<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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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>
LOGO
January 28, 1998
Dear Shareholder:
A Joint Meeting of Shareholders of certain funds within the Delaware Investments
family of funds is being held in Philadelphia on March 17, 1999. This proxy
statement relates to funds that were previously part of the Voyageur fund
family. 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 that affect some
or all of the funds. In addition to the election of Board members and
ratification of the selection of auditors, the proposals include a change in the
designation of investment objectives from "fundamental" to non-fundamental, a
change in the fundamental policy concerning diversification of investments,
approval of new, standardized investment management agreements which contain fee
increases, fee decreases or potential fee decreases, and approval of new,
standardized sub-advisory agreements. Also, new standardized "fundamental"
investment restrictions are proposed for the funds and the current restrictions
are proposed to be made "non-fundamental." The proposed changes will allow the
Boards to modify the objectives and "non-fundamental" restrictions in the future
without the delay and expense of holding a shareholder meeting. Finally,
shareholders are being asked to approve management's proposal to reorganize the
funds into Delaware business trusts to take advantage of various advantages
under Delaware law.
We realize that this proxy statement will take time to review, but your vote is
very important. Please familiarize yourself with the proposals presented and
mark, sign and return your proxy card (or cards) in the enclosed postage-paid
envelope. You may also call toll-free to vote by telephone, or you may vote
using the Internet. The insert accompanying this proxy statement describes how
to vote using these methods.
If we do not receive your completed proxy card(s) after several weeks, you may
be contacted by our proxy solicitor, Shareholder Communications Corporation, who
will remind you to vote your shares and will review with you the various ways in
which you can register your vote.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
LOGO
Jeffrey J. Nick
Chairman and President
Chief Executive Officer
i
<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 allow the a Fund's Board of
Directors, without additional shareholder approval, to make future
adjustments to the investment objective to give greater flexibility to
respond to market, regulatory or industry changes. Approval of this change
would not alter any fund's current investment objective.
o Allowing certain state - specific tax-free funds to change their
diversification status from diversified to 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 help provide operational efficiencies and make it
easier to monitor compliance with these restrictions.
o Converting all existing investment restrictions to "non-fundamental" would
allow a Fund's Board of Directors to analyze and approve changes to the
fund's existing investment restrictions, without additional shareholder
approval, to further the goal of standardization of investment
restrictions.
o Approval of the proposed fee increases, fee decreases or fee breakpoints
for certain funds would ensure management fee levels that will enable those
funds to continue to receive high quality investment management services.
o Approval of new standardized investment management agreements for each fund
(and standardized sub-advisory agreements where applicable) would help
provide operational efficiencies.
o The reorganization of funds from Minnesota corporations into Delaware
business trusts would provide both consistency across the Delaware
Investments fund family and flexibility of fund operations.
Q: HOW DO THE BOARD MEMBERS FOR MY FUND RECOMMEND THAT I VOTE?
The Board members for all the funds recommend that you vote in favor of, or FOR,
all of the proposals described above.
Q: WHOM DO I CALL FOR MORE INFORMATION ON HOW TO PLACE MY VOTE?
Please call your fund at 1-800-523-1918 or call Shareholder Communications at
1-800-858-0073 for additional information on how to place your vote.
PLEASE VOTE
YOUR VOTE IS IMPORTANT
ii
<PAGE>
LOGO
1818 Market Street
Philadelphia, PA 19103
Combined Proxy Statement and
Notice of Joint Annual/Special Meeting of Shareholders
to be Held on March 17, 1999
<TABLE>
<CAPTION>
<S> <C>
To the Shareholders of:
Voyageur Funds, Inc. Voyageur Mutual Funds II, Inc.
Delaware-Voyageur US Government Securities Fund Delaware-Voyageur Tax-Free Colorado Fund
Voyageur Insured Funds, Inc. Voyageur Mutual Funds III, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Aggressive Growth Fund
Delaware-Voyageur Minnesota Insured Fund Growth Stock Fund
Voyageur Intermediate Tax Free Funds, Inc. Tax-Efficient Equity Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund Voyageur Tax Free Funds, Inc.
Voyageur Mutual Funds, Inc. Delaware-Voyageur Tax-Free Minnesota Fund
Delaware Voyageur Tax-Free Arizona Fund Delaware-Voyageur Tax-Free North Dakota Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Minnesota High Yield Municipal Bond
Fund
Delaware-Voyageur Tax-Free New York Fund
Delaware-Voyageur Tax-Free Wisconsin 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, 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.
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
<TABLE>
<CAPTION>
<S> <C>
Proposal Three only applies to the following Funds:
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>
Proposal Four: To Approve Standardized Fundamental Investment Restrictions for
the Fund (Includes Seven Sub-Proposals)
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4A: Industry Concentration 4E: Investing in Commodities
4B: Borrowing Money and Issuing Senior 4F: Making Loans
Securities 4G: Redesignation of all Current Fundamental
4C: Underwriting of Securities Investment Restrictions as Non-Fundamental
4D: Investing in Real Estate
</TABLE>
Proposal Four applies to all Funds.
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 only applies 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
Proposal Eight applies to all Companies.
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.
LOGO
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
NOTICE OF JOINT ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
Proposal One: To Elect a Board of Directors for the Company
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective from
Fundamental to Non-Fundamental
Proposal Three: To Approve a Change in the Fund's Fundamental Policy Concerning
Diversification of Investments
Proposal Four: To Approve Standardized Fundamental Investment Restrictions for the Fund
(Includes Seven Sub-Proposals)
4A: Investing in 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: Resdesignation of all Current Fundamental Investment Restrictions
as Non-Fundamental
Proposal Five: To Approve a New Investment Management Agreement for the Fund
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund
Proposal Seven: To Ratify the Selection of Ernst & Young LLP as Independent Auditors
for the Company
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
EXHIBITS
Exhibit A: Outstanding Shares as of Record Date A-1
Exhibit B: Shareholders Owning 5% or More of a Fund as of October 31, 1998 B-1
Exhibit C: 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 Tables 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 for Delaware Business Trusts L-1
and Minnesota Corporations
</TABLE>
<PAGE>
LOGO
1818 Market Street
Philadelphia, PA 19103
1-800-523-1918
PROXY STATEMENT
JOINT ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1999
Meeting Information. The Board of Directors of each open-end registered
investment company within the Delaware Investments family listed on the
accompanying Notice (each a "Company") is soliciting your proxy to be voted at
the Joint Annual/Special Meeting of Shareholders to be held on Wednesday, March
17, 1999 at 10:00 a.m. at the Union League, 140 South Broad Street,
Philadelphia, Pennsylvania or any adjournments of the meeting (hereafter, the
"Meeting").
Purpose of Meeting. The purpose of the Meeting is to consider a number of
Proposals and Sub-Proposals that either apply to particular Companies, or to
individual funds within the Companies (each a "Fund"). The Proposals and
Sub-Proposals, as well as the Companies or Funds to which they apply, are listed
in the accompanying Notice.
The Board of Directors urges you to complete, sign and return the Proxy Card (or
Cards) included with this Proxy Statement, or use one of the other voting
methods described in the insert accompanying this Proxy Statement, whether or
not you intend to be present at the Meeting. It is important that you return the
signed Proxy Card(s) or use one of the other voting methods described in the
insert accompanying this Proxy Statement, promptly to help assure a quorum for
the Meeting.
General Voting Information. The persons designated on the Proxy Card as proxies
will vote your shares as you instruct on each Proxy Card. If your signed Proxy
Card is returned without any voting instructions, your shares will be voted
"FOR" each of the nominees for election as Director and "FOR" each other
Proposal or Sub-Proposal concerning your Company or Fund. The persons designated
as proxies will also be authorized to vote in their discretion on any other
matters which may come before the Meeting. If you sign and return a Proxy Card,
you may still attend the Meeting to vote your shares in person. If your shares
are held of record by a broker-dealer and you wish to vote in person at the
Meeting, you should obtain a Legal Proxy from your broker of record and present
it at the Meeting. You may also revoke your proxy at any time before the
Meeting: (i) by notifying Delaware Investments in writing; (ii) by submitting a
later signed Proxy Card; or (iii) by voting your shares in person at the
Meeting.
Each shareholder may cast one vote for each full share and a partial vote for
each partial share of a Fund or Company that they own on the record date, which
is 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.
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 estimated cost of engaging SCC, which will be shared by DMC
and the Companies, is set forth below:
<TABLE>
<CAPTION>
Range
-----
<S> <C> <C>
Voyageur Funds, Inc..................................................................................$_____ to $_____
Voyageur Insured Funds, Inc..........................................................................$_____ to $_____
Voyageur Intermediate Tax Free Funds, Inc............................................................$_____ to $_____
Voyageur Mutual Funds, Inc...........................................................................$_____ to $_____
Voyageur Mutual Funds II, Inc........................................................................$_____ to $_____
Voyageur Mutual Funds III, Inc.......................................................................$_____ to $_____
Voyageur Tax Free Funds, Inc.........................................................................$_____ to $_____
</TABLE>
Votes Required to Approve each Proposal or Sub-Proposal. Three Proposals within
this Proxy Statement affect all shareholders of a Company as a whole, regardless
of whether or not the Company consists of a number of individual Funds. These
Proposals are the election of Directors, the ratification of the selection of
the independent auditors and the reorganization of the Company
<PAGE>
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 only affect particular Funds
and, therefore, only shareholders of those Funds are permitted to vote on those
Proposals or Sub-Proposals.
The amount of votes of a Company or Fund that are needed to approve the
different Proposals or Sub-Proposals varies. The voting requirements are
described within each Proposal or Sub-Proposal.
Abstentions and broker non-votes will be included for purposes of determining
whether a quorum is present at the Meeting. They will be treated as votes
present at the Meeting, but will not be treated as votes cast. They therefore
would have no effect on Proposals which require a plurality or majority of votes
cast for approval, but would have the same effect as a vote "AGAINST" on
Proposals requiring a majority of votes present or a majority of outstanding
voting securities for approval. (These different voting standards are explained
in the various Proposals.) DMC will reimburse banks, brokers or dealers for
their reasonable expenses in forwarding soliciting materials to shareholders.
Each Fund's most recent Annual Report and Semi-Annual Report to Shareholders
were previously mailed to shareholders. Copies of these reports are available
upon request, without charge, by writing or calling the Funds at the address and
telephone number shown on the top of the previous page of the Proxy Statement.
Proposal One: To Elect a Board of Directors 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. Yoemans. 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.
Jeffrey J. Nick* (45), Chairman, President, Chief Executive Officer and Director
and/or Trustee of each of the 34 investment companies in the Delaware
Investments family; President and Director of Delaware Management Holdings,
Inc., 1997 to present; President, Chief Executive Officer and Director of
Lincoln National Investment Companies, Inc., 1996 to present; Director of
Delaware International Advisers Ltd., 1998 to present; Director of Vantage
Global Advisors, Inc., 1996 to present; Director of Lynch & Mayer Inc.
(investment adviser), 1997 to present; Managing Director of Lincoln National UK
plc, 1992-1996; Senior Vice President of Lincoln National Corporation
responsible for corporate planning and development, 1989-1992.
Walter P. Babich (71), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Board Chairman of Citadel
Constructors, Inc. (commercial building construction), 1988 to present; Partner
of I&L Investors, 1988-1991; Partner of Irwin & Leighton Partnership (building
construction), 1986-1988.
Anthony D. Knerr (59), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Founder and Managing Director,
Anthony Knerr & Associates (strategic consulting company to major non-profit
institutions and organizations), 1991 to present; Founder and Chairman of the
Publishing Group, Inc. 1988-1990; Executive Vice President/Finance and Treasurer
of Columbia University, 1982-1988; Lecturer of English at Columbia University,
1987-1989.
Ann R. Leven (57), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Treasurer, National Gallery of
Art, 1994 to present; Director of four investment companies sponsored by Acquila
Management Corporation, 1985 to February, 1998; Deputy Treasurer of the National
Gallery of Art, 1990 to 1994; Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, 1984-1990; Adjunct Professor at Columbia Business
School, 1975-1992.
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<PAGE>
W. Thacher Longstreth(1) (77), Director and/or Trustee of each of the 34
investment companies in the Delaware Investments family; Philadelphia City
Councilman, 1984 to present; Consultant20 , Packard Press, 1988 to present;
Senior Partner, MLW Associates (business consulting), 1983 to present; Director,
Healthcare Services Group, 1983 to present; Director Emeritus, Tasty Baking
Company, 1991 to present; Director, MicroLeague Micromedia, Inc. (computer game
publisher), 1996 to present; Director, Tasty Baking Company, 1968-1991; Vice
Chairman, The Winchell Company (financial printing), 1983-1988.
Thomas F. Madison (62), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; President and Chief Executive
Officer of MLM Partners, Inc., 1993 to present; Chairman of the Board of
Communications Holdings, Inc., 1996 to present; Vice Chairman--Office of the CEO
of The Minnesota Mutual Life Insurance Company, February to September, 1994;
Director of Valmont Industries (irrigation systems and steel manufacturing),
1987 to present; Director of Eltrax Systems, Inc. (data communications
integration), 1993 to present; Director of Minnegasco, Span Link Communications
(software), 1995 to present; Director of ACI Telecentrics (outbound
telemarketing and telecommunications), 1997 to present; Director of Aon Risk
Services, 1996 to present; Director of Digital River, 1997 to present.
Charles E. Peck (72), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Retired; Secretary/Treasurer,
Enterprise Homes, Inc., 1992 to present; Chairman and Chief Executive Officer of
The Ryland Group, Inc., 1981 to 1990.
Wayne A. Stork* (61), Chairman and Director and/or Trustee of each of the 34
investment companies in the Delaware Investments family and Delaware Capital
Management, Inc.; Chairman, President, Chief Executive Officer and Director of
DMH Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman,
President, Chief Executive Officer, Chief Investment Officer and
Director/Trustee of Delaware Management Company, Inc. and Delaware Management
Business Trust; Chairman, President, Chief Executive Officer and Chief
Investment Officer of Delaware Management Company (a series of Delaware
Management Business Trust); Chairman, Chief Executive Officer and Chief
Investment Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Chairman, Chief Executive Officer and Director of
Delaware International Advisers Ltd., Delaware International Holdings Ltd. and
Delaware Management Holdings, Inc.; President and Chief Executive Officer of
Delvoy, Inc.; Chairman of Delaware Distributors, L.P.; Director of Delaware
Service Company, Inc. and Retirement Financial Services, Inc. During the past
five years, Mr. Stork has served in various executive capacities at different
times within the Delaware Investments organization.
Jan R. Yeomans (50), Vice President and Treasurer of the 3M Corporation, 1994 to
Present; Director of Benefit Funds and Financial Markets for the 3M Corporation,
1987-1994; Manager of Benefit Fund Investments for the 3M Corporation,
1985-1987; Manager of Pension Funds for the 3M Corporation, 1983-1985;
Consultant - Investment Technology Group of Chase Econometrics, 1982-1983;
Consultant for Data Resources, 1980-1982; Programmer for the Federal Reserve
Bank of Chicago, 1970-1974.
Board and Committee Meetings. During the twelve months ended October 31, 1998,
each Company held [(Delaware to advise:) _________] Board meetings.
Each Board of Directors has an Audit Committee for the purpose of meeting, at
least annually, with the Company's independent auditors and officers to oversee
the quality of financial reporting and the internal controls of the Company, and
for such purposes as the Board of Directors may from time to time direct. The
Audit Committee of each Company consists of the following four Directors
appointed by the Board, all of whom are considered to be independent because
they are not "interested persons" as defined in the Investment Company Act of
1940, as amended (the "1940 Act"): Ann R. Leven, Chairperson, Walter P. Babich,
Anthony D. Knerr and Thomas F. Madison. Members of the Audit Committee serve for
three years or until their successors have been appointed and qualified. The
Audit Committee held [(Delaware to advise:) ________] meetings for each Company
during the twelve months ended October 31, 1998.
Each Board of Directors also has a Nominating Committee, which meets for the
purpose of proposing nominees to serve as Directors. Nominees are considered by
the full Board of Directors for each Fund and, when appropriate, by shareholders
at annual or special shareholder meetings. The Nominating Committee of each
Company consists of the following three Directors appointed by the Boards, two
of whom are considered to be independent Directors: Wayne A. Stork, Anthony D.
Knerr and W. Thacher Longstreth. [(Delaware please confirm:) This Committee met
once during the past year for the purpose of determining the proposed list of
nominees for this Meeting.] The selection and nomination of the independent
Director nominees is committed to the discretion of the present independent
Directors. Each Nominating Committee will consider suggestions for the
- -------------
(1) W. Thacher Longstreth is a current member of the Board of Directors for
each Company. Mr. Longstreth is retiring from each Company's Board and,
therefore, is not a nominee.
*This nominee is considered to be an "interested person" of each Company, as
that term is defined in the Investment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
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<PAGE>
Board of Directors nominations from shareholders. Shareholders who wish to
suggest candidates for nomination to the Board of Directors for a Company at any
future annual meeting should identify the candidate and furnish a written
statement of the person's qualifications to the Nominating Committee at the
principal executive offices of the Companies.
Board Compensation. Each independent Director receives compensation from each
Company of which he/she is a member of the Board of Directors. The interested
Directors are compensated by the investment manager and do not receive
compensation from the Companies. Each independent Director currently receives a
total annual retainer fee of $38,500 for serving as a Director for all 34
Companies within the Delaware Investments family, plus $3,145 for each set of
Board meetings attended (generally, seven sets of 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 during its last fiscal year. 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 $ $ $ $ $ $ None
Voyageur Insured Funds, Inc. None $ $ $ $ $ $ None
Voyageur Intermediate Tax Free
Funds, Inc. None $ $ $ $ $ $ None
Voyageur Mutual Funds, Inc. None $ $ $ $ $ $ None
Voyageur Mutual Funds II, Inc. None $ $ $ $ $ $ None
Voyageur Mutual Funds III, Inc. None $ $ $ $ $ None
Voyageur Tax Free Funds, Inc. None $ $ $ $ $ $ None
Total Compensation From All $ None
Companies in the Delaware
Investments Family for the 12 months
ended December 31, 1998 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, Wayne A. Stork, David K. Downes, Richard G. Unruh, Paul E. Suckow, Michael
P. Bishof, George M. Chamberlain, Jr., Joseph H. Hastings, Patrick P. Coyne,
Mitchell L. Conery, Paul A. Matlack, Gary A. Reed, Babak Zenouzi, Gerald T.
Nichols, Christopher S. Beck, George H. Burwell, Robert L. Arnold, Gerald S.
Frey, Roger A. Early, John B. Fields, Paul Grillo, Cynthia L. Isom, Frank X.
Morris, James F. Stanley and Paul Dokas. Exhibit C includes biographical
information and the past business experience of such officers, except for Mr.
Nick and Mr. Stork, 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.
Management's Ownership of the 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 plurality of
votes cast by shareholders of a Company, regardless of the votes of individual
Funds within the Company. This means that the nominees receiving the largest
number of votes will be elected to fill the available Board positions.
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<PAGE>
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 changes, even those not resulting in significant changes in the
way a fund is managed or to 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, 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 intends to request that the
Directors consider a number of modifications to the language used to define
certain 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 reclassification of any Fund's
investment objective from fundamental to non-fundamental is not approved by
shareholders of a particular Fund, that Fund's investment objective will remain
fundamental and shareholder approval (and its attendant costs and delays) will
continue to be required prior to any change in investment objective.
At meetings of the Directors held in July and September, 1998, the Directors
considered the enhanced management flexibility to respond to market, industry or
regulatory changes that would accrue to the Board of Directors if each relevant
Fund's fundamental investment objective were redesignated as non-fundamental and
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.
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 Tax-Free 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
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<PAGE>
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.
Management of the Funds listed above has recommended to the Directors that those
Funds change their diversification policies from diversified to non-diversified.
This change requires shareholder approval under the 1940 Act. In approving the
proposed change and concluding that it would recommend such a change 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 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.
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,
in their discretion, are permitted to deem other restrictions fundamental, and
they may also adopt "non-fundamental" restrictions, which can be changed by the
board of directors without shareholder approval. Of course, any change in a
fund's investment restrictions, whether fundamental or not, would be approved by
the board of directors 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
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<PAGE>
addition, a number of Funds adopted fundamental restrictions in response to
state laws and regulations that no longer apply because they were preempted by
the National Securities Markets Improvement Act of 1996. As a result, a number
of fundamental restrictions are no longer required to be fundamental, and some
previously required restrictions are no longer required at all.
The Directors, together with Fund management and the investment managers and
sub-advisers, have analyzed the current fundamental investment restrictions of
each Fund, and have concluded that six new standardized fundamental investment
restrictions should be adopted for each Fund. The proposed investment
restrictions relate only to activities that are required under the 1940 Act to
be the subject of fundamental policies and restrictions. Management believes
that a modern, standardized list of restrictions will enhance the ability of the
Funds to achieve their objectives because the Funds will have greater investment
management flexibility to respond to changes in market, industry or regulatory
conditions. In addition, standardized restrictions are expected to enable the
Funds to operate more efficiently and to more easily monitor compliance with
investment restrictions.
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 re-classified as
non-fundamental, at the same time that the six new standardized fundamental
investment restrictions are adopted for each Fund. If the current fundamental
restrictions are made non-fundamental, the Directors would be able to modify or
eliminate the current restrictions without the costs or delays associated with a
shareholder vote.
The proposed changes will not affect any Fund's investment objective and will
not change the way any Fund is currently being managed or operated, since all
current investment restrictions will remain in place as non-fundamental
restrictions. If, as proposed, the current fundamental investment restrictions
are reclassified as non-fundamental, management intends in the future to
recommend that the Board of Directors approve certain modifications designed to
result in a more modern and standardized list of investment restrictions for the
various Delaware Investments Funds. The recommendations by management will
likely involve the modification or elimination of current restrictions. The
Board of Directors will determine separately for each Fund whether elimination
or modification of a common investment restriction is appropriate for that Fund.
The six new proposed fundamental investment restrictions are described below
within the relevant Sub-Proposals. In addition, Exhibit E contains a list of the
current fundamental investment restrictions for each Fund which are proposed to
be reclassified as non-fundamental. Unless all of the Sub-Proposals are approved
by shareholders of a particular Fund, none of the Sub-Proposals will be adopted
for that Fund.
Required Vote. Approval of each Sub-Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
The Directors have voted to adopt each of the proposed standardized fundamental
investment restrictions for the Funds, as well as to approve the
reclassification of the existing fundamental investment restrictions as
non-fundamental, and unanimously recommend that you vote FOR each Sub-Proposal
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 approve the standardized
fundamental investment restriction set forth below for each Fund. 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
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<PAGE>
concentration restriction
for the Funds and is intended to provide flexibility for Funds to respond to
changes in the SEC staff's position on concentration of investments or to other
relevant legal, regulatory or market developments without the delay or expense
of a shareholder vote.
Adoption of the proposed fundamental restriction will not materially affect the
way the Funds are currently managed or operated because the existing
concentration restrictions will remain in place as non-fundamental policies
unless and until a Fund's Board of Directors modifies 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 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 the following new standardized
fundamental restriction that covers both borrowing and senior securities and
which is designed to reflect all current regulatory requirements.
Senior Securities. SEC staff interpretations under the 1940 Act allow open-end
funds 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 may also borrow from banks, provided that
if such bank borrowings exceed 5%, the fund must have assets totaling at least
300% of the borrowing when the amount of the borrowing is added to the fund's
other assets. The effect of this latter provision is to allow an open-end fund
to borrow from banks amounts up
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<PAGE>
to one-third (33 1/3%) of its total assets (including the amount borrowed).
Open-end funds typically borrow money to meet redemptions to avoid being forced
to sell portfolio securities before they would have otherwise been sold. This
technique allows open-end funds greater flexibility to buy and sell portfolio
securities for investment or tax considerations, rather than for cash flow
considerations.
The borrowing restrictions for Funds limit borrowings to 20%, 10% or 5% of
assets, rather than the 33 1/3% allowed by law. Further, a number of older Funds
only permit borrowing "as a temporary measure for extraordinary purposes" and
most provide that the Fund may not borrow for leveraging purposes or purchase
securities while borrowings are outstanding.
Effects of the Proposed Investment Restrictions. Since the proposed investment
restriction would provide greater flexibility for such Funds to engage in
borrowing and to engage in Leveraging-Type Transactions, the Funds may be
subject to additional costs and risks. For example, the costs of borrowing can
reduce a Fund's total return. Further, upon engaging in Leveraging-Type
Transactions, such Funds could experience increased risks due to the effects of
leveraging. The SEC staff's collateralization requirements are designed to
address such risks.
Board Recommendation. The Board of Directors recommends that shareholders
approve the proposed fundamental investment restriction for each Fund. The
proposed investment restriction will establish a standardized borrowing and
senior securities restriction which is written to provide flexibility for Funds
to respond to changes in legal, regulatory or market developments. Adoption of
the new restriction, however, will not affect the way such Funds are currently
managed or operated because the existing restrictions will remain as
non-fundamental policies unless and until 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 funds
specifically permits such re-sales. Management, consistent with SEC staff
interpretations, believes that the Funds legally would not be regulated as
underwriters in these circumstances.
<PAGE>
The Board of Directors recommends that the shareholders of each Fund approve the
standardized fundamental investment restriction regarding underwriting set forth
below. The proposed restriction is substantially similar to the current
restriction for most Funds. The new restriction is proposed for each Fund
because it will help to achieve the goal of standardization of the language of
the investment restrictions among all Funds. Adoption of the proposed
restriction will not affect the way the Funds are currently managed or operated.
Proposed Underwriting Restriction: The Fund may not underwrite the
securities of other issuers, except that the Fund may engage in transactions
involving the acquisition, disposition or resale of its portfolio
securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933.
Sub-Proposal 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' restrictions allow the Funds
to invest in companies that deal in real estate, or to invest in securities that
are secured by real estate. Under the 1940 Act, a fund's policy or restrictions
regarding investment in real estate must be fundamental.
The Board of Directors recommends that shareholders of each Fund approve the
fundamental investment restriction concerning real estate set forth below. The
proposed investment restriction is designed to standardize the language of the
real estate restriction among the various Funds. The proposed investment
restriction will permit Funds to purchase securities whose payments of interest
or principal are secured by mortgages or other rights to real estate in the
event of default. The investment restriction will also enable the Funds to
invest in companies within the real estate industry, provided such investments
are consistent with the Fund's investment objectives and policies. Adoption of
the proposed restriction will not affect the way the
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<PAGE>
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 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 approve the
fundamental investment restriction concerning commodities set forth below for
each Fund. The proposed restriction would standardize the language of the
restriction among the various Funds and provide appropriate flexibility for the
Funds to invest in financial futures contracts and related options. As proposed,
the restriction is broad enough to permit investment in financial futures
instruments for either investment or hedging purposes, and, thus is broader than
many Funds' current restrictions. Using financial futures instruments can
involve substantial risks, and will be utilized only if the investment manager
determines that such investments are advisable and such practices are later
affirmatively authorized by the Board 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 approve the standardized
fundamental investment restriction concerning lending described below for each
Fund. The proposed restriction prohibits loans by the Funds except in the
circumstances described above and, in some cases, would provide more flexibility
than the current lending restriction because of the authority to engage in
securities lending. Although securities lending involves certain risks if the
borrower fails to return the securities, management believes that increased
flexibility to engage in securities lending does not materially increase the
risk to which the Funds are currently subject. Also, the adoption of the
restriction will not affect the way the Funds are currently managed or operated,
because the existing lending restrictions will remain in place as
non-fundamental policies unless and until 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.
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<PAGE>
Each Fund currently is subject to its own list of fundamental investment
restrictions, which are set forth in Exhibit E. Certain 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 reclassified as non-fundamental. After the
current investment restrictions are made non-fundamental, Fund management and
the Directors will analyze and evaluate each Fund's investment restrictions on
an individual basis while considering the particular investment objective and
policies of the Fund. Over time, the Funds' investment restrictions can be
standardized, if appropriate. With the exception of a Fund's classification as a
diversified fund for purposes of the 1940 Act, the proposed 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.
The conversion of investment restrictions to non-fundamental will provide
management of the Funds with the flexibility to respond to industry changes and
also to take advantage of unique pricing and distribution structures that have
developed over the past ten years. For example, eliminating certain fundamental
restrictions and converting them to non-fundamental would permit the Funds to
operate in a "master-feeder" structure at some point in the future should
management determine that such a structure were appropriate.
In a "master-feeder" structure, investors purchase shares of one or more feeder
funds which, in turn, invest all of their assets in corresponding master funds
which have identical investment objectives, policies and restrictions as the
feeder funds. The assets are collectively managed at the master fund level and
the different feeder funds can have varying distribution and expense structures.
The principal advantage of the master-feeder structure is the consolidation of
investment management of multiple identical investment pools into one investment
pool. The structure is also sufficiently flexible to permit offshore feeder
funds' assets to be managed at the master fund level.
By making the investment restrictions non-fundamental, management will have the
flexibility to ensure that the investment restrictions of a Fund will not limit
the Fund's ability to operate in a master-feeder structure. Before any existing
Fund would convert to a master-feeder structure, shareholders would be notified
of such a change and the prospectus of the particular Fund would be amended to
disclose the ability to operate in a master-feeder structure.
Proposal 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.
o Potential management fee decrease due to the addition of breakpoints which
would result in lower fees as Fund assets grow.
o Elimination of a provision concerning shareholder approval of amendments.
To determine which proposed changes apply to your Fund, please check the table
at the end of this Proposal.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the fund, which means the
vote: (i) more than 50% of the outstanding voting securities of the fund; or
(ii) 67% or more of the voting
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<PAGE>
securities of the Fund present at a meeting, if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, whichever
is less.
If shareholders approve the new Agreements, any modified management fees will
take effect on [(Delaware to advise:) ____________], or at a later date if the
Meeting is postponed or adjourned. If a new Agreement is not approved for a
particular Fund, the current Agreement will continue in effect. The Board of
Directors for each Fund has unanimously approved the proposed Agreements and
recommends that you vote FOR the new Investment Management Agreement for your
Fund.
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 are used by its investment manager to pay for the personnel,
equipment, office space and facilities that are needed to manage the assets of
the Fund and to administer its affairs.
Reasons for Proposed Changes in Management Fees. At the request of the Boards,
management recently undertook a complete review of the level and structure of
the management fees for each Fund within the Delaware Investments family. The
extensive review process was performed with the guidance of an outside
consultant to help ensure the accuracy of the results and conclusions. The
process involved the comparison of each Fund with its own universe of
"competing" funds, which were identified based on investment objective, asset
type and distribution channel. Once competing funds were identified, management
compared fee rates at various asset sizes to evaluate both fee rates and
breakpoint structures. Management's goal was to establish a consistent fee
structure for the various Delaware Investments Funds that would be competitive
with funds with a similar investment objective and size in the current
marketplace.
Management believes that a competitive management fee structure is needed to
ensure that Delaware Investments will continue to be able to deliver Funds with
competitive expense ratios and provide the increased investment opportunities
and service options that are now available to shareholders. Also, in recent
years, management has noticed increased competition for talented investment and
service professionals along with growing expenses in order to recruit and retain
such personnel. By establishing fee levels at competitive market rates,
management believes it can continue to attract talented professionals and
support high-quality, long-term investment management and shareholder services
to help maintain solid investment performance.
Description of Proposed Changes in Management Fees. As a result of its analysis,
Fund management has identified a number of different management fee pricing
levels to be established for the Funds in the Delaware Investments family, each
reflecting the dynamics and complexity of managing the assets of particular
categories of Funds based on asset type (such as equity or fixed-income),
sub-divisions within asset type (such as "insured" or "non-insured" fixed-income
securities) and geography (such as domestic or international). In addition, Fund
management identified a standardized schedule of breakpoints for Funds at each
of the management fee level categories, so that management fees will be reduced
if a Fund's assets grow to certain levels, in order to allow the Funds to
benefit from economies of scale. The meetings described in this Proxy Statement
are part of a series of shareholder meetings to be held at which the
standardized management fee pricing levels and schedules of breakpoints will be
put into place for many of the Delaware Investments Funds.
The chart included in Exhibit 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 and the effect that such waivers would have
had on the amounts paid under the proposed Agreement. In addition, in order to
demonstrate the effect that the proposed management fee changes are expected to
have on the overall expenses of the Funds, Exhibit G contains a Fee Table for
each Fund for which a management fee increase is proposed, showing the actual
expense levels under the current management fees and the projected expense
levels following implementation of the proposed management fees.
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
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and considered performance and ranking data for each Fund along with other
comparative funds within the investment objective category, as well as a
performance comparison to a relevant securities index for each Fund. In addition
to the expense and performance information, the Directors reviewed the
investment manager's historical profitability with respect to each Fund and the
anticipated effects of any management fee changes.
The Directors also considered the reasons presented by management with respect
to each proposed management fee change, including the anticipated impact of
management fee increases or decreases on shareholders of the Funds. In support
of fee increases for particular Funds, the Directors considered various factors
including the enhanced service options and investment opportunities that are
made available to shareholders, the growing expense associated with recruiting
and retaining qualified investment and service professionals in an increasingly
competitive industry and the importance of supporting quality, long-term service
by investment managers to help achieve solid investment performance.
Following consideration of all of the information and factors discussed above,
the Directors for each Fund, including all of the independent Directors,
unanimously approved the proposed management fee changes.
Other Proposed Changes to Investment Management Agreements
In addition to modifications to the management fee structure, certain other
changes to the Investment Management Agreements are proposed, one or more of
which may apply to a particular Fund. The proposed changes are designed to
eliminate provisions that appear in certain older Funds' Agreements and to
standardize the form of Agreement among all Funds within the Delaware
Investments family. Please refer to the table below to determine whether the
changes are proposed for your Fund's Agreement.
Shareholder Approval of Amendments to Investment Management Agreements. Under
the 1940 Act, shareholder approval is normally required before any fund
investment management agreement can be materially amended. The purpose of this
requirement is to allow shareholders to make decisions concerning provisions of
an investment management agreement that could affect their investment.
Funds are, however, permitted to amend such agreements without shareholder
approval if the change involves a decrease in management fee rates or a
potential decrease due to the introduction or restructuring of breakpoints. In
such cases, the SEC staff believes that mutual funds should not be required to
experience the delay and costs of seeking shareholder approval, since
shareholders are generally assumed to be in favor of management fee decreases.
Each Fund's current Investment Management Agreements 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. DMC understands that the Delaware Balanced Fund may have a claim to the
use of the name "Delaware." Without reaching any conclusion as to such claim,
each Agreement will recognize the ability of multiple Funds to use the words
described above in their names.
Summary of Changes to Investment Management Agreements
The following table lists all of the Funds for which new Investment Management
Agreements are proposed, as well as the types of changes that are proposed for
each Agreement.
<TABLE>
<CAPTION>
Elimination of Shareholder
Company/Fund Name Management Fee Change Approval for Amendments
----------------- --------------------- -----------------------
<S> <C> <C>
Voyageur Funds, Inc.
Delaware Voyageur US Government Securities Fund 0.05% increase/add breakpoints X
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Potential decrease due to addition of breakpoints X
</TABLE>
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<TABLE>
<CAPTION>
Elimination of Shareholder
Company/Fund Name Management Fee Change Approval for Amendments
----------------- --------------------- -----------------------
<S> <C> <C>
Delaware-Voyageur Tax-Free Minnesota Insured Fund Potential decrease due to addition of breakpoints X
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Minnesota Intermediate Fund 0.10% increase/add breakpoints X
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free California Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free Idaho Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free Iowa Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Minnesota High Yield Municipal 0.10% decrease/add breakpoints X
Bond Fund
National High-Yield Municipal Bond Fund 0.10% decrease/add breakpoints X
Delaware-Voyageur Tax-Free New York Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free Wisconsin Fund 0.05% increase/add breakpoints X
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund 0.05% increase/add breakpoints X
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund 0.25% decrease/add breakpoints X
Growth Stock Fund 0.35% decrease/add breakpoints X
Tax-Efficient Equity Fund Potential decrease due to change in breakpoints X
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free North Dakota Fund 0.05% increase/add breakpoints X
</TABLE>
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 $17.3 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 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 such other funds, together with the current (and proposed, in some
cases) management or sub-advisory fee rates for such funds, 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: Wayne A. Stork, Chairman, President, Chief Executive Officer and
Chief Investment Officer; Richard G. Unruh, Jr., Executive Vice President; David
K. Downes, Executive Vice President, Chief Operating Officer and Chief Financial
Officer; and George M. Chamberlain, Jr., Senior Vice President and Secretary;
and John B. Fields, Vice President/Senior Portfolio Manager.
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
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Directors, or (ii) a vote of a majority of the outstanding voting securities of
the Fund, and (iii) in either case, separately by a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act). Each current and
proposed Agreement may be terminated without penalty by (i) the Fund, by a vote
of a majority of the Board of Directors, or (ii) by a vote of a majority of the
outstanding voting securities of a Fund, or (iii) by DMC or DIAL, as relevant,
at any time on 60 days' written notice. Each Agreement will also terminate
automatically upon its "assignment," as that term is defined in the 1940 Act.
Under each of the current and proposed Agreements, best efforts are used to
obtain the best available price and most favorable execution for portfolio
transactions. Orders may be placed with brokers or dealers who provide brokerage
and research services to the investment manager or their advisory clients. To
the extent consistent with the requirements of the rules of the SEC and the
National Association of Securities Dealers, Inc., these orders may be placed
with brokers who sell shares of the Funds. The services provided may include
advice, either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or industries;
providing information on economic factors and trends; assisting in determining
portfolio strategy; providing computer software and hardware used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. Such services are used by the investment manager in connection with
their investment decision-making process with respect to one or more Funds or
accounts that they manage, and need not be used exclusively with respect to the
Fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In some
instances, services provided constitute in some part brokerage and research
services used in connection with the investment decision-making process and
constitute in some part services used in connection with administrative or other
functions not related to the investment decision-making process. In such cases,
the investment manager will make a good faith allocation of brokerage and
research services and will pay out of their own resources for services used by
them in connection with administrative or other functions not related to the
investment decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the investment manager or sub-adviser shall
not be liable to the Fund or any shareholder of the Fund for any action or
omission in the course of, or in connection with, rendering services under a
current or proposed Agreement, or for any losses that may be sustained in the
purchase, holding or sale of any security or otherwise.
Other Agreements with the Funds
Each Company is currently party to a Distribution Agreement relating to the
Funds with Delaware Distributors, L.P. (the "Distributor"), an affiliate of DMC.
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 any payments made to the
Distributor pursuant to Rule 12b-1 Plans and to DSC pursuant to service
agreements, for each Fund's most recently completed fiscal year.
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund
This Proposal only applies to the following Funds:
<TABLE>
<CAPTION>
<S> <C>
Voyageur Funds, Inc. Voyageur Mutual Funds III, Inc.
Delaware-Voyageur US Government Securities Fund Growth Stock Fund
</TABLE>
Shareholders of the two Funds listed above are being asked to approve a new
Sub-Advisory Agreement with their Fund's existing sub-adviser. Exhibit F to this
Proxy Statement lists the current sub-adviser for each Fund, along with the
sub-advisory fee rates and other information about the current sub-advisory
agreements. New Agreements are required at this time because the existing
Agreements will terminate if new Investment Management Agreements are approved
as described in Proposal 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 utilize sub-advisers.
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<PAGE>
One new provision requires the sub-adviser for the two Funds listed above to
share in any fee waiver or expense limitation arrangement entered into by the
investment manager for those Funds. This provision does not affect the amounts
to be paid by the Fund, but the sub-adviser may receive less, depending on
management fee waivers or expense limitations.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
The proposed Sub-Advisory Agreement for these Funds will not take effect until
shareholders approve a new Investment Management Agreement for each Fund.
[(Delaware to confirm:)] If a proposed Sub-Advisory Agreement is not approved
for a Fund, the investment manager will take responsibility for all aspects of
investment management until such time as a new sub-advisory arrangement is
approved by the Board of Directors and by shareholders.
The Board of Directors for each Fund has unanimously approved the proposed
Sub-Advisory Agreements and recommends that you vote FOR the new Sub-Advisory
Agreement for your Fund.
Information About the Sub-Adviser
Voyageur Asset Management LLC ("VAM") is the sub-adviser for the
Delaware-Voyageur US Government Securities Fund of Voyageur Funds, Inc. and the
Growth Stock Fund of Voyageur Mutual Funds III, Inc. VAM is registered as an
investment adviser under the Advisers Act and has been providing advisory
services to the US Government Securities Fund since [_______________] and to the
Growth Stock Fund since [____________________]. VAM is located at 90 South
Seventh Street, Suite 4400, Minneapolis, MN 55402.
On [November 30, 1998], VAM was managing approximately [$___________] in assets
for _________________[SRSY is in the process of compiling more complete
information from VAM].
VAM is a [provide Parent info]. [Name and principal occupation of the principal
executive officer and each director of the firm to be described here; along with
information about any firm officers or directors who serve as officers or
directors of the Fund - SRSY is in the process of compiling this information
from VAM.]
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.
Under each of the current and proposed sub-advisory agreements, best efforts are
used to obtain the best available price and most favorable execution for
portfolio transactions. Orders may be placed with brokers or dealers who provide
brokerage and research services to the investment manager, sub-adviser or their
advisory clients. To the extent consistent with the requirements of the rules of
the SEC and the National Association of Securities Dealers, Inc., these orders
may be placed with brokers who sell shares of the Funds. The services provided
may include advice, either directly or through publications or writings, as to
the value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software and hardware used in
security analyses; and providing portfolio performance evaluation and technical
market analyses. Such services are used by the investment manager or sub-adviser
in connection with their investment decision-making process with respect to one
or more Funds or accounts that they manage, and need not be used exclusively
with respect to the Fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In
-16-
<PAGE>
some instances, services provided constitute in some part brokerage and research
services used in connection with the investment decision-making process and
constitute in some part services used in connection with administrative or other
functions not related to the investment decision-making process. In such cases,
the sub-adviser will make a good faith allocation of brokerage and research
services and will pay out of their own resources for services used by them in
connection with administrative or other functions not related to the investment
decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the sub-adviser shall not be liable to the
Fund or any shareholder of the Fund for any action or omission in the course of,
or in connection with, rendering services under a current or proposed Agreement,
or for any losses that may be sustained in the purchase, holding or sale of any
security or otherwise.
Proposal 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.
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 you ratify
the selection of Ernst & Young LLP as independent auditors for such Company for
the current fiscal year.
-17-
<PAGE>
Proposal Eight: To Approve the Reorganization 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 (the "Current Boards") 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 (a "Reorganization") pursuant to which each
Company will change its state and form of organization from a Minnesota
corporation into a Delaware business trust. Each Company may be referred to in
this Proposal as a "Current Fund" or the "Current Funds" and each Series of a
Company is referred to in this Proposal as the "Current Series."
For each Current Fund, the Reorganization involves the continuation of the
Current Fund in the form of a newly created Delaware business trust. The newly
created Delaware business trusts are referred to in this Proposal as the "New
Funds." Separate classes and series of shares of each Delaware business trust
that correspond to the classes and series of each Current Fund will carry on the
business of the Current Fund. The series of shares of the New Funds that
correspond to the Current Series are referred to in this Proposal as the "New
Series." Each New Fund and New Series will have substantially the same name as
its corresponding Current Fund and Current Series.
Under the Reorganization, the investment objectives of each New Series will be
the same as those of its corresponding Current Series; the portfolio securities
of each Current Series will be transferred to its corresponding New Series; and
shareholders will own interests in each New Fund that are equivalent to their
interests in the Current Fund on the closing date of the Reorganization. The
directors, and the officers and employees of each Current Fund on the effective
date of the Reorganization will become the trustees, officers and employees,
respectively, of the corresponding New Fund and will operate the New Fund in the
same manner as they previously operated the Current Fund. The investment manager
responsible for the investment management of each New Series will be the same as
the investment manager to the Current Series. For those Current Series with
sub-advisory arrangements, the sub-adviser for each New Series will be the same
as the sub-adviser to the Current Series. In essence, a shareholder's investment
in a Current Fund will not change for all practical purposes. The investment
manager of each Current Series is referred to as the "Current Adviser" and, for
those Current Series with sub-advisory arrangements, the sub-adviser to each
Current Series is referred to as the "Current Sub-Adviser."
Background and Reasons for the Reorganizations. The Current Boards unanimously
recommend conversion of the Current Funds into Delaware business trusts because
they have determined that the Delaware business trust form of organization is an
inherently flexible form of organization and provides certain administrative
advantages to the Companies. Delaware trust law contains provisions specifically
designed for mutual funds. Those provisions take into account the unique
structure and operation of mutual funds, and allow mutual funds to simplify
their operations by reducing administrative burdens so that, in general, they
may operate more efficiently. For example, mutual funds organized as Delaware
business trusts are not required to hold annual shareholders' meetings and may
create new series or classes of shares without obtaining the approval of
shareholders at a meeting.
Under Delaware business trust law, the New Funds will have the flexibility to
respond to future business contingencies. For example, a New Fund will have the
power to consolidate with another entity, to cause each New Series to become a
separate trust and to change the New Fund's domicile all without a shareholder
vote, unless such vote is required under the1940 Act or other applicable law.
This flexibility could help to assure that the New Fund operates under the most
advanced form of organization and could help reduce the expense and frequency of
future shareholders' meetings for non-investment related issues.
The Reorganizations also will increase uniformity among the mutual funds within
the Delaware Investments family. Increased uniformity among the mutual funds,
many of which share common directors, trustees, officers and service providers,
is expected to reduce the costs and resources devoted to compliance with varying
state corporate or trust laws and also reduce administrative burdens.
Another advantage that is afforded to a mutual fund organized as a Delaware
business trust is that there is a well established body of corporate precedent
that may be relevant in deciding issues pertaining to the trust.
For these reasons, the Current Boards believe it is in the interests of the
shareholders of the Current Funds to reorganize the Current Funds into Delaware
business trusts. At present, it appears that the most advantageous time to
consummate the Reorganizations is on or before ________________, 1999. This
date, however, may be modified by the Current Fund and the New Fund. The Current
Boards reserve the right to abandon the Reorganizations if they determine that
such action is in the best interests of the Current Funds.
<PAGE>
The following discussion applies to the Reorganization of each Current Fund,
except where otherwise specifically noted.
Consequences and Procedures of the Reorganization. Upon consummation of the
Reorganization, the New Fund will continue the Current Fund's business with the
same investment objectives, policies and restrictions that are in effect for the
Current Series at the time of the consummation of the Reorganization (see the
discussion under "Investment Policies and Restrictions" below). The net asset
value of the shares of each class of each Current Series will not be affected by
the Reorganization. The New Fund has been organized specifically for the purpose
of effecting the Reorganization. Immediately prior to the effective date of the
Reorganization (as defined in the Plan), each New Fund will have outstanding
only one share of each class of beneficial interest of each New Series
corresponding to the shares of each class of each Current Series. The Current
Fund will be the sole holder of the shares of beneficial interest. The Plan
contemplates that the directors serving at the time of the Reorganization will
serve as the trustees of the New Fund, with comparable responsibilities. The
officers of the Current Fund will become officers of the New Fund with
comparable responsibilities. The Reorganization will not result in the
recognition of income, gain or loss for Federal income tax purposes to the
Current Fund, the New Fund or the holders of shares of the Current Fund. (See
"Certain Tax Consequences of the Plan.")
To accomplish the Reorganization, the Plan provides that the Current Fund will
transfer all of the assets of the Current Series, subject to its related
liabilities, to the corresponding New Fund and to each of its corresponding New
Series. The New Fund will establish an account for each shareholder and will
credit to that account the exact number of full and fractional shares of the
class of the New Series that such shareholder previously held in the same class
of the corresponding Current Series on the effective date of the Reorganization.
Each shareholder will retain the right to any declared but undistributed
dividends or other distributions payable on the shares of the Current Series
that he or she owned. On the date of the Reorganization, the net asset value per
share of each class of shares of each Current Series will be the same as the net
asset value per share of the corresponding class of shares of the New Series.
The New Fund will assume all liabilities and obligations of its corresponding
Current Fund. As soon as practicable after the effective date of the
Reorganization, the Current Fund will be dissolved and its existence terminated.
On the effective date of the Reorganization, each certificate representing
shares of a class of a Current Series will represent an identical number of
shares of the same class of the corresponding New Series. Shareholders will have
the right to exchange their certificates of the Current Fund for certificates of
the New Fund. A shareholder, however, is not required to make this exchange of
certificates.
The Plan provides that the effective date of the Reorganization will be (i) the
next business day after the later of the receipt of all necessary regulatory
approvals and the final adjournment of the meeting of shareholders of the
Current Fund at which the Plan will be considered, or (ii) such later date as
the Current Fund and the New Fund may mutually agree. It is expected that this
will be on ________________, 1999, or such earlier time as the Current Board
deems advisable and in the best interests of the Current Fund and its
shareholders. The Plan may be terminated and the Reorganization abandoned at any
time prior to the effective date of the Reorganization by the Current Board. If
the Reorganization is not so approved or if the Current Board determines to
terminate or abandon the Reorganization, the Current Fund will continue to
operate as a Minnesota corporation.
Capitalization and Structure. Each New Fund was established pursuant to a
substantially identical Agreement and Declaration of Trust ("Trust Document")
under the laws of the State of Delaware. Each New Fund is organized as a series
company. The Trust Document permits the Trustees to issue an unlimited number of
shares of beneficial interest, with no par value. The Board of Trustees of the
New Fund has the power to divide such shares into an unlimited number of series
or classes of beneficial interest without shareholder approval. Each of the
other New Funds has designated the same number of series and classes as its
corresponding Current Fund. Each share of a New Series represents an equal
proportionate interest in the assets and liabilities belonging to that series
(or class) as declared by the Board of Trustees.
Shares of the respective classes of the New Series have substantially the same
dividend, redemption, voting, exchange and liquidation rights, and terms of
conversion as the shares of the corresponding Current Series. Please see Exhibit
L, "Comparison And Significant Differences For Delaware Business Trusts And
Minnesota Corporations." Shares of the respective classes of the Current Series
and the corresponding New Series are fully paid, non-assessable, and freely
transferable and have no preemptive or subscription rights.
<PAGE>
Prior to the Reorganization, the New Fund will have nominal assets and no
liabilities. The sole shareholder of the New Fund will be the corresponding
Current Fund. Each New Series will have the same investment objectives and
policies as its corresponding Current Series at the time of the Reorganization.
(See the discussion under "Investment Policies and Restrictions" below.) The
Current Adviser will provide investment management services to the New Series as
it does to the Current Series. For the Current Series that have sub-advisory
arrangements, the Current Sub-Adviser will provide sub-advisory services to the
corresponding New Series as it does to the Current Series. The New Fund will
have the same fiscal year as the Current Fund.
Subsequent to the closing of the Reorganization, shares of the respective
classes of the Current Series will be exchanged for an identical number of
shares of the same class of the corresponding New Series. Thereafter, shares of
each class of the New Series will be available for issuance at their net asset
value applicable at the time of sale. The New Fund will adopt the Current Fund's
existing registration statement under the Securities Act of 1933 and the 1940
Act.
Effects of Shareholder Approval of the Reorganization. An investment company
registered under the 1940 Act is required to: (1) submit the selection of the
company's independent auditors to all shareholders for their ratification; (2)
call a special meeting to elect directors (trustees) within 60 days if, at any
time, less than one half of the directors (trustees) holding office have been
elected by all shareholders; and (3) submit any proposed investment management
agreement and sub-advisory agreement relating to a particular series of the
investment company to the shareholders of that series for approval.
The Current Board believes that it is in the best interest of the shareholders
of the Current Fund (who will become the shareholders of the corresponding New
Fund if the Reorganization is approved) to avoid the considerable expense of
another shareholders' meeting to obtain the shareholder approvals described
above shortly after the closing of the Reorganization. The Current Board also
believes that it is not in the best interest of the shareholders to carry out
the Reorganization if the surviving New Fund would not have a Board of Trustees,
independent auditors, and investment management agreements or sub-advisory
agreements complying with the 1940 Act.
The Current Board will, therefore, consider approval of the Reorganization by
the requisite vote of the shareholders of the Current Fund to constitute the
approval of the Plan contained in Exhibit K, and also to constitute, for the
purposes of the 1940 Act: (1) ratification of the independent auditors for each
Current Fund at the time of the Reorganization as the New Fund's independent
auditors (please see Proposal Seven); (2) election of the Directors of the
Current Fund who are in office at the time of the Reorganization as the trustees
of the New Fund after the closing of the Reorganization (please see Proposal
One); (3) approval by the shareholders of each Current Series of the investment
management agreement between the New Fund on behalf of the New Series and the
Current Adviser, which will be substantially identical to the agreement that is
in place between the Current Fund and the Current Adviser for the corresponding
Current Series on the effective date of the Reorganization (please see Proposal
Five); and (4) for those Current Series subject to a sub-advisory agreement,
approval by the shareholders of the Current Series of the sub-advisory agreement
between the Current Adviser and the Current Sub-Adviser, which will be
substantially identical to the agreement that is in place between the Current
Adviser and the Current Sub-Adviser on the effective date of the Reorganization
(please see Proposal Six).
The New Fund will issue a single share of each class of each New Series to the
Current Fund, and, assuming approval of the Reorganization by shareholders of
the Current Fund, the officers of the Current Fund, prior to the Reorganization,
will cause the Current Fund, as the sole shareholder of the New Fund, to vote
such shares "FOR" the matters specified in the above paragraph. The Current Fund
will then consider the requirements of the 1940 Act referred to above to have
been satisfied.
The mailing address and telephone number of the principal executive offices of
both the Current Fund and the New Fund are 1818 Market Street, Philadelphia, PA
19103, and 1-800-523-1918, respectively.
Investment Policies and Restrictions. If the investment policies and
restrictions for the Current Series as proposed and set forth in Proposals Two,
Three and Four are approved by the shareholders, the investment policies and
restrictions of the corresponding New Series will be the policies and
restrictions of the Current Series as amended by the provisions set forth in
such Proposals. For each Current Series for which the investment policies and
restrictions set forth in Proposals Two, Three and Four are not approved, the
investment policies and restrictions of the corresponding New Series after the
Reorganization will be the investment policies and restrictions of that Current
Series immediately prior to the Reorganization.
Investment Management Agreements. If the proposed new investment management
agreement relating to the Current Series, and as proposed and described in
Proposal Five (a "New Agreement"), is approved by the shareholders of the
Current Series, the terms of the investment management agreement for the
corresponding New Series will be substantially identical to the New Agreement
for the Current Series. For each Current Series for which the New Agreement
described in Proposal Five is not approved, if any, the investment management
agreement for the corresponding New Series will be substantially identical to
the existing investment management agreement currently in place for that Current
Series.
<PAGE>
Sub-Advisory Agreements. For the Current Series with sub-advisory arrangements,
if the proposed new sub-advisory agreement relating to the Current Series, as
proposed and described in Proposal Six (a "New Sub-Advisory Agreement"), is
approved by the shareholders of the Current Series, the terms of the
sub-advisory agreement for the corresponding New Series will be substantially
identical to the New Sub-Advisory Agreement for the Current Series. For each
Current Series for which the New Sub-Advisory Agreement described in Proposal
Six is not approved, if any, the sub-advisory agreement for the corresponding
New Series will be substantially identical to the existing sub-advisory
agreement currently in place for that Current Series.
Certain Tax Consequences of the Plan. It is anticipated that the transactions
contemplated by the Plan will be tax-free for federal income tax purposes.
Consummation of the Reorganization is subject to receipt of a legal opinion from
the law firm of Stradley, Ronon, Stevens & Young, LLP, counsel to the Current
Fund and the New Fund, that, under the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), the exchange of assets of the Current Fund for
the shares of the corresponding New Fund, the transfer of such shares to the
holders of shares of the Current Fund, and the liquidation and dissolution of
the Current Fund pursuant to the Plan will not give rise to the recognition of a
gain or loss for federal income tax purposes to the Current Fund, the New Fund,
or shareholders of the Current Fund or the New Fund. A shareholder's adjusted
basis for tax purposes in the shares of the New Fund after the exchange and
transfer will be the same as his adjusted basis for tax purposes in the shares
of the corresponding Current Fund immediately before the exchange.
As a business trust, the New Fund (or, in certain circumstances, its
shareholders who are Pennsylvania residents) would be subject to the
Pennsylvania county personal property tax. However, at present, Pennsylvania
counties generally have stopped assessing personal property taxes. This is due,
in part, to ongoing litigation challenging the validity of the tax. However, if
the personal property tax were reinstituted, or any similar state or local tax
were imposed, the New Fund'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.
Distribution Plans and Shareholder Servicing Arrangements. The New Fund will
enter into agreements with DSC for transfer agency, dividend disbursing and
shareholder servicing and fund accounting services that are substantially
identical to the agreements currently in effect for each corresponding Current
Fund for such services. Delaware Distributors, L.P. ("DDLP") will serve as the
national distributor for the shares of the New Series under a separate
distribution agreement between DDLP and the New Fund that is substantially
identical to the distribution agreement currently in effect for the Current
Series.
The Current Fund has adopted distribution plans under Rule 12b-1 of the 1940 Act
(each a "Distribution Plan") relating to certain classes of shares of the
Current Series. For each class of shares of the Current Series that is subject
to a Distribution Plan, the corresponding New Fund also has adopted a
distribution plan that is substantially identical to the Distribution Plan
currently in place for the same class of shares of the corresponding Current
Series.
Requests for Redemption of the Current Fund. Any request to redeem shares of the
Current Fund that is received and processed prior to the Reorganization will be
treated as a redemption of shares of the Current Fund. Any request to redeem
shares of the Current Fund received or processed after the Reorganization will
be treated as a request for the redemption of shares of the corresponding New
Fund.
Expenses of the Reorganization. Because the Reorganization will benefit solely
the Current Fund and its shareholders, the Current Board has authorized that the
expenses incurred by the Current Fund in the Reorganization or arising out of
the Reorganization shall be paid by the Current Fund, whether or not the
Reorganization is approved by the shareholders.
Comparison of Legal Structures. A comparison of the Delaware Business Trust Act
with the Minnesota Business Corporation Act, including a comparison of relevant
provisions of the governing documents of the Current Funds and the New Funds, is
included in Exhibit L, which is entitled "Comparison And Significant Differences
For Delaware Business Trusts And Minnesota Corporations."
Required Vote. The Plans and the transactions contemplated thereby, including
the liquidation and dissolution of the Current Funds, requires the approval of
the shareholders as set forth below: [To be inserted.]
The Current Board unanimously recommends that you vote FOR the Reorganization.
<PAGE>
EXHIBIT A
OUTSTANDING SHARES AS OF RECORD DATE (January 18, 1999)
<TABLE>
<CAPTION>
Shares Outstanding Shares Owned by Fund Directors
on and Executive Officers as a Group
Company/Fund Record Date* as of October 31, 1998
------------ ------------ ----------------------
<S> <C> <C>
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund
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, Inc.
Delaware-Voyageur Tax-Free Arizona Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund
National High-Yield Municipal Bond Fund
Delaware-Voyageur Tax-Free New York Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free North Dakota Fund
</TABLE>
* The Shares outstanding on the record date included 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
<TABLE>
<CAPTION>
Number of Percent of Percent of
Company/Fund Name and Address Shares Fund Company
------------ ---------------- ------ ---- -------
<S> <C> <C> <C> <C>
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund
Voyageur Insured Funds, Inc
Delaware-Voyageur Tax-Free Arizona Insured Fund
Delaware-Voyageur Tax-Free Colorado Insured Fund
Delaware-Voyageur Minnesota Insured Fund
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Minnesota High Yield Municipal Bond
Fund
National High-Yield Municipal Bond Fund
Delaware-Voyageur Tax-Free New York Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free North Dakota Fund
</TABLE>
B-1
<PAGE>
EXHIBIT C
EXECUTIVE OFFICERS OF THE COMPANIES
David K. Downes (58) Executive Vice President, Chief Operating Officer, Chief
Financial Officer of each of the 34 investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc, Founders CBO Corporation,
Delaware Capital Management, Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware Distributors, L.P.; Executive
Vice President, Chief Operating Officer, Chief Financial Officer and Trustee of
Delaware Management Business Trust; Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware Management Company,
Inc., DMH Corp., Delaware Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.; President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.; President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware International Holdings Ltd.;
Chairman and Director of Delaware Management Trust Company; Chairman, Chief
Executive Officer and Director of Retirement Financial Services, Inc. During the
past five years, Mr. Downes has served in various executive capacities at
different times in the Delaware Investments organization.
Richard G. Unruh (59) Executive Vice President of each of the 34 investment
companies in the Delaware Investments family, Delaware Management Holdings,
Inc., Delaware Management Company (a series of Delaware Management Business
Trust) and Delaware Capital Management, Inc.; President of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Executive Vice
President and Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust; Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive capacities
at different times within the Delaware Investments organization.
Paul E. Suckow (51) Executive Vice President/Chief Investment Officer, Fixed
Income of each of the 34 investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Management Business Trust,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc.; Executive Vice President and Director of
Founders Holdings, Inc.; Executive Vice President of Delaware Capital
Management, Inc.; Director of Founders CBO Corporation; Director of HYPPCO
Finance Company Ltd. During the past five years, Mr. Suckow has served in
various executive capacities at different times within the Delaware Investments
organization.
Michael P. Bishof (36) Senior Vice President/Treasurer of each of the 34
investment companies in the Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust) and Delaware Service Company,
Inc.; Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series of
Delaware Management Business Trust); Senior Vice President and Manager of
Investment Accounting of Delaware International Holdings Ltd.; Senior Vice
President and Assistant Treasurer of Founders CBO Corporation. Before joining
Delaware Investments in 1995, Mr. Bishof was a Vice President for Bankers Trust,
New York, NY, from 1994 to 1995, a Vice President for CS First Boston Investment
Management, New York, NY, from 1993 to 1994, and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY, from 1987 to 1993.
George M. Chamberlain, Jr. (51) Senior Vice President, Secretary and General
Counsel of each of the 34 investment companies in the Delaware Investments
family; Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc.; Senior Vice President, Secretary and
Director/Trustee of DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Retirement Financial Services Inc., Delaware Capital Management, Inc., Delvoy,
Inc. and Delaware Management Business Trust; Executive Vice President, Secretary
and Director of Delaware Management Trust Company.
Joseph H. Hastings (48) Senior Vice President/Corporate Controller of each of
the 34 investment companies in the Delaware Investments family and Founders
Holdings, Inc.; Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Management Business Trust, Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital Management,
Inc., Delaware International Holdings Ltd. and Delvoy, Inc.; Chief Financial
Officer/Treasurer of Retirement Financial Services, Inc.; Executive Vice
President/Chief Financial Officer/Treasurer of Delaware Management Trust
Company; Senior Vice President/Assistant Treasurer of Founders CBO Corporation.
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware Investments organization.
C-1
<PAGE>
Patrick P. Coyne (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), Delaware
Capital Management, Inc., and of the fixed-income funds in the Delaware
Investments family. During the past five years, Mr. Coyne has served in various
capacities at different times within the Delaware Investments organization.
Mitchell L. Conery (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and of the
fixed-income funds in the Delaware Investments family. Before joining Delaware
Investments in 1997, Mr. Conery was an investment officer with Travelers
Insurance from 1995 through 1996, and a research analyst with CS First Boston
from 1992 to 1995.
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.
Gary A. Reed (43) Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), and Delaware Capital
Management, Inc.; and an officer of the fixed-income funds in the Delaware
Investments family. During the past five years, Mr. Reed has served in various
capacities at different times within the Delaware Investments organization.
Babak Zenouzi (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and of the
equity funds in the Delaware Investments family. During the past five years, Mr.
Zenouzi has served in various capacities at different times within the Delaware
Investments organization.
George H. Burwell (36) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 8
investment companies in Delaware Investments and of Delaware Management Company.
Before joining Delaware Investments in 1992, Mr. Burwell was a portfolio manager
for Midlantic Bank, New Jersey. In addition, he was a security analyst for Balis
& Zorn, New York and for First Fidelity Bank, New Jersey.
Gerald S. Frey (52) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 8
investment companies in the Delaware Group and of Delaware Management Company,
Inc. Before joining the Delaware Group in 1996, Mr. Frey was a Senior Director
with Morgan Grenfell Capital Management, New York, NY from 1986 to 1995.
C-2
<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................................... 1,270.806 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 31,403.410 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund................................... 19,012.257 - / -
WALTER P. BABICH
Delaware Group Cash Reserve, Inc............................ 7,869.800 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund.................................. 9,651.044 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund....................................... 4,314.040 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund..................................... 6,938.292 Less than 1%/Less than 1%
ANTHONY D. KNERR
None
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
<S> <C> <C>
ANN R. LEVEN
Delaware Group Equity Funds I, Inc.
Delaware Fund........................................... 750.665 Less than 1%/Less than 1%
Delaware Group Equity Funds I, Inc.
Devon Fund.............................................. 254.789 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund..................................... 2,025.428 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 2,036.432 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund............................................... 2,527.037 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 994.566 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund............................... 1,174.926 Less than 1%/Less than 1%
W. THACHER LONGSTRETH
Delaware Group Equity Funds I, Inc.
Delaware Fund .......................................... 40,815.95 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund..................................... 67,652.453 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 4,161.893 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund.............................................. 5,296.988 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund............................................. 1,942.898 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 934.814 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund......................................... 60,197.084 Less than 1%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund.................................... 96.057 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
U.S. Government Money Fund.............................. 90.100 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................ 25,648.646 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 40,105.860 Less than 1%/Less than 1%
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund....................................... 40,050.721 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund.............................. 221.163 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%
WAYNE A. STORK
Delaware Group Equity Funds I, Inc.
Devon Fund ................................................ 65,720.574 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund........................................ 1,118.749 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund....................................... 2,862.459 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund............................................ 601,720.448 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
High-Yield Opportunities Fund.............................. 1,066,253.089 40.28%/Less than 1%
Delaware Group Government Fund, Inc.
Government Income Series................................... 5,322.055 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc. .......................... 4,783,208.930 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc..................... 1,075.010 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund................................. 1,231,454.464 1.11%/1.10%
Delaware Group Global & International Funds, Inc.
International Equity Series................................ 11,838.599 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund..................................... 1,225.190 Less than 1%/Less than 1%
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
<S> <C> <C>
THOMAS F. MADISON
Delaware Group Equity Funds I, Inc.
Devon Fund............................................... 246.327 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund................................ 159.373 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund................................... 132.162 Less than 1%/Less than 1%
CHARLES E. PECK
Delaware Group Equity Funds I, Inc.
Delaware Fund............................................ 16,151.178 Less than 1%/Less than 1%
Delaware Group Equity Funds I, Inc.
Devon Fund............................................... 12,876.107 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund................................ 9,633.481 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund............................................... 21,771.736 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund.............................................. 7,583.990 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund..................................... 7,248.518 Less than 1%/Less than 1%
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund......................................... 14,417.178 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund.......................................... 67,477.705 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................. 16,939/372 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund................................ 8,691.150 Less than 1%/Less than 1%
</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...........................E2
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund.............................E4
Delaware-Voyageur Minnesota Insured Fund....................................E4
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund......................E4
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund.....................................E6
Delaware-Voyageur Tax-Free California Fund..................................E6
Delaware-Voyageur Tax-Free Idaho Fund.......................................E6
Delaware-Voyageur Tax-Free Iowa Fund........................................E8
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund.................E10
National High-Yield Municipal Bond Fund....................................E12
Delaware-Voyageur Tax-Free New York Fund....................................E6
Delaware-Voyageur Tax-Free Wisconsin Fund...................................E8
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund...................................E14
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund.....................................................E16
Growth Stock Fund..........................................................E18
Tax-Efficient Equity Fund..................................................E20
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund...................................E4
Delaware-Voyageur Tax-Free North Dakota Fund................................E4
E-1
<PAGE>
Delaware-Voyageur US Government Securities Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-2
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
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.
E-3
<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
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-4
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
E-5
<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
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* 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 Tax-Free Iowa Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-8
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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-9
<PAGE>
Delaware-Voyageur Minnesota High-Yield Municipal Bond Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-10
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
E-11
<PAGE>
National High-Yield Municipal Bond Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-12
<PAGE>
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-13
<PAGE>
Delaware-Voyageur Tax-Free Colorado Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-14
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
E-15
<PAGE>
Aggressive Growth Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-16
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-16
<PAGE>
Growth Stock Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-18
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
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.
E-19
<PAGE>
Tax-Efficient Equity Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-20
<PAGE>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
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.
E-21
<PAGE>
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Insured Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --Delaware-Voyageur Tax-Free Arizona Delaware 4/30/97(1) 0.50% per year 0.50% on first $500 million
Insured Fund Management 0.475% on next $500 million
Company, 0.45% on next $1,500 million
Inc. 0.425% on assets in excess of
("DMC") $2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota Insured DMC 4/30/97(1) 0.50% per year 0.50% on first $500 million
Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Intermediate Tax Free Funds,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota DMC 4/30/97(1) 0.40% per year 0.50% on first $500 million
Intermediate Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Arizona Fund DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free California DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
Voyageur Insured Funds, Inc.
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --Delaware-Voyageur Tax-Free Arizona N/A N/A
Insured Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota Insured N/A N/A
Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Intermediate Tax Free Funds,
Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota
Intermediate Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Arizona Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free California
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-1
<PAGE>
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --Delaware-Voyageur Tax-Free Idaho Fund DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Iowa Fund DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota High Yield DMC 4/30/97(1) 0.65% per year 0.55% on first $500 million
Municipal Bond Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --National High-Yield Municipal Bond DMC 4/30/97(1) 0.65% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free New York DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Wisconsin DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds II, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Colorado DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Idaho Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Iowa Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota High Yield
Municipal Bond Fund
- -------------------------------------------------------------------------------------------------------
- --National High-Yield Municipal Bond
Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free New York
Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Wisconsin
Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds II, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Colorado
Fund
- -------------------------------------------------------------------------------------------------------
</TABLE>
F-2
<PAGE>
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voyageur Tax Free Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free North DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Dakota Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds III, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Aggressive Growth Fund DMC 4/30/97(1) 1.00% per year 0.75% on first $500 million
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
- ------------------------------------------------------------------------------------------------------------------------------------
- --Growth Stock Fund DMC 4/30/97(1) 1.00% per year 0.65% on first $500 million
0.60% on next $500 million
(Investment Management) 0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- -----------------------------------------------------------------------------------------------------------------------------------
- --Growth Stock Fund Voyageur 4/30/97(1) 0.50% per year 0.325 % per year
Asset
(Sub-Advisory) Management [Does DMC want
LLC ("VAM") breakpoints; BD
materials don't say]
- -----------------------------------------------------------------------------------------------------------------------------------
- --Tax-Efficient Equity Fund DMC 4/30/97(1) 0.75% on first 0.75% on first $500 million
$500 million 0.70% on next $500 million
0.725% on next 0.65% on next $1,500 million
$500 million 0.60% on assets in excess of
0.70% on assets $2,500 million; all per year
in excess of
$1,000 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.
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota
Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free North
Dakota Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds III, Inc.
- -------------------------------------------------------------------------------------------------------
- --Aggressive Growth Fund
- -------------------------------------------------------------------------------------------------------
- --Growth Stock Fund
(Investment Management)
- -------------------------------------------------------------------------------------------------------
- --Growth Stock Fund
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------
- --Tax-Efficient Equity Fund N/A N/A
- -------------------------------------------------------------------------------------------------------
</TABLE>
F-3
<PAGE>
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Voyageur Tax Free Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Securities Fund 0.50% on next $500 million
(Investment Management) 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government VAM 4/30/97(1) 0.25% per year No Change
Securities Fund
(Sub-Advisory)
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
<PAGE>
[RESTUBBED FROM PREVIOUS PAGE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government
Securities Fund
(Investment Management)
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government
Securities Fund
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE>
EXHIBIT G
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Names 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% None None
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%
==== ==== ==== ==== ==== ====
Total Operating Expenses
After Waiver*................ 1.02% **% 1.77% **%
==== == ==== == ==== ====
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................................. 0.31% 0.31% 0.31% 0.31% N/A N/A
----- ----- ----- ----- --- ---
Total Operating Expenses.............. 0.86% 0.96% 1.71% 1.81% N/A N/A
==== ==== ===== ===== === ===
Total Operating Expenses
After Waiver*................ 0.86% **% 1.71% **% N/A N/A
==== == ===== == === ===
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................................. 0.28% 0.28% 0.28% 0.28% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses....... 1.03% 1.08% 1.78% 1.83%
==== ==== ==== ====
Total Operating Expenses
After Waiver*................ 0.50% **% 1.25% **% N/A N/A
==== == ==== == === ===
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................................. 0.54% 0.54% 0.54% 0.54% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 1.29% 1.34% 2.04% 2.09% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.25% **% 1.00% **% N/A N/A
==== == ==== == === ===
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................................. 0.24% 0.24% 0.24% 0.24% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 0.99% 1.04% 1.74% 1.79% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.99% **% 1.74% **% N/A N/A
==== == ==== == === ===
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................................. 0.32% 0.32% 0.32% 0.32% N/A N/A
---- ---- ---- ---- --- ---
</TABLE>
* DMC or DIAL 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>
<TABLE>
<CAPTION>
Class A Shares Class B & C Shares Institutional Shares
Names of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------- ------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Total Operating Expenses.............. 1.07% 1.12% 1.82% 1.87% N/A N/A
==== ==== ==== ==== === ===
After Waiver*................ 1.00% **% 1.75% **% N/A N/A
===== == ==== == === ===
Delaware-Voyageur Tax-Free New York Fund
(Voyageur Mutual Funds, Inc.)
0.75% 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................................. 0.33% 0.33% 0.33% 0.33% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 1.08% 1.13% 1.83% 1.88% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 1.00% **% 21.75% **% N/A N/A
==== == ===== == === ===
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
==== === ==== == === ===
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................................. 0.24% 0.24% 0.24% 0.24% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 0.99% 1.04% 1.74% 1.79% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.87% **% 1.62% **% N/A N/A
==== == ==== == === ===
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................................. 0.22% 0.22% 0.22% 0.22% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 0.97% 1.02% 1.72% 1.77% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.94% **% 1.69% **% N/A N/A
==== == ==== == === ===
Declaware-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>
*DMC or DIAL 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>
EXHIBIT H
FUNDS SIMILARLY 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 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Blue Chip Fund DMC $_________ .65% on first $500 million .65% on first $500 million
(Investment Management) .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
Blue Chip Fund VGA $_________ .15% on average daily net N/A
(Sub-Advisory) assets averaging one year
old or less
.20% on average daily net
assets averaging two years
old or less, but greater
than one year old
.35% on average daily net
assets averaging over two
years old; all per year
Capital Appreciation Fund DMC $_________ .75% on first $500 million .75% on first $500 million
.725% on next $500 million .70% on next $500 million
.70% on assets in excess of .65% on next $1,500 million
$1,000 million; all per year .60% on assets in excess of $2,500
million; all per year
Convertible Securities Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of $2,500
million, all per year
Decatur Income Fund DMC $_________ .60% on first $100 million .65% on first $500 million
.525% on next $150 million .60% on next $500 million
.50% on next $250 million .55% on next $1,500 million
.475% on assets in excess of .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 $_________ .60% on first $500 million .65% on first $500 million
.575% on next $250 million .60% on next $500 million
.55% on assets in excess of .55% on next $1,500 million
$750 million; all per year .50% on assets in excess of
less directors' fees $2,500 million; all per year
Decatur Total Return Series DMC $_________ .60% per year less .65% on first $500 million
(Variable Annuity) directors' fees .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million, all per year
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-1
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Delaware Fund DMC $_________ .60% on first $100 million .65% on first $500 million
.525% on next $150 million .60% on next $500 million
.50% on next $250 million .55% on next $1,500 million
.475% on assets in excess of .50% on assets in excess of
$500 million; all per year, $2,500 million; all per year
less directors' fees
Delaware Series DMC $_________ .60% per year less .65% on first $500 million
(Variable Annuity) directors' fees .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
DelCap Fund DMC $_________ .75% per year less .75% on first $500 million
directors' fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
DelCap Series DMC $_________ .75% per year less .75% on first $500 million
(Variable Annuity) directors' fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Devon Fund DMC $_________ .60% on first $500 million .65% on first $500 million
.50% on assets in excess of .60% on next $500 million
$500 million; all per year .55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
Devon Series DMC $_________ .60% 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
Diversified Value Fund DMC $_________ .65% on first $500 million N/A
.60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
The Growth & Income DMC $_________ .55% per year N/A
Portfolio**
The Large Cap Value Equity DMC $_________ .55% per year less .55% per year
Portfolio** directors' fees
Mid Cap Value Fund DMC $_________ .75% on first $500 million N/A
.70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
The Mid Cap Growth Equity DMC $_________ .80% per year less .75% per year
Portfolio** directors' fees
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-2
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
The Real Estate Investment DMC $_________ .75% per year .75% on first $500 million
Trust Portfolio** .70% on next $500 million
(Investment Management) .65% on next $1,500 million
.60% on assets in excess of
$2,500 million per year
The Real Estate Investment LIM $_________ 30% on management fee paid N/A
Trust Portfolio** to DMC
(Sub-Advisory)
The Real Estate Investment DMC $_________ .75% per year N/A
Trust Portfolio II**
(Investment Management)
The Real Estate Investment LIM $_________ 30% of management fee paid N/A
Trust Portfolio II** to DMC
(Sub-Advisory)
REIT Series DMC $_________ .75% on first $500 million N/A
(Variable Annuity) .70% on next $500 million
(Investment Management) .65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
REIT Series LIM $_________ 30% of management fee paid N/A
(Variable Annuity) to DMC
(Sub-Advisory)
Retirement Income Fund DMC $_________ .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; all per year .50% on assets in excess of
$2,500; all per year
Small Cap Contrarian Fund DMC $_________ .75% on first $500 million N/A
.70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
The Small Cap Growth Equity DMC $_________ .75% per year N/A
Portfolio**
The Small/Mid Cap Value DMC $_________ .65% per year N/A
Equity Portfolio**
Small Cap Value Fund DMC $_________ .75% per year less .75% on first $500 million
directors' fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Small Cap Value Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-3
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Social Awareness Fund DMC $_________ .75% on first $500 million .75% on first $500 million
(Investment Management) .725% on next $500 million .70% on next $500 million
.70% on assets in excess of .65% on next $1,500 million
$1,000; all per year .60% on assets in excess of
$2,500 million; all per year
Social Awareness Fund VGA $_________ .20% on average daily net N/A
(Sub-Advisory) assets averaging one year
old or less
.25% of average daily net
assets averaging two years
old or less, but greater
than one year old
.40% of average daily net
assets averaging over two
years old; all per year
Social Awareness Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
(Investment Management) .65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Social Awareness Series VGA $_________ .25% on first $20 million N/A
(Variable Annuity) .35% on next $30 million
(Sub-Advisory) .40% on assets in excess of
$50 million; all per year
Trend Fund DMC $_________ .75% per year less .75% on first $500 million
director's fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Trend Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
U.S. Growth Fund DMC $_________ .70% per year .65% on first $500 million
(Investment Management) .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
U.S. Growth Fund L&M $_________ .40% per year N/A
(Sub-Advisory)
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-4
<PAGE>
<TABLE>
<CAPTION>
Domestic Fixed-Income Funds
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
The Aggregate Fixed Income DMC $_________ .40% per year N/A
Portfolio**
Corporate Bond Fund DMC $_________ .50% on first $500 million N/A
.475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware Group Dividend and DMC $_________ .55% per year N/A
Income Fund, Inc.***
Delchester Fund DMC $_________ .60% on first $500 million .65% on first $500 million
.575% on next $250 million .60% on next $500 million
.55% on assets in excess of .55% on next $1,500 million
$750 million; all per year .50% on assets in excess of
less directors' fees $2,500 million; all per year
Delchester Series DMC $_________ .60% per year less .65% on first $500 million
(Variable Annuity) directors' fees .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
The Diversified Core Fixed DMC $_________ .43% per year N/A
Income Portfolio**
(Investment Management)
The Diversified Core Fixed DIAL $_________ Fee equal to portion of N/A
Income Portfolio** management fee attributable
(Sub-Advisory) to foreign investments
Extended Duration Bond Fund DMC $_________ .55% on first $500 million N/A
.50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
U.S. Government Fund DMC $_________ .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 $_________ .45% per year N/A
Portfolio**
High-Yield Opportunities Fund DMC $_________ .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 $_________ .40% per year less .40% per year
Fixed-Income Portfolio** directors' fees
Limited Term Government Fund DMC $_________ .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
$1,500 million; all per year
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-5
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
The Limited-Term Maturity DMC $_________ .30% per year N/A
Portfolio**
Strategic Income Fund DMC $_________ .65% on first $500 million .65% on first $500 million
(Investment Management) .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 Fund DIAL $_________ 1/3 of management fees paid N/A
(Sub-Advisory) to DMC
Strategic Income Series DMC $_________ .65% per year .65% on first $500 million
(Variable Annuity) .60% on next $500 million
(Investment Management) .55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
Strategic Income Series DIAL $_________ 1/3 of management fee paid N/A
(Variable Annuity) to DMC
(Sub-Advisory)
</TABLE>
<TABLE>
<CAPTION>
National Tax Free Funds
<S> <C> <C> <C> <C>
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
---- ----------- -------------- ------------------------ ------------------------
Tax Free Insured Fund DMC $_________ .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
$1,500 million; all per year
Tax Free USA Fund DMC $_________ .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 per year
Tax Free USA Intermediate DMC $_________ .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 per year less
directors' fees
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-6
<PAGE>
<TABLE>
<CAPTION>
State Tax Free Funds
<S> <C> <C> <C> <C>
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
---- ------------ -------------- ------------------------ ------------------------
Voyageur Arizona Municipal DMC $_________ .40% per year N/A
Income Fund, Inc.***
Delaware-Voyageur Tax-Free DMC $_________ .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 $_________ .40% per year N/A
Municipal Income Fund,
Inc.***
Delaware-Voyageur Tax Free DMC $_________ .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
Delaware-Voyageur Tax Free DMC $_________ .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 $_________ .40% per year N/A
Municipal Income Fund***
Delaware-Voyageur Tax Free DMC $_________ .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 $_________ .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% per year N/A
Income Fund, Inc.***
Voyageur Minnesota Municipal DMC $_________ .40% per year N/A
Income Fund II, Inc.***
Voyageur Minnesota Municipal DMC $_________ .40% per year N/A
Income Fund III, Inc.***
Tax Free New Jersey Fund DMC $_________ .55% on the first $500 .55% on first $500 million
million .50% on next $500 million
.525% on next $500 million .45% on next $1,500 million
.50% on assets in excess of .425% on assets in excess of
$1,000 million; all per year $2,500 million per year
Delaware-Voyageur Tax Free DMC $_________ .55% on first $500 million N/A
New 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
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-7
<PAGE>
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Tax Free Ohio Fund DMC $_________ .55% on 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 per year
Delaware-Voyageur Tax Free DMC $_________ .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 $_________ .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 per year
Delaware-Voyageur Tax Free DMC $_________ .55% on first $500 million N/A
Utah 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 $_________ .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; all per year
</TABLE>
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-8
<PAGE>
EXHIBIT I
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [REGISTRANT], a[____________] ("Fund") on behalf
of the [SERIES] ("Series"), and [MANAGER NAME] , a ________________]
("Investment Manager").
WITNESSETH:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 and is currently comprised
of [_] series, including the Series; as a separate series of the Fund, each
series engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager is a registered investment adviser under the
Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and
WHEREAS, the Fund on behalf of the Series and the Investment Manager desire to
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment
and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Fund's Board of Directors and officers of
the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Investment Manager shall for all
purposes herein be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent
of the Fund. The Investment Manager shall regularly make decisions as to
what securities and other instruments to purchase and sell on behalf of the
Series and shall effect the purchase and sale of such investments in
furtherance of the Series' objectives and policies and shall furnish the
Board of Directors of the Fund with such information and reports regarding
the Series' investments as the Investment Manager deems appropriate or as
the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not
in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders;
calling and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and accounting fees;
taxes; and federal and state registration fees. Directors, officers and
employees of the Investment Manager may be directors, officers and
employees of any of the investment companies within the Delaware
Investments family (including the Fund). Directors, officers and employees
of the Investment Manager who are directors, officers and/or employees of
these investment companies shall not receive any compensation from such
companies for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and in
the performance of this Agreement, the Fund and Investment Manager may
share facilities common to each, which may include legal and accounting
personnel, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for
which the Investment Manager or any such Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or
who sell shares of any other fund for which the Investment Manager or any
such Sub-Adviser provides investment advisory services. Broker/dealers who
sell shares of the funds of which Delaware Management Company is investment
manager, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance
with the Rules of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
I-1
<PAGE>
(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.
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
I-2
<PAGE>
terminate this Agreement at any time, without the payment of a penalty, on
sixty days' written notice to the Fund of its intention to do so. Upon
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for
any obligation to respond for a breach of this Agreement committed prior to
such termination, and except for the obligation of the Fund to pay to the
Investment Manager the fee provided in Paragraph 4 hereof, prorated to the
date of termination. This Agreement shall automatically terminate in the
event of its assignment.
11. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
12. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to be
affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , 19 .
[MANAGER NAME] [REGISTRANT NAME]
for the [SERIES NAME]
By:_________________________________
Name:_______________________________
Title:______________________________
By:________________________________
Name:______________________________
Title:_____________________________
Attest:_____________________________
Name:_______________________________
Title:______________________________
Attest:____________________________
Name:______________________________
Title:_____________________________
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").
WITNESSETH:
WHEREAS, [REGISTRANT NAME], a [______________] ("Fund"), has been organized and
operates as an investment company registered under the Investment Company Act of
1940 and engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager and the Fund on behalf of the [Series]
("Series") have entered into an agreement of even date herewith ("Investment
Management Agreement") whereby the Investment Manager will provide investment
advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Management Agreement permits the Investment Manager to
hire one or more sub-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; 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
J-1
<PAGE>
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.
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.
J-2
<PAGE>
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.
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:___________________________________
J-3
<PAGE>
Agreed to and accepted as of the day and year first above written:
[REGISTRANT 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 ______________, 1998 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, $.01 par value, of each of the Fund's separate series and the
respective classes of those series, all as set forth in the Appendix attached
hereto (hereinafter, the series are individually and collectively referred to as
"Series of the Fund" and the classes are individually referred to as a "Class of
the Fund" and collectively as "Classes of the Fund"), equal in number to the
number of full and fractional shares of common stock, ______ 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").
K-1
<PAGE>
(b) In order to effect such delivery, the Fund will establish
an open account for each shareholder of each Series of the Corporation 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.
(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
K-2
<PAGE>
("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 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;
K-3
<PAGE>
(f) The shares of each Series and Class of the Fund are
eligible for offering to the public in those states of the United States and
jurisdictions in which the shares of their corresponding Series and Class of the
Corporation 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: Messrs. Walter P. Babich, W. Thacher Longstreth, Charles E. Peck,
Wayne A. Stork, Thomas F. Madison, and Jeffrey J. Nick, and Ms. Ann R. Leven;
(ii) Select Ernst & Young LLP as the independent
auditors for the Fund for the fiscal year ending [month and day], 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;
K-4
<PAGE>
(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;
(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.
K-5
<PAGE>
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.
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.
<TABLE>
<CAPTION>
[Name of Minnesota corporation]
(a Minnesota Corporation)
Attest:
<S> <C>
By: /s/ George M. Chamberlain, Jr. By: /s/ Jeffrey J. Nick
---------------------------------------- ------------------------------------------
George M. Chamberlain, Jr. Jeffrey J. Nick
Secretary President and Chief Executive Officer
K-6
<PAGE>
[Name of Delaware business trust]
(a Delaware business trust)
Attest:
By: /s/ Eric E. Miller By: /s/ Jeffrey J. Nick
---------------------------------------- ------------------------------------------
Eric E. Miller Jeffrey J. Nick
Assistant Secretary President and Chief Executive Officer
</TABLE>
K-7
<PAGE>
Appendix
Series and Classes of Corresponding Series and Classes of
[name of Minnesota corporation] [name of Delaware business trust]
K-8
<PAGE>
EXHIBIT L
COMPARISON and SIGNIFICANT DIFFERENCES
for DELAWARE BUSINESS TRUSTS and
MINNESOTA CORPORATIONS
L-1
<PAGE>
DELAWARE INVESTMENTS
1818 MARKET STREET
PHILADELPHIA, PA 19103
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, The Undersigned
hereby Appoints {________________}, or any of them, with the right of
substitution, proxies of the undersigned at the Special Meeting Of Shareholders
of the above fund to be held AT The Union League, 140 South Broad Street,
Philadelphia, Pennsylvania, on March 17, 1999 at 10:00 A.M., or at any
postponement or adjournments thereof, with all the powers which the undersigned
would possess, if personally present, and instructs them to vote upon any
matters which may properly be acted upon at this meeting and specifically as
indicated on the lower portion of this form. Please refer to the proxy statement
for a discussion of each of these matters.
BY SIGNING AND DATING THIS CARE, YOU AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCREITION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY SIGNED AND DATED.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Vote On Directors For Withhold For All
1. To elect the following nominees as Directors or Trustees of the Company All All Except
01) JEFFREY J. NICK 06) ANN R. LEVEN
02 WAYNE A. STORK 07) JAN R. YOEMANS _______________________________________________
03) WALTER P. BABICH 08) THOMAS F. MADISON To withhold authority to vote, "For All Except"
04) ANTHONY D. KNERR 09) CHARLES E. PECK and write the nominee's number on the line
above.
Vote On Proposals For Against Abstain
2. To approve the redesignation of the Fund's 4G. To redesignate all current fundamental
investment objective from fundamental to non- investment
restrictions as non-fundamental
fundamental
3. To approve a change in the Fund's fundamental policy concerning
diversification of investments.
4. To approve standardized fundamental investment 5. To approve a new investment management
restrictions for the Fund (proposal involves agreement for the Fund
separate votes on sub-proposals 3A-3G)
4A. To adopt a new fundamental investment 6. To approve a new sub-advisory agreement
restriction concerning concentration of the for the Fund
Fund's investments in the same industry
4B. To adopt a new fundamental investment 7. To ratify the selection of Ernst & Young LLP, as
restriction concerning borrowing money and independent auditors for the Company
issuing senior securities
4C. To adopt a new fundamental investment 8. To approve the restructuring of the Company
restriction concerning underwriting from a Minnesota Corporation into a Delaware
4D. To adopt a new fundamental investment Business Trust
restriction concerning investments in real
estate PLEASE DATE AND SIGN NAME OR NAMES BELOW AS
4E. To adopt a new fundamental investment PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR
restriction concerning investments in SHARES AS INDICATED ABOVE, WHER SHARES ARE
commodities REGISTERED WITH JOINT OWNERS SHOULD SIGN.
4F. To adopt a new fundamental investment PERSONS SIGNING AS EXECUTOR, ADMINISTRATOR,
restriction concerning lending by the Fund TRUSTEE OR OTHER REPRESENTATIVE SHOULD
GIVE FULL TITLE AS SUCH.
----------------------------------------------- -------------------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
</TABLE>
