<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR INSURED FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR MUTUAL FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR MUTUAL FUNDS II, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR MUTUAL FUNDS III, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
VOYAGEUR TAX-FREE FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[GRAPHIC OMITTED]
January 28, 1999
Dear Shareholder:
A Joint Annual/Special Meeting of Shareholders of many of the funds within the
Delaware Investments family of funds is being held in Philadelphia on March 17,
1999. We ask that you take the time to review the enclosed proxy statement and
provide us with your vote on the important issues affecting your fund.
The enclosed proxy statement describes eight separate proposals. Certain
proposals affect only some of the funds. Others affect each of the funds. In
addition to the election of Board members and ratification of the selection of
auditors, the proxy statement includes proposals to change the designation of
investment objectives and current investment restrictions from "fundamental" to
"non-fundamental," as well as a proposal to adopt for the funds new,
standardized "fundamental" investment restrictions. The proposed changes will
allow the Boards to modify the funds' investment objectives and
"non-fundamental" restrictions in the future without the delay and expense of
holding a shareholder meeting. In addition, the proxy statement includes a
proposal to change certain funds' fundamental policy concerning diversification
of investments.
The proxy statement also contains proposals to approve new, standardized
investment management agreements which contain fee increases for some funds
and, for others, fee decreases or potential fee decreases. Also, new
standardized sub-advisory agreements are proposed for funds that are
sub-advised. Finally, shareholders are being asked to approve management's
proposal to restructure the funds into Delaware business trusts to enable the
funds to benefit from various advantages under Delaware law.
We realize that this proxy statement will take time to review, but your vote is
very important. Please familiarize yourself with the proposals presented and
mark, sign and return your proxy card (or cards) in the enclosed postage-paid
envelope. You may also call toll-free to vote by telephone, or you may vote
using the internet. The insert accompanying this proxy statement describes how
to vote using these methods.
If we do not receive your completed proxy card(s) after several weeks, you may
be contacted by our proxy solicitor, Shareholder Communications Corporation,
who will remind you to vote your shares and will review with you the various
ways in which you can register your vote.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
/s/ Jeffrey J. Nick
- ----------------------
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
<PAGE>
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
We encourage you to read the attached proxy statement in full; however, the
following are some typical questions that shareholders might have regarding
this proxy statement.
Q: WHY IS DELAWARE INVESTMENTS SENDING ME THIS PROXY STATEMENT?
Investment companies are required to obtain shareholders' votes for certain
types of action. As a shareholder, you have a right to vote on certain major
policy decisions, such as those included here.
Q: WHAT ARE THE ISSUES CONTAINED IN THIS PROXY STATEMENT?
There are eight different proposals presented here and they are outlined in the
Notice at the beginning of the proxy statement. The Notice describes which
proposals apply to which funds.
Q: HOW WOULD THE BROAD-BASED PROPOSALS AFFECT ME AS A FUND SHAREHOLDER?
o Changing the designation of a fund's investment objective from "fundamental"
to "non-fundamental" would not alter any fund's current investment
objective, but it would allow the fund's Board to make future adjustments
to the investment objective, without having to obtain shareholder approval.
Shareholders would, however, receive advance written notice of any proposed
changes. Management does not currently intend to recommend any material
changes to the investment objective of any fund.
o Changing a "fundamental" policy to permit the investments of five
state-specific tax-free funds to be non-diversified would give those funds
greater flexibility in selecting appropriate investments from a smaller
universe of available choices.
o Adopting a standardized list of "fundamental" investment restrictions across
all funds would modernize the restrictions to meet current regulatory
requirements, would provide operational efficiencies and would make it
easier to monitor compliance with these restrictions.
o Designating all existing investment restrictions as "non-fundamental" would
not alter the way a fund is currently managed or operated but would allow a
fund's Board to analyze and approve changes to the fund's existing
investment restrictions, without having to obtain additional shareholder
approval. Over time, management expects to recommend that the Board
evaluate each fund's investment restrictions so that those restrictions can
be modernized and standardized, if appropriate.
o Approval of the proposed fee increases, fee decreases or potential fee
decreases through the introduction of breakpoints for some of the funds
would ensure management fee levels that will enable those funds to continue
to receive high quality investment management services.
o Approval of new standardized investment management agreements for each fund
(and standardized sub-advisory agreements where applicable) would help
provide operational efficiencies.
o The restructuring of funds from Minnesota corporations into corresponding
Delaware business trusts would provide both consistency across the Delaware
Investments fund family and greater flexibility of fund operations.
Q: HOW DO THE BOARD MEMBERS FOR MY FUND RECOMMEND THAT I VOTE?
The Board members for all the funds recommend that you vote in favor of, or
FOR, all of the proposals described above.
i
<PAGE>
Q: WHOM DO I CALL FOR MORE INFORMATION ON HOW TO PLACE MY VOTE?
Please call your fund at 1-800-523-1918 or call Shareholder Communications
Corporation at 1-800-858-0073 for additional information on how to place your
vote.
PLEASE VOTE
YOUR VOTE IS IMPORTANT
ii
<PAGE>
[GRAPHIC OMITTED]
1818 Market Street
Philadelphia, PA 19103
Combined Proxy Statement and
Notice of Joint Annual/Special Meeting of Shareholders
to be Held on March 17, 1999
To the Shareholders of:
<TABLE>
<CAPTION>
<S> <C>
Voyageur Funds, Inc. Delaware-Voyageur Minnesota High Yield
Delaware-Voyageur US Government Municipal Bond Fund
Securities Fund Delaware-Voyageur Tax-Free New York Fund
Voyageur Insured Funds, Inc. Delaware-Voyageur Tax-Free Wisconsin Fund
Delaware-Voyageur Tax-Free Arizona Insured Fund National High Yield Muncipal Bond Fund
Delaware-Voyageur Minnesota Insured Fund Voyageur Mutual Funds II, Inc.
Voyageur Intermediate Tax-Free Funds, Inc. Delaware-Voyageur Tax-Free Colorado Fund
Delaware-Voyageur Tax-Free Minnesota Voyageur Mutual Funds III, Inc.
Intermediate Fund Aggressive Growth Fund
Voyageur Mutual Funds, Inc. Growth Stock Fund
Delaware-Voyageur Tax-Free Arizona Fund Tax-Efficient Equity Fund
Delaware-Voyageur Tax-Free California Fund Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Idaho Fund Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free Iowa Fund Delaware-Voyageur Tax-Free North Dakota Fund
</TABLE>
This is your official Notice that a Joint Annual/Special Meeting of
Shareholders of each open-end registered investment company within the Delaware
Investments family listed in bold faced type above (each a "Company") will be
held on Wednesday, March 17, 1999 at 10:00 a.m. at the Union League of
Philadelphia, 140 South Broad Street, Philadelphia, Pennsylvania. Each separate
fund within a Company may be referred to as a "Fund." The purpose of the
meeting is to consider and act upon the following Proposals and Sub-Proposals
that apply either to particular Companies or Funds, and to transact any other
business that properly comes before the meeting and any adjournments thereof.
<TABLE>
<CAPTION>
<S> <C>
Proposal One: To Elect a Board of Directors for
the Company .................................. Proposal One applies to all Companies.
Proposal Two: To Approve the Redesignation
of the Fund's Investment Objective from
Fundamental to Non-Fundamental ............... Proposal Two applies to all Funds.
Proposal Three: To Approve a Change in the
Fund's Fundamental Policy Concerning
Diversification of Investments ............... Proposal Three applies only to the following Funds:
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund
Delaware-Voyageur Minnesota Insured Fund
Voyageur Intermediate Tax-Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota
Intermediate Fund
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Proposal Four: To Approve Standardized
Fundamental Investment Restrictions for
the Fund (Includes Seven Sub-Proposals) ...... Proposal Four applies to all Funds.
4A: Industry Concentration
4B: Borrowing Money and Issuing Senior
Securities
4C: Underwriting of Securities
4D: Investing in Real Estate
4E: Investing in Commodities
4F: Making Loans
4G: Redesignation of all Current Fundamental
Investment Restrictions as Non-
Fundamental
Proposal Five: To Approve a New Investment
Management Agreement for the Fund ........... Proposal Five applies to all Funds.
Proposal Six: To Approve a New Sub-Advisory
Agreement for the Fund ...................... Proposal Six applies only to the following Funds:
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund
Voyageur Mutual Funds III, Inc.
Growth Stock Fund
Proposal Seven: To Ratify the Selection of
Ernst & Young LLP as Independent
Auditors for the Company .................... Proposal Seven applies to all Companies.
Proposal Eight: To Approve the Restructuring
of the Company from a Minnesota
Corporation into a Delaware Business Trust
and the Dissolution of the Minnesota
Corporation ................................. Proposal Eight applies to all Companies.
</TABLE>
Please note that a separate vote is required for each Proposal or Sub-Proposal
that applies to your Company or your Fund. Please vote your Proxy promptly to
avoid the need for further mailings. Your vote is important.
/s/ Jeffrey J. Nick
- ---------------------------------
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
PROXY STATEMENT 1
Proposal One: To Elect a Board of Directors for the Company 2
Proposal Two: To Approve the Redesignation of the Fund's Investment
Objective from Fundamental to Non-Fundamental 6
Proposal Three: To Approve a Change in the Fund's Fundamental Policy
Concerning Diversification of Investments 7
Proposal Four: To Approve Standardized Fundamental Investment Restrictions
for the Fund (Includes Seven Sub-Proposals) 8
4A: Industry Concentration 9
4B: Borrowing Money and Issuing Senior Securities 10
4C: Underwriting of Securities 11
4D: Investing in Real Estate 11
4E: Investing in Commodities 12
4F: Making Loans 12
4G: Resdesignation of all Current Fundamental Investment
Restrictions as Non-Fundamental 13
Proposal Five: To Approve a New Investment Management Agreement for the 14
Fund
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund 19
Proposal Seven: To Ratify the Selection of Ernst & Young LLP as Independent
Auditors for the Company 20
Proposal Eight: To Approve the Restructuring of the Company from a
Minnesota Corporation into a Delaware Business Trust and the
Dissolution of the Minnesota Corporation 21
EXHIBITS
Exhibit A: Outstanding Shares as of Record Date, January 18, 1999 A-1
Exhibit B: Shareholders Owning 5% or More of a Fund as of October 31, 1998 B-1
Exhibit C: Executive Officers of the Companies C-1
Exhibit D: Shareholdings by Directors and Nominees in the Delaware Investments
Funds as of October 31, 1998 D-1
Exhibit E: Lists of Current Fundamental Investment Restrictions E-1
Exhibit F: Information Relating to Investment Management and Sub-Advisory Agreements F-1
Exhibit G: Actual and Hypothetical Expense Information for the Past Fiscal Year G-1
Exhibit H: Similar Funds Managed by the Investment Managers and Sub-Advisers H-1
Exhibit I: Form of Investment Management Agreement I-1
Exhibit J: Form of Sub-Advisory Agreement J-1
Exhibit K: Form of Agreement and Plan of Reorganization K-1
Exhibit L: Comparison and Significant Differences Between Delaware Business
Trusts and Minnesota Corporations L-1
</TABLE>
v
<PAGE>
[GRAPHIC OMITTED]
1818 Market Street
Philadelphia, PA 19103
1-800-523-1918
PROXY STATEMENT
JOINT ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1999
Meeting Information. The Board of Directors of each open-end registered
investment company within the Delaware Investments family listed on the
accompanying Notice (each a "Company") is soliciting your proxy to be voted at
the Joint Annual/Special Meeting of Shareholders to be held on Wednesday, March
17, 1999 at 10:00 a.m. at the Union League of Philadelphia, 140 South Broad
Street, Philadelphia, Pennsylvania or any adjournments of the meeting
(hereafter, the "Meeting").
Purpose of Meeting. The purpose of the Meeting is to consider a number of
Proposals and Sub-Proposals that either apply to particular Companies, or to
individual funds within the Companies (each a "Fund"). The Proposals and
Sub-Proposals, as well as the Companies or Funds to which they apply, are
listed in the accompanying Notice.
The Board of Directors urges you to complete, sign and return the Proxy Card
(or Cards) included with this Proxy Statement, or use one of the other voting
methods described in the insert accompanying this Proxy Statement, whether or
not you intend to be present at the Meeting. It is important that you promptly
return the signed Proxy Card(s), or use one of the other voting methods
described in the insert accompanying this Proxy Statement, to help assure a
quorum for the Meeting.
General Voting Information. The persons designated on the Proxy Card as proxies
will vote your shares as you instruct on each Proxy Card. If your signed Proxy
Card is returned without any voting instructions, your shares will be voted
"FOR" each of the nominees for election as Director and "FOR" each other
Proposal or Sub-Proposal concerning your Company or Fund. The persons
designated as proxies will also be authorized to vote in their discretion on
any other matters which may come before the Meeting. If you sign and return a
Proxy Card, you may still attend the Meeting to vote your shares in person. If
your shares are held of record by a broker-dealer and you wish to vote in
person at the Meeting, you should obtain a Legal Proxy from your broker of
record and present it at the Meeting. You may also revoke your proxy at any
time before the Meeting: (i) by notifying Delaware Investments in writing at
1818 Market Street, Philadelphia, PA 19103; (ii) by submitting a later signed
Proxy Card; or (iii) by voting your shares in person at the Meeting. If your
shares are held in the name of your broker, you will have to make arrangements
with your broker to revoke a previously executed proxy.
Each shareholder may cast one vote for each full share and a partial vote for
each partial share of a Fund or Company that they owned on the record date,
which was January 18, 1999. Exhibit A shows the number of shares of each Fund
and Company that were outstanding on the record date and Exhibit B lists the
shareholders who own 5% or more of each Fund. It is expected that this Proxy
Statement and the accompanying Proxy Card(s) will be mailed to shareholders of
record on or about January 28, 1999.
<PAGE>
This proxy solicitation is being made largely by mail, but may also be made by
officers or employees of the Companies or their investment managers or
affiliates, through telephone, facsimile, oral or other communications.
Shareholders may provide proxy instructions by returning their Proxy Card by
mail or fax and may also communicate proxy instructions through the internet or
by telephone via touch-tone voting. Delaware Management Company ("DMC"), the
investment manager for each of the Funds, on behalf of itself and the
Companies, has engaged Shareholder Communications Corporation ("SCC") to assist
in the solicitation. The costs of engaging SCC will be shared by DMC and the
Companies. The estimate of the portion of those costs to be borne by the
Companies is set forth below:
Range
---------------------
Voyageur Insured Funds, Inc. ........................ $19,800 to $24,600
Voyageur Intermediate Tax Free Funds, Inc. .......... $ 2,100 to $ 2,600
Voyageur Mutual Funds, Inc. ......................... $ 1,800 to $ 2,200
Voyageur Mutual Funds II, Inc. ...................... $12,800 to $15,900
Voyageur Tax Free Funds, Inc. ....................... $14,700 to $18,300
Votes Required to Approve each Proposal or Sub-Proposal. Three Proposals within
this Proxy Statement affect all shareholders of a Company as a whole,
regardless of whether or not the Company consists of a number of individual
Funds. These Proposals are the election of Directors, the ratification of the
selection of the independent auditors and the restructuring of the Company from
a Minnesota corporation to a Delaware business trust. All shareholders of a
Company will vote together on these Proposals. The remaining Proposals or
Sub-Proposals contained in this Proxy Statement affect only particular Funds
and, therefore, only shareholders of those Funds are permitted to vote on those
Proposals or Sub-Proposals.
The amount of votes of a Company or Fund that are needed to approve the
different Proposals or Sub-Proposals varies. The voting requirements are
described within each Proposal or Sub-Proposal.
Abstentions will be counted as present for purposes of determining whether a
quorum of shares is present at the Meeting with respect to the item on which
the abstention is noted, and will have the same result 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 shares covered by such non-vote shall not be counted as
present for purposes of calculating the vote with respect to such proposal. DMC
will reimburse banks, brokers or dealers for their reasonable expenses in
forwarding soliciting materials to shareholders.
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.
Each Fund's most recent Annual Report and Semi-Annual Report to Shareholders
were previously mailed to shareholders. Copies of these reports are available
upon request, without charge, by writing or calling the Funds at the address
and telephone number shown on the top of the previous page of the Proxy
Statement.
Proposal One: To Elect a Board of Directors for the Company
This Proposal applies to all Companies.
You are being asked to vote to elect each of the following nominees to the
Board of Directors for your Company: Jeffrey J. Nick, Walter P. Babich, Anthony
D. Knerr, Ann R. Leven, Thomas F. Madison, Charles E. Peck, Wayne A. Stork, and
Jan R. Yeomans. With the exception of Jan R. Yeomans, each nominee is currently
a member of the Board of Directors for each Company. If elected, these persons
will serve as Directors until the next Annual or Special Meeting of
Shareholders called for the purpose of electing Directors, and/or until their
successors have been elected and qualify for office. It is not expected that
any nominee will withdraw or become unavailable for election, but in such a
case, the power given by you in the Proxy Card may be used to vote for a
substitute nominee or nominees as recommended by the existing Boards of
Directors.
Directors and Nominees. Presented below is information about the age, position
with the Companies, principal occupation and past business experience of each
current Director and nominee. With the exception of Thomas F. Madison, each
current Director joined each Company's Board in 1997. Thomas F. Madison joined
the Board of Directors of each Company in 1994.
2
<PAGE>
Jeffrey J. Nick* (45), Chairman (since 1998), President, Chief Executive
Officer and Director and/or Trustee (since 1997) of each of the 34 investment
companies in the Delaware Investments family. As of January 1, 1999, Chairman,
President, Chief Executive Officer and Director/Trustee of DMH Corp., Delvoy,
Inc., Delaware Management Company, Inc., Delaware Management Business Trust,
Founders Holdings, Inc.; Chairman, Chief Executive Officer and Director of
Delaware Distributors, Inc., Delaware International Holdings, Ltd., Delaware
International Advisers Ltd. (Director of Delaware International Advisers Ltd.
since 1998); Chairman and Chief Executive Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Chairman of Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors L.P.; Chairman and Director of Delaware Capital
Management, Inc. and Retirement Financial Services, Inc.; President, Chief
Executive Officer and Director of Delaware Management Holdings, Inc. (President
and Director of Delaware Management Holdings, Inc. since 1997); Director of
Delaware Service Company, Inc. President; Chief Executive Officer and Director
of Lincoln National Investment Companies, Inc., 1996 to present; Director of
Vantage Global Advisors, Inc., 1996 to present; Director of Lynch & Mayer, Inc.
(invest- ment adviser), 1997 to present; Managing Director of Lincoln National
UK plc, 1992-1996; Senior Vice President of Lincoln National Corporation
responsible for corporate planning and development, 1989-1992.
Walter P. Babich (71), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Board Chairman of Citadel
Constructors, Inc. (commercial building construction), 1988 to present; Partner
of I&L Investors, 1988-1991; Partner of Irwin & Leighton Partnership (building
construction), 1986-1988.
Anthony D. Knerr (60), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Founder and Managing Director,
Anthony Knerr & Associates (strategic consulting company to major non-profit
institutions and organizations), 1991 to present; Founder and Chairman of the
Publishing Group, Inc., 1988-1990; Executive Vice President/Finance and
Treasurer of Columbia University, 1982-1988; Lecturer of English at Columbia
University, 1987-1989.
Ann R. Leven (58), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Treasurer, National Gallery of
Art, 1994 to present; Director of four investment companies sponsored by
Acquila Management Corporation, 1985 to 1998; Deputy Treasurer of the National
Gallery of Art, 1990 to 1994; Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, 1984-1990; Adjunct Professor at Columbia Business
School, 1975-1992.
W. Thacher Longstreth** (78), Director and/or Trustee of each of the 34
investment companies in the Delaware Investments family; Philadelphia City
Councilman, 1984 to present; Consultant, Packard Press, 1988 to present; Senior
Partner, MLW Associates (business consulting), 1983 to present; Director,
Healthcare Services Group, 1983 to present; Director Emeritus, Tasty Baking
Company, 1991 to present; Director, MicroLeague Micromedia, Inc. (computer game
publisher), 1996 to present; Director, Tasty Baking Company, 1968-1991; Vice
Chairman, The Winchell Company (financial printing), 1983-1988.
Thomas F. Madison (62), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; President and Chief Executive
Officer of MLM Partners, Inc., 1993 to present; Chairman of the Board of
Communications Holdings, Inc., 1996 to present; Vice Chairman--Office of the
CEO of The Minnesota Mutual Life Insurance Company, February to September,
1994; Director of Valmont Industries (irrigation systems and steel
manufacturing), 1987 to present; Director of Eltrax Systems, Inc. (data
communications integration), 1993 to present; Director of Minnegasco, Span Link
Communications (software), 1995 to present; Director of ACI Telecentrics
(outbound telemarketing and telecommunications), 1997 to present; Director of
Aon Risk Services, 1996 to present; Director of Digital River, 1997 to present.
Charles E. Peck (72), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Retired; Secretary/Treasurer,
Enterprise Homes, Inc., 1992 to present; Chairman and Chief Executive Officer
of The Ryland Group, Inc., 1981 to 1990.
- ------------
* This nominee is considered to be an "interested person" of each Company, as
that term is defined in the Investment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
** This Director will be retiring from service on the Board of Directors for
each Company following election of the new Board and, therefore, is not a
nominee.
3
<PAGE>
Wayne A. Stork* (61), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Chairman and Director of Delaware
Management Holdings, Inc. and Director of Delaware International Advisors Ltd.
In addition, until December 31, 1998, Chairman of each of the 34 investment
companies in the Delaware Investments family; Director of Delaware Capital
Management, Inc.; Chairman, President, Chief Executive Officer and Director of
DMH Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman,
President, Chief Executive Officer, Chief Investment Officer and
Director/Trustee of Delaware Management Company, Inc. and Delaware Management
Business Trust; Chairman, President, Chief Executive Officer and Chief
Investment Officer of Delaware Management Company (a series of Delaware
Management Business Trust); Chairman, Chief Executive Officer and Chief
Investment Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Chairman and Chief Executive Officer of Delaware
International Advisers Ltd; Chairman, Chief Executive Officer and Director of
Delaware International Holdings Ltd.; Chief Executive Officer of Delaware
Management Holdings, Inc.; President and Chief Executive Officer of Delvoy,
Inc.; Chairman of Delaware Distributors, L.P.; Director of Delaware Service
Company, Inc. and Retirement Financial Services, Inc. During the past five
years, Mr. Stork has served in various executive capacities at different times
within the Delaware Investments organization.
Jan R. Yeomans (50), Vice President and Treasurer of the 3M Corporation, 1994
to Present; Director of Benefit Funds and Financial Markets for the 3M
Corporation, 1987-1994; Manager of Benefit Fund Investments for the 3M
Corporation, 1985-1987; Manager of Pension Funds for the 3M Corporation,
1983-1985; Consultant for Investment Technology Group of Chase Econometrics,
1982-1983; Consultant for Data Resources, 1980-1982; Programmer for the Federal
Reserve Bank of Chicago, 1970-1974.
Board and Committee Meetings. During the twelve months ended October 31, 1998,
each Company held seven Board meetings.
Each Board of Directors has an Audit Committee for the purpose of meeting, at
least annually, with the Company's independent auditors and officers to oversee
the quality of financial reporting and the internal controls of the Company,
and for such purposes as the Board of Directors may from time to time direct.
The Audit Committee of each Company consists of the following four Directors
appointed by the Board, all of whom are considered to be independent because
they are not "interested persons" as defined in the Investment Company Act of
1940, as amended (the "1940 Act"): Ann R. Leven, Chairperson, Walter P. Babich,
Anthony D. Knerr and Thomas F. Madison. Members of the Audit Committee serve
for three years or until their successors have been appointed and qualified.
The Audit Committee held six meetings for each Company during the twelve months
ended October 31, 1998.
Each Board of Directors also has a Nominating Committee, which meets for the
purpose of proposing nominees to serve as Directors. Nominees are considered by
the full Board of Directors for each Fund and, when appropriate, by
shareholders at annual or special shareholder meetings. The Nominating
Committee of each Company consists of the following three Directors appointed
by the Boards: Anthony D. Knerr and Charles E. Peck, both of whom are
independent, and Wayne A. Stork. W. Thacher Longstreth whose term as a
committee member would have expired in November 1998, continued to serve until
the nominating process for this Meeting of shareholders was completed. This
Committee met three times during the past year for the purpose of determining
the proposed list of nominees for this Meeting. The selection and nomination of
the independent Director nominees is committed to the discretion of the present
independent Directors. The Nominating Committee will consider suggestions for
the Board of Directors nominations from shareholders. Shareholders who wish to
suggest candidates for nomination to the Boards of Directors at any future
annual meeting should identify the candidate and furnish a written statement of
the person's qualifications to the Nominating Committee at the principal
executive offices of the Companies.
Board Compensation. Each independent Director receives compensation from each
Company of which he/she is a member of the Board of Directors. The interested
Directors are compensated by the investment manager and
- ------------
* This nominee is considered to be an "interested person" of each Company, as
that term is defined in the Investment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
4
<PAGE>
do not receive compensation from the Companies. Each independent Director
currently receives a total annual retainer fee of $38,000 for serving as a
Director for all 34 Companies within the Delaware Investments family, plus
$3,145 for each set of Board meetings attended (seven regular meetings).
Members of the Audit Committee currently receive additional annual compensation
of $5,000 from all Companies, in the aggregate, with the exception of the
chairperson, who receives $6,000.
Under the terms of each Company's retirement plan for Directors, each
independent Director who, at the time of his or her retirement from the Board
of Directors, has attained the age of 70 and served on the Board of Directors
for at least five continuous years, is entitled to receive payments from the
Company for a period of time equal to the lesser of the number of years that
such person served as a Director or the remainder of such person's life. The
annual amount of such payments will be equal to the amount of the annual
retainer that is paid to Directors of the Company at the time of such person's
retirement. If an eligible Director of each Company within the Delaware
Investments family had retired as of October 31, 1998, he or she would have
been entitled to annual payments in an amount equal to the annual retainer fee
noted in the previous paragraph. The following table identifies the amount each
Director received from each Company and from the fund complex as a whole during
the 12 months ending October 31, 1998. Each Director other than Thomas Madison
joined the board of Directors of the Companies on May 1, 1997.
<TABLE>
<CAPTION>
Jeffrey J. Walter P. Anthony D. Ann R. W. Thacher Thomas F. Charles E. Wayne A.
Company Name Nick Babich Knerr Leven Longstreth Madison Peck Stork
- ------------------------------ ------------ ----------- ------------ ---------- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Voyageur Funds, Inc. ......... None $ 928 $ 928 $ 933 $ 898 $ 910 $ 898 None
Voyageur Insured Funds, Inc... None $ 2,067 $ 2,067 $ 2,097 $ 1,916 $ 1,954 $ 1,916 None
Voyageur Intermediate Tax-
Free Funds, Inc. ............ None $ 922 $ 922 $ 926 $ 904 $ 908 $ 904 None
Voyageur Mutual Funds, Inc.... None $ 1,396 $ 1,396 $ 1,410 $ 1,322 $ 1,341 $ 1,322 None
Voyageur Mutual Funds II,
Inc. ........................ None $ 1,730 $ 1,730 $ 1,753 $ 1,619 $ 1,647 $ 1,619 None
Voyageur Mutual Funds III,
Inc. ........................ None $ 895 $ 895 $ 898 $ 880 $ 880 $ 795 None
Voyageur Tax Free Funds,
Inc. ........................ None $ 1,980 $ 1,980 $ 2,008 $ 1,840 $ 1,875 $ 1,840 None
Total Compensation From
All Companies in the
Delaware Investments
Family for the 12 months
ended October 31, 1998 ...... None $65,384 $65,384 $66,545 $60,384 $62,467 $60,384 None
</TABLE>
Officers. Each Board of Directors and the senior management of the Companies
appoint officers each year, and from time to time as necessary. The following
individuals are executive officers of one or more of the Companies: Jeffrey J.
Nick, David K. Downes, Richard G. Unruh, Paul E. Suckow, Richard J. Flannery,
Michael P. Bishof, George M. Chamberlain, Jr., Joseph H. Hastings, Patrick P.
Coyne, Mitchell L. Conery, Elizabeth H. Howell, Andrew M. McCullagh, Jr.,
George H. Burwell and Gerald S. Frey. Exhibit C includes biographical
information and the past business experience of such officers, except for Mr.
Nick whose information is set forth above along with the other Directors and
nominees. The Exhibit also identifies which officers are also officers of DMC.
The above officers of the Companies own shares of common stock and/or options
to purchase shares of common stock of Lincoln National Corporation ("LNC"), the
ultimate parent of DMC.
While in the employ of Oppenheimer Management Corporation, Mr. Paul E. Suckow
was the subject of an Administrative Proceeding brought by the U.S. Securities
and Exchange Commission ("SEC"). As a result of this proceeding, Mr. Suckow was
found to have violated Section 34(b) of the 1940 Act by failing properly to
disclose material facts in certain books and records by order of the SEC dated
December 1, 1992. Mr. Suckow was suspended from the business for 120 days.
5
<PAGE>
Management's Ownership of Delaware Investments Funds. Attached to this Proxy
Statement as Exhibit D is a list of the Directors' and nominees' shareholdings
of the various Funds within the Delaware Investments family on an individual
basis. Exhibit A lists the aggregate holdings by all of the Directors, nominees
and executive officers as a group.
Required Vote. Each Director of a Company shall be elected by a majority of
votes cast by shareholders of a Company present at the Meeting, regardless of
the votes of individual Funds within the Company.
Proposal Two: To Approve the Redesignation of the Fund's Investment
Objective from Fundamental to Non-Fundamental
This Proposal applies all Funds.
The investment objective of each Fund is designated as "fundamental," which
means that any modifications, even those not resulting in significant changes
in the way a fund is managed or the risks to which it is subject, require
shareholder approval. Under the 1940 Act, a fund's investment objective is not
required to be fundamental. However, many investment companies have elected to
designate their investment objectives as fundamental. This practice arose
largely as a result of comments provided by state securities regulators in
their review of fund registration statements during the state registration
process, as well as because of historical drafting conventions.
In light of the enactment of the National Securities Markets Improvement Act of
1996 ("NSMIA"), which eliminated state securities administrative review of
investment company registration statements, and in order to provide the Boards
of Directors with enhanced flexibility to respond to market, industry or
regulatory changes, each Fund's Board of Directors has approved the
redesignation from fundamental to non-fundamental of each Fund's investment
objective. Directors may change a non-fundamental investment objective at any
time without the delay and expense of soliciting proxies and holding a
shareholder meeting.
For a complete description of the investment objective of your Fund, please
consult your Fund's prospectus. The redesignation from fundamental to
non-fundamental will not alter any Fund's current investment objective. If this
Proposal is approved, however, Fund management expects to request that the
Directors consider a number of modifications to the language used to describe
some of the Funds' investment objectives. The requested modifications are
designed to modernize and standardize the expression of such investment
objectives, but if the modifications are implemented, neither the principal
investment design nor the day-to-day management of the Funds would be
materially altered. If at any time in the future, the Directors approve a
change in a Fund's non-fundamental investment objective, either in connection
with the currently anticipated modernization and standardization or otherwise,
shareholders will be given notice of the change prior to its implementation.
Required Vote. Approval of this proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
or represented by proxy, whichever is less. If the redesignation of any Fund's
investment objective from fundamental to non-fundamental is not approved by
shareholders of a particular Fund, that Fund's investment objective will remain
fundamental and shareholder approval (and its attendant costs and delays) will
continue to be required prior to any change in investment objective.
At meetings of the Directors held in July and September, 1998, the Directors
considered the enhanced management flexibility to respond to market, industry
or regulatory changes that would accrue to the Board of Directors if each
Fund's fundamental investment objective were redesignated as non-fundamental
and each Fund's Board of Directors unanimously approved the proposed change.
The Board of Directors unanimously recommends that you vote FOR the
redesignation of the investment objective of your Fund as non-fundamental.
6
<PAGE>
Proposal Three: To Approve a Change in the Fund's Fundamental Policy
Concerning Diversification of Investments
This Proposal applies only to the following Funds:
<TABLE>
<CAPTION>
<S> <C>
Voyageur Insured Funds, Inc. Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Delaware-Voyageur Tax-Free Colorado Fund
Delaware-Voyageur Minnesota Insured Fund
Voyageur Tax Free Funds, Inc.
Voyageur Intermediate Tax-Free Funds, Inc. Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
</TABLE>
Mutual funds generally diversify their investments among many different
securities. They are, however, free to choose the extent to which they will
diversify their investments, provided they meet certain minimum limits set
forth in the 1940 Act and/or the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"). Generally, in order to be diversified under the 1940
Act, a fund may not invest more than 5% of its total assets in a single issuer
(except U.S. government securities, as defined in the 1940 Act), or purchase
more than 10% of the outstanding securities of a single issuer. This limit only
applies to 75% of the fund's total assets, which means that any fund which is
diversified under the 1940 Act may invest up to 25% of its assets in a single
security. If a fund elects to be "non-diversified" under the 1940 Act, it must
still operate within the diversification requirements of the Internal Revenue
Code, which are similar to the 1940 Act diversification requirements, but apply
only to 50% of a fund's assets, rather than 75%. As to the remaining 50% of
fund assets, a fund may buy as few as two separate securities, each
representing 25% of the value of the fund.
The Funds listed above currently are classified and operate as "diversified"
funds, as that term is defined in the 1940 Act. Management has recommended to
the Directors that the Funds change their classification to "non-diversified,"
which means that they will operate within the more flexible diversification
restrictions contained in the Internal Revenue Code.
Each of the above Funds seeks to achieve its objective through investment in
fixed income securities, the interest on which is exempt from federal income
taxation and income taxation in the relevant state ("municipal securities").
Funds with this investment profile are often referred to as "state-specific
tax-free funds." Many state-specific tax-free funds operate as non-diversified
funds for 1940 Act purposes because the universe of available investments for
such funds is relatively small. These funds, however, continue to meet the
diversification requirements of the Internal Revenue Code.
The proposed change requires shareholder approval under the 1940 Act. In
approving the proposed change and concluding that it would recommend it to the
Funds' respective shareholders, the Directors considered: (i) the relatively
small market for municipal securities; (ii) the fact that many state-specific
tax-free funds, including most of the other Delaware-Voyageur state-specific
tax-free Funds within the Delaware Investments family, operate as
non-diversified funds under the 1940 Act; and (iii) the previous experience of
the Funds' investment manager in managing the Funds and the relative difficulty
it experienced in locating attractive investments. At their September, 1998
Board meetings, the Directors unanimously approved the proposed change.
The Funds' diversification policies are found in their prospectuses. In the
event that shareholders approve the proposed change, each of the Funds listed
above would amend its current prospectus disclosure describing its
diversification policy. Any future change from non-diversified to diversified
status by a Fund would not require shareholder approval under the 1940 Act. If
the proposed change is not approved, the Funds will continue to operate within
the 1940 Act diversification limitations.
Required Vote. Approval of this proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
or represented by proxy, whichever is less.
The Board of Directors unanimously recommends that you vote FOR the change in
diversification policy.
7
<PAGE>
Proposal Four: To Approve Standardized Fundamental Investment
Restrictions for the Fund (This Proposal involves separate votes on
Sub-Proposals 4A through 4G)
This Proposal applies to all Funds.
Proposal Overview
Each Fund is subject to investment restrictions which establish percentage and
other limits that govern the Fund's investment activities. Under the 1940 Act,
investment restrictions relating to certain activities are required to be
"fundamental," which means that any changes require shareholder approval. Funds
are permitted to deem other restrictions fundamental, and they may also adopt
"non-fundamental" restrictions, which can be changed by the Board of Directors
without shareholder approval. Of course, any change in a Fund's investment
restrictions, whether fundamental or not, would be approved by the Board and
reflected in the Fund's prospectus or other offering documents.
Unlike investment objectives and policies, which are often different for each
Fund, investment restrictions for Funds tend to be the same or similar, because
they are based on legal or regulatory requirements that apply to all Funds.
Over the years, however, as new Funds were created or added to the Delaware
Investments family (including Voyageur Funds within this proxy statement),
investment restrictions relating to the same activities were expressed in a
variety of different ways. Many older Funds are subject to investment
restrictions that were adopted in response to regulatory, business or industry
conditions that no longer exist. In addition, a number of Funds adopted
fundamental restrictions in response to state laws and regulations that no
longer apply because they were preempted by NSMIA. As a result, a number of
fundamental restrictions are no longer required to be fundamental, and some
previously required restrictions are no longer required at all.
The Directors, together with Fund management and the investment manager, have
analyzed the current fundamental investment restrictions of each Fund, and have
concluded that six new standardized fundamental investment restrictions should
be adopted for each Fund. The proposed investment restrictions relate only to
activities that are required under the 1940 Act to be the subject of
fundamental policies and restrictions. Management believes that a modern,
standardized list of restrictions will enhance the ability of the Funds to
achieve their objectives because the Funds will have greater investment
management flexibility to respond to changes in market, industry or regulatory
conditions. In addition, standardized restrictions are expected to enable the
Funds to operate more efficiently and to more easily monitor compliance with
investment restrictions.
Most of the Funds currently have fundamental investment restrictions that
govern the same activities covered by the proposed fundamental investment
restrictions, and a number of Funds currently have other fundamental investment
restrictions governing additional activities. Management is recommending that
all current fundamental investment restrictions for each Fund be redesignated
as non-fundamental at the same time that the six new standardized fundamental
investment restrictions are adopted for each Fund. If the current fundamental
restrictions are made non-fundamental, the Directors would be able to modify or
eliminate the current restrictions without the costs or delays associated with
a shareholder vote.
The proposed changes will not affect any Fund's investment objective and will
not change the way any Fund is currently being managed or operated, since all
current investment restrictions will remain in place as non-fundamental
restrictions. If, as proposed, the current fundamental investment restrictions
are redesignated as non-fundamental, management expects in the future to
recommend that the Board of Directors approve certain modifications designed to
result in a more modern and standardized list of investment restrictions for
the various Delaware Investments funds. The recommendations by management will
likely involve the modification or elimination of current restrictions. The
Board of Directors will determine separately for each Fund whether elimination
or modification of an investment restriction is appropriate for that Fund.
8
<PAGE>
The six new proposed fundamental investment restrictions are described below
within the relevant Sub-Proposals. Unless all of the Sub-Proposals are approved
by shareholders of a particular Fund, none of the Sub-Proposals will be adopted
for that Fund.
Exhibit E contains a list of the current "fundamental" investment restrictions
for each Fund which are proposed to be redesignated as "non-fundamental." That
Exhibit includes the current restrictions relating to the activities which are
the subject of the new proposed restrictions and shareholders are encouraged to
compare the current and proposed restrictions.
Required Vote. Approval of each Sub-Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
or represented by proxy, whichever is less.
The Directors have voted to adopt each of the proposed standardized fundamental
investment restrictions for the Funds, as well as to approve the redesignation
of the existing fundamental investment restrictions as non-fundamental, and
unanimously recommend that you vote FOR each Sub-Proposal 4A through 4G for
your Fund.
Sub-Proposal 4A: To adopt a new fundamental investment restriction concerning
the concentration of the Fund's investments in the same industry.
Under the 1940 Act, a fund's policy of concentrating its investments in
securities of companies in the same industry must be fundamental. A mutual fund
concentrates its investments, for purposes of the SEC, if it invests more than
25% of its "net" assets (exclusive of cash, U.S. government securities and
tax-exempt securities) in a particular industry or group of industries. Having
the concentration policy apply to "net" assets represents a recent change by
the SEC staff from its previous concentration standard which applied to 25% of
a fund's "total" assets. The change would slightly reduce a fund's ability to
concentrate, since the "net" assets figure is lower than "total" assets of a
fund because liabilities are subtracted.
Each Fund currently has a fundamental investment restriction prohibiting it
from concentrating its investments in the same industry. There are, however,
numerous variations in the way that the investment restriction is described in
the Funds' offering documents. In addition, most restrictions define
concentration in terms of a percentage of "total" assets, rather than in
accordance with the new "net" assets standard.
The Board of Directors recommends that shareholders of each Fund vote FOR the
approval of the proposed standardized fundamental investment restriction
regarding concentration set forth below. In approving the proposed investment
restriction and concluding that it would recommend the investment restriction
to Fund shareholders, the Directors considered that the proposed investment
restriction will standardize the concentration restriction for the Funds and is
intended to provide flexibility for Funds to respond to changes in the SEC
staff's position on concentration of investments or to other relevant legal,
regulatory or market developments without the delay or expense of a shareholder
vote.
Adoption of the proposed fundamental restriction will not affect the way the
Funds are currently managed or operated because the existing concentration
restrictions will remain in place as non-fundamental policies unless and until
a Fund's Board of Directors modifies them in the future.
Proposed Concentration Restriction: The Fund will not make investments that
will result in the concentration (as that term may be defined in the 1940 Act,
any rule or order thereunder, or SEC staff interpretation thereof) of its
investments in the securities of issuers primarily engaged in the same
industry, provided that this restriction does not limit the Fund from investing
in obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or in tax-exempt securities or certificates of deposit.
The Board of Directors has also approved a related non-fundamental policy,
which will be adopted for each Fund if the new fundamental restriction is
approved and which provides that, in applying the concentration restriction:
(i) utility companies will be divided according to their services, for example,
gas, gas transmission, electric and
9
<PAGE>
telephone will each be considered a separate industry; (ii) financial service
companies will be classified according to the end users of their services, for
example, automobile finance, bank finance and diversified finance will each be
considered a separate industry; and (iii) asset backed securities will be
classified according to the underlying assets securing such securities. This
non-fundamental policy is intended to keep the concentration restriction from
unnecessarily limiting a Fund's investments.
Sub-Proposal 4B: To adopt a new fundamental investment restriction concerning
borrowing money and issuing senior securities.
Introduction to Sub-Proposal. The 1940 Act imposes certain limits on investment
companies with respect to borrowing money and issuing senior securities. A
"senior security" is defined as an obligation of a fund with respect to its
earnings or assets that takes precedence over the claims of the fund's
shareholders with respect to the same earnings or assets. The 1940 Act
generally prohibits funds from issuing senior securities, in order to limit
their ability to use leveraging. In general, a fund uses leveraging when it
enters into securities transactions with borrowed money or money to which it
has only a temporary entitlement.
The limitations on borrowing and issuing senior securities are generally
designed to protect shareholders and their investments by restricting a fund's
ability to subject its assets to any claims of creditors or senior security
holders who would be entitled to dividends or rights on liquidation of the fund
that take precedence over the rights of shareholders. Borrowing money and
issuing senior securities are related activities under the 1940 Act in that, if
a fund fails to adhere to the restrictions applicable to borrowing, the fund
will be considered to have issued an impermissible senior security. Under the
1940 Act, a fund's investment restrictions relating to borrowing and senior
securities must be fundamental.
The current investment restrictions concerning borrowing and senior securities
vary considerably from Fund to Fund and are set forth in Exhibit E.
Shareholders of each Fund are being asked to approve a new standardized
fundamental restriction that covers both borrowing and senior securities and
which is designed to reflect current regulatory requirements.
Senior Securities. SEC staff interpretations under the 1940 Act allow open-end
funds to engage in a number of types of transactions which might be considered
to raise "senior securities" or "leveraging" concerns, so long as the funds
meet certain collateral requirements set by the SEC staff. These collateral
requirements are designed to protect shareholders. For example, some of the
transactions that may raise senior security concerns include short sales,
certain options and futures transactions, reverse repurchase agreements and
securities transactions that obligate the fund to pay money at a future date
(these transactions may be referred to collectively as "Leveraging-Type
Transactions"). Funds that engage in Leveraging-Type Transactions must set
aside money or securities or engage in certain offsetting securities
transactions, to meet the SEC staff's collateralization requirements.
Consistent with SEC staff positions, the senior security restrictions for most
of the Funds specifically permit the funds to engage in Leveraging-Type
Transactions.
Borrowing. Under the 1940 Act, an open-end fund is permitted to borrow up to 5%
of its total assets for temporary purposes from any person so long as the
borrowing is privately arranged, and also to borrow from banks, provided that
if such bank borrowings exceed 5%, the fund must have assets totaling at least
300% of the borrowing when the amount of the borrowing is added to the fund's
other assets. The effect of this latter provision is to allow an open-end fund
to borrow from banks amounts up to one-third (33 1/3%) of its total assets
(including the amount borrowed). Open-end funds typically borrow money to meet
redemptions to avoid being forced to sell portfolio securities before they
would have otherwise been sold. This technique allows funds greater flexibility
to buy and sell portfolio securities for investment or tax considerations,
rather than for cash flow considerations.
The borrowing restrictions for Funds limit borrowings to 20%, 10% or 5% of
assets, rather than the 331/3% allowed by law. Further, a number of older Funds
only permit borrowing "as a temporary measure for extraordinary purposes" and
most provide that the Fund may not borrow for leveraging purposes or purchase
securities while borrowings are outstanding.
Effects of the Proposed Investment Restriction. Since the proposed investment
restriction would provide greater flexibility for such Funds to engage in
borrowing and to engage in Leveraging-Type Transactions, the
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<PAGE>
Funds may be subject to additional costs and risks. For example, the costs of
borrowing can reduce a Fund's total return. Further, upon engaging in
Leveraging-Type Transactions, the Funds could experience increased risks due to
the effects of leveraging. The SEC staff's collateralization requirements are
designed to address such risks.
The Board of Directors recommends that shareholders of each Fund vote FOR
approval of the proposed standardized fundamental investment restriction
regarding borrowing and issuing senior securities set forth below. The proposed
investment restriction will establish a standardized borrowing and senior
securities restriction which is written to provide flexibility for Funds to
respond to changes in legal, regulatory or market developments. Adoption of the
new restriction, however, will not affect the way the Funds are currently
managed or operated because the existing restrictions will remain as
non-fundamental policies unless and until the Board of Directors modifies them
in the future.
Proposed Borrowing and Senior Securities Restriction: The Fund may not borrow
money or issue senior securities, except as the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, may permit.
Sub-Proposal 4C: To adopt a new fundamental investment restriction concerning
underwriting.
Each Fund is currently subject to a fundamental investment restriction
prohibiting it from acting as an underwriter of the securities of other
issuers. Under the 1940 Act, a fund's policy or restriction relating to
underwriting must be fundamental. A person or company is generally considered
an underwriter under the federal securities laws if it participates in the
public distribution of securities of other issuers, usually by purchasing the
securities from the issuer and re-selling the securities to the public.
Underwriters are subject to stringent regulatory requirements and often are
exposed to substantial liability. Thus, virtually all mutual funds operate in a
manner that allows them to avoid acting as underwriters.
From time to time, a mutual fund may purchase a security for investment
purposes which it later sells or re-distributes to institutional investors or
others under circumstances where the fund could possibly be considered to be an
underwriter under the technical definition of underwriter contained in the
securities laws. The current underwriting restriction for each Fund
specifically permits such re-sales. Management, consistent with SEC staff
interpretations, believes that the Funds legally would not be regulated as
underwriters in these circumstances.
The Board of Directors recommends that the shareholders of each Fund vote FOR
the approval of the proposed standardized fundamental investment restriction
regarding underwriting set forth below. The proposed restriction is
substantially similar to the current restriction for most Funds. The new
restriction is proposed for each Fund because it will help to achieve the goal
of standardization of the language of the investment restrictions among all
Funds. Adoption of the proposed restriction will not affect the way the Funds
are currently managed or operated.
Proposed Underwriting Restriction: The Fund may not underwrite the securities
of other issuers, except that the Fund may engage in transactions involving the
acquisition, disposition or resale of its portfolio securities under
circumstances where it may be considered to be an underwriter under the
Securities Act of 1933.
Sub-Proposal 4D: To adopt a new fundamental investment restriction concerning
investments in real estate.
Each Fund currently has a fundamental investment restriction prohibiting the
purchase or sale of real estate. All of the Funds' current restrictions allow
the Funds to invest in companies that deal in real estate, or to invest in
securities that are secured by real estate. Under the 1940 Act, a fund's policy
or restrictions regarding investments in real estate must be fundamental.
The Board of Directors recommends that shareholders of each Fund vote FOR the
approval of the proposed standardized fundamental investment restriction
regarding real estate set forth below. The proposed investment restriction is
designed to standardize the language of the real estate restriction among the
various Funds. The proposed investment restriction will permit Funds to
purchase securities whose payments of interest or principal are secured by
mortgages or other rights to real estate in the event of default. The
investment restriction will
11
<PAGE>
also enable the Funds to invest in companies within the real estate industry,
provided such investments are consistent with the Fund's investment objective
and policies. Adoption of the proposed restriction will not affect the way the
Funds are managed or operated because the current restrictions will remain as
non-fundamental policies unless and until the Board of Directors modifies them
in the future.
Proposed Real Estate Restriction: The Fund may not purchase or sell real estate
unless acquired as a result of ownership of securities or other instruments and
provided that this restriction does not prevent the Fund from investing in
issuers which invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by real
estate or interests therein.
Sub-Proposal 4E: To adopt a new fundamental investment restriction concerning
investments in commodities.
All of the Funds currently are subject to fundamental investment restrictions
prohibiting the purchase or sale of commodities or commodity contracts. Under
the 1940 Act, policies and restrictions regarding commodities must be
fundamental. The most common types of commodities are physical commodities such
as wheat, cotton, rice and corn. However, under federal law, futures contracts
are considered to be commodities and, therefore, financial futures contracts,
such as futures contracts related to currencies, stock indices or interest
rates, are considered to be commodities. If a Fund buys a financial futures
contract, it obtains the right to receive (or, if the Fund sells the contract,
the Fund is obligated to pay) the cash difference between the contract price
for an underlying asset or index and the future market price, if the market
price is higher. If the future price is lower, the Fund is obligated to pay
(or, if the Fund sold the contract, the Fund is entitled to receive) the amount
of the decrease. Funds often desire to invest in financial futures contracts
and options related to such contracts for hedging or other investment reasons.
The Board of Directors recommends that shareholders of each Fund vote FOR the
approval of the proposed standardized fundamental investment restriction
regarding commodities set forth below. The proposed restriction would
standardize the language of the restriction among the various Funds and provide
appropriate flexibility for the Funds to invest in financial futures contracts
and related options. As proposed, the restriction is broad enough to permit
investment in financial futures instruments for either investment or hedging
purposes, and, thus is broader than many Funds' current restrictions. Using
financial futures instruments can involve substantial risks, and will be
utilized only if the investment manager determines that such investments are
advisable and such practices are affirmatively authorized by the Board of
Directors. Adoption of the restriction will not affect the way the Funds are
currently managed or operated because the existing commodities restrictions
will remain as non-fundamental policies unless and until the Board of Directors
modifies them in the future.
Proposed Commodities Restriction: The Fund may not purchase or sell physical
commodities, unless acquired as a result of ownership of securities or other
instruments and provided that this restriction does not prevent the Fund from
engaging in transactions involving futures contracts and options thereon or
investing in securities that are secured by physical commodities.
Sub-Proposal 4F: To adopt a new fundamental investment restriction concerning
lending by the Fund.
Each of the Funds is currently subject to a fundamental investment restriction
limiting its ability to make loans. In order to ensure that the Funds may
invest in certain debt securities or repurchase agreements, which could be
characterized as the making of loans, the Funds current fundamental
restrictions specifically permit such investments. Securities lending is a
practice that has become common in the mutual fund industry and involves the
temporary loan of portfolio securities to parties who use the securities for
the settlement of securities transactions. The collateral delivered to a Fund
in connection with such a transaction is then invested to provide the Fund with
additional income.
The Board of Directors recommends that shareholders of each Fund vote FOR the
approval of the proposed standardized fundamental investment restriction
regarding lending set forth below. The proposed restriction prohibits loans by
the Funds except in the circumstances described above and, in some cases, would
provide more flexibility than the current lending restriction because of the
authority to engage in securities lending. Although securities lending involves
certain risks if the borrower fails to return the securities, management
believes that
12
<PAGE>
increased flexibility to engage in securities lending does not materially
increase the risk to which the Funds are currently subject. Also, the adoption
of the restriction will not affect the way the Funds are currently managed or
operated, because the existing lending restrictions will remain in place as
non-fundamental policies unless and until the Board of Directors modifies them
in the future.
Proposed Lending Restriction: The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt obligations,
entering into repurchase agreements, loaning its assets to broker/dealers or
institutional investors and investing in loans, including assignments and
participation interests.
Sub-Proposal 4G: To redesignate all current fundamental investment restrictions
as non-fundamental.
Each Fund currently is subject to its own list of fundamental investment
restrictions. Exhibit E lists the current fundamental investment restrictions
of each Fund. Some of the Funds are also subject to their own list of non-
fundamental investment restrictions. As described in the previous
Sub-Proposals, all Funds have a fundamental investment restriction governing
concentration, borrowing, underwriting, real estate, commodities and lending
and most Funds have a fundamental investment restriction governing senior
securities. Many of the Funds, especially the older Funds, have additional
fundamental investment restrictions governing activities that are no longer
required to be subject to fundamental investment restrictions.
The Directors and Fund management recognize that many of the current
fundamental investment restrictions cover the same activities as the proposed,
standardized fundamental investment restrictions so that there will be
overlapping restrictions. However, rather than asking shareholders for approval
to eliminate the current restrictions at this time in favor of the new
standardized restrictions, the Board of Directors for each Fund is recommending
that all current fundamental restrictions be redesignated as non-fundamental.
Approval of the proposed redesignation will not change any of the current
restrictions. If the current restrictions are made non-fundamental, however,
Fund management and the Directors expect to evaluate each Fund's investment
restrictions on an individual basis given the particular investment objective
and policies of the Fund. Over time, the Funds' investment restrictions can be
standardized, if appropriate. With the exception of a Fund's classification as
a diversified fund for purposes of the 1940 Act, the proposed reclassification
of the current investment restrictions as non-fundamental will provide the
Directors with the authority and ability to make such changes without being
required to seek an additional shareholder vote. Even if a Fund does not
designate its status as a diversified fund as fundamental, the 1940 Act would
require shareholder approval of any proposal to convert it to a non-diversified
fund.
The conversion of investment restrictions to non-fundamental will provide
management of the Funds with the flexibility to respond to industry changes and
also to take advantage of unique pricing and distribution structures that have
developed over the past ten years. For example, eliminating certain fundamental
restrictions and converting them to non-fundamental would permit the Funds to
operate in a "master-feeder" structure at some point in the future should
management determine that such a structure were appropriate.
In a "master-feeder" structure, investors purchase shares of one or more feeder
funds which, in turn, invest all of their assets in corresponding master funds
which have identical investment objectives, policies and restrictions as the
feeder funds. The assets are collectively managed at the master fund level and
the different feeder funds can have varying distribution and expense
structures. The principal advantage of the master-feeder structure is the
consolidation of investment management of multiple identical investment pools
into one investment pool. The structure is also sufficiently flexible to permit
offshore feeder funds' assets to be managed at the master fund level.
By making the investment restrictions non-fundamental, the Board will have the
flexibility to ensure that the investment restrictions of a Fund will not limit
the Fund's ability to operate in a master-feeder structure. Before any existing
Fund would convert to a master-feeder structure, shareholders would be notified
of such a change and the prospectus of the particular Fund would be amended to
disclose the ability to operate in a master-feeder structure.
The Board of Directors recommends that shareholders of each Fund vote FOR the
approval of the proposal to redesignate all current "fundamental" restrictions,
as "non-fundamental."
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<PAGE>
Proposal Five: To Approve a New Investment Management Agreement
for the Fund
This Proposal applies to all Funds.
Proposal Overview
Shareholders of the Funds are being asked to approve a new Investment
Management Agreement with Delaware Management Company (previously defined as
"DMC"), the current investment manager for each Fund. The new Investment
Management Agreements will reflect one or more of the following changes, all of
which are explained in further detail below.
o Management fee increase or management fee decrease, together with the
addition of fee "breakpoints," which reduce fee rates as Fund assets grow.
The term "breakpoint" refers to a point in a fee schedule where the fee rate
charged on a certain amount of assets declines. The reduced rate applies
only to fund assets within the range described for that breakpoint.
o Potential management fee decrease due to the addition or restructing of
breakpoints which would result in lower fees as Fund assets grow.
o Elimination of a provision concerning shareholder approval of amendments.
o Miscellaneous changes to the form of the Agreement designed to standardize
the language of the Agreement among all Delaware Investments funds.
To determine the proposed change in management fees for your Fund, please check
the table at page 16.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
or represented by proxy, whichever is less.
If shareholders approve the new Agreements, any modified management fees will
take effect on April 1, 1999, or at a later date if the Meeting is postponed or
adjourned. If a new Agreement is not approved for a particular Fund, the
current Agreement will continue in effect.
The Board of Directors for each Fund has unanimously approved the proposed
Agreements and recommends that you vote FOR the new Investment Management
Agreement for your Fund.
Proposed Changes in Management Fees
Purpose of Management Fees. Each Fund has hired DMC to serve as its investment
manager. Under the current Investment Management Agreements, the portfolio
management team for each Fund regularly decides which securities or instruments
to buy or sell for the Fund and the investment manager directly or indirectly
arranges for the placement and execution of orders for the purchase or sale of
such securities and instruments. The investment manager is also responsible for
each Fund's regulatory compliance and general administrative operations and
provides regular reports to the Fund's Board of Directors. The management fees
paid by a Fund, in part, are used by its investment manager to pay for the
personnel, equipment, office space and facilities that are needed to manage the
assets of the Fund and to administer its affairs.
Reasons for Proposed Changes in Management Fees. At the request of the Boards,
management recently undertook a complete review of the level and structure of
the management fees for each fund within the Delaware Investments family. The
extensive review process was performed with the guidance of an outside
consultant to help ensure the accuracy of the results and conclusions. The
process involved the comparison of each fund with its own universe of
"competing" funds, which were identified based on investment objective, asset
type and distribution channel. Once competing funds were identified, management
compared fee rates at various asset
14
<PAGE>
sizes to evaluate both fee rates and breakpoint structures. Management's goal
was to establish a consistent fee structure for the various Delaware
Investments funds that would be competitive with funds with a similar
investment objective and size in the current marketplace.
Management believes that a competitive management fee structure is needed to
ensure that Delaware Investments will continue to be able to deliver funds with
competitive expense ratios and provide the increased investment opportunities
and service options that are now available to shareholders. Also, in recent
years, management has noticed increased competition for talented investment and
service professionals along with growing expenses in order to recruit and
retain such personnel. By establishing fee levels at competitive market rates,
management believes it can continue to attract talented professionals and
support high-quality, long-term investment management and shareholder services
to help maintain solid investment performance.
Description of Proposed Changes in Management Fees. As a result of its
analysis, management has identified a number of different management fee
pricing levels to be established for the funds in the Delaware Investments
family, each reflecting the dynamics and complexity of managing the assets of
particular categories of funds based on asset type (such as equity or
fixed-income), sub-divisions within asset type (such as "insured" or "non-
insured" fixed-income securities) and geography (such as domestic or
international). In addition, management identified a standardized schedule of
breakpoints for funds at each of the management fee level categories, so that
management fees will be reduced if a fund's assets grow to certain levels, in
order to allow the funds to benefit from economies of scale. The meetings
described in this Proxy Statement are part of a series of shareholder meetings
to be held at which the standardized management fee pricing levels and
schedules of breakpoints will be put into place for many of the Delaware
Investments funds.
The chart included in Exhibit F shows the current and proposed management fee
rates for each Fund and the dollar amounts paid to the investment manager and
its affiliates during the last fiscal year. If a management fee increase is
proposed, the chart shows the dollar amount that the Fund would have paid to
DMC if the proposed management fees had been in effect. The chart also shows
whether DMC has waived any management fees. In addition, in order to
demonstrate the effect that the proposed management fee changes are expected to
have on the overall expenses of the Funds, Exhibit G contains a Fee Table and
Expense Example for each Fund for which an increase in the fee rate is
proposed, showing the actual expense levels under the current management fees
and the projected expense levels following implementation of the proposed
management fees.
Board Consideration of Proposed Management Agreement Changes. In considering
the proposed management fee changes, the Directors reviewed extensive materials
concerning the methodology used by management to identify competitive peer
groups for comparison and to develop proposed management fee pricing and
breakpoint levels for the various categories of Funds. The Directors reviewed
separate reports for each Fund containing detailed comparative management fee
and expense information of each Fund and other funds in the relevant peer
group, as well as expense ratio comparisons with relevant mutual fund indices.
The Directors assessed how the management fee changes would position each Fund
within its peer group. The Directors also reviewed and considered performance
and ranking data for each Fund along with other comparative funds within the
investment objective category, as well as a performance comparison to a
relevant securities index for each Fund. In addition to the expense and
performance information, the Directors reviewed the investment manager's
historical profitability with respect to each Fund and the anticipated effects
of any management fee changes.
The Directors also considered the reasons presented by management with respect
to each proposed management fee change, including the anticipated impact of
management fee increases or decreases on shareholders of the Funds. In support
of fee increases for particular Funds, the Directors considered various factors
including the enhanced service options and investment opportunities that are
made available to shareholders, the growing expense associated with recruiting
and retaining qualified investment and service professionals in an increasingly
competitive industry and the importance of supporting quality, long-term
service by investment managers to help achieve solid investment performance.
Following consideration of all of the information and factors discussed above,
the Directors for each Fund, including all of the independent Directors,
unanimously approved the proposed management fee changes.
15
<PAGE>
Summary of Proposed Management Fee Changes. The following table lists the
proposed changes to investment management fees for each of the Funds. While the
table generally describes the type of proposed changes in management fees,
shareholders are directed to Exhibit F, which sets forth in detail the current
and proposed management fee schedules, including proposed changes in
breakpoints. Shareholders are also directed to Exhibit G, which contains
information comparing expenses under a Fund's current Agreement with those that
would be borne by the Fund under its proposed Agreement. These Exhibits are
important to a complete understanding of the proposed changes and shareholders
are encouraged to review them.
<TABLE>
<CAPTION>
Company/Fund Name Proposed Management Fee Change
- --------------------------------------------------------------------- -------------------------------
<S> <C>
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund .................... Increase/Add Breakpoints
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund .................... Potential Decrease due to
Addition of Breakpoints
Delaware-Voyageur Minnesota Insured Fund ........................... Potential Decrease due to
Addition of Breakpoints
Voyageur Intermediate Tax-Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund ............. Increase/Add Breakpoints
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund ............................ Increase/Add Breakpoints
Delaware-Voyageur Tax-Free California Fund ......................... Increase/Add Breakpoints
Delaware-Voyageur Tax-Free Idaho Fund .............................. Increase/Add Breakpoints
Delaware-Voyageur Tax-Free Iowa Fund ............................... Increase/Add Breakpoints
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund ......... Decrease/Add Breakpoints
Delaware-Voyageur Tax-Free New York Fund ........................... Increase/Add Breakpoints
Delaware-Voyageur Tax-Free Wisconsin Fund .......................... Increase/Add Breakpoints
National High Yield Municipal Bond Fund ............................ Decrease/Add Breakpoints
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund ........................... Increase/Add Breakpoints
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ............................................. Decrease/Add Breakpoints
Growth Stock Fund .................................................. Decrease/Add Breakpoints
Tax-Efficient Equity Fund .......................................... Potential Decrease due to
Change in Breakpoints
Voyageur Tax-Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund .......................... Increase/Add Breakpoints
Delaware-Voyageur Tax-Free North Dakota Fund ....................... Increase/Add Breakpoints
</TABLE>
16
<PAGE>
Other Proposed Changes to Investment Management Agreements
In addition to modifications to the management fee structure, other changes to
the Investment Management Agreements are proposed for each Fund. The proposed
changes are designed to standardize the form of Agreement among all funds
within the Delaware Investments family.
Shareholder Approval of Amendments to Investment Management Agreements. Under
the 1940 Act, shareholder approval is normally required before any fund
investment management agreement can be materially amended. The purpose of this
requirement is to allow shareholders to make decisions concerning provisions of
an investment management agreement that could affect their investment.
Funds are, however, permitted to amend such agreements without shareholder
approval if, for example, the change involves a decrease in management fee
rates or a potential decrease due to the introduction or restructuring of
breakpoints. In such cases, the SEC staff believes that mutual funds should not
be required to experience the delay and costs of seeking shareholder approval,
since shareholders are generally assumed to be in favor of management fee
decreases.
Each Fund's current Investment Management Agreement requires shareholder
approval of any amendment to the Agreement, regardless of whether shareholder
approval would be required under federal law. Management proposes to change the
Agreements to permit amendments without shareholder approval in appropriate
circumstances like those described above.
Miscellaneous Changes. In addition to the changes discussed above, there are
certain miscellaneous changes designed to standardize the form of Agreement
among all Delaware Investments funds. First, the Agreements for the Funds will
reflect non-material language and structural changes to conform the Agreements
to the standard Delaware Investments model Agreement. Second, each new
Agreement will contain a provision permitting the names "Delaware," "Delaware
Investments" or "Delaware Group" to be used by other funds, series or classes,
whether already existing or to be created in the future, which are, or may be,
sponsored or advised by DMC. The first Delaware Investments fund to use the
word "Delaware" in its name was the Delaware Balanced Fund (formerly Delaware
Fund) series of Delaware Group Equity Funds I, Inc., which was originally
established in 1938. Although management has reached no conclusion as to
whether the Delaware Balanced Fund may have a claim to the use of the name
"Delaware," each Agreement will recognize the ability of multiple Funds to use
the words described above in their names.
17
<PAGE>
Information about the Investment Manager
DMC serves as investment manager for each of the Funds. DMC is registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Advisers
Act") and, together with its predecessors, has been managing funds within the
Delaware Investments family since 1938. DMC is located at One Commerce Square,
Philadelphia, Pennsylvania 19103.
On November 1, 1998, DMC was managing approximately $15.8 billion in assets in
various open-end and closed-end mutual fund accounts. Other affiliates of DMC
were managing additional institutional and separate account assets in the
amount of $27.8 billion on that date.
DMC is an indirect, wholly owned subsidiary of Lincoln National Corporation,
also known as Lincoln Financial Group. Lincoln National Corporation, with
headquarters currently in Fort Wayne, Indiana, is a diversified organization
involved in many aspects of the financial services industry, including
insurance and investment management.
DMC also provides investment management or sub-advisory services to other Funds
within the Delaware Investments family which have investment objectives that
are similar to those of the Funds to which this proxy statement applies. For
the names of these other funds, together with their current (and proposed, in
some cases) management or sub-advisory fee rates, see Exhibit H.
DMC is a series of Delaware Management Business Trust. The Trustees who operate
the business and their principal occupations (which are positions with DMC) are
as follows: Jeffrey J. Nick, Chairman, President, and Chief Executive Officer;
Richard G. Unruh, Jr., Executive Vice President; David K. Downes, Executive
Vice President, Chief Operating Officer and Chief Financial Officer; Richard J.
Flannery, Executive Vice President and General Counsel; and John B. Fields,
Vice President/Senior Portfolio Manager.
Other Information Relevant to Approval of
Investment Management Agreements
The form of proposed Investment Management Agreement for the Funds is attached
as Exhibit I. Each current and proposed Agreement has an initial term of two
years and provides that it will thereafter continue in effect from year to year
only if such continuation is specifically approved at least annually with
respect to each Fund by (i) a vote of a majority of the Board of Directors, or
(ii) a vote of a majority of the outstanding voting securities of the Fund, and
(iii) in either case, separately by a majority of the Directors who are not
"interested persons" (as defined in the 1940 Act). Each current and proposed
Agreement may be terminated without penalty by (i) the Fund, by a vote of a
majority of the Board of Directors, or (ii) by a vote of a majority of the
outstanding voting securities of a Fund, or (iii) by DMC, at any time on 60
days' written notice. Each Agreement will also terminate automatically upon its
"assignment," as that term is defined in the 1940 Act.
Under each of the current and proposed Agreements, best efforts are used to
obtain the best available price and most favorable execution for portfolio
transactions. Orders may be placed with brokers or dealers who provide
brokerage and research services to DMC or its advisory clients. To the extent
consistent with the requirements of the rules of the SEC and the National
Association of Securities Dealers, Inc., these orders may be placed with
brokers who sell shares of the Funds. The services these brokers provide may
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software and hardware
used in security analyses; and providing portfolio performance evaluation and
technical market analyses. Such services are used by the investment manager in
connection with its investment decision-making process with respect to one or
more funds or accounts that it manages, and need not be used exclusively with
respect to the fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide those services, if the higher commissions are deemed reasonable in
relation
18
<PAGE>
to the value of the brokerage and research services provided. In some
instances, part of the services constitute brokerage and research services used
in connection with the investment decision-making process and the remainder of
the services constitute services used in connection with administrative or
other functions not related to the investment decision-making process. In these
cases, the investment manager will make a good faith allocation of brokerage
and research services and will pay out of its own resources for services it
uses in connection with administrative or other functions not related to the
investment decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the investment manager shall not be liable
to the Fund or any shareholder of the Fund for any action or omission in the
course of, or in connection with, rendering services under a current or
proposed Agreement, or for any losses that may be sustained in the purchase,
holding or sale of any security or otherwise.
Other Agreements with the Funds
Each Company is currently party to a Distribution Agreement relating to the
Funds with Delaware Distributors, L.P. (the "Distributor"), an affiliate of
DMC. The Distributor's principal address is 1818 Market Street, Philadelphia,
PA 19103. Pursuant to the Distribution Agreement, the Distributor provides
underwriting, distribution and marketing services to the Funds. The Agreement
includes references to distribution plans adopted pursuant to Rule 12b-1 under
the 1940 Act. The Companies are also parties to a Shareholders Services
Agreement and a Fund Accounting Agreement with Delaware Service Company, Inc.
("DSC"), an affiliate of DMC, pursuant to which DSC provides fund accounting,
shareholder servicing, dividend disbursing and transfer agency services.
Exhibit F to this Proxy Statement lists the amount of payments made to the
Distributor pursuant to Rule 12b-1 Plans and to DSC pursuant to service
agreements, for each Fund's most recently completed fiscal year.
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund
This Proposal applies only to the following Funds:
Voyageur Funds, Inc. Voyageur Mutual Funds III, Inc.
Delaware-Voyageur US Government Growth Stock
Securities Fund
Shareholders of the two Funds listed above are being asked to approve a new
Sub-Advisory Agreement with their Fund's existing sub-adviser, Voyageur Asset
Management LLC ("VAM"). Exhibit F to this Proxy Statement sets forth the
sub-advisory fee rates and other information about the current sub-advisory
agreements. New Agreements are being proposed at this time because the existing
Agreements will terminate if new Investment Management Agreements are approved
as described in Proposal Five.
The proposed Sub-Advisory Agreements do not contain any changes in sub-advisory
fee rates and are largely identical to the current Sub-Advisory Agreements.
There are a number of minor changes in language in the form of the Agreement,
which are designed to result in a single, standardized Agreement among all
Delaware Investments funds that use sub-advisers.
One new provision requires VAM to share in any fee waiver or expense limitation
arrangement entered into by DMC for those Funds. This provision would not
affect the amounts to be paid by the Fund, but VAM may receive less, depending
on management fee waivers or expense limitations.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present
or represented by proxy, whichever is less.
If approved by shareholders, the proposed Sub-Advisory Agreement for a Fund
will take effect following the approval. If a proposed Sub-Advisory Agreement
is not approved for a Fund, but the proposed Investment Management Agreement is
approved, DMC will take responsibility for all aspects of investment management
until such time as a new sub-advisory arrangement is approved by the Board and
by shareholders. If neither the proposed Investment Management Agreement nor
the proposed Sub-Advisory Agreement for a Fund is approved by shareholders, the
current Agreements will remain in place.
19
<PAGE>
The Board of Directors for each Fund has unanimously approved the proposed
Sub-Advisory Agreements and recommends that you vote FOR the new Sub-Advisory
Agreement for your Fund.
Information About the Sub-Adviser
VAM is registered as an investment adviser under the Advisers Act and has been
providing advisory services to each of the US Government Securities Fund and
the Growth Stock Fund since April 30, 1997. VAM is located at 90 South Seventh
Street, Suite 4400, Minneapolis, MN 55402.
On December 31, 1998, VAM was managing approximately $6.8 billion in assets for
various government, corporate and high net worth individual clients.
VAM is owned in part by its senior executives: Frank C. Tonnemaker, James C.
King and Louis V. Nanne; and in part, through an intermediate holding company,
by the Dougherty Financial Group LLC (the "Dougherty Group"). The owners of the
Dougherty Group are Michael E. Dougherty, James O. Pohlad, Robert C. Pohlad,
William M. Pohlad and Gerald A. Kraut.
Mr. Frank C. Tonnemaker serves as President and as a director of VAM. In
addition to Mr. Tonnemaker, the other directors of VAM and their principal
occupations are: James C. King, Executive Vice President and Chief Investment
Officer -- Equities of VAM; Louis V. Nanne, Executive Vice President of VAM;
Michael E. Dougherty, Chairman of the Board of Directors of the Dougherty
Group; Gerald A. Kraut, President and Chief Executive Officer of the Dougherty
Group; John G. Taft, President and Chief Executive Officer of the Dougherty
Summit Securities LLC; and Thomas J. Abood, Secretary of VAM and Senior Vice
President and General Counsel of the Dougherty Group.
Other Information Relevant to Approval of
Sub-Advisory Agreements
The form of proposed Sub-Advisory Agreement for the Funds is attached as
Exhibit J. Each current and proposed Agreement has an initial term of two years
and provides that it will thereafter continue in effect from year to year only
if such continuation is specifically approved at least annually with respect to
each Fund by (i) a vote of a majority of the Board of Directors, or (ii) a vote
of a majority of the outstanding voting securities of the Fund, and (iii) in
either case, separately by a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act). Each current and proposed Agreement may
be terminated without penalty by (i) the Fund, by a vote of a majority of the
Board of Directors, or (ii) by a vote of a majority of the outstanding voting
securities of a Fund, or (iii) by the sub-adviser at any time on 60 days'
written notice. Each Agreement will also terminate automatically upon its
"assignment," as that term is defined in the 1940 Act and upon the termination
of the Investment Management Agreement to which it relates.
The specific terms of the current and proposed Sub-Advisory Agreements that
relate to the provision of advisory services are virtually identical to the
terms of the corresponding Investment Management Agreements, which are
described in Proposal Five under "Other Information Relevant to Approval of
Investment Management Agreements."
Proposal Seven: To Ratify the Selection of Ernst & Young LLP as
Independent Auditors for the Company
This Proposal applies to all Companies.
The Boards of Directors have selected Ernst & Young LLP as independent auditors
of each Company for the current fiscal year and shareholders are asked to
ratify this selection. Ernst & Young LLP's principal address is Two Commerce
Square, Philadelphia, PA 19103. A representative from Ernst & Young LLP is
expected to be present at the Meeting. The representative of Ernst & Young LLP
will have an opportunity to make a statement if he or she desires to do so and
will be available to respond to appropriate questions. Each Companies' Audit
Committee meets periodically with the representatives of Ernst & Young LLP to
receive reports from Ernst & Young LLP and plan for the Companies' audits.
20
<PAGE>
Required Vote. A simple majority (more than 50%) of the outstanding voting
securities of each Company, regardless of individual Funds within a Company, is
required to ratify the selection of Ernst & Young LLP as independent auditor
for each such Company.
The Board of Directors of each Company unanimously recommends that shareholders
ratify the selection of Ernst & Young LLP as independent auditors for such
Company for the current fiscal year.
Proposal Eight: To Approve the Restructuring of the Company from a
Minnesota Corporation into a Delaware Business Trust and the
Dissolution of the Minnesota Corporation
This Proposal applies to all Companies.
The Board of Directors of each Company has approved separate Agreements and
Plans of Reorganization (a "Plan" or the "Plans") substantially in the form
attached to this Proxy Statement as Exhibit K. Each Plan provides for a
reorganization (hereafter, the "Reorganization") pursuant to which each Company
will change its state and form of organization from a Minnesota corporation
into a Delaware business trust.
For each Company, the Reorganization involves the continuation of the Company
in the form of a newly created Delaware business trust. These corresponding new
Delaware business trusts will be referred to in this Proposal as "New
Companies." The Funds in each of the Companies will become corresponding new
Funds ("New Funds") of the New Companies and will carry on the business of the
Companies.
Under the Reorganization, the investment objective of each New Fund will be the
same as that of its corresponding Fund; the portfolio securities of each Fund
will be transferred to its corresponding New Fund; and shareholders will own
interests in each New Company that are equivalent to their interests in the
corresponding Company on the closing date of the Reorganization. The directors,
officers and employees of each Company on the effective date of the
Reorganization will become the trustees, officers and employees, respectively,
of the corresponding New Company and will operate each New Company in the same
manner as they previously operated the corresponding Company. DMC will remain
as investment manager. For those Funds with sub-advisory arrangements, VAM will
remain as the sub-adviser. Each New Company and New Fund will have
substantially the same name as its corresponding Company and Fund. Each New
Company will have the same fiscal year as the corresponding Company, and the
mailing address and telephone number of the principal executive offices of each
New Company will be the same as its corresponding Company. For all practical
purposes, a shareholder's investment in a Fund will not change.
Background and Reasons for the Reorganizations. The Boards unanimously
recommend conversion of the Companies into Delaware business trusts because
they have determined that the Delaware business trust form of organization is
an inherently flexible form of organization and would provide certain
administrative advantages to the Companies. Delaware business trust law
contains provisions specifically designed for mutual funds and there is a well
established body of corporate legal precedent that may be relevant in deciding
issues pertaining to the trust. Those provisions take into account the unique
structure and operation of mutual funds, and allow mutual funds to simplify
their operations by reducing administrative burdens so that, in general, they
may operate more efficiently.
Under Delaware business trust law, the New Companies will have more flexibility
to respond to future business contingencies. For example, a New Company will
have the power to cause each New Fund to become a separate trust and to change
the New Company's domicile all without a shareholder vote, unless such vote is
required under the 1940 Act or other applicable law. This flexibility may
permit the New Company to operate under the most advanced form of organization
and could help reduce the expense and frequency of future shareholders'
meetings for non-investment related issues.
The Reorganizations also will increase uniformity among the mutual funds within
the Delaware Investments family. Increased uniformity among the mutual funds,
many of which share common directors, trustees, officers and service providers,
is expected to reduce the costs and resources devoted to compliance with
various state laws and also reduce administrative burdens.
21
<PAGE>
For these reasons, the Boards believe it is in the interests of the
shareholders to reorganize the Companies into Delaware business trusts. The
Boards reserve the right to abandon a Reorganization if they determine that
such action is in the best interests of a Company.
The following discussion applies to the Reorganization of each Company except
where otherwise specifically noted.
Consequences and Procedures of the Reorganization. The net asset value of the
shares of each class of each Fund will not be affected by the Reorganization.
Each New Company has been organized specifically for the purpose of effecting
the Reorganization. The Reorganization will not result in the recognition of
income, gain or loss for Federal income tax purposes to a Company or its
shareholders, or to any New Company. (See "Certain Federal Income and State Tax
Consequences of the Plan, below.")
To accomplish the Reorganization, the Plan provides that each Company will
transfer all of the assets of each of its Funds subject to its related
liabilities, to the corresponding New Company and to each of its corresponding
New Funds. The New Company will establish an account for each shareholder and
will credit to that account the exact number of full and fractional shares of
the class of the New Fund that such shareholder previously held in the same
class of the corresponding Fund on the effective date of the Reorganization.
Each shareholder will retain the right to any declared but undistributed
dividends or other distributions payable on the shares of the Fund that he or
she owned as of the effective date of the Reorganization. On the date of the
Reorganization, the net asset value per share of each class of shares of each
Fund will be the same as the net asset value per share of the corresponding
class of shares of the New Fund. The New Company will assume all liabilities
and obligations of the Company. As soon as practicable after the effective date
of the Reorganization, the current Fund will be dissolved and its existence
terminated.
On the effective date of the Reorganization, each certificate representing
shares of a class of a Fund will represent an identical number of shares of the
same class of the corresponding New Fund. Shareholders will have the right to
exchange their certificates of the Company for certificates of the New Company.
Each Plan may be terminated and the Reorganization abandoned at any time prior
to the effective date of the Reorganization by the Board. If a Reorganization
is not approved by shareholders or if the Board determines to terminate or
abandon the Reorganization, the Company will continue to operate as a Minnesota
corporation.
Capitalization and Structure. Each New Company was established pursuant to a
substantially identical Agreement and Declaration of Trust ("Trust Document")
under the laws of the State of Delaware. Each New Company is organized as a
series company. The Trust Document permits the Trustees to issue an unlimited
number of shares of beneficial interest, with no par value. The Board of
Trustees of the New Company has the power to divide such shares into an
unlimited number of series or classes of beneficial interest without
shareholder approval. Each New Company has designated the same number of series
and classes as its corresponding Company. Each share of a New Fund represents
an equal proportionate interest in the assets and liabilities belonging to that
series (or class).
Shares of the respective classes of the New Funds have substantially the same
dividend, redemption, voting, exchange and liquidation rights, and terms of
conversion as the shares of the corresponding Funds. Please see Exhibit L,
"Comparison and Significant Differences Between Delaware Business Trusts and
Minnesota Corporations." Shares of the respective classes of each Fund are,
and, when issued, shares of each corresponding New Fund will be, fully paid,
non-assessable, and freely transferable and have no preemptive or subscription
rights.
At the time of Reorganization, shares of the respective classes of a Fund will
be exchanged for an identical number of shares of the same class of the
corresponding New Fund. Thereafter, shares of each class of the New Fund will
be available for issuance at their net asset value applicable at the time of
sale. Each New Company will adopt the corresponding Company's existing
registration statement under the Securities Act of 1933 and the 1940 Act.
Effects of Shareholder Approval of the Reorganization. An investment company
registered under the 1940 Act is required to: (i) submit the selection of the
company's independent auditors to all shareholders for their ratification; (ii)
call a special meeting to elect directors (trustees) within 60 days if, at any
time, less than one half
22
<PAGE>
of the directors (trustees) holding office have been elected by all
shareholders; and (iii) submit any proposed investment management agreement and
sub-advisory agreement relating to a particular series of the investment
company to the shareholders of that series for approval.
Each Board believes that it is in the best interest of the shareholders of each
Company (who will become the shareholders of a corresponding New Company if the
Reorganization is approved) to avoid the considerable expense of another
shareholders' meeting for the New Company to obtain the shareholder approvals
described above shortly after the closing of the Reorganization. Each Board
also believes that it is not in the best interest of the shareholders to carry
out a Reorganization if the surviving New Company would not have a Board of
Trustees, independent auditors, and investment management agreements or
sub-advisory agreements complying with the 1940 Act.
Each Board will, therefore, consider approval of a Reorganization by the
requisite vote of the shareholders of the Company to constitute the approval of
the Plan contained in Exhibit K, and also to constitute, for the purposes of
the 1940 Act: (i) ratification of the independent auditors for each Company as
the New Company's independent auditors (please see Proposal Seven); (ii)
election of the Directors of the Company as the trustees of the New Company
(please see Proposal One); (iii) approval by the shareholders of each Fund of
the investment management agreement between the New Company on behalf of the
New Fund and DMC, which will be substantially identical to the agreement that
is in place between the Company and DMC (please see Proposal Five); and (iv)
for those Funds subject to a sub-advisory agreement, approval by the
shareholders of the Fund of the sub-advisory agreement between DMC and VAM
which will be substantially identical to the agreement that is in place between
DMC and VAM (please see Proposal Six).
Assuming approval of a Reorganization by shareholders, a New Company will issue
a single share of each class of each New Fund to the corresponding Company.
Prior to the Reorganization, the officers will cause the Company, as the sole
shareholder of the corresponding New Company, to vote such shares "FOR" the
matters specified in the above paragraph. Each New Company will then consider
the requirements of the 1940 Act referred to above to have been satisfied.
Investment Objective, Policies and Restrictions. The investment objective,
policies and restrictions for each New Fund will be the investment objective,
policies and restrictions of the corresponding Fund immediately prior to the
reorganization. That is, each New Fund's investment objective, policies and
restrictions will reflect the results of the shareholders' votes on Proposals
Two, Three and Four.
Investment Management Agreements. If the proposed new investment management
agreement relating to a Fund, and as proposed and described in Proposal Five (a
"New Agreement"), is approved by the shareholders of the Fund, the terms of the
investment management agreement for the corresponding New Fund will be
substantially identical to the New Agreement for the Fund. For each Fund for
which the New Agreement described in Proposal Five is not approved, if any, the
investment management agreement for the corresponding New Fund will be
substantially identical to the existing investment management agreement
currently in place for that Fund.
Sub-Advisory Agreements. For a Fund with sub-advisory arrangements, if the
proposed new sub-advisory agreement relating to a Fund, as proposed and
described in Proposal Six (a "New Sub-Advisory Agreement"), is approved by the
shareholders of the Fund, the terms of the sub-advisory agreement for the
corresponding New Fund will be substantially identical to the New Sub-Advisory
Agreement for the Fund. For each Fund for which the New Sub-Advisory Agreement
described in Proposal Six is not approved, if any, the sub-advisory agreement
for the corresponding New Fund will be substantially identical to the existing
sub-advisory agreement currently in place for that Fund, unless the Investment
Management Agreement to which it relates is approved. In that instance, DMC
will take responsibility for all aspects of investment management until such
time as a new sub-advisory arrangement is approved by the Board and by
shareholders.
Certain Federal Income and State Tax Consequences of the Plan. It is
anticipated that the transactions contemplated by the Plan will be tax-free for
federal income tax purposes. Consummation of the Reorganization is subject to
receipt of a legal opinion from the law firm of Stradley, Ronon, Stevens &
Young, LLP, counsel to the Company and the New Company, that, under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the
exchange of assets of the Company for the shares of the corresponding New
Company, the
23
<PAGE>
transfer of those shares to the holders of shares of the Company, and the
liquidation and dissolution of the Company pursuant to the Plan will not give
rise to the recognition of a gain or loss for federal income tax purposes to
the Company, the New Company, or shareholders of the Company or the New
Company. A shareholder's adjusted basis for tax purposes in the shares of the
New Company after the exchange and transfer will be the same as his or her
adjusted basis for tax purposes in the shares of the Company immediately before
the exchange.
As a business trust, each New Company (or, in certain circumstances, its
shareholders who are Pennsylvania residents) would be subject to the
Pennsylvania county personal property tax. However, at present, Pennsylvania
counties generally have stopped assessing personal property taxes. This is due,
in part, to ongoing litigation challenging the validity of the tax. However, if
the personal property tax were reinstituted, or any similar state or local tax
were imposed, each New Company's options would be reevaluated at that time.
Each shareholder should consult his or her own tax adviser with respect to the
details of these tax consequences and with respect to state and local tax
consequences of the proposed transaction.
Shareholder Servicing Arrangements and Distribution Plans. Each New Company
will enter into agreements with DSC for transfer agency, dividend disbursing
and shareholder servicing and fund accounting services that are substantially
identical to the agreements currently in effect for each corresponding Company
for such services. Delaware Distributors, L.P. will serve as the distributor
for the shares of the New Funds under a separate distribution agreement that is
substantially identical to the distribution agreement currently in effect for
the Funds.
Each New Company has adopted distribution plans under Rule 12b-1 of the 1940
Act relating to the distribution of certain classes of shares that are
substantially identical to the distribution plans currently in place for the
same classes of shares of the Company.
Requests for Redemption of the Company. Any request to redeem shares of the
Company that is received and processed prior to the Reorganization will be
treated as a redemption of shares of the Company. Any request to redeem shares
of a Company received or processed after the Reorganization will be treated as
a request for the redemption of shares of the corresponding New Company.
Expenses of the Reorganization. Because the Reorganization will benefit the
Company and its shareholders, the Board has authorized that the expenses
incurred by a Company in the Reorganization or arising out of the
Reorganization shall be paid by the Company, whether or not the Reorganization
is approved by the shareholders.
Comparison of Legal Structures. A comparison of the Delaware Business Trust Act
with the Minnesota Business Corporation Act, including a comparison of relevant
provisions of the governing documents of the Companies and the New Companies,
is included in Exhibit L, which is entitled "Comparison and Significant
Differences Between Delaware Business Trusts and Minnesota Corporations."
Required Vote. The Plans and the transactions contemplated thereby, including
the liquidation and dissolution of the Companies, requires the approval of a
simple majority (more than 50%) of the outstanding voting securities of a
Company, regardless of individual funds within the Company.
The Board unanimously recommends that you vote FOR the Reorganization.
24
<PAGE>
EXHIBIT A
OUTSTANDING SHARES AS OF RECORD DATE (January 18, 1999)
<TABLE>
<CAPTION>
Shares Owned
by Fund
Directors,
Nominees and
Shares Executive Officers Percent
Outstanding as a Group of Fund/
on as of Company
Company/Fund Record Date* October 31, 1998 Owned
- ------------------------------------------- ------------------ -------------------- -------------------
<S> <C> <C> <C>
Voyageur Funds, Inc.
Delaware-Voyageur US Government
Securities Fund ....................... 8,108,895.311 N/A N/A
Voyageur Insured Funds, Inc
Delaware-Voyageur Tax-Free Arizona
Insured Fund .......................... 16,077,890.710 N/A N/A
Delaware-Voyageur Minnesota Insured
Fund .................................. 27,252,167.943 N/A N/A
Voyageur Intermediate Tax-Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota
Intermediate Fund ..................... 5,584,847.193 16,651.894 0.31%/0.31%
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund 1,734,073.293 N/A N/A
Delaware-Voyageur Tax-Free California
Fund .................................. 2,740,628.785 N/A N/A
Delaware-Voyageur Tax-Free Idaho Fund .. 4,574,761.739 N/A N/A
Delaware-Voyageur Tax-Free Iowa Fund ... 4,465,585.053 N/A N/A
Delaware-Voyageur Minnesota High Yield
Municipal Bond Fund ................... 5,326,358.996 9,530.902 0.19%/0.03%
Delaware-Voyageur Tax-Free New York
Fund .................................. 1,119,218.819 N/A N/A
Delaware-Voyageur Tax-Free Wisconsin
Fund .................................. 3,948,458.842 N/A N/A
National High Yield Municipal Bond Fund. 9,159,733.685 N/A N/A
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado
Fund .................................. 32,767,406.645 118.351 0.0004%/0.0004%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ................. 7,271,276.857 16,344.451 0.27%/0.14%
Growth Stock Fund ...................... 1,559,285.711 N/A N/A
Tax-Efficient Equity Fund .............. 5,660,747.671 N/A N/A
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota
Fund .................................. 33,545,163.975 3,687.911 0.01%/0.01%
Delaware-Voyageur Tax-Free North Dakota
Fund .................................. 2,743,194.222 N/A N/A
</TABLE>
* The Shares outstanding on the record date include all shares purchased in
transactions that have settled by the record date.
A-1
<PAGE>
EXHIBIT B
SHAREHOLDERS OWNING 5% OR MORE OF A FUND AS OF OCTOBER 31, 1998
The following accounts held of record 5% or more of the outstanding shares of
the Funds listed below as of October 31, 1998. Management does not have
knowledge of beneficial owners.
<TABLE>
<CAPTION>
Number Percent Percent
Fund/Series Name and Address of Shares of Fund of Company
- ------------------------------- --------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Voyageur Funds, Inc. Bankers Trust Company as Trustee for 2,947,149 37.11% 37.11%
Delaware-Voyageur US Public Service Electric & Gas
Government Securities Fund Company
Master Employee Benefit Plan
34 Exchange Place
Attn: Donna Dekowski
New Jersey, NJ 07303
Voyageur Insured Funds, Inc. Merrill Lynch, Pierce, Fenner & Smith 1,361,936 8.54% 8.54%
Delaware-Voyageur Tax-Free For the Sole Benefit of its Customers
Arizona Insured Fund Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Voyageur Mutual Funds, Inc. Dain Rauscher Incorporated 187,472 11.71% 0.60%
Delaware-Voyageur Tax-Free For the Benefit of Gaylord Rubin and
Arizona Fund Beverly Rubin, Co-Trustees
Gaylord and Beverly Rubin Family Trust
4712 East Palo Verde Drive
Phoenix, AZ 85018
Delaware-Voyageur Tax-Free U.S. Bancorp Investments, Inc. 410,868 17.02% 1.31%
California Fund 100 South Fifth Street, Ste. 1400
Minneapolis, MN 55402
Donaldson Lufkin Jenrette Securities 182,783 7.57% 0.58%
Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303
Margaret R. Peterson TTE 179,372 7.43% 0.57%
The Peterson Family Trust
539 Walnut
Burbank, CA 91501
Delaware-Voyageur Tax-Free Merrill Lynch, Pierce, Fenner & Smith 634,245 14.71% 2.03%
Idaho Fund For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Delaware-Voyageur Woodland Development Corp. 370,714 7.26% 1.18%
Minnesota High Attn: Larry Carlson
Yield Municipal Bond Fund 830 West Main Street
Anoka, MN 55303
Delaware-Voyageur Tax-Free Wheat First Securities, Inc. 93,546 8.51% 0.30%
New York Fund Anthony A. Pugliese and Carole D.
Pugliese JT Ten
109 Eastwoods Road
Pound Ridge, NY 10576
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
Number Percent Percent
Fund/Series Name and Address of Shares of Fund of Company
- --------------------------------- ---------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Salomon Smith Barney 348,710 8.91% 1.11%
Wisconsin Fund 388 Greenwich Street
New York, NY 10013
Paine Webber 332,520 8.49% 1.06%
For the Benefit of Bayan
c/o First State Bank of Bayport
Attn: Barb Monteith
950 North Highway 95
Bayport, MN 55003
Voyageur Mutual Funds III, Inc. Merrill Lynch, Pierce, Fenner & Smith 406,551 6.73% 3.44%
Aggressive Growth Fund For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Merrill Lynch, Pierce, Fenner & Smith 397,062 6.57% 3.36%
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Growth Stock Fund Charles Schwab & Co. Inc. 112,321 7.70% 0.95%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Voyageur Tax-Free Funds, Inc. Merrill Lynch, Pierce, Fenner & Smith 2,064,394 6.20% 5.73%
Delaware-Voyageur Tax-Free For the Sole Benefit of its Customers
Minnesota Fund Attn: Fund Administration
4800 Deer Lake Drive East
Jacksonville, FL 32246
Delaware-Voyageur Tax-Free Wilkota and Company 254,898 9.30% 0.70%
North Dakota Fund 1st Nat'l Bank & Trust Co. of Williston
P.O. Box 1827
Williston, ND 58802
</TABLE>
B-2
<PAGE>
EXHIBIT C
EXECUTIVE OFFICERS OF THE COMPANIES
David K. Downes (59) Executive Vice President, Chief Operating Officer, Chief
Financial Officer of each of the 34 investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc., Founders CBO
Corporation, Delaware Capital Management, Inc., Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust) and Delaware Distributors, L.P.;
Executive Vice President, Chief Financial Officer, Chief Administrative Officer
and Trustee of Delaware Management Business Trust; Executive Vice President,
Chief Operating Officer, Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp., Delaware Distributors, Inc., Founders
Holdings, Inc. and Delvoy, Inc.; President, Chief Executive Officer, Chief
Financial Officer and Director of Delaware Service Company, Inc.; President,
Chief Operating Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman and Director of Delaware Management Trust
Company; Chairman, Chief Executive Officer and Director of Retirement Financial
Services, Inc.; Director of Delaware International Advisers, Ltd.; and Vice
President of Lincoln Funds Corporation. During the past five years, Mr. Downes
has served in various executive capacities at different times in the Delaware
Investments organization.
Richard G. Unruh (59) Executive Vice President/Chief Investment Officer,
Equities of each of the 34 investment companies in the Delaware Investments
family and Delaware Management Company (a series of Delaware Management
Business Trust); Executive Vice President of Delaware Management Holdings,
Inc., Delaware Capital Management, Inc. and Delaware Management Business Trust;
Executive Vice President/Chief Investment Officer, Equities and
Director/Trustee of Delaware Management Company, Inc.; and Director of Delaware
International Advisers Ltd. During the past five years, Mr. Unruh has served in
various executive capacities at different times within the Delaware Investments
organization.
Paul E. Suckow (51) Executive Vice President/Chief Investment Officer, Fixed
Income of each of the 34 investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust) and Delaware Investment Advisers
(a series of Delaware Management Business Trust); Executive Vice President and
Director of Founders Holdings, Inc.; Executive Vice President of Delaware
Capital Management, Inc., Delaware Management Business Trust and Delaware
Management Holdings, Inc.; Director of Founders CBO Corporation; a Director of
HYPPCO Finance Company Ltd. During the past five years, Mr. Suckow has served
in various executive capacities at different times within the Delaware
Investments organization.
Richard J. Flannery (41) Senior Vice President of each of the 34 investment
companies in the Delaware Investments family; Executive Vice President and
General Counsel of Delaware Management Holdings, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust), Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Distributors, L.P., Founders CBO Corporation; Executive Vice President/General
Counsel and Director/Trustee of DMH Corp., Delaware Management Company, Inc.,
Delaware Management Business Trust, Delaware Service Company, Inc., Delaware
Capital Management, Inc., Retirement Financial Services, Inc., Delaware
Management Trust Company, Delaware Distributors, Inc., Delaware International
Holdings Ltd., Founders Holdings, Inc., and Delvoy, Inc.; and Director of
Delaware International Advisers Ltd. and HYPPCO Finance Company Ltd. During the
last five years, Mr. Flannery has served in various executive capacities at
different times within the Delaware Investments organization.
Michael P. Bishof (36) Senior Vice President/Treasurer of each of the 34
investment companies in the Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware Management
Business Trust) and Delaware Service Company, Inc.; Senior Vice President and
Treasurer/Manager of Investment Accounting of Delaware Distributors, L.P. and
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.; and Senior Vice President and Assistant Treasurer
of Founders CBO Corporation. Before joining
C-1
<PAGE>
Delaware Investments in 1995, Mr. Bishof was a Vice President for Bankers
Trust, New York, NY, from 1994 to 1995, a Vice President for CS First Boston
Investment Management, New York, NY, from 1993 to 1994, and an Assistant Vice
President for Equitable Capital Management Corporation, New York, NY, from 1987
to 1993.
George M. Chamberlain, Jr. (51) Senior Vice President, Secretary and General
Counsel of each of the 34 investment companies in the Delaware Investments
family; Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Distributors, Inc., Delaware Service Company, Inc., Retirement
Financial Services Inc., Delaware Capital Management, Inc., and Delvoy, Inc.;
Executive Vice President, Secretary and Director of Delaware Management Trust
Company; Senior Vice President and Director of Founders Holdings, Inc.; Senior
Vice President and Director of Delaware International Holdings Ltd.; and
Director of Delaware International Advisers Ltd. During the past five years,
Mr. Chamberlain has served in various executive capacities at different times
within the Delaware Investments organization.
Joseph H. Hastings (49) Senior Vice President/Corporate Controller of each of
the 34 investment companies in the Delaware Investments family and Founders
Holdings, Inc.; Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd. and Delvoy, Inc.; Chief Financial Officer/Treasurer
of Retirement Financial Services, Inc.; Executive Vice President/Chief
Financial Officer/Treasurer of Delaware Management Trust Company; and Senior
Vice President/Assistant Treasurer of Founders CBO Corporation. During the past
five years, Mr. Hastings has served in various executive capacities at
different times within the Delaware Investments organization.
Patrick P. Coyne (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Capital Management, Inc., and of the
fixed-income funds in the Delaware Investments family. During the past five
years, Mr. Coyne has served in various capacities at different times within the
Delaware Investments organization.
Mitchell L. Conery (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Capital Management, Inc. and of the
fixed-income investment companies in the Delaware Investments family. Before
joining Delaware Investments in 1997, Mr. Conery was an investment officer with
Travelers Insurance from 1995 through 1996, and a research analyst with CS
First Boston and MBIA Corporation.
Elizabeth H. Howell (36) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and of the
fixed-income funds in the Delaware Investments family. Before joining Delaware
Investments in 1997, Ms. Howell was a senior portfolio manager with Voyageur
Fund Managers, Inc.
Andrew M. McCullagh (50) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and of the
fixed-income funds in the Delaware Investments family. Before joining Delaware
Investments in 1997, Mr. McCullagh was a senior portfolio manager with Voyageur
Fund Managers, Inc.
George H. Burwell (37) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and each of the equity investment companies in the
Delaware Investments family. During the past five years Mr. Burwell has served
in various capacities at different times within the Delaware Investments
organization.
C-2
<PAGE>
Gerald S. Frey (52) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and the equity investment companies in the Delaware
Investments family. Before joining the Delaware Group in 1996, Mr. Frey was a
Senior Director with Morgan Grenfell Capital Management, New York, NY from 1986
to 1995.
C-3
<PAGE>
EXHIBIT D
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
- ------------------------------------------------------------- -------------- --------------------------
<S> <C> <C>
JEFFREY J. NICK
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund (Growth and Income Fund
after 1/99) ............................................ 1,270.806 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc ......................... 31,403.410 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund ................................ 19,012.257 4.32%/Less than 1%
WALTER P. BABICH
Delaware Group Cash Reserve, Inc ......................... 7,896.800 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund (Growth and Income Fund
after 1/99) ............................................ 9,651.044 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................................... 4,314.040 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund .................................. 6,938.292 Less than 1%/Less than 1%
ANTHONY D. KNERR
None
ANN R. LEVEN
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ......... 750.665 Less than 1%/Less than 1%
Devon Fund .............................................. 254.789 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund (Decatur Equity Income Fund after
1/99) .................................................. 2,025.428 Less than 1%/Less than 1%
Decatur Total Return Fund (Growth and Income Fund
after 1/99) ............................................ 2,036.432 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund .............................................. 2,527.037 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................................... 994.566 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund ............................... 1,174.926 Less than 1%/Less than 1%
W. THACHER LONGSTRETH
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ......... 40,815.950 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund (Decatur Equity Income Fund after
1/99) .................................................. 67,652.453 Less than 1%/Less than 1%
Decatur Total Return Fund (Growth and Income Fund
after 1/99) ............................................ 4,161.893 Less than 1%/Less than 1%
</TABLE>
D-1
<PAGE>
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
- ---------------------------------------------------------------- -------------- --------------------------
<S> <C> <C>
Delaware Group Equity Funds III, Inc.
Trend Fund ................................................. 5,296.988 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund ................................................ 1,942.898 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund ....................................... 934.814 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund ............................................ 60,197.084 Less than 1%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund ....................................... 96.057 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund ............................... 25,648.646 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc ............................ 40,105.860 Less than 1%/Less than 1%
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund .......................................... 40,050.721 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund ................................. 221.163 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc ..................... 470.830 Less than 1%/Less than 1%
Delaware Group Dividend and Income Fund, Inc ................ 1,000.000 Less than 1%/Less than 1%
Delaware Group Global Dividend and Income Fund, Inc ......... 1,274.000 Less than 1%/Less than 1%
THOMAS F. MADISON
Delaware Group Equity Funds I, Inc.
Devon Fund ................................................. 246.327 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund .................................. 159.373 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ..................................... 132.162 Less than 1%/Less than 1%
CHARLES E. PECK
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ............ 16,151.178 Less than 1%/Less than 1%
Devon Fund ................................................. 12,876.107 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund (Growth and Income Fund
after 1/99) ............................................... 9,633.481 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund ................................................. 21,771.736 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund ................................................ 7,583.990 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund ....................................... 7,248.518 Less than 1%/Less than 1%
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund ........................................... 14,417.178 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund ............................................ 67,477.705 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund ............................... 16,939.372 Less than 1%/Less than 1%
</TABLE>
D-2
<PAGE>
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
- ------------------------------------------------------------ ----------------- --------------------------
<S> <C> <C>
Delaware Group Global & International Funds, Inc.
International Equity Fund .............................. 8,691.150 Less than 1%/Less than 1%
WAYNE A. STORK
Delaware Group Equity Funds I, Inc.
Devon Fund ............................................. 65,720.574 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund (Decatur Equity Income Fund after
1/99) ................................................. 1,125.446 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund ................................... 142,009.027 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund ........................................ 619,259.389 Less than 1%/Less than 1%
High-Yield Opportunities Fund .......................... 1,091,608.340 33.30%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund ................................... 5,322.055 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc. ....................... 3,760,011.960 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc ................. 1,081.950 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund ............................. 887,532.832 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund .............................. 11,838.599 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ................................. 9,273.539 Less than 1%/Less than 1%
JAN R. YEOMANS
None
</TABLE>
D-3
<PAGE>
EXHIBIT E
LISTS OF CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
Table of Contents
Voyageur Funds, Inc.
Delaware-Voyageur U.S. Government Securities Fund .................. E-2
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund .................... E-3
Delaware-Voyageur Minnesota Insured Fund ........................... E-3
Voyageur Intermediate Tax-Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund ............. E-3
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund ............................ E-5
Delaware-Voyageur Tax-Free California Fund ......................... E-5
Delaware-Voyageur Tax-Free Idaho Fund .............................. E-5
Delaware-Voyageur Tax-Free Iowa Fund ............................... E-6
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund ......... E-8
National High Yield Municipal Bond Fund ............................ E-9
Delaware-Voyageur Tax-Free New York Fund ........................... E-5
Delaware-Voyageur Tax-Free Wisconsin Fund .......................... E-6
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund ........................... E-10
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ............................................. E-12
Growth Stock Fund .................................................. E-13
Tax-Efficient Equity Fund .......................................... E-15
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund .......................... E-3
Delaware-Voyageur Tax-Free North Dakota Fund ....................... E-3
E-1
<PAGE>
Delaware-Voyageur US Government Securities Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest more than 25% of its assets in the securities of issuers in
any single industry; provided that there shall be no limitation on the purchase of securities
issued by banks and obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities.
Borrowing* The Fund shall not borrow money, except from banks for temporary or emergency
purposes in an amount not exceeding 5% of the value of the Fund's total assets. The
Fund will not borrow for leverage purposes, and securities will not be purchased while
borrowings are outstanding. Interest paid on any money borrowed will reduce the Fund's
net income. The Fund shall not pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 5% of its total assets (taken at the lower of cost or current value) and
then only to secure borrowings permitted under "Borrowing".
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not purchase securities on margin, except such short-term credits as may
be necessary for the clearance of purchases and sales of securities. The Fund shall not
make short sales of securities or maintain a short position for the account of the Fund
unless at all times when a short position is open it owns an equal amount of such
securities or owns securities which, without payment of any further consideration, are
convertible into or exchangeable for securities of the same issue as, and equal in amount
to, the securities sold short.
Underwriting The Fund shall not underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be deemed to be an
underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase securities which
are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or commodity contracts.
Lending The Fund shall not make loans, except by purchase of debt obligations in which the Fund
may invest consistent with its investment policies and through repurchase agreements.
Illiquid Securities The Fund shall not purchase securities restricted as to resale. The Fund shall not invest in
(a) securities which in the opinion of the Fund's investment adviser at the time of such
investment are not readily marketable, and (b) securities the disposition of which is
restricted under federal securities laws as described in the preceding paragraph.
Investment Companies The Fund shall not invest in securities of other investment companies, except as part of a
merger, consolidation or acquisition of assets.
Control or Management None.
Options The Fund shall not purchase options or puts, calls, straddles, spreads or combinations
thereof; in connection with the purchase of fixed-income securities, however, the
Fund may acquire attached warrants or other rights to subscribe for securities of companies
issuing such fixed-income securities or securities of parents or subsidiaries of such
companies. (The Fund's investment policies do not currently permit it to exercise warrants
or rights with respect to equity securities.)
Futures None. Borrowing.
Unseasoned Issuers None.
Warrants See "Options."
Holdings by Affiliates The Fund shall not invest in securities of any issuer if, to the knowledge of the Fund,
officers and directors of the Fund or officers and directors of the Fund's investment
adviser who beneficially own more than 1/2 of 1% of the securities of that issuer together
own more than 5%.
Oil or Gas The Fund shall not buy or sell oil, gas or other mineral leases, rights or royalty contracts.
Miscellaneous None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-2
<PAGE>
Delaware-Voyageur Tax-Free Arizona Insured Fund
Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Minnesota Insured Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Delaware-Voyageur Tax-Free North Dakota Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest 25% or more of its assets in the securities of issuers
in any single industry, except that the Fund may invest without limitation, in
circumstances in which other appropriate available investments may be in
limited supply, in housing, health care and utility obligations; provided that
there shall be no limitation on the purchase of Tax Exempt Obligations and,
for defensive purposes, obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities. (Note: For purposes of this
investment restriction, the Fund's investment adviser (the "Manager")
interprets "Tax Exempt Obligations" to exclude limited obligation bonds
payable only from revenues derived from facilities or projects within a single
industry.)
Borrowing* The Fund shall not borrow money, except from banks for temporary or
emergency purposes in an amount not exceeding 20% of the value of the
Fund's total assets, including the amount borrowed. The Fund may not borrow
for leverage purposes, and securities will not be purchased while borrowings
are outstanding. Interest paid on any money borrowed will reduce the Fund's
net income.
The Fund shall not pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 10% of its total assets (taken at the lower of cost or
current value) and then only to secure borrowings permitted by the restriction
described in the preceding paragraph).
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.
The Fund shall not make short sales of securities or maintain a short position
for the account of such Fund unless at all times when a short position is open
it owns an equal amount of such securities or owns securities which, without
payment of any further consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the securities sold
short.
Underwriting The Fund shall not underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio investments, it
may be deemed to be an underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or commodity contracts
(including futures contracts).
Lending The Fund shall not make loans, except by purchase of debt obligations in
which the Fund may invest consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities The Fund shall not invest more than 15% of its net assets in illiquid
investments.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-3
<PAGE>
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
<S> <C>
Investment Companies None.
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates The Fund shall not invest in securities of any issuer if, to the knowledge of
the Fund, officers and directors or trustees [as applicable] of the Fund or
officers and directors of the Fund's investment adviser who beneficially own
more than 1/2 of 1% of the securities of that issuer together own more than
5% of such securities.
Oil or Gas None.
Miscellaneous None.
</TABLE>
E-4
<PAGE>
Delaware-Voyageur Tax-Free Arizona Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free New York Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest 25% or more of its assets in the securities of issuers in any
single industry (except that it may invest without limitation, in circumstances in which
other appropriate available investments may be in limited supply, in housing, health care,
utility, transportation, education and/or industrial obligations); provided that there shall be
no limitation on the purchase of Tax Exempt Obligations and, for defensive purposes,
obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities.
(Note: For purposes of this investment restriction, the Manager interprets "Tax Exempt
Obligations" to exclude limited obligations bonds payable only from revenues derived
from facilities or projects within a single industry.)
Borrowing* The Fund shall not borrow money (provided that the Fund may enter into reverse
repurchase agreements), except from banks for temporary or emergency purposes in an
amount not exceeding 20% of the value of the Fund's total assets, including the amount
borrowed. The Fund may not borrow for leverage purposes, provided that the Fund may
enter into reverse repurchase agreements for such purposes, and securities will not be
purchased while outstanding borrowings exceed 5% of the value of the Fund's total
assets.
Issuing Senior Securities* The Fund shall not issue any senior securities (as defined in the Investment Company Act
of 1940), except as set forth in the investment restriction pertaining to "Borrowing, and
except to the extent that using options, futures contracts and options on futures contracts,
purchasing or selling on a when-issued or forward commitment basis or using similar
investment strategies may be deemed to constitute issuing a senior security.
Short Sales/Margin* None.
Underwriting The Fund shall not underwrite securities issued by other persons except to the extent that,
in connection with the disposition of portfolio investments, the Fund may be deemed to
be an underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase securities which
are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or futures or options contracts with
respect to physical commodities. This restriction shall not restrict the Fund from
purchasing or selling, on a basis consistent with any restrictions contained in its
then-current prospectus, any financial contracts or instruments which may be deemed
commodities (including, by way of example and not by way of limitation, options,
futures, and options on futures with respect, in each case, to interest rates, currencies,
stock indices, bond indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase of debt obligations in which the Fund
may invest consistent with its investment policies, and through repurchase agreements.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
</TABLE>
- -----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-5
<PAGE>
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest 25% or more of its assets in the securities of
issuers in any single industry, except that it may invest without limitation,
in circumstances in which other appropriate available investments may be
in limited supply, in housing, health care and/or utility obligations; provided
that there shall be no limitation on the purchase of Tax Exempt Obligations
and, for defensive purposes, obligations issued or guaranteed by U.S.
government, its agencies or instrumentalities. (Note: For purposes of this
investment restriction, the Manager interprets "Tax Exempt Obligations" to
exclude limited obligations bonds payable only from revenues derived from
facilities or projects within a single industry.)
Borrowing* The Fund shall not borrow money, except from banks for temporary or
emergency purposes in an amount not exceeding 20% of the value of the
Fund's total assets, including the amount borrowed. The Fund may not
borrow for leverage purposes, and securities will not be purchased while
borrowings are outstanding. Interest paid on any money borrowed will
reduce the Fund's net income.
Issuing Senior Securities* The Fund shall not issue any senior securities (as defined in the Investment
Company Act of 1940), except as set forth in the investment restriction
pertaining to "Borrowing," and except to the extent that purchasing or
selling on a when-issued or forward commitment basis may be deemed to
constitute issuing a senior security.
Short Sales/Margin* The Fund shall not make short sales of securities or maintain a short
position for the account of the Fund unless at all times when a short
position is open it owns an equal amount of such securities or owns
securities which, without payment of any further consideration, are
convertible into or exchangeable for securities of the same issue as, and
equal in amount to, the securities sold short.
Underwriting The Fund shall not underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal securities
laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or commodity contracts
(including futures contracts). This restriction shall not restrict the Fund from
purchasing or selling, on a basis consistent with any restrictions contained
in its then-current prospectus, any financial contract or instruments which
may be deemed commodities (including by way of example, and not by
way of limitation, options, futures and options on futures with respect, in
each case, to interest rates, currencies, stock indices, bond indices or
interest rate indices).
Lending The Fund shall not make loans, except by purchase of debt obligations in
which the Fund may invest consistent with its investment policies and
through repurchase agreements.
Illiquid Securities None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-6
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies None.
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-7
<PAGE>
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest 25% or more of its total assets in the securities of
any industry, although, for purposes of this limitation, tax-exempt securities
and U.S. Government obligations are not considered to be part of any
industry.
Borrowing* The Fund shall not borrow money (provided that the Fund may enter into
reverse repurchase agreements with respect to not more than 10% of its total
assets), except from banks for temporary or emergency purposes in an amount
not exceeding 20% of the value of the Fund's total assets, including the
amount borrowed. The Fund may not borrow for leverage purposes, provided
that the Fund may enter into reverse repurchase agreements for such purposes,
and securities will not be purchased while outstanding borrowings exceed 5%
of the value of the Fund's total assets.
Issuing Senior Securities* The Fund shall not issue any senior securities (as defined in the Investment
Company Act of 1940), except as set forth in investment restriction pertaining
to "Borrowing," and except to the extent that using options, futures contracts
and options on futures contracts, purchasing or selling on a when-issued or
forward commitment basis or using similar investment strategies may be
deemed to constitute issuing a senior security.
Short Sales/Margin* None.
Underwriting The Fund shall not underwrite securities issued by other persons except to the
extent that, in connection with the disposition of portfolio investments, the
Fund may be deemed to be an underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or futures or options
contracts with respect to physical commodities. This restriction shall not
restrict the Fund from purchasing or selling, on a basis consistent with any
restrictions contained in its then-current Prospectus, any financial contracts or
instruments which may be deemed commodities (including, by way of
example and not by way of limitation, options, futures, and options on futures
with respect, in each case, to interest rates, currencies, stock indices, bond
indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase of debt obligations in
which the Fund may invest consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Issuing Senior" and "Commodities."
Futures See "Issuing Senior" and "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-8
<PAGE>
National High Yield Municipal Bond Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest 25% or more of its total assets in the securities of
any industry, although, for purposes of this limitation, tax-exempt securities
and U.S. Government obligations are not considered to be part of any
industry.
Borrowing* The Fund shall not borrow money (provided that the Fund may enter into
reverse repurchase agreements with respect to not more than 10% of its total
assets), except from banks for temporary or emergency purposes in an amount
not exceeding 20% of the value of the Fund's total assets, including the
amount borrowed. The Fund may not borrow for leverage purposes, provided
that the Fund may enter into reverse repurchase agreements for such purposes,
and securities will not be purchased while outstanding borrowings exceed 5%
of the value of the Fund's total assets.
Issuing Senior Securities* The Fund shall not issue any senior securities (as defined in the Investment
Company Act of 1940), except as set forth under "Borrowing," and except to
the extent that using options, futures contracts and options on futures
contracts, purchasing or selling on a when-issued or forward commitment
basis or using similar investment strategies may be deemed to constitute
issuing a senior security.
Short Sales/Margin* None.
Underwriting The Fund shall not underwrite securities issued by other persons except to the
extent that, in connection with the disposition of portfolio investments, the
Fund may be deemed to be an underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or futures or options
contracts with respect to physical commodities. This restriction shall not
restrict the Fund from purchasing or selling, on a basis consistent with any
restrictions contained in its then-current prospectus, any financial contracts or
instruments which may be deemed commodities (including, by way of
example and not by way of limitation, options, futures, and options on futures
with respect, in each case, to interest rates, currencies, stock indices, bond
indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase of debt obligations in
which the Fund may invest consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-9
<PAGE>
Delaware-Voyageur Tax-Free Colorado Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest 25% or more of its assets in the securities of issuers
in any single industry, except that the Fund may invest without limitation, in
circumstances in which other appropriate available investments may be in
limited supply, in housing, health care and utility obligations; provided that
there shall be no limitation on the purchase of Tax Exempt Obligations and,
for defensive purposes, obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities. (Note: For purposes of this
investment restriction, the Fund's investment adviser (the "Manager")
interprets "Tax Exempt Obligations" to exclude limited obligation bonds
payable only from revenues derived from facilities or projects within a single
industry.)
Borrowing* The Fund shall not borrow money, except from banks for temporary or
emergency purposes in an amount not exceeding 10% of the value of the
Fund's total assets, including the amount borrowed. The Funds may not
borrow for leverage purposes, and securities will not be purchased while
borrowings are outstanding. Interest paid on any money borrowed will reduce
the Fund's net income.
The Fund shall not pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 10% of its total assets (taken at the lower of cost or
current value) and then only to secure borrowings permitted by the restriction
described in the preceding paragraph).
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.
The Fund shall not make short sales of securities or maintain a short position
for the account of the Fund unless at all times when a short position is open it
owns an equal amount of such securities or owns securities which, without
payment of any further consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the securities sold
short.
Underwriting The Fund shall not underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio investments, it
may be deemed to be an underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or commodity contracts
(including futures contracts).
Lending The Fund shall not make loans, except by purchase of debt obligations in
which the Fund may invest consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities The Fund shall not invest more than 15% of its net assets in illiquid
investments.
Investment Companies None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-10
<PAGE>
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates The Fund shall not invest in securities of any issuer if, to the knowledge of
the Fund, officers and directors (or trustees) of the Fund or officers and
directors of the Fund's investment adviser who beneficially own more than 1/2
of 1% of the securities of that issuer together own more than 5% of such
securities.
Oil or Gas None.
Miscellaneous None.
</TABLE>
E-11
<PAGE>
Aggressive Growth Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest more than 25% of the value of its total assets in
securities of issuers in any one industry. For purposes of this restriction, the
term industry will be deemed to include the government of any country
other than the United States, but not the U.S. government.
Borrowing* The Fund shall not borrow money, except that the Fund may borrow from
banks for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 20% of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the total assets of the
Fund, the Fund will not make any additional investments.
Issuing Senior Securities* None.
Short Sales/Margin* None.
Underwriting The Fund shall not act as an underwriter of securities, except that the Fund
may acquire securities under circumstances in which, if the securities were
sold, the Fund might be deemed to be an underwriter for purposes of the
Securities Act of 1933, as amended.
Real Estate The Fund shall not purchase or sell real estate or real estate limited
partnership interests, except that the Fund may purchase and sell securities
of companies that deal in real estate or interests in real estate.
Commodities The Fund shall not purchase or sell commodities or commodity contracts,
except futures contracts and related options and other similar contracts.
Lending The Fund shall not lend money to other persons, except through purchasing
debt obligations, lending portfolio securities and entering into repurchase
agreements.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
Diversification The Fund shall not invest more than 5% of the value of its total assets in
the securities of any one issuer (other than securities of the U.S.
Government or its agencies or instrumentalities).
Concentration The Fund shall not concentrate its investments in any particular industry;
however, it may invest up to 25% of the value of its total assets in the
securities of issuers conducting their principal business activities in any one
industry.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-12
<PAGE>
Growth Stock Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Borrowing* The Fund shall not borrow money, except from banks for temporary or
emergency purposes in an amount not exceeding 5% of the value of the
Fund's total assets.
The Fund shall not mortgage, pledge or hypothecate its assets except in an
amount not exceeding 10% of the value of its total assets, to secure
temporary or emergency borrowing. For purposes of this policy, collateral
arrangements for margin deposits on futures contracts or with respect to the
writing of options are not deemed to be a pledge of assets.
Issuing Senior Securities* The Fund shall not issue any senior securities as defined in the Investment
Company Act of 1940 (the "1940 Act"), except to the extent that using
options and futures contracts may be deemed to constitute issuing a senior
security.
Short Sales/Margin* The Fund shall not purchase securities on margin, except that it may obtain
such short-term credits as may be necessary for the clearance of purchases
or sales of securities and except that it may make margin deposits in
connection with futures contracts.
The Fund shall not make short sales except where, by virtue of ownership
of other securities, it has the right to obtain without payment of further
consideration, securities equivalent in kind and amount to those sold.
Underwriting The Fund shall not underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal securities
laws.
Real Estate The Fund shall not purchase or sell real estate or real estate mortgage
loans, except the Fund may purchase or sell securities issued by companies
owning real estate or interests therein.
Commodities The Fund shall not purchase or sell commodities or commodities futures
contracts, except that it may enter into financial futures contracts and
engage in related options transactions.
Lending The Fund shall not make loans to other persons, except to the extent that
repurchase agreements are deemed to be loans under the 1940 Act, and
except that it may purchase debt securities as described in the Prospectus
under "Investment Objectives and Policies." The purchase of a portion of
an issue of bonds, debentures or other debt securities distributed to the
public or to financial institutions will not be considered the making of a
loan.
Illiquid Securities The Fund shall not invest more than 15% of its net assets in illiquid
investments.
Investment Companies The Fund shall not invest more than 5% of the value of its total assets in
the securities of any single investment company or more than 10% of the
value of its total assets in the securities of two or more investment
companies except as part of a merger, consolidation or acquisition of assets.
Control or Management The Fund shall not invest for the purpose of exercising control or
management.
The Fund shall not purchase more than 10% of any class of securities of
any one issuer (taking all preferred stock issues of an issuer as a single
class and all debt issues of an issuer as a single class) or acquire more than
10% of the outstanding voting securities of an issuer.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-13
<PAGE>
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Options The Fund shall not write, purchase or sell puts, calls or combinations
thereof, except that it may (a) purchase or write put and call options on
stock indexes listed on national securities exchanges, (b) write and purchase
put and call options with respect to the securities in which it may invest
and (c) engage in financial futures contracts and related options
transactions. See "Borrowing."
Futures See "Borrowing," "Short Sales/Margin" and "Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the value of its total assets in
the securities of any issuers which, with their predecessors, have a record of
less than three years' continuous operation. (Securities of such issuers will
not be deemed to fall within this limitation if they are guaranteed by an
entity in continuous operation for more than three years.)
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain the securities of any issuer, if, to the
Fund's knowledge, those officers or directors of Delaware Voyageur Mutual
Funds III, Inc. or its affiliates or of its investment adviser or sub-adviser
who individually own beneficially more than 0.5% of the outstanding
securities of such issuer, together own beneficially more than 5% of such
outstanding securities.
Oil or Gas The Fund shall not purchase or sell oil, gas or other mineral leases, rights
or royalty contracts, except the Fund may purchase or sell securities of
companies investing in the foregoing.
Miscellaneous The Fund shall not participate on a joint or a joint and several basis in any
securities trading account.
</TABLE>
E-14
<PAGE>
Tax-Efficient Equity Fund
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Fund shall not invest more than 25% of the value of its total assets in
securities of issuers in any one industry. For purposes of this restriction, the
term industry will be deemed to include the government of any country other
than the United States, but not the U.S. government.
Borrowing* The Fund shall not borrow money, except that the Fund may borrow from
banks for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 20% of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the total assets of the Fund, the Fund
will not make any additional investments.
Issuing Senior Securities* The Fund shall not issue any senior securities, as defined in the Investment
Company Act of 1940, other than as set forth under "Borrowing" above and
except to the extent that using options and futures contracts or purchasing or
selling securities on a when-issued or delayed delivery basis may be deemed
to constitute issuing a senior security.
Short Sales/Margin* None.
Underwriting The Fund shall not act as an underwriter of securities, except that the Fund
may acquire securities under circumstances in which, if the securities were
sold, the Fund might be deemed to be an underwriter for purposes of the
Securities Act of 1933, as amended.
Real Estate The Fund shall not purchase or sell real estate or real estate limited
partnership interests, except that the Fund may purchase and sell securities of
companies that deal in real estate or interests in real estate.
Commodities The Fund shall not purchase or sell commodities or commodity contracts,
except futures contracts and related options and other similar contracts.
Lending The Fund shall not lend money to other persons, except through purchasing
debt obligations, lending portfolio securities and entering into repurchase
agreements.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Issuing Senior Securities."
Futures See "Issuing Senior Securities" and "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-15
<PAGE>
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Fund/Series Sub-Adviser Agreement 12/31/98 Net Assets
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voyageur Funds, Inc.
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur US Delaware 4/30/97(1) $ 88,356,711 0.50%
Government Management per year
Securities Fund Company
(Investment Management) ("DMC")
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur US Voyager 4/30/97(1) $ 88,356,711 0.25%
Government Asset per year
Securities Fund Management, LLC
(Sub-Advisory) ("VAM")
- ---------------------------------------------------------------------------------------------------
Voyageur Insured Funds, Inc.
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $186,251,126 0.50% per year
Arizona Insured Fund
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur Minnesota DMC 4/30/97(1) $300,984,781 0.50% per year
Insured Fund
- ---------------------------------------------------------------------------------------------------
Voyageur Intermediate Tax-Free Funds, Inc.
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 61,384,558 0.40% per year
Minnesota Intermediate Fund
- ---------------------------------------------------------------------------------------------------
Voyageur Mutual Funds, Inc.
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 19,037,987 0.50% per year
Arizona Fund
- ---------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 30,167,681 0.50% per year
California Fund
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The Servicing/
Management Last Fiscal Distribution
Fees Due Year Under Percentage Fees Paid
Proposed Management (or and/or Waived Proposed Difference Last Fiscal
Sub-Advisory) Fee Rate Last Fiscal Management Between Year to
Based on Average Daily Year Fee Rate Rate Affiliates of
Fund/Series Net Assets (A) (B) A & B Manager
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Voyageur Funds, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur US 0.55% on first $500 million $455,622 due $495,246 due 9% $ 334,038
Government 0.50% on next $500 million $57,484 waived
Securities Fund 0.45% on next $1,500 million
(Investment Management) 0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur US No Change $198,997 N/A N/A N/A
Government
Securities Fund
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------------------------------
Voyageur Insured Funds, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.50% on first $500 million $940,874 due N/A N/A $ 592,005
Arizona Insured Fund 0.475% on next $500 million $158,245 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Minnesota 0.50% on first $500 million $1,489,251 due N/A N/A $1,019,557
Insured Fund 0.475% on next $500 million $87,920 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------------
Voyageur Intermediate
Tax-Free Funds, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.50% on first $500 million $237,393 due $269,659 due 25% $ 148,241
Minnesota Intermediate Fund 0.475% on next $500 million $3,203 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $78,069 due $85,539 due 10% $ 82,879
Arizona Fund 0.50% on next $500 million All waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $57,615 due $63,369 due 10% $ 89,283
California Fund 0.50% on next $500 million All waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
F-1
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Fund/Series Sub-Adviser Agreement 12/31/98 Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 52,746,716 0.50% per year
Idaho Fund
- ------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 45,069,185 0.50% per year
Iowa Fund
- ------------------------------------------------------------------------------------------------
Delaware-Voyageur Minnesota DMC 4/30/97(1) $ 57,064,481 0.65% per year
High Yield Municipal Bond
Fund
- ------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 11,675,670 0.50% per year
New York Fund
- ------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 39,897,096 0.50% per year
Wisconsin Fund
- ------------------------------------------------------------------------------------------------
National High Yield Municipal DMC 4/30/97(1) $ 98,170,371 0.65% per year
Bond Fund
- ------------------------------------------------------------------------------------------------
Voyageur Mutual Funds II, Inc.
- ------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $377,892,520 0.50% per year
Colorado Fund
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Management
Fees that
Would Have
Been Due
During The
Management Last Fiscal
Fees Due Year Under
Proposed Management (or and/or Waived Proposed Percentage
Sub-Advisory) Fee Rate Last Fiscal Management Difference
Based on Average Daily Year Fee Rate Between
Fund/Series Net Assets (A) (B) Rate A & B
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free 0.55% on first $500 million $219,372 due $241,122 due 10%
Idaho Fund 0.50% on next $500 million $40,342 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $212,968 due $234,343 due 10%
Iowa Fund 0.50% on next $500 million $46,541 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Minnesota 0.55% on first $500 million $228,106 due $192,257 due -16%
High Yield Municipal Bond 0.50% on next $500 million All waived
Fund 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $47,505 due $54,560 due 15%
New York Fund 0.50% on next $500 million $12,835 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $175,711 due $192,328 due 9%
Wisconsin Fund 0.50% on next $500 million $31,208 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
National High Yield Municipal 0.55% on first $500 million $439,463 due $373,239 due -15%
Bond Fund 0.50% on next $500 million $112,927 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds II, Inc.
- -------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $1,831,093 due $2,007,166 due 10%
Colorado Fund 0.50% on next $500 million $404,016 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Servicing/
Distribution
Fees Paid
Last Fiscal
Year to
Affiliates of
Fund/Series Manager
- -----------------------------------------------
<S> <C>
Delaware-Voyageur Tax-Free $ 207,033
Idaho Fund
- -----------------------------------------------
Delaware-Voyageur Tax-Free $ 172,767
Iowa Fund
- -----------------------------------------------
Delaware-Voyageur Minnesota $ 198,873
High Yield Municipal Bond
Fund
- -----------------------------------------------
Delaware-Voyageur Tax-Free $ 39,713
New York Fund
- -----------------------------------------------
Delaware-Voyageur Tax-Free $ 132,359
Wisconsin Fund
- -----------------------------------------------
National High Yield Municipal $ 267,087
Bond Fund
- -----------------------------------------------
Voyageur Mutual Funds II, Inc.
- -----------------------------------------------
Delaware-Voyageur Tax-Free $1,224,872
Colorado Fund
- -----------------------------------------------
</TABLE>
- ------------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
F-2
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Fee Rate
Investment Asset Size Based on
Manager or Date of as of Average Daily
Fund/Series Sub-Adviser Agreement 12/31/98 Net Assets
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voyageur Mutual Funds III, Inc.
- -------------------------------------------------------------------------------------------------
Aggressive Growth Fund DMC 4/30/97(1) $150,863,196 1.00% per year
- -------------------------------------------------------------------------------------------------
Growth Stock Fund (Investment DMC 4/30/97(1) $ 48,755,899 1.00% per year
Management)
- -------------------------------------------------------------------------------------------------
Growth Stock Fund VAM 4/30/97(1) $ 48,755,899 0.50% per year
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------
Tax-Efficient Equity Fund DMC 4/30/97(1) $ 66,275,684 0.75% on first
$500 million
0.725% on next
$500 million
0.70% on assets
in excess of
$1,000 million;
all per year
- -------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- -------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $435,349,501 0.50% per year
Minnesota Fund
- -------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free DMC 4/30/97(1) $ 31,109,297 0.50% per year
North Dakota Fund
- -------------------------------------------------------------------------------------------------
<CAPTION>
Management
Fees that
Would Have
Been Due
During The
Management Last Fiscal
Fees Due Year Under
Proposed Management (or and/or Waived Proposed Percentage
Sub-Advisory) Fee Rate Last Fiscal Management Difference
Based on Average Daily Year Fee Rate Between
Fund/Series Net Assets (A) (B) Rate A & B
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voyageur Mutual Funds III, Inc.
- --------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund 0.75% on first $500 million $155,146 due $116,359 due -25%
0.70% on next $500 million $83,957 waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Growth Stock Fund (Investment 0.65% on first $500 million $412,380 due $267,984 due -35%
Management) 0.60% on next $500 million $33,831 waived
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Growth Stock Fund 0.325% per year $184,697 N/A N/A
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------------
Tax-Efficient Equity Fund 0.75% on first $500 million $54,805 due N/A N/A
0.70% on next $500 million $37,722 waived
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million, all per year
- --------------------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- --------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $2,137,372 due $2,342,518 due 10%
Minnesota Fund 0.50% on next $500 million $176,334 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free 0.55% on first $500 million $158,453 due $174,733 due 10%
North Dakota Fund 0.50% on next $500 million $45,541 waived
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Servicing/
Distribution
Fees Paid
Last Fiscal
Year to
Affiliates of
Fund/Series Manager
- -----------------------------------------------
<S> <C>
Voyageur Mutual Funds III, Inc.
- -----------------------------------------------
Aggressive Growth Fund $ 140,256
- -----------------------------------------------
Growth Stock Fund (Investment $ 188,455
Management)
- -----------------------------------------------
Growth Stock Fund N/A
(Sub-Advisory)
- -----------------------------------------------
Tax-Efficient Equity Fund $ 42,337
- -----------------------------------------------
Voyageur Tax Free Funds, Inc.
- -----------------------------------------------
Delaware-Voyageur Tax-Free $1,460,186
Minnesota Fund
- -----------------------------------------------
Delaware-Voyageur Tax-Free $ 115,950
North Dakota Fund
- -----------------------------------------------
</TABLE>
- ------------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
F-3
<PAGE>
EXHIBIT G
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur US Government Securities Fund
(Voyageur Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% 0.50% 0.55%
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% 0.25% 0.25%
Other Expenses .................................... 0.27% 0.27% 0.27% 0.27% 0.27% 0.27%
---- ---- ---- ---- ---- ----
Total Operating Expenses ....................... 1.02% 1.07% 1.77% 1.82% 1.02% 1.07%
==== ==== ==== ==== ==== ====
Total Operating Expenses After Waiver* ......... 1.02% **% 1.77% **% 1.02% **%
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $574 $579 $784 $799 $1,011 $1,037 $1,664 $1,719
Class B (Redemption) ............ $580 $585 $857 $873 $1,159 $1,185 $1,886 $1,940
Class B (No Redemption) ......... $180 $185 $557 $573 $ 959 $ 985 $1,886 $1,940
Class C (Redemption) ............ $280 $285 $557 $573 $ 959 $ 985 $2,084 $2,137
Class C (No Redemption) ......... $180 $185 $557 $573 $ 959 $ 985 $2,084 $2,137
Institutional Class ............. $104 $109 $325 $340 $ 563 $ 590 $1,248 $1,306
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware Voyageur Tax-Free Arizona Fund
(Voyageur Mutual Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.32% 0.32% 0.32% 0.32% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.07% 1.12% 1.82% 1.87% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.60% **% 1.35% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $480 $485 $703 $718 $ 943 $ 969 $1,632 $1,687
Class B (Redemption) ............ $585 $590 $873 $888 $1,185 $1,211 $1,940 $1,995
Class B (No Redemption) ......... $185 $190 $573 $588 $ 985 $1,011 $1,940 $1,995
Class C (Redemption) ............ $285 $290 $573 $588 $ 985 $1,011 $2,137 $2,190
Class C (No Redemption) ......... $185 $190 $573 $588 $ 985 $1,011 $2,137 $2,190
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Minnesota
Intermediate Fund
(Voyageur Intermediate Tax-Free Funds, Inc.)
Management Fees ................................... 0.40% 0.50% 0.40% 0.50% N/A N/A
12b-1 Fees ........................................ 0.15% 0.15% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.25% 0.25% 0.25% 0.25% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 0.80% 0.90% 1.65% 1.75% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.80% **% 1.65% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
- ------------
* DMC voluntarily waived all or a portion of its management fee and, in some
cases, made expense payments on behalf of the Funds, all in order to limit
total operating expenses to certain amounts during the past fiscal year.
These voluntary waivers and payments can be ended at any time.
** Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-1
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $354 $364 $523 $554 $ 707 $ 760 $1,238 $1,352
Class B (Redemption) ............ $568 $575 $820 $851 $1,097 $1,149 $1,421 $1,534
Class B (No Redemption) ......... $168 $178 $520 $551 $ 897 $ 949 $1,421 $1,534
Class C (Redemption) ............ $268 $278 $520 $551 $ 897 $ 949 $1,955 $2,062
Class C (No Redemption) ......... $168 $178 $520 $551 $ 897 $ 949 $1,955 $2,062
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free California Fund .
(Voyageur Mutual Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.32% 0.32% 0.32% 0.32% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.07% 1.12% 1.82% 1.87% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.35% **% 1.82% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $480 $485 $703 $718 $ 943 $ 969 $1,632 $1,687
Class B (Redemption) ............ $585 $590 $873 $888 $1,185 $1,211 $1,940 $1,995
Class B (No Redemption) ......... $185 $190 $573 $588 $ 985 $1,011 $1,940 $1,995
Class C (Redemption) ............ $285 $290 $573 $588 $ 985 $1,011 $2,137 $2,190
Class C (No Redemption) ......... $185 $190 $573 $588 $ 985 $1,011 $2,137 $2,190
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Idaho Fund
(Voyageur Mutual Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.27% 0.27% 0.27% 0.27% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.02% 1.07% 1.77% 1.82% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.95% **% 1.70% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $475 $480 $688 $703 $ 917 $ 943 $1,576 $1,632
Class B (Redemption) ............ $580 $585 $857 $873 $1,159 $1,185 $1,886 $1,940
Class B (No Redemption) ......... $180 $185 $557 $573 $ 959 $ 985 $1,886 $1,940
Class C (Redemption) ............ $280 $285 $557 $573 $ 959 $ 985 $2,084 $2,137
Class C (No Redemption) ......... $180 $185 $557 $573 $ 959 $ 985 $2,084 $2,137
</TABLE>
- ------------
* DMC voluntarily waived all or a portion of its management fee and, in some
cases, made expense payments on behalf of the Funds, all in order to limit
total operating expenses to certain amounts during the past fiscal year.
These voluntary waivers and payments can be ended at any time.
** Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-2
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Iowa Fund
(Voyageur Mutual Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.31% 0.31% 0.31% 0.31% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.06% 1.11% 1.81% 1.86% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.96% **% 1.70% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $479 $484 $700 $715 $ 938 $ 964 $1,621 $1,676
Class B (Redemption) ............ $584 $589 $869 $885 $1,180 $1,206 $1,930 $1,984
Class B (No Redemption) ......... $184 $189 $569 $585 $ 980 $1,006 $1,930 $1,984
Class C (Redemption) ............ $284 $289 $569 $585 $ 980 $1,006 $2,127 $2,180
Class C (No Redemption) ......... $184 $189 $569 $585 $ 980 $1,006 $2,127 $2,180
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free New York Fund
(Voyageur Mutual Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.40% 0.40% 0.40% 0.40% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.15% 1.20% 1.90% 1.95% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.75% **% 0.10% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $488 $493 $727 $742 $ 984 $1,010 $1,720 $1,775
Class B (Redemption) ............ $593 $598 $897 $912 $1,226 $1,252 $2,027 $2,080
Class B (No Redemption) ......... $193 $198 $597 $612 $1,026 $1,052 $2,027 $2,080
Class C (Redemption) ............ $193 $298 $597 $612 $1,026 $1,052 $2,222 $2,275
Class C (No Redemption) ......... $293 $198 $597 $612 $1,026 $1,052 $2,222 $2,275
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Wisconsin Fund
(Voyageur Mutual Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.29% 0.29% 0.29% 0.29% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.04% 1.09% 1.79% 1.84% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 1.00% **% 1.75% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
- ------------
* DMC voluntarily waived all or a portion of its management fee and, in some
cases, made expense payments on behalf of the Funds, all in order to limit
total operating expenses to certain amounts during the past fiscal year.
These voluntary waivers and payments can be ended at any time.
** Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-3
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $477 $482 $694 $709 $ 927 $ 953 $1,598 $1,654
Class B (Redemption) ............ $582 $587 $863 $879 $1,170 $1,196 $1,908 $1,962
Class B (No Redemption) ......... $182 $187 $563 $579 $ 970 $ 996 $1,908 $1,962
Class C (Redemption) ............ $282 $287 $563 $579 $ 970 $ 996 $2,105 $2,159
Class C (No Redemption) ......... $182 $187 $563 $579 $ 970 $ 996 $2,105 $2,159
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Colorado Fund
(Voyageur Mutual Funds II, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.17% 0.17% 0.17% 0.17% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 0.92% 0.97% 1.67% 1.72% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 0.92% **% 1.67% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $465 $470 $657 $672 $ 855 $ 891 $1,464 $1,520
Class B (Redemption) ............ $570 $575 $826 $842 $1,107 $1,133 $1,777 $1,831
Class B (No Redemption) ......... $170 $175 $526 $542 $ 907 $ 933 $1,777 $1,831
Class C (Redemption) ............ $270 $275 $526 $542 $ 907 $ 933 $1,976 $2,030
Class C (No Redemption) ......... $170 $175 $526 $542 $ 907 $ 933 $1,976 $2,030
</TABLE>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free Minnesota Fund
(Voyageur Tax Free Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.25% 0.25% 0.25% 0.25% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.00% 1.05% 1.75% 1.80% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 1.00% **% 1.75% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $473 $478 $681 $697 $ 907 $ 933 $1,554 $1,609
Class B (Redemption) ............ $578 $583 $851 $866 $1,149 $1,175 $1,864 $1,919
Class B (No Redemption) ......... $178 $183 $551 $566 $ 949 $ 975 $1,864 $1,919
Class C (Redemption) ............ $278 $283 $551 $566 $ 949 $ 975 $2,062 $2,116
Class C (No Redemption) ......... $178 $183 $551 $566 $ 949 $ 975 $2,062 $2,116
</TABLE>
- ------------
* DMC voluntarily waived all or a portion of its management fee and, in some
cases, made expense payments on behalf of the Funds, all in order to limit
total operating expenses to certain amounts during the past fiscal year.
These voluntary waivers and payments can be ended at any time.
** Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-4
<PAGE>
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Name of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------------------------------------- ---------- ---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware-Voyageur Tax-Free
North Dakota Fund
(Voyageur Tax Free Funds, Inc.)
Management Fees ................................... 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees ........................................ 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses .................................... 0.40% 0.40% 0.40% 0.40% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses ....................... 1.15% 1.20% 1.90% 1.95% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses After Waiver* ......... 1.00% **% 1.75% **% N/A N/A
==== ==== ==== ==== === ===
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Expense Examples Actual Proposed Actual Proposed Actual Proposed Actual Proposed
- --------------------------------- -------- ---------- -------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A ......................... $488 $493 $727 $742 $ 984 $1,010 $1,720 $1,775
Class B (Redemption) ............ $593 $598 $897 $912 $1,226 $1,252 $2,027 $2,080
Class B (No Redemption) ......... $193 $198 $597 $612 $1,026 $1,052 $2,027 $2,080
Class C (Redemption) ............ $293 $298 $597 $612 $1,026 $1,052 $2,222 $2,275
Class C (No Redemption) ......... $193 $198 $597 $612 $1,026 $1,052 $2,222 $2,275
</TABLE>
- ------------
* DMC voluntarily waived all or a portion of its management fee and, in some
cases, made expense payments on behalf of the Funds, all in order to limit
total operating expenses to certain amounts during the past fiscal year.
These voluntary waivers and payments can be ended at any time.
** Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-5
<PAGE>
EXHIBIT H
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
Domestic Equity Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- --------------------------- -------------- ---------------- --------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Blue Chip Fund DMC $ 17,847,454 0.65% on first $500 million 0.65% on first $500 million
(Investment Management) 0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000 million; all per year 0.50% on assets in excess of
$2,500 million; all per year
Capital Appreciation Fund DMC $ 2,563,644 0.75% on first $500 million 0.75% on first $500 million
0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
Convertible Securities DMC $ 8,133,078 0.75% per year 0.75% on first $500 million
Series (Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Decatur Income Fund DMC $2,384,398,634 0.60% on first $100 million 0.65% on first $500 million
0.525% on next $150 million 0.60% on next $500 million
0.50% on next $250 million 0.55% on next $1,500 million
0.475% on assets in excess of 0.50% on assets in excess of
$500 million; all per year $2,500 million; all per year
less directors' fees
Decatur Total Return Fund DMC $1,402,172,696 0.60% on first $500 million 0.65% on first $500 million
0.575% on next $250 million 0.60% on next $500 million
0.55% on assets in excess of 0.55% on next $1,500 million
$750 million; all per year 0.50% on assets in excess of
less directors' fees $2,500 million; all per year
Decatur Total Return DMC $ 577,896,430 0.60 per year less 0.65% on first $500 million
Series (Variable Annuity) directors' fees 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Delaware Fund DMC $1,045,205,203 0.60% on first $100 million 0.65% on first $500 million
0.525% on next $150 million 0.60% on next $500 million
0.50% on next $250 million 0.55% on next $1,500 million
0.475% on assets in excess of 0.50% on assets in excess of
$500 million; all per year, $2,500 million; all per year
less directors' fees
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to shareholders in a
separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-1
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------ -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware Series DMC $201,539,215 0.60% per year less 0.65% on first $500 million
(Variable Annuity) directors' fees 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
DelCap Fund DMC $817,570,752 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
DelCap Series DMC $130,546,134 0.75% per year less 0.75% on first $500 million
(Variable Annuity) directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Devon Fund DMC $302,046,022 0.60% on first $500 million 0.65% on first $500 million
0.50% on assets in excess of 0.60% on next $500 million
$500 million; all per year 0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Devon Series DMC $ 68,595,698 0.60% per year 0.65% on first $500 million
(Variable Annuity) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Diversified Value Fund DMC $ 2,316,079 0.65% on first $500 million N/A
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
The Growth & Income DMC $ 2,373,603 0.55% per year N/A
Portfolio*,**
The Large Cap Value DMC $124,365,131 0.55% per year less 0.55% per year
Equity Portfolio** directors' fees
Mid Cap Value Fund DMC $ 2,095,163 0.75% on first $500 million N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
The Mid Cap Growth DMC $ 6,284,704 0.80% per year less 0.75% per year
Equity Portfolio** directors' fees
The Real Estate DMC $ 71,589,077 0.75% per year 0.75% on first $500 million
Investment 0.70% on next $500 million
Trust Portfolio 0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; per year
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
** These funds are institutional and are only sold to investors who invest a minimum of $1,000,000.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to shareholders in a
separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-2
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------ -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
The Real Estate DMC $ 5,942,731 0.75% per year N/A
Investment
Trust Portfolio II**
REIT Series DMC $ 5,519,385 0.75% on first $500 million N/A
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Retirement Income Fund DMC $ 2,911,468 0.65% on first $500 million 0.65% on first $500 million
0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000 million; all per year 0.50% on assets in excess of
$2,500; all per year
Small Cap Contrarian DMC $ 2,084,138 0.75% on first $500 million N/A
Fund 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
The Small Cap Growth DMC $ 4,009,987 0.75% per year N/A
Equity Portfolio**
The Mid Cap Value DMC $ 2,901,624 0.65% per year N/A
Equity Portfolio**
Small Cap Value Fund DMC $525,102,433 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Small Cap Value Series DMC $103,942,296 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Social Awareness Fund DMC $ 87,050,941 0.75% on first $500 million 0.75% on first $500 million
0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
** These funds are institutional funds and are only sold to investors who invest a minimum of $1,000,000
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to shareholders in a
separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-3
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------ -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Social Awareness Series DMC $ 26,942,788 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Trend Fund DMC $594,971,007 0.75% per year less 0.75% on first $500 million
director's fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Trend Series DMC $170,364,973 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
U.S. Growth Fund DMC $ 62,656,068 0.70% per year 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Domestic Fixed-Income Funds
The Aggregate Fixed DMC $ 6,492,082 0.40% per year N/A
Income Portfolio**
Corporate Bond Fund DMC $ 38,399,311 0.50% on first $500 million N/A
0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware Group Dividend DMC $221,141,149 0.55% per year N/A
and Income Fund, Inc.***
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
** This fund is an institutional fund and is only sold to investors who invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to
shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-4
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* As of 12/31/98 On Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C>
Delchester Fund DMC $1,382,947,497 0.60% on first $500 million 0.65% on first $500 million
0.575% on next $250 million 0.60% on next $500 million
0.55% on assets in excess of 0.55% on next $1,500 million
$750 million; all per year 0.50% on assets in excess of
less directors' fees $2,500 million; all per year
Delchester Series DMC $ 120,628,573 0.60% per year less 0.65% on first $500 million
(Variable Annuity) directors' fees 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
The Diversified Core Fixed DMC $ 3,303,897 0.43% per year N/A
Income Portfolio**
Extended Duration Bond Fund DMC $ 32,255,272 0.55% on first $500 million N/A
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
U.S. Government Fund DMC $ 181,655,118 .60% per year less .55% on first $500 million
directors' fees .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
The High-Yield Bond DMC $ 21,560,283 .45% per year N/A
Portfolio**
High-Yield Opportunities Fund DMC $ 20,748,401 .65% on first $500 million .65% on first $500 million
.625% on next $500 million .60% on next $500 million
.60% on assets in excess of .55% on next $1,500 million
$1,000 million; all per year .50% on assets in excess of
$2,500 million; all per year
The Intermediate DMC $ 26,571,322 .40% per year less .40% per year
Fixed-Income Portfolio** directors' fees
Limited Term Government Fund DMC $ 357,445,604 .50% per year less .50% on first $500 million
directors' fees .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
The Limited-Term Maturity DMC $ 21,000 .30% per year N/A
Portfolio**
Strategic Income Fund DMC $ 48,014,523 .65% on first $500 million .65% on first $500 million
.625% on next $500 million .60% on next $500 million
.60% on assets in excess of .55% on next $1,500 million
$1,000 million; all per year .50% on assets in excess of
$2,500 million; all per year
Strategic Income Series DMC $ 20,496,652 .65% per year .65% on first $500 million
(Variable Annuity) .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
** These funds are institutional funds and are only sold to investors who invest a minimum of $1,000,000.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to shareholders in a
separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-5
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
National Tax Free Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* As of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C>
Tax-Free Insured Fund DMC $ 79,399,126 .60% per year less .50% on first $500 million
directors' fees .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Tax-Free USA Fund DMC $606,574,863 .60% on first $500 million .55% on first $500 million
.575% on next $250 million .50% on next $500 million
.55% on assets in excess of .45% on next $1,500 million
$750 million; all per year .425% on assets in excess of
less directors' fees $2,500 million; all per year
Tax-Free USA Intermediate DMC $ 28,530,418 .50% per year .50% on first $500 million
Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
less directors' fees
State Tax Free Funds
Voyageur Arizona Municipal DMC $ 45,751,660 .40% per year N/A
Income Fund, Inc.***
Delaware-Voyageur Tax-Free DMC $ 35,916,466 .50% on first $500 million N/A
California Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Voyageur Colorado Insured DMC $ 73,869,200 .40% per year N/A
Municipal Income Fund,
Inc.***
Delaware-Voyageur Tax Free DMC $ 17,442,694 .55% on first $500 million N/A
Florida Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
- ------------
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to
shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-6
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* As of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C>
Delaware-Voyageur Tax Free DMC $148,131,828 .50% on first $500 million N/A
Florida Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Voyageur Florida Insured DMC $ 38,113,552 .40% per year N/A
Municipal Income Fund***
Delaware-Voyageur Tax Free DMC $ 17,697,388 .55% on first $500 million N/A
Kansas Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $ 56,368,954 .50% on first $500 million N/A
Missouri Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Voyageur Minnesota Municipal DMC $ 40,237,567 .40% per year N/A
Income Fund, Inc.***
Voyageur Minnesota Municipal DMC $109,015,281 .40% per year N/A
Income Fund II, Inc.***
Voyageur Minnesota Municipal DMC $ 25,839,781 .40% per year N/A
Income Fund III, Inc.***
Tax Free New Jersey Fund DMC $ 3,297,937 .55% on the first $500 million .55% on first $500 million
.525% on next $500 million .50% on next $500 million
.50% on assets in excess of .45% on next $1,500 million
$1,000 million; all per year .425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax Free New DMC $ 24,083,040 .55% on first $500 million N/A
Mexico Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Tax Free Ohio Fund DMC $ 1,453,742 .55% on first $500 million .55% on first $500 million
.525% on next $500 million .50% on assets in excess of
.50% on assets in excess of .45% on next $1,500 million
$1,000 million; all per year .425% on assets in excess of
$2,500 million; all per year.
- ------------
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
*** Closed-end fund that does not accept new investments; therefore, there are no breakpoints in the management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to
shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-7
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGER AND SUB-ADVISER
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* As of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C>
Delaware-Voyageur Tax Free DMC $ 36,669,973 .50% on first $500 million N/A
Oregon Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Tax Free Pennsylvania Fund DMC $921,717,539 .60% on first $500 million .55% on first $500 million
.575% on next $250 million .50% on next $500 million
.55% on assets in excess of .45% on next $1,500 million
$750 million; all per year .425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax Free Utah DMC $ 3,300,312 .55% on first $500 million N/A
Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax Free DMC $ 4,159,209 .50% on first $500 million N/A
Washington Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; aoo per year
- -----------
* Investment Manager/Sub-Adviser:
Delaware Management Company ("DMC")
Voyageur Asset Management LLC ("VAM")
++ Proposed fee rates reflect increases, decreases or other changes which have been, or will be presented to
shareholders in a separate shareholder meeting, and which have not yet taken effect.
</TABLE>
H-8
<PAGE>
EXHIBIT I
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [COMPANY], a[ ] ("Fund") on behalf of the
[SERIES] ("Series"), and [MANAGER NAME] , a ] ("Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 and is currently comprised
of [ ] series, including the [ ] Series; as a separate series of the Fund, each
series engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager is a registered investment adviser under the
Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and
WHEREAS, the Fund on behalf of the Series and the Investment Manager desire to
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment
and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Fund's Board of Directors and officers of
the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Investment Manager shall for all
purposes herein be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent
of the Fund. The Investment Manager shall regularly make decisions as to
what securities and other instruments to purchase and sell on behalf of
the Series and shall effect the purchase and sale of such investments in
furtherance of the Series' objectives and policies and shall furnish the
Board of Directors of the Fund with such information and reports regarding
the Series' investments as the Investment Manager deems appropriate or as
the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not
in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of
shares; preparation of share certificates; reports and notices to
shareholders; calling and holding of shareholders' meetings; miscellaneous
office expenses; brokerage commissions; custodian fees; legal and
accounting fees; taxes; and federal and state registration fees.
Directors, officers and employees of the Investment Manager may be
directors, officers and employees of any of the investment companies
within the Delaware Investments family (including the Fund). Directors,
officers and employees of the Investment Manager who are directors,
officers and/or employees of these investment companies shall not receive
any compensation from such companies for acting in such dual capacity. In
the conduct of the respective businesses of the parties hereto and in the
performance of this Agreement, the Fund and Investment Manager may share
facilities common to each, which may include legal and accounting
personnel, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for
which the Investment Manager or any such Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund
or who sell shares of any other fund for which the Investment
I-1
<PAGE>
Manager or any such Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the funds of which the Investment
Manager or Sub-Adviser serve as investment manager, shall only receive
orders for the purchase or sale of portfolio securities to the extent that
the placing of such orders is in compliance with the Rules of the
Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject
to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the
Fund and the Fund may agree to pay a member of an exchange, broker or
dealer an amount of commission for effecting a securities transaction in
excess of the amount of commission another member of an exchange, broker
or dealer would have charged for effecting that transaction, in such
instances where the Fund and the Investment Manager have determined in
good faith that such amount of commission was reasonable in relation to
the value of the brokerage and research services provided by such member,
broker or dealer, viewed in terms of either that particular transaction or
the Investment Manager's overall responsibilities with respect to the Fund
and to other funds and other advisory accounts for which the Investment
Manager or any Sub-Adviser, as defined in Paragraph 5 hereof, exercises
investment discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets, a fee based
on the average daily net assets of the Series during the month. Such fee
shall be calculated in accordance with the following schedule:
Monthly Annual Rate Average Daily Net Assets
------- ----------- ------------------------
If this Agreement is terminated prior to the end of any calendar month,
the management fee shall be prorated for the portion of any month in which
this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the
number of calendar days in the month, and shall be payable within 10 days
after the date of termination.
5. The Investment Manager may, at its expense, select and contract with
one or more investment advisers registered under the Investment Advisers
Act of 1940 ("Sub-Advisers") to perform some or all of the services for
the Series for which it is responsible under this Agreement. The
Investment Manager will compensate any Sub-Adviser for its services to the
Series. The Investment Manager may terminate the services of any
Sub-Adviser at any time in its sole discretion, and shall at such time
assume the responsibilities of such Sub-Adviser unless and until a
successor Sub-Adviser is selected and the requisite approval of the
Series' shareholders is obtained. The Investment Manager will continue to
have responsibility for all advisory services furnished by any
Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund under
the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different
services to others so long as its ability to render the services provided
for in this Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other
corporation, association, firm or individual, and may render underwriting
services to the Fund or to any other investment company, corporation,
association, firm or individual.
8. It is understood and agreed that so long as the Investment Manager
and/or its advisory affiliates shall continue to serve as the Fund's
investment adviser, other mutual funds as may be sponsored or advised by
the Investment Manager or its affiliates shall have the right permanently
to adopt and to use the words "Delaware," "Delaware Investments" or
"Delaware Group" in their names and in the names of any series or class of
shares of such funds.
I-2
<PAGE>
9. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of its duties as the Investment
Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale
of any security, or otherwise.
10. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period
of two years and may be renewed thereafter only so long as such renewal
and continuance is specifically approved at least annually by the Board of
Directors or by the vote of a majority of the outstanding voting
securities of the Series and only if the terms and the renewal hereof have
been approved by the vote of a majority of the Directors of the Fund who
are not parties hereto or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the
Fund at any time, without the payment of a penalty, on sixty days' written
notice to the Investment Manager of the Fund's intention to do so,
pursuant to action by the Board of Directors of the Fund or pursuant to
the vote of a majority of the outstanding voting securities of the Series.
The Investment Manager may terminate this Agreement at any time, without
the payment of a penalty, on sixty days' written notice to the Fund of its
intention to do so. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination, and except for the
obligation of the Fund to pay to the Investment Manager the fee provided
in Paragraph 4 hereof, prorated to the date of termination. This Agreement
shall automatically terminate in the event of its assignment.
11. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
12. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to be
affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , 19 .
<TABLE>
<S> <C>
[MANAGER NAME] [REGISTRANT NAME]
for the [SERIES NAME]
By: __________________________________
Name: ________________________________
Title: _______________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
Attest: ______________________________
Name: ________________________________
Title: _______________________________
Attest: ______________________________
Name: ________________________________
Title: _______________________________
</TABLE>
I-3
<PAGE>
EXHIBIT J
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between [MANAGER NAME] ("Investment Manager"), and
[SUB-ADVISER NAME] ("Sub-Adviser").
W I T N E S S E T H:
WHEREAS, [REGISTRANT NAME], a [ ] ("Fund"), has been organized and operates
as an investment company registered under the Investment Company Act of 1940
and engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager and the Fund on behalf of the [Series]
("Series") have entered into an agreement of even date herewith ("Investment
Management Agreement") whereby the Investment Manager will provide investment
advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Management Agreement permits the Investment Manager to
hire one or more sub-advisers to assist the Investment Manager in providing
investment advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Manager and the Sub-Adviser are registered Investment
Advisers under the Investment Advisers Act of 1940 and engage in the business
of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Investment Manager hereby employs the Sub-Adviser, subject always
to the Investment Manager's control and supervision, to manage the
investment and reinvestment of that portion of the Series' assets as the
Investment Manager shall designate from time to time and to furnish the
Investment Manager with investment recommendations, asset allocation
advice, research, economic analysis and other investment services with
respect to securities in which the Series may invest, subject to the
direction of the Board and officers of the Fund for the period and on the
terms hereinafter set forth. The Sub-Adviser hereby accepts such
employment and agrees during such period to render the services and assume
the obligations herein set forth for the compensation herein provided. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized,
have no authority to act for or represent the Fund in any way, or in any
way be deemed an agent of the Fund. The Sub-Adviser shall regularly make
decisions as to what securities to purchase and sell on behalf of the
Series with respect to that portion of the Series' assets designated by
the Investment Manager, shall effect the purchase and sale of such
investments in furtherance of the Series' objectives and policies and
shall furnish the Board of Directors of the Fund with such information and
reports regarding its activities as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request in the
performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Articles of Incorporation,
By-Laws and Prospectus of the Fund and with the instructions and
directions of the Investment Manager and of the Board of Directors of the
Fund and will conform to and comply with the requirements of the 1940 Act,
the Internal Revenue Code of 1986 and all other applicable federal and
state laws and regulations consistent with the provisions of Section 15(c)
of the Investment Company Act of 1940.
2. Under the terms of the Investment Management Agreement, the Fund shall
conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation
of the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of
stock, including issuance and repurchase of shares; preparation of share
certificates;
J-1
<PAGE>
reports and notices to shareholders; calling and holding of shareholders'
meetings; miscellaneous office expenses; brokerage commissions; custodian
fees; legal and accounting fees; taxes; and federal and state registration
fees. Without limiting the foregoing, except as the Investment Manager and
the Sub-Adviser may agree in writing from time to time, the Sub-Adviser
shall have no responsibility for record maintenance and preservation
obligations under Section 31 of the Investment Company Act of 1940.
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser
as sub-adviser or investment manager. Directors, officers and employees of
the Sub-Adviser who are Directors, officers and/or employees of the Fund,
shall not receive any compensation from the Fund for acting in such dual
capacity. In the conduct of the respective business of the parties hereto
and in the performance of this Agreement, the Fund, the Investment Manager
and the Sub-Adviser may share facilities common to each, which may include
legal and accounting personnel, with appropriate proration of expenses
between and among them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Sub-Adviser will place orders for the purchase
and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, to the Sub-Adviser or
to any other Fund for which the Investment Manager or Sub-Adviser provides
investment advisory services and/or with broker/dealers who sell shares of
the Fund or who sell shares of any other Fund for which the Investment
Manager or Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the Funds for which the Investment
Manager or Sub-Adviser provides advisory services shall only receive
orders for the purchase or sale of portfolio securities to the extent that
the placing of such orders is in compliance with the rules of the
Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject
to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Sub-Adviser may ask the Fund and
the Fund may agree to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of
the amount of commission another member of an exchange, broker or dealer
would have charged for effecting that transaction, in such instances where
it and the Sub-Adviser have determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such member, broker or dealer, viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Fund and to other funds and other
advisory accounts for which the Investment Manager or the Sub-Adviser
exercises investment discretion.
4. As compensation for the services to be rendered to the Fund for the
benefit of the Series by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser:
[(The following language is used for funds that do not have an asset-based
sub-advisory fee rate:) a monthly fee equal to [%] of the fees paid to the
Investment Manager under the Investment Management Agreement.]
[(The following language is used for funds that have an asset-based
sub-advisory fee rate:) a monthly fee equal to [insert asset-based fee
rate]; provided however, that the Sub-Adviser shall waive all or a portion
of the fees payable under this Agreement to the extent necessary to bear
its proportionate share of any management fee waiver undertaken by the
Investment Manager. The amount of such waiver by the Sub-Adviser shall be
calculated by multiplying the dollar amount of the management fees waived
by the investment manager by the percentage that the then-current
sub-advisory fee rate represents of the then-current investment management
fee rate.]
If this Agreement is terminated prior to the end of any calendar month,
the Sub-Advisory fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the
number of calendar days, during which the Agreement is in effect, bears to
the number of calendar days in the month, and shall be payable within 10
days after the date of termination.
J-2
<PAGE>
5. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Series under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render
similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby;
provided, however, except for advisory arrangements implemented prior to
the date of this Agreement, during the term of this Agreement, the
Sub-Adviser, will not, without the written consent of the Investment
Manager, which consent will not be unreasonably withheld, render
investment company (or portfolio thereof) which the Investment manger
reasonably determines would be in competition with and which has
investment policies similar to those of the Portfolio.
6. Subject to the limitation set forth in Paragraph 5, the Sub-Adviser,
its directors, officers, employees, agents and shareholders may engage in
other businesses, may render investment advisory services to other
investment companies, or to any other corporation, association, firm or
individual, and may render underwriting services to the Fund or to any
other investment company, corporation, association, firm or individual.
The Investment Manager agrees that it shall not use the Sub-Adviser's name
or otherwise refer to the Sub-Adviser in any materials distributed to
third parties, including the Series' shareholders, without the prior
written consent of the Sub-Adviser.
7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of its duties as Sub-Adviser to
the Fund, the Sub-Adviser shall not be subject to liability to the Fund,
to the Investment Manager or to any shareholder of the Fund for any action
or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding
or sale of any security, or otherwise.
8. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period
of two years and may be renewed thereafter only so long as such renewal
and continuance is specifically approved at least annually by the Board of
Directors or by the vote of a majority of the outstanding voting
securities of the Series and only if the terms and the renewal hereof have
been approved by the vote of a majority of the Directors of the Fund who
are not parties hereto or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated by the
Investment Manager or the Fund at any time, without the payment of a
penalty, on sixty days' written notice to the Sub-Adviser, of the
Investment Manager's or the Fund's intention to do so, in the case of the
Fund pursuant to action by the Board of Directors of the Fund or pursuant
to the vote of a majority of the outstanding voting securities of the
Series. The Sub-Adviser may terminate this Agreement at any time, without
the payment of a penalty on sixty days' written notice to the Investment
Manager and the Fund of its intention to do so. Upon termination of this
Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to
pay to the Sub-Adviser the fee provided in Paragraph 4 hereof, prorated to
the date of termination. This Agreement shall automatically terminate in
the event of its assignment. This Agreement shall automatically terminate
upon the termination of the Investment Management Agreement.
9. This Agreement shall extend to and bind the successors of the parties
hereto.
10. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested person"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
J-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to be
affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , .
[MANAGER NAME]
By:_____________________________________
Name:
Title:
Attest: _______________________________
[SUB-ADVISER NAME]
By:_____________________________________
Name:
Title:
Attest: _______________________________
Agreed to and accepted as of the day and year first above written:
[COMPANY NAME]
on behalf of the [SERIES NAME]
By:_____________________________________
Chairman
Attest: _______________________________
J-4
<PAGE>
EXHIBIT K
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of this
___ day of ______________, 1999 by and between [name of Delaware business
trust], a Delaware business trust ("Fund"), and [name of Minnesota
corporation], a Minnesota corporation ("Corporation") (the Fund and the
Corporation are hereinafter collectively referred to as the "parties").
In consideration of the mutual promises contained herein, and intending to
be legally bound, the parties hereto agree as follows:
1. Plan of Reorganization.
(a) Upon satisfaction of the conditions precedent described in Section 3
hereof, the Corporation will convey, transfer and deliver to the Fund at the
closing provided for in Section 2 (hereinafter referred to as the "Closing")
all of the Corporation's then-existing assets, the assets belonging to each
series of the Corporation, to be conveyed, transferred and delivered to the
corresponding series of the Fund. In consideration thereof, the Fund agrees at
the Closing (1) to assume and pay, to the extent that they exist on or after
the Effective Date of the Reorganization (as defined in Section 2 hereof), all
of the Corporation's obligations and liabilities, whether absolute, accrued,
contingent or otherwise, including all fees and expenses in connection with the
Agreement, which fees and expenses shall in turn include, without limitation,
costs of legal advice, accounting, printing, mailing, proxy solicitation and
transfer taxes, if any, the obligations and liabilities allocated to each
series of the Corporation to become the obligations and liabilities of the
corresponding series of the Fund, and (2) to deliver, in accordance with
paragraph (b) of this Section 1, full and fractional shares of beneficial
interest, of no par value, of each of the Fund's separate series and the
respective classes of those series, all as set forth in the Appendix attached
hereto (hereinafter, the series are individually and collectively referred to
as "Series of the Fund" and the classes are individually referred to as a
"Class of the Fund" and collectively as "Classes of the Fund"), equal in number
to the number of full and fractional shares of common stock, ______ par value,
of, respectively, each of the Corporation's separate series and the respective
classes of those series, all as set forth in the Appendix attached hereto
(hereinafter, the series are referred to individually and collectively as
"Series of the Corporation" and the classes are referred to individually as a
"Class of the Corporation" and collectively as "Classes of the Corporation")
outstanding immediately prior to the Effective Date of the Reorganization. The
transactions contemplated hereby are intended to qualify as a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended ("Code").
(b) In order to effect such delivery, the Fund will establish an open
account for each shareholder of each Series of the Corporation and, on the
Effective Date of the Reorganization, will credit to such account full and
fractional shares of such Series and Class of the Fund equal to the number of
full and fractional shares such shareholder holds in the corresponding Series
and Class of the Corporation at the close of regular trading on the New York
Stock Exchange on the business day immediately preceding the Effective Date of
the Reorganization; fractional shares of each Class of the Fund will be carried
to the third decimal place. On the Effective Date of the Reorganization, the
net asset value per share of beneficial interest of each Class of the Fund
shall be deemed to be the same as the net asset value per share of the
corresponding Class of the Corporation at the close of regular trading on the
New York Stock Exchange on the business day immediately preceding the Effective
Date of the Reorganization. On the Effective Date of the Reorganization, each
certificate representing shares of a Series and Class of the Corporation will
represent the same number of shares of the corresponding Series and Class of
the Fund. Each shareholder of the Corporation will have the right to exchange
his (her) share certificates for share certificates of the Fund. However, a
shareholder need not make this exchange of certificates unless he (she) so
desires. Simultaneously with the crediting of the shares of the Series and
Classes of the Fund to the shareholders of record of the Corporation, the
shares of the Series and Classes of the Corporation held by such shareholder
shall be cancelled.
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<PAGE>
(c) As soon as practicable after the Effective Date of the Reorganization,
the Corporation shall take all necessary steps under Minnesota law to effect a
complete dissolution of the Corporation.
2. Closing and Effective Date of the Reorganization.
The Closing shall consist of (i) the conveyance, transfer and delivery of
the Corporation's assets to the Fund, in exchange for the assumption and
payment by the Fund of the Corporation's liabilities; and (ii) the issuance and
delivery of the Fund's shares in accordance with Section 1(b), together with
related acts necessary to consummate such transactions. The Closing shall occur
either on (a) the business day immediately following the later of receipt of
all necessary regulatory approvals and the final adjournment of the meeting of
shareholders of the Corporation at which this Agreement will be considered or
(b) such later date as the parties may mutually agree ("Effective Date of the
Reorganization").
3. Conditions Precedent.
The obligations of the Corporation and the Fund to effectuate the
reorganization hereunder shall be subject to the satisfaction of each of the
following conditions:
(a) Such authority and orders from the Securities and Exchange
Commission ("Commission") as may be necessary to permit the parties to
carry out the transactions contemplated by this Agreement shall have been
received;
(b) (i) One or more post-effective amendments to the Corporation's
Registration Statement on Form N-1A ("Registration Statement") under the
Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended ("1940 Act"), containing such amendments to the
Registration Statement as are determined by the Trustees of the Fund to be
necessary and appropriate as a result of this Agreement shall have been
filed with the Commission; (ii) the Fund shall have adopted as its own
such Registration Statement, as so amended; (iii) the most recent
post-effective amendment to the Registration Statement filed with the
Commission relating to the Fund shall have become effective, and no
stop-order suspending the effectiveness of the Registration Statement
shall have been issued, and no proceeding for that purpose shall have been
initiated or threatened by the Commission (other than any such stop-order,
proceeding or threatened proceeding that shall have been withdrawn or
terminated); and (iv) an amendment of the Form N-8A Notification of
Registration filed pursuant to Section 8(a) of the 1940 Act ("Form N-8A")
reflecting the change in legal form of the Corporation to a Delaware
business trust shall have been filed with the Commission and the Fund
shall have expressly adopted such amended Form N-8A as its own for
purposes of the 1940 Act;
(c) Each party shall have received an opinion of Stradley, Ronon,
Stevens & Young, LLP, Philadelphia, Pennsylvania, to the effect that the
reorganization contemplated by this Agreement qualifies as a
"reorganization" under Section 368 of the Code, and thus will not give
rise to the recognition of income, gain or loss for federal income tax
purposes to the Corporation, the Fund, or the shareholders of the
Corporation or the Fund;
(d) The Corporation shall have received an opinion of Stradley, Ronon,
Stevens & Young, LLP, dated the Effective Date of the Reorganization,
addressed to and in form and substance satisfactory to the Corporation, to
the effect that (i) the Fund is duly formed as a business trust under the
laws of the State of Delaware; (ii) this Agreement and the reorganization
provided for herein and the execution and delivery of this Agreement have
been duly authorized and approved by all requisite action of the Fund and
this Agreement has been duly executed and delivered by the Fund and is a
legal, valid and binding agreement of the Fund in accordance with its
terms; and (iii) the shares of the Fund to be issued in the reorganization
have been duly authorized and, upon issuance thereof in accordance with
this Agreement, will have been validly issued and fully paid and will be
non-assessable by the Fund;
(e) The Fund shall have received the opinion of Stradley, Ronon, Stevens
& Young, LLP, dated the Effective Date of the Reorganization, addressed to
and in form and substance satisfactory to the Fund, to the effect that:
(i) the Corporation is a corporation, duly organized and validly existing
under the laws of
K-2
<PAGE>
the State of Minnesota; (ii) the Corporation is an open-end investment
company of the management type registered under the 1940 Act; and (iii)
this Agreement and the reorganization provided for herein and the execution
of this Agreement have been duly authorized and approved by all requisite
corporate action of the Corporation and this Agreement has been duly
executed and delivered by the Corporation and is a legal, valid and binding
agreement of the Corporation in accordance with its terms;
(f) The shares of each Series and Class of the Fund are eligible for
offering to the public in those states of the United States and
jurisdictions in which the shares of their corresponding Series and Class
of the Corporation are presently eligible for offering to the public so as
to permit the issuance and delivery of shares contemplated by this
Agreement to be consummated;
(g) This Agreement and the reorganization contemplated hereby shall have
been adopted and approved by the appropriate action of shareholders at an
annual or special meeting or any adjournment thereof;
(h) The shareholders of the Corporation shall have voted to direct the
Corporation to vote, and the Corporation shall have voted, as sole
shareholder of the Fund, to:
(i) Elect as Trustees of the Fund the following individuals: Jeffrey
J. Nick, Walter P. Babich, Ann R. Leven, Thomas F. Madison, Charles E.
Peck, Wayne A. Stork, and Jan R. Yeomans.
(ii) Select Ernst & Young LLP as the independent auditors for the
Fund for the fiscal year ending [month and day], 2000;
(iii) (A) With respect to each Series, if at the annual or special
meeting specified in paragraph (g) of this Section 3 (or any
adjournment thereof) the shareholders of a Series of the Corporation
(x) approve a proposal for a new investment management agreement ("New
Investment Management Agreement") between the current investment
advisor to the Series (the "Advisor") and the Corporation on behalf of
such Series, approve an investment management agreement between the
Advisor and the Fund on behalf of such Series that is substantially
identical to the New Investment Management Agreement, or (y) do not
approve a proposal for a New Investment Management Agreement between
the Advisor and the Corporation on behalf of such Series, approve an
investment management agreement between the Advisor and the Fund on
behalf of such Series that is substantially identical to the
then-current investment management agreement between the Advisor and
the Corporation on behalf of such Series;
(B) With respect to each Series that is subject to a sub-advisory
agreement, if any, if at the annual or special meeting specified in
paragraph (g) of this Section 3 (or any adjournment thereof) the
shareholders of such Series of the Corporation (x) approve a proposal
for a new sub-advisory agreement ("New Sub-Advisory Agreement") between
the Advisor and the current sub-advisor (the "Sub-Advisor") with respect
to the assets of such Series, approve a New Sub-Advisory Agreement
between the Advisor and the Sub-Advisor with respect to the assets of
such Series that is substantially identical to the New Sub-Advisory
Agreement, or (y) do not approve a proposal for a New Sub-Advisory
Agreement between the Advisor and the Sub-Advisor, approve a
sub-advisory agreement between the Advisor and the Sub-Advisor with
respect to the assets of such Series that is substantially identical to
the then-current sub-advisory agreement between the Advisor and the
Sub-Advisor with respect to the assets of such Series;
(i) The Trustees of the Fund shall have taken the following actions at
a meeting duly called for such purposes:
(i) Approval of the investment management agreements and the
sub-advisory agreements, if any, described in paragraph (h) of this
Section 3 hereof, for each Series of the Fund;
(ii) Approval of a distribution plan, if any, for each Class of each
Series of the Fund, as adopted pursuant to Rule 12b-1 under the 1940
Act, that is substantially identical to the then-current distribution
plan, if any, as adopted pursuant to Rule 12b-1 under the 1940 Act for
each Class of each corresponding Series of the Corporation;
K-3
<PAGE>
(iii) Approval of the assignment of the Corporation's Custodian
Agreement with Norwest Bank Minnesota, N.A. to the Fund;
(iv) Selection of Ernst & Young LLP as the Fund's independent auditors
for the fiscal year ending [month and day], 2000;
(v) Approval of the Fund's Shareholders Services Agreement with
Delaware Service Company, Inc.;
(vi) Approval of the Fund Accounting Agreement with Delaware Service
Company, Inc. that covers the funds comprising the Delaware Investments
Family of Funds;
(vii) Approval of the Distribution Agreement between the Fund and
Delaware Distributors, L.P. on behalf of the Series and Classes;
(viii) Authorization of the issuance by the Fund, prior to the
Effective Date of the Reorganization, of one share of each Series and
Class of the Fund to the Corporation in consideration for the payment of
$10.00 per share for the purpose of enabling the Corporation to vote on
the matters referred in paragraph (h) of this Section 3 hereof;
(ix) Submission of the matters referred to in paragraph (h) of this
Section 3 to the Corporation as sole shareholder of each Series of the
Fund; and
(x) Authorization of the issuance and delivery by the Fund of shares
of each Series and Class of the Fund on the Effective Date of the
Reorganization in exchange for the assets of the corresponding Series of
the Corporation pursuant to the terms and provisions of this Agreement.
At any time prior to the Closing, any of the foregoing conditions may be
waived by the Board of Directors of the Corporation if, in the judgment of such
Board, such waiver will not effect in a materially adverse way the benefits
intended to be accorded the shareholders of the Corporation under this
Agreement.
4. Termination.
The Board of Directors of the Corporation may terminate this Agreement and
abandon the reorganization contemplated hereby, notwithstanding approval
thereof by the shareholders of the Corporation, at any time prior to the
Effective Date of the Reorganization if, in the judgment of such Board, the
facts and circumstances make proceeding with this Agreement inadvisable.
5. Entire Agreement.
This Agreement embodies the entire agreement between the parties and there
are no agreements, understandings, restrictions or warranties among the parties
other than those set forth herein or herein provided for.
6. Further Assurances.
The Corporation and the Fund shall take such further action as may be
necessary or desirable and proper to consummate the transactions contemplated
hereby.
7. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument.
8. Governing Law.
This Agreement and the transactions contemplated hereby shall be governed
by and construed and enforced in accordance with the laws of the State of
Minnesota.
K-4
<PAGE>
IN WITNESS WHEREOF, the Fund and the Corporation have each caused this
Agreement and Plan of Reorganization to be executed on its behalf by its
Chairman, President or a Vice President and attested by its Secretary or an
Assistant Secretary, all as of the day and year first-above written.
[Name of Minnesota corporation]
(a Minnesota Corporation)
Attest:
By:_________________________________ By:__________________________________
George M. Chamberlain, Jr. Jeffrey J. Nick
Secretary President and Chief Executive
Officer
[Name of Delaware business trust]
(a Delaware business trust)
Attest:
By:_________________________________ By:__________________________________
Eric E. Miller Jeffrey J. Nick
Assistant Secretary President and Chief Executive Officer
K-5
<PAGE>
APPENDIX
<TABLE>
<CAPTION>
Series and Classes of [name of Minnesota corporation] Corresponding Series and Classes of [name of Delaware business trust]
- ------------------------------------------------------- ----------------------------------------------------------------------
<S> <C>
</TABLE>
K-6
<PAGE>
EXHIBIT L
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Governing Documents -- Created by a governing instrument -- A corporation's articles of
(which may consist of one or more incorporation must be filed with the
instruments, including an agreement and Minnesota Secretary of State in order to
declaration of trust and By-Laws) and a form a Minnesota corporation. The
Certificate of Trust, which must be Voyageur Insured Funds, Inc., Voyageur
filed with the Delaware Secretary of Intermediate Tax-Free Fund, Inc.,
State. The Delaware Business Trust Voyageur Mutual Funds, Inc., Voyageur
("DBT") statutes found at Del. Code. Mutual Funds II, Inc., Voyageur Tax-Free
Ann. title 12, section 3801, et seq. are Funds, Inc., Voyageur Mutual Funds III,
referred to in this chart as the Inc., Voyageur Funds, Inc., Voyageur
"Delaware Act." Arizona Municipal Income Fund, Inc.,
Voyageur Colorado Insured Municipal
-- A DBT is an unincorporated Income Fund, Inc., Voyageur Minnesota
association organized under the Delaware Municipal Income Fund, Inc ., Voyageur
Act which operates similar to a typical Minnesota Municipal Income Fund II, Inc.
corporation. A DBT's operations are and Voyageur Minnesota Municipal Income
governed by a trust instrument and Fund III, Inc. (the "Current Funds")
By-Laws. The business and affairs of a were created by the filing of Articles
DBT are managed by or under the of Incorporation with the state of
direction of a Board of Trustees. Minnesota.
-- A DBT is organized as an open-end -- Under Minnesota law, the business and
investment company subject to the affairs of a corporation are governed by
Investment Company Act of 1940, as its articles of incorporation and
amended (the "1940 Act"). Shareholders By-Laws (the "charter documents"). A
own shares of "beneficial interest" as Board of Directors manages and directs
compared to the shares of "common stock" the business and affairs of a Minnesota
issued by corporations. There is corporation.
however, no practical difference between
the two types of shares. -- A Minnesota corporation organized as
an open-end investment company is
-- As described in this chart, DBTs are subject to the 1940 Act.
granted a significant amount of
organizational and operational
flexibility. Delaware law makes it
easier to obtain needed shareholder
approvals, and also permits management
of a DBT to take various actions without
being required to make state filings or
obtain shareholder approval. The
Delaware Act also contains favorable
limitations on shareholder and Trustee
liability, and provides for
indemnification out of trust property
for any shareholder or Trustee that may
be held personally liable for the
obligations of a DBT.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-1
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Multiple Series and -- Under the Delaware Act, a declaration -- Minnesota law permits a corporation
Classes of trust may provide for classes, groups to issue one or more series or classes
or series of shares, or classes, groups of stock and, if the stock is divided
or series of shareholders, having such into more than one series or class, the
relative rights, powers and duties as charter is required to describe each
the declaration of trust may provide. series or class, including any
The series and classes of a DBT may be preferences, conversion or other rights,
described in the declaration of trust or voting powers, restrictions, limitations
in resolutions adopted by the board of as to dividends, qualifications and
trustees. Neither state filings nor terms or conditions of redemption.
shareholder approval is required to Minnesota law further provides that a
create series or classes. The New Funds' corporation's articles of incorporation
Agreement and Declaration of Trust (the may authorize the board of directors to
"Declaration of Trust") permits the establish more than one class or series
creation of multiple series and classes of shares. If a corporation's articles
and establishes the provisions relating include this authorization, as provided
to shares. for in the Current Funds' Articles, a
new series or class of shares may be
-- The Delaware Act explicitly provides established by a resolution approved by
for a reciprocal limitation of the affirmative vote of the directors. A
interseries liability. The debts, statement certifying adoption of the
liabilities, obligations and expenses resolution must be filed with the
incurred, contracted for or otherwise Minnesota Secretary of State.
existing with respect to a particular
series of a multiple series investment -- Minnesota law provides that a
company registered under the 1940 Act corporation may issue securities only
are enforceable only against the assets when authorized by the Board. In order
of such series, and not against the to increase the aggregate number of
assets of the trust, or any other shares of the stock that a Minnesota
series, generally, provided that: corporation is permitted to issue, an
amendment to the articles of
(i) the governing instrument incorporation is required, which would
creates one or more series; require shareholder approval. Unlike the
Declaration of Trust for the New Funds,
(ii) separate and distinct records which state that the Funds shall have an
are maintained for any such series; unlimited number of shares, Minnesota
law provides for a specific number of
(iii) the series' assets are held authorized shares, alth ough that number
and accounted for separately from the is large.
trust's other assets or any series
thereof; -- Minnesota law does not contain a
statutory provision addressing series
(iv) notice of the limitation on liability with respect to a multiple
liabilities of the series is set forth series investment company; however, if
in the certificate of trust; and the stock of a corporation is divided
into series or classes, Minnesota law
(v) the governing instrument so requires that the articles set forth any
provides. preferences or restrictions relating to
such series or classes. Therefore, a
The Declaration of Trust for the New shareholder of one series of shares of a
Funds provides that each of its series Minnesota corporation will not be liable
shall not be charged with the for the obligations of another series of
liabilities of any other series. shares of that corporation, provided
Further, it states that any general that the articles contain a provision
assets or liabilities not readily to that effect. As a result, the Current
identifiable as to a particular series Funds' Articles state that a shareholder
will be allocated or charged by the of one series will not be liable for the
Trustees of the New Funds to and among obligations of another series of shares.
any one or more series in such manner,
and on such basis, as the Trustees deem -- A court applying federal securities
fair and equitable in their sole law may not respect provisions that
discretion. As required by the Delaware serve to limit the liability of one
Act, the New Funds' Certificate of Trust series of an investment company's shares
specifically limits the debts, for the liabilities of another series.
liabilities, obligations and expenses Accordingly, provisions relating to
incurred, contracted for or otherwise series liability contained in the
existing with respect to a particular Articles may be preempted by the way in
series of the New Fund as enforceable which the courts interpret the 1940 Act.
against the assets of that series of the
New Fund, and not against the assets of
the New Fund generally.
-- A court applying federal securities
law may not respect provisions that
serve to limit the liability of one
series of an investment company's shares
for the liabilities of another series.
Accordingly, provisions relating to
series liability contained in the
Declaration of Trust may be preempted by
the way in which the courts interpret
the 1940 Act.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-2
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Shareholder Voting Rights -- The governing instrument determines -- The Minnesota law, unlike the
and Proxy Requirements shareholders' rights. The Declaration of Delaware Act, clearly states that,
Trust for the New Funds provides that unless the corporate documents provide
shareholders of record of each share are for a greater or lesser number of votes
entitled to one vote for each full per share, each share of stock is
share, and a fractional vote for each entitled to one vote on each matter
fractional share. In addition, submitted to a vote at a meeting of
shareholders are not entitled to shareholders. The Current Funds'
cumulative voting for electing a Articles provide that the holder of each
trustee(s) or for any other matter. The share of stock of a fund is entitled to
Declaration of Trust further provides one vote for each full share, and a
that voting by the New Funds will occur fractional vote for each fractional
separately by series, and if applicable, share of stock, irrespective of the
by class, subject to: (1) requirements series or class. In addition, shareholders
of the 1940 Act where shares of the are not entitled to cumulative
Trust must be voted in the aggregate voting for electing director(s) or for
without reference to series or class, any other matter. The Articles further
and (2) where the matter affects only a state that, on any matter submitted to a
particular series or class. vote of shareholders, all shares of the
corporation then issued and outstanding
-- The Delaware Act and By-Laws for the and entitled to vote, irrespective of
New Funds also permit the New Funds to series or class, shall be voted in the
accept proxies by any electronic, aggregate and not by series or class
telephonic, computerized, except when (1) otherwise expressly
telecommunications or other reasonable required by Minnesota law; (2) otherwise
alternative to the execution of a permitted by the 1940 Act or the rules
written instrument authorizing the proxy adopted thereunder; or (3) the matter
to act, provided such authorization is affects the interests of the particular
received within eleven (11) months series or class, in which case only
before the meeting. shareholders of the affected series or
class shall be entitled to vote.
-- Minnesota law requires class or
series voting in certain circumstances,
including certain amendments to articles
of incorporation and plans of merger or
exchange. In particular, Minnesota law
provides that the holders of the
outstanding shares of a class or series
are entitled to vote separately on an
amendment to the articles if the
amendment would have certain
consequences, even if the articles
negate voting rights for that series or
class. Minnesota law requires a separate
vote if the amendment would, among
other things, increase or decrease the
number of authorized shares of the
series or class, effect an exchange or
reclassification of the series or class,
create a new series or class (or
increase the authorized shares of an
existing series or class) with prior or
superior rights or preferences or change
the rights or preferences of the class
or series in any way.
-- Minnesota law also permits a
corporation to accept proxies. A
shareholder may cast or authorize the
casting of a vote by filing a written
appointment of a proxy with an officer
of the corporation at or before the
meeting at which the appointment is to
be effective. In addition, a shareholder
of a publicly held corporation may cast
or authorize the casting of a vote by a
proxy by transmitting to the corporation
an appointment of a proxy by means of a
telegram, cablegram, or any other form
of electronic transmission, including
telephonic transmission, whether or not
accompanied with written instructions of
the shareholder. The Current Funds'
By-Laws simply provide that the right to
vote by proxy shall exist. This right
exists only if the instrument
authorizing such proxy to act is
executed in writing by the shareholder
or the shareholder's attorney. Minnesota
law provides for the same flexibility as
the Delaware Act if the By-Laws are
amended.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-3
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Shareholders' Meetings -- Delaware law permits special -- Minnesota law does not require a
shareholder meetings to be called for corporation to hold annual shareholder
any purpose. However, the governing meetings. Minnesota law does permit
instrument determines beneficial owners' special shareholder meetings to be
rights to call meetings. The Declaration called for any purpose.
of Trust for the New Funds provides that
the Board of Trustees shall call -- Under Minnesota law, special
shareholder meetings for the purpose of shareholder meetings may be called for
(1) electing trustees, (2) matters any purpose by: (1) the chief executive
prescribed by law, the Declaration of officer; (2) the chief financial
Trust or By-Laws, or (3) for taking officer; (3) two or more directors; (4)
action upon any other matter deemed a person authorized in the articles or
necessary or desirable by the Board of by-laws; or (5) a shareholder or
Trustees. The By-Laws further provide shareholders holding ten (10%) percent
that a shareholder meeting may be called or more of the voting power of all
at any time by the Board of Trustees, by shares entitled to vote. In those cases
the Chairperson of the Board, or by the where a shareholder or shareholders seek
President or any Vice President or the to call a special meeting for the
Secretary and any two (2) Trustees. An purpose of considering any action
annual shareholders' meeting is not relating to a business combinat ion,
required by Delaware law, the such shareholder(s) must constitute
Declaration of Trust or By-Laws. twenty-five percent (25%) or more of the
voting power of all shares entitled to
vote. Consistent with Minnesota law, the
Current Funds' By-Laws permit either the
chairperson, the president, two
directors, or shareholders holding ten
percent (10%) or more of a corporation's
shares to call a special meeting.
- ------------------------------------------------------------------------------------------------------------------------------------
Quorum Requirement -- The Declaration of Trust of the New -- Under Minnesota law, a majority of
Funds, consistent with the Delaware Act, shareholders entitled to vote
establishes a quorum when thirty-three constitutes a quorum unless a larger or
and one-third percent (33 1/3%) of the smaller proportion or number is provided
shares entitled to vote are present in in the articles or by-laws. The Current
person or by proxy. For purposes of Funds' By-Laws require a majority of
determining whether a quorum exists, the shareholders present or by proxy at a
Declaration of Trust provides that meeting in order to transact business.(1)
included and treated as votes present at
the shareholders' meeting but are not
treated as votes cast.
- ------------------------------------------------------------------------------------------------------------------------------------
Action Without -- Delaware law permits the governing -- Under Minnesota law, any action
Shareholders' Meeting instrument to set forth the procedure required to be approved at a meeting of
whereby action required to be approved shareholders may also be approved by the
by shareholders at a meeting may be done unanimous written consent of
by consent. The Declaration of Trust for shareholders entitled to vote at such
the New Funds allows an action to be meeting. The Current Funds' By-Laws are
taken absent a shareholder meeting if consistent with Minnesota law.(2)
the shareholders having not less than
the minimum number of votes that would
be necessary to authorize or take that
action at a meeting at which all shares
entitled to vote on the matter were
present and voted, consent to be the
action in writing.
- ------
1 The By-Laws of Voyageur Mutual Funds, Inc., Voyageur Mutual Funds, II, Inc. and Voyageur Mutual Funds, III, Inc. require ten
percent (10%) of the shares outstanding and entitled to vote to constitute a quorum for the transaction of business at any
regular or special shareholder meeting.
2 Directors may also act without holding a meeting of the Board of Directors. Minnesota law permits directors to take action by
unanimous written consent signed by all directors. A lesser number may take written action, if the action does not require
shareholder approval and if the Articles so provide. In such a case, written action approved by the number of directors that
would be required to take the action at a meeting of the board with all directors present is sufficient. The Current Funds'
Articles are consistent with the provision of Minnesota law.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-4
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Matters Requiring -- The Delaware Act affords Trustees the -- Under Minnesota law, the greater of
Shareholder Approval ability to easily adapt a DBT to future (i) a majority of the voting power of
contingencies. For example, Trustees the shares present and entitled to vote
have the authority to incorporate a DBT, on a matter, or (ii) a majority of the
to merge or consolidate with another voting power of the minimum number of
entity, to cause multiple series of a shares entitled to vote that would
DBT to become separate trusts, to change constitute a quorum for the transaction
the domicile or to liquidate a DBT, all of business at the meeting is necessary
without having to obtain a shareholder to take shareholder action, except where
vote. More importantly, in cases where the articles or Minnesota law require a
funds are required or do elect to seek larger proportion. A merger of funds or
shareholder approval for transactions, a sale of all of the assets of a fund
the Delaware Act provides great would require the approval of a majority
flexibility with respect to the quorum of the fund's outstanding shares under
and voting requirements for approval of Minnesota law. The Current Funds'
such transactions. By-Laws require that all questions be
decided by a majority of those entitled
-- The Declaration of Trust for the New to vote and represented at a meeting,
Funds, consistent with the Delaware Act, except as otherwise provided by the 1940
affords shareholders the power to vote Act or other applicable law.
on the following matters:
(1) the election of trustees
(including the filling of any
vacancies);
(2) as required by the Declaration
of Trust, By-Laws, the 1940 Act or
registration statement; and
(3) other matters deemed by the
Board of Trustees to be necessary or
desirable.
-- The Declaration of Trust provides
that when a quorum is present, a
majority of votes cast shall decide any
issues, and a plurality shall elect a
Trustee(s), unless a different vote is
required by the Declaration of Trust,
By-Laws or under applicable law.
- ------------------------------------------------------------------------------------------------------------------------------------
Amendments to -- The Delaware Act provides broad -- Under Minnesota law, when a
Governing Documents flexibility with respect to amendments corporation has outstanding shares, the
of governing documents of a DBT. The New articles of incorporation may be amended
Funds' Declaration of Trust state that, by the board of directors adopting a
if shares have been issued, shareholder resolution to amend the articles and
approval to adopt amendments to the submitting the amendment to the
Declaration of Trust is only required if shareholders at either an annual or a
such adoption would adversely affect to special meeting. In order to approve an
a material degree the rights and amendment, Minnesota law requires the
preferences of the shares of any series affirmative vote of the greater of (i) a
(or class) already issued. Before majority of the voting power of the
adopting any amendment to the shares present and entitled to vote on
Declaration of Trust relating to shares the amendment, or (ii) a majority of the
without shareholder approval, the voting power of the minimum number of
Trustees are required to determine that shares entitled to vote that would
the amendment is: (i) consistent with constitute a quorum for the transaction
the fair and equitable treatment of all of business at the meeting. Because
shareholders, and (ii) shareholder shareholder approval is required for
approval is not required by the 1940 Act amendments to the articles of
or other applicable law. incorporation in all cases, Minnesota
law is more restrictive than the
-- The New Funds' By-Laws may be amended Delaware Act. The Current Funds'
or repealed by the affirmative vote or Articles do not provide further guidance
written consent of a majority of the in this regard.
outstanding shares entitled to vote.
Subject to the rights of the -- The Current Funds' By-Laws may be
shareholders, those By-Laws also may be amended or altered by a vote of the
adopted, amended or repealed by the majority of the Board of Directors at
Board of Trustees. any meeting. Such authority is subject
to the power of the shareholders to
change or repeal the By-Laws by a
majority vote. The Board is not
permitted to make or alter any By-Laws:
(1) fixing a quorum for meetings of
shareholders, (2) prescribing procedures
for removing directors or filling
vacancies on the Board of Directors, or
(3) fixing the number, classification,
qualifications, or terms of office. The
Board of Directors may adopt or amend
any By-Law to increase or decrease their
number.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-5
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Record Date/Notice -- The Delaware Act permits a governing -- Minnesota law, unlike the Delaware
instrument to contain provisions that Act, sets forth the procedure by which a
provide for the establishment of record corporation is to determine which
dates for determining voting rights. shareholders are entitled to notice of
and to vote at a meeting. Minnesota law
-- The Declaration of Trust for the New requires that the record date for
Funds provides that the Board of determining those shareholders entitled
Trustees may fix in advance a record to vote at a meeting must be no more
date which shall not be more than one than sixty (60) days prior to the
hundred eighty (180) days, nor less than meeting date. The articles or by-laws
seven (7) days, before the date of any may provide for a shorter period, but
such meeting. The Declaration of Trust may not permit the establishment of a
for the New Fund also establishes longer period of time. Consistent with
procedures by which a record date can be Minnesota law, the Current Funds'
set if the Board fails to establish a By-Laws authorize the Directors to set a
record date in accordance with the above date not more than sixty (60) days
procedures. In such situations, the before the meeting, as limited by
record date for determining which statute. If a date is not set by the
shareholders are en titled to notice of Directors, then the record date is
or to vote at any meeting, is set at the deemed to be thirty (30) days before the
close of business on the first business meeting.
day that precedes the day on which
notice is given or, if notice is waived, -- Unlike the Delaware Act, Minnesota
at the close of business on the business law contains specific notice
day which is five (5) days next requirements for shareholder meetings.
preceding the day on which the meeting Notice of each shareholder meeting to be
is held. The Declaration of Trust given to each shareholder entitled to
provides that the record date for vote at the meeting no more than sixty
determining shareholders entitled to (60) and not less than ten (10) days
give consent to action in writing before a meeting. A shorter notice
without a meeting is determined in the period may be established in the
following manner: (i) when the Board of articles or bylaws; however, the Current
Trustees has not taken prior action, Funds' charter documents do not provide
the record date will be set on the day additional guidance in this regard.(4)
on which the first written consent is
given; or (ii) when the Board of
Trustees has taken prior action, the
record date will be set at the close of
business on the day on which the Board
of Trustees adopt the resolution
relating to that action or the
seventy-fifth (75th) day before the date
of such other action, whichever is
later.
-- The By-Laws for the New Fund provides
that all notices of shareholder meetings
shall be sent or otherwise given to
shareholders not less than seven (7) or
more than ninety-three (93) days before
the date of the meeting.(3)
- ------
3 Pursuant to the By-Laws of the New Fund, regular meetings of the Board of Trustees may be held without notice. Special meetings
of the Board of Trustees require at least seven (7) days notice, if given by United States mail, and at least forty-eight (48)
hours notice, if notice is delivered personally, by telephone, by courier, to the telegraph company, or by express mail,
facsimile, electronic mail or similar service.
4 Under Minnesota law, notice of a board meeting shall be given to directors as provided in the articles or by-laws. The Current
Funds' By-Laws provide that directors shall have ten (10) days notice of meetings.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
L-6
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Removal of Directors/ -- The Delaware Act is silent with -- Under Minnesota law, shareholders of
Trustees respect to the removal of Trustees. a corporation may remove a director,
However, the Declaration of Trust states with or without cause. To remove a
that the Board of Trustees, by action of director, an affirmative vote of the
a majority of the then Trustees at a holders of the proportion or number of
duly constituted meeting, may fill the voting shares of the classes or
vacancies in the Board of Trustees or series sufficient to elect the director
remove Trustees with or without cause. that represents the class or series is
required. However, this requirement may
be modified by the articles, by-laws or
another agreement. The By-Laws provide
that the Board of Directors or an
individual Director may be removed from
office, with or without cause, by a vote
of the shareholders holding a majority
of the shares entitled to vote at an
election of Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder Rights of -- The Delaware Act sets forth the -- Minnesota law requires a shareholder
Inspection rights of shareholders to gain access to to make a written request to access
and receive copies of certain Trust corporate documents. The request must
documents and records. This right is state the purpose for the inquiry, and
qualified by the extent otherwise the shareholder must demonstrate that
provided in the governing instrument of the stated purpose is a proper purpose.
the Trust as well as a reasonable demand A proper purpose is defined as a purpose
standard related to the shareholder's reasonably related to the person's
interest as an owner of the DBT. interest as a shareholder. Upon making
such a request, the shareholder has the
-- Consistent with Delaware law, the right at any reasonable time to examine
By-Laws of the New Funds provide that at and copy the corporation's share
reasonable times during office hours, a register and other corporate records
shareholder may inspect the share reasonably related to the stated
registry and By-Laws. The By-Laws purpose and described with particularity
further permit at any reasonable time in the written demand. Minnesota law
during usual business hours for a also allows a corporation to seek a
purpose reasonably related to the protective order permitting the
shareholder's interests, that a corporation to withhold portions of the
shareholder inspect and copy accounting records of proceedings of the board for
books and records and minutes of a reasonable time. The Current Funds'
proceedings of the shareholders and the By-Laws and Minnesota law require the
Board of Trustees and any committee or Funds, upon the written demand of a
committees of the Board of Trustees. shareholder, to make available certain
corporate documents within ten (10) days
of the request, not including the share
register.
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Other -- The Delaware Act does not contain any -- Minnesota law permits a corporation's
Distributions statutory limitations on the payment of board of directors to make distributions
dividends and other distributions. to shareholders. The Current Funds'
Articles and By-Laws grant Directors
-- The New Funds' By-Laws specify that this right. Minnesota law, however,
the declaration of dividends is subject prohibits a distribution if, after the
to the Declaration of Trust and distribution is made, the corporation is
applicable law. In addition, the By-Laws unable to pay its debts as they become
provide that prior to payment of due in the ordinary course of business.
dividends, the New Funds may set aside a Moreover, a distribution to a class may
reserve(s) to meet contingencies, be made only if: (i) all of the holders
equalizing dividends, repairing or of shares having a preference for the
maintaining property or for other payment of that kind of distribution are
purposes deemed by the Trustees to be in paid, and (ii) the distribution does not
the best interest of the Fund. reduce the remaining net assets of the
corporation below the aggregate
preferential amount payable in the event
of liquidation to the holders of
preferential shares, unless the
distribution is made to those
shareholders in the order and to the
extent of their respective priorities,
or the holders who do not receive a
distribution in that order agree to
waive their rights. Finally, if the
distributions are insufficient to
satisfy all preferences, the distributions
to the class shall be made pro rata.
-- The Current Funds' Articles and
By-Laws provide that the Board of
Directors may, to the extent permitted
by Minnesota law, declare and pay
dividends or distributions. The amount
of such distributions is solely within
the discretion of the Board of
Directors.
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</TABLE>
L-7
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
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<S> <C> <C>
Shareholder/Beneficial -- Personal liability is limited by the -- As a general matter, the shareholders
Owner Liability Delaware Act to the amount of investment of a Minnesota corporation are not
in the trust and may be further limited liable for the obligations of the
or restricted by the governing corporation. The liability of a
instrument. shareholder is limited to the
consideration paid or required to be
-- Consistent with Delaware law, the paid for the stock. There is no
Declaration of Trust for the New Funds provision in the Current Funds' Articles
provides that the DBT, its trustees, or By-Laws varying this protection. A
officers, employees, and agents do not shareholder of a Minnesota corporation
have the power to personally bind a may, however, be liable for illegal
shareholder. Shareholders of the DBT are distributions. Under Minnesota law, a
entitled to the same limitation of shareholder who receives an illegal
personal liability extended to distribution is liable to the corporation
stockholders of a private corporation to the extent that the distribution
organized for profit under the general exceeds permissible amounts.
corporation law of the State of
Delaware.
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Director/Trustee -- Subject to the declaration of trust, -- Minnesota law requires the directors
Liability the Delaware Act provides that a of a corporation to perform their duties
trustee, when acting in such capacity, in good faith, in a manner that they
may not be held personally liable to any believe is in the best interest of the
person other than the DBT or a corporation, and with the care of
beneficial owner for any act, omission ordinarily prudent persons. To the
or obligation of the DBT or any trustee. extent that a director performs his or
A trustee's duties and liabilities to her duties as required, he or she will
the DBT and its beneficial owners may be not be held liable simply by reason of
expanded or restricted by the provisions having been a director of the
of the declaration of trust. corporation. A corporation may eliminate
or limit, in its articles, a director's
-- The Declaration of Trust for the New liability to the corporation or its
Funds provides that the Trustees shall shareholders for mo netary damages for
not be liable or responsible for any act breach of fiduciary duty. However, the
or omission of any officer, agent, articles may not eliminate or limit a
employee, manager or principal director's liability for acts which
underwriter of the New Funds, nor shall constitute a breach of the duty of
any Trustee be responsible for the act loyalty to the corporation and its
or omission of any other Trustee. shareholders, acts done in bad faith, or
Trustees and officers of the New Funds acts which involve intentional
may be held liable to the Funds and/or misconduct or improper benefits. The
shareholders solely for such Trustee's Current Funds' Articles limit the
or officer's own willful misfeasance, liability of Directors for money damages
bad faith, gross negligence or reckless for breach of fiduciary duty as a
disregard of the duties involved in the director to the fullest extent permitted
conduct of the office of such Trustee or by Minnesota law and consistent with the
officer, and may not be held liable for 1940 Act.
errors of judgment or mistakes of fact
or law. In addition, the Declaration of
Trust also provides that the Trustees
acting in their capacity as Trustees,
shall not be personally liable for acts
done by or on behalf of the New Fund.
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</TABLE>
L-8
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
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<S> <C> <C>
Indemnification -- The Delaware Act permits a DBT to -- Minnesota law provides a
indemnify and hold harmless any trustee, comprehensive statutory framework
beneficial owner or agent from and relating to the indemnification of
against any and all claims and demands. directors and officers. Under the
Consistent with the Delaware Act, the statute, the articles or by-laws may
Declaration of Trust for the New Funds limit the right to indemnification.
provides for the indemnification of Minnesota law requires that any such
officers and trustees from and against prohibitions or conditions apply equally
any and all claims and demands arising to all persons or all persons of a
out of or related to the performance of class. The Current Funds' charter
duties as an officer or Trustee. The New documents require indemnification of
Funds will not indemnify, hold harmless officers and directors to the fullest
or relieve from liability trustees or extent permitted by law and the 1940
office rs for those acts or omissions Act.
for which they are liable if such
conduct constitutes willful misfeasance, -- Minnesota law requires that officers
bad faith, gross negligence or reckless and directors be indemnified for actions
disregard of their duties. committed in their official capacities
(unless otherwise prohibited or limited
-- The Declaration of Trust also by the articles or by-laws). Minnesota
provides that any shareholder or former law does not permit indemnification of
shareholder that is exposed to liability directors or officers who commit certain
by reason of a claim or demand related acts. Indemnification will not be
to having been a shareholder, and not permitted if the act or omission of the
because of his or her acts or omissions, director or officer (i) was committed in
shall be entitled or beheld harmless and bad faith; (ii) resulted in an improper
indemnified out of the assets of the personal benefit to the individual; or
DBT. (iii) in the case of a criminal proce
eding was committed when the director or
officer had reasonable cause to believe
that the act or omission was unlawful.
In addition to those prohibited acts, a
director or officer may not be
indemnified if (i) he or she has already
been indemnified by another organization
or employee benefit plan for the same
conduct; or (ii) he or she did not
believe the conduct was in the best
interest of the corporation.
-- Under both the New Funds' By-Laws and
Minnesota law, the termination of a
proceeding by judgment, order,
settlement, or plea of nolo contendre
does not in and of itself establish that
a person did not meet the standard of
conduct required for indemnification.
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Insurance -- The Delaware Act does not contain a -- The Current Funds may choose to
provision specifically related to purchase insurance on behalf of any
insurance. The Trust's Declaration of director, officer or employee against
Trust provides that the Trustees shall any liability asserted against and
be entitled and have the authority to incurred by such person in any such
purchase with Trust assets insurance for capacity or arising out of such person's
liability and for all expenses position. Minnesota law also permits
reasonably incurred or paid or expected insurance coverage whether or not the
to be paid by a Trustee or officer in corporation would have been required to
connection with any claim, or proceeding indemnify such person against liability.
in which he or she becomes involved by The current Funds' charter documents do
virtue of his or her capacity (or former not contain provisions relating to
capacity) with the Trust. The Bylaws of insurance.
the New Funds permit such insurance
coverage to extend to employees and
other agents of the Trust.
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</TABLE>
L-9
<PAGE>
COMPARISON AND SIGNIFICANT DIFFERENCES
BETWEEN DELAWARE BUSINESS TRUSTS AND MINNESOTA CORPORATIONS
<TABLE>
<CAPTION>
Delaware Business Trust Minnesota Corporation
- --------------------------------------- --------------------------------------- -------------------------------------
<S> <C> <C>
Redemption at Option of -- The Delaware Act authorizes the -- The Minnesota Act contains no
Trust/Corporation repurchase and redemption of shares of a comparable provision. The statute does,
business trust. The Declaration of Trust however, make references to the power of
provides that, unless otherwise provided a corporation to redeem shares. The
in the prospectus of the trust relating Minnesota Act provides that a
to shares, as such prospectus may be corporation may issue shares of a class
amended from time to time, the Board of or series, subject to the right of the
Trustees may, from time to time, without corporation to redeem any of those
the vote or consent of the shareholders, shares at the price fixed for their
and subject to the 1940 Act, redeem redemption by the articles or by the
shares, or authorize the closing of any board or at a price determined in a
shareholder account, subject to such manner specified by the articles or the
conditions as may be established by the board. The Current Funds' By-Laws permit
Board of Trustees. the corporation to redeem a
shareholder's interest if, following a
redemption request by any shareholder of
the corporation, the value of the
shareholder's interest in the
corporation falls below the required
minimum investment. The redemption will
only be effective if: (1) a redemption
by a shareholder causes the minimum
investment to fall below the required
amount; and (2) the corporation waits
sixty (60) days before redeeming the
shares to enable the shareholder to make
an additional investment.
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</TABLE>
L-10
<PAGE>
DELAWARE
INVESTMENTS
===========
DELAWARE INVESTMENTS
1818 MARKET STREET
PHILADELPHIA, PA 19103
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The Undersigned
hereby appoints Jeffrey J. Nick and David K. Downes, or any of them, with the
right of substitution, proxies of the undersigned at the Joint Annual/Special
Meeting of Shareholders of the above Fund to be held at The Union League, 140
South Broad Street, Philadelphia, Pennsylvania, on March 17, 1999 at 10:00
A.M., or at any postponement or adjournments thereof, with all the powers
which the undersigned would possess, if personally present, and instructs them
to vote upon any matters which may properly be acted upon at this meeting and
specifically as indicated on the lower portion of this form. Please refer to
the proxy statement for a discussion of each of these matters.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
PLEASE DATE AND SIGN NAME OR NAMES BELOW AS PRINTED ABOVE TO AUTHORIZE THE
VOTING OF YOUR SHARES AS INDICATED ABOVE, WHERE SHARES ARE REGISTERED WITH JOINT
OWNERS, ALL OWNERS SHOULD SIGN. PERSONS SIGNING AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR OTHER REPRESENTATIVE SHOULD GIVE FULL TITLE AS SUCH.
<PAGE>
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: DELA11 KEEP THIS PORTION FOR YOUR RECORDS
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Vote On Directors
1. To elect the following nominees as Directors of the Company For Withhold For All To withhold authority to vote, mark
01) JEFFREY J. NICK 05) THOMAS F. MADISON All All Except "For All Except" and write the
02) WALTER P. BABICH 06) CHARLES E. PECK nominees's number on the line below.
03) ANTHONY D. KNERR 07) WAYNE A. STORK
04) ANN R. LEVEN 08) JAN R. YEOMANS / / / / / / _____________________________________
Vote on Proposals For Against Abstain For Against Abstain
2. To approve the redesignation of the 4F. To adopt a new fundamental
Fund's investment objective from / / / / / / investment restriction concerning / / / / / /
fundamental to non-fundamental lending by the Fund
4G. To redesignate all current
fundamental investment / / / / / /
4. To approve standardized fundamental restrictions as non-fundamental
investment restrictions for the
Fund (proposal involves separate 5. To approve a new investment
votes on sub-proposals 4A-4G) management agreement for the Fund / / / / / /
4A. To adopt a new fundamental 6. To approve a new sub-advisory
investment restriction concerning / / / / / / agreement for the Fund / / / / / /
concentration of the Fund's
investments in the same industry 7. To ratify the selection of Ernst &
Young LLP, as independent auditors / / / / / /
4B. To adopt a new fundamental for the Company
investment restriction concerning / / / / / /
borrowing money and issuing 8. To approve the restructuring of the
senior securities Company from a Minnesota corporation / / / / / /
into a Delaware business trust and the
4C. To adopt a new fundamental dissolution of the Minnesota corporation
investment restriction concerning / / / / / /
underwriting
4D. To adopt a new fundamental investment
restriction concerning investments / / / / / /
in real estate
4E. To adopt a new fundamental investment
restriction concerning investments / / / / / /
in commodities
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- ------------------------------------------ ------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
</TABLE>
