vote for
each full share, and a fractional vote for each each fractional share. In addition,
fractional shares. In addition, shareholders are not shareholders are not entitled to cumulative
entitled to cumulative voting for electing a voting for electing a trustee(s). The
trustee(s) or for any other matter. The Declaration Declaration of Trust calls for class voting
of Trust further provides that voting by the New in certain limited circumstances.
Company will occur separately by series, and if Specifically, with respect to any matter
applicable, by class, subject to: (1) requirements of relating to or arising from the distribution
the 1940 Act where shares of the Trust must be plan of a particular class, only the shares
voted in the aggregate without reference to series of that particular class are entitled to
or class, and (2) where the matter affects only a vote. Likewise, shares of a particular class
particular series or class. are not entitled to vote upon or with respect
to any matter relating to or arising from any
-- The Delaware Act and By-Laws for the New distribution plan relating to any other
Company also permits the New Company to class.
accept proxies by any electronic, telephonic,
computerized, telecommunications or other -- The Declaration of Trust allows for in
reasonable alternative to the execution of a written person and proxy voting. Accordingly, the
instrument authorizing the proxy to act, provided Company's Procedural Guidelines permit the
such authorization is received within eleven (11) Company to accept proxies and votes by
months before the meeting. various means, including telegram, telex,
cablegram or datagram or facsimile or other
similar reproduction, in addition to a signed
written instrument.
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders' Meetings -- Delaware law permits special shareholder meetings -- The Company's Declaration of Trust provides
to be called for any purpose. However, the that the trustees of the Company are required
Declaration of Trust for the New Company provides to call a meeting of the shareholders upon the
that the Board of Trustees shall call shareholder written request of shareholders owning at
meetings for the purpose of (1) electing trustees, least twenty percent (20%) of the outstanding
(2) taking action upon matters prescribed by law, shares that are entitled to vote. The
the Declaration of Trust or By-Laws, or (3) for Declaration of Trust and Procedural Guidelines
taking action upon any other matter deemed necessary do not require an annual shareholders
or desirable by the Board of Trustees. The By-Laws meeting.
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 Requirements -- The Declaration of Trust of the New Company, -- The Company's Declaration of Trust provides
consistent with the Delaware Act, establishes a that a majority of the shares of the Company
quorum when thirty-three and one-third percent that are outstanding and entitled to vote
(331/3%) of the shares entitled to vote are present constitutes a quorum.
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.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-3
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- ----------------------- ----------------------------------------------------- ------------------------------------------------
<S> <C> <C>
Action Without -- Delaware law permits the governing instrument -- The Company's Declaration of Trust and
Shareholders' Meeting to set forth the procedure whereby action required Procedural Guidelines do not conatain any
to be approved by shareholders at a meeting may provisions that authorize the shareholders of
be done by consent. The Declaration of Trust for the Trust to take action without a meeting.(1)
the New Company 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 Requiring
Shareholder Approval -- The Delaware Act affords Trustees the ability to -- The Declaration of Trust provides
easily adapt a DBT to future contingencies. For example, shareholders of the Company with the right to
Trustees may be authorized to incorporate a DBT, to vote: (i) for the election of trustees; (ii)
merge or consolidate with another entity, to cause approval of any investment adviser to the
multiple series of a DBT to become separate trusts, to Fund; (iii) additional matters relating to
change the domicile or to liquidate a DBT, all without the Company as may be required or authorized
having to obtain a shareholder vote. More importantly, by law, or the Procedural Guidelines, or any
in cases where funds are required or do elect to seek registration of the Company with the SEC or
shareholder approval for transactions, the Delaware Act any state; and (iv) on such other matters
provides great flexibility with respect to the quorum that the trustees may consider desirable.
and voting requirements for approval of such
transactions. -- Subject to applicable legal and regulatory
requirements and/or the Company's documents,
-- The Declaration of Trust for the New Company, the Declaration of Trust further provides
consistent with the Delaware Act, affords shareholders that a majority of the beneficial shares
the power to vote on the following matters: (1) the voted shall decide any question and a
election of trustees (including the filling of any plurality shall elect a trustee, subject to
vacancies); (2) as required by the Declaration of Trust, establishing a quorum for the meeting.
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 to Governing -- The Delaware Act provides broad flexibility with --Trustees may amend the Declaration of Trust
Documents respect to amendments of governing documents of a DBT. without shareholder approval except for those
The New Company's Declaration of Trust states that, if provisions of the Declaration of Trust that
shares have been issued, shareholder approval to adopt contain fundamental investment restrictions
amendments to the Declaration of Trust is only required that require a "vote of a majority of the
if such adoption would adversely affect to a material outstanding voting securities" consistent
degree the rights and preferences of the shares of any with the 1940 Act.
series (or class) already issued. Before adopting any
amendment to the Declaration of Trust relating to share
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 Company's By-Laws may be adopted, amended or
repealed by the Board of Trustees.
- ------------
(1) The Company's Declaration of Trust allows the Trustees to take action without a meeting of uncommon written consent. Such
consent must be filed with the minutes of the proceedings of the Board of Trustees or the particular committee, as applicable
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-4
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- --------------------- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Record Date/Notice -- Delaware law permits a governing instrument -- The Declaration of Trust sets forth the
to contain provisions that provide for the procedure by which the Company may determine
establishment of record dates for determining which shareholders are entitled to notice of a
voting rights. meeting, to vote at a meeting or certain other
rights.
-- The Declaration of Trust for the New Company
provides that the Board of Trustees may fix in -- The Company's Declaration of Trust provides
advance a record date which shall not be more that the record date for determining which
than one hundred eighty (180) days, nor less than shareholders are entitled to notice of a
seven (7) days, before the date of any such shareholders' meeting or to vote at a shareholders'
meeting. The Declaration of Trust for the New meeting may be set at any time from the ninetieth
Company also establishes procedures by which a day (90th day) before the meeting up to the day
record date can be set if the Board fails to before the meeting.
establish a record date in accordance with the
above procedures. In such situations, the record -- The Company's Declaration of Trust further
date for determining which shareholders are provides that beneficial owners of the Trust are
entitled to notice of or to vote at any meeting, is entitled to at least ten (10) days' notice of a
set at the close of business on the first business meeting.
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 Company 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 -- The Company's Declaration of Trust provides that
Directors/ removal of Trustees. However, the Declaration of a Trustee may be removed by a written instrument
Trustees Trust states that the Board of Trustees, by action signed by at least two-thirds (2/3) of the number
of a majority of the then Trustees at a duly of Trustees prior to such removal, specifying the
constituted meeting, may fill vacancies in the Board date when such removal shall become effective.
of Trustees or remove Trustees with or without
cause.
- ------------
(2) Pursuant to the By-Laws of the New Company, 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 deliverd personally, by telephone, by courier, to the telegraph company, or by
express mail, facsimile, electronic mail or similar service.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-5
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- ----------------------- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Shareholder Rights of -- The Delaware Act sets forth the rights of -- The Company documents do not contain any
Inspection shareholders to gain access to and receive copies of provision that authorizes the shareholders to
certain Trust documents and records. This right is inspect any account, book, or document of the
qualified by the extent otherwise provided in the Company.
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 Company 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.
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Other -- The Delaware Act does not contain any statutory -- The Declaration of Trust provides that
Distributions limitations on the payment of dividends and other Trustees may declare dividends from time to time.
distributions. The New Company's By-Laws specify that The Declaration of Trust also provides that
the declaration of dividends is subject to the Trustees may pay and declare such dividends
Declaration of Trust and applicable law. In addition, according to whatever formula they adopt (subject
the By-Laws provide that prior to payment of to any applicable rule, regulation or order of
dividends, the New Company may set aside a reserve(s) the Securities and Exchange Commission or any
to meet contingencies, equalizing dividends, other applicable law or regulation). The Company
repairing or maintaining property or for other has adopted a distribution plan under Rule 12b-1
purposes deemed by the Trustees to be in the best (the "Plan") for certain classes of its shares.
interest of the Company. Pursuant to the terms of the various classes of
the Company, 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.
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders/ -- Personal liability is limited by the Delaware Act -- The Company's Declaration of Trust
Beneficial to the amount of investment in the trust and may be limits the personal liability of each
Owner Liability further limited or restricted by the governing shareholder to the amount invested in
instrument. Consistent with Delaware law, the the Company. Trustees are not authorized
Declaration of Trust for the New Company provides to personally bind any shareholder or
that the DBT, its trustees, officers, employees, and demand payment of a shareholder in
agents do not have the power to personally bind a addition to his or her investment unless
shareholder. Shareholders of the DBT are entitled to agreed to by such shareholder.
the same limitation of personal liability extended to
stockholders of a private corporation organized for -- The Declaration of Trust further
profit under the general corporation law of the State states that all obligations of the
of Delaware. Company shall include a recitation
limiting payment of such obligations to
the Company and its assets. The absence
of such a provision does not, however,
operate to bind any shareholder.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-6
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- --------------------- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Director Trustee -- Subject to the declaration of trust, the Delaware -- Under the Declaration of Trust, if
Liability Act provides that a trustee, when acting in such the Trustees have acted under the
capacity, may not be held personally liable to any reasonable belief that their actions are
person other than the DBT or a beneficial owner for in the best interest of the Company,
any act, omission or obligation of the DBT or any they can be held personally liable only
trustee. A trustee's duties and liabilities to the for willful misfeasance, bad faith or
DBT and its beneficial owners may be expanded or gross negligence in the performance of
restricted by the provisions of the declaration of their duties, or by reason of reckless
trust. disregard of their obligations and
duties as Trustees. The Declaration of
-- The Declaration of Trust for the New Company Trust further provides that every
provides that the Trustees shall not be liable or written agreement, obligation or other
responsible in any event for any neglect or undertaking made or issued by the
wrongdoing of any officer, agent, employee, manager Company may contain a provision, which
or principal underwriter of the New Company, nor states that the Trustees will not be
shall any Trustee be responsible for the act or held personally liable under said
omission of any other Trustee. In addition, the instrument. The absence of such a
Declaration of Trust also provides that the Trustees provision, however, shall not operate to
acting in their capacity as Trustees, shall not be bind any Trustee.
personally liable for -acts done by or on behalf of
the New Company.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-7
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- ------------------- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Indemnification -- The Delaware Act permits a DBT to indemnify -- Shareholders held personally liable
and hold harmless any trustee, beneficial owner or solely by reason of being a shareholder
agent from and against any and all claims and of the Company are entitled to
demands. Consistent with the Delaware Act, the indemnification from all loss and
Declaration of Trust for the New Company expense arising from such liability out
provides for the indemnification of officers and of the assets of the Company. Upon
trustees from and against any and all claims and request of a shareholder, the Company
demands arising out of or related to the will assume the defense of any claim
performance of duties as an officer or Trustee. The against such shareholder for any act or
New Company will not indemnify, hold harmless obligation of the Company and satisfy
or relieve from liability trustees or officers for any judgment based on these claims.
those acts or omissions for which they are liable if
such conduct constitutes willful misfeasance, bad -- The Declaration of Trust provides
faith, gross negligence or reckless disregard of that Trustees and former Trustees are
their duties. entitled to indemnification for expenses
and liabilities (including settlements
-- The Declaration of Trust also provides that any and related expenses) that are
shareholder or former shareholder that is exposed reasonably incurred in connection with
to liability by reason of a claim or demand related their duties as Trustees. Trustees are
to having been a shareholder, and not because of entitled to indemnification where such
his or her acts or omissions, shall be entitled or Trustee(s) has acted in good faith and
beheld harmless and indemnified out of the assets with the reasonable belief that his or
of the DBT. her actions were in the best interests
of the Company.
-- 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 Company; 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 Company, not
including any beneficial shares of the
Company owned by any affiliated person
of the Company; (c) the vote of
two-thirds of those trustees of the
Company, 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 Company 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 Company. A Trustee is not
required to make such an undertaking if
it is later determined that the Trustee
is entitled to indemnification.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-8
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND PENNSYLVANIA COMMON LAW TRUSTS
<TABLE>
<CAPTION>
Delaware Business Trust Pennsylvania Common Law Trust
- ------------------- ---------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
Insurance -- The Delaware Act does not contain a provision -- The Company's Declaration of Trust
specifically related to insurance. The New Company's provides that any rights of
Declaration of Trust provides that the Trustees shall indemnification may be insured against
be entitled and have the authority to purchase with by policies maintained by the Company.
Company assets insurance for liability and for all Any such policies: (i) shall be
expenses reasonably incurred or paid or expected to severable; (ii) shall not affect any
be paid by a Trustee or officer in connection with other rights to which any Trustee may
any claim, or proceeding in which he or she becomes now or hereafter be entitled; (iii)
involved by virtue of his or her capacity (or former shall continue as to former Trustees;
capacity) with the Company. The By-Laws of the New and (iv) shall inure to the benefit of
Company permits such insurance coverage to extend to the heirs, executors and administrators
employees and other agents of the Company. of Trustees and former Trustees.
-- In addition, the New Companys' By-Laws provide
that a trustee is not entitled to indemnification
from liability: (i) with respect to any claim, issue
or matter as to which such trustee shall have been
adjudged to be liable in the performance of his or
her duty to the Company, unless the court in which
that action was brought shall determine that the
trustee is fairly and rasonably entitled to
indemnity; or (ii) with respect to any claim, issue
or matter as to which the trustee shall have been
adjudged to be liable on the basis that personal
benefit was improperly received by the trustee,
whether or not the benefit resulted from an action
taken in the trustee's official capacity; or (iii)
with respect to amounts paid in settling or otherwise
disposing of a threatened or pending action with or
without court approval, or of expenses incurred in
defending a threatened or pending action which
settled or was otherwise disposed of without court
approval, unless the Company's Board of Trustees has
found that the trustee has acted in accordance with
the appropriate standard of conduct.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N-9
<PAGE>
DELAWARE
INVESTMENTS
- -----------
DELAWARE INVESTMENTS
1818 MARKET STREET
PHILADELPHIA, PA 19103
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
Undersigned hereby appoints Jeffrey J. Nick and David K. Downes, or any of
them, with the right of substitution, proxies of the undersigned at the
Special Meeting Of Shareholders of the above Fund to be held at The Union
League, 140 South Broad Street, Philadelphia, Pennsylvania, on March 17, 1999
at 10:00 A.M., or at any postponement or adjournments thereof, with all the
powers which the undersigned would possess, if personally present, and
instructs them to vote upon any matters which may properly be acted upon at
this meeting and specifically as indicated on the lower portion of this form.
Please refer to the proxy statement for a discussion of each of these matters.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE EACH
PROPOSAL AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" EACH PROPOSAL, AND TO USE
THEIR DISCRETION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING, PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
<TABLE>
<CAPTION>
<S> <C> <C>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: DELAW1 KEEP THIS PORTION FOR YOUR RECORDS
- ----------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
</TABLE>
Vote On Directors
1. To elect the following nominees as Directors of the Company
01) JEFFREY J. NICK 06) THOMAS F. MADISON
02) WALTER P. BABICH 07) CHARLES E. PECK
03) JOHN H. DURHAM 08) WAYNE A. STORK
04) ANTHONY D. KNERR 09) JAN R. YEOMANS
05) ANN R. LEVEN
For Withhold For All
All All Except
[ ] [ ] [ ]
To withhold authority to vote, mark "For All Except"
and write the nominee's number on the line below.
------------------------------------------------------
Vote On Proposals For Against Abstain
2. To approve the redesignation of the [ ] [ ] [ ]
Fund's investment objective from
fundamental to non-fundamental
3. To approve standardized fundamental [ ] [ ] [ ]
investment restrictions for the
Fund (proposal involves separate
votes on sub-proposals 3A-3G)
3A. To adopt a new fundamental [ ] [ ] [ ]
investment restriction
concerning concentration of
the Fund's investments in the
same industry
3B. To adopt a new fundamental [ ] [ ] [ ]
investment restriction
concerning borrowing money and
issuing senior securities
3C. To adopt a new fundamental [ ] [ ] [ ]
investment restriction
concerning underwriting
3D. To adopt a new fundamental [ ] [ ] [ ]
investment restriction
concerning investments in real
estate
<PAGE>
3E. To adopt a new fundamental [ ] [ ] [ ]
investment restriction
concerning investments in
commodities
3F. To adopt a new fundamental [ ] [ ] [ ]
investment restriction
concerning lending by the Fund
3G. To redesignate all current [ ] [ ] [ ]
fundamental investment
restrictions as
non-fundamental
4. To approve a new investment [ ] [ ] [ ]
management agreement for the Fund
5. To approve a new sub-advisory [ ] [ ] [ ]
agreement for the Fund
6. To ratify the selection of Ernst & [ ] [ ] [ ]
Young LLP, as independent auditors
for the Company
7. To approve the restructuring of the [ ] [ ] [ ]
Company from its current form of
organization into a Delaware
business trust
PLEASE DATE AND SIGN NAME OR NAMES BELOW
AS PRINTED ABOVE TO AUTHORIZE THE VOTING
OF YOUR SHARES AS INDICATED ABOVE, WHERE
SHARES ARE REGISTERED WITH JOINT OWNERS,
ALL OWNERS SHOULD SIGN. PERSONS SIGNING
AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR
OTHER REPRESENTATIVE SHOULD GIVE FULL
TITLE AS SUCH.
----------------------------------------------------
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| | |
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Signature [PLEASE SIGN WITHIN BOX] Date
----------------------------------------------------
| | |
| | |
-----------------------------------------------------
Signature (Joint Owners) Date
