SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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 ss. 240.14a-11(c) or ss. 240.14a-12
Voyageur Tax Free Funds, Inc.
Voyageur Intermediate Tax Free Funds, Inc.
Voyageur Insured Funds, Inc.
Voyageur Investment Trust
Voyageur Investment Trust II
Voyageur Mutual Funds, Inc.
Voyageur Mutual Funds II, Inc.
Voyageur Mutual Funds III, Inc.
(Name of Registrant as Specified in its Charter)
[Insert Name]
(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 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:
Dear Shareholder:
In January, Lincoln National Corporation (NYSE: LNC) announced that it had
entered into an agreement to acquire the business of Voyageur Fund Managers,
Inc.("Voyageur Fund Managers"). If the agreement is consummated, Lincoln
National Corporation will control Voyageur Fund Managers. LNC also controls
Delaware Management Company, Inc., which with its affiliates acts as investment
advisor to the Delaware Group of Funds.
Because this acquisition affects the Funds' investment manager, shareholders of
most Funds are being asked to approve a new investment management agreement.
Shareholders of a few Funds (Voyageur National Tax Free, Voyageur National
Insured Tax Free, Voyageur National Limited Term Tax Free, and Voyageur
International Equity Funds) are being asked to approve liquidation of their
Funds. If you are a shareholder of one of these Funds, you will have the
opportunity to invest your liquidation proceeds at net asset value into any of
the open-end Delaware Funds. Shareholders of the Voyageur Growth and Income Fund
are being asked to approve the reorganization of their Fund. The Voyageur Growth
and Income Fund is not a part of the LNC acquisition and the reorganization is
required to separate that Fund (which is a series of a corporation containing a
number of Funds) from Funds that are part of the acquisition. Segall Bryant and
Hamill is expected to continue as sub-advisor to the Growth and Income Fund.
With the enclosed proxy statement, we have included a question and answer
section, intended to address some of the more commonly asked questions about the
proposed acquisition and the future management of your Voyageur Funds. If you
have additional questions, we encourage you to contact Shareholder
Communications Corporation, a professional proxy solicitation firm retained by
Voyageur Fund Managers, Inc. and Lincoln National Corporation to assist in
answering shareholders questions about the proxy vote. You may call Shareholder
Communications Corporation at 800.733.8481 extension 438 on Monday through
Friday from 9 a.m. to 11 p.m. (Eastern Standard Time).
We believe shareholders in the Voyageur Funds will benefit from this
transaction. When Voyageur's mutual funds are added to Delaware's existing line
of mutual funds (16 open end funds consisting of 48 separate portfolios and two
closed end funds), Voyageur Fund shareholders will have access to a wider
variety of investment options. Delaware Management Company has a conservative,
long-term investment philosophy that is consistent with and similar to that of
Voyageur Fund Managers. Your Fund Board has unanimously approved the proposals
and recommends that shareholders vote in favor of all of the items on the
enclosed proxy card(s).
Your vote is important. Please review the proxy statement then take a moment to
complete, sign and mail your proxy card(s). A postage-paid envelope is enclosed
for your convenience. If the date of the meeting approaches and we have not
received your vote, you may receive a telephone call from a representative of
Shareholder Communications Corporation reminding you to vote your shares.
We appreciate your prompt attention to this very important matter.
Sincerely,
John G. Taft
President
Q&A ABOUT THE VOYAGEUR FUND MANAGERS ACQUISITION
ON JANUARY 15, LINCOLN NATIONAL CORPORATION, ANNOUNCED IT WOULD ACQUIRE VOYAGEUR
FUND MANAGERS. IN RESPONSE TO THIS ACQUISITION, WE CREATED THIS QUESTION AND
ANSWER SECTION TO ADDRESS ANY CONCERNS YOU MAY HAVE. IF YOU REQUIRE ADDITIONAL
INFORMATION ABOUT THE PROXY OR TRANSACTION, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS AT 800.733.8481 EXTENSION 438. A REPRESENTATIVE WILL BE AVAILABLE
TO ANSWER YOUR QUESTIONS FROM MONDAY THROUGH FRIDAY FROM 9 A.M. TO 11 P.M.
(EASTERN STANDARD TIME).
Q. How will the acquisition of Voyageur Fund Managers impact my investments?
A. We believe this acquisition will be very positive for our fund shareholders.
Delaware Management Company -- an indirect subsidiary of Lincoln National
Corporation -- currently offers a broad variety of retail open-end mutual
funds and two closed-end funds with assets under management of approximately
$10.3 billion. Shareholders should benefit from this extended product line,
which will allow choices (through exchanges at net asset value) from a wider
variety of mutual funds. Also by combining the assets of these two fund
families, it is anticipated that certain efficiencies may be gained through
the coordination of administrative, marketing and trading functions.
Q. Will the investment advisory fees stay the same?
A. Yes, under the terms of the proposed investment advisory agreements, the
investment management fees paid by your Fund will remain the same. However,
certain expense limitation provisions contained in your current advisory
agreements have not been included in the proposed agreements. Delaware
Management Company has nevertheless agreed to comply with these limitations
for two years.
Q. Will the management of my Voyageur Fund investments change dramatically?
A. No. For most Voyageur Funds, the portfolio managers will remain the same. A
number of Voyageur employees have entered into employment agreements with
Lincoln National Corporation. This includes two of Voyageur's senior
portfolio managers, Elizabeth H. Howell and Andrew M. McCullagh, who will
continue to manage the majority of the Voyageur tax free funds from their
offices in Minneapolis and Denver. For certain funds, experienced Delaware
personnel will provide investment advice in a manner that is generally
consistent with prior management. Delaware Management has a conservative,
long-term investment philosophy consistent with that of Voyageur.
Some of the changes to the management of Voyageur's Funds are summarized as
follows:
* It is proposed that Voyageur National Tax Free, National Insured Tax
Free, National Limited Term Tax Free and Voyageur International Equity
Funds be liquidated. If the liquidations are approved, shareholders
will have the opportunity to move their assets at net asset value
(NAV) into any of the Delaware funds, including funds with comparable
investment objectives, for a period of one year following the
liquidation.
* It is proposed that Growth and Income Fund approve a plan of
reorganization which would in essence cause it to become a series of a
different corporate entity. Growth and Income Fund is not
participating in the acquisition, and the reorganization is required
to separate Growth and Income Fund from the other Funds that are
series of the same corporation and are participating in the
acquisition. The reorganization will not result in any other changes
to Growth and Income Fund shareholders; management of the Fund through
Segall Bryant and Hamill will remain essentially unchanged.
* Voyageur Florida Tax Free, Florida Insured Tax Free, Florida Limited
Term Tax Free, National High Yield Municipal Bond and New York Tax
Free Funds will be co-managed by Delaware Vice Presidents and Senior
Portfolio Managers, Mitchell L. Conery and Patrick P. Coyne and
Voyageur Vice President and Senior Portfolio Manager, Andrew M.
McCullagh, will assist with the management of the Florida Funds.
* Senior Voyageur Portfolio Manager Elizabeth H. Howell will assume
portfolio management responsibility for the Voyageur Wisconsin Tax
Free and Voyageur Iowa Tax Free Funds.
* For the Voyageur Growth Stock Fund, Delaware Management will retain
the services of James C. King, the Fund's current portfolio manager,
through a sub-advisory arrangement.
* Aggressive Growth Fund will be co-managed by Delaware Vice Presidents
and Senior Portfolio Managers, Edward N. Antoian and Gerald S. Frey.
Q. Why is a shareholder vote necessary?
A. The Investment Company Act of 1940, as amended, generally requires that
shareholders approve a new investment advisory agreement whenever there is a
change in control of the investment adviser. The proposed acquisition of the
holding company of Voyageur Fund Managers by Lincoln National Corporation
will result in a change in control of Voyageur Fund Managers and, therefore,
requires a shareholder vote on a new investment advisory agreement for each
Fund (other than those being asked to liquidate or reorganize).
Q. Is the Fund board changing?
A. The current Voyageur Fund board of directors has nominated a slate of
directors which includes one current Voyageur Fund board member, Thomas F.
Madison, the six members of the current board of the Delaware Group of Funds
and one additional individual from Lincoln National Corporation. The
Delaware Fund, board currently contains five independent directors.
Q. Who will pay for the cost associated with the acquisition, the shareholder
meeting and this proxy solicitation?
A. Lincoln National Corporation -- not the Funds -- will bear the costs
associated with consideration of the proposals being presented to
shareholders, including the costs of the joint meetings of shareholders and
the proxy solicitation.
Q. How do the Fund Board members suggest I vote?
A. After careful consideration, the board members of the Voyageur Funds
unanimously recommend that you vote "FOR" all the items on the enclosed
proxy card.
Q. Who should I contact about this proxy vote?
A. Shareholder Communications Corporation at 800.733.8481 extension 438. They
are a professional proxy solicitation firm retained by Voyageur Fund
Managers and Delaware Management Holdings to assist in answering
shareholders questions about the proxy vote and soliciting shareholder
votes.
Q. Who will answer questions about my Voyageur Fund investments?
A. During this transition period, it will be business as usual; shareholders
should call Voyageur Client Services at 800.545.3863 to obtain information
about their Voyageur Fund investments.
Q. Are all of the Voyageur Funds covered by the enclosed proxy statement?
A. No. All of the Voyageur Funds are affected by the proposed acquisition.
However, because different Funds are affected differently, there are three
separate proxy statements. As a result, depending on which Voyageur Fund you
own, you may receive more than one proxy statement.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
90 South Seventh Street
Minneapolis, Minnesota 55402
NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 11, 1997
A special joint meeting of shareholders will be held at 9:00 a.m. on
Friday, April 11, 1997 at 90 South Seventh Street, Suite 4400, Minneapolis,
Minnesota 55402 for the following mutual funds (individually a "Fund" and
collectively the "Funds"), each of which is a series of one of the registered
investment companies listed above (individually a "Company" and collectively the
"Companies"):
VOYAGEUR TAX FREE FUNDS, INC.
Minnesota Tax Free Fund
North Dakota Tax Free Fund
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
Minnesota Limited Term Tax Free Fund
National Limited Term Tax Free Fund
VOYAGEUR INSURED FUNDS, INC.
Arizona Insured Tax Free Fund
Minnesota Insured Fund
National Insured Tax Free Fund
VOYAGEUR INVESTMENT TRUST
California Insured Tax Free Fund
Florida Insured Tax Free Fund
Florida Tax Free Fund
Kansas Tax Free Fund
Missouri Insured Tax Free Fund
New Mexico Tax Free Fund
Oregon Insured Tax Free Fund
Utah Tax Free Fund
Washington Insured Tax Free Fund
VOYAGEUR INVESTMENT TRUST II
Florida Limited Term Tax Free Fund
VOYAGEUR MUTUAL FUNDS, INC.
Arizona Tax Free Fund
California Tax Free Fund
Iowa Tax Free Fund
Idaho Tax Free Fund
Minnesota High Yield Municipal Bond Fund
National High Yield Municipal Bond Fund
National Tax Free Fund
New York Tax Free Fund
Wisconsin Tax Free Fund
VOYAGEUR MUTUAL FUNDS II, INC.
Colorado Tax Free Fund
VOYAGEUR MUTUAL FUNDS III, INC.
Aggressive Growth Fund
Growth Stock Fund
Growth and Income Fund
International Equity Fund
The meeting will be held for the following purposes:
1. For shareholders of each Company to elect a Board of
Directors or Trustees.
2. For shareholders of each Fund (except for International
Equity Fund, National Insured Tax Free Fund, National
Limited Term Tax Free Fund, National Tax Free Fund and
Growth and Income Fund) to approve a new Investment
Advisory Agreement.
3. For shareholders of Growth Stock Fund, to approve a Sub-
Advisory Agreement.
4. For shareholders of each of International Equity Fund,
National Insured Tax Free Fund, National Limited Term Tax
Free Fund and National Tax Free Fund, to approve the
liquidation of their respective Fund and the distribution
of such Fund's net assets to shareholders. For each
Fund, approval of the liquidation will be considered
approval of an amendment to the articles of incorporation
of such Fund's Company required to effect the
liquidation.
5. For shareholders of Growth and Income Fund, a series of
Voyageur Mutual Funds III, Inc., to approve an Agreement
and Plan of Reorganization pursuant to which all of the
assets of the Fund would be acquired by a newly formed
series of VAM Institutional Funds, Inc., also called
Growth and Income Fund ("New Growth and Income Fund"),
and whereby shareholders of the Fund would become
shareholders of New Growth and Income Fund. A vote in
favor of the Plan will be considered a vote in favor of
an amendment to the articles of incorporation of Voyageur
Mutual Funds III required to effect the Plan.
6. To transact such other business as may properly come
before the meeting.
EACH COMPANY'S BOARD OF DIRECTORS OR TRUSTEES UNANIMOUSLY
RECOMMENDS APPROVAL OF EACH ITEM LISTED ON THIS NOTICE OF SPECIAL
MEETING OF SHAREHOLDERS.
Shareholders of record on February 10, 1997 are the only persons
entitled to notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. We hope you
can attend. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE UPCOMING MEETING,
PLEASE FILL IN, SIGN, DATE AND MAIL THE ENCLOSED PROXY OR PROXIES AS PROMPTLY AS
POSSIBLE IN ORDER TO SAVE FURTHER SOLICITATION EXPENSE. WE RESPECTFULLY ASK FOR
YOUR COOPERATION IN RETURNING YOUR PROXY PROMPTLY. A stamped return envelope is
included for your convenience. If you are present at the meeting, you may then
revoke your proxy and vote in person, as explained in the Proxy Statement in the
section entitled "SPECIAL JOINT MEETING OF SHAREHOLDERS--APRIL 11, 1997."
Dated: February 24, 1997 Thomas J. Abood
Secretary
PROXY STATEMENT
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
SPECIAL JOINT MEETING OF SHAREHOLDERS--APRIL 11, 1997
The enclosed proxy is solicited by the Board of Directors or Trustees
(hereafter referred to as "Board of Directors") of each open-end investment
company listed above (individually a "Company" and collectively the "Companies")
in connection with a special joint meeting of shareholders of each Company to be
held on April 11, 1997, and any adjournments thereof (the "Meeting"). The series
of the Companies (individually a "Fund" and collectively the "Funds") are set
forth in the table below. The costs of solicitation, including the cost of
preparing and mailing the Notice of Meeting of Shareholders and this Proxy
Statement, will be borne by Lincoln National Corporation ("LNC") and will not be
an expense of the Funds, and the mailing will take place on approximately
February 24, 1997. Representatives of Voyageur Fund Managers, Inc. ("VFM"), the
current investment adviser of each Fund, may, without cost to the Funds, solicit
proxies on behalf of management of the Funds by means of mail, telephone or
personal calls. The address of VFM is that of the Companies as listed above. VFM
has engaged Shareholder Communications Corporation ("SCC") to assist in the
solicitation. Representatives of SCC may telephone shareholders who have not
voted, encouraging them to vote. The estimated cost of engaging SCC, all of
which will be paid by LNC and not by your Fund, is $50,000.
A proxy may be revoked before the Meeting by giving written notice of
revocation to the Secretary of the applicable Company, or at the Meeting prior
to voting. Unless revoked, properly executed proxies in which choices are not
specified by the shareholders will be voted "for" each item for which no choice
is specified, in accordance with the recommendation of the applicable Company's
Board of Directors. In instances where choices are specified by the shareholders
in the proxy, those proxies will be voted or the vote will be withheld in
accordance with the shareholder's choice. With regard to the election of
directors, votes may be cast in favor or withheld. Abstentions may be specified
on all proposals other than the election of directors. Abstentions and votes
withheld with respect to the election of directors will be counted as present
for purposes of determining whether a quorum of sharesis present at the Meeting
with respect to the item on which the abstention is noted, and will have the
same effect as a vote "against" such item. Under the Rules of the New York Stock
Exchange, if a proposal is considered "non-discretionary," then brokers who hold
Fund shares in street name for customers are not authorized to vote on such
proposal on behalf of their customers who have not furnished the broker specific
voting instructions. If a broker returns a "non-vote" proxy, indicating a lack
of authority to vote on a proposal, then the shares covered by such non-vote
shall not be counted as present for purposes of calculating the vote with
respect to such proposal. So far as the Board of Directors is aware, no matter
other than those described in this Proxy Statement will be acted upon at the
Meeting. Should any other matters properly come before the Meeting calling for a
vote of shareholders, it is the intention of the persons named as proxies in the
enclosed proxy to act upon such matters according to their best judgment.
Only shareholders of record of each Fund on February 10, 1997, may vote
at the Meeting or any adjournment thereof. As of that date, there were issued
and outstanding common shares of each Fund (shares of beneficial interest with
respect to series of Voyageur Investment Trust and Voyageur Investment Trust II)
as follows:
<TABLE>
<CAPTION>
Common Shares
-------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
VOYAGEUR TAX FREE FUNDS, INC ............................................
Minnesota Tax Free Fund ("Minnesota Fund") ........................... 34,370,282 541,588 240,643
North Dakota Tax Free Fund ("North Dakota Fund") ..................... 3,085,012 74,063 3,745
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC ...............................
Minnesota Limited Term Tax Free Fund ("Minnesota Limited Term Fund") . 5,759,736 39,261 125,130
National Limited Term Tax Free Fund ("National Limited Term Fund") ... 125,024 5,089 24,704
VOYAGEUR INSURED FUNDS, INC .............................................
Arizona Insured Tax Free Fund ("Arizona Insured Fund") ............... 18,731,386 313,033 47,787
Minnesota Insured Fund ("Minnesota Insured Fund") .................... 28,315,083 680,361 300,865
National Insured Tax Free Fund ("National Insured Fund") ............. 2,866,425 173,871 18,385
VOYAGEUR INVESTMENT TRUST
California Insured Tax Free Fund ("California Insured Fund") ......... 2,895,763 641,928 5,275
Florida Insured Tax Free Fund ("Florida Insured Fund") ............... 17,385,877 302,084 0
Florida Tax Free Fund ("Florida Fund") ............................... 560,472 171,751 1,479
Kansas Tax Free Fund ("Kansas Fund") ................................. 974,084 238,574 8,624
Missouri Insured Tax Free Fund ("Missouri Insured Fund") ............. 1,763,454 1,044,382 10,786
New Mexico Tax Free Fund ("New Mexico Fund") ......................... 1,855,582 75,942 27,148
Oregon Insured Tax Free Fund ("Oregon Insured Fund") ................. 2,138,180 493,281 35,800
Utah Tax Free Fund ("Utah Fund") ..................................... 343,850 36,928 0
Washington Insured Tax Free Fund ("Washington Insured Fund") ......... 234,650 51,670 1,912
VOYAGEUR INVESTMENT TRUST II
Florida Limited Term Tax Free Fund ("Florida Limited Term Fund") ..... 300,010 90,634 5,209
VOYAGEUR MUTUAL FUNDS, INC ..............................................
Arizona Tax Free Fund ("Arizona Fund") ............................... 902,845 331,590 2,244
California Tax Free Fund ("California Fund") ......................... 136,694 68,667 9,103
Iowa Tax Free Fund ("Iowa Fund") ..................................... 4,169,642 182,646 71,420
Idaho Tax Free Fund ("Idaho Fund") ................................... 2,678,615 485,200 77,292
Minnesota High Yield Municipal Bond Fund ("Minnesota High Yield Fund") 737,194 379,387 104,403
National High Yield Municipal Bond Fund ("National High Yield Fund") . 5,418,759 9,030 0
National Tax Free Fund ("National Fund") ............................. 315,528 59,234 6,051
New York Tax Free Fund ("New York Fund") ............................. 936,292 24,098 4,993
Wisconsin Tax Free Fund ("Wisconsin Fund") ........................... 2,865,825 141,891 60,310
VOYAGEUR MUTUAL FUNDS II, INC ...........................................
Colorado Tax Free Fund ("Colorado Fund") ............................. 33,170,837 391,579 137,314
VOYAGEUR MUTUAL FUNDS III, INC ..........................................
Aggressive Growth Fund ("Aggressive Growth Fund") .................... 508,383 6,604 12,167
Growth Stock Fund ("Growth Fund") .................................... 1,378,556 44,163 24,557
Growth and Income Fund ("Growth and Income Fund") .................... 392,831 17,596 0
International Equity Fund ("International Fund") ..................... 263,499 5,504 7,360
</TABLE>
Each shareholder of a Fund is entitled to one vote for each share held. None of
the matters to be presented at the Meeting will entitle any shareholder to
cumulative voting or appraisal rights. A list of those persons who, to the
knowledge of Fund management, beneficially owned more than 5% of the voting
shares of any class of any of the Funds as of February 10, 1997, is set forth in
Schedule 1 to this Proxy Statement.
In the event that sufficient votes are not received for the adoption of
any proposal, an adjournment or adjournments of the Meeting may be sought. Any
adjournment would require a vote in favor of the adjournment by the holders of a
majority of the shares present at the Meeting (or any adjournment thereof) in
person or by proxy. In such circumstances, the persons named as proxies will
vote in favor of any proposed adjournment.
COPIES OF EACH FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE
AVAILABLE TO SHAREHOLDERS UPON REQUEST. IF YOU WOULD LIKE TO RECEIVE A COPY,
PLEASE CONTACT THE FUNDS AT 90 SOUTH SEVENTH STREET, MINNEAPOLIS, MINNESOTA
55402 OR CALL (800) 553-2143 AND ONE WILL BE SENT, WITHOUT CHARGE, BY
FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF YOUR REQUEST.
<TABLE>
<CAPTION>
The following table illustrates which Proposals are to be voted upon by
shareholders of a Fund:
Proposal Number
----------------
Fund 1 2 3 4 5
---- --- --- --- --- ---
Approve Approve
Elect Board Advisory Sub-Advisory Approve Approve
of Directors Agreement Agreement Liquidation Reorganization
------------ --------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Aggressive Growth Fund X X
- ------------------------------------------------------------------------------------------------------------------
Arizona Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Arizona Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
California Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
California Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Colorado Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Florida Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Florida Limited Term Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Florida Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Growth and Income Fund X X
- ------------------------------------------------------------------------------------------------------------------
Growth Stock Fund X X X
- ------------------------------------------------------------------------------------------------------------------
Idaho Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
International Equity Fund X X
- ------------------------------------------------------------------------------------------------------------------
Iowa Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Kansas Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Minnesota High Yield Municipal
Bond Fund X X
- ------------------------------------------------------------------------------------------------------------------
Minnesota Insured Fund X X
- ------------------------------------------------------------------------------------------------------------------
Minnesota Limited Term Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Minnesota Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Missouri Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
National High Yield Municipal
Bond Fund X X
- ------------------------------------------------------------------------------------------------------------------
National Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
National Limited Term Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
National Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
New Mexico Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
New York Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
North Dakota Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Oregon Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Utah Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Washington Insured Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
Wisconsin Tax Free Fund X X
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
BACKGROUND
INTRODUCTION
The Meeting has been called as a result of the proposed Merger, as
defined and discussed in greater detail below under "The Proposed Merger." The
proposed Merger involves the parent company of VFM and a newly formed subsidiary
of LNC. The Merger, which is expected to occur on or about April 30, 1997, will
result in LNC having ultimate ownership and control of VFM, the Funds'
investment adviser. This change in control will result in the automatic
termination of the investment advisory agreements between the Funds and VFM.
Thus, shareholders of each Fund (other than International Equity Fund, National
Insured Tax Free Fund, National Limited Term Tax Free Fund, National Tax Free
Fund and Growth and Income Fund) are being asked to approve new investment
advisory agreements. Shareholders of Growth Stock Fund are also being asked to
approve a sub-advisory agreement with a new limited liability company owned by
the current owners of VFM, whereby the limited liability company will continue
to utilize James C. King, the Fund's current portfolio manager, to provide
day-to-day portfolio management services to the Fund.
Shareholders of International Equity Fund, National Insured Tax Free
Fund, National Limited Term Tax Free Fund and National Tax Free Fund are being
asked to approve the liquidation of their Funds in connection with the Merger.
Shareholders of Growth and Income Fund are being asked to approve the
reorganization of their Fund into a series of a different corporate entity. As a
result of this reorganization, Growth and Income Fund would be advised by a new
limited liability company owned by the current owners of VFM, rather than by an
entity controlled by LNC.
In addition, shareholders of all Funds are being asked to elect eight
members to each Company's Board of Directors, including one director from the
current Boards who has been nominated for reelection. The remaining members of
the current Boards are expected to resign immediately prior to closing of the
Merger. Shareholders of the Funds that are being asked to approve liquidation or
reorganization proposals are being asked to elect directors because they were
record holders of their respective Company's shares on the record date for the
Meeting and are therefore required to be included among shareholders entitled to
vote. Such shareholders will not be affected by the election of directors,
however, if the liquidation or reorganization of their respective Fund is
approved.
All of the proposals on which shareholders are being asked to vote,
other than the reorganization of Growth and Income Fund, are contingent upon
consummation of the Merger. If the Merger is not consummated, the current Boards
of Directors will remain in office, the current investment advisory agreements
and any current sub- advisory agreements will remain in effect, and
International Equity Fund, National Insured Tax Free Fund, National Limited Term
Tax Free Fund and National Tax Free Fund will not be liquidated.
THE PROPOSED MERGER
VFM currently serves as the investment adviser to each Fund and
provides the Funds with administrative, accounting, transfer agency and dividend
disbursing services. Voyageur Fund Distributors, Inc. ("VFD"), a wholly owned
subsidiary of VFM, acts as the distributor of each Fund's shares. VFM is an
indirect wholly owned subsidiary of Dougherty Financial Group, Inc. ("DFG"),
which is owned 49.83% by Michael E. Dougherty and 49.83% equally by James O.
Pohlad, Robert C. Pohlad and William M. Pohlad (the "Pohlads").
On January 15, 1997, DFG, Mr. Dougherty and the Pohlads entered into an
Agreement and Plan of Merger with LNC (the "Merger Agreement"). The Merger
Agreement provides that a wholly owned subsidiary of LNC will be merged with and
into DFG, causing DFG to become a wholly owned subsidiary of LNC. This
transaction is referred to herein as the "Merger." Prior to the closing date of
the Merger (the "Closing Date") a reorganization will be completed (the
"Reorganization") whereby certain assets of DFG and its subsidiaries, including
all of the assets of VFM used solely or primarily in the private accounts
investment advisory business of VFM, will be sold by DFG to certain newly
organized limited liability companies. Thus, these assets will not be acquired
by LNC in connection with the Merger.
LNC, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management. Delaware Management Company, Inc.
("DMC"), an indirect wholly owned subsidiary of LNC, and its affiliate, Delaware
International Advisers Ltd., serve as the investment advisers to the investment
companies in the Delaware Group of Investment Companies (the "Delaware Group"),
which currently includes 16 open-end funds and two closed-end funds (comprising
48 separate investment portfolios). Delaware Distributors, L.P. ("Delaware
Distributors"), also an indirect wholly owned subsidiary of LNC, serves as the
national distributor for each open-end fund in the Delaware Group. DMC through
its Delaware Investment Advisers division, Delaware International Advisers Ltd.
and certain other subsidiaries of Delaware Management Holdings, Inc. ("DMH")
also provides investment advice with respect to separately managed accounts of
institutional and other clients. DMH, through its subsidiaries, is responsible
for the management of approximately $32 billion.
Under the Merger Agreement, holders of DFG common stock will receive
LNC common stock with a value of approximately $69 million. This amount is
subject to certain adjustments, including a downward adjustment in the event
that the aggregate net assets of the Funds, other than those Funds for which
liquidation has been proposed, and certain other investment companies managed by
VFM (collectively, the "Voyageur Funds") as of the Closing Date is less than 90%
but equal to or greater than 80% of the aggregate net assets of the Voyageur
Funds as of January 14, 1997. In connection with the Reorganization, all issued
and outstanding shares of DFG common stock other than those owned by Mr.
Dougherty and the Pohlads will be redeemed and all outstanding options (other
than those held by certain optionholders receiving compensation under the Merger
Agreement) will be canceled. As a result, immediately prior to consummation of
the Merger, the issued and outstanding shares of DFG will be owned 50% by
Michael E. Dougherty, 16 2/3% by James O. Pohlad, 16 2/3% by Robert C. Pohlad
and 16 2/3% by William M. Pohlad.
The closing of the Merger (the "Closing") is subject to a number of
conditions, including a condition that Voyageur Funds which collectively
represent at least 90% of the aggregate net assets of the Voyageur Funds as of
the Closing Date will, by shareholder vote, have approved new investment
advisory agreements and, with respect to the open-end Voyageur Funds, the Boards
of Directors of such Funds shall have approved new distribution agreements. In
addition, the aggregate net assets of the Voyageur Funds as of the Closing Date
shall not be less than 80% of the aggregate net assets of the Voyageur Funds as
of January 14, 1997, and the net assets of each of Minnesota Insured Fund,
Minnesota Tax Free Fund, Florida Insured Tax Free Fund, Colorado Tax Free Fund
and Arizona Insured Tax Free Fund as of the Closing Date shall not be less than
80% of their net assets as of January 14, 1997.
CONSUMMATION OF THE MERGER
If the Merger is consummated, LNC will own indirectly all of the
outstanding voting securities of VFM, which in turn will own all of the
outstanding voting securities of VFD. Such new ownership will constitute a
change in control of VFM and VFD and will cause the current investment advisory
agreements and distribution agreements of each Fund to terminate automatically
in accordance with their terms, as required by the Investment Company Act of
1940, as amended (the "1940 Act"). Such terminations will necessitate adoption
of new agreements for the provision of investment advisory and distribution
services. Shareholder approvals of the new investment advisory agreements are
required under the 1940 Act and are proposed and described below under "Proposal
Two--Proposal to Approve New Investment Advisory Agreements."
Shareholder approvals of new distribution agreements are not required.
However, such agreements have been approved by the Board of Directors of each
Company, effective as of such approval. Each Company, on behalf of the Funds in
such Company, will enter into new distribution agreements with both VFD and
Delaware Distributors that will be identical in all material respects to such
Company's current distribution agreement. Delaware Distributors and VFD will act
as the co-principal distributors of the Funds' shares. Delaware Distributors, an
indirect wholly owned subsidiary of LNC, is the national distributor for all of
the mutual funds in the Delaware Group. Under their distribution agreements, VFD
and Delaware Distributors will receive payments pursuant to the Funds' Rule
12b-1 Plans of Distribution. The Plans of Distribution, including the Rule 12b-1
fees payable thereunder, will not change as a result of the Merger.
Following the Merger, it is possible that the businesses of VFM and DMC
will be combined to consolidate all investment management activities of the
Delaware Group and the Voyageur Funds into one company, and that the businesses
of VFD and Delaware Distributors will be combined to consolidate distribution
activities for the two groups into one company. In the event that such
combinations take place, no change in ultimate control or management of VFM or
VFD would occur.
Each Company has also entered into an administrative services agreement
with VFM which, pursuant to its terms, will terminate automatically upon
consummation of the Merger. Under the administrative services agreements, VFM
acts as the Funds' dividend disbursing, transfer, administrative and accounting
services agent to perform dividend-paying functions, to calculate each Fund's
daily share price, to maintain shareholder records and to perform certain
regulatory and compliance related services for the Funds. Following consummation
of the Merger, each Company will enter into a shareholder services agreement
with Delaware Service Company, Inc. ("Delaware Service") pursuant to which
Delaware Service will serve as the shareholder servicing, dividend disbursing
and transfer agent for each Fund and a fund accounting agreement with Delaware
Service pursuant to which Delaware Service will serve as the accounting agent
for each Fund. Delaware Service is an indirect, wholly owned subsidiary of LNC.
In order to provide continuity in the provision of these services to
the Funds, the Merger Agreement requires Dougherty Financial Group LLC ("DFG
LLC"), one of the limited liability companies to be formed in the Reorganization
discussed above, to provide certain transition services to LNC or one of its
subsidiaries after Closing. Accordingly, upon Closing, DFG LLC will enter into a
Transition Services Agreement with DMH, an indirect parent company of Delaware
Service and a wholly owned subsidiary of LNC, pursuant to which, for a period of
up to two years following the Closing Date, DFG LLC shall provide to DMH certain
specified services which may include the following: (a) human resources,
supervision, general administrative, accounting and employee benefits; (b) fund
accounting; (c) transfer agency; (d) legal, tax and compliance; (e) support
services for brokers, wholesalers, marketing, customer support, fulfillment,
securities trading, investment management, the unit investment trust business
and the closed-end funds businesses; (f) hardware and software systems and
maintenance; and (g) third-party vendor relationships. Payments under the
Transition Services Agreement will be the responsibility of DMH and not of the
Funds.
To provide continuity of management of the Funds, LNC has offered
employment contracts to Andrew M. McCullagh, Jr. and Elizabeth H. Howell, which
have been accepted. Either Mr. McCullagh or Ms. Howell currently acts as the
portfolio manager for each of the Funds that is being asked to approve a new
investment advisory agreement other than the following: Florida Limited Term Tax
Free Fund, Florida Insured Tax Free Fund, Florida Tax Free Fund, Iowa Tax Free
Fund, New York Tax Free Fund, Wisconsin Tax Free Fund, National High Yield
Municipal Bond Fund, Growth Stock Fund and Aggressive Growth Fund. LNC has also
offered employment to and received acceptances from others involved in the
investment process with Mr. McCullagh and Ms. Howell, including assistant
portfolio managers and research analysts. In addition, Frank C. Tonnemaker,
current president of VFD, and other marketing personnel have accepted employment
contracts with LNC. Mr. Tonnemaker is expected to serve in a senior marketing
role with responsibility for overseeing the transition of the Funds' management
and distribution.
PROPOSAL ONE
ELECTION OF DIRECTORS
Listed below are the nominees for director to be elected by the
shareholders of each Company. Current members of each Company's Board of
Directors are Clarence G. Frame, Thomas F. Madison, Richard F. McNamara, James
W. Nelson and Robert J. Odegard. Upon closing of the Merger, all of such
individuals other than Mr. Madison will resign, and the nominees set forth below
will take office. Such individuals have been nominated for election by the
current disinterested directors of the Companies. The election of such nominees
is contingent upon consummation of the Merger. It is intended that the enclosed
proxy will be voted for the shares represented thereby for the election of the
persons named below as directors of each Company unless such authority has been
withheld in the proxy. The term of office of each person elected will be until
the next regular meeting of shareholders or until his or her successor is duly
elected and shall qualify. Mr. Madison has been a director of each Company since
May 1, 1994. Messrs. Babich, Knerr, Longstreth, Peck and Stork and Ms. Leven are
currently directors of each investment company in the Delaware Group. Pertinent
information regarding each nominee for at least the past five years is set forth
following his or her name below.
Principal Occupation and Business
Name and Age Experience During Past 5 Years
- ------------ ----------------------------------------
Walter P. Babich (age 69) Director and/or Trustee of the 18
investment companies in the Delaware
Group; Board Chairman, Citadel
Constructors, Inc., 1988 to present;
Partner, I&L Investors, 1988 to 1991;
Partner, Irwin & Leighton (building
construction), 1986 to 1988.
Anthony D. Knerr (age 58) Director and/or Trustee of the 18
investment companies in the Delaware
Group; founder and Managing Director,
Anthony Knerr & Associates (consulting
company to non-profit institutions and
organizations), 1991 to present; founder
and Chairman of The Publishing Group,
Inc., 1988 to 1990; Executive Vice
President/ Finance and Treasurer,
Columbia University, 1982 to 1988;
lecturer in English, Columbia
University, 1987 to 1989.
Ann R. Leven (age 56) Director and/or Trustee of the 18
investment companies in the Delaware
Group; Director of four investment
companies sponsored by Aquila Management
Corporation, 1985 to present; Treasurer,
National Gallery of Art, 1994 to
present; Deputy Treasurer, National
Gallery of Art, 1990 to 1994; Treasurer
and Chief Fiscal Officer, Smithsonian
Institution, 1984 to 1990; Adjunct
Professor, Columbia Business School,
1975 to 1992.
W. Thacher Longstreth (age 76) Director and/or Trustee of the 18
investment companies in the Delaware
Group; Philadelphia City Councilman,
1984 to present; Consultant, Packard
Press, 1988 to present; President, 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 to 1991; Vice
Chairman, The Winchell Company
(financial printing), 1983 to 1988.
Thomas F. Madison (age 60) Director and/or Trustee of the 16
Voyageur investment companies since
1994; President and CEO of MLM Partners,
Inc. since 1993; Chairman of the Board,
Communications Holdings, Inc., since
1996; previously, Vice Chairman--Office
of the CEO, The Minnesota Mutual Life
Insurance Company from February to
September 1994; President of U.S. WEST
Communications--Markets from 1988 to
1993. Mr. Madison currently serves on
the board of directors of Valmont
Industries, Inc. (irrigation systems and
steel manufacturing), Eltrax Systems,
Inc. (data communications integration),
Minnegasco, Span Link Communications
(software) and ACI Telecentrics
(outbound telemarketing and
telecommunications).
*Jeffrey J. Nick (age 43) President, Chief Executive Officer and
Director of Lincoln National Investment
Companies, Inc.; Managing Director,
Lincoln National UK plc, 1992 to
present; responsible for corporate
planning and development, Lincoln
National Corporation, 1989 to 1992;
previously, Arthur D. Little, Inc.
(management consultancy); Chase
Investment Bank (merchant banking).
Charles E. Peck (age 71) Director and/or Trustee of the 18
investment companies in the Delaware
Group; Secretary/Treasurer, Enterprise
Homes, Inc., 1992 to present; Chairman
and Chief Executive Officer, The Ryland
Group, Inc. (home building), 1981 to
1990.
*Wayne A. Stork (age 59) Chairman, President, Chief Executive
Officer, Director and/or Trustee of 17
investment companies in the Delaware
Group (which excludes Delaware Pooled
Trust, Inc.), Delaware Management
Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders
Holdings, Inc.; Chairman and Director of
Delaware Pooled Trust, Inc., Delaware
Distributors, Inc. and Delaware Capital
Management, Inc.; Chairman, President,
Chief Executive Officer, Chief
Investment Officer and Director of
Delaware Management Company, Inc.;
Chairman, Chief Executive Officer and
Director of Delaware International
Advisers Ltd.; Director of Delaware
Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.;
during the past five years, Mr. Stork
has served in various executive
capacities at different times within the
Delaware organization.
* Denotes directors who will be considered to be "interested persons" (as
defined by the 1940 Act) of the Companies upon closing of the Merger.
As of January 31, 1997, the current officers and directors of each Fund
as a group beneficially owned less than 1% of each class of outstanding shares
of such Fund, except for John G. Taft who owns beneficially approximately 2% of
Voyageur Aggressive Growth Fund's Class A shares and 4% of International Equity
Fund's Class A shares.
The Board of Directors of each Company has established an Audit
Committee which consists of each of the current directors. If the nominees named
above are elected and the Merger is consummated, it is expected that the Audit
Committee will be reconstituted at the first meeting of the Boards of Directors
following the Closing. The Audit Committee met two times during the most
recently ended fiscal year for each Company. The Companies do not have
nominating or compensation committees.
The functions to be performed by the Audit Committee are to recommend
annually to the Board a firm of independent certified public accountants to
audit the books and records of each Company for the ensuing year; to monitor
that firm's performance; to review with the firm the scope and results of each
audit and determine the need, if any, to extend audit procedures; to confer with
the firm and representatives of each Company on matters concerning the Funds'
financial statements and reports including the appropriateness of its accounting
practices and of its financial controls and procedures; to evaluate the
independence of the firm; to review procedures to safeguard portfolio
securities; to review the purchase by each Company from the firm of non-audit
services; to review all fees paid to the firm; and to facilitate communications
between the firm and each Company's officers and directors.
For the most recently ended fiscal year of each Company, there were
five meetings of the Board of Directors. The only nominee for director at this
Meeting, Mr. Madison, attended all meetings of the Board of Directors and of
committees of which he was a member that were held while he was serving on the
Board of Directors or on such committee.
No compensation is paid by any Company or Fund to its officers or
directors, except that each director who is not an employee of VFM or any of its
affiliates currently receives an annual fee of $26,000 for serving as a director
of all of the open-end and closed-end investment companies for which VFM acts as
investment adviser, plus a $500 fee for each special in-person meeting attended
by such director. Set forth below is the compensation received by each current
director from each Company for its most recently ended fiscal year and the
aggregate compensation received by each such director from all closed-end and
open-end investment companies managed by VFM during the calendar year ended
December 31, 1996.
<TABLE>
<CAPTION>
DIRECTOR
COMPENSATION ----------------------------------------------------------------------------
FROM EACH COMPANY MR. FRAME MR. MCNAMARA MR. MADISON MR. NELSON MR. ODEGARD
- ----------------- --------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Tax Free Funds $ 6,126 $ 6,126 $ 6,126 $ 6,126 $ 6,126
Intermed. Tax Free Funds $ 911 $ 911 $ 911 $ 911 $ 911
Insured Funds $ 7,088 $ 7,088 $ 7,088 $ 7,088 $ 7,088
Mutual Funds Inc. $ 1,462 $ 1,462 $ 1,462 $ 1,462 $ 1,462
Mutual Funds II $ 4,682 $ 4,682 $ 4,682 $ 4,682 $ 4,682
Mutual Funds III $ 375 $ 375 $ 375 $ 375 $ 375
Investment Trust $ 4,817 $ 4,817 $ 4,817 $ 4,817 $ 4,817
Investment Trust II $ 36 $ 36 $ 36 $ 36 $ 36
TOTAL COMPENSATION
FROM FUND COMPLEX $ 25,500 $ 25,500 $ 25,500 $ 25,500 $ 25,500
- --------------------
</TABLE>
* Director compensation paid during the first quarter of 1996 was based on an
annual fee of $24,000, which was subsequently increased to $26,000.
VOTE REQUIRED
EACH COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF
SUCH COMPANY VOTE IN FAVOR OF THE FOREGOING NOMINEES TO SERVE AS NEW DIRECTORS
OF SUCH COMPANY. The vote of a majority of shares of each Company represented at
the meeting and entitled to vote, provided at least a quorum is represented in
person or by proxy, is sufficient for the election of the above nominees. Unless
otherwise instructed, the proxies will vote for the above nominees. In the event
any of the above nominees are not candidates for election at the meeting, the
proxies will vote for such other persons as the Board of Directors may
designate. Nothing currently indicates that such a situation will arise.
PROPOSAL TWO
PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION
As discussed above, the Merger will cause the current investment
advisory agreement of each Fund (individually a "Current Agreement" and
collectively the "Current Agreements") to terminate automatically in accordance
with its terms, as required by the 1940 Act. Such terminations will necessitate
adoption by each Fund of a new investment advisory agreement for the provision
of such services (individually a "New Agreement" and collectively the "New
Agreements"). Under the 1940 Act, each Fund's New Agreement must be approved by
the Fund's shareholders.
Shareholders of the following Funds are being asked to approve New
Agreements with VFM:
Arizona Fund Minnesota Insured Fund
Arizona Insured Fund Minnesota Limited Term Fund
California Fund Missouri Insured Fund
California Insured Fund New Mexico Fund
Colorado Fund North Dakota Fund
Idaho Fund Oregon Insured Fund
Iowa Fund Utah Tax Free Fund
Kansas Fund Washington Insured Fund
Minnesota Fund Wisconsin Fund
Minnesota High Yield Fund
For each such Fund (other than Iowa Fund and Wisconsin Fund), the
principal portfolio manager, either Andrew M. McCullagh, Jr. or Elizabeth H.
Howell, will remain unchanged. For Iowa Fund and Wisconsin Fund, VFM will
continue as investment adviser, but the portfolio manager will be changed from
Steven P. Eldredge to Ms. Howell. Biographical information on Mr. McCullagh and
Ms. Howell can be found below under "Executive Officers of Voyageur Funds."
Shareholders of the following Funds are being asked to approve New
Agreements with DMC:
Aggressive Growth Fund Growth Stock Fund
Florida Fund National High Yield Fund
Florida Insured Fund New York Fund
Florida Limited Term Fund
DMC is an indirect wholly owned subsidiary of LNC. Portfolio managers
of the Funds managed by DMC will be individuals currently employed by DMC,
except as discussed below. Biographical information for the individuals who are
expected to manage the Funds after consummation of the Merger can be found below
under "Executive Officers of Voyageur Funds."
After the Merger, Aggressive Growth Fund will be managed by Edward N.
Antoian and Gerald S. Frey. Florida Insured Fund, Florida Limited Term Fund,
Florida Fund, National High Yield Fund and New York Fund will be managed by
Patrick P. Coyne and Mitchell L. Conery. Mr. McCullagh will assist Messrs. Coyne
and Conery in the management of Florida Insured Fund, Florida Limited Term Fund
and Florida Fund. Growth Stock Fund will continue to be managed by James C. King
pursuant to a sub-advisory agreement with VAM Asset Management LLC. See Proposal
Three below.
BOARD OF DIRECTORS RECOMMENDATION
The Boards of Directors of each Company, including the disinterested
directors, voted to approve the New Agreements. For information about each
Board's deliberations and the reasons for its recommendation, please see
"Evaluation of the Merger by the Boards of Directors" near the end of this
Proposal Two.
The Boards of Directors recommend that shareholders of each Fund vote
FOR approval of such Fund's New Agreement.
COMPARISON OF NEW AGREEMENTS AND CURRENT AGREEMENTS
The material differences between the Funds' New Agreements and the
Funds' Current Agreements are discussed below. A form of New Agreement is
attached to this Proxy Statement as Exhibit A. The following discussion is
qualified in its entirety by reference to the text of such New Agreement. If
approved by shareholders, the New Agreements will take effect upon consummation
of the Merger.
ADVISORY SERVICES. Pursuant to both the Current Agreements and the New
Agreements, either VFM or DMC, as the case may be (sometimes referred to
hereinafter as the "Adviser"), has the sole and exclusive responsibility for the
management of the respective Fund's portfolio and the making and execution of
all investment decisions for the Fund subject to the objectives and investment
policies and restrictions of the Fund and subject to the supervision of the
Company's Board of Directors; provided that under the New Agreements the Adviser
may retain one or more sub-advisers. See "Ability to Retain a Sub-Adviser"
below. Under the Current Agreements and the New Agreements the Adviser is
required to furnish, at its own expense, office facilities, equipment and
personnel for servicing the investments of each Fund. In addition, the Adviser
is required, if a Company so requests, to arrange for its officers and employees
to serve without compensation from the Funds as directors, officers or employees
of the Companies if duly elected to such positions by the shareholders or
directors of the Companies.
COMPENSATION. Investment advisory fees payable by each Fund under its
Current Agreement are identical to fees which will be payable under its New
Agreement except that, as described in the following paragraph, under certain
Current Agreements, VFM is contractually obligated to waive its advisory fee if
total Fund operating expenses exceed a certain level. As compensation for the
Adviser's services, each Fund is obligated to pay to the Adviser a monthly
investment advisory fee in the amount set forth in the table on page 13, below.
The fee is based on the average daily value of each Fund's net assets at the
close of business of each business day.
FEE AND EXPENSE LIMITATIONS. Under each Fund's Current Agreement (other
than the Current Agreements of Growth Fund, Aggressive Growth Fund and Growth
and Income Fund), VFM is contractually obligated to waive its advisory fee if
and to the extent that aggregate Fund operating expenses exceed 1% of the Fund's
average daily net assets. Fund operating expenses are defined to include, among
other expenses, the advisory fee paid to VFM under the Current Agreement, the
administrative services fee paid to VFM under the Fund's Administrative Services
Agreement and deferred organizational costs, but to exclude interest, taxes,
brokerage fees and commissions, insurance premiums on portfolio securities (with
respect to those Funds that invest in insured municipal bonds) and Rule 12b-1
plan fees. The Current Agreements of Growth Fund, Aggressive Growth Fund and
Growth and Income Fund do not include contractual expense limitation provisions.
The New Agreements will not include any contractual expense limitation
provisions. However, DMC has committed, for a period of two years following the
date of Closing, to voluntarily waive fees and/or pay Fund expenses to the same
extent, if any, as would have been necessary to comply with such contractual
provisions.
Under both the Current Agreements and the New Agreements, all costs and
expenses incurred in the operation of the Funds, to the extent not specifically
assumed by the Adviser or the Funds' distributor, are the responsibility of the
Funds.
ABILITY TO RETAIN A SUB-ADVISER. The Current Agreements provide that
VFM shall have the sole and exclusive responsibility for the management of each
Fund's investment portfolio and for making and executing all investment
decisions for each Fund. Each New Agreement authorizes the Adviser, at its
expense, to retain a sub-adviser or sub-advisers to perform some or all of the
services for which the Adviser is responsible under the New Agreement. Any
retention of a sub-adviser is subject to approval by the Board of Directors and
the shareholders of the respective Fund.
STANDARD OF CARE. The Current Agreements do not contain an explicit
standard of care. The New Agreements provide that, unless there is willful
misfeasance, bad faith, gross negligence or a reckless disregard by the Adviser
of its duties, the Adviser shall not be liable to the Funds or their
shareholders for any action or omission in the course of, or connected with,
rendering services under the New Agreements or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE. The New Agreements
each provide that, subject to the primary objective of obtaining the best
available prices and execution, the Adviser may place orders with brokers or
dealers who provide brokerage and research services to the Adviser or its
advisory clients. The New Agreements also provide that, to the extent consistent
with the Rules of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc., these orders may be placed with brokers
who sell shares of the Funds to which the Adviser provides advisory services.
The services which may be provided to the Adviser 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 will be used by the Adviser in connection with its investment
decision-making process with respect to one or more Funds and accounts that it
manages, and need not be used, or used exclusively, with respect to the Fund or
account generating the brokerage. The New Agreements also provide that 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. There are no provisions in the Current
Agreements addressing these issues. Disclosure in each Fund's current Prospectus
and Statement of Additional Information provides, however, that the Adviser may
engage in such practices.
TERM. If approved by shareholders, the New Agreements will become
effective upon consummation of the Merger and will have initial terms of two
years. Thereafter, as is also the case with the Current Agreements, each Fund's
New Agreement will continue from year to year only if approved annually (a) by
the Fund's Board of Directors or by the vote of a majority of the outstanding
voting securities of the Fund and (b) by the vote of a majority of the directors
of the Fund who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting of the
Board of Directors of the Fund called for the purpose of voting on such
approval. In the case of both the New Agreements and the Current Agreements,
each Agreement may be terminated by the Fund or by the Adviser on 60 days'
notice to the other party, and terminates automatically upon its assignment.
OTHER INFORMATION RELATED TO ADVISORY AGREEMENTS
The first table below sets forth for each Fund the date of such Fund's
Current Agreement, the date on which such Agreement was last submitted to a vote
of the shareholders of the Fund, the purpose of such submission, the rate of
compensation payable under such Agreement, advisory fees paid to and waived by
VFM for the Fund's last fiscal year and the Fund's net assets at December 31,
1996. The second table sets forth for each Fund's last fiscal year
administrative services fees paid to VFM under the Fund's Administrative
Services Agreement, commissions retained by VFD under the Fund's Distribution
Agreement, and Rule 12b-1 fees paid to VFD under the Fund's Plan of
Distribution.
<TABLE>
<CAPTION>
Date Last Net Assets
Date of Submitted to Purpose of Rate of Advisory Advisory of Fund
Agmt Shareholders Submission Compensation* Fees Paid Fees Waived at 12/31/96
------- ------------ ---------- ------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
AZ Insured 11/1/93 10/13/93 (3) 0.50% $1,119,609 $ 0 $212,922,363
AZ Tax Free 3/1/95 (4) (4) 0.50% $ 55,464 $ 55,464 $ 13,268,431
CA Insured 11/1/93 10/13/93 (3) 0.50% $ 192,101 $ 75,000 $ 37,323,194
CA Tax Free 3/1/95 (4) (4) 0.50% $ 7,369 $ 7,369 $ 1,972,477
CO Tax Free 11/1/93 9/28/94 (2) 0.50% $1,865,515 $ 0 $364,022,636
FL Ltd Term 5/2/94 (4) (4) 0.40% $ 11,429 $ 11,429 $ 4,255,243
FL Insured 11/1/93 10/13/93 (3) 0.50% $1,074,026 $ 25,000 $195,392,923
FL Tax Free 3/1/95 (4) (4) 0.50% $ 29,915 $ 29,915 $ 7,411,424
MN Ltd Term 11/1/93 10/13/93 (3) 0.40% $ 281,038 $ 0 $ 67,569,891
MN Insured 11/1/93 10/13/93 (3) 0.50% $1,518,301 $ 0 $314,820,291
MN Tax Free 11/1/93 10/13/93 (3) 0.50% $2,222,690 $ 0 $437,696,176
MN High Yield 6/3/96 (4) (4) 0.65% $ 17,203 $ 17,203 $ 9,705,551
ID Tax Free 12/1/94 (4) (4) 0.50% $ 131,410 $130,000 $ 33,451,212
IA Tax Free 11/1/93 (4) (4) 0.50% $ 217,160 $ 5,000 $ 42,352,589
KS Tax Free 11/1/93 10/13/93 (3) 0.50% $ 60,154 $ 30,000 $ 12,668,250
MO Insured 11/1/93 10/13/93 (3) 0.50% $ 290,247 $ 95,000 $ 59,885,472
NTL High Yield 11/13/96 (4) (4) 0.65% $ 140,548 $ 35,572 $ 59,192,976
NY Tax Free 11/20/96 (4) (4) 0.50% $ 17,615 $ 17,615 $ 10,351,401
NM Tax Free 11/1/93 10/13/93 (3) 0.50% $ 107,784 $ 0 $ 21,268,754
ND Tax Free 11/1/93 10/13/93 (3) 0.50% $ 175,239 $ 0 $ 34,454,124
OR Insured 11/1/93 10/13/93 (3) 0.50% $ 124,769 $ 65,000 $ 26,031,139
UT Tax Free 11/1/93 10/13/93 (3) 0.50% $ 21,935 $ 21,935 $ 4,258,007
WA Insured 11/1/93 10/13/93 (3) 0.50% $ 12,662 $ 12,662 $ 2,917,416
WI Tax Free 11/1/93 (4) (4) 0.50% $ 141,262 $ 10,000 $ 30,186,630
Agg Growth 5/16/94 (4) (4) 1.00% $ 34,256 $ 25,000 $ 5,442,223
Growth 9/1/95 8/21/95 (1) 1.00% $ 222,957 $ 25,000 $ 32,079,713
- --------------------
* As a percentage of average daily net assets.
(1) To approve an increase in advisory fees.
(2) To ratify the Advisory Agreement.
(3) To approve a new Advisory Agreement (same terms and fees) with VFM as a
result of a change in control in the Adviser. (4) Not submitted to
public shareholders.
</TABLE>
<TABLE>
<CAPTION>
Commissions
Retained by
Administrative VFD under Rule 12b-1
Fees Paid Administrative Distribution Fees Paid Rule 12b-1
to VFM Fees Waived Agreement to VFD Fees Waived
-------------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AZ Insured $307,939 $ 0 $ 40,338 $ 140,267 $ 293,789
AZ Tax Free $ 35,594 $ 34,536 $ 13,217 $ 21,757 $ 2,854
CA Insured $ 85,853 $ 0 $ 14,226 $ 38,694 $ 22,641
CA Tax Free $ 20,859 $ 21,559 $ 1,641 $ 1,892 $ 811
CO Tax Free $438,237 $ 0 $ 68,666 $ 320,190 $ 500,871
FL Ltd Term $ 23,812 $ 21,512 $ 1,233 $ 4,623 $ 5,417
FL Insured $324,664 $ 0 $ 20,261 $ 14,422 $ 483,322
FL Tax Free $ 28,312 $ 30,812 $ 5,271 $ 6,210 $ 3,755
MN Ltd Term $115,484 $ 0 $ 5,306 $ 80,724 $ 124
MN Insured $353,378 $ 0 $ 33,673 $ 55,021 $ 6,996
MN Tax Free $504,689 $ 0 $ 69,682 $ 264,477 $ 8,024
MN High Yield $ 12,121 $ 13,721 $ 20 $ 7,608 $ 0
ID Tax Free $ 64,457 $ 0 $ 32,689 $ 28,358 $ 9,559
IA Tax Free $103,079 $ 0 $ 26,641 $ 9,593 $ 58,179
KS Tax Free $ 42,148 $ 0 $ 7,686 $ 11,977 $ 16,119
MO Insured $130,186 $ 0 $ 29,607 $ 50,306 $ 103,956
NTL High Yield $ 8,025 $ 0 $ 0 $ 27 $ 17,451
NY Tax Free $ 3,400 $ 5,447 $ 1 $ 288 $ 0
NM Tax Free $ 57,384 $ 0 $ 6,724 $ 4,600 $ 41,408
ND Tax Free $ 88,034 $ 0 $ 5,425 $ 2,849 $ 72,351
OR Insured $ 66,238 $ 0 $ 20,166 $ 24,373 $ 33,580
UT Tax Free $ 26,694 $ 8,065 $ 800 $ 2,499 $ 9,557
WA Insured $ 23,166 $ 21,966 $ 2,196 $ 1,938 $ 4,501
WI Tax Free $ 71,833 $ 0 $ 11,170 $ 7,264 $ 21,850
Agg Growth $ 26,121 $ 0 $ 608 $ 227 $ 0
Growth $ 80,534 $ 0 $ 6,662 $ 47,797 $ 0
Growth & Income $ 14,750 $ 10,744 $ 0 $ 30 $ 0
</TABLE>
FEES AND EXPENSES
As discussed above, certain Current Agreements contain contractual
expense limitations. The New Agreements will not contain any such limitations.
However, DMC has committed for a period of two years following the date of the
Closing of the Merger to voluntarily waive fees and/or pay Fund expenses to the
same extent, if any, as would have been necessary had such contractual expense
limitations ("Contractual Limitations") remained in place. VFM also committed in
the current Prospectuses for certain of the Funds to voluntarily waive fees or
reimburse Fund expenses in such a manner as would result in each such Fund being
charged fees and expenses that would approximate those set forth in the Fees and
Expenses tables appearing in those Prospectuses ("Prospectus Waivers").
In addition to the Contractual Limitations and Prospectus Waivers
described above, VFM and VFD have, on a voluntary basis, waived additional fees
and reimbursed additional Fund expenses for certain Funds. The amount of such
additional voluntary fee waivers and expense reimbursements has varied from year
to year depending on VFM's and VFD's assessment of market conditions. Senior
management of VFM and VFD have reviewed with senior management of DMC, Delaware
Distributors and Delaware Service the amount of such additional fees and
expenses that VFM and VFD expected to voluntarily waive or reimburse during 1997
and the expected total expense ratios for each Fund for 1997, after taking into
account such additional voluntary fee waivers and expense reimbursements.
In addition to adhering to the Contractual Limitations for the two-year
period after Closing, DMC has committed to adhere to all Prospectus Waivers for
so long as specified in the current Fund Prospectuses and, through December 31,
1997, has committed to waive fees and/or pay Fund expenses to the extent
necessary to cause the total expense ratio for Class A shares of each Fund to
equal the expense ratio that senior management of VFM and VFD projected to
maintain for such class of each such Fund during 1997. Expense ratios for Class
B and Class C of each Fund are expected to vary from the expense ratio for Class
A by the amount of the difference in the Rule 12b-1 plan fees payable for each
class. The expense ratios projected to be maintained by senior management of VFM
and VFD for 1997 are not higher than the expense ratios set forth in the Fees
and Expenses tables in the above-referenced Prospectuses, after taking into
account the Prospectus Waivers.
In accordance with DMC's standard process, it is expected that,
commencing in 1998, the voluntary fee waivers and expense limitations described
in this paragraph will be reviewed on a semi-annual basis and may be adjusted or
eliminated from time to time based on factors determined by DMC, Delaware
Distributors and Delaware Service to be relevant. Notwithstanding any possible
adjustment or elimination of voluntary fee waivers or expense limitations, fees
paid to VFM or DMC for investment management services after the Closing will not
exceed those set forth in the New Agreements being considered for approval at
the Meeting unless shareholder approval is obtained. In addition, Rule 12b-1
Plan payments for each class of the Fund will not exceed the levels set forth in
the Funds' existing Rule 12b-1 Plans without shareholder approval.
EVALUATION OF THE MERGER BY THE BOARDS OF DIRECTORS
On January 15, 1997, the Boards of Directors of the Companies were
informed by VFM that DFG had entered into the Merger Agreement. After such
notification, the Boards were advised by counsel to the Funds regarding their
fiduciary obligations and the nature and extent of the information that they
should consider requesting in order to evaluate the New Agreements and the
potential impact of the Merger on the Funds and their shareholders. A special
meeting of the Boards was held on January 28, 1997, at which meeting the Boards
met with various executive officers of LNC, DMC, Delaware Distributors and
Delaware Service ("DMH representatives"). These individuals presented to Board
members background information on LNC, information on DMC, including its
experience in municipal bond fund, fixed income fund and equity fund management,
and the structure of and rationale behind the proposed Merger. They also
discussed with Board members the organizational continuity that would follow the
Merger, noting in particular that the majority of the Funds would continue to be
managed by their current portfolio managers. They also discussed the
capabilities of Delaware Distributors and Delaware Service and described the
Transition Services Agreement referred to above that was designed to help
provide continuity with respect to shareholder servicing, fund accounting and
dividend disbursing and transfer agency services. DMH representatives summarized
other benefits that the Merger, in their opinion, could bring to Fund
shareholders, including benefits in the areas of customer service and fund
accounting, improved distribution as a result of the strength of Delaware
Distributors, and access through a net asset value exchange privilege to all
open-end mutual funds in the Delaware Group.
At the meeting, the Boards appointed a special committee made up of
disinterested directors (the "Special Committee") to further consider and make
recommendations to the Boards as to the appropriateness of the proposed
transactions. Those directors who are members of the Special Committee are James
W. Nelson and Thomas F. Madison. On February 5, 1997, the Special Committee
traveled to DMH's headquarters and met with senior management representatives of
DMC, Delaware Distributors and Delaware Service to review various aspects of the
proposed Merger, the background of DMC and its affiliates, DMC's operational
capabilities and compliance functions and future plans for the Funds. The
Special Committee also met with outside counsel to the funds in the Delaware
Group, a representative of Ernst & Young LLP ("Ernst & Young"), the independent
public accountants to the funds in the Delaware Group, proposed portfolio
managers for some of the Funds and with certain nominees to the Funds' Boards.
At a meeting on February 7, 1997, the Boards of Directors of the Funds
met to review with the Special Committee the findings of such committee. The
Boards also met with senior management representatives of DMC, Delaware
Distributors and Delaware Service and reviewed substantial additional
information, including information regarding the following points: (a) the
structure of the Merger; (b) the performance and abilities of DMC, including
performance information for funds in the Delaware Group; (c) benefits of the
Merger to Fund shareholders; (d) Fund expenses following the transaction; (e)
proposed staffing and personnel relative to the Funds; (f) organizational style;
(g) the financial condition of LNC and its affiliates; (h) the fact that
consolidations of the Funds currently are not being considered; (i) anticipated
changes in Fund officers and counsel; (j) the compliance philosophy and record
of DMC and its affiliates; (k) distribution, shareholder servicing and fund
accounting; and (l) pro forma profitability information (in connection with
providing advisory, distribution and other services to the Funds) for DMC,
Delaware Distributors and Delaware Service, assuming consummation of the Merger.
The Boards were also informed at such meeting that DMC anticipates that it will
recommend, at some point after consummation of the Merger, that Ernst & Young be
appointed as the independent public accountants for the Companies.
A final meeting of the Boards was held on February 14, 1997 for the
purpose of approving the Funds' New Agreements. At such meeting, each Company's
Board recommended that the shareholders of each Fund that is a series of such
Company approve the Fund's New Agreement, to become effective as of the closing
of the Merger. During its deliberations the Boards noted, in particular, the
following:
* Each Fund's New Agreement contains substantially the same
material terms and conditions as are contained in the Fund's
Current Agreement except that, as discussed above, the New
Agreements do not contain contractual expense limitation
provisions, they allow the Adviser to retain one or more
sub-advisers and they contain explicit standards of care.
* DMC has committed, for a period of two years following the
date of Closing, to voluntarily waive fees and/or pay Fund
expenses to the same extent, if any, as would have been
necessary to comply with the contractual expense limitations
in the Current Agreements.
* The Funds will not bear any costs or expenses in connection
with the Merger, including the costs of this proxy
solicitation.
* No change in any Fund's investment objectives or fundamental
policies are currently contemplated in connection with the
Merger.
* The Merger is expected to result in a number of benefits to
shareholders, including access through a net asset value
exchange privilege to all of the open-end mutual funds in the
Delaware Group.
* The Merger is not expected to cause any change in the
investment personnel managing the majority of the Funds.
The Board also considered Section 15(f) of the 1940 Act during its
deliberations. Section 15(f) provides a "safe harbor" from the 1971 case of
ROSENFELD V. BLACK, in which the U.S. Court of Appeals for the Second Circuit
held that an investment adviser is prohibited from benefitting financially in
connection with the sale or assignment of its advisory office to another
investment adviser. Under the ROSENFELD analysis, any compensation received by
an investment adviser or an affiliate thereof in connection with the transfer or
assignment of an investment advisory agreement arguably would be prohibited if
all or any portion of such compensation constitutes consideration for the
assistance by such investment adviser or affiliate thereof in facilitating the
transfer of the investment advisory office to the successor adviser. The Section
15(f) safe harbor is available if two conditions are met. First, for a period of
three years after the transaction at least 75% of the board members of the
investment company must not be "interested persons" (within the meaning of the
1940 Act) of the new or predecessor investment adviser. The Board of Directors
which shareholders are being asked to elect in Proposal One, above, consists of
eight directors, two of whom, Jeffrey J. Nick and Wayne A. Stork, are interested
persons of LNC, and none of whom are interested persons of VFM. Accordingly, the
composition of the proposed Board of Directors would be in compliance with this
provision of Section 15(f). Second, an "unfair burden" must not be imposed upon
the investment company as a result of such transaction or any express or implied
terms, conditions or understandings applicable thereto. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during a two-year period
after the transaction whereby the investment adviser, or any interested person
of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its shareholders (other
than fees for bona fide investment advisory or other services) or from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter for such investment company). In
connection therewith, LNC represented to the Board that it will use its best
efforts to assure that the Funds do not execute any portfolio transactions
through an affiliate of LNC for a period of at least two years following
consummation of the Merger.
LNC has represented in the Merger Agreement that neither LNC nor any of
its affiliates has any express or implied understanding or arrangement which
would impose an unfair burden on any of the Funds or would in any way violate
Section 15(f) of the 1940 Act as a result of the transactions contemplated by
the Merger Agreement.
VOTE REQUIRED
THE BOARDS OF DIRECTORS RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE
IN FAVOR OF APPROVAL OF SUCH FUND'S NEW AGREEMENT. Approval of the proposal for
a Fund requires the favorable vote of a majority of the outstanding shares of
such Fund, as defined in the 1940 Act, which means the lesser of the vote of (a)
67% of the shares of the Fund present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund. Unless otherwise instructed, the proxies
will vote to approve the New Agreements.
PROPOSAL THREE
PROPOSAL TO APPROVE A SUB-ADVISORY AGREEMENT
PURSUANT TO WHICH VOYAGEUR ASSET MANAGEMENT LLC
WOULD MANAGE THE ASSETS OF GROWTH STOCK FUND
THE PROPOSED SUB-ADVISORY AGREEMENT
As set forth in Proposal Two, shareholders of Growth Stock Fund are
being asked to approve a new investment advisory agreement with DMC. DMC
proposed that the Board of Directors approve a sub-advisory agreement (the
"Sub-Advisory Agreement") between DMC and Voyageur Asset Management LLC ("VAM
LLC"). It is expected that VAM LLC will be a wholly owned subsidiary of DFG LLC
formed as a part of the Reorganization. See "Background." After the Merger, VAM
LLC is expected to conduct the private account investment advisory business
formerly conducted by VFM. The current portfolio manager for Growth Stock Fund,
James C. King, will be an employee of VAM LLC following the Merger and, if the
proposed Sub-Advisory Agreement is approved, will continue to act as Growth
Stock Fund's portfolio manager after the Merger. Mr. King was a director of VFM
and VFD from 1993 through 1995 and has been a Senior Equity Portfolio Manager of
VFD since 1990. He has over 30 years of investment experience. The Board of
Directors of Growth Stock Fund has approved, and recommends that Growth Stock
Fund shareholders approve, the Sub-Advisory Agreement. If approved by
shareholders, the Sub-Advisory Agreement would be effective upon closing of the
Merger.
DMC believes that it has the capacity among its existing investment
personnel to manage Growth Stock Fund without the assistance of a sub-adviser
but has at this point determined to utilize a sub-adviser to enhance the
continuity in the provision of investment management services for existing
Growth Stock Fund shareholders. In fact, DMC under the proposed investment
management agreement intends to be actively involved in the management of Growth
Stock Fund. At such time as DMC determines that it would be prudent to manage
the Growth Stock Fund without the assistance of a sub-adviser, it may,
consistent with the terms of the Sub-Advisory Agreement, terminate such
agreement.
The form of Sub-Advisory Agreement is attached as Exhibit B to this
Proxy Statement. The following discussion is qualified in its entirety by
reference to the text of the Sub-Advisory Agreement.
Under the terms of the Sub-Advisory Agreement, and subject to the
supervision of DMC, VAM LLC will direct the investment of Growth Stock Fund's
assets and will be responsible for the formulation and implementation of a
continuing program for the management of the Fund's assets and resources. VAM
LLC will make all determinations with respect to the investment of the assets of
Growth Stock Fund and will take such steps as may be necessary to implement the
determinations, including the placement of purchase and sale orders on behalf of
the Fund.
The Sub-Advisory Agreement provides that DMC shall pay VAM LLC a
monthly management fee at an annual rate of .50% of Growth Stock Fund's average
daily net assets during each month (provided that, to the extent that DMC
undertakes in Growth Stock Fund's Registration Statement or elsewhere to waive
its investment advisory fee, VAM LLC has agreed to proportionately waive its
sub-advisory fee). VAM LLC's sub-advisory fee will be paid by DMC, not by
Growth Stock Fund.
As is the case with the proposed investment advisory agreement for
Growth Stock Fund, the Sub-Advisory Agreement provides that, subject to the
primary objective of obtaining the best available prices and execution, VAM LLC
may place orders with brokers or dealers who provide brokerage and research
services to VAM LLC or its advisory clients. See "Proposal Two--Comparison of
New Agreements and Current Agreements--Portfolio Transactions and Allocation of
Brokerage."
The Sub-Advisory Agreement will terminate automatically in the event of
its assignment. In addition, the Sub-Advisory Agreement is terminable at any
time, without penalty, by the Board of Directors of Growth Stock Fund or by a
vote of a majority of the Fund's outstanding voting securities on 60 days'
written notice to DMC and VAM LLC, by DMC on 60 days' written notice to VAM LLC,
or by VAM LLC on 60 days' written notice to the DMC. The Sub-Advisory Agreement
shall have an initial term of two years and thereafter shall continue in effect
only so long as such continuance is specifically approved at least annually by
either the Board of Directors of Growth Stock Fund, or by a vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the Fund,
provided that, in either event, such continuance is also approved by a vote of a
majority of the directors who are not parties to such Agreement, or interested
persons of such parties, cast in person at a meeting called for the purpose of
voting on such approval.
THE BOARD'S CONSIDERATIONS
The Sub-Advisory Agreement was approved by the Growth Stock Fund's
Board of Directors, subject to shareholder approval, at a meeting called for the
purpose of voting on the Sub-Advisory Agreement held February 14, 1997. Prior to
approving the Sub-Advisory Agreement, the Board considered a variety of
factors, including: (a) the historical performance of Growth Stock Fund under
current management; (b) the nature, quality and extent of the services proposed
to be provided by VAM LLC pursuant to the Sub-Advisory Agreement; (c) DMC's
role in supervising VAM LLC in its capacity as sub-adviser to DMC; and (d) the
reasonableness of the proposed fee allocation between DMC and VAM LLC in light
of the reduced investment role but continued overall responsibility of DMC.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF GROWTH STOCK FUND RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT.
Adoption of the proposal requires the favorable vote of a majority of the
outstanding shares of the Fund, as defined in the 1940 Act, which means the
lesser of the vote of (a) 67% of the shares of the Fund present at a meeting
where more than 50% of the outstanding shares are present in person or by proxy,
or (b) more than 50% of the outstanding shares of the Fund. Unless otherwise
instructed, the proxies will vote for the approval of the proposed Sub-Advisory
Agreement.
PROPOSAL FOUR
PROPOSAL TO APPROVE THE LIQUIDATION OF
INTERNATIONAL EQUITY FUND, NATIONAL INSURED TAX FREE FUND,
NATIONAL LIMITED TERM TAX FREE FUND
AND NATIONAL TAX FREE FUND
INTRODUCTION
On February 7, 1997, the Boards of Directors of International Equity
Fund, National Insured Tax Free Fund, National Limited Term Tax Free Fund and
National Tax Free Fund (individually a "Liquidating Fund" and collectively the
"Liquidating Funds") considered the recommendation of VFM that such Funds be
liquidated and terminated. A Plan of Liquidation and Termination for each such
Fund (individually a "Liquidation Plan" and collectively the "Liquidation
Plans") was subsequently adopted by the Boards on February 14, 1997, subject to
shareholder approval. A copy of the form of Liquidation Plan is attached as
Exhibit C to this Proxy Statement. If the Liquidation Plan is approved by a
Liquidating Fund's shareholders, the portfolio securities and other assets of
such Fund will be sold, creditors will be paid or reserves for such payments
established, and the net proceeds of such sales will be distributed to
shareholders in cash, pro rata in accordance with their shareholdings. With
respect to each Fund, approval of the Liquidation Plan will be considered
approval of an amendment to the articles of incorporation of such Fund's Company
required to effect the Liquidation Plan.
BACKGROUND
In connection with the Merger described at the beginning of this Proxy
Statement under "Background," LNC and VFM determined that neither VFM nor DMC
would act as investment adviser to the Liquidating Funds after consummation of
the Merger. LNC's and VFM's determination was based primarily upon the small
size of each of the Liquidating Funds, the fact that each of the Liquidating
Funds is duplicative of a fund offered within the Delaware Group, and the cost
of and amount of time available to complete a merger of each Liquidating Fund
into its corresponding Delaware Group fund prior to or at the time of Closing.
The Liquidating Funds had the following net asset values as of December 31,
1996:
Fund Net Assets
---- ----------
International Equity Fund $ 2,560,777
National Insured Tax Free Fund $ 32,030,258
National Limited Term Tax Free Fund $ 1,184,425
National Tax Free Fund $ 3,737,821
Shareholders of the Liquidating Funds will be given the opportunity to
invest their redemption or liquidation proceeds in Class A shares of any
open-end mutual fund in the Delaware Group (including the Voyageur Funds that
become members of the Delaware Group as a result of the Merger) at net asset
value, without the imposition of any front-end sales charge, for a period of one
year following the liquidation of the shareholder's Fund.
THE BOARDS' CONSIDERATIONS
At the meeting of the Boards of Directors held on February 7, 1997, VFM
reviewed LNC's conclusion with the Boards. VFM noted that VAM LLC has decided
that it will not manage the Liquidating Funds after the Merger on a continuing
basis, since VAM LLC intends to retain generally only those assets related to
the management of private accounts and certain non-retail mutual funds. VFM also
expressed its opinion that, given the small size of each of the Liquidating
Funds, it would be difficult to find an alternative investment adviser
interested in managing such Funds. VFM then reviewed the tax consequences of a
liquidation with the Boards, explaining that the payment of liquidation
distributions will be a taxable event to shareholders. Finally, VFM informed the
Boards that shareholders of the Liquidating Funds would be given the opportunity
to invest their redemption or liquidation proceeds in Class A shares of any
open-end mutual fund in the Delaware Group (including the Voyageur Funds that
become members of the Delaware Group) at net asset value, without the imposition
of any front-end sales charge.
On February 14, 1997, the Boards of Directors, including all of the
independent directors, unanimously approved for each Liquidating Fund its
Liquidation Plan and determined to recommend that shareholders of each
Liquidating Fund approve its respective Liquidation Plan.
If shareholders of a Fund do not approve liquidation, the Board of
Directors will meet to determine an alternative course of action. Liquidation of
the Funds is contingent upon consummation of the Merger.
SUMMARY OF THE LIQUIDATION PLANS AND RELATED TRANSACTIONS
For each Liquidating Fund, such Fund's Liquidation Plan will become
effective upon consummation of the Merger (the "Effective Date"). From the
Effective Date through the completion of liquidation, VAM LLC will act on an
interim basis as the investment adviser for each Liquidating Fund. As soon as
practicable after the Effective Date of a Liquidating Fund's Liquidation Plan,
such Fund will complete the sale of its portfolio securities in order to convert
its assets to cash. After the Effective Date, such Fund will not engage in any
business activity except for the purpose of winding up its business and affairs,
preserving the value of its assets and distributing such assets to shareholders
after the payment to (or reservation of assets for payment to) all creditors of
the Fund. All contracts entered into by or on behalf of a Liquidating Fund will
terminate upon consummation of the transactions contemplated by such Fund's
Liquidation Plan. After the Effective Date of a Liquidating Fund's Liquidation
Plan, and in any event within 60 days thereafter, such Fund will mail to each
shareholder of record who has not redeemed such shareholder's shares a
liquidating distribution equal to the shareholder's proportionate interest in
the remaining assets of the Fund and information concerning the sources of the
liquidating distribution. Shareholders of the Liquidating Funds may reinvest
their redemption proceeds or the proceeds of their liquidating distributions in
Class A shares of any of the mutual funds in the Delaware Group at net asset
value without the imposition of any front-end sales charge for a period of one
year following liquidation of the shareholder's Fund.
After the distribution of assets to shareholders, each Liquidating Fund
will be terminated in accordance with its Liquidation Plan and applicable
provisions under Minnesota law. The Liquidation Plans provide that the Boards of
Directors may authorize such variations from, or amendments to, the provisions
of the Liquidation Plans as may be necessary or appropriate to effect the
complete liquidation and termination of the Liquidating Funds in accordance with
the purposes to be accomplished by the Liquidation Plans.
The adoption of the Liquidation Plan by a Liquidating Fund will not
affect the right of shareholders of such Fund to redeem shares of such Fund at
their then current net asset value per share any day prior to the day the
liquidating distribution is made.
FEDERAL INCOME TAX CONSEQUENCES
PAYMENT BY A LIQUIDATING FUND OF LIQUIDATION DISTRIBUTIONS TO
SHAREHOLDERS WILL BE A TAXABLE EVENT. BECAUSE THE INCOME TAX CONSEQUENCES FOR A
PARTICULAR SHAREHOLDER MAY VARY DEPENDING ON INDIVIDUAL CIRCUMSTANCES, EACH
SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF RECEIPT OF A LIQUIDATING
DISTRIBUTION.
Each Liquidating Fund currently qualifies, and intends to continue to
qualify through the end of the liquidation period, for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended, so that
it will be relieved of federal income tax on any investment company taxable
income or net capital gain (the excess of net long-term capital gain over net
short-term capital loss) from the sale of its assets. The payment of liquidation
distributions will be a taxable event to shareholders. Each shareholder will be
viewed as having sold his or her Fund shares for an amount equal to the
liquidation distribution(s) he or she receives. Each shareholder will recognize
gain or loss in an amount equal to the difference between (a) the shareholder's
adjusted basis in the Fund shares, and (b) such liquidation distribution(s). The
gain or loss will be capital gain or loss to the shareholder if the Fund shares
were capital assets in the shareholder's hands and generally will be long-term
if the Fund shares were held for more than one year before the liquidation
distribution is received.
Immediately prior to declaring the liquidating distribution, National
Insured Tax Free Fund, National Limited Term Tax Free Fund and National Tax Free
Fund will declare a dividend of all current but undistributed tax-exempt
interest income. Shareholders will be entitled to treat this amount as an
exempt-interest dividend, I.E., as tax-exempt interest income in their hands.
This tax-exempt dividend will be paid at the same time as the liquidating
distribution, and shareholders will be notified of the portion of the total
distribution that constitutes the tax-exempt interest dividend. The balance of
the liquidating distribution will be treated as an amount realized from the sale
of Fund shares, as discussed above.
Each Liquidating Fund generally will be required to withhold tax at the
rate of 31% with respect to any liquidation distribution paid to individuals and
certain other non-corporate shareholders who fail to certify to the Fund that
their social security number or taxpayer identification number provided to the
Fund is correct and that the shareholder is not subject to backup withholding.
The foregoing summary is generally limited to the material federal
income tax consequences to shareholders who are individual United States
citizens and who hold shares as capital assets. It does not address the federal
income tax consequences to shareholders who are corporations, trusts, estates,
tax-exempt organizations, pension plans, Individual Retirement Accounts or
non-resident aliens. This summary does not address state or local tax
consequences. Shareholders are urged to consult their own tax advisers to
determine the extent of the federal income tax liability they would incur as a
result of receiving a liquidation distribution, as well as any tax consequences
under any applicable state, local or foreign laws.
VOTE REQUIRED
EACH LIQUIDATING FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF SUCH FUND'S LIQUIDATION PLAN. For each
Liquidating Fund, the affirmative vote of a majority of the outstanding shares
of the Fund is required to approve the Liquidation Plan.
PROPOSAL FIVE
PROPOSAL FOR GROWTH AND INCOME FUND
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION
INTRODUCTION
Shareholders of Growth and Income Fund (for purposes of this Proposal
Five, the "Fund") are being asked to consider and vote upon an Agreement and
Plan of Reorganization, dated as of February 14, 1997 (the "Reorganization
Plan"), by and between Voyageur Mutual Funds III, Inc. ("Voyageur III"), on
behalf of the Fund, and VAM Institutional Funds, Inc. ("VAM Funds"), on behalf
of a newly formed series of VAM Funds which is also called Growth and Income
Fund (the "New Fund"). Pursuant to the Reorganization Plan, all of the assets of
the Fund would be acquired by New Fund (which, prior to such time, would have no
assets) and shareholders of the Fund would become shareholders of New Fund and
would receive shares in New Fund equal to the value of their holdings in the
Fund on the date of such transaction (the transactions described above are
referred to as the "Fund Reorganization"). The shares to be issued by New Fund
pursuant to the Fund Reorganization ("New Fund Shares") will be issued at net
asset value without a sales charge. Each Fund shareholder will receive New Fund
shares that are of the same class as such shareholder's Fund shares (i.e., Class
A, Class B or Class C). A vote in favor of the Reorganization Plan will be
considered a vote in favor of an amendment to the articles of incorporation of
Voyageur III required to effect the Fund Reorganization as contemplated by the
Reorganization Plan. The Fund Reorganization is not contingent upon consummation
of the Merger.
BACKGROUND
The Fund is currently a series of Voyageur III. Aggressive Growth Fund,
Growth Stock Fund and International Equity Fund are also series of Voyageur III.
As described above, in connection with the Merger, shareholders of Aggressive
Growth Fund and Growth Stock Fund are being asked to approve new investment
advisory agreements with DMC, and shareholders of International Equity Fund are
being asked to approve such Fund's liquidation. In addition, shareholders of
each series of Voyageur III (including the Fund) are being asked to approve a
new Board of Directors for Voyageur III that will consist principally of
individuals who currently serve on the Board of Directors of the investment
companies in the Delaware Group.
In negotiating the terms of the Merger, the owners of VFM and DFG
determined that they would prefer to maintain any current rights their companies
have to provide investment advisory or distribution services to the Fund.
However, in order to do this the Fund must be separated out of the corporate
entity of which Aggressive Growth Fund, Growth Stock Fund and International
Equity Fund are series. In order to accomplish this, the Fund Reorganization is
being recommended. If the Reorganization Plan is approved, it will in essence
cause the Fund to become, as the New Fund, a series of a different corporate
entity, VAM Funds. However, this corporate entity will, like Voyageur III, be a
Minnesota corporation, and will have the same Board of Directors as Voyageur
III. The provisions of the articles of incorporation of VAM Funds, and the
rights of shareholders determined thereunder, are substantially the same as
those of Voyageur III and its shareholders. The Reorganization Plan will not
result in any other material changes to shareholders. Management of the Fund
will remain essentially unchanged because VAM LLC (the successor to this portion
of VFM's operations) will continue to manage the Fund and utilize Segall Bryant
& Hamill ("Segall Bryant") as sub-adviser. See "Comparison of Fund and New
Fund."
THE REORGANIZATION PLAN
The terms and conditions under which the Fund Reorganization would be
consummated are set forth in the Reorganization Plan and are summarized below.
This summary is qualified in its entirety by reference to the Reorganization
Plan, a copy of which is attached as Exhibit D to this Proxy Statement.
The Reorganization Plan provides that (a) the Fund will transfer all of
its assets, including portfolio securities, cash, cash equivalents, securities,
commodities, futures and interest receivables, to New Fund at the Closing Time
in exchange for the assumption by New Fund of all of the Fund's liabilities,
including all expenses, costs, charges and reserves, as reflected on an
unaudited statement of assets and liabilities of the Fund prepared by the
Treasurer of Voyageur III as of the Valuation Date in accordance with generally
accepted accounting principles consistently applied from the prior audited
period, and the delivery of New Fund Shares; and (b) such New Fund Shares will
be distributed to the shareholders of the Fund at the Closing Time or as soon as
practicable thereafter and outstanding Fund shares will be canceled and retired.
The distribution of New Fund Shares and the cancellation and retirement of
outstanding Fund shares is to be accomplished under the Reorganization Plan by
amending the articles of incorporation of Voyageur III in the manner provided in
the amendment set forth in Exhibit 1 to the Reorganization Plan.
For technical reasons, certain of the Fund's existing investment
limitations may be deemed to preclude the Fund from consummating the Fund
Reorganization to the extent that the Fund Reorganization would involve the Fund
holding all of its assets as shares of New Fund until such shares are
distributed to the Fund's shareholders. By approving the Reorganization Plan,
the Fund's shareholders will be deemed to have agreed to waive each of these
limitations.
The number of New Fund Shares to be delivered to the Fund will have an
aggregate net asset value equal to the value of the Fund assets acquired by New
Fund (net of the liabilities assumed by New Fund); these values will be
calculated as of the close of business of the New York Stock Exchange on a
business day not later than the fifth business day following the receipt of the
requisite approval of the Reorganization Plan by the shareholders of the Fund or
at such other time as the Fund and New Fund may agree (the "Valuation Date").
These New Fund Shares will be distributed to the former Fund shareholders, with
each such shareholder receiving New Fund Shares of the same class as and with a
value equal to the value of their Fund shares.
New Fund will cause its transfer agent to credit and confirm an
appropriate number of New Fund Shares to each Fund shareholder. Neither the Fund
nor New Fund issues stock certificates.
The Reorganization Plan provides that no sales charges will be incurred
by Fund shareholders in connection with the acquisition by them of New Fund
shares pursuant to the Reorganization Plan. The Reorganization Plan also
provides that former holders of Fund shares will receive credit for the period
they held such shares in determining any contingent deferred sales charge
applicable upon redemption of their New Fund Shares and in determining the date
upon which New Fund Class B Shares convert to New Fund Class A Shares.
The Closing Time will be 5:00 p.m., Eastern Time, on the Valuation
Date, or at such other time as the Fund and New Fund may agree. The consummation
of the Fund Reorganization is contingent upon the approval of the Reorganization
Plan by the shareholders of the Fund and the receipt of the other opinions and
certificates set forth in Sections 6, 7 and 8 of the Reorganization Plan and the
occurrence of the events described in those Sections, certain of which may be
waived by the Fund or New Fund. The Reorganization Plan may be amended in any
mutually agreeable manner, except that no amendment may be made subsequent to
the Meeting which would detrimentally affect the value of the New Fund Shares to
be distributed. LNC will bear all direct costs associated with preparation,
printing, filing and proxy solicitation expenses incurred in connection with
obtaining requisite shareholder approval of the Fund Reorganization. In
addition, VFM will pay any unamortized organizational expenses on the books of
the Fund immediately prior to the Fund Reorganization.
The Reorganization Plan may be terminated and the Fund Reorganization
abandoned at any time, before or after approval by the Fund's shareholders, by
mutual consent of the Fund and New Fund. In addition, either party may terminate
the Reorganization Plan upon the occurrence of a material breach of the
Reorganization Plan by the other party or if, by July 1, 1997, any condition set
forth in the Reorganization Plan has not been fulfilled or waived by the party
entitled to its benefits.
Shareholders of the Fund will continue to be able to redeem their
shares at net asset value next determined after receipt of the redemption
request until the close of business on the business day next preceding the
Closing Date. Redemption requests received by the Fund thereafter will be
treated as requests for redemption of shares of New Fund.
TAX ASPECTS OF THE REORGANIZATION
It is intended that the Fund Reorganization will qualify for federal
income tax purposes as a tax-free reorganization under Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that, for
federal income tax purposes, no income, gain or loss will be recognized by the
Fund's shareholders. The Fund has not asked, nor does it plan to ask, the
Internal Revenue Service to rule on the tax consequences of the Fund
Reorganization.
As a condition to the closing of the Fund Reorganization, the two funds
will receive an opinion from Dorsey & Whitney LLP, counsel to the funds, based
in part on certain representations to be furnished by each fund, substantially
to the effect that the federal income tax consequences of the Fund
Reorganization will be as follows:
(i) the Fund Reorganization will constitute a reorganization
within the meaning of Section 368(a)(1)(F) of the Code, and New Fund
and the Fund each will qualify as a party to the Fund Reorganization
under Section 368(b) of the Code;
(ii) Fund shareholders will recognize no income, gain or loss
upon receipt, pursuant to the Fund Reorganization, of New Fund shares.
Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Fund
which are distributed by the Fund prior to the Fund Reorganization;
(iii) the tax basis of New Fund shares received by each Fund
shareholder pursuant to the Fund Reorganization will be equal to the
tax basis of the Fund shares exchanged therefor;
(iv) the holding period of New Fund shares received by each
Fund shareholder pursuant to the Fund Reorganization will include the
period during which the Fund shareholder held the Fund shares exchanged
therefor, provided that the Fund shares were held as a capital asset on
the date of the Fund Reorganization;
(v) the Fund will recognize no income, gain or loss by
reason of the Fund Reorganization;
(vi) New Fund will recognize no income, gain or loss by
reason of the Fund Reorganization;
(vii) the tax basis of the assets received by the Fund
pursuant to the Fund Reorganization will be the same as the basis of
those assets in the hands of the Fund immediately prior to the Fund
Reorganization;
(viii) the holding period of the assets received by New Fund
pursuant to the Fund Reorganization will include the period during
which such assets were held by the Fund; and
(ix) New Fund will succeed to and take into account the
earnings and profits, or deficit in earnings and profits, of the Fund
immediately prior to the Fund Reorganization.
The foregoing advice is based in part upon certain representations
furnished by the Fund, VFM and certain 5% shareholders of the Fund, of which two
principal ones are: (a) immediately following consummation of the Fund
Reorganization, the shareholders of the Fund will own all of the outstanding
stock of the New Fund and will own such stock solely by reason of their
ownership of stock of the Fund immediately prior to the Fund Reorganization; and
(b) there is no plan or intention on the part of shareholders of the Fund who
own 5% or more of the shares of the Fund and, to the best knowledge of
management of the Fund, there is no plan or intention on the part of the
remaining shareholders of the Fund to sell, exchange or otherwise dispose of any
of the shares of the New Fund stock received in the Fund Reorganization.
SHAREHOLDERS OF THE FUND SHOULD CONSULT THEIR TAX ADVISORS REGARDING
THE EFFECT, IF ANY, OF THE PROPOSED FUND REORGANIZATION IN LIGHT OF THEIR
INDIVIDUAL CIRCUMSTANCES. SINCE THE FOREGOING DISCUSSION RELATES ONLY TO THE
FEDERAL INCOME TAX CONSEQUENCES OF THE FUND REORGANIZATION, SHAREHOLDERS OF THE
FUND SHOULD CONSULT THEIR TAX ADVISORS AS TO STATE AND LOCAL TAX CONSEQUENCES,
IF ANY, OF THE FUND REORGANIZATION.
DISSENTERS' RIGHTS
Pursuant to Sections 302A.471 and 302A.473 of the Minnesota Business
Corporation Act (the "MBCA Sections"), record holders of Fund shares are
entitled to assert dissenters' rights in connection with the Fund Reorganization
and obtain payment of the "fair value" of their shares, provided such
shareholders comply with the requirements of the MBCA Sections. NOTWITHSTANDING
THE PROVISIONS OF THE MBCA SECTIONS, THE DIVISION OF INVESTMENT MANAGEMENT OF
THE COMMISSION HAS TAKEN THE POSITION THAT ADHERENCE TO STATE APPRAISAL
PROCEDURES BY A REGISTERED INVESTMENT COMPANY ISSUING REDEEMABLE SECURITIES
WOULD CONSTITUTE A VIOLATION OF RULE 22C-1 UNDER THE 1940 ACT. THIS RULE
PROVIDES THAT NO OPEN-END INVESTMENT COMPANY MAY REDEEM ITS SHARES OTHER THAN AT
NET ASSET VALUE NEXT COMPUTED AFTER RECEIPT OF A TENDER OF SUCH SECURITY FOR
REDEMPTION. IT IS THE VIEW OF THE DIVISION OF INVESTMENT MANAGEMENT THAT RULE
22C-1 PREEMPTS APPRAISAL PROVISIONS IN STATE STATUTES.
It should be emphasized that, as usual, Fund shareholders may redeem
their shares at net asset value at any time prior to the Closing Date in
accordance with the redemption procedures set forth in the Fund's Prospectus.
DESCRIPTION OF SHARES
Shares of New Fund to be issued pursuant to the Reorganization Plan
will, when issued, be fully paid and nonassessable by New Fund and transferable
without restrictions and will have no preemptive or conversion rights.
COMPARISON OF FUND AND NEW FUND
INVESTMENT ADVISER AND SUB-ADVISER. VAM, on behalf of New Fund, will
enter into an investment advisory agreement with VAM LLC. The terms of such
advisory agreement will be substantially identical to the terms of the Fund's
current investment advisory agreement with VFM. As described above, prior to the
Merger DFG will complete a reorganization whereby certain assets of DFG and its
subsidiaries, including certain assets of VFM, will be sold by DFG to certain
newly organized limited liability companies, including VAM LLC. These limited
liability companies will not be acquired by LNC in the Merger. The ultimate
ownership and control of VAM LLC will remain with the same individuals who
currently control VFM, namely, Michael E. Dougherty, James O. Pohlad, Robert C.
Pohlad and William M. Pohlad. It is expected that those individuals who
currently serve as the principal executive officer and the directors of VFM
will, with the exception of Frank C. Tonnemaker, serve in similar capacities
with VAM LLC after the merger. See "Supplemental Information about Voyageur Fund
Managers, Inc." VAM LLC in turn will enter into a sub-advisory agreement with
Segall Bryant, the Fund's current sub-adviser, containing substantially
identical terms to the current sub-advisory agreement between VFM and Segall
Bryant. Ralph Segall, Managing Director of Segall Bryant, who is primarily
responsible for the day-to-day management of the Fund's portfolio, will continue
to act in such capacity for New Fund. A vote in favor of the Fund Reorganization
will be deemed a vote to authorize the Fund (as the sole shareholder of New Fund
Shares on the date of the Fund Reorganization) to vote in favor of both a new
advisory agreement between the New Fund and VAM LLC and a new sub-advisory
agreement between VAM LLC and Segall Bryant.
The Fund Reorganization is not contingent upon consummation of the
Merger. Thus, in the event shareholders approve the Fund Reorganization and the
Merger is not consummated, the Fund may enter into an advisory agreement with
VFM, rather than VAM LLC, which would in turn enter into a sub-advisory
agreement with Segall Bryant.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The investment
objectives, policies and restrictions of New Fund will be identical to those of
the Fund.
DIRECTORS AND EXECUTIVE OFFICERS. As mentioned above, the Directors of
VAM Funds are the same as the current Directors of Voyageur III. The officers of
VAM Funds are the same individuals as listed below under "Executive Officers of
Voyageur Funds." However, Mr. McCullagh and Ms. Howell will resign as officers
of VAM Funds immediately prior to the Merger.
PLAN OF DISTRIBUTION; PRINCIPAL UNDERWRITER. The Plan of Distribution
for New Fund will be substantially identical to the Fund's current Plan of
Distribution. VFD acts as the principal underwriter of the Fund's shares.
Dougherty Dawkins LLC, one of the limited liability companies to be formed in
the reorganization of DFG, will act as the principal underwriter of New Fund's
shares.
DIVIDEND DISBURSING, TRANSFER, ADMINISTRATIVE AND ACCOUNT SERVICES
AGENT. VFM acts as the Fund's dividend disbursing, transfer, administrative and
account services agent pursuant to an administrative services agreement. VAM LLC
will act in such capacities for New Fund pursuant to an administrative services
agreement that will have substantially identical terms to the current agreement
between VFM and the Fund. VAM LLC may contract with third parties to provide
some of these services.
THE BOARD'S CONSIDERATIONS
At a meeting of the Board of Directors of Voyageur III held on February
7, 1997, VFM reviewed the proposed Reorganization Plan with the Board. In
reviewing the Reorganization Plan the Board considered the various factors
discussed above, including the following:
(a) The Fund is currently a series of a corporate entity that
will become a part of the Delaware Group, whereas the Fund will not be
advised by DMC or its affiliates;
(b) The Reorganization Plan will result in no material changes
to shareholders other than a change in the corporate entity of which
their fund is a series, and will allow their fund to be a series of a
corporate entity that will be advised by VAM LLC;
(c) The Board of Directors of VAM Funds will not change as a
result of the Merger and will continue to consist of the same
individuals who currently serve on the Board of Directors of Voyageur
III;
(d) It is anticipated that the Fund Reorganization will
constitute a tax-free reorganization for federal income tax purposes,
and no gain or loss will be recognized by the Fund or its shareholders
for federal income tax purposes as a result of the Fund Reorganization.
Based on the foregoing, at a meeting held on February 14, 1997, the
Board determined that the Fund Reorganization is in the best interests of the
shareholders of the Fund and that the interests of Fund shareholders will not be
diluted as a result thereof, and therefore approved the Reorganization Plan.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF VOYAGEUR III UNANIMOUSLY RECOMMENDS THAT FUND
SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF THE REORGANIZATION PLAN. The
affirmative vote of a majority of the Fund shares entitled to vote is required
to approve the Reorganization Plan.
SUPPLEMENTAL INFORMATION ABOUT
VOYAGEUR FUND MANAGERS, INC.
VFM, a Minnesota corporation, is an indirect wholly owned subsidiary of
DFG, which is owned 49.83% by Michael E. Dougherty and 49.83% equally by James
O. Pohlad, Robert C. Pohlad and William M. Pohlad. Mr. Dougherty co-founded the
predecessor of DFG in 1977 and has served as DFG's Chairman of the Board and
Chief Executive Officer since inception. As of January 31, 1997, VFM and its
affiliates served as the investment manager to six closed-end and ten open-end
investment companies (comprising 33 separate investment portfolios),
administered numerous private accounts and managed approximately $11 billion in
assets.
The names and principal occupations of the principal executive officer
and each director of VFM are set forth below. The address of all individuals is
that of the VFM and the Funds.
Name Principal Occupation
- ---- --------------------
Michael E. Dougherty Chairman of VFM; Chairman of VFD and
Dougherty Dawkins, Inc.; Director,
Chairman of the Board, President and
Chief Executive Officer of DFG.
John G. Taft Director and President of VFM; Director
and Executive Vice President of VFD.
Jane M. Wyatt Director and Chief Investment Officer
of VFM; Director and Executive Vice
President of VFD.
Edward J. Kohler Director and Executive Vice President
of VFM; Director of VFD.
Frank C. Tonnemaker Director and Executive
Vice President of VFM; and Director and
President of VFD.
All of such individuals will resign their positions immediately prior
to Closing. It is expected that, after consummation of the Merger, the
individuals who currently serve as the principal executive officer and directors
of DMC will also serve as the principal executive officer and directors of VFM.
See "Supplemental Information about Delaware Management Company, Inc." below.
Information regarding compensation received by VFM pursuant to certain
advisory agreements is set forth above under "Proposal Two--Proposal to Approve
New Investment Advisory Agreements." Set forth below is information regarding
advisory agreements between VFM and certain other open-end and closed-end funds
which have investment objectives similar to those of one or more of the Funds
being asked to approve new investment advisory agreements under Proposal Two:
<TABLE>
<CAPTION>
Advisory Fees
Rate of Waived for Net Assets of
Fund VFM's Compensation Last Fiscal Year Fund at 12/31/96
- ---- ------------------ ---------------- ----------------
<S> <C> <C> <C>
Minnesota Municipal Income Fund Inc. Annual rate of .40% of $ 0 $ 58,315,692
average weekly net assets
Minnesota Municipal Income Fund II, Inc. Annual rate of .40% of $ 0 $ 161,051,362
average weekly net assets
Minnesota Municipal Income Fund III, Inc. Annual rate of .40% of $ 0 $ 38,910,971
average weekly net assets
Arizona Municipal Income Fund, Inc. Annual rate of .40% of $ 0 $ 67,367,446
average weekly net assets
Florida Insured Municipal Income Fund Annual rate of .40% of $ 0 $ 54,439,214
average weekly net assets
Colorado Insured Municipal Income Fund Inc. Annual rate of .40% of $ 0 $ 107,788,794
average weekly net assets
National Insured Tax Free Fund Annual rate of .50% of $145,000 $ 32,030,258
average daily net assets
National Limited Term Tax Free Fund Annual rate of .40% of $ 4,731 $ 1,184,425
average daily net assets
National Tax Free Fund Annual rate of .50% of $ 12,665 $ 3,737,821
average daily net assets
</TABLE>
SUPPLEMENTAL INFORMATION ABOUT
DELAWARE MANAGEMENT COMPANY, INC.
DMC is an indirect, wholly owned subsidiary of DMH. In turn, DMH is an
indirect, wholly-owned subsidiary, and subject to the ultimate control, of LNC.
LNC, an Indiana corporation with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management. DMC and its
predecessors have been managing the funds in the Delaware Group since 1938. On
December 31, 1996, DMC and its affiliates within the Delaware Group, including
Delaware International Advisers Ltd., were supervising in the aggregate
approximately $32 billion in assets in the various institutional or separately
managed and investment company accounts. DMC is located at One Commerce Square,
Philadelphia, Pennsylvania 19103.
The names and principal occupations of the principal executive officer
and each director of DMC are set forth below. The address of all individuals is
that of DMC.
Name Principal Occupation
- -------------- ---------------------------------------------
Wayne A. Stork Chairman, President, Chief Executive
Officer, Chief Investment Officer and
Director of Delaware Management Company,
Inc.; Chairman, President, Chief Executive
Officer, Director and/or Trustee of 17
investment companies in the Delaware Group
(which excludes Delaware Pooled Trust, Inc.),
Delaware Management Holdings, Inc., DMH
Corp., Delaware International Holdings Ltd.
and Founders Holdings, Inc.; Chairman and
Director of Delaware Pooled Trust, Inc.,
Delaware Distributors, Inc. and Delaware
Capital Management, Inc.; Chairman, Chief
Executive Officer and Director of Delaware
International Advisers Ltd.; Director of
Delaware Service Company, Inc. and Delaware
Investment & Retirement Services, Inc.
Winthrop S. Jessup Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of 17 investment companies in
the Delaware Group (which excludes Delaware
Pooled Trust, Inc.) and Delaware Management
Holdings, Inc.; President and Chief Executive
Officer of Delaware Pooled Trust, Inc.;
President and Director of Delaware Capital
Management, Inc.; Executive Vice President
and Director of DMH Corp., Delaware
International Holdings Ltd. and Founders
Holdings, Inc.; Vice Chairman and Director of
Delaware Distributors, Inc.; Vice Chairman of
Delaware Distributors, L.P.; Director of
Delaware Service Company, Inc., Delaware
International Advisers Ltd., Delaware
Management Trust Company and Delaware
Investment & Retirement Services, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of the 18 investment
companies in the Delaware Group; Senior Vice
President of Delaware Management Holdings,
Inc.; Director of Delaware International
Advisers Ltd.
David K. Downes Executive Vice President/Chief Operating
Officer/Chief Financial Officer and Director
of Delaware Management Company, Inc.; Senior
Vice President/Chief Administrative
Officer/Chief Financial Officer of the 18
investment companies in the Delaware Group;
Chairman and Director of Delaware Management
Trust Company and Delaware Investment &
Retirement Services, Inc.; President/Chief
Executive Officer/Chief Financial Officer
and Director of Delaware Service Company,
Inc.; Executive Vice President/Chief
Operating Officer/Chief Financial Officer
and Director of DMH Corp., Delaware
Distributors, Inc., Founders Holdings, Inc.
and Delaware International Holdings Ltd.;
Executive Vice President/Chief Operating
Officer/Chief Financial Officer of Delaware
Management Holdings, Inc. and Delaware
Capital Management, Inc.; Senior Vice
President/Chief Administrative Officer/Chief
Financial Officer of Delaware Distributors,
L.P., Director of Delaware International
Advisers Ltd.
George M. Chamberlain, Jr. Senior Vice President, Secretary and
Director of Delaware Management Company,
Inc.; Senior Vice President and Secretary of
the 18 investment companies in the Delaware
Group, Delaware Management Holdings, Inc. and
Delaware Distributors, L.P.; Executive Vice
President, Secretary and Director of Delaware
Management Trust Company; Senior Vice
President, Secretary and Director of DMH
Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Investment &
Retirement Services, Inc., Founders Holdings,
Inc. and Delaware Capital Management, Inc.;
Secretary and Director of Delaware
International Holdings Ltd., Director of
Delaware International Advisers Ltd.,
Attorney.
DMC currently serves as investment adviser for the following funds that
have investment objectives similar to those of one or more of the Funds being
asked to approve new investment advisory agreements under Proposal Two:
<TABLE>
<CAPTION>
Advisory Fees
Rate of Compensation Waived for Assets as of
Fund (Based on Average Net Assets) Last Fiscal Year 12/31/96
- ---- ----------------------------- ---------------- --------
<S> <C> <C> <C>
DMC Tax-Free Income Trust-
Pennsylvania $0.60% on the first $500 million of $ 0 $ 980,153,397
average daily net assets, 0.575% on the
next $250 million and 0.55% on the average
daily net assets in excess of $750
million*
Delaware Group Trend Fund, Inc. 0.75% per annum* $ 0 $ 687,462,147
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund 0.60% on the first $500 million of $ 0 $ 714,446,205
average daily net assets, 0.575% on the
next $250 million and 0.55% on the average
daily net assets in excess of $750
million*
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund 0.60% per annum* $ 0 $ 82,759,533
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Intermediate Fund 0.50% per annum* $ 106,549 $ 27,729,826
Delaware Group Equity Funds IV, Inc.
DelCap Fund 0.75% per annum* $ 0 $ 1,052,693,274
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund 0.70% per annum $ 16,950 $ 30,610,376
Delaware Group Adviser Funds, Inc.
Enterprise Fund 0.80% per annum $ 22,095 $ 29,701,855
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio 0.80% per annum* $ 28,562 $ 28,172,838
Delaware Group Premium Fund, Inc.
Growth Series 0.75% per annum* $ 14,335 $ 79,935,338
Delaware Group Premium Fund, Inc.
Emerging Growth Series 0.75% per annum $ 42,019 $ 56,306,532
- --------------------
</TABLE>
* All fees are reduced by fees paid to directors or trustees of the Fund,
unless otherwise indicated.
EXECUTIVE OFFICERS OF VOYAGEUR FUNDS
Certain information about the executive officers of the Funds is set
forth below. Unless otherwise indicated, all positions have been held more than
five years.
Position and Term of Office with the
Funds and Business Experience During
Name (Age) the Past Five Years
- ---------- --------------------------------------
John G. Taft (42) President of the Funds (Executive Vice
President of Colorado Tax Free Fund);
President of VFM; Director of VFM and of
VFD since 1993; Executive Vice President
of VFD (since 1995); Management
Committee member of VFM from 1991 to
1993.
Andrew M. McCullagh, Jr. (48) Executive Vice President of the Funds
(President of Colorado Tax Free Fund);
Senior Tax Exempt Portfolio Manager of
VFM; previously, Director of VFM and
VFD from 1993 to 1995.
Jane M. Wyatt (42) Executive Vice President of the Funds;
Director and Chief Investment Officer of
VFM since 1993; Director and Executive
Vice President of VFD since 1993;
previously, Executive Vice President and
Portfolio Manager of VFM from 1992 to
1993.
Steven P. Eldredge (40) Vice President of the Funds since 1995;
Senior Tax Exempt Portfolio Manager of
VFM since 1995; previously, portfolio
manager for ABT Mutual Funds, Palm
Beach, Florida, from 1989 to 1995.
Elizabeth H. Howell (35) Vice President of the Funds; Senior Tax
Exempt Portfolio Manager of VFM.
James C. King (56) Vice President of the Funds; Senior
Equity Portfolio Manager of VFM since
1993; previously, Director of VFM and
VFD from 1993 to 1995.
Kenneth R. Larsen (33) Treasurer of the Funds; Treasurer of VFM
and VFD; previously, Director, Secretary
and Treasurer of VFM and VFD from 1993
to 1995.
Thomas J. Abood (33) Secretary of the Funds since 1995;
Senior Vice President and General
Counsel since 1994 of DFG; Senior Vice
President of VFM, VFD and Voyageur
Companies, Inc. since 1995; previously,
Vice President of VFM and Voyageur
Companies, Inc. from 1994 to 1995;
previously, associated with the law firm
of Skadden, Arps, Slate, Meagher & Flom,
Chicago, Illinois from 1988 to 1994.
All of such individuals except Ms. Howell and Mr. McCullagh will resign
their positions with the Funds immediately prior to Closing. It is expected
that, after consummation of the Merger, the newly elected Boards of Directors
will elect the following individuals, in addition to Ms. Howell and Mr.
McCullagh, to serve as officers of the Funds:
Expected Position with Funds and Business
Name (Age) Experience During the Past Five Years
- ---------- -------------------------------------
Wayne A. Stork (59) Chairman, President, Chief Executive
Officer, Director and/or Trustee of the
Funds. See "Supplemental Information
About Delaware Management Company, Inc."
for a description of Mr. Stork's business
experience.
Winthrop S. Jessup (51) Executive Vice President of the Funds.
See "Supplemental Information About
Delaware Management Company, Inc." for a
description of Mr. Jessup's business
experience.
Richard G. Unruh, Jr. (57) Executive Vice President of the Funds.
See "Supplemental Information About
Delaware Management Company, Inc." for a
description of Mr. Unruh's business
experience.
Paul E. Suckow (49) Executive Vice President/Chief Investment
Officer, Fixed Income of the Funds and of
the 18 investment companies in the
Delaware Group and Delaware Management
Company, Inc.; Executive Vice President
and Director of Founders Holdings, Inc.;
Senior Vice President/Chief Investment
Officer, Fixed Income of Delaware
Management Holdings, Inc.; Senior Vice
President of Delaware Capital Management,
Inc.; Director of Founders CBO
Corporation; Director of HYPPCO Finance
Company Ltd.; before returning to the
Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of
Fixed Income for Oppenheimer Management
Corporation, New York, New York from 1985
to 1992; prior to 1985, he was a fixed-
income portfolio manager for the Delaware
Group.
David K. Downes (57) Senior Vice President/Chief
Administrative Officer/ Chief Financial
Officer of the Funds. See "Supplemental
Information About Delaware Management
Company, Inc." for a description of
Mr. Downes' business experience.
George M. Chamberlain, Jr. (50) Senior Vice President and Secretary of
the Funds. See "Supplemental Information
About Delaware Management Company, Inc."
for a description of Mr. Chamberlain's
business experience.
Mitchell L. Conery (38) Vice President/Senior Portfolio Manager
of the tax-free Funds and of the tax-free
and fixed-income investment companies in
the Delaware Group and Delaware
Management Company, Inc.; from 1995 to
1996, Mr. Conery was an investment
officer with Travelers Insurance and
from 1992 to 1995, he was a research
analyst with CS First Boston. Mr. Conery
joined the Delaware Group in 1997.
Patrick P. Coyne (33) Vice President/Senior Portfolio Manager
of the tax-free Funds and of the tax-free
and fixed-income investment companies in
the Delaware Group, Delaware Management
Company, Inc. and Delaware Capital
Management, Inc.; during the past five
years, Mr. Coyne has served in various
capacities within the Delaware
organization.
Edward N. Antoian (41) Vice President/Senior Portfolio Manager
of the equity Funds and of the equity
investment companies in the Delaware
Group, Delaware Management Company, Inc.
and Delaware Capital Management, Inc.;
during the past five years, Mr. Antoian
has served in various capacities within
the Delaware organization.
Gerald S. Frey (50) Vice President/Senior Portfolio Manager
of the equity Funds and of the equity
investment companies in the Delaware
Group and Delaware Management Company,
Inc.; before joining the Delaware Group
in 1996, Mr. Frey was a Senior Director
with Morgan Grenfell Capital Management,
New York, New York from 1986 to 1995.
Michael P. Bishof (34) Vice President/Treasurer of the Funds and
of the 18 investment companies in the
Delaware Group, Delaware Management
Company, Inc., Delaware Distributors,
Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., and
Founders Holdings, Inc.; Vice
President/Manager of Investment
Accounting of Delaware International
Holdings Ltd.; Assistant Treasurer of
Founders CBO Corporation; before joining
the Delaware Group in 1995, Mr. Bishof
was a Vice President for Bankers Trust,
New York, New York from 1994 to 1995, a
Vice President for CS First Boston
Investment Management, New York, New
York from 1993 to 1994 and an Assistant
Vice President for Equitable Capital
Management Corporation, New York, New
York from 1987 to 1993.
SHAREHOLDER PROPOSALS
As series of Minnesota corporations (or, in some instances,
Massachusetts business trusts), the Funds are not required to hold annual
shareholder meetings. Since the Funds do not hold regular meetings of
shareholders, the anticipated date of the next shareholder meeting cannot be
provided. Any shareholder proposal which may properly be included in the proxy
solicitation material for a special shareholder meeting must be received by the
Fund no later than four months prior to the date proxy materials are mailed to
shareholders.
Dated: February 24, 1997 Thomas J. Abood, Secretary
NAME OF FUND % OF CLASS/
ACCOUNT NAME & ADDRESS # OF SHARES
- ---------------------- ------------
Aggressive Growth--Class A
Michele M Simonet 8.29/
7415 Coventry Way 42,161
Edina MN 55439
Dougherty Financial Group Inc
401k Salary Reduction Plan 13.70/
90 South 7th St Ste 4300 69,625
Minneapolis MN 55402
Dougherty Financial Group Inc 23.39/
Money Purchase Pension Plan 118,888
90 S Seventh St Ste 4300
Minneapolis MN 55402
Olcoba Company - Reinvest 22.41/
P O Box 1000 113,929
Minneapolis MN 55480
Aggressive Growth--Class B
Shan Lin 6.02/
Suzan P Lin JT TEN 398
12994 Killdeer St
Coon Rapids MN 55448
Wedbush Morgan Securities 17.08/
A/C 1327-3545 1,128
1000 Wilshire Blvd.
Los Angeles CA 90017
Raymond James & Assoc Inc 27.06/
for Elite Acct#50099089 1,787
FAO Anthony & Marie Hillerman Co-
TTEES UA Dtd 2-22-90
1632 Francisca Rd Nw
Albuquerque NM 87107
Aggressive Growth--Class C
David A. Johnson 10.08/
1500 Sw 5th Ave Suite 250 61,227
Portland OR 97204
Emery Jahnke 30.48/
Ann Jahnke JT TEN 3,709
2402 Lilac Lane
Fargo ND 58102
William J Cahill 7.35/
Karen a Cahill JT TEN 894
704 Morningside Dr
Burlington IA 52601
Arizona Insured Tax Free--Class B
Robert D Wickwire TTEE 13.07/
Robert D Wickwire Rev 40,246
Trust UA Dtd 11/13/91
6050 N Camino Esplendora
Tucson AZ 85718
Prudential Securities 5.98/
FBO Mary Dehn Van 18,410
Dessel TTEE Mary Dehn
Van Dessel Rev Tr
UA Dtd 06/29/95
Sun City West AZ 85375
NFSC Febo # 0sn-734934 6.07/
Sallye B Schumacher 18,692
TTEE Schumacher Trust
U/A 8/1/95 8101
N Mummy Mountain Rd
Paradise Valley AZ 85253
Edna Weber TTEE 5.91/
Weber Family Trust 18,182
Dtd 7/20/93
6148 E Butte
Mesa AZ 85205
Arizona Insured Tax Free--Class C
Harriet J Welch TTEE 7.62/
The Welch Family Trust 3,639
U/A Dtd 8-25-92
15612 E Willis
Gilbert AZ 85296
NFSC Febo # B9f-509647 12.23/
John D & Jane 5,845
Ellen Cooper TTEE
The John D and Jane Ellen Cooper
Tr U/A 8/21/80
P.O. Box 401
Paulden AZ 86334
Roy L Carson 8.37/
Marian L Carson JT TEN 4,000
2116 W Comstock
Chandler AZ 85224
Martha Stephens & 25.02/
Warren Stephens TTEE 11,956
Donald P Haddock
& Fern S Haddock Rev Tr
UA Dtd 3/10/86
FBO F. Haddock Surv
2645 E Southern #210
Tempe AZ 85282
Arizona Tax Free--Class A
Prudential Securities Inc. FBO 22.61/
Gaylord Rubin & Bevery 203,113
Rubin Co-TTEEs Gaylord
and Beverly Rubin Family Trust
UA Dtd. 4/13/87
Phoenix AZ 85018
Dorothy H. Green TTEE 8.55/
Green Family Trust Part A 76,768
UA Dtd 5/9/89
5002 E. Mesquite Wood Court
Suite 700
Phoenix AZ 85044
Arizona Tax Free--Class B
Prudential Securities Inc. 7.27/
FBO Mrs Virginia S Strickland 24,118
TTEE Strickland Family Trust
UA Dtd 2/7/96
7500 N Calle Sin Envidia
Tucson AZ 85718
Prudential Securities Inc. FBO 7.54
Gaylord Rubin Beverly Rubin 25,018
Co-TTEEs Gaylord and Beverly
Rubin Family Trust
UA Dtd 4/13/87
Phoenix AZ 85018
Christine McKeever TTEE 11.08/
Christine McKeever Trust 36,725
U/A Dtd 11/13/90
4628 E Gelding
Phoenix AZ 85032
NFSC Febo # 0sn-734934 5.96/
Sallye B Schumacher TTEE 19,760
Schumacher Trust U/A 8/1/95
8101 N Mummy Mountain Rd
Paradise Valley AZ 85253
Arizona Tax Free--Class C
Paul S Gerber 24.86/
Aaron Gerber JT TEN 533
8261 E Gelding Dr
Scottsdale AZ 85260
Marion F Stewart 75.14/
2536 N Tyndall 1,611
Tucson AZ 85719
California Tax Free--Class A
John G Macleod & Dorothy 5.60/
Irene Macleod TTEE 7,649
John G & Dorothy I Macleod
Family Tr U/A Dtd 03/03/87
1021 W Mariposa
Stockton CA 95204
L Daniel Halliday 6.40/
8700 N West Lane Apt 4 8,752
Stockton CA 95210-2229
The Five R's 18.06/
Edmund B Richards 24,689
Brian J Richards
5949 Hollister Ave
Goleta CA 93117
Charles E Pigue & Phyllis 6.69/
E Pigue TTEEs 9,149
Charles & Phyllis Pigue
1992 Tr PO Box 6989
San Carlos CA 94070
Thelma Beam & Edith 7.31/
Ramsey TTEEs 9,991
Beam Family Tr
UA Dtd 09/17/87 Residual
250 Raylow Ave
Manteca CA 95336
Thelma Beam & 18.70/
Edith Ramsey TTEEs 25,568
Beam Family Tr
UA Dtd 09/17/87 Survivor
250 Raylow Ave
Manteca CA 95336
California Tax Free--Class B
Painewebber FBO 18.16/
Minnie Mast Trustee 12,470
FBO the Minnie Mast
13956 San Pablo Ave, Apt 205
San Pablo CA 94806
Painewebber FBO 12.15/
Pearl Newsom TTEE 8,346
U/A 5/20/88
FBO Pearl Newsom
C/O The Remington Club
16925 Hierba Drive #422
San Diego CA 92128
California Tax Free--Class C
Long Q Nguyen 45.56/
Thoa K Nguyen JT TEN 4,147
3229 Adelanto Lane
San Jose CA 95135
Carolyn Carter Trustee 10.61/
Carter Family Trust 966
Dtd April 8 1992
PO Box 1535
Colfax CA 95713
Margie M Bartels TTEE 43.83/
Bartels Family Trust Dtd 6/5/84 3,990
9608 Lemoran
Downey CA 90240
Colorado Tax Free--Class C
Dorothy E Radant TTEE 6.15/
Gertrude E Kallenbach Rev Tr 8,450
U/A Dtd 10/19/93 1332 Cresent Dr
Wausau WI 54401
Dean Witter FBO 6.59/
Bette J Storms 9,051
3855 Hermitage Drive
Colorado Springs CO 80906
Colorado Tax Free--Class B
Everen Clearing Corp. 7.49/
A/C 4272-0671 29,312
William J Keller
111 East Kilbourn Avenue
Milwaukee, WI 53202
Florida Ltd Term Tax Free--Class B
Pauline B Butler 5.92/
450 Avenue F SE 5,358
Winter Haven FL 33880
WCG Investment Partnership 5.93/
Attn Howard Wolofsky 5,366
C/O Dimensions
11781 Sw 9th Ct
Pembroke Pines FL 33025
Painewebber FBO 5.90/
Michael Nadir 5,340
P O Box 1031
Elfers FL 34680
NFSC Febo # Ckd-032000 5.97/
John A Dragseth TTEE 5,405
John A Dragseth Trust U/A
3/27/96
3623 Se Old St Lucie Blvd
Stuart FL 34996
Florida Ltd Term Tax Free--Class C
Prudential Securities Inc. 100.00/
FBO Mrs June L Mason TTEE 5,209
June L Mason Rev Lvg Trust
UA Dtd 03/10/87 1180 Reef Rd
Apt A19 Vero Beach FL 32963
Florida Tax Free Fund--Class B
NFSC Febo # 0da-173347 8.17/
Robert K Sedgwick 14,032
TTEE Robert K Sedgwick Trust
U/A 5/25/93
7711 Sundown Court
Bayonet Point FL 34667
Anita R Alexander & 11.46/
John E Alexander TTEEs 19,683
Anita R Alexander Trust Dtd 3-9-95
2010 New Bedford Drive
Sun City Center FL 33573
Painewebber FBO 5.61/
Mrs Ann E Greene and 9,643
Miss Terry a Warren JTWROS
1745 Sw 2nd Avenue Boca
Raton FL 33432
Painewebber FBO 5.57/
Eugene A Wildes & Rosalind 9,570
B Wildes Co-TTEES
Restated Trust
11 Loggerhead Lane
Tequesta FL 33469
Florida Tax Free--Class C
Prudential Securities Inc. 100.00/
FBO Anna Demaio 1,479
2100 Springdale Blvd
Apt Y 215
Palm Springs FL 33461
Growth and Income--Class B
Donaldson Lufkin Jenrette 12.97/
Securities Corporation Inc 2,283
PO Box 2052
Jersey City NJ 07303
Donaldson Lufkin Jenrette 39.37/
Securities Corporation Inc. 6,928
P. O. Box 2052
Jersey City, NJ 07303
Wexford Clearing Services 33.15/
Corp FBO Roger C Geis 5,833
515 Clover Leaf Pkwy Ne
Blaine MN 55434
Growth Stock--Class A
Dougherty Financial Group Inc 7.76/
401k Salary Reduction Plan 107,036
90 South 7th St Ste 4300
Minneapolis MN 55402
Olcoba Company - Reinvest 5.38/
P O Box 1000 74,206
Minneapolis MN 55480
Growth Stock--Class C
Painewebber FBO 5.51/
Painewebber Cust. FBO 1,352
Michael Weiland
P.o. Box 3321
Weehawken NJ 07087
Mabel Walters TTEE 6.92/
Covell Family Trus 1,699
UA Dtd 11/ /6/94
7324 NW Pendridge Road
Portland OR 97229
Robert C Kingson 10.94/
Kathryn E Kingson JT TEN 2,566
1428 SwWHall
Portland OR 97201
Painewebber FBO 5.42/
Painewebber Cust. FBO 1,331
Donald M Ferreira
P.o. Box 3321
Weehawken NJ 07087
Painewebber FBO 5.25/
Painewebber Cust. FBO 1,289
Hailiane M Sorensen
P.o. Box 3321
Weehawken NJ 07087
Emery Jahnke 8.49/
Ann Jahnke JT TEN 2,085
2402 Lilac Lane
Fargo ND 58102
Idaho Tax Free--Class A
Audrey Ann Shayne 7.07/
4760 Rivervista Place 182,385
Boise ID 83703
Idaho Tax Free--Class C
Joseph Daltoso 13.30/
4386 S Cochees Way 10,277
Boise ID 83709
Painewebber FBO 11.55/
Latham Williams & 8,925
Suzanne Williams JTWROS
Box 3639
Ketchum ID 83340
Archie Lurus & 12.64/
Georgia Lurus JT TEN 9,768
2391 N 55th E
Idaho Falls ID 83401
Allan M May 5.65/
Debra Rogers-May JT TEN 4,370
P O Box 114
Whitebird ID 83554
Donaldson Lufkin Jenrette 5.37/
Securities Corporation Inc. 4,152
P. O. Box 2052
Jersey City, NJ 07303
International Equity--Class A
Dougherty Financial Group Inc 13.78/
401k Salary Reduction Plan 36,312
90 South 7th St Ste 4300
Minneapolis MN 55402
Dougherty Financial Group Inc 30.95/
Money Purchase Pension Plan 81,544
90 S Seventh St Ste 4300
Minneapolis MN 55402
Olcoba Company - Reinvest 13.06/
P O Box 1000 34,414
Minneapolis MN 55480
International Equity--Class B
William G & Margaret E 42.28/
Chapman TTEEs 2,327
William G & Margaret
Elaine Chapman Rev Tr
UA Dtd 06/30/95
8101 Rio Grande Nw
Albuquerque NM 87114
Victor R Bernot III 9.62/
106 E 217th St 529
Euclid OH 44123
International Equity--Class C
Gregory A Toutges 8.20/
2115 18th St S 604
Moorhead MN 56560
Emery Jahnke 68.90/
Ann Jahnke JT TEN 5,071
2402 Lilac Lane
Fargo ND 58102
Iowa Tax Free--Class C
Donald R Kurtz 11.77/
Mildred Kurtz JTTEN 8,403
1010 Plane Street
Burlington IA 52601
John A Reid 6.11/
Box 219 4,367
Greene IA 50636
Fern L Morrison 6.72/
Doyle D Morrison POA 4,803
421 Leffler
West Burlington IA 52655
Marian W Palmer 6.40/
904 Oak St 4,571
Burlington IA 52601
Mary E Aringdale 7.58/
Robert F Aringdale JT TEN 5,413
2924 Sunnyside Ave
Burlington IA 52601
Iowa Tax Free--Class B
Alex P Despenas 27.44/
Ethel Despenas Ten Comm 50,110
960 Briarstone
Mason City IA 50401
Laura B Schroeder 5.05/
1241 3rd Ave Sw 9,223
Le Mars IA 51031
Stanley A Collins 6.71/
Clarice T Collins Ten Comm 12,256
PO Box 1705
Mason City IA 50401
Kansas Tax Free--Class A
Thomas B Robinson 5.88/
PO Box 8405 57,302
Kansas City MO 64114
Kansas Tax Free--Class B
William T Martin TTEE 9.78/
William T Martin Tr U T A 23,323
Dtd Apr 30 81
The Forum Apt 124
3501 W 95th St
O P KS 66206
Kansas Tax Free--Class C
Richard L Mcclellan 27.03/
Nyllia Jo Mcclellan JT TEN 2,331
15405 W 144th Terrace
Olathe KS 66062
Johann A Zacharias 19.71/
Marcia J Higginson JTTEN 1,700
3713 Jp Drive, Hays KS 67601
Gilbert O Sears 44.99/
213 E Parliament 3,880
Smith Center KS 66967
Randall L Hockett 5.69/
1721 North 73rd Terrace #8 491
Kansas City KS 66112
Minnesota High Yld Muni Bond--Class A
Kay L Marvin & Charles C 11.87/
Marvin TTEE 87,512
Charles C Marvin Trust
UA Dtd 9/6/96
PO Box 625
Warroad MN 56763
Patrick M Gaughan & Alan 6.79/
Hamel TTEEs Timothy 50,057
Gaughan Trust Dtd 4/1/93
299 Coon Rapids Blvd #210
Coon Rapids MN 55433
Minnesota High Yld Muni Bond--Class B
Painewebber FBO 7.61/
Eugene M Delonais 28,869
2874 Rice Street
St. Paul MN 55113
Painewebber FBO 5.22/
Boman, Evans & Delonais 19,822
TTEEs U/A Dtd 5/15/83
2874 Rice Street
St. Paul MN 55113
Minnesota High Yld Muni Bond--Class C
Painewebber FBO 6.29/
Olive Grace Sellman TTEE 6,562
U/A Dtd 3/2/92
Olive Grace Sellman Rev Tr
7612 E Forest Lake Dr
Parkville MO 64152
Bonnie Kersting & Steven 20.00/
Kersting TTEE 20,879
Bonnie Kersting Rev Tr
U/A Dtd 3/24/94
17751 Layton Path
Lakeville MN 55044
William Paul Huber 9.83/
301 S Meridian 10,258
Belle Plaine MN 56011
Donaldson Lufkin Jenrette 5.12/
Securities Corporation Inc. 5,346
P. O. Box 2052
Jersey City, NJ 07303
Minnesota Insured--Class B
Margaret Pollak 5.44/
P O Box 435 36,854
Fulda MN 56131
Minnesota Insured--Class C
Marguerite F Hawkinson 9.21/
4038 Valentine Court 26,996
Arden Hills MN 55112
Minnesota Ltd Term Tax Free--Class B
Kathleen P Cleary 6.01/
3410 Filmore St 2,356
Minneapolis MN 55418
James R Smallen 5.13/
Joanne M Smallen JT TEN 2,011
8312 Russell Ave S
Bloomington MN 55431
Russell E Roos 12.03/
Helen Shirley Roos JT TEN 4,715
504 S Freeman
Luverne MN 56156
NFSC Febo # Bah-547972 24.03/
Larry C Jordan 9,416
1633 Eustis, St Paul MN 55108
NFSC Febo # 03m-497525 14.23/
James Kuskey Mary Kuskey 5,577
1723 Clarence Street
Maplewood MN 55109
NFSC Febo # Bah-484016 7.03/
Lois M Hoffman TTEE 2,755
Lois M Hoffman Trust
U/A 1/1/96 2265
Youngman Ave #203
St Paul MN 55116
NFSC Febo # Bah-586382 5.22/
Bernice T Hatch 2,045
Harold Hatch JT TEN
214 Richmond St W
South St Paul MN 55075
NFSC Febo # Bah-569550 5.43/
Loretta Y Grais 2,129
740 River Road
St Paul MN 55116
NFSC Febo # Bah-603465 9.33/
George V Modersbach 3,657
2235 Rockwood Ave Apt
711 St Paul MN 55116
Minnesota Ltd Term Tax Free--Class C
Robert P Fischer 5.26/
2390 Pagel Road 6,337
Mendota Heights MN 55120
Daniel S Mcgrath 7.05/
1706 Mary Lane 8,500
North Mankato MN 56003
Richard J Long 13.02/
2285 Stewart Ave Apt 240 415,699
St Paul MN 55116
Nicholas Eoloff 12.67/
Mary Eoloff JT TEN 15,282
1315 Goodrich
St Paul MN 55105
Bradley E Bakken TTEE 13.66/
Bradley E Bakken Rev Trust 16,468
UA Dtd 12/17/93
10100 Windsor Lane
Minnetonka MN 55343
Minnesota Tax Free--Class C
Erik J Russell 5.34/
2800 83rd Lane North 12,979
Minneapolis MN 55444
Missouri Insured Tax Free--Class A
Corelink Financial Inc 6.86/
1855 Gateway Blvd Ste 750 326,106
Concord CA 94520
Missouri Insured Tax Free--Class B
Corelink Financial Inc 32.00/
1855 Gateway Blvd Ste 750 334,189
Concord CA 94520
Missouri Insured Tax Free--Class C
George A Rhodes TTEE 46.36/
George A Rhodes Tr as Amnd 5,000
UA Dtd 10/07/96
1359 East Stoneridge
Springfield MO 65803
NFSC Febo # 0a1-564028 27.30/
Bryan E Jaynes 2,944
6434 Alamo Avenue
Apt #2W
St Louis MO 63105
Darrell L Williams 7.29/
11434 Holmes Street 787
Apt 202
Kansas City MO 64131
Painewebber FBO 19.05/
James M Brown 2,055
4223-A Summit Knoll Dr
St Louis MO 63129
National High Yld Muni Bond-Class A
Dain Bosworth Inc FBO 7.11/
Juanita M Daly 385,417
1200 Rancho Cr
Las Vegas NV 89107
National High Yld Muni Bond-Class B
NFSC Febo # 03m-609668 94.65/
Lorraine K Linderman 8,547
Arthur Gratias
605 Jefferson Street
Dysart IA 52224
NFSC Febo # 03m-692298 5.35/
Lyle J Battleson 483
16289 34th Street St
Mason City IA 50401
National Insured Tax Free--Class A
Millerbernd Manufacturing Co 5.62/
P O Box 98 161,061
Winsted MN 55395
National Insured Tax Free--Class B
NFSC Febo # 03m-390658 5.52/
Joe Moreno 9,596
Carmen Moreno
7851 Robin Lane
Denver CO 80202
Corelink Financial Inc 5.53/
1855 Gateway Blvd Ste 750 9,611
Concord CA 94520
Donaldson Lufkin Jenrette 6.57/
Securities Corporation Inc. 11,431
P. O. Box 2052
Jersey City, NJ 07303-9998
Franz Deffert 8.96/
Julianne Deffert JT TEN 15,579
6167 W 61st Pl
Arvada CO 80003
National Insured Tax Free--Class C
Gary P. Nichols 52.50/
Sharon L. Nichols 9,652
1705 Lawrence Street
Parkersburg WV 26101
National Ltd Term Tax Free--Class A
George Alan Holley 37.97/
17534 W 53rd Drive 47,466
Golden CO 80403-1139
Voyageur Fund Managers 47.37/
90 South 7th St Suite 4400 59,219
Minneapolis MN 55402
Eivind K Djupedal 10.20/
Gwendolyn a Djupedal JT TEN 12,750
Cargill Russia-moscow
PO Box 5674
Minneapolis MN 55440
National Ltd Term Tax Free--Class B
Philip L Redo 100.00/
Jenette Kerr JTTEN 5,088
1115 Michigan Ave
Evanston IL 60202
National Ltd Term Tax Free-Class C
Emery Jahnke 100.00/
Ann Jahnke JT TEN 24,704
2402 Lilac Lane
Fargo ND 58102
National Tax Free--Class A
Fern D Wewers 5.91/
1978 72nd Ave 18,651
Princeton MN 55371
Cecil G Henry & 5.84/
Maureen W Henry TTEEs 18,415
Cecil G & Maureen W Henry
Trust U/A Dtd 10/12/90
7042 Montreal Drive
Lakeland FL 33809
Werner Eric Hellwig TTEE 7.37/
Werner Eric Hellwig Rev 23,265
Living Trust UA Dtd 3/1491
2851 S Valley View Blvd #1016
Las Vegas NV 89102
Donald L Dennie 7.58/
1001 South Ed Carey Drive 23,921
Box 132
Harlingen TX 78552
Alice I Webber & Charles 7.69/
B Webber TTEEs 24,259
Alice I Webber Trust
U/A Dtd 6/23/92
3240 Double Tree Drive
Jackson WY 83001
National Tax Free--Class B
Donaldson Lufkin Jenrette 5.44/
Securities Corporation Inc 3,222
PO Box 2052
Jersey City NJ 07303
Wesley Kendrick 7.90/
Margaret S Kendrick JT TEN 4,681
Box 826
Raton NM 87740
Donaldson Lufkin Jenrette 8.06/
Securities Corporation Inc 4,773
P O Box 2052
Jersey City NJ 07303
Griffen A Bond TTEE 9.19/
Robert W & Griffen A Bond 5,441
Trust UA Dtd 4/19/84
133 El Dorado - Orchard Springs
Winter Haven FL 33884
Donaldson Lufkin Jenrette 16.73/
Securities Corporation Inc. 9,911
P. O. Box 2052
Jersey City, NJ 07303
Richard E Costello 5.11/
2544 Toni Lee 3,029
West Jordan UT 84088
Kathryn A Onken 17.82/
2915 34th Street 10,558
Slayton MN 56172
Marion R Rick TTEE 5.59/
Marion Rita Rick Rev Tr 3,310
UA Dtd 11/20/92
4926 Quail Ridge Dr Nw
Albuquerque NM 87114
National Tax Free--Class C
Wesley Kendrick 51.35/
Margaret S Kendrick JT TEN 3,109
Box 826 Raton NM 87740
Donaldson Lufkin Jenrette 23.65/
Securities Corporation Inc 1,432
P O Box 2052
Jersey City NJ 07303
New Mexico Tax Free--Class B
Nicholas Chintis & Jeanne 13.12/
Chintis TTEEs Chintis Family 9,964
Trust U/A Dtd 3/31/93
PO Box 2332
Silver City NM 88062
Claude E Leyendecker 6.84/
PO Box 1846 5,198
Deming NM 88031
Byrd T Mooney 8.74/
610 E 16th Street 6,639
Farmington NM 87401
Donaldson Lufkin Jenrette 9.48/
Securities Corporation Inc. 7,200
P.O. Box 2052
Jersey City, NJ 07303
Adele A Anderson 9.85/
2916 Cutler Ave NE 7,484
Albuquerque NM 87106
J Thomas Brewer 5.46/
Nona Brewer JT TEN 4,144
2101 Runyan Avenue,
Artesia NM 88210
Louie B Campanella Tr 6.16/
Louie B Campanella Trust 4,677
U/A Dtd 12/4/91
102 Lytton Circle
Las Cruces NM 88001
Painewebber FBO Lewis 6.81/
G Helm & Betty J HelmJT TEN 5,174
8213 Cherry Hills Dr NE
Albuquerque NM 87111
David S Heymann & 5.04/
Kimberly K Heymann JT TEN 3,827
1200 Heritage Dr
Northfield MN 55057
New Mexico Tax Free--Class C
Title Services Inc 33.92/
Attn Bob Harris 9,209
PO Box 696
Raton NM 87740
R Harold Wingo 12.58/
Ethel J Wingo JT TEN 3,416
725 Collier Ave
Raton NM 87740
Donaldson Lufkin Jenrette 24.18/
Securities Corporation Inc. 6,565
P. O. Box 2052
Jersey City NJ 07303
Worth Wilkins 6.02/
Mollie Wilkins 1,635
PO Box 37
Raton NM 87740
Bob Harris 7.47/
Kathy R Harris 2,029
712 S 5th Street
Raton NM 87740
Kathleen Porter Harris 7.16/
712 S 5th Street 1,943
Raton NM 87740
New York Tax Free--Class B
Terence P Vertucci 61.12/
382 Truax Road 14,729
Amsterdam NY 12010
Claudia Schellenberg 10.87/
32-43 90th St Apt 202 2,619
Flushing NY 11369
Donaldson Lufkin Jenrette 6.30/
Securities Corporation Inc. 1,518
P.o. Box 2052
Jersey City, NJ 07303
New York Tax Free--Class C
Donaldson Lufkin Jenrette 99.56/
Securities Corporation Inc. 4,971
P.O. Box 2052
Jersey City, NJ 07303
North Dakota Tax Free--Class A
Wilkota and Company 6.38/
1st National Bank & Trust Co. 196,546
of Williston
P O Box 1827
Williston ND 58802
North Dakota Tax Free--Class B
Wesley W Weeding 6.25/
Geraldine M Weeding JTTEN 4,683
331 W 6th St West
Fargo ND 58078
Wayne Petsinger & 6.89/
Norma Petsinger JTTEN 5,163
3196 24th Ave So
Grand Forks ND 58201
Paula Shermoen 5.12/
RR 1 Box 54A 3,841
Gilby ND 58235
Susan K Krueger 6.27/
P O Box 716 4,698
West Fargo ND 58078
Edward D Jones & CO F/A/O 12.36/
Arthur N Lee 9,264
Edj# 824-00638-1-1 P O
Box 2500 Maryland Heights MO 6304
Roberta J Mohagen 5.10/
104 Prairiewood Drive 3,824
Fargo ND 58103
North Dakota Tax Free--Class C
Jacob N Gust 61.79/
Barbara A Olive JT TEN 2,314
4614 81st N Fargo ND 58102
Stephen J Tinguely 10.36/
5603 53rd Ave N 388
Harwood ND 58042
Debbie S Kolegraf 27.85/
Kim M Kolegraf JT TEN 1,043
1673 Pocatello Drv
Bismarck ND 58501
Oregon Insured Tax Free--Class B
Dorothy Mccue 10.20/
2098 Law Lane 50,307
Eugene OR 97401
Oregon Insured Tax Free--Class C
NFSC Febo # 0jr-117285 6.24/
Philip E Lindvig TTEE 2,235
The Philip E/ Lindvig Living Tr
U/A 10/18/93
1345 So. Cherry Lane
Lake Oswego OR 97034
Painewebber FBO 28.80/
Herbert L Bodner TTEE of 10,310
the Bodner Family Trust U/A
Dd 5/9/88
1419 NW 14th
Portland OR 97209
Edward D Jones and Co 9.96/
F/A/O Carol Roesch 3,566
Edj# 858-02914-1-0
P O Box 2500
Maryland Heights MO 63043
Painewebber FBO 14.49/
Harold H Saltzman and 5,187
Ruth E Saltzman Trustees
Dtd 4/11/95
6130 Sw Thomas St
Portland OR 97221
Painewebber FBO 28.42/
Daniel Oseran & 10,173
Tracy Oseran JTTEN
4500 SW Humphrey
Portland OR 97221
Utah Tax Free--Class A
Smith Barney Inc. 5.61/
00119401643 19,292
388 Greenwich Street
New York NY 10013
UtahTax Free--Class B
Prudential Securities FBO 62.18/
William T Logan & 22,963
Sally M Logan JT TEN
1216 Aerie Drive
Park City UT 84068
Smith Barney Inc. 27.72/
00150343722 10,235
388 Greenwich Street
New York NY 10013
Washington Insured Tax Free--Class A
Herman J Torrano Jr & 7.57/
Barbara Torrano TTEE 17,669
Torrano Tr UA Dtd 12/19/89
PO Box 296
Sequim WA 98382
Washington Insured Tax Free--Class B
Painewebber FBO 31.16/
Hogin Family Trust 16,100
R D & M Hogin TTEEs
7624 N Panorama Dr
Spokane WA 99208
Painewebber FBO 9.56/
John E Stockton 4,938
Rt 1 Box 19
Dayton WA 99328
Painewebber FBO 5.89/
Robert D Weir & 3,042
Carol C Weir JTWROS
PO Box 5
Waitsburg WA 99361
Painewebber FBO 5.87/
Loraine W Schempp & 3,035
Irma G Schempp JT TEN
8538 Rd T Nw
Quincy WA 98848
Painewebber FBO 9.62/
Gordon W Perkins 4,971
Audrey A Perkins JTWROS
PO Box 205
Starbuck WA 99359
Painewebber FBO 14.27/
Arne L Filan 7,372
40 South Division
Walla Walla WA 99362
Washington Insured Tax Free--Class C
Walter G Neiman 100.00/
2041 Cloverdale Rd 1,911
Kalama WA 98625
Wisconsin Tax Free--Class C
Adeline B Straus 10.29/
2108 Edgewood Court 6,206
Kaukauna WI 54130
Joyce J Krahn TTEE 28.79/
Duane C Braeger Irrev Tr 17,364
UA Dtd 07/28/95
W 760 Hilts Lake Rd
Rhinelander WI 54501
Alan R & Harriet S 22.08/
Hyman TTEEs 13,319
Alan R & Harriet S Hyman Rev
Liv Tr U/A Dtd 10/19/92
1244 Dartmouth Road
Madison WI 53705
Beverly Kneebone 8.79/
1505 Stemp Terrace 5,302
Madison WI 53711
Wisconsin Tax Free--Class B
Joyce M Weigel 8.02/
5387 Mariners Cove Dr #309 11,377
Madison WI 53704
George J Kadlec TTEE 9.43/
George J Kadlec Tr 13,383
U/A Dtd 04/13/95
820 Cliffwood Lane
La Crosse WI 54601
Edward J Saur 6.39/
Veronica Saur JT TEN 9,066
P O Box 66
Kellnersville WI 54215
Lydia M Aschenbrener 8.08/
3939 S 92nd St C-203 11,470
Greenfield WI 53228
Robert G Woller 7.55/
P O Box 95 10,709
Pound WI 54161
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
This Agreement, made this ___ day of ________, 1997, by and
between ___________ Funds, Inc., a Minnesota corporation (the "Company"), on
behalf of each Fund represented by a series of shares of common stock of the
Fund that adopts this Agreement (each a "Fund" and, collectively, the "Funds")
(the Funds, together with the date each Fund adopts this Agreement, are set
forth in Exhibit A hereto, which shall be updated from time to time to reflect
additions, deletions or other changes thereto), and [Voyageur Fund Managers,
Inc.] [Delaware Management Company, Inc.], a _________ corporation ("Adviser"),
WITNESSETH:
1. INVESTMENT ADVISORY SERVICES.
(a) The Company hereby engages Adviser on behalf of the Funds,
and Adviser hereby agrees to act, as investment adviser for, and to manage the
investment of the assets of, the Funds.
(b) The investment of the assets of each Fund shall at all
times be subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, and the current Prospectus and the
Statement of Additional Information, if any, of the Company and each Fund and
shall conform to the policies and purposes of each Fund as set forth in such
documents and as interpreted from time to time by the Board of Directors of the
Company. Within the framework of the investment policies of each Fund, and
subject to such other limitations and directions as the Board of Directors may
from time to time prescribe, Adviser shall have the sole and exclusive
responsibility for the management of each Fund's assets and the making and
execution of all investment decisions for each Fund, except as set forth in the
following paragraph. Adviser shall report to the Board of Directors regularly at
such times and in such detail as the Board may from time to time determine
appropriate, in order to permit the Board to determine the adherence of Adviser
to the investment policies of the Funds.
(c) Adviser may, at its expense, select and contract with one
or more registered investment advisers ("Sub-Adviser") for any of the Funds to
perform some or all of the services for such Funds. Such Sub-Adviser shall be
responsible for executing orders for the purchase and sale of portfolio
securities. Adviser will compensate any Sub-Adviser for its services to the
Funds. Adviser 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.
(d) Adviser shall, at its own expense, furnish all office
facilities, equipment and personnel necessary to discharge its responsibilities
and duties hereunder. Adviser shall arrange, if requested by the Company, for
officers or employees of Adviser to serve without compensation from any Fund as
directors, officers, or employees of the Company if duly elected to such
positions by the shareholders or directors of the Company (as required by law).
(e) Adviser hereby acknowledges that all records pertaining to
each Fund's investments are the property of the Company, and in the event that a
transfer of investment advisory services to someone other than Adviser should
ever occur, Adviser will promptly, and at its own cost, take all steps necessary
to segregate such records and deliver them to the Company.
(f) Subject to the primary objective of obtaining the best
available prices and execution, Adviser will place orders for the purchase and
sale of portfolio securities with such broker/dealers who provide statistical,
factual and financial information and services to the Funds, Adviser or to any
other fund for which Adviser provides investment advisory services and/or with
broker/dealers who sell shares of the Funds or who sell shares of any other fund
for which Adviser provides investment advisory services. Broker/dealers who sell
shares of the funds of which Adviser is investment manager, shall only receive
orders for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the Rules of the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
(g) Notwithstanding the provisions of subparagraph (f) above,
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Company, Adviser may ask the Funds and the Funds
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 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 Adviser's overall responsibilities with respect to the Funds and to other
funds and other advisory accounts for which Adviser exercises investment
discretion.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and management services
to be rendered by Adviser hereunder, each Fund shall pay to Adviser a monthly
fee, which fee shall be paid to Adviser not later than the fifth business day of
the month following the month in which said services were rendered. The monthly
fee payable by each Fund shall be as set forth in Exhibit A hereto, which may be
updated from time to time to reflect amendments, if any, to Exhibit A. The
monthly fee payable by each Fund shall be based on the average of the net asset
values of all of the issued and outstanding shares of the Fund as determined as
of the close of each business day of the month pursuant to the Articles of
Incorporation, Bylaws, and currently effective Prospectus and Statement of
Additional Information of the Company and the Fund. For purposes of calculating
each Fund's average daily net assets, as such term is used in this Agreement,
each Fund's net assets shall equal its total assets minus (a) its total
liabilities and (b) its net orders receivable from dealers.
3. ALLOCATION OF EXPENSES.
(a) In addition to the fee described in Section 2 hereof, each
Fund shall pay all its costs and expenses which are not assumed by Adviser.
These Fund expenses include, by way of example, but not by way of limitation,
all expenses incurred in the operation of the Fund and any public offering of
its shares, including, among others, Rule 12b-1 plan of distribution fees (if
any), interest, taxes, brokerage fees and commissions, fees of the directors who
are not employees of Adviser or the principal underwriter of the Fund's shares
(the "Underwriter"), or any of their affiliates, expenses of directors' and
shareholders' meetings, including the cost of printing and mailing proxies,
expenses of insurance premiums for fidelity and other coverage, expenses of
redemption of shares, expenses of issue and sale of shares (to the extent not
borne by the Underwriter under its agreement with the Fund), expenses of
printing and mailing stock certificates representing shares of the Fund,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents, accounting services agents, investor servicing agents, and
bookkeeping, auditing, and legal expenses. Each Fund will also pay the fees and
bear the expense of registering and maintaining the registration of the Fund and
its shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
(b) The Underwriter shall bear all advertising and promotional
expenses in connection with the distribution of each Fund's shares, including
paying for prospectuses for new shareholders, except as provided in the
following sentence. No Fund shall use any of its assets to finance costs
incurred in connection with the distribution of its shares except pursuant to a
Plan of Distribution, if any, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (as amended, the "1940 Act").
4. FREEDOM TO DEAL WITH THIRD PARTIES.
Adviser shall be free to render services to others similar to
those rendered under this Agreement or of a different nature except as such
services may conflict with the services to be rendered or the duties to be
assumed hereunder.
5. REPORTS TO DIRECTORS OF THE FUND.
Appropriate officers of Adviser shall provide the directors of
the Company with such information as is required by any plan of distribution
adopted by the Company on behalf of any Fund pursuant to Rule 12b-1 under the
1940 Act.
6. STANDARD OF CARE.
In the absence of willful misfeasance, bad faith, gross
negligence or a reckless disregard of the performance of duties of the Adviser
to the Funds, the Adviser shall not be subject to liabilities of the Funds or to
any shareholders of the Funds 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.
7. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
(a) The effective date of this Agreement with respect to each
Fund shall be the date set forth on Exhibit A hereto.
(b) Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect with respect to each Fund for a period of two
years from the date of its execution, and thereafter shall continue in effect
only so long as such continuance is specifically approved at least annually by
(i) the Board of Directors of the Company or by the vote of a majority of the
outstanding voting securities of the applicable Fund, and (ii) by the vote of a
majority of the directors of the Company who are not parties to this Agreement
or "interested persons", as defined in the 1940 Act, of Adviser or of the
Company cast in person at a meeting called for the purpose of voting on such
approval.
(c) This Agreement may be terminated with respect to any Fund
at any time, without the payment of any penalty, by the Board of Directors of
the Company or by the vote of a majority of the outstanding voting securities of
such Fund, or by Adviser, upon 60 days' written notice to the other party.
(d) This agreement shall terminate automatically in the event
of its "assignment" (as defined in the 1940 Act).
(e) No amendment to this Agreement shall be effective with
respect to any Fund until approved by the vote of: (i) a majority of the
directors of the Company who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of Adviser or of the Company cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
a majority of the outstanding voting securities of the applicable Fund.
(f) Wherever referred to in this Agreement, the vote or
approval of the holders of a majority of the outstanding voting securities or
shares of a Fund shall mean the lesser of (i) the vote of 67% or more of the
voting securities of such Fund present at a regular or special meeting of
shareholders duly called, if more than 50% of the Fund's outstanding voting
securities are present or represented by proxy, or (ii) the vote of more than
50% of the outstanding voting securities of such Fund.
8. NOTICES.
Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Company and Adviser have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
VOYAGEUR________________________ FUNDS, INC.
By ____________________________
Its __________________________
[VOYAGEUR FUND MANAGERS, INC.]
[DELAWARE MANAGEMENT COMPANY, INC.]
By _____________________________
Its ___________________________
Exhibit A
to
Investment Advisory Agreement
between
[Voyageur Fund Managers, Inc.]
[Delaware Management Company, Inc.]
and
Voyageur _____________ Funds, Inc.
MONTHLY
ADVISORY FEE
(as % of average
FUND EFFECTIVE DATE daily net assets)
---- -------------- -----------------
EXHIBIT B
SUB-ADVISORY AGREEMENT
Agreement, dated __________, 1997, by and between Delaware
Management Company, Inc. (the "Adviser"), a _______________________ corporation,
and Voyageur Asset Management LLC, a Minnesota limited liability company
("Sub-Adviser").
WHEREAS, Voyageur Mutual Funds III, Inc., a Minnesota
corporation (the"Company"), on behalf of its Growth Stock Fund, a separately
managed series of the Company (the "Fund"), has appointed Adviser as the Fund's
investment adviser pursuant to an Investment Advisory Agreement dated ________,
1997 (the "Advisory Agreement"); and
WHEREAS, pursuant to the terms of the Advisory Agreement,
Adviser desires to appoint Sub-Adviser as its sub-adviser for the Fund, and
Sub-Adviser is willing to act in such capacity upon the terms set forth herein;
and
WHEREAS, pursuant to the terms of the Advisory Agreement, the
Company has approved the appointment of Sub-Adviser as Sub-Adviser for the
Fund.
NOW, THEREFORE, in consideration of the mutual agreements
herein made, Adviser and Sub-Adviser agree as follows:
1. Adviser hereby employs Sub-Adviser to serve as sub-adviser
for, and to manage the investment of the assets of, the Fund as set forth
herein. Sub-Adviser hereby accepts such employment and agrees, for the
compensation herein provided, to assume all obligations herein set forth and to
bear all expenses of its performance of such obligations (but no other
expenses). Sub-Adviser shall not be required to pay expenses of the Fund,
including, but not limited to (a) brokerage and commission expenses; (b)
federal, state, local and foreign taxes, including issue and transfer taxes
incurred by or levied on the Fund; (c) interest charges on borrowings; (d) the
Fund's organizational and offering expenses, whether or not advanced by Adviser;
(e) the cost of other personnel providing services to the Fund; (f) fees and
expenses of registering or otherwise qualifying the shares of the Fund under
applicable state securities laws; (g) expenses of printing and distributing
reports to shareholders; (h) costs of shareholders' meetings and proxy
solicitation; (i) charges and expenses of the Fund's custodian and registrar,
transfer agent and dividend disbursing agent; (j) compensation of the Company's
officers, directors and employees that are not Affiliated Persons or Interested
Persons (as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended (the "1940 Act") and the rules, regulations and releases relating
thereto) of Adviser; (k) legal and auditing expenses; (l) costs of certificates
representing common shares of the Fund; (m) costs of stationery and supplies;
(n) insurance expenses; (o) association membership dues; (p) the fees and
expenses of registering the Fund and its shares with the Securities and Exchange
Commission; (q) travel expenses of officers and employees of Sub-Adviser to the
extent such expenses relate to the attendance of such persons at meetings at the
request of the Board of Directors of the Company; and (r) all other charges and
costs of the Fund's operation unless otherwise explicitly provided herein.
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise) have no authority to act for or on behalf of the Fund in any way
or otherwise be deemed an agent of the Fund.
2. Sub-Adviser shall direct the Fund's investments in
accordance with applicable law and the investment objective, policies and
restrictions set forth in the Fund's then-effective Registration Statement under
the Securities Act of 1933, as amended, including the Prospectus and Statement
of Additional Information of the Fund contained therein, subject to the super
vision of the Company, its officers and directors, and Adviser and in accordance
with the investment objectives, policies and restrictions from time to time
prescribed by the Board of Directors of the Company and communicated by Adviser
to Sub-Adviser and subject to such further limitations as Adviser may from time
to time impose by written notice to Sub-Adviser.
3. Sub-Adviser shall formulate and implement a continuing
program for managing the investment of the Fund's assets, and shall amend and
update such program from time to time as financial and other economic conditions
warrant. Sub-Adviser shall make all determinations with respect to managing the
investment of the Fund's assets and shall take such steps as may be necessary to
implement the same, including the placement of purchase and sale orders on
behalf of the Fund.
4. Sub-Adviser shall furnish such reports to Adviser as
Adviser may reasonably request for Adviser's use in discharging its obligations
under the Advisory Agreement, which reports may be distributed by Adviser to the
Company's Board of Directors at periodic meetings of the Board of Directors and
at such other times as may be reasonably requested by the Board of Directors.
Copies of all such reports shall be furnished to Adviser for examination and
review within a reasonable time prior to the presentation of such reports to
Company's Board of Directors.
5. Sub-Adviser shall select the brokers and dealers that will
execute the purchases and sales of securities for the Fund and markets on or in
which such transactions will be executed and shall place, in the name of the
Fund or its nominee, all such orders.
(a) Subject to the primary objective of obtaining the best
available prices and execution, Sub-Adviser will place orders
for the purchase and sale of portfolio securities with such
broker/dealers who provide statistical, factual and financial
information and services to the Fund, Sub-Adviser or to any
other fund for which 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
Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the funds for which
Sub-Adviser provides 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 Company,
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 Sub-Adviser has 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 Sub-Adviser's overall
responsibilities with respect to the Fund and to other funds
and other advisory accounts for which Sub-Adviser exercises
investment discretion.
(c) It is understood that certain other clients of Sub-Adviser
may have investment objectives and policies similar to
those of the Fund, and that Sub-Adviser may, from time to
time, make recommendations that result in the purchase or sale
of a particular security by its other clients simultaneously
with the Fund. If transactions on behalf of more than one
client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. In
such event, Sub-Adviser shall allocate advisory
recommendations and the placing of orders in a manner that is
deemed equitable by Sub-Adviser to the accounts involved,
including the Fund. When two or more of the clients of
Sub-Adviser (including the Fund) are purchasing or selling the
same security on a given day from the same broker or dealer,
such transactions may be averaged as to price.
(d) Sub-Adviser agrees that it will not purchase or sell
securities for the Fund in any transaction in which it,
Adviser or any "affiliated person" of the Company, Adviser or
Sub-Adviser or any affiliated person of such "affiliated
person" is acting as principal; provided, however, that
Sub-Adviser may effect transactions pursuant to Rule 17a-7
under the 1940 Act in compliance with the Fund's
then-effective policies concerning such transactions.
(e) Sub-Adviser agrees that it will not execute any portfolio
transactions for the Fund with a broker or dealer or futures
commission-merchant which is an "affiliated person" of the
Company, Adviser or Sub-Adviser or an "affiliated person" of
such an "affiliated person" without the prior written consent
of Adviser. In effecting any such transactions with the prior
written consent of Adviser, Sub-Adviser shall comply with
Section 17(e)(1) of the 1940 Act, other applicable provisions
of the 1940 Act, if any, the then-effective Registration
Statement of the Fund under the Securities Act of 1933, as
amended and the Fund's then-effective policies concerning such
transactions.
(f) Sub-Adviser shall promptly communicate to Adviser and, if
requested by Adviser, to the Company's Board of Directors,
such information relating to portfolio transactions as Adviser
may reasonably request. The parties understand that the Fund
shall bear all brokerage commissions in connection with the
purchases and sales of portfolio securities for the Fund and
all ordinary and reasonable transaction costs in connection
with purchases of such securities in private placements and
subsequent sales thereof.
6. Sub-Adviser may (at its cost except as contemplated by
paragraph 5 of this Agreement) employ, retain or otherwise avail itself of the
services and facilities of persons and entities within its own organization or
any other organization for the purpose of providing Sub-Adviser, Adviser or the
Fund with such information, advice or assistance, including but not limited to
advice regarding economic factors and trends and advice as to transactions in
specific securities, as Sub-Adviser may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or otherwise helpful
to Adviser or the Fund, or in the discharge of Sub-Adviser's overall
responsibilities with respect to the other accounts for which it serves as
investment manager or investment adviser.
7. Sub-Adviser shall cooperate with and make available to
Adviser, the Fund and any agents engaged by the Fund, Sub-Adviser's expertise
relating to matters affecting the Fund.
8. For the services to be rendered under this Agreement, and
the facilities to be furnished for each fiscal year of the Fund, Adviser shall
pay to Sub-Adviser a monthly management fee at the annual rate of .50% of the
Fund's average daily net assets. This fee will be computed based on net assets
at the beginning of each day and will be paid to Sub-Adviser monthly on or
before the fifteenth day of the month next succeeding the month for which the
fee is paid. The fee shall be prorated for any fraction of a fiscal year at the
commencement and termination of this Agreement.
Pursuant to the Advisory Agreement, Adviser receives monthly
from the Fund compensation at the annual rate of 1.00% of the Fund's average
daily net assets. If Adviser has undertaken in the Fund's Registration Statement
as filed under the 1940 Act or elsewhere to waive all or part of its fee under
the Advisory Agreement or to reduce such fee upon order of the Board of
Directors or the vote of a majority of the outstanding voting securities of the
Fund, Sub-Adviser's fee payable under this Agreement will be proportionately
waived.
9. Sub-Adviser represents, warrants and agrees that:
(a) Sub-Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act") and is
currently in compliance and shall at all times continue to
comply with the requirements imposed upon it by Advisers Act
and other applicable laws and regulations. Sub-Adviser agrees
to (i) supply Adviser with such documents as Adviser may
reasonably request to document compliance with such laws and
regulations and (ii) immediately notify Adviser of the
occurrence of any event which would disqualify Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to any applicable law or regulation.
(b) Sub-Adviser will maintain, keep current and preserve on
behalf of the Company all records required or permitted by the
1940 Act in the manner provided by such Act. Sub-Adviser
agrees that such records are the property of the Company, and
will be surrendered to the Company promptly upon request.
(c) Sub-Adviser will complete such reports concerning
purchases or sales of securities on behalf of Sub-Adviser as
Adviser may from time to time require to document compliance
with the 1940 Act, Advisers Act, the Internal Revenue Code,
applicable state securities laws and other applicable laws and
regulations or regulatory and taxing authorities in countries
other than the United States.
(d) After filing with the Securities and Exchange Commission
any amendment to its Form ADV, Sub-Adviser will promptly
furnish a copy of such amendment to Adviser.
(e) Sub-Adviser will immediately notify Adviser of the
occurrence of any event which would disqualify Sub-Adviser
from serving as an investment adviser of an investment company
pursuant to Section 9 of the 1940 Act or any other applicable
statute or regulation.
10. Adviser represents, warrants and agrees that:
(a) It has been duly authorized by the Board of Directors of
the Company to delegate to Sub-Adviser the provision of the
services contemplated hereby.
(b) Adviser and the Company are currently in compliance and
shall at all times continue to comply with the requirements
imposed upon Adviser and the Company by applicable law and
regulations.
11. Sub-Adviser will not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or its shareholders in
connection with the performance of its duties under this Agreement, except a
loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
duties under this Agreement.
12. This Agreement shall become effective as of the date first
set forth above. Wherever referred to in this Agreement, the vote or approval of
the holders of a majority of the outstanding voting securities or shares of the
Fund shall mean the vote of 67% or more of such shares if the holders of more
than 50% of such shares are present in person or by proxy or the vote of more
than 50% of such shares, whichever is less.
Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect for a period of two years from the date of
its execution, and thereafter shall continue in effect only so long as such
continuance is specifically approved at least annually (a) by the Board of
Directors of the Company or by the vote of a majority of the outstanding voting
securities of the Fund, and (b) by the vote of a majority of the directors who
are not parties to this Agreement or Interested Persons of Adviser, Sub-Adviser
or the Company, cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated at any time without the
payment of any penalty (a) by the vote of the Board of Directors of the Company
or by the vote of the holders of a majority of the outstanding voting securities
of the Fund, upon 60 days' written notice to Adviser and the Sub-Adviser, or (b)
by Adviser, upon 60 days' written notice to the Sub-Adviser; or (c) by the
Sub-Adviser, upon 60 days' written notice to Adviser. This Agreement shall
automatically terminate in the event of its assignment as defined in the 1940
Act and the rules thereunder, provided, however, that such automatic termination
shall be prevented in a particular case by an order of exemption from the
Securities and Exchange Commission or a no-action letter of the staff of the
Commission to the effect that such assignment does not require termination as a
statutory or regulatory matter. This Agreement shall automatically terminate
upon completion of the dissolution, liquidation or winding up of the Fund.
13. No amendment to or modification of this Agreement shall be
effective unless and until approved by the vote of a majority of the outstanding
shares of the Fund.
14. This Agreement shall be binding upon, and inure to the
benefit of, Adviser and Sub-Adviser, and their respective successors.
15. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers thereunto duly authorized in
multiple counterparts, each of which shall be an original but all of which shall
constitute one of the same instrument.
DELAWARE MANAGEMENT COMPANY, INC.
By________________________________
Name:
Title:
VOYAGEUR ASSET MANAGEMENT LLC
By________________________________
Name:
Title:
EXHIBIT C
_________________ FUND, A SERIES OF __________ FUNDS, INC.
PLAN OF LIQUIDATION AND TERMINATION
The following Plan of Liquidation and Termination (the "Plan") of
________________ Fund (the "Fund"), one of ___ series of ________ Funds, Inc.
(the "Company"), a corporation organized and existing under the laws of the
state of Minnesota, which has operated as an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), is intended to accomplish the complete liquidation
and termination of the Fund in conformity with the provisions of the Company's
Articles of Incorporation and ByLaws, and Minnesota law.
WHEREAS, the Company's Board of Directors (the "Board") has deemed that
it is advisable and in the best interest of the Fund and its shareholders to
liquidate and terminate the Fund, and the Board, on February 7 and February 14,
1997, considered the matter and determined to recommend the liquidation and
termination of the Fund pursuant to this Plan;
NOW, THEREFORE, the liquidation and termination of the Fund shall be
carried out in the manner hereinafter set forth:
1. EFFECTIVE DATE OF PLAN. This Plan shall be effective upon
consummation of the merger of a wholly owned subsidiary of Lincoln National
Corporation ("LNC") with and into Dougherty Financial Group Inc. ("DFG")
pursuant to an Agreement and Plan of Merger by and among LNC, DFG, Michael E.
Dougherty, James O. Pohlad, Robert C. Pohlad and William M. Pohlad, provided
that the Plan has previously been adopted and approved at a meeting of
shareholders of the Fund called for the purpose of voting upon the Plan, by a
vote of holders of more than 50 percent of the outstanding shares of the Fund.
The date of effectiveness of the Plan is hereinafter called the "Effective
Date."
2. CESSATION OF BUSINESS. After the Effective Date, the Company shall
not engage in any business activities on behalf of the Fund except for the
purpose of winding up the Fund's business and affairs, preserving the value of
its assets and distributing its assets to shareholders in accordance with the
provisions of this Plan after the payment to (or reservation of assets for
payment to) all creditors of the Fund. After the Effective Date, the Fund shall
not issue any new shares except in connection with the reinvestment of dividends
or distributions by existing shareholders. Notwithstanding the provisions of
this Plan, the Company shall, prior to making the final liquidating distribution
to Fund shareholders, continue to honor requests for the redemption of Fund
shares received up to and including 4:00 p.m. on the day before the Liquidation
Record Date (as defined in Section 5 below).
3. LIQUIDATION OF ASSETS. As soon as practicable after the Effective
Date and consistent with the terms of the Plan, the Company shall cause the
liquidation of the Fund's assets to cash form.
4. PAYMENT OF DEBTS. As soon as practicable after the Effective Date,
the Company shall determine and pay (or reserve sufficient amounts to pay) the
amount of all known or reasonably ascertainable liabilities of the Fund incurred
or expected to be incurred prior to the date of the liquidating distribution
provided in Section 5 below.
5. LIQUIDATING DISTRIBUTION. As soon as practicable after the Effective
Date, and in any event within sixty (60) days thereafter, the Company will mail
the following to each Fund shareholder of record who has not redeemed its
shares: (i) a liquidating distribution equal to the shareholder's proportionate
interest in the remaining assets of the Fund (after the payment and creation of
the reserves contemplated by Section 4 above); and (ii) information concerning
the sources of the liquidating distribution. On or before such mailing date the
Company will compile the list of remaining shareholders of record entitled to
receive a liquidation distribution. The day on which such list is determined
shall be the "Liquidation Record Date." The payment of the liquidating
distribution and the retirement and cancellation of Fund shares will be effected
pursuant to an amendment to the Articles of Incorporation of the Company in the
form attached hereto as Exhibit 1 (the "Amendment").
6. TERMINATION AND DISSOLUTION. As promptly as practicable after the
completion of the liquidating distribution described in the preceding paragraph,
the Fund shall be terminated pursuant to the terms of this Plan and applicable
provisions of Minnesota law.
7. EXPENSES OF LIQUIDATION AND TERMINATION. All expenses incurred by
the Company in relation to the carrying out of this Plan, other than brokerage
commissions and taxes, if any, shall be borne by Lincoln National Corporation.
8. POWER OF THE BOARD. The Board and, subject to the general direction
of the Board, the officers of the Company, shall have authority to do or to
authorize any or all acts and things as provided for in this Plan and any and
all such further acts and things as they may consider necessary or desirable to
carry out the purposes of this Plan, including without limitation, the execution
and filing of all articles, documents, information returns, tax returns, forms
and other papers which may be necessary or appropriate to implement this Plan or
which may be required by the provisions of the Investment Company Act of 1940,
as amended, the Securities Act of 1933, as amended, and applicable Minnesota
law.
9. AMENDMENTS TO THE PLAN. The Board shall have the authority to
authorize such variations from or amendments to the provisions of this Plan
(other than the terms of the liquidating distribution) as may be necessary or
appropriate to effect the complete liquidation and termination of the Fund and
the distribution of the Fund's assets to Fund shareholders in accordance with
the purposes intended to be accomplished by this Plan.
EXHIBIT 1 TO PLAN OF LIQUIDATION AND TERMINATION
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
____________________ FUNDS, INC.
The undersigned officer of _______________ Funds, Inc. (the
"Corporation"), a corporation subject to the provisions of Chapter 302A of the
Minnesota Statutes, hereby certifies that the Corporation's (a) Board of
Directors, at a meeting held February 14, 1997, and (b) shareholders, at a
meeting held April 11, 1997, adopted the resolutions hereinafter set forth; and
such officer further certifies that the amendments to the Corporation's Articles
of Incorporation set forth in such resolution were adopted pursuant to Chapter
302A.
WHEREAS, the Corporation is registered as an open-end management
investment company (I.E., a mutual fund) under the Investment Company Act of
1940 and offers its shares to the public in several series, each of which
represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interest of the holders of the
___________________ Fund (the "Fund"), a series of the Corporation, to liquidate
and terminate the Fund pursuant to the Plan of Liquidation and Termination (the
"Liquidation Plan") approved by Fund shareholders on April 11, 1997;
WHEREAS, the Corporation wishes to provide for the distribution of the
assets of the Fund to its shareholders and the simultaneous cancellation and
retirement of the outstanding shares of the Fund; and
WHEREAS, the Liquidation Plan requires that, in order to bind all
shareholders of the Fund to the foregoing and, in particular, to bind such
shareholders to the cancellation and retirement of the outstanding shares of the
Fund, it is necessary to adopt an amendment to the Corporation's Articles of
Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Articles of
Incorporation be, and the same hereby are, amended to add the following Article
5A immediately following Article 5 thereof:
5A. (a) For purposes of this Article 5A, the following terms
shall have the following meanings:
"EFFECTIVE DATE" means the date on which the Fund shareholders
adopt and approve the Plan of Liquidation and Termination (the
"Liquidation Plan") approved by the Fund shareholders on April 11,
1997.
THE "FUND" means the Series __ Common Shares of the
Corporation, which have been designated _________________________ Fund
in the bylaws of the Corporation.
"LIQUIDATING DISTRIBUTION DATE" means the date, as soon as
practicable after the Effective Date, for the consummation of the
liquidation.
(b) At the Liquidating Distribution Date, the assets belonging to the
Fund shall be distributed, as described in the Liquidation Plan, among the
Fund's shareholders in proportion to each shareholder's interest in the
remaining assets of the Fund. For purposes of the foregoing, the term "assets
belonging to" has the meaning assigned to it in Article 7(b) of the
Corporation's Articles of Incorporation.
(c) All issued and outstanding shares of the Fund shall simultaneously
be canceled on the Books of the Fund and retired.
(d) From and after the Liquidating Distribution Date, the Fund Shares
canceled and retired pursuant to paragraph (c) above shall have the status of
authorized and unissued Shares of the Corporation without designation as to
series.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment on behalf of the Corporation on
_______________, 1997.
_________________ FUNDS, INC.
By _______________________________
Its
EXHIBIT D
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
the __ day of ______, 1997, by and between Voyageur Mutual Funds III, Inc.
("Voyageur III"), on behalf of its series Growth and Income Fund, and VAM
Institutional Funds, Inc. ("VAM Funds"), on behalf of its newly formed series
Growth and Income Fund ("New Growth and Income Fund"). Voyageur III and VAM
Funds are Minnesota corporations. As used in this Agreement, the terms "New
Growth and Income Fund" and "Growth and Income Fund" shall be construed to mean,
respectively, "VAM Funds on behalf of New Growth and Income Fund" and "Voyageur
III on behalf of Growth and Income Fund," where necessary to reflect the fact
that a corporate series is generally considered the beneficiary of corporate
level actions taken with respect to the series and is not itself recognized as a
person under law.
This Agreement is intended to be and is adopted as a "plan of
reorganization," within the meaning of Treas. Reg. 1.368-2(g), for a
reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended (the "Code"). The reorganization (the "Reorganization") will consist
of the transfer to New Growth and Income Fund of all of the assets of Growth and
Income Fund in exchange for the assumption by New Growth and Income Fund of all
liabilities of Growth and Income Fund and the issuance by New Growth and Income
Fund of shares of common stock, par value $0.01 per share ("New Growth and
Income Fund Shares"), to be distributed, after the Closing Time hereinafter
determined, to the shareholders of Growth and Income Fund in liquidation of
Growth and Income Fund as provided herein, all upon the terms and conditions
hereinafter set forth in this Agreement. The distribution of New Growth and
Income Fund Shares to Growth and Income Fund shareholders and the retirement and
cancellation of Growth and Income Fund shares will be effected pursuant to an
amendment to the Articles of Incorporation of Voyageur III in the form attached
hereto as Exhibit 1 (the "Amendment"), to be adopted by Voyageur III in
accordance with the Minnesota Business Corporation Act.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. REORGANIZATION AND LIQUIDATION OF GROWTH AND INCOME FUND
1.1. Subject to the terms and conditions set forth herein and in the
Amendment and on the basis of the representations and warranties contained
herein, Growth and Income Fund agrees to assign, deliver and otherwise transfer
the Growth and Income Fund Assets (as defined in paragraph 1.2) to New Growth
and Income Fund and New Growth and Income Fund agrees in exchange therefor to
assume all liabilities of Growth and Income Fund at the Closing Time (as defined
in paragraph 3.1) as set forth in paragraph 1.3and to deliver to Growth and
Income Fund Shareholders (as defined in paragraph 1.5) the number of New Growth
and Income Fund Shares, including fractional New Growth and Income Fund Shares,
determined in accordance with paragraph 2.2. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2. The "Growth and Income Fund Assets" shall consist of all property,
including, without limitation, all cash, cash equivalents, securities, futures
and interest receivables owned by Growth and Income Fund, and any deferred or
prepaid expenses shown as an asset on Growth and Income Fund's books, on the
Valuation Date (as defined in paragraph 2.1).
1.3. New Growth and Income Fund will assume all liabilities of Growth
and Income Fund, which include, without limitation, all expenses, costs, charges
and reserves reflected on an unaudited Statement of Assets and Liabilities of
Growth and Income Fund prepared by the Treasurer of Growth and Income Fund as of
the Valuation Date in accordance with generally accepted accounting principles
consistently applied from the prior audited period ("Valuation Date Statement").
1.4. At the Closing Time or as soon as practicable thereafter, pursuant
to paragraph 1.1 hereof and the Amendment, Growth and Income Fund will
distribute New Growth and Income Fund Shares received by Growth and Income Fund
pro rata to its shareholders of record determined as of the close of business on
the Valuation Date ("Growth and Income Fund Shareholders"). Thereafter, no
additional shares representing interests in Growth and Income Fund shall be
issued. Such distribution will be accomplished by an instruction, signed by
Growth and Income Fund's Secretary, to transfer New Growth and Income Fund
Shares then credited to Growth and Income Fund's account on the books of New
Growth and Income Fund to open accounts on the books of VAM Funds in the names
of the Growth and Income Fund Shareholders and representing the respective pro
rata number of New Growth and Income Fund Shares due each such Growth and Income
Fund Shareholder. All issued and outstanding shares of Growth and Income Fund
simultaneously will be canceled on Growth and Income Fund's books.
1.5. Ownership of New Growth and Income Fund Shares will be shown on
the books of VAM Fund's transfer agent. New Growth and Income Fund Shares will
be issued in the manner described in New Growth and Income Fund's then-current
Prospectus and Statement of Additional Information, except no front-end sales
charges will be incurred by Growth and Income Fund Shareholders in connection
with New Growth and Income Fund Shares received in the Reorganization. Growth
and Income Fund Shareholders shall receive New Growth and Income Fund shares
that are of the same class as the Growth and Income Fund shares in exchange for
which such New Growth and Income Fund shares are issued.
1.6 New Growth and Income Fund agrees that in determining any
contingent deferred sales charges applicable to any shares distributed by it in
the Reorganization, and in determining the date upon which any Class B shares
distributed by it in the Reorganization convert to Class A shares, it shall give
credit for the period during which the holders thereof held Growth and Income
Fund shares in exchange for which such New Growth and Income Fund shares were
issued.
1.7. Any transfer taxes payable upon issuance of New Growth and Income
Fund Shares in a name other than the registered holder of Growth and Income Fund
Shares on Growth and Income Fund's books as of the close of business on the
Valuation Date shall, as a condition of such issuance and transfer, be paid by
the person to whom New Growth and Income Fund Shares are to be issued and
transferred.
1.8. Any reporting responsibility of Growth and Income Fund is and
shall remain the responsibility of Growth and Income Fund.
1.9. All books and records maintained on behalf of Growth and Income
Fund will be delivered to New Growth and Income Fund and, after the Closing,
will be maintained by New Growth and Income Fund or its designee in compliance
with applicable record retention requirements under the Investment Company Act
of 1940, as amended (the "1940 Act").
2. VALUATION
2.1. The "Valuation Date" shall be a business day not later than the
5th business day following the receipt of the requisite approval of this
Agreement by shareholders of Growth and Income Fund or such other date after
such shareholder approval as may be mutually agreed upon. The value of the
Growth and Income Fund Assets shall be the value of such assets computed as of
4:00 p.m., Eastern time, on the Valuation Date, using the valuation procedures
set forth in Growth and Income Fund's then current Prospectus and Statement of
Additional Information.
2.2. The New Growth and Income Fund Shares to be issued hereunder will
have an aggregate net asset value equal to the value of the Growth and Income
Fund Assets, net of the liabilities of Growth and Income Fund, determined in
accordance with paragraph 2.1.
2.3. All computations of value shall be made by Voyageur Fund Managers,
Inc. ("VFM") in accordance with its regular practice in pricing Growth and
Income Fund. New Growth and Income Fund shall cause VFM to deliver a copy of its
valuation report at the Closing.
3. CLOSING AND CLOSING TIME
3.1. The Closing shall take place on the Valuation Date as of 5:00
p.m., Eastern time, or at such other day or time as the parties may agree (the
"Closing Time"). The Closing shall be held in a location mutually agreeable to
the parties hereto. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the Closing Time unless otherwise provided.
3.2. Portfolio securities held by Growth and Income Fund (together with
any cash or other assets) shall be delivered by Growth and Income Fund to
Norwest Bank Minnesota, N.A. (the "Custodian"), as custodian for New Growth and
Income Fund, for the account of New Growth and Income Fund at or before the
Closing Time in conformity with applicable custody provisions under the 1940 Act
and duly endorsed in proper form for transfer in such condition as to constitute
good delivery thereof in accordance with the custom of brokers. The portfolio
securities shall be accompanied by all necessary federal and state stock
transfer stamps or a check for the appropriate purchase price of such stamps.
Portfolio securities and instruments deposited with a securities depository (as
defined in Rule 17f-4 under the 1940 Act) shall be delivered at or before the
Closing Time by book-entry in accordance with customary practices of such
depository and the Custodian. The cash delivered shall be in the form of a
Federal Funds wire, payable to the order of "Norwest Bank Minnesota, N.A.,
Custodian for Growth and Income Fund, a series of VAM Institutional Funds, Inc."
3.3. In the event that on the Valuation Date, (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such Exchange or elsewhere shall be
disrupted so that, in the judgment of both New Growth and Income Fund and Growth
and Income Fund, accurate appraisal of the value of the Growth and Income Fund
Assets is impracticable, the Valuation Date shall be postponed until the first
business day after the day when trading shall have been fully resumed without
restriction or disruption and reporting shall have been restored.
3.4. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably request.
4. COVENANTS OF NEW GROWTH AND INCOME FUND AND GROWTH AND INCOME FUND
4.1. Except as otherwise expressly provided herein, Growth and Income
Fund will operate its business in the ordinary course between the date hereof
and the Closing Time, it being understood that such ordinary course will include
customary dividends and other distributions.
4.2. VAM Funds will prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement onForm N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), relating to New Growth and
Income Fund Shares (the "Registration Statement").
4.3. Growth and Income Fund will call a meeting of its shareholders to
consider and act upon this Agreement and the Amendment and to take all other
action necessary to obtain approval of the transactions contemplated herein,
including, if necessary, the waiver of any existing investment limitations that
might otherwise preclude Growth and Income Fund from holding all of its assets
as New Growth and Income Fund Shares until such shares are distributed to Growth
and Income Fund shareholders. Voyageur III will prepare the notice of meeting,
form of proxy and proxy statement (collectively, "Proxy Materials") to be used
in connection with such meeting. VAM Funds will furnish Voyageur III with such
information relating to New Growth and Income Fund as is reasonably necessary
for the preparation of the Proxy Materials.
4.4. Subject to the provisions of this Agreement, New Growth and Income
Fund and Growth and Income Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
4.5. As soon after the Closing Time as is reasonably practicable,
Voyageur III (a) shall prepare and file all federal and other tax returns and
reports of Growth and Income Fund required by law to be filed with respect to
all periods ending on or before the Closing Time but not theretofore filed, and
(b) shall pay all federal and other taxes shown as due thereon and/or all
federal and other taxes that were unpaid as of the Closing Time, including
without limitation, all taxes for which the provision for payment was made as of
the Closing Time (as represented in paragraph 5.2(l)).
4.6. New Growth and Income Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act and the 1940
Act as it may deem appropriate in order to continue its operations after the
Closing Time.
5. REPRESENTATIONS AND WARRANTIES
5.1. VAM Funds represents and warrants to Voyageur III as follows:
(a) New Growth and Income Fund is a series of VAM Funds. VAM
Funds is a corporation validly existing and in good standing under the
laws of Minnesota with corporate power to carry on its business as
presently conducted.
(b) VAM Funds is a duly registered management investment
company, and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect.
(c) The Prospectus and Statement of Additional Information of
New Growth and Income Fund will, at the Closing Time, conform in all
materials respects to the applicable requirements of the 1933 Act and
the 1940 Act and the regulations thereunder and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) New Growth and Income Fund is not in, and the execution,
delivery and performance of this Agreement will not result in, a
material violation of any provision of VAM Funds's Articles of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which New Growth and Income
Fund is a party or by which it is bound.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against VAM Funds or New
Growth and Income Fund or any of its properties or assets which, if
adversely determined, would materially and adversely affect its
financial condition or the conduct of its business; and New Growth and
Income Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects, or is reasonably likely to materially
and adversely affect, its business or its ability to consummate the
transactions herein contemplated.
(f) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of VAM
Funds, and this Agreement constitutes a valid and binding obligation of
New Growth and Income Fund enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws relating to or
affecting creditors rights and to general equity principles.
(g) New Growth and Income Fund Shares to be issued and
delivered to Growth and Income Fund, for the account of the Growth and
Income Fund Shareholders, pursuant to the terms of this Agreement will
at the Closing Time have been duly authorized and, when so issued and
delivered, will be duly and validly issued New Growth and Income Fund
Shares, and will be fully paid and nonassessable with no personal
liability attaching to the ownership thereof;
(h) The information furnished or to be furnished by New Growth
and Income Fund for use in registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto.
(i) The Proxy Materials, insofar as they relate to New Growth
and Income Fund, will, at the time of the meeting of Growth and Income
Fund's shareholders and at the Closing Time, not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
materially misleading.
5.2 Voyageur III represents and warrants to VAM Funds as follows:
(a) Growth and Income Fund is a series of Voyageur III.
Voyageur III is a corporation validly existing and in good standing
under the laws of Minnesota.
(b) Voyageur III is a duly registered management investment
company, and its registration with the Commission as an investment
company under the 1940 Act and the registration of its shares under the
1933 Act are in full force and effect.
(c) All of the issued and outstanding shares of common stock
of Growth and Income Fund have been offered and sold in compliance in
all material respects with applicable registration requirements of the
1933 Act and state securities laws. Shares of Growth and Income Fund
are registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and Voyageur III
is not subject to any stop order and is fully qualified to sell Growth
and Income Fund shares in each state in which such shares have been
registered.
(d) The current Prospectus and Statement of Additional
Information of Growth and Income Fund conform in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) Growth and Income Fund is not in, and the execution,
delivery and performance of this Agreement will not result in, a
material violation of any provision of Voyageur III's Articles of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which Growth and Income Fund is
a party or by which it is bound.
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against Growth and Income Fund
or any of its properties or assets which, if adversely determined,
would materially and adversely affect its financial condition or the
conduct of its business; and Growth and Income Fund knows of no facts
that might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the transactions
herein contemplated.
(g) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights
of Growth and Income Fund as of April 30, 1996 and for the year then
ended, certified by KPMG Peat Marwick LLP, and the unaudited Statement
of Assets and Liabilities, Statement of Operations, Statement of
Changes in Net Assets and Financial Highlights of Growth and Income
Fund as of October 30, 1996 and for the six months then ended, fairly
present, in all material respects, Growth and Income Fund's financial
condition as of such date, and its results of operations, changes in
its net assets and financial highlights for such period in accordance
with generally accepted accounting principles, and as of such date
there were no known liabilities of Growth and Income Fund (contingent
or otherwise) not disclosed therein that would be required in
accordance with generally accepted accounting principles to be
disclosed therein.
(h) Since the date of the most recent unaudited financial
statements, there has not been any material adverse change in Growth
and Income Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by Growth and Income Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and acknowledged by New Growth and
Income Fund prior to the date of this Agreement and prior to the
Closing Time. All liabilities of Growth and Income Fund (contingent and
otherwise) are reflected in the Valuation Date Statement. For the
purpose of this subparagraph (h), neither a decline in Growth and
Income Fund's net asset value per share nor a decrease in Growth and
Income Fund's size due to redemptions by Growth and Income Fund
shareholders shall constitute a material adverse change.
(i) Growth and Income Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to the Closing Time.
(j) All issued and outstanding shares of Growth and Income
Fund are, and at the Closing Time will be, duly and validly issued and
outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof. Growth and Income Fund does not
have outstanding any options, warrants or other rights to subscribe for
or purchase any of its shares, nor is there outstanding any security
convertible into any of its shares. All such shares will, at the time
of Closing, be held by the persons and in the amounts recorded by
Growth and Income Fund's transfer agent.
(k) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Time by all
necessary action on the part of Voyageur III and, subject to the
approval of Growth and Income Fund's shareholders, this Agreement
constitutes a valid and binding obligation of Growth and Income Fund
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws relating to or affecting creditors' rights
and to general equity principles.
(l) All material federal and other tax returns and reports of
Growth and Income Fund required by law to be filed on or before the
Closing Time shall have been filed and are correct and all federal and
other taxes shown as due or required to be shown as due on said returns
and reports have been paid or provision has been made for the payment
thereof and, to the best of Growth and Income Fund's knowledge, no such
return is currently under audit and no assessment has been asserted
with respect to any such return and there are no facts that might form
the basis for such proceedings.
(m) For each taxable year since its inception, Growth and
Income Fund has met all the requirements of Subchapter M of the Code
for qualification and treatment as a "regulated investment company" and
neither the execution or delivery of, nor the performance of its
obligations under, this Agreement will adversely affect, and no other
events, to the best of Growth and Income Fund's knowledge, are
reasonably likely to occur which will adversely affect the ability of
Growth and Income Fund to continue to meet the requirements of
Subchapter M of the Code.
(n) At the Closing Time, Growth and Income Fund will have good
and valid title to the Growth and Income Fund Assets, subject to no
liens (other than the obligation, if any, to pay the purchase price of
portfolio securities purchased by Growth and Income Fund which have not
settled prior to the Closing Time), security interests or other
encumbrances, and full right, power and authority to assign, deliver
and otherwise transfer such assets hereunder, and upon delivery and
payment for such assets, New Growth and Income Fund will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including any restrictions as might arise under the
1933 Act.
(o) At the time of the meeting of Growth and Income Fund's
shareholders and at the Closing Time, the Proxy Materials will (i)
comply in all material respects with the provisions of the 1934 Act and
the 1940 Act and the regulations thereunder and (ii) not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither Growth and Income Fund nor Voyageur III
shall be construed to have made the foregoing representation with
respect to portions of the Proxy Materials furnished by New Growth and
Income Fund. Any other information furnished by Growth and Income Fund
for use in any other manner that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with the applicable federal
securities and other laws and regulations thereunder.
(p) Growth and Income Fund has maintained or has caused to be
maintained on its behalf all books and accounts as required of a
registered investment company in compliance with the requirements of
Section 31 of the 1940 Act and the Rules thereunder.
(q) Growth and Income Fund is not acquiring New Growth and
Income Fund Shares to be issued hereunder for the purpose of making any
distribution thereof other than in accordance with the terms of this
Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF GROWTH AND INCOME FUND
The obligations of Growth and Income Fund to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by New Growth and Income Fund of all the obligations to be performed
by it hereunder on or before the Closing Time and, in addition thereto, the
following conditions:
6.1. All representations and warranties of New Growth and Income Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Time with the same force and
effect as if made on and as of the Closing Time.
6.2. New Growth and Income Fund shall have delivered to Growth and
Income Fund a certificate of its President and Treasurer, in a form reasonably
satisfactory to Growth and Income Fund and dated as of the date of the Closing,
to the effect that the representations and warranties of VAM Funds made in this
Agreement are true and correct at and as of the Closing Time, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as Voyageur III shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW GROWTH AND INCOME FUND
The obligations of New Growth and Income Fund to complete the
transactions provided for herein shall be subject, at its election, to the
performance by Growth and Income Fund of all the obligations to be performed by
it hereunder on or before the Closing Time and, in addition thereto, the
following conditions:
7.1. All representations and warranties of Voyageur III contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Time with the same force and effect as if made
on and as of the Closing Time.
7.2. Growth and Income Fund shall have delivered to New Growth and
Income Fund at the Closing a certificate of its President and its Treasurer, in
form and substance satisfactory to New Growth and Income Fund and dated as of
the date of the Closing, to the effect that the representations and warranties
of Growth and Income Fund made in this Agreement are true and correct at and as
of the Closing Time, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as New Growth and
Income Fund shall reasonably request.
7.3. Growth and Income Fund shall have delivered to New Growth and
Income Fund a statement, certified by the Treasurer of Voyageur III, of the
Growth and Income Fund Assets and its liabilities, together with a list of
Growth and Income Fund's portfolio securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax purposes,
such statement to be prepared as of the Closing Time and in accordance with
generally accepted accounting principles consistently applied.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW GROWTH AND
INCOME FUND AND GROWTH AND INCOME FUND.
The obligations of Growth and Income Fund and New Growth and Income
Fund hereunder are each subject to the further conditions that on or before the
Closing Time:
8.1. This Agreement and the Amendment and the transactions contemplated
herein and therein shall have been approved by the requisite vote of the holders
of the outstanding shares of Growth and Income Fund in accordance with the
provisions of Voyageur III's Articles of Incorporation, and certified copies of
the resolutions evidencing such approval shall have been delivered to New Growth
and Income Fund.
8.2. At the Closing Time, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by New Growth and Income Fund or Growth and Income
Fund to permit consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve risk of a material adverse
effect on the assets or properties of New Growth and Income Fund or Growth and
Income Fund.
8.4. On or prior to the Valuation Date, Growth and Income Fund shall
have declared and paid a dividend or dividends and/or other distribution or
distributions that, together with all previous such dividends or distributions,
shall have the effect of distributing to its shareholders all of Growth and
Income Fund's investment company taxable income (computed without regard to any
deduction for dividends paid) and all of its net capital gain (after reduction
for any capital loss carry-forward and computed without regard to any deduction
for dividends paid) for the taxable year during which the Reorganization occurs.
8.5. The parties shall have received an opinion of the law firm of
Dorsey & Whitney LLP (based on such representations as such law firm shall
reasonably request), addressed to VAM Funds and Voyageur III, which opinion may
be relied upon by the shareholders of Growth and Income Fund, substantially to
the effect that the federal income tax consequences of the Reorganization will
be as follows:
(i) the Reorganization will constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and New Growth
and Income Fund and Growth and Income Fund each will qualify
as a party to the Reorganization under Section 368(b) of the
Code;
(ii) Growth and Income Fund shareholders will recognize no income,
gain or loss upon receipt, pursuant to the Reorganization, of
New Growth and Income Fund shares. Growth and Income Fund
shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of
Growth and Income Fund which are distributed by Growth and
Income Fund prior to the Reorganization;
(iii) the tax basis of New Growth and Income Fund shares received by
each Growth and Income Fund shareholder pursuant to the
Reorganization will be equal to the tax basis of Growth and
Income Fund shares exchanged therefor;
(iv) the holding period of New Growth and Income Fund shares
received by each Growth and Income Fund shareholder pursuant
to the Reorganization will include the period during which the
Growth and Income Fund shareholder held the Growth and Income
Fund shares exchanged therefor, provided that the Growth and
Income Fund shares were held as a capital asset on the date of
the Reorganization;
(v) Growth and Income Fund will recognize no income, gain or
loss by reason of the Reorganization;
(vi) New Growth and Income Fund will recognize no income, gain
or loss by reason of the Reorganization;
(vii) the tax basis of the assets received by New Growth and Income
Fund pursuant to the Reorganization will be the same as the
basis of those assets in the hands of Growth and Income Fund
immediately prior to the Reorganization;
(viii) the holding period of the assets received by New Growth and
Income Fund pursuant to the Reorganization will include the
period during which such assets were held by Growth and Income
Fund; and
(ix) New Growth and Income Fund will succeed to and take into
account the earnings and profits, or deficit in earnings and
profits, of Growth and Income Fund immediately prior to the
Reorganization.
Notwithstanding anything herein to the contrary, neither New Growth and
Income Fund nor Growth and Income Fund may waive the condition set forth in this
paragraph 8.5.
8.6. The Amendment shall have been filed in accordance with
applicable provisions of Minnesota law.
9. FEES AND EXPENSES
9.1. (a) Lincoln National Corporation shall bear all direct expenses
incurred in connection with entering into and carrying out the
provisions of this Agreement, including expenses incurred in connection
with the preparation, printing, filing and solicitation of proxies to
obtain requisite shareholder approvals.
(b) VFM shall pay any unamortized organizational expenses on
the books of Growth and Income Fund immediately prior to the
Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the
parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein.
11. TERMINATION
11.1. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Voyageur III and VAM
Funds;
(b) by either VAM Funds or Voyageur III by notice to the
other, without liability to the terminating party on account of such
termination (providing the terminating party is not otherwise in
material default or breach of this Agreement) if the Closing shall not
have occurred on or before July 1, 1997; or
(c) by either New Growth and Income Fund or Growth and Income
Fund, in writing without liability to the terminating party on account
of such termination (provided the terminating party is not otherwise in
material default or breach of this Agreement), if (i) the other party
shall fail to perform in any material respect its agreements contained
herein required to be performed on or prior to the Closing Time, (ii)
the other party materially breaches any of its representations,
warranties or covenants contained herein, (iii) the Growth and Income
Fund shareholders fail to approve this Agreement at any meeting called
for such purpose at which a quorum was present, or (iv) any other
condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it
will not or cannot be met.
11.2. (a) Termination of this Agreement pursuant to paragraphs 11.1(a)
or (b) shall terminate all obligations of the parties hereunder and
there shall be no liability for damages on the part of New Growth and
Income Fund or Growth and Income Fund or the directors or officers of
New Growth and Income Fund or Growth and Income Fund, to any other
party or its directors or officers.
(b) Termination of this Agreement pursuant to paragraph
11.1(c) shall terminate all obligations of the parties hereunder and
there shall be no liability for damages on the part of New Growth and
Income Fund or Growth and Income Fund or the directors or officers of
New Growth and Income Fund or Growth and Income Fund, except that any
party in breach of this Agreement shall, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties; PROVIDED, HOWEVER,
that following the meeting of Growth and Income Fund's shareholders called by
Growth and Income Fund pursuant to paragraph 4.3, no such amendment may have the
effect of changing the provisions for determining the number of New Growth and
Income Fund shares to be issued to the Growth and Income Fund Shareholders under
this Agreement to the detriment of such Growth and Income Fund Shareholders
without their further approval.
13 MISCELLANEOUS
13.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
13.3. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
13.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.5. The obligations and liabilities of VAM Funds hereunder are solely
those of New Growth and Income Fund. It is expressly agreed that no shareholder,
nominee, director, officer, agent or employee of VAM Funds on behalf of New
Growth and Income Fund shall be personally liable hereunder. The execution and
delivery of this Agreement have been authorized by the directors of VAM Funds
and signed by authorized officers of VAM Funds acting as such, and neither such
authorization by such directors nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally.
13.6. The obligations and liabilities of Voyageur III hereunder are
solely those of Growth and Income Fund. It is expressly agreed that no
shareholder, nominee, director, officer, agent or employee of Growth and Income
Fund shall be personally liable hereunder. The execution and delivery of this
Agreement have been authorized by the directors of Voyageur III and signed by
authorized officers of Voyageur III acting as such, and neither such
authorization by such directors nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer.
VOYAGEUR MUTUAL FUNDS III, INC., on
behalf of Growth and Income Fund
By _______________________________
Its _______________________________
VAM INSTITUTIONAL FUNDS, INC., on
behalf of Growth and Income Fund
By _______________________________
Its ________________________________
EXHIBIT 1 TO AGREEMENT AND PLAN OF REORGANIZATION
ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
VOYAGEUR MUTUAL FUNDS III, INC.
The undersigned officer of Voyageur Mutual Funds III, Inc. (the
"Corporation"), a corporation subject to the provisions of Chapter 302A of the
Minnesota Statutes, hereby certifies that the Corporation's Board of Directors
and shareholders, at meetings held February 14, 1997 and April 11, 1997,
respectively, adopted the resolutions hereinafter set forth; and such officer
further certifies that the amendments to the Corporation's Amended and Restated
Articles of Incorporation set forth in such resolutions were adopted pursuant to
said Chapter 302A.
WHEREAS, the Corporation is registered as an open end management
investment company (i.e., a mutual fund) under the Investment Company
Act of 1940 and offers its shares to the public in several series, each
of which represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interests of the holders of
the Series D shares of the Corporation (also known as the "Growth and
Income Fund") that the assets belonging to such series be sold to
Series L (also known as the "Growth and Income Fund") of VAM Funds,
Inc. ("VAM Funds"), a Minnesota corporation and an open end management
investment company registered under the Investment Company Act of 1940,
in exchange for shares of Series L of VAM Funds; and
WHEREAS, the Corporation wishes to provide for the pro rata
distribution of the shares of Series L of VAM Funds received by it to
holders of Corporation's Series D common shares, and the simultaneous
cancellation and retirement of the outstanding Series D common shares
of the Corporation; and
WHEREAS, the Corporation and VAM Funds have entered into an Agreement
and Plan of Reorganization providing for the foregoing transactions;
and
WHEREAS, the Agreement and Plan of Reorganization requires that, in
order to bind all holders of shares of the Corporation's Series D
common shares to the foregoing transactions, and in particular to bind
such holders to the cancellation and retirement of the outstanding
Series D common shares of the Corporation, it is necessary to adopt an
amendment to the Corporation's Amended and Restated Articles of
Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Amended and
Restated Articles of Incorporation be, and the same hereby are, amended
to add the following Article 5A immediately following Article 5
thereof:
5A. (a) For purposes of this Article 5A, the following
terms shall have the following meanings:
"Corporation" means this corporation.
"VAM Funds" means VAM Institutional Funds, Inc., a Minnesota
corporation.
"Acquired Fund" means the Corporation's Growth and Income Fund, which
is represented by the Series D common shares of the Corporation.
"Acquired Fund Shares" means the Corporation's Series D shares.
"Class A Acquired Fund Shares" means the Acquired Fund's Class A
shares.
"Class B Acquired Fund Shares" means the Acquired Fund's Class B
shares.
"Class C Acquired Fund Shares" means the Acquired Fund's Class C
shares.
"Acquiring Fund" means VAM Fund's Growth and Income Fund, which is
represented by the Series L common shares of VAM Funds.
"Acquiring Fund Share" means VAM Fund's Series L shares.
"Class A Acquiring Fund Shares" means the Acquiring Fund's Class A
shares.
"Class B Acquiring Fund Shares" means the Acquiring Fund's Class B
shares.
"Class C Acquiring Fund Shares" means the Acquiring Fund's Class C
shares.
"Valuation Date" means the day established in the Agreement and Plan of
Reorganization as the day upon which the value of the assets of the
Acquired Fund is determined for purposes of the reorganization.
"Valuation Time" means 4:00 p.m., Eastern time, on the Valuation Date.
"Closing Time" means 5:00 p.m., Eastern time, on the Valuation Date, or
such other date and time upon which the parties to the reorganization
may agree.
(b) At the Closing Time, the assets belonging to the Acquired Fund, the
Special Liabilities associated with such assets, and the General Assets and
General Liabilities allocated to the Acquired Fund, shall be sold to and assumed
by the Acquiring Fund, in return for Class A Acquiring Fund Shares, Class B
Acquiring Fund Shares, and Class C Acquiring Fund Shares, all pursuant to the
Agreement and Plan of Reorganization between the Corporation and VAM Funds
relating thereto. For purposes of the foregoing, the terms "assets belonging
to," "Special Liabilities," "General Assets" and "General Liabilities" have the
meanings assigned to them in Article 7(b), (c) and (d) of the Corporation's
Amended and Restated Articles of Incorporation.
(c) The number of Class A Acquiring Fund Shares, Class B Acquiring Fund
Shares and Class C Acquiring Fund Shares to be received by the Acquired Fund and
distributed by it to the respective Acquired Fund shareholders shall be
determined as follows:
(i) The net asset value per share of the Class A Acquired Fund
Shares, Class B Acquired Fund Shares and Class C Acquired Fund Shares
shall be computed as of the Valuation Time, using the valuation
procedures set forth in the Acquired Fund's then-current Prospectus and
Statement of Additional Information, and as may be required by the
Investment Company Act of 1940, as amended.
(ii) The total number of all classes of Acquiring Fund Shares
to be issued (including fractional shares, if any) in exchange for the
assets and liabilities of the Acquired Fund shall have an aggregate net
asset value equal to the aggregate net asset value of all classes of
the Acquired Fund Shares as of the Valuation Time, as determined
pursuant to (i) above. The total number of Class A Acquiring Fund
Shares to be issued (including fractional shares, if any) in exchange
for the assets and liabilities of the Acquired Fund which are allocable
to the Class A Acquired Fund Shares shall have an aggregate net asset
value equal to the aggregate net asset value of the Class A Acquired
Fund Shares as of the Valuation Time, as determined pursuant to (i)
above. The total number of Class B Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the assets and
liabilities of the Acquired Fund which are allocable to the Class B
Acquired Fund Shares shall have an aggregate net asset value equal to
the aggregate net asset value of the Class B Acquired Fund Shares as of
the Valuation Time, as determined pursuant to (i) above. The total
number of Class C Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the assets and liabilities
of the Acquired Fund which are allocable to the Class C Acquired Fund
Shares shall have an aggregate net asset value equal to the aggregate
net asset value of the Class C Acquired Fund Shares as of the Valuation
Time, as determined pursuant to (i) above.
(iii) At the Closing Time, the Acquired Fund shall distribute
to the Acquired Fund shareholders in liquidation of the Acquired Fund
pro rata (based upon the ratio that the number of Acquired Fund Shares
of the respective classes owned by each Acquired Fund shareholder
immediately prior to the Closing Time bears to the total number of
issued and outstanding Acquired Fund Shares immediately prior to the
Closing Time) the full and fractional Acquiring Fund Shares received by
the Acquired Fund pursuant to (i) and (ii) above. Accordingly, each
holder of Class A Acquired Fund Shares shall receive, immediately after
the Closing Time, Class A Acquiring Fund Shares with an aggregate net
asset value equal to the aggregate net asset value of the Class A
Acquired Fund Shares owned by such Acquired Fund shareholder at the
Valuation Time; each holder of Class B Acquired Fund Shares shall
receive, immediately after the Closing Time, Class B Acquiring Fund
Shares with an aggregate net asset value equal to the aggregate net
asset value of the Class B Acquired Fund Shares owned by such Acquired
Fund shareholder at the Valuation Time; and each holder of Class C
Acquired Fund Shares shall receive, immediately after the Closing Time,
Class C Acquiring Fund Shares with an aggregate net asset value equal
to the aggregate net asset value of the Class C Acquired Fund Shares
owned by such Acquired Fund shareholder at the Valuation Time.
(d) The distribution of Class A Acquiring Fund Shares, Class B
Acquiring Fund Shares and Class C Acquiring Fund Shares to Acquired Fund
shareholders, as provided for in paragraph (c) above, shall be accomplished by
the issuance of such Acquiring Fund Shares to open accounts on the share records
of the Acquiring Fund in the names of the Acquired Fund shareholders
representing the numbers of Class A Acquiring Fund Shares, Class B Acquiring
Fund Shares and Class C Acquiring Fund Shares due each such shareholder pursuant
to the foregoing provisions. All issued and outstanding Acquired Fund common
shares shall simultaneously be canceled on the books of the Acquired Fund and
retired. From and after the Closing Time, share certificates formerly
representing Acquired Fund common shares, if any, shall represent the number of
Class A Acquiring Fund Shares, Class B Acquiring Fund Shares and Class C
Acquiring Fund Shares determined in accordance with the foregoing provisions.
(e) From and after the Closing Time, the Acquired Fund Shares canceled
and retired pursuant to paragraph (d) above shall have the status of authorized
and unissued shares of the Corporation, without designation as to series.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment on behalf of the Corporation on
, 1997.
VOYAGEUR MUTUAL FUNDS III, INC.
By________________________________
Its_______________________________
FOR VOYAGEUR FUNDS VOTING ON PROPOSALS 1 AND 2:
[AGGRESSIVE GROWTH FUND
ARIZONA INSURED TAX FREE FUND
ARIZONA TAX FREE FUND
CALIFORNIA INSURED TAX FREE FUND
CALIFORNIA TAX FREE FUND
COLORADO TAX FREE FUND
FLORIDA INSURED TAX FREE FUND
FLORIDA LIMITED TERM TAX FREE FUND
FLORIDA TAX FREE FUND
IDAHO TAX FREE FUND
IOWA TAX FREE FUND
KANSAS TAX FREE FUND
MINNESOTA HIGH YEILD MUNICIPAL BOND FUND
MINNESOTA INSURED FUND
MINNESOTA LIMITED TERM MUNICIPAL BOND FUND
MINNESOTA TAX FREE FUND
MISSOURI INSURED TAX FREE FUND
NATIONAL HIGH YEILD MUNICIPAL BOND FUND
NEW MEXICO TAX FREE FUND
NORTH DAKOTA TAX FREE FUND
OREGON INSURED TAX FREE FUND
UTAH TAX FREE FUND
WASHINGTON INSURED TAX FREE FUND
WISCONSIN TAX FREE FUND]
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints Thomas J. Abood, John G. Taft and Kenneth R.
Larsen, and each of them, with power to act without the other and with the right
of substitution in each, the proxies of the undersigned to vote all shares of
Voyageur [name of Voyageur Fund] (the "Fund"), held by the undersigned at a
special meeting of shareholders of the Fund to be held on April 11, 1997, and at
any adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the
contrary below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven, W. Thacher
Longstreth, Thomas F. Madison, Jeffrey J. Nick, Charles E. Peck and Wayne A.
Stork.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. To vote: FOR_________ AGAINST__________ approval of a new Investment
Advisory Agreement.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________ , 1997
____________________________________________
____________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
VOYAGEUR GROWTH AND INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints Thomas J. Abood, John G. Taft and Kenneth R.
Larsen, and each of them, with power to act without the other and with the right
of substitution in each, the proxies of the undersigned to vote all shares of
Voyageur Growth and Income Fund (the "Fund"), held by the undersigned at a
special meeting of shareholders of the Fund to be held on April 11, 1997, and at
any adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the
contrary below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven, W. Thacher
Longstreth, Thomas F. Madison, Jeffrey J. Nick, Charles E. Peck and Wayne A.
Stork.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
5. To vote: FOR_________ AGAINST__________ approval of an Agreement and Plan
of Reorganization pursuant to which all of the assets of the Fund would be
acquired by a newly formed series of VAM Institutional Funds, Inc., also called
Growth and Income Fund, and shareholders would become shareholders of the newly
formed series.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________ , 1997
____________________________________________
____________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
VOYAGEUR GROWTH STOCK FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints Thomas J. Abood, John G. Taft and Kenneth R.
Larsen, and each of them, with power to act without the other and with the right
of substitution in each, the proxies of the undersigned to vote all shares of
Voyageur Growth Stock Fund (the "Fund"), held by the undersigned at a special
meeting of shareholders of the Fund to be held on April 11, 1997, and at any
adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the
contrary below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven, W. Thacher
Longstreth, Thomas F. Madison, Jeffrey J. Nick, Charles E. Peck and Wayne A.
Stork.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. To vote: FOR_________ AGAINST__________ approval of a new Investment Advisory
Agreement
3. To vote: FOR_________ AGAINST__________ approval of a Sub-Advisory Agreement
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________ , 1997
____________________________________________
____________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
FOR VOYAGEUR FUNDS VOTING ON PROPOSALS 1 AND 4:
[INTERNATIONAL EQUITY FUND, NATIONAL INSURED TAX FREE FUND, NATIONAL LIMITED
TERM TAX FREE FUND AND NATIONAL TAX FREE FUND]
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints Thomas J. Abood, John G. Taft and Kenneth R.
Larsen, and each of them, with power to act without the other and with the right
of substitution in each, the proxies of the undersigned to vote all shares of
Voyageur [name of Voyageur Fund] (the "Fund"), held by the undersigned at a
special meeting of shareholders of the Fund to be held on April 11, 1997, and at
any adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the
contrary below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven, W. Thacher
Longstreth, Thomas F. Madison, Jeffrey J. Nick, Charles E. Peck and Wayne A.
Stork.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
4. To vote: FOR_________ AGAINST__________ approval of liquidation of the Fund
and the distribution of the Fund's net assets to the shareholders
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________ , 1997
____________________________________________
____________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
