SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-16270
File No. 811-5267
REGISTRATION STATEMENT UNDERTHE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 24 X
_____
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 24 X
VOYAGEUR FUNDS, INC.
_______________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
_______________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
__________________
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
_______________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Public Offering: March 1, 1999
__________________
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph(b)
on (date) pursuant to paragraph(b)
_____
_____ 60 days after filing pursuant to paragraph (a)(1)
X on March 1, 1999 pursuant to paragraph (a)(1)
_____
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate:
_____ This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
Title of Securities Being Registered
------------------------------------
US Government Securities Fund Class A Shares,
US Government Securities Fund Class B Shares,
US Government Securities Fund Class C Shares
and
US Government Securities Fund Institutional Class Shares
--- C O N T E N T S ---
This Post-Effective Amendment No. 24 to Registration File No.
33-16270 includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheets
4. Part A - Prospectus
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
CROSS-REFERENCE SHEET*
----------------------
PART A
-------
Location in
Item No. Description Prospectuses
- -------- --------------- ------------
1 Front and Back Cover Pages Same
2 Risk/Return Summary; Fund Profile
Investments, Risks and Performances
3 Risk/Return Summary; Fee Table Fund Profile
4 Investment Objectives; Principal How we manage
Investment Strategies and the Fund;
Related Risks Other investment
strategies and
risk considerations
5 Management's Discussion of
Performance N/A
6 Management, Organization and Who manages
Capital Structure the Fund
7 Shareholder Information How to buy shares;
How to redeem shares;
Special services;
Dividends,
distributions and
taxes all under About
your account
8 Distribution Arrangements Choosing a share class;
How to reduce sales charges
under About your account
9 Financial Highlights Information Financial Highlights
CROSS-REFERENCE SHEET*
----------------------
PART B
-------
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
10 Cover Page and Table of Contents Same
11 Fund History General Information
12 Description of the Fund and Investment Restrictions
Its Investments and Risks and Policies
13 Management of the Fund...
Officers and Directors; Purchasing Shares
14 Control Persons and Principal
Holders of Securities Officers and Directors
15 Investment Advisory and Other Officers and Directors;
Services Purchasing Shares; Investment
Management Agreement;
General Information;
Financial Statements
16 Brokerage Allocation and Other Trading Practices and
Practices Brokerage
17 Capital Stock and Other Securities Capitalization and
Noncumulative Voting
(under General Information)
18 Purchase, Redemption and Pricing Purchasing Shares;
of Shares Redemption and Exchange;
Determining Offering
Price and
Net Asset Value;
19 Taxation of the Fund Accounting and Tax
Issues; Taxes
20 Underwriters Purchasing Shares
21 Calculation of Performance data Performance Information
22 Financial Statements Financial Statements
CROSS-REFERENCE SHEET
----------------------
PART C
-------
Location in
Item No. Description Part C
- ------- ----------- -----------
23 Exhibits Item 23
24 Persons Controlled by or under
Common Control with Registrant Item 24
25 Indemnification
26 Business and Other Connections of the
Investment Adviser Item 26
27 Principal Underwriters Item 27
28 Location of Accounts and Records Item 28
29 Management Services Item 29
30 Undertakings Item 30
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
Delaware-Voyageur
US Government Securities Fund
Class A * Class B * Class C * Institutional Class
Prospectus
March 1, 1999
Current Income Fund
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
[inside front cover]
Table of Contents
Fund profile page
US Government Securities Fund
How we manage the Fund page
Our investment strategies
The risks of investing in the Fund
Who manages the Fund page
Investment manager and Sub-adviser
Portfolio manager
Who's who?
About your account page
Investing in the Fund
Choosing a share class
How to reduce your sales charge
How to buy shares
How to redeem shares
Special services
Dividends, distributions and taxes
Retirement plans
Other investment strategies and
risk considerations page
Financial Highlights page
[sidebar copy at bottom of page]
How to use this prospectus
Here are guidelines to help you use this prospectus to make well-informed
investment decisions about our funds. If you're looking for a specific
piece of information, the table of contents can guide you directly to the
appropriate section.
Step 1
- ------------------------------------------------------------------------
Take a look at the fund profile for an overview of the Fund.
Step 2
- ------------------------------------------------------------------------
Learn in-depth information about how the Fund invests, the risks involved
and the people and organizations responsible for the Fund's day-to-day
operations.
Step 3
- ------------------------------------------------------------------------
Determine which fund features and services you would like to take
advantage of.
Step 4
- ------------------------------------------------------------------------
Use the glossary that begins on page x to find definitions of words
printed in bold type throughout the prospectus.
An Investment Overview
When choosing a mutual fund to invest in, you have a variety of options
and important information to consider. This prospectus provides
information about US Government Securities Fund, a mutual fund from the
Delaware Investments Family of Funds.
However, before evaluating individual funds, your first step is to define
your personal financial goals. Knowing your goals and determining your
investment time horizon in advance can help you make a more appropriate
fund selection. It is also important to select a fund in the context of
your entire investment program. Diversification or spreading your money
among different types of investments is usually a sound investment
strategy. A professional financial advisor can help you build an investment
portfolio that fits your financial situation, your investment objectives
and your risk tolerance. A financial advisor can also explain the role
that US Government Securities Fund might play in your investment plan.
Investing for current income with US Government Securities Fund
Investors with medium range or long-term goals often choose mutual funds
designed to provide current income. These funds may invest in various
types of bonds including corporate, government or municipal bonds. These
funds generally involve less risk than stock funds but more risk than
money market funds. Like all mutual funds, current income funds allow you
to invest conveniently in a diversified portfolio without having to select
and monitor individual securities on your own.
[House Graphic - Highlighting the Current Income section]
Building Blocks of Asset Allocation
Aggressive Growth Equity Funds
Growth Equity Funds
International and Global Funds
Asset Allocation Funds
Total Return
Fixed Income Funds for...
Current Income
These funds invest in corporate and/or U.S. government bonds and seek
current income which is typically taxable. Risk levels vary with maturity
and quality of the bonds in the portfolio.
Taxable Bond Funds
Tax-Exempt Bond Funds
Money Market Funds (Taxable and Tax-Exempt)
Profile: US Government Securities Fund
What are the Fund's goals?
US Government Securities Fund seeks to provide a high level of current
income consistent with prudent investment risk.
What are the Fund's main investment strategies?
We invest primarily in U.S. Treasury securities including bills, notes and
bonds as well as other debt securities that are:
(bullet) issued by the U.S. government,
(bullet) unconditionally guaranteed by the U.S. government or
(bullet) backed by the full faith and credit of the U.S. government.
We may invest a significant portion of our portfolio in debt obligations
guaranteed by the Government National Mortgage Association also known as
GNMA.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you
may lose part or all of the money you invest. The price of Fund shares
will increase and decrease according to changes in the value of the Fund's
investments. This Fund will be affected by changes in bond prices,
particularly as a result of changes in interest rates. An investment in
the Fund is not a deposit of any bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
For a more complete discussion of risk, please turn to page x.
Who should invest in the Fund
(bullet) Investors with medium or long range goals.
(bullet) Investors looking for regular income from their investments.
(bullet) Investors looking for a bond investment to help balance their
investments in stocks or more aggressive securities.
(bullet) Investors who are looking for an income investment that can
provide total return opportunities through the automatic reinvestment
of income dividends.
Who should not invest in the Fund
(bullet) Investors with very short-term financial goals.
(bullet) Investors who are unwilling to accept share prices that may
fluctuate, sometimes significantly, over the short term.
(bullet) Investors seeking long-term growth of capital.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser
to determine whether it is an appropriate choice for you.
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of
investing in the Fund. We show how returns for the Fund's Class A
shares have varied over the past ten calendar years, as well as average
annual returns of all share classes for the one, five and ten years and
since inception, if applicable -- all compared to the performance of the
Lehman Brothers Government/Corporate Bond Index. You should remember that
unlike the Fund, the index is unmanaged and doesn't include the actual
costs of buying, selling, and holding securities. The Fund's past
performance does not necessarily indicate how it will perform in the
future. The Classes' returns reflect voluntary expense caps. The returns
would be lower without this voluntary cap.
* US Government Securities Fund * Lehman Brothers Government/Corporate
Bond Index
1998
1997
1998
1996
1995
1994
1993
1992
1991
1990
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)
FPO]
[bar chart]
Year-by-year total return (Class A)
The maximum Class A sales charge of 4.75%, which is normally deducted when
you purchase shares, is not reflected in these total returns. If this fee
were included, the returns would be less than those shown. The average
annual returns shown below do include the sales charge.
As of December 31, 1998, the Fund had a year-to-date return of XX%. During
the periods illustrated in this bar chart, the Fund's highest return
was XX% [date] and its lowest return was XX% [date].
<TABLE>
<CAPTION>
Average annual return for periods ending 12/31/98
CLASS A B (if C (if Institutional Lehman
redeemed) redeemed) Class Brothers
Government/
Corporate
Bond Index
<S> <C> <C> <C> <C> <C>
1 year
5 years
10 years
Since inception
(Class B - 6/7/94
Class C - 1/10/95
Institutional
Class - 6/7/94)
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or
sell shares of the Fund. The Fund may waive or reduce sales charges;
please see the Statement of Additional Information for details.
</TABLE>
<TABLE>
<CAPTION>
CLASS A B C Institutional
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases as a
percentage of offering
price 4.75% none none none
Maximum contingent deferred
sales charge (load) as a
percentage of original
purchase price or
redemption price, whichever
is lower none(1) 4%(2) 1%(3) none
Maximum sales charge (load)
imposed on reinvested
dividends none none none none
Redemption fees (4) none none none none
</TABLE>
Annual fund operating expenses are deducted from the Fund's income or
assets before it pays dividends and before its total return is calculated.
We will not charge you separately for these expenses.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Management fees (7)
Distribution and service
(12-1) fees (5) 0.25% 1.00% 1.00% 0.00% (6)
Other expenses (7)
Total operating expenses (7)
</TABLE>
This example is intended to help you compare the cost of investing in the
Fund to the cost of investing in other mutual funds with similar
investment objectives. We show the cumulative amount of Fund expenses on a
hypothetical investment of $10,000 with an annual 5% return over the time
shown. (8) This is an example only, and does not represent future expenses,
which may be greater or less than those shown here.
<TABLE>
<CAPTION>
CLASS (9) A B B (if redeemed) C C (if redeemed) Institutional
<S> <C> <C> <C> <C> <C> <C>
1 year
3 years
5 years
10 years
</TABLE>
1 A purchase of Class A shares at $1 million or more may be made at net
asset value. However, if you buy the shares through a financial adviser
who is paid a commission, a contingent deferred sales charge of 1% will be
imposed on certain redemptions within the first year of purchase and 0.50%
within the second year of purchase. Additional Class A purchase options
that involve a contingent deferred sales charge may be permitted from time
to time and will be disclosed in the prospectus if they are available.
2 If you redeem Class B shares during the first two years after you buy
them, you will pay a contingent deferred sales charge of 4%. The
contingent deferred sales charge is 3% during the third and fourth years,
2% during the fifth year, 1% during the sixth year, and 0% thereafter.
Your Class B shares will automatically convert to Class A shares after
approximately eight years.
3 Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
4 First Union Bank, the bank through which we wire money, currently
charges $7.50 per redemption for redemptions payable by wire.
5 The Fund has adopted a plan under rule 12b-1 that allows the Fund to pay
distribution fees for the sales and distribution of its shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges. Each share class is subject
to a separate 12b-1 plan.
6 The distributor has agreed to waive 12b-1 plan fees for the
Institutional Class shares acquired by shareholders on or after March 1,
1998. As the portion of assets attributable to Institutional Class Shares
acquired on or after March 1, 1998 increases, and so long as the
distributor's voluntary waiver is in effect for those shares, this figure
will decrease. See the Statement of Additional Information for additional
information.
7 The investment manager has agreed to waive fees and pay expenses for the
period January 1, 1998 through June 30, 1999 in order to prevent total
operating expenses (excluding any taxes, interest, brokerage fees,
extraordinary expenses and 12b-1 fees) from exceeding 0.85% of average
daily net assets. See the Statement of Additional Information for a
further discussion of expense caps.
8 The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show.
9 The Class B example reflects the conversion of Class B shares to Class A
shares at the end of the eighth year. However, the conversion may occur as
late as three months after the eighth anniversary of purchase, during
which time the higher 12b-1 plan fees payable by Class B shares will
continue to be assessed. Information for the ninth and tenth years
reflects expenses of the Class A shares.
How we manage the Fund
The Fund's investment objective is to provide its shareholders with a high
level of current income consistent with prudent investment risk. The
Fund's investment objective is fundamental and may not be changed without
shareholder approval. There can, of course, be no assurance that the Fund
will achieve its objective.
We take a disciplined approach to investing, combining investment
strategies and risk management techniques that can help shareholders meet
their goals.
Investment strategy
The Fund investments in the following:
(bullet) U.S. Treasury bills, notes, bonds and other obligations issued or
unconditionally guaranteed by the U.S. government, or otherwise backed by
the full faith and credit of the U.S. government (U.S. Government Securities)
(bullet) repurchase agreements fully secured by such obligations
(bullet) A significant portion of the Fund's assets are invested in
mortgage participation certificates guaranteed by the Government
National Mortgage Association (GNMA Certificates)
The Board of Directors may change any investment policy not designated as
fundamental.
Securities guaranteed by the full faith and credit of the U.S. government
include a variety of securities, which differ in their interest rates,
maturities and dates of issuance. For example, Treasury bills have
maturities of one year or less, Treasury notes have maturities of one to
ten years and Treasury bonds generally have maturities of greater than ten
years at the date of issuance. GNMA Certificates are also backed by the
full faith and credit of the U.S. Treasury. Certain other obligations
issued by federal agencies or instrumentalities may also be supported by
the full faith and credit of the U.S. Treasury, depending on the
circumstances of the issue. The Fund may invest in Treasury Inflation
Indexed Securities (TIPS). TIPS, introduced for the first time in January
1997, are inflation-protected securities whose rates of return are
proportional to the rise and fall of the Consumer Price Index.
The Fund may purchase U.S. Government Securities on a when-issued or
delayed delivery basis. The settlement dates for these types of
transactions are determined by mutual agreement of the parties and may
occur a month or more after the parties have agreed to the transaction,
except that in no case will the period from the trade date to the
settlement date exceed 120 days. Securities purchased on a when-issued or
delayed delivery basis are subject to market fluctuation and may decrease
in value prior to their maturity, and no interest accrues to the purchaser
during the period prior to settlement. See Investment Restrictions and
Policies in the Statement of Additional Information.
Although the securities in the Fund's portfolio are guaranteed as to
principal and interest by the U.S. government or otherwise backed by the
full faith and credit of the U.S. government, the market value of these
securities upon which the Fund's daily net asset value is based will
fluctuate and will tend to vary inversely with changes in prevailing
interest rates. As a result, the price per share a shareholder receives on
redemption may be more or less than the price originally paid for the
shares. The dividends per share paid by the Fund may also vary. In
general, shorter term bonds are less sensitive to interest rate changes,
but longer term bonds generally offer higher yields.
For additional information about the Fund's investment policies and
certain risks associated with investments in certain types of securities,
see Other Investment Policies and Risk Considerations. The Statement of
Additional Information provides more information concerning the Fund's
investment policies, restrictions and risk factors.
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you
may receive little or no return on your investment, and the risk that you
may lose part or all of the money you invest. Before you invest in a Fund
you should carefully evaluate the risks. You should consider an investment
in the Fund to be a long-term investment that typically provides the best
results when held for a number of years. The following are the chief risks
you assume when you invest in US Government Securities Fund. Please see
the Statement of Additional Information for further discussion of these
risks and the other risks not discussed here.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------
<S> <C>
US Government Securities Fund
----------------------------------------------
Market risk is the risk that all We maintain a long-term investment approach
or a majority of the securities in and focus on high quality individual bonds
a certain market -- like the stock that we believe can provide a steady stream of
or bond market -- will decline in income regardless of interim fluctuations in
value because of factors such as the bond market. We do not try to predict
economic conditions, future overall interest rate movements and do not
expectations or investor confidence. buy and sell securities for short-term
purposes.
- ------------------------------------------------------------------------------------
Interest rate risk is the risk that Interest rate risk is the most significant
securities will decrease in value risk for this fund. In striving to manage
if interest rates rise. The risk this risk, we monitor economic conditions and
is greater for bonds with the interest rate environment. We keep the
longer maturities than for those average maturity of the portfolio as short as
with shorter maturities. is prudent, in keeping with our objective to
provide high current income.
- ------------------------------------------------------------------------------------
Credit Risk: The possibility that By focusing exclusively on U.S. Treasury
a bond's issuer (or an entity that securities and other securities that are
insures the bond) will be unable backed by the U.S. government, we minimize
to make timely payments of interest . the possibility that any of the securities in
and principal. our portfolio will not pay interest or
principal. US government securities are
generally considered to be of the highest
quality.
- ------------------------------------------------------------------------------------
Liquidity risk is the possibility U.S. Treasuries and other U.S. government debt
that securities cannot be readily securities are typically the most liquid
sold, or can only be sold at a price securities available. Therefore, liquidity
lower than the price that the Fund risk is not a significant risk for this Fund.
has valued them.
- ------------------------------------------------------------------------------------
Prepayment risk is the risk that Prepayment risk can be a significant risk to
the principal on a bond that you this Fund because we generally invest a large
own will be prepaid prior to percentage of our holdings in mortgage
maturity at a time when interest securities issued by the National Government
rates are lower than what that Mortgage Association. Homeowners or others who
bond was paying. You would then have mortgages are more likely to prepay them
have to reinvest that money at a when interest rates are relatively low. In
lower interest rate. order to manage this risk, when interest rates
are low or when we believe rates will be
declining, we tend to hold discount mortgages.
Discount mortgages have interest rates lower
than the current rates, so there is little
incentive for homeowners to prepay their
principal.
- ------------------------------------------------------------------------------------
Foreign risk is the risk that We do not typically invest in any foreign
foreign securities may be securities.
adversely affected by political
instability, changes in currency
exchange rates, foreign economic
conditions or inadequate regulatory
and accounting standards.
- ------------------------------------------------------------------------------------
</TABLE>
[begin glossary]
How to use this glossary
Words found in the glossary are printed in boldface the first time they
appear in the prospectus. So if you would like to know the meaning of a
word that isn't in boldface, you might still find it in the glossary.
Glossary A-B
Amortized cost
- ------------------------------------------------------------------------
Similar to depreciated value, amortized cost reflects the value of a
fixed-income security adjusted to account for any premium that was paid
above the par value when the security was purchased. The purpose of
amortization is to reflect resale or redemption value.
Appreciation
- ------------------------------------------------------------------------
An increase in the value of an investment.
Average maturity
- ------------------------------------------------------------------------
An average of when the individual bonds and other debt securities held in
a portfolio will mature.
Bond
- ------------------------------------------------------------------------
A debt security, like an IOU, issued by a company, municipality or
government agency. In return for lending money to the issuer, a bond buyer
generally receives fixed periodic interest payments and repayment of the
loan amount on a specified maturity date. A bond's price changes prior to
maturity and is inversely related to current interest rates. When interest
rates rise, prices fall, and when interest rates fall, prices rise.
Bond ratings
- ------------------------------------------------------------------------
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are
considered investment grade. Bonds rated Ba/BB or lower are commonly known
as junk bonds.
C-C
Capital
- ------------------------------------------------------------------------
The amount of money you invest.
Capital gains distributions
- ------------------------------------------------------------------------
Payments to mutual fund shareholders of profits (realized gains) from the
sale of a fund's portfolio securities. Usually paid once a year; may be
either short-term gains or long-term gains.
Commission
- ------------------------------------------------------------------------
The fee an investor pays to a financial adviser for investment advice and
help in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
- ------------------------------------------------------------------------
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
- ------------------------------------------------------------------------
Measurement of U.S. inflation; represents the price of a basket of
commonly purchased goods.
Contingent deferred sales charge (CDSC)
- ------------------------------------------------------------------------
Fee charged by some mutual funds when shares are redeemed (sold back to
the fund) within a set number of years; an alternative method for
investors to compensate a financial adviser for advice and service, rather
than an up-front commission.
[glossary to be continued]
Who manages the Fund
Investment Manager and Sub-Adviser
The Fund is managed by Delaware Management Company, a series of Delaware
Management Business Trust which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Voyageur Asset Management LLC is the
Fund's sub-adviser. As sub-adviser, Voyageur is responsible for day-to-day
management of the Fund's assets. Delaware Management Company administers
the Fund's affairs and has ultimate responsibility for all investment
advisory services for the Fund. Delaware Management Company also
supervises the sub-adviser's performance. For their services to the Fund,
the manager and sub-adviser were paid an aggregate fee for the last fiscal
year as follows:
Investment Management Fees
US Government
Securities Fund
As a percentage of average
daily net assets 0.00%
Portfolio Manager
Mark Simenstad, Senior Portfolio Manager of Voyageur Asset Management LLC
since August 1996, has had primary responsibility for making day-to-day
investment decisions for the Fund since October 6, 1997. Mr. Simenstad
holds a bachelor's degree from St. Olaf College and an MBA from the
University of Minnesota. Prior to August 1996, Mr. Simenstad was a Vice
President/Portfolio Manager of Investment Advisors, Inc. and prior to
August 1993, he was an Assistant Vice President/Portfolio Manager of
Lutheran Brotherhood. Mr. Simenstad is a CFA and has 15 years of
investment management experience.
Year 2000
As with other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by its service providers do not properly process and
calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Fund is taking steps to
obtain satisfactory assurances that the Fund's major service providers are
taking steps reasonably designed to address the Year 2000 Problem with
respect to the computer systems that such service providers use. There can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the business of the Fund.
[glossary continued]
C-E
Cost basis
- ------------------------------------------------------------------------
The original purchase price of an investment, used in determining capital
gains and losses.
Currency exchange rates
- ------------------------------------------------------------------------
The price at which one country's currency can be converted into another's.
This exchange rate varies almost daily according to a wide range of
political, economic and other factors.
Depreciation
- ------------------------------------------------------------------------
A decline in an investment's value.
Diversification
- ------------------------------------------------------------------------
The process of spreading investments among a number of different
securities, asset classes or investment styles to reduce the risks of
investing.
[glossary to be continued]
[sidebar]
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
Board of Directors
Investment Manager The Fund Custodian
Delaware Management Company Norwest Bank Minnesota, N.A.
One Commerce Square Sixth Street & Marquette Avenue
Philadelphia, PA 19103 Minneapolis, MN 55402
Sub-Adviser
Voyageur Asset Management LLC
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
Portfolio Service agent Distributor
managers Delaware Service Company, Inc. Delaware Distributors, L.P.
(see page x 1818 Market Street 1818 Market Street
for details) Philadelphia, PA 19103 Philadelphia, PA 19103
Financial advisers
Shareholders
Board of directors A mutual fund is governed by a board of directors which
has oversight responsibility for the management of the fund's business
affairs. Directors establish procedures and oversee and review the
performance of the investment manager, the distributor and others that
perform services for the fund. At least 40% of the board of directors
must be independent of the fund's investment manager or distributor.
These independent fund directors, in particular, are advocates for
shareholder interests.
Custodian Mutual funds are legally required to protect their portfolio
securities by placing them with a custodian, typically a qualified bank
custodian who segregates fund securities from other bank assets.
Investment manager An investment manager is a company responsible for
selecting portfolio investments consistent with objectives and policies
stated in the mutual fund's prospectus. The investment manager places
portfolio orders with broker/dealers and is responsible for obtaining the
best overall execution of those orders. A written contract between a
mutual fund and its investment manager specifies the services the manager
performs. Most management contracts provide for the manager to receive an
annual fee based on a percentage of the fund's average net assets. The
manager is subject to numerous legal restrictions, especially regarding
transactions between itself and the funds it advises.
Sub-adviser A sub-adviser is a company generally responsible for the
management of the fund's assets. They are selected and supervised by the
investment manager.
Portfolio managers Portfolio managers are employed by the investment
manager or sub-adviser to make investment decisions for individual
portfolios on a day-to-day basis.
Service agent Mutual fund companies employ service agents (sometimes
called transfer agents) to maintain records of shareholder accounts,
calculate and disburse dividends and capital gains and prepare and mail
shareholder statements and tax information, among other functions. Many
service agents provide customer service to shareholders, as well.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject
to National Association of Securities Dealers, Inc. (NASD) rules governing
mutual fund sales practices.
Financial advisers Financial advisers provide investment advice to their
clients, analyzing their financial objectives and recommending appropriate
funds or other investments. Financial advisers are compensated for their
services, generally through sales commissions, and through 12b-1 and/or
service fees deducted from the fund's assets.
Shareholders Like shareholders of other companies, mutual fund
shareholders have specific voting rights, including the right to elect
directors. Material changes in the terms of a fund's management contract
must be approved by a shareholder vote, and funds seeking to change
fundamental investment objectives or policies must also seek shareholder
approval.
[glossary continued]
Dividend distribution
- ------------------------------------------------------------------------
Payments to mutual fund shareholders of dividends passed along from the
fund's portfolio of securities.
Expense ratio
- ------------------------------------------------------------------------
A mutual fund's total operating expenses, expressed as a percentage of its
total net assets. Operating expenses are the costs of running a mutual
fund, including management fees, offices, staff, equipment and expenses
related to maintaining the fund's portfolio of securities. They are paid
from the fund's assets before any earnings are distributed to
shareholders.
[glossary to be continued]
About your account
Investing in the Fund
You can choose from a number of share classes for the Fund. Because each
share class has a different combination of sales charges, fees, and other
features, you should consult your financial adviser to determine which
class best suits your investment goals and time frame.
Choosing a share class
Class A
(bullet) Class A shares have an up-front sales charge of up to 4.75% that
you pay when you buy the shares. The offering price for Class A shares
includes the front-end sales charge.
(bullet) If you invest $100,000 or more, your front-end sales charge will
be reduced.
(bullet) You may qualify for other reduced sales charges, as described in
"How to reduce your sales charge," and under certain circumstances the
sales charge may be waived; please see the Statement of Additional
Information.
(bullet) Class A shares are also subject to an annual 12b-1 fee no greater
than 0.25% of average daily net assets, which is lower than the 12b-1 fee
for Class B and Class C shares.
(bullet) Class A shares generally are not subject to a contingent deferred
sales charge.
Class B
(bullet) Class B shares have no up-front sales charge, so the full amount
of your purchase is invested in the Fund. However, you will pay a
contingent deferred sales charge if you redeem your shares within six
years after you buy them.
(bullet) If you redeem Class B shares during the first two years after you
buy them, the shares will be subject to a contingent deferred sales charge
of 4%. The contingent deferred sales charge is 3% during the third and
fourth years, 2% during the fifth year, 1% during the sixth year, and 0%
thereafter.
(bullet) Under certain circumstances the contingent deferred sales charge
may be waived; please see the Statement of Additional Information.
(bullet) For approximately eight years after you buy your Class B shares,
they are subject to annual 12b-1 fees no greater than 1% of average daily
net assets, of which 0.25% are service fees paid to the distributor,
dealers or others for providing services and maintaining shareholder
accounts.
(bullet) Because of the higher 12b-1 fees, Class B shares have higher
expenses and any dividends paid on these shares are lower than dividends
on Class A shares.
(bullet) Approximately eight years after you buy them, Class B shares
automatically convert into Class A shares with a 12b-1 fee of no more than
0.25%.
(bullet) You may purchase up to $250,000 of Class B shares at any one
time. The limitation on maximum purchases varies for retirement plans.
[glossary continued]
F-M
Financial adviser
- ------------------------------------------------------------------------
Financial professional (e.g., broker, banker, accountant, planner or
insurance agent) who analyzes clients' finances and prepares personalized
programs to meet objectives.
Fixed-income securities
- ------------------------------------------------------------------------
With fixed-income securities, the money you originally invested is
returned to you at a prespecified maturity date. These securities, which
include government, corporate or municipal bonds, as well as money market
securities, typically pay a fixed rate of return.
[glossary to be continued]
Class C
(bullet) Class C shares have no up-front sales charge, so the full amount
of your purchase is invested in the Fund. However, you will pay a
contingent deferred sales charge if you redeem your shares within 12
months after you buy them.
(bullet) Under certain circumstances the contingent deferred sales charge
may be waived; please see the Statement of Additional Information.
(bullet) Class C shares are subject to an annual 12b-1 fee which may not
be greater than 1% of average daily net assets, of which 0.25% are service
fees paid to the distributor, dealers or others for providing personal
services and maintaining shareholder accounts.
(bullet) Because of the higher 12b-1 fees, Class C shares have higher
expenses and pay lower dividends than Class A shares.
(bullet) Unlike Class B shares, Class C shares do not automatically
convert into another class.
(bullet) You may purchase any amount less than $1,000,000 of Class C
shares at any one time. The limitation on maximum purchases varies for
retirement plans.
Institutional Class
(bullet) Institutional Class shares are available to the following group
of investors:
(bullet) officers and directors of the Fund;
(bullet) officers, directors and full-time employees of the manager or
sub-adviser, and officers, directors and full-time employees of parents
and subsidiaries of the foregoing companies;
(bullet) officers, directors and full-time employees of investment
advisers of other mutual funds subject to a sales charge and included in
any other family of mutual funds that includes any Voyageur Fund or
Delaware Investments Fund as a member (Other Load Funds), and officers,
directors and full-time employees of parents, subsidiaries and corporate
affiliates of those investment advisers;
(bullet) spouses and lineal ancestors and descendants of the officers,
directors/trustees and employees referenced referenced above, and lineal
ancestors and descendants of their spouses;
(bullet) investment executives and other employees of banks and dealers
that have selling agreements with the Underwriter and parents, spouses and
children under the age of 21 of such investment executives and other
employees;
(bullet) trust companies and bank trust departments for funds held in a
fiduciary, agency, advisory, custodial or similar capacity;
(bullet) any state or any political subdivision thereof or any
instrumentality, department, authority or agency of any state or political
subdivision thereof;
(bullet) partners and full-time employees of the Fund's counsel;
(bullet) managed account clients of the manager or sub-adviser, clients of
investment advisers affiliated with the Adviser or Sub-Adviser and other
registered investment advisers and their clients (the Fund may be
available through a broker-dealer which charges a transaction fee for
purchases and sales);
(bullet) tax-qualified employee benefit plans for employees of the Adviser
or Sub-Adviser and their subsidiaries; and
(bullet) employee benefit plans qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (which does not include
Individual Retirement Accounts) and custodial accounts under Section
403(b)(7) of the Code (also known as tax-sheltered annuities).
(bullet) Institutional Class shares have no up-front sales charge, so the
full amount of your purchase is invested in the Fund.
(bullet) Institutional Class shares are not subject to a contingent
deferred sales charge.
(bullet) Institutional Class shares are subject to an annual 12b-1 fee
which may not be greater than 0.25%. The distributor has agreed to waive
12b-1 fees for Institutional Class shares acquired by shareholders on or
after March 1, 1998.
<TABLE>
<CAPTION>
Class A Sales Charges
Amount Sales charge Sales charge as Dealer's
of purchase as % % of amount commission as
of offering price invested %
Of offering price
<S> <C> <C> <C>
Less than 4.75% X.XX% 4.00%
$100,000
$100,000 but 3.75% X.XX% 3.00%
under $250,000
$250,000 but 2.50% X.XX% 2.00%
under $500,000
$500,000 but 2.00% X.XX% 1.60%
under $1 million
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1
million or more of Class A shares. However, if your financial adviser is
paid a commission on your purchase, you may have to pay a limited
contingent deferred sales charge of 1% if you redeem these shares within
the first year and 0.50% if you redeem them within the second year.
<TABLE>
<CAPTION>
Amount of Sales charge Sales charge Dealer's commission as
purchase as % as % %
of offering of amount of offering price
price invested
<S> <C> <C> <C>
$1 million up to
$5 million none None 1.00%
Next $20 million
up to $25 million none None 0.50
Amount over $25
million none None 0.25
</TABLE>
[glossary continued]
Inflation
- ------------------------------------------------------------------------
The increase in the cost of goods and services over time. U.S. inflation
is measured by the Consumer Price Index (CPI).
Investment goal
- ------------------------------------------------------------------------
The objective, such as long-term capital growth or high current income,
that a mutual fund pursues.
Management fee
- ------------------------------------------------------------------------
The amount paid by a mutual fund to the investment adviser for management
services, expressed as a percentage of the fund's net assets.
[glossary to be continued]
About your account continued
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on Class
A, B and C shares. Please refer to the Statement of Additional Information
for detailed information and eligibility requirements. You can also get
additional information from your financial adviser. You or your financial
adviser must notify us at the time you purchase shares if you are eligible
for any of these programs.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Share class
Program How it works A B C
- ------------------------------------------------------------------------------------
Letter of Intent Through a Letter of Intent X Although the
you agree to invest a Letter of Intent
certain amount in Delaware and Rights of
Investment Funds (except Accumulation do
money market funds with no not apply to the
sales charge) over a 13-month purchase of Class
period to qualify for reduced B and C shares,
front-end sales charges. you can combine
your purchase of
Class B and C
shares to fulfill
your Letter of
Intent or qualify
for Rights of
Accumulation.
- ------------------------------------------------------------------------------------
Rights of Accumulation You can combine your holdings X
of all funds in the Delaware
Investments family (except
money market funds with no
sales charge) as well as the
holdings of your spouse and
children under 21 to qualify
for reduced front-end sales
charges.
- ------------------------------------------------------------------------------------
Reinvestment of Redeemed Up to 12 months after you X
Shares redeem shares, you can reinvest
the proceeds without paying a
front-end sales charge.
- ------------------------------------------------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may X
SARSEP, Prototype Profit qualify for reduced sales
Sharing, Pension, charges by combining the
SIMPLE 401(k), 403(b)(7), purchases of all members
and 457 Retirement Plans of the group. Members of
these groups may also qualify
to purchase shares without a
front-end sales charge and a
waiver of any contingent
deferred sales charges.
- ------------------------------------------------------------------------------------
</TABLE>
[glossary continued]
M-P
NASD (National Association of Securities Dealers)
- ------------------------------------------------------------------------
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the
actions of its members.
[glossary to be continued]
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a fee for this
service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to
the fund and class of shares you wish to purchase to Delaware Investments,
1818 Market Street, Philadelphia, PA 19103. If you are making an initial
purchase by mail, you must include a completed investment application, or
an appropriate retirement plan application if you are opening a retirement
account, with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank,
ABA #031201467, Bank Account number 2014128934013. Include your account
number and the name of the fund in which you want to invest. If you are
making an initial purchase by wire, you must call us so we can assign an
account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in
the Delaware Investments family for shares of other funds in the family.
Please keep in mind, however, that under most circumstances, you may only
exchange between the same class of shares. To open an account by exchange,
call the Shareholder Service Center at 800-523-1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated
telephone service, or through our web site, www.delawarefunds.com. For
more information about how to sign up for these services, call our
Shareholder Service Center at 800-523-1918.
[glossary continued]
NAV (Net asset value)
- ------------------------------------------------------------------------
The daily dollar value of one mutual fund share. Equal to a fund's net
assets divided by the number of shares outstanding.
NRSRO (Nationally recognized statistical rating organization)
- ------------------------------------------------------------------------
A company that assesses the quality and potential performance of bonds,
commercial paper, preferred and common stocks and municipal short-term
issues, rating the probability that the issuer of the debt will meet the
scheduled interest payments and repay the principal. Ratings are published
by such companies as Moody's Investors Service (Moody's), Standard &
Poor's Corporation (S&P), Duff & Phelps, Inc. (Duff), and Fitch Investor
Services, Inc. (Fitch).
[glossary to be continued]
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can open an account with an
initial investment of $1,000, and make additional investments at any time
for as little as $100.
(bullet) If you are buying shares in an IRA or Roth IRA; under the Uniform
Gifts to Minors Act or the Uniform Transfers to Minors Act; or through an
Automatic Investing Plan, the minimum purchase is $250, and you can make
additional investments of only $25.
(bullet) If you are buying shares in an Education IRA, the minimum
purchase is $500, and you can made additional investments of only $25.
(bullet) The minimums vary for retirement plans other than IRAs, Roth IRAs
or Education IRAs.
The price you pay for shares will depend on when we receive your purchase
order. If we or an authorized agent receive your order before the close of
trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Time)
on a business day, you will pay that day's closing share price which is
based on the Fund's net asset value. If we receive your order after the
close of trading, you will pay the next business day's price. A business
day is any day that the New York Stock Exchange is open for business. We
reserve the right to reject any purchase order.
We determine the Fund's net asset value (NAV) per share at the close of
trading of the New York Stock Exchange each business day that the Exchange
is open. We calculate this value by adding the market value of all the
securities and assets in the Fund's portfolio, deducting all liabilities,
and dividing the resulting number by the number of shares outstanding. The
result is the net asset value per share. We price securities and other
assets for which market quotations are available at their market value. We
price debt securities on the basis of valuations provided to us by an
independent pricing service that uses methods approved by the board of
directors. Any investments that have a maturity of less than 60 days we
price at amortized cost. We price all other securities at their fair
market value using a method approved by the board of directors.
[glossary continued]
P-S
Principal
- ------------------------------------------------------------------------
Amount of money you invest. Also refers to a bond's original face value,
due to be repaid at maturity.
Prospectus
- ------------------------------------------------------------------------
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
[glossary to be continued]
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your
shares. Your adviser may charge a fee for this service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing
to: Delaware Investments, 1818 Market Street, Philadelphia, PA 19103. All
owners of the account must sign the request, and for redemptions of
$50,000 or more, you must include a signature guarantee for each owner.
Signature guarantees are also required when redemption proceeds are going
to anyone other than the account holder(s) of record.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or if you redeem at least $1,000 of shares,
you may have the proceeds sent directly to your bank by wire. Bank
information must be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds
deposited directly to your bank account the next business day after we
receive your request. If you request a wire deposit, the First Union Bank
fee (currently $7.50) will be deducted from your proceeds. Bank
information must be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service,
or through our web site, www.delawarefunds.com. For more information about
how to sign up for these services, call our Shareholder Service department
at 800-523-1918.
[glossary continued]
Redeem
- ------------------------------------------------------------------------
To cash in your shares by selling them back to the mutual fund.
Risk
- ------------------------------------------------------------------------
Generally defined as variability of value; also credit risk, inflation
risk, currency and interest rate risk. Different investments involve
different types and degrees of risk.
Sales charge
- ------------------------------------------------------------------------
Charge on the purchase of fund shares sold through financial advisers. May
vary with the amount invested. Typically used to compensate advisers for
advice and service provided.
[glossary to be continued]
About your account continued
How to redeem shares (cont.)
If you hold your shares in certificates, you must submit the certificates
with your request to sell the shares. We recommend that you send your
certificates by certified mail.
When you send us a properly completed request to redeem or exchange
shares, you will receive the net asset value as determined at the close of
business on the day we receive your request. We will deduct any applicable
contingent deferred sales charges. You may also have to pay taxes on the
proceeds from your sale of shares. We will send you a check, normally the
next business day, but no later than seven days after we receive your
request to sell your shares. If you purchased your shares by check, we
will wait until your check has cleared, which can take up to 15 days,
before we send your redemption proceeds.
If you are required to pay a contingent deferred sales charge when you
redeem your shares, the amount subject to the fee will be based on the
shares' net asset value when you purchased them or their net asset value
when you redeem them, whichever is less. This arrangement assures that you
will not pay a contingent deferred sales charge on any increase in the
value of your shares. You also will not pay the charge on any shares
acquired by reinvesting dividends or capital gains. If you exchange shares
of one fund for shares of another, and later redeem those shares, the
purchase price for purposes of the contingent deferred sales charge
formula will be the price you paid for the original shares not the
exchange price. The redemption price for purposes of this formula will be
the NAV of the shares you are actually redeeming.
Account Minimum
If you redeem Class A, B or C shares and your account balance falls below
the required account minimum of $1,000 ($250 for IRAs and Roth IRAs,
Uniform Gift to Minors Act accounts or accounts with automatic investing
plans, and $500 for Education IRAs) for three or more consecutive months,
you will have until the end of the current calendar quarter to raise the
balance to the minimum. If your account is not at the minimum by the
required time, you will be charged a $9 fee for that quarter and each
quarter after that until your account reaches the minimum balance. If your
account in any class is below the minimum balance because of redemptions,
the Fund may redeem your account after 60 days' written notice to you.
[glossary continued]
S-S
SEC (Securities and Exchange Commission)
- ------------------------------------------------------------------------
Federal agency established by Congress to administer the laws governing
the securities industry, including mutual fund companies.
Share classes
- ------------------------------------------------------------------------
Different classifications of shares; mutual fund share classes offer a
variety of sales charge choices.
Signature guarantee
- ------------------------------------------------------------------------
Certification by a bank, brokerage firm or other financial institution
that a customer's signature is valid.
[glossary to be continued]
Special services
To help make investing with us as easy as possible, and to help you build
your investments, we offer the following special services to Class A, B
and C share accounts.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions or direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
from your shares in one or more Delaware Investments funds into any other
Delaware Investments fund. Wealth Builder Exchanges are subject to the
same rules as regular exchanges and require a minimum monthly exchange of
$100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the
Dividend Reinvestment Plan are not subject to a front-end sales charge or
to a contingent deferred sales charge. Institutional Class shareholders
may reinvest dividends only into Institutional Class shares of this Fund
and not into any other Delaware Investments Funds.
[glossary continued]
Standard deviation
- ------------------------------------------------------------------------
A measure of an investment's volatility; for mutual funds, measures how
much a fund's total return varies from its historical average.
Statement of Additional Information (SAI)
- ------------------------------------------------------------------------
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies
and risks.
[glossary to be continued]
About your account (continued)
Special services (continued)
Exchanges
You can exchange all or part of your Class A, B and C shares for shares of
the same class in another Delaware Investments fund without paying a sales
charge and without paying a contingent deferred sales charge on the shares
of the fund from which you make your exchange. However, if you exchange
shares from a fund that does not have a sales charge you will pay any
applicable sales charges on your new shares. You don't pay sales charges
on shares that you acquire through the reinvestment of dividends. When
exchanging Class B and Class C shares of one fund for similar shares in
other funds, your new shares will be subject to the same contingent
deferred sales charge as the shares you originally purchased. The holding
period for the CDSC will also remain the same, with the amount of time you
held your original shares being credited toward the holding period of your
new shares. When you exchange shares, you are purchasing shares in another
fund so you should be sure to get a copy of the fund's prospectus and read
it carefully before buying shares through an exchange. You may have to pay
taxes on your exchange.
MoneyLineSM On Demand Service
Through our MoneylineSM On Demand Service, you or your financial adviser
may transfer money between your Fund account and your predesignated bank
account by telephone request. This service is not available for retirement
plans.
MoneyLineSM Direct Deposit Service
Through our MoneylineSM Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account.
Delaware Investments does not charge a fee for this service; however, your
bank may assess one. This service is available for Institutional Class
shares but it is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly
or quarterly payment from your account made to you or someone you
designate. If the value of your account is $5,000 or more, you can make
withdrawals of at least $25 monthly, or $75 quarterly. You may also have
your withdrawals deposited directly to your bank account through our
MoneylineSM Direct Deposit Service.
[glossary continued]
T-V
Total return
- ------------------------------------------------------------------------
An investment performance measurement, expressed as a percentage, based on
the combined earnings from dividends, capital gains and change in price
over a given period.
[glossary to be continued]
Dividends, distributions and taxes
Dividends, if any, are declared daily and paid monthly. Capital gains, if
any, are declared and paid annually. We automatically reinvest all
dividends and any capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser
about your particular tax situation and how it might be affected by
current tax law. The tax status of your dividends from the Fund is the
same whether you reinvest your dividends or receive them in cash.
Distributions from the Fund's long-term capital gains are taxable as
capital gains, while distributions from short-term capital gains and net
investment income are generally taxable as ordinary income. Any capital
gains may be taxable at different rates depending on the length of time
the Fund held the assets. In addition, you may be subject to state and
local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount
and nature of all dividends and capital gains that you were paid for the
prior year.
Retirement plans
In addition to being an appropriate investment for your Individual
Retirement Account (IRA), Roth IRA and Education IRA, shares in the Fund
may be suitable for group retirement plans. You may establish your IRA
account even if you are already a participant in an employer-sponsored
retirement plan. For more information on how shares in the Fund can play
an important role in your retirement planning or for details about group
plans, please consult your financial adviser, or call 800-523-1918.
[glossary continued]
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
- ------------------------------------------------------------------------
Federal and state laws that provide a simple way to transfer property to a
minor with special tax advantages.
Volatility
- ------------------------------------------------------------------------
The tendency of an investment to go up or down in value by different
magnitudes. There are "low volatility" and "high volatility" investments.
[end glossary]
Other investment policies and risk considerations
GNMA Certificates
The Fund may invest in certificates of the Government National Mortgage
Association (GNMA). GNMA Certificates are mortgage-backed securities. Each
Certificate evidences an interest in a specific pool of mortgages insured
by the Federal Housing Administration or the Farmers Home Administration
or guaranteed by the Veterans Administration. GNMA Certificates differ
from bonds in that principal is scheduled to be paid back by the borrower
over the length of the loan rather than returned in a lump sum at
maturity. Scheduled payments of principal and interest are made to the
registered holders of GNMA Certificates. Interest on GNMA Certificates is
paid monthly rather than semi-annually as for most traditional bonds. The
GNMA Certificates in which the Fund will generally invest are of the
modified pass-through type. The Fund may also purchase "variable rate"
GNMA Certificates and may purchase other types of certificates which may
be issued with GNMA's guarantee. U.S. Government GNMA guarantees the
timely payment of monthly installments of principal and interest on
modified pass-through Certificates at the time such payments are due,
whether or not such amounts are collected by the issuer on the underlying
mortgages. The National Housing Act provides that the full faith and
credit of the United States is pledged to the timely payment of principal
and interest by GNMA of amounts due on these GNMA Certificates. GNMA may
borrow U.S. Treasury funds to the extent needed to make payments under its
guarantee.
The average life of GNMA Certificates varies with the maturities of the
underlying mortgage instruments with maximum maturities of 30 years. The
average life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of
prepayments of refinancing of such mortgages or foreclosure. Such
prepayments are passed through to the registered holder with the regular
monthly payments of principal and interest, and have the effect of
reducing future payments. Due to the GNMA guarantee, foreclosures impose
no risk to principal investments.
The average life of pass-through pools varies with the maturities of the
underlying mortgage instruments. In addition, a pool's term may be
shortened by unscheduled or early payments of principal and interest on
the underlying mortgages. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates, general
economic conditions, the location and age of the mortgage and other social
and demographic conditions. As prepayment rates vary widely, it is not
possible to accurately predict the average life of a particular pool.
However, statistics indicate that the average life of the type of
mortgages backing the majority of GNMA Certificates is approximately 12
years. For this reason, it is standard practice to treat GNMA Certificates
as 30-year mortgage-backed securities which prepay fully in the twelfth
year. Pools of mortgages with other maturities or different
characteristics will have varying assumptions for average life. The
assumed average life of pools of mortgages having terms of less than 30
years is less than 12 years, but typically not less than five years.
The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages
underlying the Certificates, but only by the amount of the fees paid to
GNMA and the issuer. Such fees in the aggregate usually amount to
approximately 1/2 of 1%.
Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments
and the associated average life assumption. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby shortening the
actual average life of a pool of mortgage-related securities. Conversely,
in periods of rising rates, the rate of prepayment tends to decrease,
thereby lengthening the actual average life of the pool. Prepayments
generally occur when interest rates have fallen. Reinvestments of
prepayments will be at lower rates. Historically, actual average life has
been consistent with the 12-year assumption referred to above. The actual
yield of each GNMA Certificate is influenced by the prepayment experience
of the mortgage pool underlying the Certificates and may differ from the
yield based on the assumed average life. Moreover, any premium paid on the
purchase of a GNMA Certificate will be lost if the obligation is prepaid.
In periods of falling interest rates, this potential for prepayment may
reduce the general upward price increase of GNMAs which might otherwise
occur. Price changes of the GNMAs held by the Fund have a direct impact on
the net asset value per share of the Fund.
Zero-coupon securities
The Fund may invest in "zero-coupon" Treasury securities, which are U.S.
Treasury bills, notes and bonds that have been stripped of their unmatured
interest coupons. Zero-coupon securities do not entitle the holder to any
periodic payment of interest prior to maturity. Rather, such securities
usually trade at a deep discount from their face value and pay their
entire face value at maturity. The difference between the face value of
the security (at maturity) and the amount at which the security was
purchased (i.e., the "discount") represents interest income to the holder.
STRIPs are a type of zero-coupon security in which the Fund may invest.
STRIPs are securities where the principal and interest components are
traded independently under the Separate Trading of Registered Interest and
Principal Securities Program ("STRIPs"). Under STRIPs, the principal and
interest components are individually numbered and separately issued by the
U.S. Treasury at the request of depository financial institutions, which
then trade the component parts independently. The market prices of
zero-coupon securities are generally more volatile than the market prices
of securities that pay interest periodically and are likely to respond to
changes in interest rates to a greater degree than do non-zero-coupon
securities having similar maturities and credit quality. Current federal
income tax law requires that a holder of a taxable zero-coupon security
report as income each year the portion of the original issue discount of
such security that accrues that year, even though the holder receives no
cash payments of interest during the year. The Fund intends to qualify as
a regulated investment company under the Code. Accordingly, during periods
when the Fund receives no interest payments on its zero-coupon securities,
it will be required, in order to maintain its desired tax treatment, to
distribute cash approximating the income attributable to such securities.
Such distribution may require the sale of portfolio securities to meet the
distribution requirements and such sales may be subject to the risk factor
discussed above.
Short-term trading
The Fund intends to use short-term trading of its securities as a means of
managing its portfolio to achieve its investment objective. The Fund will
engage in short-term trading if it believes the transactions, net of costs
(including commission, if any), will result in improving the income or,
secondarily, appreciation potential of its portfolio. The successful use
of short-term trading will depend upon the ability of the Fund to evaluate
particular securities and anticipate relevant market factors, including
interest rate trends and variations from such trends. Short-term trading
such as that contemplated by the Fund places a premium upon the ability of
the Fund to obtain relevant information, evaluate it promptly and take
advantage of its evaluations by completing transactions on a favorable
basis. As used herein, "short-term trading" means selling securities held
for a relatively brief period of time, usually less than three months.
The Fund's short-term trading may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest rates. A change in
securities held by the Fund is known as "portfolio turnover" and may
involve the payment by the Fund of dealer mark-ups or underwriting
commissions and of transaction costs on the sale of securities as well as
on reinvestment of the proceeds in other securities. In addition, frequent
changes in the Fund's portfolio securities may result in greater tax
liability to the Fund's shareholders by reason of more short-term capital
gains. See Dividends, Distributions and Taxes and the Statement of
Additional Information.
Repurchase Agreements
The Fund will also seek to achieve its investment objective through
investing in repurchase agreements with banks or broker/dealers deemed to
be creditworthy by the manager, under guidelines approved by the Board of
Directors. A repurchase agreement is a short-term investment in which the
purchaser (i.e. the Fund) acquires ownership of a debt security and the
seller agrees to repurchase the obligation at a future time and set price,
thereby determining the yield during the purchaser's holding period.
Generally, repurchase agreements are of short duration, often less than
one week but on occasion for longer periods. Not more than 10% of the
Fund's assets may be invested in illiquid securities, including repurchase
agreements of over seven-days' maturity. Should an issuer of a repurchase
agreement fail to repurchase the underlying security, the loss to the
Fund, if any, would be the difference between the repurchase price and the
market value of the security. The Fund will limit its investments in
repurchase agreements to those which the manager under guidelines of the
Board of Directors determines to present minimal credit risks and which
are of high quality. In addition, the Fund must have collateral of at
least 102% of the repurchase price, including the portion representing the
Fund's yield under such agreements, which is monitored on a daily basis.
Repurchase agreements may be considered loans under the 1940 Act, but the
Fund considers repurchase agreements contracts for the purchase and sale
of securities, and it seeks to perfect a security interest in the
collateral securities so that it has the right to keep and dispose of the
underlying collateral in the event of default.
The funds in Delaware Investments have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow
Delaware Investments funds jointly to invest cash balances. The Fund may
invest cash balances in a joint repurchase agreement in accordance with
the terms of the Order and subject generally to the conditions described
above.
* * *
The Statement of Additional Information describes certain of these
investment policies and risk considerations. The Statement of Additional
Information also sets describes other investment policies, risk
considerations and more specific investment restrictions.
<TABLE>
<CAPTION>
Financial highlights
The financial highlights table is intended to help you understand the
Fund's financial performance. All "per share" information reflects
financial results for a single Fund share. This information has been
audited by Ernst & Young LLP, whose report, along with the Fund's
financial statements, is included in the Fund's annual report, which is
available upon request by calling 800-523-1918.
Class A Shares
- ------------------------------------------------------------------------------------
Period
7/1/96
Year Ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.37 10.16
Income From Investment
Operations
Net investment income ($) 0.59 0.21
Net realized & unrealized
gains (losses) on
investments ($) 0.24 0.21
Total from investment
operations ($) 0.83 0.42
Less Distributions
Dividends from net
investment income ($) (0.60) (0.21)
Distributions from realized
gains ($) none none
Total distributions ($) (0.60) (0.21)
Net asset value, end of
period ($) 10.60 10.37
Total Return (%) (3) 8.37(6) 4.18
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 52,213 65,516
Ratio of expenses to average
daily net assets (%) 0.93 0.98(4,5)
Ratio of net investment
income to average daily net
assets (%) 5.76 6.03
Portfolio turnover rate (%) 202.47 66.29
Volatility, as indicated by
year-by-year return 8.37(6) 4.18
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. For Class A shares: does not reflect the maximum sales charge
of 4.75%, nor the Limited CDSC that varies from 0.50% to 1% that would
apply in the event of certain redemptions within two years of purchase.
Total return for periods less than 12 months have not been annualized.
4 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
5 Annualized.
6 Total return reflects expense limitations in effect during the period.
<CAPTION>
Financial highlights (Continued)
The financial highlights table is intended to help you understand the
Fund's financial performance. All "per share" information reflects
financial results for a single Fund share. This information has been
audited by Ernst & Young LLP, whose report, along with the Fund's
financial statements, is included in the Fund's annual report, which is
available upon request by calling 800-523-1918.
Class A Shares
- ------------------------------------------------------------------------------------
Year Ended 6/30
U.S. Government Securities Fund 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.37 9.76 10.99
Income From Investment
Operations
Net investment income ($) 0.63 0.62 0.55
Net realized & unrealized
gains (losses) on
investments ($) (0.23) 0.63 (0.94)
Total from investment
operations ($) 0.40 1.25 (0.39)
Less Distributions
Dividends from net
investment income ($) (0.61) (0.62) (0.55)
Distributions from realized
gains ($) none (0.02) (0.29)
Total distributions ($) (0.61) (0.64) (0.84)
Net asset value, end of
period ($) 10.16 10.37 9.76
Total Return (%) (3) 3.88 13.45 (3.95)
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 68,442 75,886 84,660
Ratio of expenses to average
daily net assets (%) 0.974 0.95 0.96
Ratio of net investment
income to average daily net
assets (%) 6.07 6.38 5.10
Portfolio turnover rate (%) 145.35 144.39 124.38
Volatility, as indicated by
year-by-year return 3.88 13.45 (3.95)
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. For Class A shares: does not reflect the maximum sales charge
of 4.75%, nor the Limited CDSC that varies from 0.50% to 1% that would
apply in the event of certain redemptions within two years of purchase.
Total return for periods less than 12 months have not been annualized.
4 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
5 Annualized.
6 Total return reflects expense limitations in effect during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
Class B Shares
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.38 10.17
Income From Investment
Operations
Net investment income ($) 0.52 0.18
Net realized & unrealized
gains (losses) on
investments ($) 0.24 0.21
Total from investment
operations ($) 0.76 0.39
Less Distributions
Dividends from net
investment income ($) (0.53) (0.18)
Distributions from realized
gains ($) none none
Total distributions ($) (0.53) (0.18)
Net asset value, end of
period ($) 10.61 10.38
Total Return (%) (4) 7.59(5) 3.91
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 2,257 2,139
Ratio of expenses to average
daily net assets (%) 1.67 1.73(6,7)
Ratio of net investment
income to average daily net
assets (%) 5.02 5.24
Portfolio turnover rate (%) 202.47 66.29
Volatility, as indicated by
year-by-year return 7.595 3.91
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Date of initial public offering.
4 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. For Class B shares: does not reflect the contingent deferred
sales charge which varies from 1%-4% depending upon the holding period.
Total return for periods less than 12 months have not been annualized.
5 Total return reflects expense limitations in effect during the period.
6 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
7 Annualized.
<CAPTION>
Financial Highlights (Continued)
Class B Shares
- ------------------------------------------------------------------------------------
Period
6/7/94(3)
Year Ended 6/30 through
U.S. Government Securities Fund 1996 1995 6/30/94
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.38 9.75 10.05
Income From Investment
Operations
Net investment income ($) 0.57 0.56 0.01
Net realized & unrealized
gains (losses) on
investments ($) (0.23) 0.65 (0.28)
Total from investment
operations ($) 0.34 1.21 (0.27)
Less Distributions
Dividends from net
investment income ($) (0.55) (0.56) (0.01)
Distributions from realized
gains ($) none (0.02) (0.02)
Total distributions ($) (0.55) (0.58) (0.03)
Net asset value, end of
period ($) 10.17 10.38 9.75
Total Return (%) (4) 3.325 12.90(5) (2.68)
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 1,780 139 24
Ratio of expenses to average
daily net assets (%) 1.466 1.54 0.308
Ratio of net investment
income to average daily net
assets (%) 5.55 5.56 0.11
Portfolio turnover rate (%) 145.35 144.39 124.38
Volatility, as indicated by
year-by-year return 3.325 12.905 (2.68)
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Date of initial public offering.
4 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. For Class B shares: does not reflect the contingent deferred
sales charge which varies from 1%-4% depending upon the holding period.
Total return for periods less than 12 months have not been annualized.
5 Total return reflects expense limitations in effect during the period.
6 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
7 Annualized.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Class C Shares
- ------------------------------------------------------------------------------------
Period
7/1/96
Year Ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.36 10.15
Income From Investment
Operations
Net investment income ($) 0.52 0.18
Net realized & unrealized
gains (losses) on
investments ($) 0.24 0.21
Total from investment
operations ($) 0.76 0.39
Less Distributions
Dividends from net
investment income ($) (0.53) (0.18)
Distributions from realized
gains ($) none none
Total distributions ($) (0.53) (0.18)
Net asset value, end of
period ($) 10.59 10.36
Total Return (%) (4) 7.60(5) 3.92
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 138 234
Ratio of expenses to average
daily net assets (%) 1.68 1.73(6,7)
Ratio of net investment
income to average daily net
assets (%) 5.02 5.26
Portfolio turnover rate (%) 202.47 66.29
Volatility, as indicated by
year-by-year return 7.60(5) 3.92
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Date of initial public offering.
4 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. For Class C shares: does not reflect the 1% contingent
deferred sales charge on redemptions within 12 months from the date of
purchase. Total return for periods less than 12 months have not been
annualized.
5 Total return reflects expense limitations in effect during the period.
6 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
7 Annualized.
8 Ratios presented for the period from June 7, 1994 to June 30, 1994 are
not annualized as they are not indicative of anticipated annual results.
<CAPTION>
Financial Highlights (Continued)
Class C Shares
- ------------------------------------------------------------------------------------
Period
1/10/95(3)
Year Ended 6/30 through
U.S. Government Securities Fund 1996 6/30/95
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.36 9.48
Income From Investment
Operations
Net investment income ($) 0.55 0.27
Net realized & unrealized
gains (losses) on
investments ($) (0.23) 0.88
Total from investment
operations ($) 0.32 1.15
Less Distributions
Dividends from net
investment income ($) (0.53) (0.27)
Distributions from realized
gains ($) none none
Total distributions ($) (0.53) (0.27)
Net asset value, end of
period ($) 10.15 10.36
Total Return (%) (4) 3.11 12.73
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 224 221
Ratio of expenses to average
daily net assets (%) 1.70(6) 1.62
Ratio of net investment
income to average daily net
assets (%) 5.33 5.10
Portfolio turnover rate (%) 145.35 144.39
Volatility, as indicated by
year-by-year return 3.11 12.73
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Date of initial public offering.
4 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. For Class C shares: does not reflect the 1% contingent
deferred sales charge on redemptions within 12 months from the date of
purchase. Total return for periods less than 12 months have not been
annualized.
5 Total return reflects expense limitations in effect during the period.
6 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
7 Annualized.
8 Ratios presented for the period from June 7, 1994 to June 30, 1994 are
not annualized as they are not indicative of anticipated annual results.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Institutional Class Shares
- ------------------------------------------------------------------------------------
Period
7/1/96
Year Ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.37 10.16
Income From Investment
Operations
Net investment income ($) 0.60 0.21
Net realized & unrealized
gains (losses) on
investments ($) 2.24 0.21
Total from investment
operations ($) 0.84 0.42
Less Distributions
Dividends from net
investment income ($) (0.61) (0.21)
Distributions from realized
gains ($) none none
Total distributions ($) (0.61) (0.21)
Net asset value, end of
period ($) 10.60 10.37
Total Return (%) (4) 8.395 4.17
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 45,589 50,066
Ratio of expenses to average
daily net assets (%) 0.93 0.99(6,7)
Ratio of net investment
income to average daily net
assets (%) 5.76 6.00
Portfolio turnover rate (%) 202.47 66.29
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Date of initial public offering.
4 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. Total return for periods less than 12 months have not been
annualized.
5 Total return reflects expense limitations in effect during the period.
6 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
7 Annualized.
8 Ratios presented for the period from June 7, 1994 to June 30, 1994 are
not annualized as they are not indicative of anticipated annual results.
<CAPTION>
Financial Highlights (continued)
Institutional Class Shares
- ------------------------------------------------------------------------------------
Period
6/7/94(3)
Year Ended 6/30 through
U.S. Government Securities Fund 1996 1995 6/30/94
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period ($) 10.37 9.75 10.05
Income From Investment
Operations
Net investment income ($) 0.63 0.62 0.01
Net realized & unrealized
gains (losses) on
investments ($) (0.23) 0.64 (0.28)
Total from investment
operations ($) 0.40 1.26 (0.27)
Less Distributions
Dividends from net
investment income ($) (0.61) (0.62) (0.01)
Distributions from realized
gains ($) none (0.02) (0.02)
Total distributions ($) (0.61) (0.64) (0.03)
Net asset value, end of
period ($) 10.16 10.37 9.75
Total Return (%) (4) 3.88 13.57 (2.64)
Ratios and Supplemental
Data:
Net asset value, end of
period (000's omitted) ($) 41,688 54,445 49,898
Ratio of expenses to average
daily net assets (%) 0.976 0.94 0.25(8)
Ratio of net investment
income to average daily net
assets (%) 6.07 6.39 0.16
Portfolio turnover rate (%) 145.35 144.39 124.38
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
3 Date of initial public offering.
4 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value. Total return for periods less than 12 months have not been
annualized.
5 Total return reflects expense limitations in effect during the period.
6 For the period and year shown, the expense ratio reflects the effect of
gross expense attributable to earnings credits on uninvested cash balances
received by the Fund.
7 Annualized.
8 Ratios presented for the period from June 7, 1994 to June 30, 1994 are
not annualized as they are not indicative of anticipated annual results.
</TABLE>
How to read the financial highlights
Net investment income
- ------------------------------------------------------------------------
Net investment income includes dividend and interest income earned from
the Fund's securities after expenses have been deducted.
Net gains (losses) on investments (both realized and unrealized)
- ------------------------------------------------------------------------
A realized gain occurs when we sell an investment at a profit, while a
realized loss occurs when we sell an investment at a loss. When an
investment increases or decreases in value but we do not sell it, we
record an unrealized gain or loss. The amount of realized gain per share
that we pay to shareholders is listed under "Less
Distributions-Distributions from realized gains."
Realized gains
- ------------------------------------------------------------------------
Profits realized from the sale of securities.
Net asset value (NAV)
- ------------------------------------------------------------------------
This is the value of a mutual fund share, calculated by dividing the net
assets by the number of shares outstanding.
Total return
- ------------------------------------------------------------------------
This represents the percentage increase or decrease in the value of a
share of a fund during specific periods, in this case, annual periods. In
calculating this figure for the financial highlights table, we include fee
waivers, exclude front-end and contingent deferred sales charges, and
assume the shareholder has reinvested all dividends and realized gains.
Net assets
- ------------------------------------------------------------------------
Net assets represent the total value of all the assets in the Fund's
portfolio, less any liabilities, that are attributable to that class of
the Fund.
How to read the financial highlights
(continued)
Ratio of expenses to average daily net assets
- ------------------------------------------------------------------------
The expense ratio is the percentage of total investment that a fund pays
annually for operating expenses and management fees. These expenses
include accounting and administration expenses, services for shareholders,
and similar expenses.
Ratio of net investment income to average daily net assets
- ------------------------------------------------------------------------
We determine this ratio by dividing net investment income by average net
assets.
Portfolio turnover rate
- ------------------------------------------------------------------------
This figure tells you the amount of trading activity in a fund's
portfolio. For example, a fund with a 50% turnover has bought and sold
half of the value of its total investment portfolio during the stated
period.
[back cover]
US Government Securities Fund
Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance
during their last fiscal year. You can find more detailed information
about the Fund in the current Statement of Additional Information, which
we have filed electronically with the Securities and Exchange Commission
(SEC) and which is legally a part of this prospectus. If you want a free
copy of the Statement of Additional Information, the annual or semi-annual
report, or if you have any questions about investing in the Fund, you can
write to us at 1818 Market Street, Philadelphia, PA 19103, or call
toll-free 800-523-1918. You may also obtain additional information about
the Fund from your financial adviser.
You can find reports and other information about the Fund on the SEC web
site (http://www.sec.gov), or you can get copies of this information,
after payment of a duplicating fee, by writing to the Public Reference
Section of the SEC, Washington, D.C. 20549-6009. Information about the
Fund, including its Statement of Additional Information, can be reviewed
and copied at the Securities and Exchange Commission's Public Reference
Room in Washington, D.C. You can get information on the public reference
room by calling the SEC at 1-800-SEC-0330.
Web site
www.delawarefunds.com
E-mail
[email protected]
Shareholder Service Center
800-523-1918
Call the Shareholder Service Center:
Monday to Friday, 8 a.m. to 8 p.m. Eastern time.
For fund information; literature; price, yield and performance figures.
For information on existing regular investment accounts and retirement
plan accounts including wire investments; wire redemptions; telephone
redemptions and telephone exchanges.
Delaphone Service
800-362-FUND (800-362-3863)
For convenient access to account information or current performance
information on all Delaware Investment Funds seven days a week, 24
hours a day, use this Touch-ToneR service.
Registrant's Investment Company Act file number: 811-5267
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
P-___ [--] PP 2/99
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1999
VOYAGEUR FUNDS, INC.
DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND
1818 Market Street
Philadelphia, PA 19103
For Prospectus, Performance and Information on Existing Accounts:
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY) Nationwide 800-362-7500
Voyageur Funds, Inc. is a professionally-managed mutual fund of the series
type which currently offers one series of shares: Delaware-Voyageur US
Government Securities Fund (the "Fund"). The Fund offers four classes:
Class A Shares, Class B Shares, Class C Shares and Institutional Class
Shares.
This Statement of Additional Information ("Part B" of the registration
statement) supplements the information contained in the current Prospectus
for the Fund Classes dated March 1, 1999 as it may be amended from time to
time. Part B should be read in conjunction with the Prospectus. Part B is
not itself a prospectus but is, in its entirety, incorporated by reference
into Prospectus. The Prospectus may be obtained by writing or calling your
investment dealer or by contacting the Fund's national distributor,
Delaware Distributors, L.P. (the "Distributor"), at the above address or
by calling the above phone numbers. The Fund's financial statements, the
notes relating thereto, the financial highlights and the report of
independent auditors are incorporated by reference from the Annual Report
into this Part B. The Annual Report will accompany any request for Part B.
The Annual Report can be obtained, without charge, by calling
800-523-1918.
TABLE OF CONTENTS
Cover Page
Investment Restrictions and Policies
Accounting and Tax Issues
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Investment Plans
Determining Offering Price and Net Asset Value
Redemption and Exchange
Distributions and Taxes
Investment Management Agreement and
Sub-Advisory Agreement
Officers and Directors
General Information
Appendix A--Description of Ratings
Appendix B - General Characteristics and Risks of Options and Futures
Appendix C--Investment Objectives of the Other Funds in the Delaware
Investments Family
Financial Statements
INVESTMENT RESTRICTIONS AND POLICIES
Investment Restrictions
The Fund has adopted certain investment restrictions set forth below
which, together with the investment objectives of the Fund and other
policies which are specifically identified as fundamental in the
Prospectus or herein cannot be changed without approval by holders of a
majority of the outstanding voting shares of the Fund. As defined in the
Investment Company Act of 1940 (the "1940 Act"), this means the lesser of
the vote of (1) 67% of the shares of the Fund at a meeting where more than
50% of the outstanding shares of the Fund are present in person or by
proxy or (2) more than 50% of the outstanding shares of the Fund. The
following investment restrictions apply to the Fund. The Fund will not:
1. 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.
2. 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 by restriction (1)
above.
3. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities.
4. 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.
5. 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.
6. Purchase or sell real estate, although it may purchase securities which
are secured by or represent interests in real estate.
7. Purchase or sell commodities or commodity contracts.
8. Make loans, except by purchase of debt obligations in which the Fund
may invest consistent with its investment policies and through repurchase
agreements.
9. 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%.
10. Purchase securities restricted as to resale.
11. 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.
12. 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 fundamental restriction (10) above).
13. Invest in securities of other investment companies, except as part of
a merger, consolidation or acquisition of assets.
14. 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.)
15. Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
Any investment restriction or limitation which involves a maximum
percentage of securities or assets shall not be considered to be violated
unless an excess over the percentage occurs immediately after an
acquisition of securities or a utilization of assets and such excess
results therefrom.
When Issued and Delayed Delivery Securities
When issued and delayed delivery transactions permit the Fund to lock-in a
price or yield on a security it intends to purchase, regardless of future
changes in interest rates. At the time the Fund commits to purchase
securities on a when-issued or delayed delivery basis, it will record the
transaction and thereafter reflect the value, each day, of such security
in determining its net asset value. At the time of delivery of the
securities, the value may be more or less than the purchase price. The
Fund will also establish a segregated account with its custodian in which
it will maintain cash or cash equivalents or other portfolio securities
equal in value to its commitments for such when-issued or delayed delivery
securities. The Fund generally will enter into agreements to purchase
securities on a when-issued or delayed delivery basis only with the
intention of actually acquiring the securities. The purchase of securities
on a when-issued or delayed delivery basis exposes the Fund to risk
because the securities may decrease in value prior to their delivery.
Purchasing securities on a when-issued or delayed delivery basis involves
the additional risk that the return available in the market when the
delivery takes place will be higher than that obtained in the transaction
itself. Although the Fund dos not presently intend to do so, these risks
could result in increased volatility of the Fund's net asset value to the
extent that the Fund purchases securities on a when-issued or delayed
delivery basis while remaining substantially fully invested.
Repurchase Agreements
The Fund will also follow the collateral custody, protection and
perfection guidelines recommended by the Comptroller of the Currency for
the use of national banks in their direct repurchase agreement activities.
As an additional safety measure, the Fund will enter into repurchase
agreements only with primary dealers that report to the Federal Reserve
Bank of New York or with the 100 largest U. S. commercial banks, as
measured by domestic deposits.
ACCOUNTING AND TAX ISSUES
When the Fund writes a call option, an amount equal to the premium
received by it is included in the section of the Fund's assets and
liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently "marked to market" to reflect the current market
value of the option written. The current market value of a written option
is the last sale price on the principal Exchange on which such option is
traded or, in the absence of a sale, the mean between the last bid and
asked prices. If an option which the Fund has written expires on its
stipulated expiration date, the Fund reports a realized gain. If the Fund
enters into a closing purchase transaction with respect to an option which
the Fund has written, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. Any such gain or
loss is a short-term capital gain or loss for federal income tax purposes.
If a call option which the Fund has written is exercised, the Fund
realizes a capital gain or loss (long-term or short-term, depending on the
holding period of the underlying security) from the sale of the underlying
security and the proceeds from such sale are increased by the premium
originally received.
Other Tax Requirements -- The Fund has qualified and intends to continue
to qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the
extent its earnings are distributed as provided in the Code and it
satisfies other requirements relating to the sources of its income and
diversification of its assets.
In order to qualify as a regulated investment company for federal income
tax purposes, the Fund must meet certain specific requirements, including:
(i) The Fund must maintain a diversified portfolio of securities, wherein
no security (other than U.S. government securities and securities of other
regulated investment companies) can exceed 25% of the Fund's total assets,
and, with respect to 50% of the Fund's total assets, no investment (other
than cash and cash items, U.S. Government securities and securities of
other regulated investment companies) can exceed 5% of the Fund's total
assets;
(ii) The Fund must derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale
or disposition of stock and securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies;
(iii) The Fund must distribute to its shareholders at least 90% of its
investment company taxable income and net tax-exempt income for each of its
fiscal years, and
(iv) The Fund must realize less than 30% of its gross income for each fiscal
year from gains from the sale of securities and certain other assets that
have been held by the Fund for less than three months ("short-short
income"). The Taxpayer Relief Act of 1997 (the "1997 Act") repealed the 30%
short-short income test for tax years of regulated investment companies
beginning after August 5, 1997; however, this rule may have continuing
effect in some states for purposes of classifying the Fund as a regulated
investment company.
The Code requires the Funds to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital
gain net income earned during the 12 month period ending October 31 (in
addition to amounts from the prior year that were neither distributed nor
taxed to the Fund) to you by December 31 of each year in order to avoid
federal excise taxes. The Fund intends as a matter of policy to declare
and pay sufficient dividends in December or January (which are treated by
you as received in December) but does not guarantee and can give no
assurances that its distributions will be sufficient to eliminate all such
taxes.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized
gains related to the offsetting positions in the straddle. Excess losses,
if any, can be recognized in the year of loss. Deferred losses will be
carried forward and recognized in the year that unrealized losses exceed
unrealized gains.
The 1997 Act has also added new provisions for dealing with transactions
that are generally called "Constructive Sale Transactions." Under these
rules, the Fund must recognize gain (but not loss) on any constructive
sale of an appreciated financial position in stock, a partnership interest
or certain debt instruments. The Fund will generally be treated as making
a constructive sale when it: 1) enters into a short sale on the same or
substantially identical property; 2) enters into an offsetting notional
principal contract; or 3) enters into a futures or forward contract to
deliver the same or substantially identical property. Other transactions
(including certain financial instruments called collars) will be treated
as constructive sales as provided in Treasury regulations to be published.
There are also certain exceptions that apply for transactions that are
closed before the end of the 30th day after the close of the taxable year.
PERFORMANCE INFORMATION
From time to time, the Fund may state each of its Classes' total return in
advertisements and other types of literature. Any statement of total
return performance data for a Class will be accompanied by information on
the average annual compounded rate of return for that Class over, as
relevant, the most recent one-, five- and ten-year, or life-of-fund
periods, as applicable. The Fund may also advertise aggregate and average
total return information for its Classes over additional periods of time.
In addition, the Fund may include illustrations showing the power of
compounding in advertisements and other types of literature.
In presenting performance information for Class A Shares, the Limited CDSC
applicable to only certain redemptions of those shares will not be
deducted from any computation of total return. See the Prospectus for a
description of the Limited CDSC, or other CDSC, and the limited instances
in which it applies. All references to a CDSC in this Performance
Information section will apply to Class B Shares or Class C Shares of the
Fund.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used
for the actual computations:
n
P(1 + T) = ERV
Where: P = a hypothetical initial purchase order of
$1,000 from which, in the case of
only Class A Shares, the maximum front-end
sales charge is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical
$1,000 purchase at the end of the
period after the deduction of the applicable
CDSC, if any, with respect to
Class B Shares and Class C Shares.
Total return performance for each Class will be computed by adding all
reinvested income and realized securities profits distributions plus the
change in net asset value during a specific period and dividing by the
offering price at the beginning of the period. It will not reflect any
income taxes payable by shareholders on the reinvested distributions
included in the calculation. Because securities prices fluctuate, past
performance should not be considered as a representation of the results
which may be realized from an investment in the Fund in the future.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the
maximum front-end sales charge, if any, is deducted from the initial
$1,000 investment at the time it is made with respect to Class A Shares
and that all distributions are reinvested at net asset value, and, with
respect to Class B Shares and Class C Shares reflects the deduction of the
CDSC that would be applicable upon complete redemption of such shares. In
addition, the Fund may present total return information that does not
reflect the deduction of the maximum front-end sales charge or any
applicable CDSC.
The Fund may also state total return performance for its Classes in the
form of an average annual return. This average annual return figure will
be computed by taking the sum of a Class' annual returns, then dividing
that figure by the number of years in the overall period indicated. The
computation will reflect the impact of the maximum front-end sales charge
or CDSC, if any, paid on the illustrated investment amount against the
first year's return.
The performance of each Class, as shown below, is the average annual total
return quotations through October 31, 1998, computed as described above.
The average annual total return for Class A Shares at offer reflects the
maximum front-end sales charges paid on the purchase of shares. The
average annual total return for Class A Shares at net asset value (NAV)
does not reflect the payment of the maximum front-end sales charge of
4.75%. The average annual total return for Class B Shares and Class C
Shares including deferred sales charge reflects the deduction of the
applicable CDSC that would be paid if the shares were redeemed at October
31, 1998. The average annual total return for Class B Shares and Class C
Shares excluding deferred sales charge assumes the shares were not
redeemed at October 31, 1998 and therefore does not reflect the deduction
of a CDSC.
Securities prices fluctuated during the periods covered, and past results
should not be considered as representative of future performance.
<TABLE>
<CAPTION>
Average Annual Total Return (1)
Class A Class A Institutional Class B
(at offer) (at NAV) Class (including CDSC)
<S> <C> <C> <C> <C>
1 year
ended
10/31/98
3 years
ended
10/31/98
5 years
ended
10/31/98
10 years
ended
10/31/98
Life of
Fund (2)
<CAPTION>
Class B Class C Class C
(excluding CDSC) (including CDSC) (excluding CDSC)
<S> <C> <C> <C>
1 year
ended
10/31/98
3 years
ended
10/31/98
5 years
ended
10/31/98
10 years
ended
10/31/98
Life of
Fund (2)
(1) Reflects fee waivers and payment of expenses in effect during the
periods. Performance would have been lower without the fee waivers and
expense payments. See Plan under Rule 12b-1 under Purchasing Shares and
Investment Management Agreement and Sub-Advisory Agreement for information
about voluntary fee waivers and expense payments in effect through April
30, 1999.
(2) Class A Shares commenced operation on November 2, 1987; Institutional
Class Shares commenced operations on June 7, 1994; Class B Shares
commenced operations on June 7, 1994; Class C Shares commenced operations
on January 10, 1995.
</TABLE>
As stated in the Prospectus, the Fund may also quote the current yield for
each Class in advertisements and investor communications.
The yield computation is determined by dividing the net investment income
per share earned during the period by the maximum offering price per share
on the last day of the period and annualizing the resulting figure,
according to the following formula:
a-b 6
YIELD = 2[(-------- + 1) -- 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
d = the maximum offering price per share on the last day
of the period.
The above formula will be used in calculating quotations of yield of each
Class, based on specified 30-day periods identified in advertising by the
Fund. Using this formula, the yields for Class A Shares, Class B Shares,
Class C Shares and Institutional Class Shares for the 30-day period ended
October 31, 1998 were 0.00%, 0.00%, 0.00% and 0.00%, respectively. Yield
calculations assume the maximum front-end sales charge, if any, and do not
reflect the deduction of any CDSC or Limited CDSC and also reflect
voluntary waivers in effect during the period. Actual yield may be
affected by variations in front-end sales charges on investments. Past
performance, such as is reflected in quoted yields, should not be
considered as a representation of the results which may be realized from
an investment in any class of the Fund in the future.
The average weighted portfolio maturity at October 31, 1998 for the Fund
was 80 years.
Investors should note that the income earned and dividends paid by the
Fund will vary with the fluctuation of interest rates and performance of
the portfolio. The net asset value of the fund may change. Unlike money
market funds, the Fund invests in longer-term securities that fluctuate in
value and do so in a manner inversely correlated with changing interest
rates. The Fund's net asset value will tend to rise when interest rates
fall. Conversely, the Fund's net asset value will tend to fall as interest
rates rise. Normally, fluctuations in interest rates have a greater effect
on the prices of longer-term bonds. The value of the securities held in
the Fund will vary from day to day and investors should consider the
volatility of the Fund's net asset value as well as its yield before
making a decision to invest.
From time to time, the Fund may quote actual total return and/or yield
performance for its Classes in advertising and other types of literature.
This information may be compared to that of other mutual funds with
similar investment objectives and to stock, bond an other relevant indices
or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds. For
example, the performance of the Fund (or Class) may be compared to data
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or the
performance of unmanaged indices compiled or maintained by statistical
research firms such as Lehman Brothers or Salomon Brothers, Inc.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed
mutual funds. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the Fund's performance to another fund in appropriate categories
over specific time periods also may be quoted in advertising and other
types of literature. The total return performance reported for these
indices will reflect the reinvestment of all distributions on a quarterly
basis and market price fluctuations. The indices do not take into account
any sales charge or other fees. A direct investment in an unmanaged index
is not possible.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations. In addition, the performance
of multiple indices compiled and maintained by these firms may be combined
to create a blended performance result for comparative purposes.
Generally, the indices selected will be representative of the types of
securities in which the Fund may invest and the assumptions that were used
in calculating the blended performance will be described.
Comparative information on the Consumer Price Index may also be included
in advertisements or other literature. The Consumer Price Index, as
prepared by the U.S. Bureau of Labor Statistics, is the most commonly used
measure of inflation. It indicates the cost fluctuations of a
representative group of consumer goods. It does not represent a return
from an investment.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the Consumer Price Index), and
combinations of various capital markets. The performance of these capital
markets is based on the returns of different indices. The Fund may use the
performance of these capital markets in order to demonstrate general
risk-versus-reward investment scenarios. Performance comparisons may also
include the value of a hypothetical investment in any of these capital
markets. The risks associated with the security types in any capital
market may or may not correspond directly to those of the Fund. The Fund
may also compare performance to that of other compilations or indices that
may be developed and made available in the future.
The Fund may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that
describe general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting, questionnaires designed
to help create a personal financial profile, worksheets used to project
savings needs based on assumed rates of inflation and hypothetical rates
of return and action plans offering investment alternatives), investment
management techniques, policies or investment suitability of the Fund
(such as value investing, market timing, dollar cost averaging, asset
allocation, constant ratio transfer, automatic account rebalancing, the
advantages and disadvantages of investing in tax-deferred and taxable
investments), economic and political conditions, the relationship between
sectors of the economy and the economy as a whole, the effects of
inflation and historical performance of various asset classes, including
but not limited to, stocks, bonds and Treasury bills. From time to time
advertisements, sales literature, communications to shareholders or other
materials may summarize the substance of information contained in
shareholder reports (including the investment composition of the Fund), as
well as the views as to current market, economic, trade and interest rate
trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to the Fund. In
addition, selected indices may be used to illustrate historic performance
of selected asset classes. The Fund may also include in advertisements,
sales literature, communications to shareholders or other materials,
charts, graphs or drawings which illustrate the potential risks and
rewards of investment in various investment vehicles, including but not
limited to, domestic stocks, and/or bonds, treasury bills and shares of
the Fund. In addition, advertisements, sales literature, communications to
shareholders or other materials may include a discussion of certain
attributes or benefits to be derived by an investment in the Fund and/or
other mutual funds, shareholder profiles and hypothetical investor
scenarios, timely information on financial management, tax and retirement
planning (such as information on Roth IRAs and Education IRAs) and
investment alternatives to certificates of deposit and other financial
instruments. Such sales literature, communications to shareholders or
other materials may include symbols, headlines or other material which
highlight or summarize the information discussed in more detail therein.
Materials may refer to the CUSIP numbers of the Fund and may illustrate
how to find the listings of the Fund in newspapers and periodicals.
Materials may also include discussions of other funds, products, and
services.
The Fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Fund may compare these
measures to those of other funds. Measures of volatility seek to compare
the historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. Measures of volatility and correlation may
be calculated using averages of historical data. The Fund may advertise
its current interest rate sensitivity, duration, weighted average maturity
or similar maturity characteristics. Advertisements and sales materials
relating to the Fund may include information regarding the background and
experience of its portfolio managers.
Total return performance for each Class of the Fund will reflect the
appreciation or depreciation of principal, reinvestment of income and any
capital gains distributions paid during any indicated period, and, in the
case of Class A Shares, the impact of the maximum front-end sales charge,
if any, paid on the illustrated investment amount, annualized. Performance
of Class A Shares may also be shown without reflecting the impact of any
front-end sales charge. The results will not reflect any income taxes, if
applicable, payable by shareholders on the reinvested distributions
included in the calculations. The performance of Class B Shares and Class
C Shares will be calculated both with the applicable CDSC included and
excluded. The net asset values of the Fund fluctuate so shares, when
redeemed, may be worth more or less than the original investment, and the
Fund's results should not be considered a guarantee of future performance.
The following tables present examples, for purposes of illustration only,
of cumulative total return performance for each Class of the Fund through
October 31, 1998 For these purposes, the calculations reflect maximum
sales charges, if any, and assume the reinvestment of any realized
securities profits distributions and income dividends paid during the
indicated periods. The performance does not reflect any income taxes
payable by shareholders on the reinvested distributions included in the
calculations. The performance of Class A Shares reflects the maximum
front-end sales charge paid on the purchase of shares but may also be
shown without reflecting the impact of any front-end sales charge. The
performance of Class B Shares and Class C Shares is calculated both with
the applicable CDSC included and excluded.
<TABLE>
<CAPTION>
Cumulative Total Return (1)
Class A Class A Institutional Class B
(at offer) (at NAV) Class (including CDSC)
<S> <C> <C> <C> <C>
3 months
ended
10/31/98
6 months
ended
10/31/98
(2)
9 months
ended
10/31/98
1 year
ended
10/31/98
3 years
ended
10/31/98
5 years
ended
10/31/98
10 years
ended
10/31/98
Life of
Fund (3)
<CAPTION>
Class B Class C Class C
(excluding CDSC) (including CDSC) (excluding CDSC)
<S> <C> <C> <C>
3 months
ended
10/31/98
6 months
ended
10/31/98
9 months
ended
10/31/98
1 year
ended
10/31/98
3 years
ended
10/31/98
5 years
ended
10/31/98
10 years
ended
10/31/98
Life of
Fund (3)
(1) Reflects fee waivers and payment of expenses in effect during the
periods. Performance would have been lower without the fee waivers and
expense payments. See Plan under Rule 12b-1 under Purchasing Shares and
Investment Management Agreement and Sub-Advisory Agreement for information
about voluntary fee waivers and expense payments in effect through April
30, 1999.
(2) For the six-month period ended October 31, 1998, cumulative total
return for Class A Shares at net asset value was 0.00%.
(3) Class A Shares commenced operation on November 2, 1987; Institutional
Class Shares commenced operations on June 7, 1994; Class B Shares
commenced operations on June 7, 1994; Class C Shares commenced operations
on January 10, 1995.
</TABLE>
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds available
from Delaware Investments, will provide general information about
investment alternatives and scenarios that will allow investors to assess
their personal goals. This information will include general material about
investing as well as materials reinforcing various industry-accepted
principles of prudent and responsible personal financial planning. One
typical way of addressing these issues is to compare an individual's goals
and the length of time the individual has to attain these goals to his or
her risk threshold. In addition, the Distributor will provide information
that discusses the Manager's and Sub-Adviser's overriding investment
philosophy and how that philosophy impacts the Fund's, and other Delaware
Investments funds', investment disciplines employed in seeking their
objectives. The Distributor may also from time to time cite general or
specific information about the institutional clients of Delaware or the
Manager, including the number of such clients serviced by Delaware or the
Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and
logic says to invest when prices are low. However, even experts can't
always pick the highs and the lows. By using a strategy known as
dollar-cost averaging, you schedule your investments ahead of time. If you
invest a set amount on a regular basis, that money will always buy more
shares when the price is low and fewer when the price is high. You can
choose to invest at any regular interval--for example, monthly or
quarterly--as long as you stick to your regular schedule. Dollar-cost
averaging looks simple and it is, but there are important things to
remember.
Dollar-cost averaging works best over longer time periods, and it doesn't
guarantee a profit or protect against losses in declining markets. If you
need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why
dollar-cost averaging can make sense for long-term goals. Since the
potential success of a dollar-cost averaging program depends on continuous
investing, even through periods of fluctuating prices, you should consider
your dollar-cost averaging program a long-term commitment and invest an
amount you can afford and probably won't need to withdraw. You also should
consider your financial ability to continue to purchase shares during
periods of high fund share prices. Delaware Investments offers three
services -- Automatic Investing Plan, Direct Deposit Purchase Plan and the
Wealth Builder Option -- that can help to keep your regular investment
program on track. See Investing by Electronic Fund Transfer - Direct
Deposit Purchase Plan and Automatic Investing Plan under Investment Plans
and Wealth Builder Option under Investment Plans for a complete
description of these services, including restrictions or limitations.
The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will
be lower than the average price per share for the same time period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 20
Month 4 $100 $10.00 10
- -----------------------------------------------------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended to
represent the actual performance of any stock or bond fund available from
the Delaware Investments family of funds.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund shares,
your investment is given yet another opportunity to grow. It's called the
Power of Compounding. The Fund may include illustrations showing the power
of compounding in advertisements and other types of literature.
TRADING PRACTICES AND BROKERAGE
Brokers, dealers and banks are selected to execute transactions for the
purchase or sale of portfolio securities on the basis of the Manager's and
Sub-Adviser's (collectively referred to in this section as the "Manager")
judgment of their professional capability to provide the service. The
primary consideration is to have brokers, dealers or banks execute
transactions at best price and execution. Best price and execution refers
to many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors
affecting the overall benefit obtained by the account on the transaction.
Trades are generally made on a net basis where securities are either
bought or sold directly from or to a broker, dealer or bank. In these
instances, there is no direct commission charged, but there is a spread
(the difference between the buy and sell price) which is the equivalent of
a commission. When a commission is paid, the Fund pays reasonably
competitive brokerage commission rates based upon the professional
knowledge of its trading department as to rates paid and charged for
similar transactions throughout the securities industry. In some
instances, the Fund pays a minimal share transaction cost when the
transaction presents no difficulty.
During the fiscal years ended October 31, 1996, 1997 and 1998, no
brokerage commissions were paid by the Fund.
The Manager may allocate out of all commission business generated by all
of the funds and accounts under its management, brokerage business to
brokers or dealers who provide brokerage and research services. These
services 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 Manager in connection with its investment
decision-making process with respect to one or more funds and accounts
managed by it, and may not be used, or used exclusively, with respect to
the fund or account generating the brokerage.
During the fiscal year ended October 31, 1998, there were no portfolio
transactions of the Fund resulting in brokerage commissions directed to
brokers for brokerage and research services.
As provided in the Securities Exchange Act of 1934 (the "1934 Act") and
the Fund's Investment Management Agreement and Sub-Advisory Agreement,
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.
Although transactions are directed to broker/dealers who provide such
brokerage and research services, Voyageur Funds, Inc. believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such
services and that such commissions are reasonable in relation to the value
of the brokerage and research services provided. In some instances,
services may be provided to the Manager which constitute in some part
brokerage and research services used by the Manager in connection with its
investment decision-making process and constitute in some part services
used by the Manager in connection with administrative or other functions
not related to its investment decision-making process. In such cases, the
Manager will make a good faith allocation of brokerage and research
services and will pay out of its own resources for services used by the
Manager in connection with administrative or other functions not related
to its investment decision-making process. In addition, so long as no fund
is disadvantaged, portfolio transactions which generate commissions or
their equivalent are allocated to broker/dealers who provide daily
portfolio pricing services to the Fund and to other funds available from
Delaware Investments. Subject to best price and execution, commissions
allocated to brokers providing such pricing services may or may not be
generated by the funds receiving the pricing service.
The Manager may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will
result in best price and execution. Transactions involving commingled
orders are allocated in a manner deemed equitable to each account or fund.
When a combined order is executed in a series of transactions at different
prices, each account participating in the order may be allocated an
average price obtained from the executing broker. It is believed that the
ability of the accounts to participate in volume transactions will
generally be beneficial to the accounts and funds. Although it is
recognized that, in some cases, the joint execution of orders could
adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and Voyageur
Funds, Inc.'s Board of Directors that the advantages of combined orders
outweigh the possible disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price
and execution, the Fund may place orders with broker/dealers that have
agreed to defray certain expenses of the funds in the Delaware Investments
family of funds, such as custodian fees, and may, at the request of the
Distributor, give consideration to sales of shares of such funds as a
factor in the selection of brokers and dealers to execute portfolio
transactions.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish the Fund's
objective in relation to anticipated movements in the general level of
interest rates. The Fund is free to dispose of portfolio securities at any
time, subject to complying with the Code and the 1940 Act, when changes in
circumstances or conditions make such a move desirable in light of the
investment objective. The Fund will not attempt to achieve or be limited
to a predetermined rate of portfolio turnover, such a turnover always
being incidental to transactions undertaken with a view to achieving the
Fund's investment objective. The degree of portfolio activity may affect
brokerage costs of the Fund and taxes payable by the Fund's shareholders
to the extent of any net realized capital gains. The Fund's portfolio
turnover rate may exceed 100%. A turnover rate of 100% would occur, for
example, if all the investments in the Fund's portfolio at the beginning
of the year were replaced by the end of the year. The Fund's portfolio
turnover rate is calculated by dividing the lesser of purchases or sales
of portfolio securities for the particular fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during
the particular fiscal year, exclusive of securities whose maturities at
the time of acquisition are one year or less.
The Fund may hold securities for any period of time. The Fund's portfolio
turnover will be increased if the Fund writes a large number of call
options which are subsequently exercised. The portfolio turnover rate also
may be affected by cash requirements from redemptions and repurchases of
Fund shares. Total brokerage costs generally increase with higher
portfolio turnover rates.
The portfolio turnover rate of the Fund was 202% for the fiscal year ended
October 31, 1997 and 000% for the fiscal year ended October 31, 1998.
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's shares
and has agreed to use its best efforts to sell shares of each Fund. See
the Prospectus for information on how to invest. Shares of the Fund are
offered on a continuous basis and may be purchased through authorized
investment dealers or directly by contacting Voyageur Funds, Inc. or the
Distributor.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of such Classes
generally must be at least $100. There are no minimum purchase
requirements for the Institutional Classes, but certain eligibility
requirements must be satisfied. The initial and subsequent investment
minimums for Class A Shares will be waived for purchases by officers,
directors and employees of any Delaware Investments fund, the Manager or
any of the Manager's affiliates if the purchases are made pursuant to a
payroll deduction program. Shares purchased pursuant to the Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act and shares purchased in
connection with an Automatic Investing Plan are subject to a minimum
initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Delaware Investments Asset Planner service are
subject to a minimum initial investment of $2,000 per Asset Planner
Strategy selected.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an
amount that is less than $1,000,000. See Investment Plans for purchase
limitations applicable to retirement plans. Voyageur Funds, Inc. will
reject any purchase order for more than $250,000 of Class B Shares and
$1,000,000 or more of Class C Shares. An investor may exceed these
limitations by making cumulative purchases over a period of time. In doing
so, an investor should keep in mind, however, that reduced front-end sales
charges apply to investments of $50,000 or more in Class A Shares, and
that Class A Shares are subject to lower annual 12b-1 Plan expenses than
Class B Shares and Class C Shares and generally are not subject to a CDSC.
Selling dealers are responsible for transmitting orders promptly. Voyageur
Funds, Inc. reserves the right to reject any order for the purchase of its
shares of the Fund if in the opinion of management such rejection is in
the Fund's best interest. If a purchase is canceled because your check is
returned unpaid, you are responsible for any loss incurred. The Fund can
redeem shares from your account(s) to reimburse itself for any loss, and
you may be restricted from making future purchases in any of the funds in
the Delaware Investments family. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on
a domestic branch of a United States financial institution. If a check
drawn on a foreign financial institution is accepted, you may be subject
to additional bank charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that, as a result of
redemption, have remained below the minimum stated account balance for a
period of three or more consecutive months. Holders of such accounts may
be notified of their insufficient account balance and advised that they
have until the end of the current calendar quarter to raise their balance
to the stated minimum. If the account has not reached the minimum balance
requirement by that time, the Fund will charge a $9 fee for that quarter
and each subsequent calendar quarter until the account is brought up to
the minimum balance. The service fee will be deducted from the account
during the first week of each calendar quarter for the previous quarter,
and will be used to help defray the cost of maintaining low-balance
accounts. No fees will be charged without proper notice, and no CDSC will
apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial
purchase amount as a result of redemptions. An investor making the minimum
initial investment may be subject to involuntary redemption without the
imposition of a CDSC or Limited CDSC if he or she redeems any portion of
his or her account.
The NASD has adopted amendments to its Conduct Rules, as amended, relating
to investment company sales charges. Voyageur Funds, Inc. and the
Distributor intend to operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales
charges apply for larger purchases. See the table in the Prospectus. Class
A Shares are also subject to annual 12b-1 Plan expenses for the life of
the investment.
Class B Shares are purchased at net asset value and are subject to a CDSC
of: (i) 4% if shares are redeemed within the first two years of purchase;
(ii) 3% if shares are redeemed during the third or fourth year following
purchase; (iii) 2% if shares are redeemed during the fifth year following
purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class B Shares will automatically convert to Class A
Shares at the end of approximately eight years after purchase and,
thereafter, be subject to annual 12b-1 Plan expenses of up to a maximum of
0.25% of average daily net assets of such shares. See Automatic Conversion
of Class B Shares below.
Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class Shares are purchased at net asset value without the
imposition of a front-end or contingent deferred sales charge.
Institutional Class Shares are subject to annual 12b-1 Plan expenses for
the life of the investment. However, the Distributor has voluntarily
elected to waive its right to receive 12b-1 fees with respect to
Institutional Class Shares acquired by shareholders on or after March 1,
1998. See Plan Under Rule 12b-1 under Purchasing Shares, and Determining
Offering Price and Net Asset Value in this Part B.
Class A Shares, Class B Shares, Class C Shares and Institutional Class
Shares represent a proportionate interest in the Fund's assets and will
receive a proportionate interest in the Fund's income, before application,
as to Class A Shares, Class B Shares, Class C Shares and Institutional
Class Shares, of any expenses under the Fund's 12b-1 Plan.
Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the
case of Class B Shares or Class C Shares or in the case of any retirement
plan account including self-directed IRAs. However, purchases not
involving the issuance of certificates are confirmed to the investor and
credited to the shareholder's account on the books maintained by Delaware
Service Company, Inc. (the "Transfer Agent"). The investor will have the
same rights of ownership with respect to such shares as if certificates
had been issued. An investor that is permitted to obtain a certificate may
receive a certificate representing full share denominations purchased by
sending a letter signed by each owner of the account to the Transfer Agent
requesting the certificate. No charge is assessed by Voyageur Funds, Inc.
for any certificate issued. A shareholder may be subject to fees for
replacement of a lost or stolen certificate, under certain conditions,
including the cost of obtaining a bond covering the lost or stolen
certificate. Please contact the Fund for further information. Investors
who hold certificates representing any of their shares may only redeem
those shares by written request. The investor's certificate(s) must
accompany such request.
Alternative Purchase Arrangements
The alternative purchase arrangements described above permit investors to
choose the method of purchasing shares that is most suitable given the
amount of their purchase, the length of time they expect to hold their
shares and other relevant circumstances. Investors should determine
whether, given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge, purchase Class
B Shares and have the entire initial purchase amount invested in the Fund
with their investment being subject to a CDSC if they redeem shares within
six years of purchase, purchase Class C Shares and have the entire initial
purchase amount invested in the Fund with their investment being subject
to a CDSC if they redeem shares within 12 months of purchase, or whether
they qualify to purchase Institutional Class Shares. In addition,
investors should consider the level of annual 12b-1 Plan expenses
applicable to each Class. The higher 12b-1 Plan expenses on Class B Shares
and Class C Shares will be offset to the extent a return is realized on
the additional money initially invested upon the purchase of such shares.
However, there can be no assurance as to the return, if any, that will be
realized on such additional money. In addition, the effect of any return
earned on such additional money will diminish over time. In comparing
Class B Shares to Class C Shares, investors should consider the duration
of the annual 12b-1 Plan expenses to which each of the Classes is subject
and the desirability of an automatic conversion feature, which is
available only for Class B Shares.
The higher 12b-1 Plan expenses on Class B Shares and Class C Shares will
be offset to the extent a return is realized on the additional money
initially invested upon the purchase of such shares. However, there can be
no assurance as to the return, if any, that will be realized on such
additional money. In addition, the effect of any return earned on such
additional money will diminish over time. In comparing Class B Shares to
Class C Shares, investors should also consider the duration of the annual
12b-1 Plan expenses to which each of the classes is subject and the
desirability of an automatic conversion feature, which is available only
for Class B Shares.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Fund, the Distributor and others will be paid, in
the case of Class A Shares, from the proceeds of the front-end sales
charge and 12b-1 Plan fees, in the case of Class B Shares and Class C
Shares, from the proceeds of the 12b-1 Plan fees and, if applicable, the
CDSC incurred upon redemption and, in the case of Institutional Class
Shares, from the proceeds of the 12b-1 Plan fees. Financial advisers may
receive different compensation for selling Class A Shares, Class B Shares,
Class C Shares and Institutional Class Shares. Investors should understand
that the purpose and function of the Classes' 12b-1 Plan and the CDSCs
applicable to Class B Shares and Class C Shares are the same as those of
the 12b-1 Plan and the front-end sales charge applicable to Class A Shares
and the 12b-1 Plan applicable to Institutional Class Shares in that such
fees and charges are used to finance the distribution of the respective
Classes. See Plans Under Rule 12b-1 for the Fund Classes.
Dividends, if any, paid on Class A Shares, Class B Shares, Class C Shares
and Institutional Class Shares, to the extent any dividends are paid, will
be calculated in the same manner, at the same time and on the same day and
will be in the same amount, except that the additional amount of 12b-1
Plan expenses relating to Class B Shares and Class C Shares will be borne
exclusively by such shares. See Determining Offering Price and Net Asset
Value.
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the table in the Fund
Classes' Prospectus, and may include a series of purchases over a 13-
month period under a Letter of Intention signed by the purchaser. See
Special Purchase Features - Class A Shares, below for more information on
ways in which investors can avail themselves of reduced front-end sales
charges and other purchase features.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which
the Distributor may reallow to dealers up to the full amount of the
front-end sales. In addition, certain dealers who enter into an agreement
to provide extra training and information on Delaware Investments products
and services and who increase sales of Delaware Investments funds may
receive an additional commission of up to 0.15% of the offering price in
connection with sales of Class A Shares. Such dealers must meet certain
requirements in terms of organization and distribution capabilities and
their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and
circumstances upon which the additional commission will be paid.
Participating dealers may be deemed to have additional responsibilities
under the securities laws. Dealers who receive 90% or more of the sales
charge may be deemed to be underwriters under the 1933 Act.
Dealer's Commission
As described in the Prospectus, for initial purchases of Class A Shares of
$1,000,000 or more, a dealer's commission may be paid by the Distributor
to financial advisers through whom such purchases are effected.
For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of
the first purchase. In determining a financial adviser's eligibility for
the dealer's commission, purchases of Class A Shares of other Delaware
Investments funds as to which a Limited CDSC applies (see Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased
at Net Asset Value under Redemption and Exchange) may be aggregated with
those of the Class A Shares of a Fund. Financial advisers also may be
eligible for a dealer's commission in connection with certain purchases
made under a Letter of Intention or pursuant to an investor's Right of
Accumulation. Financial advisers should contact the Distributor concerning
the applicability and calculation of the dealer's commission in the case
of combined purchases.
An exchange from other Delaware Investments funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or
similar payment has not been previously paid on the assets being
exchanged. The schedule and program for payment of the dealer's commission
are subject to change or termination at any time by the Distributor at its
discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth above, and Class C Shares
redeemed within 12 months of purchase may be subject to a CDSC of 1%.
CDSCs are charged as a percentage of the dollar amount subject to the
CDSC. The charge will be assessed on an amount equal to the lesser of the
net asset value at the time of purchase of the shares being redeemed or
the net asset value of those shares at the time of redemption. No CDSC
will be imposed on increases in net asset value above the initial purchase
price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestment of dividends or capital gains distributions. For
purposes of this formula, the "net asset value at the time of purchase"
will be the net asset value at purchase of Class B Shares or Class C
Shares of a Fund, even if those shares are later exchanged for shares of
another Delaware Investments fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption"
will be the net asset value of the shares that were acquired in the
exchange. See Waiver of Contingent Deferred Sales Charge--Class B Shares
and Class C Shares under Redemption and Exchange for the Fund Classes for
a list of the instances in which the CDSC is waived.
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to
the annual 12b-1 Plan expenses of up to 1% of average daily net assets of
those shares. At the end of approximately eight years after purchase, the
investor's Class B Shares will be automatically converted into Class A
Shares of the same Fund. See Automatic Conversion of Class B Shares under
Classes of Shares in the Fund Classes' Prospectus. Such conversion will
constitute a tax-free exchange for federal income tax purposes. See Taxes.
Investors are reminded that the Class A Shares into which Class B Shares
will convert are subject to ongoing annual 12b-1 Plan expenses of up to a
maximum of 0.25% of average daily net assets of such shares.
In determining whether a CDSC applies to a redemption of Class B Shares,
it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends
or distributions, and finally by shares held longest during the six-year
period. With respect to Class C Shares, it will be assumed that shares
held for more than 12 months are redeemed first followed by shares
acquired through the reinvestment of dividends or distributions, and
finally by shares held for 12 months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of
that month and each subsequent month.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently
compensates dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the
dollar amount purchased. In addition, from time to time, upon written
notice to all of its dealers, the Distributor may hold special promotions
for specified periods during which the Distributor may pay additional
compensation to dealers or brokers for selling Class B Shares at the time
of purchase. As discussed below, however, Class B Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within six years of purchase,
a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services,
and bearing related expenses, in connection with the sale of Class B
Shares. These payments support the compensation paid to dealers or brokers
for selling Class B Shares. Payments to the Distributor and others under
the Class B 12b-1 Plan may be in an amount equal to no more than 1%
annually. The combination of the CDSC and the proceeds of the 12b-1 Plan
fees makes it possible for a Fund to sell Class B Shares without deducting
a front-end sales charge at the time of purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class B Shares
described in this Part B, even after the exchange. Such CDSC schedule may
be higher than the CDSC schedule for Class B Shares acquired as a result
of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last
business day of the second full week of March, June, September and
December (each, a "Conversion Date"). If the eighth anniversary after a
purchase of Class B Shares falls on a Conversion Date, an investor's Class
B Shares will be converted on that date. If the eighth anniversary occurs
between Conversion Dates, an investor's Class B Shares will be converted
on the next Conversion Date after such anniversary. Consequently, if a
shareholder's eighth anniversary falls on the day after a Conversion Date,
that shareholder will have to hold Class B Shares for as long as three
additional months after the eighth anniversary of purchase before the
shares will automatically convert into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends will
convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through
dividend reinvestment.
All such automatic conversions of Class B Shares will constitute tax-free
exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently
compensates dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the
dollar amount purchased. As discussed below, Class C Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within 12 months of purchase,
a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services,
and bearing related expenses, in connection with the sale of Class C
Shares. These payments support the compensation paid to dealers or brokers
for selling Class C Shares. Payments to the Distributor and others under
the Class C 12b-1 Plan may be in an amount equal to no more than 1%
annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class C Shares
as described in this Part B. See Redemption and Exchange.
Plan Under Rule 12b-1
Pursuant to Rule 12b-1 under the 1940 Act, Voyageur Funds, Inc. has
adopted a plan for each Class (the "Plan"). The Plan permits the Fund to
pay for certain distribution, promotional and related expenses involved in
the marketing of the respective Class of shares.
The Plan permits the Fund, pursuant to its Distribution Agreement, to pay
out of the assets of Class A Shares, Class B Shares, Class C Shares and
Institutional Class Shares monthly fees to the Distributor for its
services and expenses in distributing and promoting sales of shares of
such classes. These expenses include, among other things, preparing and
distributing advertisements, sales literature and prospectuses and reports
used for sales purposes, compensating sales and marketing personnel, and
paying distribution and maintenance fees to securities brokers and dealers
who enter into agreements with the Distributor. The Plan expenses relating
to Class B Shares and Class C Shares are also used to pay the Distributor
for advancing the commission costs to dealers with respect to the initial
sale of such shares.
In addition, the Fund may make payments out of the assets of Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares
directly to other unaffiliated parties, such as banks, who either aid in
the distribution of shares of, or provide services to, such classes.
The maximum aggregate fee payable by the Fund under its Plan, and the
Fund's Distribution Agreement, is on an annual basis, up to 0.25% of each
of the Class A Shares' and Institutional Class Shares' average daily net
assets for the year, and up to 1% (0.25% of which are service fees to be
paid to the Distributor, dealers and others for providing personal service
and/or maintaining shareholder accounts) of each of the Class B Shares'
and Class C Shares' average daily net assets for the year. Voyageur Funds,
Inc.'s Board of Directors may reduce these amounts at any time.
The Distributor has elected voluntarily to waive its right to receive
12b-1 Plan fees with respect to Institutional Class Shares acquired by
shareholders on or after March 1, 1998. Thus, so long as the Distributor's
voluntary waiver is in effect, the formula for determining the annual fee
payable on a monthly basis under the Plan with respect to Institutional
Class Shares will be the amount obtained by multiplying 0.25% by the
average daily net assets represented by shares of the Class that were
acquired before March 1, 1998. While this is the method for calculating
the 12b-1 Plan fee payable by the Institutional Class, the 12b-1 Plan fee
is an Institutional Class expense. As a result, all Institutional Class
shareholders, regardless of when they purchase their shares, will bear
12b-1 Plan expenses at the same share rate. As the portion of assets
attributable to Institutional Class Shares acquired by shareholders on or
after March 1, 1998 increases, and so long as the Distributor's voluntary
waiver is in effect, this figure will decrease.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid on behalf of Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares
would be borne by such persons without any reimbursement from the Classes.
Subject to seeking best price and execution, the Fund may, from time to
time, buy or sell portfolio securities from or to firms which receive
payments under the Plan.
From time to time, the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plan and the Distribution Agreement, as amended, have been approved by
the Board of Directors of Voyageur Funds, Inc., including a majority of
the directors who are not "interested persons" (as defined in the 1940
Act) of Voyageur Funds, Inc. and who have no direct or indirect financial
interest in the Plan, by vote cast in person at a meeting duly called for
the purpose of voting on the Plan and such Agreements. Continuation of the
Plan and the Distribution Agreements, as amended, must be approved
annually by the Board of Directors in the same manner as specified above.
Each year, the directors must determine whether continuation of the Plan
is in the best interest of shareholders of the Classes of the Fund and
that there is a reasonable likelihood of the Plan providing a benefit to
the Classes. The Plan and the Distribution Agreement, as amended, may be
terminated at any time without penalty by a majority of those directors
who are not "interested persons" or by a majority vote of the outstanding
voting securities of the Classes. Any amendment materially increasing the
percentage payable under the Plan must likewise be approved by a majority
vote of the outstanding voting securities of the Classes, as well as by a
majority vote of those directors who are not "interested persons." Also,
any material amendment to the Plan must be approved by a majority vote of
the directors including a majority of the noninterested directors of
Voyageur Funds, Inc. having no interest in the Plan. In addition, in order
for the Plan to remain effective, the selection and nomination of
directors who are not "interested persons" of Voyageur Funds, Inc. must be
effected by the directors who themselves are not "interested persons" and
who have no direct or indirect financial interest in the Plan. Persons
authorized to make payments under the Plan must provide written reports at
least quarterly to the Board of Directors for their review.
For the fiscal year ended October 31, 1998, payments from Class A Shares,
Class B Shares, Class C Shares and Institutional Class Shares of the Fund
amounted to $000,000, $00,000, $0,000 and $000,000, respectively. These
payments were used for the following purposes:
<TABLE>
<CAPTION>
Institutional
A Class B Class C Class Class
<S> <C> <C> <C> <C>
Advertising
Annual/Semi-Annual Reports
Broker Trails
Broker Sales Charges
Dealer Service Expenses
Interest on Broker Sales
Charges
Commissions to Wholesalers
Promotional-Broker Meetings
Promotional-Other
Prospectus Printing
Telephone
Wholesaler Expenses
Other
</TABLE>
Other Payments to Dealers
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund Classes exceed certain limits
as set by the Distributor, may receive from the Distributor an additional
payment of up to 0.25% of the dollar amount of such sales. The Distributor
may also provide additional promotional incentives or payments to dealers
that sell shares of the Delaware Investments family of funds. In some
instances, these incentives or payments may be offered only to certain
dealers who maintain, have sold or may sell certain amounts of shares. The
Distributor may also pay a portion of the expense of preapproved dealer
advertisements promoting the sale of Delaware Investments fund shares.
Subject to pending amendments to the NASD's Conduct Rules, in connection
with the promotion of Delaware Investments fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars
and conferences, reimburse dealers for expenses incurred in connection
with preapproved seminars, conferences and advertising and may, from time
to time, pay or allow additional promotional incentives to dealers, which
shall include non-cash concessions, such as certain luxury merchandise or
a trip to or attendance at a business or investment seminar at a luxury
resort, as part of preapproved sales contests. Payment of non-cash
compensation to dealers is currently under review by the NASD and the
Securities and Exchange Commission. It is likely that the NASD's Conduct
Rules will be amended such that the ability of the Distributor to pay
non-cash compensation as described above will be restricted in some
fashion. The Distributor intends to comply with the NASD's Conduct Rules
as they may be amended.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under the
Delaware Investments Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment
Privilege.
Purchases of Class A Shares may be made at net asset value by current and
former officers, directors and employees (and members of their families)
of the Manager, any affiliate, any of the funds in the Delaware
Investments family, certain of their agents and registered representatives
and employees of authorized investment dealers and by employee benefit
plans for such entities. Individual purchases, including those in
retirement accounts, must be for accounts in the name of the individual or
a qualifying family member. Class A Shares may also be purchased at net
asset value by current and former officers, directors and employees (and
members of their families) of the Dougherty Financial Group LLC.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value
within 12 months after the registered representative changes employment,
if the purchase is funded by proceeds from an investment where a front-end
sales charge, contingent deferred sales charge or other sales charge has
been assessed. Purchases of Class A Shares may also be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of
shares of funds in the Delaware Investments family. Officers, directors
and key employees of institutional clients of the Manager or any of its
affiliates may purchase Class A Shares at net asset value. Moreover,
purchases may be effected at net asset value for the benefit of the
clients of brokers, dealers and registered investment advisers affiliated
with a broker or dealer, if such broker, dealer or investment adviser has
entered into an agreement with the Distributor providing specifically for
the purchase of Class A Shares in connection with special investment
products, such as wrap accounts or similar fee based programs. Investors
may be charged a fee when effecting transactions in Class A Shares through
a broker or agent that offers these special investment products.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class of a Fund; any group retirement plan (excluding defined benefit
pension plans), or such plans of the same employer, for which plan
participant records are maintained on the Retirement Financial Services,
Inc. (formerly known as Delaware Investment & Retirement Services, Inc.)
proprietary record keeping system that (i) has in excess of $500,000 of
plan assets invested in Class A Shares of funds in the Delaware
Investments family and any stable value account available to investment
advisory clients of the Manager or its affiliates; or (ii) is sponsored by
an employer that has at any point after May 1, 1997 had more than 100
employees while such plan has held Class A Shares of a fund in the
Delaware Investments family and such employer has properly represented to,
and received written confirmation back from, Retirement Financial
Services, Inc. in writing that it has the requisite number of employees.
See Group Investment Plans for information regarding the applicability of
the Limited CDSC.
Purchases of Class A Shares at net asset value may also be made by bank
sponsored retirement plans that are no longer eligible to purchase
Institutional Class Shares or purchase interests in a collective trust as
a result of a change in distribution arrangements.
Investors in Delaware Investments Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Investments family at net asset
value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
fund account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset
value.
Voyageur Funds, Inc. must be notified in advance that the trade qualifies
for purchase at net asset value.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made
available under a joint venture agreement between the Distributor and
another institution through which mutual funds are marketed and which
allow investments in Class A Shares of designated Delaware Investments
funds ("eligible Delaware Investments fund shares"), as well as shares of
designated classes of non-Delaware Investments funds ("eligible
non-Delaware Investments fund shares"). Class B Shares, Class C Shares and
Institutional Class Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Investments and eligible non-Delaware
Investments fund shares held by the Allied Plan may be combined with the
dollar amount of new purchases by that Allied Plan to obtain a reduced
front-end sales charge on additional purchases of eligible Delaware
Investments fund shares. See Combined Purchases Privilege, below.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Investments fund shares for other eligible Delaware Investments
fund shares or for eligible non-Delaware Investments fund shares at net
asset value without payment of a front-end sales charge. However,
exchanges of eligible fund shares, both Delaware Investments and
non-Delaware Investments, which were not subject to a front end sales
charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Investments fund shares to which a sales charge applies.
No sales charge will apply if the eligible fund shares were previously
acquired through the exchange of eligible shares on which a sales charge
was already paid or through the reinvestment of dividends. See Investing
by Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Investments fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value
purchases of eligible Delaware Investments fund shares in connection with
Allied Plans, all participant holdings in the Allied Plan will be
aggregated. See Class A Shares.
The Limited CDSC is applicable to redemptions of net asset value purchases
from an Allied Plan on which a dealer's commission has been paid. Waivers
of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange,
apply to redemptions by participants in Allied Plans except in the case of
exchanges between eligible Delaware Investments and non-Delaware
Investments fund shares. When eligible Delaware Investments fund shares
are exchanged into eligible non-Delaware Investments fund shares, the
Limited CDSC will be imposed at the time of the exchange, unless the joint
venture agreement specifies that the amount of the Limited CDSC will be
paid by the financial adviser or selling dealer. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange.
Letter of Intention
The reduced front-end sales charges described above with respect to Class
A Shares are also applicable to the aggregate amount of purchases made
within a 13-month period pursuant to a written Letter of Intention
provided by the Distributor and signed by the purchaser, and not legally
binding on the signer or Adviser Funds, Inc. which provides for the
holding in escrow by the Transfer Agent, of 5% of the total amount of
Class A Shares intended to be purchased until such purchase is completed
within the 13-month period. A Letter of Intention may be dated to include
shares purchased up to 90 days prior to the date the Letter is signed. The
13-month period begins on the date of the earliest purchase. If the
intended investment is not completed, except as noted below, the purchaser
will be asked to pay an amount equal to the difference between the
front-end sales charge on Class A Shares purchased at the reduced rate and
the front-end sales charge otherwise applicable to the total shares
purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to
realize the difference. Such purchasers may include the value (at offering
price at the level designated in their Letter of Intention) of all their
shares of the Funds and of any class of any of the other mutual funds in
Delaware Investments (except shares of any Delaware Investments fund which
do not carry a front-end sales charge, CDSC or Limited CDSC other than
shares of Delaware Group Premium Fund, Inc. beneficially owned in
connection with the ownership of variable insurance products, unless they
were acquired through an exchange from a Delaware Investments fund which
carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention
toward the completion of such Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge
on investments of Class A Shares made by the plan. The aggregate
investment level of the Letter of Intention will be determined and
accepted by the Transfer Agent at the point of plan establishment. The
level and any reduction in front-end sales charge will be based on actual
plan participation and the projected investments in Delaware Investments
funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust the
signed Letter of Intention based on this acceptance criteria. The 13-month
period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and
equal an amount that would qualify the plan for further discounts, any
front-end sales charges will be automatically adjusted. In the event this
Letter of Intention is not fulfilled within the 13-month period, the plan
level will be adjusted (without completing another Letter of Intention)
and the employer will be billed for the difference in front-end sales
charges due, based on the plan's assets under management at that time.
Employers may also include the value (at offering price at the level
designated in their Letter of Intention) of all their shares intended for
purchase that are offered with a front-end sales charge, CDSC or Limited
CDSC of any class. Class B Shares and Class C Shares of a Fund and other
Delaware Investments funds which offer corresponding classes of shares may
also be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may
combine the total amount of any combination of Class A Shares, Class B
Shares and/or Class C Shares of the Funds, as well as shares of any other
class of any of the other Delaware Investments funds (except shares of any
Delaware Investments fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund,
Inc. beneficially owned in connection with the ownership of variable
insurance products, unless they were acquired through an exchange from a
Delaware Investments fund which carried a front-end sales charge, CDSC or
Limited CDSC). In addition, assets held by investment advisory clients of
the Manager or its affiliates in a stable value account may be combined
with other Delaware Investments fund holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
21; or a trustee or other fiduciary of trust estates or fiduciary accounts
for the benefit of such family members (including certain employee benefit
programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge with
respect to the Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of a Fund,
as well as shares of any other class of any of the other Delaware
Investments funds which offer such classes (except shares of any Delaware
Investments fund which do not carry a front-end sales charge, CDSC or
Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware
Investments fund which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and
still holds Class A Shares and/or shares of any other of the classes
described in the previous sentence with a value of $40,000 and
subsequently purchases $60,000 at offering price of additional shares of
Class A Shares, the charge applicable to the $60,000 purchase would
currently be 3.75%. For the purpose of this calculation, the shares
presently held shall be valued at the public offering price that would
have been in effect were the shares purchased simultaneously with the
current purchase. Investors should refer to the table of sales charges for
Class A Shares to determine the applicability of the Right of Accumulation
to their particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares of a Fund (and of Institutional Classes holding
shares which were acquired through an exchange from one of the other
mutual funds in Delaware Investments offered with a front-end sales
charge) who redeem such shares have one year from the date of redemption
to reinvest all or part of their redemption proceeds in Class A Shares of
that Fund or in Class A Shares of any of the other funds in the Delaware
Investments family, subject to applicable eligibility and minimum purchase
requirements, in states where shares of such other funds may be sold, at
net asset value without the payment of a front-end sales charge. This
privilege does not extend to Class A Shares where the redemption of the
shares triggered the payment of a Limited CDSC. Persons investing
redemption proceeds from direct investments in mutual funds in the
Delaware Investments family offered without a front-end sales charge will
be required to pay the applicable sales charge when purchasing Class A
Shares. The reinvestment privilege does not extend to a redemption of
either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made
at the net asset value next determined after receipt of remittance. A
redemption and reinvestment could have income tax consequences. It is
recommended that a tax adviser be consulted with respect to such
transactions. Any reinvestment directed to a fund in which the investor
does not then have an account will be treated like all other initial
purchases of a fund's shares. Consequently, an investor should obtain and
read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus
contains more complete information about the fund, including charges and
expenses.
Investors should consult their financial advisers or the Transfer Agent,
which also serves as the Funds' shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange) in connection with the features described
above.
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales
charges for investments in Class A Shares set forth in the table on page
00, based on total plan assets. If a company has more than one plan
investing in the Delaware Investments family of funds, then the total
amount invested in all plans would be used in determining the applicable
front-end sales charge reduction upon each purchase, both initial and
subsequent, upon notification to the Fund in which the investment is being
made at the time of each such purchase. Employees participating in such
Group Investment Plans may also combine the investments made in their plan
account when determining the applicable front-end sales charge on
purchases to non-retirement Delaware Investments investment accounts if
they so notify the Fund in which they are investing in connection with
each purchase. See Retirement Plans for the Fund Classes under Investment
Plans for information about Retirement Plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from a fund in the Delaware Investments
family. See Contingent Deferred Sales Charge for Certain Redemptions of
Class A Shares Purchased at Net Asset Value under Redemption and Exchange.
Institutional Class
Institutional Class Shares are available to a limited group of investors
with no sales charge at the time of purchase and no contingent deferred
sales charge upon redemption. Institutional Class Shares are subject to a
Rule 12b-1 fee payable at an annual rate of 0.25% of the Fund's average
daily net assets attributable to Institutional Class Shares. See
Distribution (12b-1) and Service under Purchasing Shares for a discussion
of the Distributor's voluntary waiver of the fee with respect to
Institutional Class Shares acquired on or after March 1, 1998.
The investors who may purchase Institutional Class Shares include: (a)
officers and directors of the Fund; (b) officers, directors and full-time
employees of the Manager or Sub-Adviser, and officers, directors and
full-time employees of parents and subsidiaries of the foregoing
companies; (c) officers, directors and full-time employees of investment
advisers of other mutual funds subject to a sales charge and included in
any other family of mutual funds that includes any Voyageur Fund or
Delaware Investments Fund as a member ("Other Load Funds"), and officers,
directors and full-time employees of parents, subsidiaries and corporate
affiliates of such investment advisers; (d) spouses and lineal ancestors
and descendants of the officers, directors/trustees and employees
referenced in clauses (a), (b) and (c), and lineal ancestors and
descendants of their spouses; (e) investment executives and other
employees of banks and dealers that have selling agreements with the
Underwriter and parents, spouses and children under the age of 21 of such
investment executives and other employees; (f) trust companies and bank
trust departments for funds held in a fiduciary, agency, advisory,
custodial or similar capacity; (g) any state or any political subdivision
thereof or any instrumentality, department, authority or agency of any
state or political subdivision thereof; (h) partners and full-time
employees of the Fund's counsel; (i) managed account clients of the
Adviser or Sub-Adviser, clients of investment advisers affiliated with the
Adviser or Sub-Adviser and other registered investment advisers and their
clients (the Fund may be available through a broker-dealer which charges a
transaction fee for purchases and sales); (j) tax-qualified employee
benefit plans for employees of the Adviser or Sub-Adviser and their
subsidiaries and (k) employee benefit plans qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code") (which does
not include Individual Retirement Accounts) and custodial accounts under
Section 403(b)(7) of the Code (also known as tax-sheltered annuities).
INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from net
investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of a Class
(based on the net asset value in effect on the reinvestment date) and will
be credited to the shareholder's account on that date. All dividends and
distributions of Institutional Classes are reinvested in the accounts of
the holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each dividend payment from net
investment income will be mailed to shareholders quarterly. A confirmation
of any distributions from realized securities profits will be mailed to
shareholders in the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either
through their investment dealers or by sending a check or money order to
the Class in which shares are being purchased. Such purchases, which must
meet the minimum subsequent purchase requirements set forth in the
Prospectus and this Part B, are made for Class A Shares at the public
offering price, and for Class B Shares, Class C Shares and Institutional
Classes at the net asset value, at the end of the day of receipt. A
reinvestment plan may be terminated at any time. This plan does not assure
a profit nor protect against depreciation in a declining market.
Reinvestment of Dividends in Other Delaware Investments Family of Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A
Shares, Class B Shares and Class C Shares may automatically reinvest
dividends and/or distributions in any of the mutual funds in the Delaware
Investments, including the Funds, in states where their shares may be
sold. Such investments will be at net asset value at the close of business
on the reinvestment date without any front-end sales charge or service
fee. The shareholder must notify the Transfer Agent in writing and must
have established an account in the fund into which the dividends and/or
distributions are to be invested. Any reinvestment directed to a fund in
which the investor does not then have an account will be treated like all
other initial purchases of a fund's shares. Consequently, an investor
should obtain and read carefully the prospectus for the fund in which the
investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including
charges and expenses.
Subject to the following limitations, dividends and/or distributions from
other funds in Delaware Investments may be invested in shares of the
Funds, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends
from Class B Shares may only be directed to other Class B Shares and
dividends from Class C Shares may only be directed to other Class C
Shares. Dividends from Institutional Class Shares may be directed only to
Institutional Class Shares of the Fund.
Capital gains and/or dividend distributions for participants in the
following retirement plans are automatically reinvested into the same
Delaware Investments fund in which their investments are held: SAR/SEP,
SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457
Deferred Compensation Plans.
Investing by Exchange
If you have an investment in another mutual fund in Delaware Investments,
you may write and authorize an exchange of part or all of your investment
into Class A Shares, Class B Shares and Class C Shares of the Fund. If you
wish to open an account by exchange, call the Shareholder Service Center
for more information. All exchanges are subject to the eligibility and
minimum purchase requirements set forth in each fund's prospectus. See
Redemption and Exchange for more complete information concerning your
exchange privileges.
Holders of Class A Shares of the Fund may exchange all or part of their
shares for certain of the shares of other funds available from Delaware
Investments, including other Class A Shares, but may not exchange their
Class A Shares for Institutional Class Shares of the Fund, or for Class B
Shares or Class C Shares of the Fund or of any other fund available from
Delaware Investments. Holders of Class B Shares of the Fund are permitted
to exchange all or part of their Class B Shares only into Class B Shares
of other Delaware Investments funds. Similarly, holders of Class C Shares
of the Fund are permitted to exchange all or part of their Class C Shares
only into Class C Shares of other Delaware Investments funds. Class B
Shares of the Fund and Class C Shares of the Fund acquired by exchange
will continue to carry the CDSC and, in the case of Class B Shares, the
automatic conversion schedule of the fund from which the exchange is made.
The holding period of Class B Shares of the Fund acquired by exchange will
be added to that of the shares that were exchanged for purposes of
determining the time of the automatic conversion into Class A Shares of
the Fund. Holders of Institutional Class Shares of the Fund may not
exchange their shares for any Class of the Fund or for any other fund
available from Delaware Investments.
Permissible exchanges into Class A Shares of the Fund will be made without
a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were
acquired through the reinvestment of dividends). Permissible exchanges
into Class B Shares or Class C Shares of the Fund will be made without the
imposition of a CDSC by the fund from which the exchange is being made at
the time of the exchange.
See Allied Plans for information on exchanges by participants in an Allied
Plan.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Fund to accept
for investment in Class A Shares, Class B Shares or Class C Shares,
through an agent bank, preauthorized government or private recurring
payments. This method of investment assures the timely credit to the
shareholder's account of payments such as social security, veterans'
pension or compensation benefits, federal salaries, Railroad Retirement
benefits, private payroll checks, dividends, and disability or pension
fund benefits. It also eliminates lost, stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A Shares, Class B Shares
and Class C Shares may make automatic investments by authorizing, in
advance, monthly payments directly from their checking account for deposit
into their Fund account. This type of investment will be handled in either
of the following ways. (1) If the shareholder's bank is a member of the
National Automated Clearing House Association ("NACHA"), the amount of the
investment will be electronically deducted from his or her account by
Electronic Fund Transfer ("EFT"). The shareholder's checking account will
reflect a debit each month at a specified date although no check is
required to initiate the transaction. (2) If the shareholder's bank is not
a member of NACHA, deductions will be made by preauthorized checks, known
as Depository Transfer Checks. Should the shareholder's bank become a
member of NACHA in the future, his or her investments would be handled
electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or
457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent
investments under such plans must be for $25 or more. An investor wishing
to take advantage of either service must complete an authorization form.
Either service can be discontinued by the shareholder at any time without
penalty by giving written notice.
Payments to the Fund from the federal government or its agencies on behalf
of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any
such payments are subject to reclamation by the federal government or its
agencies. Similarly, under certain circumstances, investments from private
sources may be subject to reclamation by the transmitting bank. In the
event of a reclamation, the Fund may liquidate sufficient shares from a
shareholder's account to reimburse the government or the private source.
In the event there are insufficient shares in the shareholder's account,
the shareholder is expected to reimburse the Fund.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer, to
make investments directly to their Class A, B and C Shares account. The
Fund will accept these investments, such as bank-by-phone, annuity
payments and payroll allotments, by mail directly from the third party.
Investors should contact their employers or financial institutions who in
turn should contact Voyageur Funds, Inc. for proper instructions.
MoneyLine (SM) On Demand
You or your investment dealer may request purchases of Class A, B or C
Shares by phone using MoneyLine (SM) On Demand. When you authorize a Fund
to accept such requests from you or your investment dealer, funds will be
withdrawn from (for share purchases) your predesignated bank account. Your
request will be processed the same day if you call prior to 4 p.m.,
Eastern time. There is a $25 minimum and $50,000 maximum limit for
MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be completed.
You can initiate this service by completing an Account Services form. If
your name and address are not identical to the name and address on your
Fund account, you must have your signature guaranteed. The Fund does not
charge a fee for this service; however, your bank may charge a fee.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in Class A, B or
C Shares through regular liquidations of shares in their accounts in other
mutual funds in the Delaware Investments family. Class A, B and C
shareholders also may elect to invest in one or more of the other mutual
funds in Delaware Investments family through the Wealth Builder Option. If
in connection with the election of the Wealth Builder Option, you wish to
open a new account to receive the automatic investment, such new account
must meet the minimum initial purchase requirements described in the
prospectus of the fund that you select. All investments under this option
are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from their
account and invested automatically into other mutual funds in the Delaware
Investments family, subject to the conditions and limitations set forth in
the Prospectus. The investment will be made on the 20th day of each month
(or, if the fund selected is not open that day, the next business day) at
the public offering price or net asset value, as applicable, of the fund
selected on the date of investment. No investment will be made for any
month if the value of the shareholder's account is less than the amount
specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the
fund into which investments are made could fluctuate. Since this program
involves continuous investment regardless of such fluctuating value,
investors selecting this option should consider their financial ability to
continue to participate in the program through periods of low fund share
prices. This program involves automatic exchanges between two or more fund
accounts and is treated as a purchase of shares of the fund into which
investments are made through the program. See Exchange Privilege for a
brief summary of the tax consequences of exchanges. Shareholders can
terminate their participation in Wealth Builder at any time by giving
written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or
457 Deferred Compensation Plans. This option also is not available to
shareholders of the Institutional Classes.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete an Asset Planner Account
Registration Form, which is available only from a financial adviser or
investment dealer. Effective September 1, 1997, the Asset Planner Service
is only available to financial advisers or investment dealers who have
previously used this service. The Asset Planner service offers a choice of
four predesigned asset allocation strategies (each with a different
risk/reward profile) in predetermined percentages in Delaware Investments
funds. With the help of a financial adviser, you may also design a
customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and
their percentage allocation in the selected Strategy. Exchanges from
existing Delaware Investments accounts into the Asset Planner service may
be made at net asset value under the circumstances described under
Investing by Exchange. Also see Buying Class A Shares at Net Asset Value.
The minimum initial investment per Strategy is $2,000; subsequent
investments must be at least $100. Individual fund minimums do not apply
to investments made using the Asset Planner service. Class A, Class B and
Class C Shares are available through the Asset Planner service. Class A, B
and C Shares are available through the Asset Planner Service. Generally,
only shares within the same class may be used within the same Strategy.
However, Class A Shares of the Fund and of other funds in the Delaware
Investments family may be used in the same Strategy with consultant class
shares that are offered by certain other Delaware Investments funds.
An annual maintenance fee, currently $35 per Strategy, is due at the time
of initial investment and by September 30 of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if
not paid by September 30. However, effective November 1, 1996, the annual
maintenance fee is waived until further notice. Investors who utilize the
Asset Planner for an IRA will continue to pay an annual IRA fee of $15 per
Social Security number. Investors will receive a customized quarterly
Strategy Report summarizing all Asset Planner investment performance and
account activity during the prior period. Confirmation statements will be
sent following all transactions other than those involving a reinvestment
of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two
years.
Retirement Plans
An investment in Class A, Class B and Class C Shares may be suitable for
tax-deferred retirement plans. Delaware Investments offers a full spectrum
of retirement plans, including the 401(k) Defined Contribution Plan,
Individual Retirement Account ("IRA") and the new Roth IRA and Education
IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs,
Roth IRAs, Education IRAs, Simplified Employee Pension Plans, Salary
Reduction Simplified Employee Pension Plans, and 403(b)(7) and 457
Deferred Compensation Plans. The CDSC may be waived on certain redemptions
of Class B Shares and Class C Shares. See Waiver of Contingent Deferred
Sales Charge - Class B Shares and Class C Shares under Redemption and
Exchange in the Prospectus for the Fund Classes for a list of the
instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase limitation
of $250,000 for retirement plans. Purchases of Class C Shares must be in
an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.
Minimum investment limitations generally applicable to other investors do
not apply to retirement plans other than Individual Retirement Accounts,
for which there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25, regardless of which Class is selected.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are
based upon the number of participants in the plan as well as the services
selected. Additional information about fees is included in retirement plan
materials. Fees are quoted upon request. Annual maintenance fees may be
shared by Delaware Management Trust Company, the Transfer Agent, other
affiliates of the Manager and others that provide services to such Plans.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class
shares. See Institutional Class, above. For additional information on any
of the plans and Delaware's retirement services, call the Shareholder
Service Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a
qualified retirement plan consultant. For further details, including
applications for any of these plans, contact your investment dealer or the
Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the special
application forms required for the Plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals, partnerships,
corporations and other eligible forms of organizations. These plans can be
maintained as Section 401(k), profit sharing or money purchase pension
plans. Contributions may be invested only in Class A Shares and Class C
Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual
is already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below,
earnings will be tax-deferred. In addition, an individual may make
contributions on behalf of a spouse who has no compensation for the year;
however, participation may be restricted based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for investors.
Individuals have five types of tax-favored IRA accounts that can be
utilized depending on the individual's circumstances. A new Roth IRA and
Education IRA are available in addition to the existing deductible IRA and
non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active
participant in an employer sponsored retirement plan. Even if a taxpayer
is an active participant in an employer sponsored retirement plan, the
full $2,000 is still available if the taxpayer's AGI is below $30,000
($50,000 for taxpayers filing joint returns) for years beginning after
December 31, 1997. A partial deduction is allowed for married couples with
income between $50,000 and $60,000, and for single individuals with
incomes between $30,000 and $40,000. These income phase-out limits reach
$80,000-$100,000 in 2007 for joint filers and $50,000-$60,000 in 2005 for
single filers. No deductions are available for contributions to IRAs by
taxpayers whose AGI after IRA deductions exceeds the maximum income limit
established for each year and who are active participants in an employer
sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each
working spouse and defer taxes on interest or other earnings from the
IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI
is below $150,000. The maximum deductible IRA contribution for a married
individual who is not an active participant, but whose spouse is, is
phased out for combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or
another IRA may rollover the distribution tax-free to a Conduit IRA. The
rollover of the eligible distribution must be completed by the 60th day
after receipt of the distribution; however, if the rollover is in the form
of a direct trustee-to-trustee transfer without going through the
distributee's hand, the 60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it is
made from a qualified retirement plan, a 403(b) plan or another IRA and
does not constitute one of the following:
(1) Substantially equal periodic payments over the employee's life or life
expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(2) Substantially equal installment payments for a period certain of 10 or
more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
(4) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee;
and
(5) A distribution of after-tax contributions which is not includable in
income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of
1998 (the "1998 Act"), the $2,000 annual limit will not be reduced by any
contributions to a deductible or nondeductible IRA for the same year. The
maximum contribution that can be made to a Roth IRA is phased out for
single filers with AGI between $95,000 and $110,000, and for couples
filing jointly with AGI between $150,000 and $160,000. Qualified
distributions from a Roth IRA would be exempt from federal taxes.
Qualified distributions are distributions (1) made after the five-taxable
year period beginning with the first taxable year for which a contribution
was made to a Roth IRA and (2) that are (a) made on or after the date on
which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time
homebuyer expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated
earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an existing
IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the
conversion is done prior to January 1, 1999, then the income from the
conversion can be included in income ratably over a four-year period
beginning with the year of conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA has
been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to
$500 per year per beneficiary. The $500 annual limit is in addition to the
$2,000 annual contribution limit applicable to IRAs and Roth IRAs.
Eligible contributions must be in cash and made prior to the date the
beneficiary reaches age 18. Similar to the Roth IRA, earnings would
accumulate tax-free. There is no requirement that the contributor be
related to the beneficiary, and there is no limit on the number of
beneficiaries for whom one contributor can establish Education IRAs. In
addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a
single beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and
$110,000, and for couples filing jointly with modified AGI of between
$150,000 and $160,000. Individuals with modified AGI above the phase-out
range are not allowed to make contributions to an Education IRA
established on behalf of any other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher
education expenses incurred by the beneficiary during the year the
distribution is made regardless of whether the beneficiary is enrolled at
an eligible educational institution on a full-time, half-time, or less
than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such
a distribution will be includible in gross income of the beneficiary and
subject to an additional 10% penalty tax if the distribution is not for
qualified higher educations expenses. Tax-free (and penalty-free)
transfers and rollovers of account balances from one Education IRA
benefiting one beneficiary to another Education IRA benefiting a different
beneficiary (as well as redesignations of the named beneficiary) is
permitted, provided that the new beneficiary is a member of the family of
the old beneficiary and that the transfer or rollover is made before the
time the old beneficiary reaches age 30 and the new beneficiary reaches
age 18.
A company or association may establish a Group IRA or Group Roth IRA for
employees or members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in order to
avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in
which the participant reaches age 70 1/2. Individuals are entitled to
revoke the account, for any reason and without penalty, by mailing written
notice of revocation to Delaware Management Trust Company within seven
days after the receipt of the IRA Disclosure Statement or within seven
days after the establishment of the IRA, except, if the IRA is established
more than seven days after receipt of the IRA Disclosure Statement, the
account may not be revoked. Distributions from the account (except for the
pro-rata portion of any nondeductible contributions) are fully taxable as
ordinary income in the year received. Excess contributions removed after
the tax filing deadline, plus extensions, for the year in which the excess
contributions were made are subject to a 6% excise tax on the amount of
excess. Premature distributions (distributions made before age 59 1/2,
except for death, disability and certain other limited circumstances) will
be subject to a 10% excise tax on the amount prematurely distributed, in
addition to the income tax resulting from the distribution. For
information concerning the applicability of a CDSC upon redemption of
Class B Shares and Class C Shares, see Contingent Deferred Sales Charge -
Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will not
apply to distributions from an IRA that are used to pay medical expenses
in excess of 7.5% of adjusted gross income or to pay health insurance
premiums by an individual who has received unemployment compensation for
12 consecutive weeks. In addition, effective January 1, 1998, the new law
allows for premature distribution without a 10% penalty if (i) the amounts
are used to pay qualified higher education expenses (including graduate
level courses) of the taxpayer, the taxpayer's spouse or any child or
grandchild of the taxpayer or the taxpayer's spouse, or (ii) used to pay
acquisition costs of a principle residence for the purchase of a
first-time home by the taxpayer, taxpayer's spouse or any child or
grandchild of the taxpayer or the taxpayer's spouse. A qualified
first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution
for first-time home purchases cannot exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Class A, B and C Shares are available for investment
by a SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31, 1996,
existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to
such existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified plans
based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to establish a plan. An
employer may also elect to make profit sharing contributions and/or
matching contributions with investments in only Class A Shares and Class C
Shares or certain other funds in the Delaware Investments family.
Purchases under the Plan may be combined for purposes of computing the
reduced front-end sales charge applicable to Class A Shares as set forth
in the table the Prospectus.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial
account to fund deferred compensation arrangements for their employees. A
custodial account agreement is available for those employers who wish to
purchase shares of any of the Classes in conjunction with such an
arrangement. Purchases under the Plan may be combined for purposes of
computing the reduced front-end sales charge applicable to Class A Shares
as set forth in the table the Prospectus.
Deferred Compensation Plan for State and Local Government Employees
("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation
plan for their employees who wish to participate. This enables employees
to defer a portion of their salaries and any federal (and possibly state)
taxes thereon. Such plans may invest in shares of the Fund. Although
investors may use their own plan, there is available a Delaware
Investments 457 Deferred Compensation Plan. Interested investors should
contact the Distributor or their investment dealers to obtain further
information. Purchases under the Plan may be combined for purposes of
computing the reduced front-end sales charge applicable to Class A Shares
as set forth in the table in the Prospectus.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan but
is easier to administer than a typical 401(k) Plan. It requires employers
to make contributions on behalf of their employees and also has a salary
deferral feature that permits employees to defer a portion of their salary
into the plan on a pre-tax basis. A SIMPLE IRA is available only to plan
sponsors with 100 or fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available only
to plan sponsors 100 or fewer employees and, in exchange for mandatory
plan sponsor contributions, discrimination testing is no longer required.
Class B Shares are not available for purchase by such plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund or its agent. Orders for purchases of
Class B Shares, Class C Shares and the Institutional Classes are effected
at the net asset value per share next calculated after receipt of the
order by the Fund in which shares are being purchased or its agent. See
Distribution and Service under Investment Management Agreement and
Sub-Advisory Agreement. Selling dealers have the responsibility of
transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value per
share plus any applicable sales charges. Offering price and net asset
value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open. The New York Stock Exchange is scheduled to be open
Monday through Friday throughout the year except for days when the
following holidays are observed: New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas. When the New York Stock Exchange is
closed, the Fund will generally be closed, pricing calculations will not
be made and purchase and redemption orders will not be processed.
An example showing how to calculate the net asset value per share and, in
the case of Class A Shares, the offering price per share, is included in
the Fund's financial statements which are incorporated by reference into
this Part B.
The Fund's net asset value per share is computed by adding the value of
all the Fund's securities and other assets, deducting any liabilities of
the Fund, and dividing by the number of Fund shares outstanding. Expenses
and fees are accrued daily. Portfolio securities, except for bonds, which
are primarily traded on a national or foreign securities exchange are
valued at the last sale price on that exchange. Options are valued at the
last reported sales price or, if no sales are reported, at the mean
between bid and asked prices. Securities not traded on a particular day,
over-the-counter securities and government and agency securities are
valued at the mean value between bid and asked prices. Money market
instruments having a maturity of less than 60 days are valued at amortized
cost. Debt securities (other than short-term obligations) are valued on
the basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Use of a pricing
service has been approved by the Board of Directors. Prices provided by a
pricing service take into account appropriate factors such as
institutional trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other
market data. If no quotations are available, all other securities and
assets are valued at fair value as determined in good faith and in a
method approved by the Board of Directors.
Each Class of the Fund will bear, pro-rata, all of the common expenses of
the Fund. The net asset values of all outstanding shares of each Class of
the Fund will be computed on a pro-rata basis for each outstanding share
based on the proportionate participation in the Fund represented by the
value of shares of that Class. All income earned and expenses incurred by
the Fund will be borne on a pro-rata basis by each outstanding share of a
Class, based on each Class' percentage in the Fund represented by the
value of shares of such Classes. Due to the specific distribution expenses
and other costs that may be allocable to each Class, the dividends paid to
each Class may vary. The net asset value per share of each Class is
expected to be equivalent.
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax-advantaged funds,
bond funds or money market funds. This service is also useful if you are
anticipating a major expenditure and want to move a portion of your
investment into a fund that has the checkwriting feature. Exchanges are
subject to the requirements of each fund and all exchanges of shares
constitute taxable events. [See Taxes.] Further, in order for an exchange
to be processed, shares of the fund being acquired must be registered in
the state where the acquiring shareholder resides. You may want to consult
your financial adviser or investment dealer to discuss which funds in
Delaware Investments will best meet your changing objectives, and the
consequences of any exchange transaction. You may also call the Delaware
Investments directly for fund information.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after a Fund receives your request in good
order, subject, in the case of a redemption, to any applicable CDSC or
Limited CDSC. For example, redemption or exchange requests received in
good order after the time the offering price and net asset value of shares
are determined will be processed on the next business day. A shareholder
submitting a redemption request may indicate that he or she wishes to
receive redemption proceeds of a specific dollar amount. In the case of
such a request, and in the case of certain redemptions from retirement
plan accounts, the Fund will redeem the number of shares necessary to
deduct the applicable CDSC in the case of Class B Shares and Class C
Shares, and, if applicable, the Limited CDSC in the case of Class A Shares
and tender to the shareholder the requested amount, assuming the
shareholder holds enough shares in his or her account for the redemption
to be processed in this manner. Otherwise, the amount tendered to the
shareholder upon redemption will be reduced by the amount of the
applicable CDSC or Limited CDSC. Redemption proceeds will be distributed
promptly, as described below, but not later than seven days after receipt
of a redemption request.
Except as noted below, for a redemption request to be in "good order," you
must provide your account number, account registration, and the total
number of shares or dollar amount of the transaction. For exchange
requests, you must also provide the name of the fund in which you want to
invest the proceeds. Exchange instructions and redemption requests must be
signed by the record owner(s) exactly as the shares are registered. You
may request a redemption or an exchange by calling the Shareholder Service
Center at 800-523-1918. The Fund may suspend, terminate, or amend the
terms of the exchange privilege upon 60 days' written notice to
shareholders.
In addition to redemption of Fund shares, the Distributor, acting as agent
of the Fund, offers to repurchase Fund shares from broker/dealers acting
on behalf of shareholders. The redemption or repurchase price, which may
be more or less than the shareholder's cost, is the net asset value per
share next determined after receipt of the request in good order by the
respective Fund, its agent, or certain authorized persons, subject to
applicable CDSC or Limited CDSC. This is computed and effective at the
time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Fund and the
Distributor end their business days at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by
the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to the applicable
CDSC or Limited CDSC), if the repurchase order was received by the
broker/dealer from the shareholder prior to the time the offering price
and net asset value are determined on such day. The selling dealer has the
responsibility of transmitting orders to the Distributor promptly. Such
repurchase is then settled as an ordinary transaction with the
broker/dealer (who may make a charge to the shareholder for this service)
delivering the shares repurchased.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption
request in good order by the Fund or certain other authorized persons (see
Distribution and Service under Investment Management Agreements and
Sub-Advisory Agreements); provided, however, that each commitment to mail
or wire redemption proceeds by a certain time, as described below, is
modified by the qualifications described in the next paragraph.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail or wire the
proceeds until it is reasonably satisfied that the purchase check has
cleared, which may take up to 15 days from the purchase date. You can
avoid this potential delay if you purchase shares by wiring Federal Funds.
The Fund reserves the right to reject a written or telephone redemption
request or delay payment of redemption proceeds if there has been a recent
change to the shareholder's address of record.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other
reason, the Fund involved will automatically redeem from the shareholder's
account the shares purchased by the check plus any dividends earned
thereon. Shareholders may be responsible for any losses to the Fund or to
the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a
result of which disposal by the Fund of securities owned by it is not
reasonably practical, or it is not reasonably practical for the Fund
fairly to value its assets, or in the event that the SEC has provided for
such suspension for the protection of shareholders, a Fund may postpone
payment or suspend the right of redemption or repurchase. In such case,
the shareholder may withdraw the request for redemption or leave it
standing as a request for redemption at the net asset value next
determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash or
kind, or partly in cash and partly in kind. Any portfolio securities paid
or distributed in kind would be valued as described in Determining
Offering Price and Net Asset Value. Subsequent sale by an investor
receiving a distribution in kind could result in the payment of brokerage
commissions. However, Voyageur Funds, Inc. has elected to be governed by
Rule 18f-1 under the 1940 Act pursuant to which each Fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of such Fund during any 90-day period for any one shareholder.
The value of a Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to a Fund may sustain either a gain
or loss, depending upon the price paid and the price received for such
shares.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value, below. Class B Shares are subject to a CDSC of: (i) 4% if shares
are redeemed within the first two years of purchase; (ii) 3% if shares are
redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; and (iv) 1%
if shares are redeemed during the sixth year following purchase. Class C
Shares are subject to a CDSC of 1% if shares are redeemed within 12 months
following purchase. See Contingent Deferred Sales Charge - Class B Shares
and Class C Shares under Purchasing Shares. Except for the applicable CDSC
or Limited CDSC and, with respect to the expedited payment by wire
described below for which, in the case of the Fund Classes, there is
currently a $7.50 bank wiring cost, neither the Funds nor the Distributor
charges a fee for redemptions or repurchases, but such fees could be
charged at any time in the future.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Investments
(in each case, "New Shares") in a permitted exchange, will not be subject
to a CDSC that might otherwise be due upon redemption of the Original
Shares. However, such shareholders will continue to be subject to the CDSC
and, in the case of Class B Shares, the automatic conversion schedule of
the Original Shares as described in this Part B and any CDSC assessed upon
redemption will be charged by the fund from which the Original Shares were
exchanged. In an exchange of Class B Shares from a Fund, the Fund's CDSC
schedule may be higher than the CDSC schedule relating to the New Shares
acquired as a result of the exchange. For purposes of computing the CDSC
that may be payable upon a disposition of the New Shares, the period of
time that an investor held the Original Shares is added to the period of
time that an investor held the New Shares. With respect to Class B Shares,
the automatic conversion schedule of the Original Shares may be longer
than that of the New Shares. Consequently, an investment in New Shares by
exchange may subject an investor to the higher 12b-1 fees applicable to
Class B Shares of a Fund for a longer period of time than if the
investment in New Shares were made directly.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your shares. The request must be signed by all
owners of the account or your investment dealer of record. For redemptions
of more than $50,000, or when the proceeds are not sent to the
shareholder(s) at the address of record, the Funds require a signature by
all owners of the account and a signature guarantee for each owner. A
signature guarantee can be obtained from a commercial bank, a trust
company or a member of a Securities Transfer Association Medallion Program
("STAMP"). Each Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The
Funds may require further documentation from corporations, executors,
retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares and Institutional Class Shares
only if a shareholder submits a specific request. Certificates are not
issued for Class B Shares or Class C Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your Class A, B or C Shares
into another mutual fund in Delaware Investments, subject to the same
conditions and limitations as other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without
charge) for you. If you choose to have your Class A Shares or Insitutional
Class Shares in certificate form, you may redeem or, in the case of Class
A Shares, exchange only by written request and you must return your
certificates.
The Telephone Redemption - Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your
account in writing that you do not wish to have such services available
with respect to your account. Each Fund reserves the right to modify,
terminate or suspend these procedures upon 60 days' written notice to
shareholders. It may be difficult to reach the Funds by telephone during
periods when market or economic conditions lead to an unusually large
volume of telephone requests. The Telephone Exchange service is not
available to Institutional Class Shares.
Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions
for redemption or exchange of Fund shares which are reasonably believed to
be genuine. With respect to such telephone transactions, each Fund will
follow reasonable procedures to confirm that instructions communicated by
telephone are genuine (including verification of a form of personal
identification) as, if it does not, the Fund or the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent transactions.
Telephone instructions are generally tape recorded, and a written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone. By exchanging shares by telephone,
you are acknowledging prior receipt of a prospectus for the fund into
which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption
proceeds of $50,000 or less mailed to you at your address of record.
Checks will be payable to the shareholder(s) of record. Payment is
normally mailed the next business day after receipt of the redemption
request. This service is only available to individual, joint and
individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If
you request a wire, your funds will normally be sent the next business
day. If the proceeds are wired to the shareholder's account at a bank
which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.
First Union National Bank's fee (currently $7.50 for Class A, B and C
Shares) will be deducted from redemption proceeds. If you ask for a check,
it will normally be mailed the next business day after receipt of your
redemption request to your predesignated bank account. There are no
separate fees for this redemption method, but the mail time may delay
getting funds into your bank account. Simply call the Shareholder Service
Center prior to the time the offering price and net asset value are
determined, as noted above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange
your shares into other funds in Delaware Investments under the same
registration, subject to the same conditions and limitations as other
exchanges noted above. As with the written exchange service, telephone
exchanges are subject to the requirements of each fund, as described
above. Telephone exchanges may be subject to limitations as to amounts or
frequency.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on
short-term swings in the securities market through frequent transactions
in and out of the funds in the Delaware Investments family. Telephone
exchanges may be subject to limitations as to amounts or frequency. The
Transfer Agent and each Fund reserve the right to record exchange
instructions received by telephone and to reject exchange requests at any
time in the future. This service is not available to Institutional Class
Shares.
MoneyLine (SM) On Demand
You or your investment dealer may request redemptions of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize the Fund to
accept such requests from you or your investment dealer, funds will be
deposited to (for share redemptions) your predesignated bank account. Your
request will be processed the same day if you call prior to 4 p.m.,
Eastern time. There is a $25 minimum and $50,000 maximum limit for
MoneyLine (SM) On Demand transactions. See MoneyLine (SM) On Demand under
Investment Plans.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic
and market conditions ("Timing Accounts"), the Funds will refuse any new
timing arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Investments funds from Timing Firms. The Fund
reserves the right to temporarily or permanently terminate the exchange
privilege or reject any specific purchase order for any person whose
transactions seem to follow a timing pattern who: (i) makes an exchange
request out of the Fund within two weeks of an earlier exchange request
out of the Fund, or (ii) makes more than two exchanges out of the Fund per
calendar quarter, or (iii) exchanges shares equal in value to at least $5
million, or more than 1/4 of 1% of the Fund's net assets. Accounts under
common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market
indicators, will be aggregated for purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds:
(1) Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware
Balanced Fund, (4) Limited-Term Government Fund, (5) USA Fund, (6)
Delaware Cash Reserve, (7) Delchester Fund and (8) Tax-Free Pennsylvania
Fund. No other Delaware Investments funds are available for timed
exchanges. Assets redeemed or exchanged out of Timing Accounts in Delaware
Investments funds not listed above may not be reinvested back into that
Timing Account. The Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to
follow a time pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the
Manager's judgment, the Fund would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A shareholder's purchase exchanges may
be restricted or refused if the Fund receives or anticipates simultaneous
orders affecting significant portions of the Fund's assets. In particular,
a pattern of exchanges that coincide with a "market timing" strategy may
be disruptive to the Fund and therefore may be refused.
Except as noted above, only shareholders and their authorized brokers of
record will be permitted to make exchanges or redemptions.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who own
or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may
establish a Systematic Withdrawal Plan for monthly withdrawals of $25 or
more, or quarterly withdrawals of $75 or more, although the Funds do not
recommend any specific amount of withdrawal. This is particularly useful
to shareholders living on fixed incomes, since it can provide them with a
stable supplemental amount. This $5,000 minimum does not apply for a
Fund's prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized
securities profits distributions will be credited to the shareholder's
account and sufficient full and fractional shares will be redeemed at the
net asset value calculated on the third business day preceding the mailing
date.
Checks are dated either the 1st or the 15th of the month, as selected by
the shareholder (unless such date falls on a holiday or a weekend), and
are normally mailed within two business days. Both ordinary income
dividends and realized securities profits distributions will be
automatically reinvested in additional shares of the Class at net asset
value. This plan is not recommended for all investors and should be
started only after careful consideration of its operation and effect upon
the investor's savings and investment program. To the extent that
withdrawal payments from the plan exceed any dividends and/or realized
securities profits distributions paid on shares held under the plan, the
withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
Shareholders should not purchase additional shares while participating in
a Systematic Withdrawal Plan.
The sale of shares for withdrawal payments constitutes a taxable event and
a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on
the holding period for the specific shares liquidated. Premature
withdrawals from retirement plans may have adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of
Class A Shares through a periodic investment program in a fund managed by
the Manager must be terminated before a Systematic Withdrawal Plan with
respect to such shares can take effect, except if the shareholder is a
participant in one of our retirement plans or is investing in Delaware
Investments funds which do not carry a sales charge. Redemptions of Class
A Shares pursuant to a Systematic Withdrawal Plan may be subject to a
Limited CDSC if the purchase was made at net asset value and a dealer's
commission has been paid on that purchase. The applicable CDSC for Class B
Shares and Class C Shares redeemed via a Systematic Withdrawal Plan will
be waived if, on the date that the Plan is established, the annual amount
selected to be withdrawn is less than 12% of the account balance. If the
annual amount selected to be withdrawn exceeds 12% of the account balance
on the date that the Systematic Withdrawal Plan is established, all
redemptions under the Plan will be subject to the applicable CDSC. Whether
a waiver of the CDSC is available or not, the first shares to be redeemed
for each Systematic Withdrawal Plan payment will be those not subject to a
CDSC because they have either satisfied the required holding period or
were acquired through the reinvestment of distributions. The 12% annual
limit will be reset on the date that any Systematic Withdrawal Plan is
modified (for example, a change in the amount selected to be withdrawn or
the frequency or date of withdrawals), based on the balance in the account
on that date. See Waiver of Contingent Deferred Sales Charge - Class B
Shares and Class C Shares, below.
An investor wishing to start a Systematic Withdrawal Plan must complete an
authorization form. If the recipient of Systematic Withdrawal Plan
payments is other than the registered shareholder, the shareholder's
signature on this authorization must be guaranteed. Each signature
guarantee must be supplied by an eligible guarantor institution. The Funds
reserve the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. This plan may be terminated by
the shareholder or the Transfer Agent at any time by giving written
notice.
Systematic Withdrawal Plan payments are normally made by check. In the
alternative, you may elect to have your payments transferred from your
Fund account to your predesignated bank account through the MoneyLine (SM)
Direct Deposit Service. Your funds will normally be credited to your bank
account up to four business days after the payment date. There are no
separate fees for this redemption method. It may take up to four business
days for the transactions to be completed. You can initiate this service
by completing an Account Services form. If your name and address are not
identical to the name and address on your Fund account, you must have your
signature guaranteed. The Funds do not charge a fee for any this service;
however, your bank may charge a fee. This service is not available for
retirement plans.
The Systematic Withdrawal Plan is not available for the Institutional
Class. Shareholders should consult with their financial advisers to
determine whether a Systematic Withdrawal Plan would be suitable for them.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
For purchases of $1,000,000 or more made on or after July 1, 1998, a
Limited CDSC will be imposed on certain redemptions of Class A Shares (or
shares into which such Class A Shares are exchanged) according to the
following schedule: (1) 1.00% if shares are redeemed during the first year
after the purchase; and (2) 0.50% if such shares are redeemed during the
second year after the purchase, if such purchases were made at net asset
value and triggered the payment by the Distributor of the dealer's
commission described above.
The Limited CDSC will be paid to the Distributor and will be assessed on
an amount equal to the lesser of: (1) the net asset value at the time of
purchase of the Class A Shares being redeemed or (2) the net asset value
of such Class A Shares at the time of redemption. For purposes of this
formula, the "net asset value at the time of purchase" will be the net
asset value at purchase of the Class A Shares even if those shares are
later exchanged for shares of another Delaware Investments fund and, in
the event of an exchange of Class A Shares, the "net asset value of such
shares at the time of redemption" will be the net asset value of the
shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years will not
be subjected to the Limited CDSC and an exchange of such Class A Shares
into another Delaware Investments fund will not trigger the imposition of
the Limited CDSC at the time of such exchange. The period a shareholder
owns shares into which Class A Shares are exchanged will count towards
satisfying the two-year holding period. The Limited CDSC is assessed if
such two year period is not satisfied irrespective of whether the
redemption triggering its payment is of Class A Shares of a Fund or Class
A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed that
shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will
not be imposed upon shares representing reinvested dividends or capital
gains distributions, or upon amounts representing share appreciation. All
investments made during a calendar month, regardless of what day of the
month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that
result from a Fund's right to liquidate a shareholder's account if the
aggregate net asset value of the shares held in the account is less than
the then-effective minimum account size; (ii) distributions to
participants from a retirement plan qualified under section 401(a) or
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), or
due to death of a participant in such a plan; (iii) redemptions pursuant
to the direction of a participant or beneficiary of a retirement plan
qualified under section 401(a) or 401(k) of the Code with respect to that
retirement plan; (iv) periodic distributions from an IRA, SIMPLE IRA, or
403(b)(7) or 457 Deferred Compensation Plan due to death, disability, or
attainment of age 59 1/2, and IRA distributions qualifying under Section
72(t) of the Internal Revenue Code; (v) returns of excess contributions to
an IRA; (vi) distributions by other employee benefit plans to pay
benefits; (vii) distributions described in (ii), (iv), and (vi) above
pursuant to a systematic withdrawal plan; and (viii) redemptions by the
classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying Class A Shares
at Net Asset Value under Purchasing Shares).
Waiver of Contingent Deferred Sales Charge - Class B Shares and Class C
Shares
The CDSC is waived on certain redemptions of Class B Shares in connection
with the following redemptions: (i) redemptions that result from the
Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the
then-effective minimum account size; (ii) returns of excess contributions
to an IRA, SIMPLE IRA, SEP/IRA, or 403(b)(7) or 457 Deferred Compensation
Plan; (iii) periodic distributions from an IRA, SIMPLE IRA, SAR/SEP,
SEP/IRA, or 403(b)(7) or 457 Deferred Compensation Plan due to death,
disability or attainment of age 59 1/2, and IRA distributions qualifying
under Section 72(t) of the Internal Revenue Code; and (iv) distributions
from an account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Code) of
all registered owners occurring after the purchase of the shares being
redeemed.
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the
shares held in the account is less than the then-effective minimum account
size; (ii) returns of excess contributions to an IRA, SIMPLE IRA,
403(b)(7) or 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan, or 401(k) Defined Contribution plan; (iii) periodic
distributions from a 403(b)(7) or 457 Deferred Compensation Plan upon
attainment of age 59 1/2, Profit Sharing Plan, Money Purchase Plan, 401(k)
Defined Contribution Plan upon attainment of age 70 1/2, and IRA
distributions qualifying under Section 72(t) of the Internal Revenue Code;
(iv) distributions from a 403(b)(7) or 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a
401(k) Defined Contribution Plan upon attainment of normal retirement age
under the plan or upon separation from service; (vi) periodic
distributions from an IRA or SIMPLE IRA on or after attainment of age 59
1/2; and (vii) distributions from an account if the redemption results
from the death of all registered owners of the account (in the case of
accounts established under the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts or trust accounts, the waiver applies upon the
death of all beneficial owners) or a total and permanent disability (as
defined in Section 72 of the Code) of all registered owners occurring
after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B Shares and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual
amount selected to be withdrawn under the Plan does not exceed 12% of the
value of the account on the date that the Systematic Withdrawal Plan was
established or modified.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DISTRIBUTIONS AND TAXES
The Fund declares a dividend to shareholders of each Class from net
investment income on a daily basis. Dividends are declared each day the
Fund is open and paid monthly. Net investment income earned on days when
the Fund is not open will be declared as a dividend on the next business
day. Purchases of shares of the Fund by wire begin earning dividends when
converted into Federal Funds and are available for investment, normally
the next business day after receipt. However, if the Fund is given prior
notice of Federal Funds wire and an acceptable written guarantee of timely
receipt from an investor satisfying the Fund's credit policies, the
purchase will start earning dividends on the date the wire is received.
Investors desiring to guarantee wire payments must have an acceptable
financial condition and credit history in the sole discretion of the Fund.
Voyageur Funds, Inc. reserves the right to terminate this option at any
time. Purchases by check earn dividends upon conversion to Federal Funds,
normally one business day after receipt.
Each Class of shares of the Fund will share proportionately in the
investment income and expenses of the Fund, except that Class A Shares,
Class B Shares, Class C Shares and Institutional Class Shares will each
bear distribution fees payable under their respective 12b-1 Plans.
Dividends are automatically reinvested in additional shares of the same
Class of the Fund at net asset value, unless, in the case of Class A
Shares, Class B Shares and Class C Shares, an election to receive
dividends in cash has been made. Payment by check of cash dividends will
ordinarily be mailed within three business days after the payable date.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If
such a shareholder's dividends increase to greater than $1.00, the
shareholder would have to file a new election in order to begin receiving
dividends in cash again. If a shareholder redeems an entire account, all
dividends accrued to the time of the withdrawal will be paid by separate
check at the end of that particular monthly dividend period, consistent
with the payment and mailing schedule described above. Any check in
payment of dividends or other distributions which cannot be delivered by
the United States Post Office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's account at the
then-current net asset value and the dividend option may be changed from
cash to reinvest. The Fund may deduct from a shareholder's account the
costs of the Fund's effort to locate a shareholder if a shareholder's mail
is returned by the United States Post Office or the Fund is otherwise
unable to locate the shareholder or verify the shareholder's mailing
address. These costs may include a percentage of the account when a search
company charges a percentage fee in exchange for their location services.
Any distributions from net realized securities profits will be made twice
a year. Payment would be made during the first quarter of the next fiscal
year. Such distributions will be reinvested in shares, unless the
shareholders elect to receive them in cash. The Fund will mail a quarterly
statement showing the dividends paid and all the transactions made during
the period.
Under the 1997 Act, as revised by the 1998 Act and the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, a Fund is
required to track its sales of portfolio securities and to report its
capital gain distributions to you according to the following categories of
holding periods:
"Mid-term capital gains" or "28 percent rate gain": securities sold by a
Fund after July 28, 1997 that were held more than one year but not more
than 18 months. These gains will be taxable to individual investors at a
maximum rate of 28%. This category of gains applied only to gains and
distributions in 1997.
"1997 Act long-term capital gains" or "20 percent rate gain": securities
sold between May 7, 1997 and July 28, 1997 that were held for more than 12
months, and securities sold by the Fund after July 28, 1997 that were held
for more than 18 months. As revised by the 1998 Act, this rate applies to
securities held for more than 12 months and sold in tax years beginning
after December 1, 1997. These gains will be taxable to individual
investors at a maximum rate of 20% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 10% for investors in
the 15% federal income tax bracket. The Omnibus Consolidated and Emergency
Supplemental Appropriations Act passed in October of 1998 included
technical corrections to the 1998 Act. The effect of this correction is
that essentially all capital gain distributions paid to shareholders
during 1998 will be taxed at a maximum rate of 20%.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
five-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individual who are subject to
tax at higher rate brackets, qualified five-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than five years. Taxpayers subject to tax at a higher rate brackets
may also make an election for shares held on January 1, 2001 to recognize
gain on their shares in order to qualify such shares as qualified
five-year property. These gains will be taxable to individual investors at
a maximum rate of 18% for investors in the 28% or higher federal income
tax brackets, and at a maximum rate of 8% for investors in the 15% federal
income tax bracket when sold after the five-year holding period.
See also Accounting and Tax Issues in this Part B.
INVESTMENT MANAGEMENT AGREEMENT AND SUB-ADVISORY AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the
supervision and direction of Voyageur Funds, Inc.'s Board of Directors.
The Manager and its predecessors have been managing the funds in Delaware
Investments since 1938. On October 31, 1998, the Manager and its
affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than $00 billion in
assets in the various institutional or separately managed (approximately
$00,000,000,000) and investment company (approximately $00,000,000,000)
accounts.
Prior to May 1, 1997, Voyageur Fund Managers, Inc. ("Voyageur") had been
retained under an investment advisory contract to act as the Fund's
investment adviser, subject to the authority of the board of directors.
Voyageur was an indirect, wholly-owned subsidiary of Dougherty Financial
Group, Inc. ("DFG"). After the close of business on April 30, 1997,
Voyageur became an indirect, wholly owned subsidiary of Lincoln National
as a result of Lincoln National's acquisition of DFG.
Because Lincoln National's acquisition of DFG resulted in a change of
control of Voyageur, the Fund's previous investment advisory agreement
with Voyageur was "assigned", as that term is defined by the 1940 Act, and
the previous agreement therefore terminated upon the completion of the
acquisition. The board of directors of Voyageur Funds, Inc. unanimously
approved new advisory agreements at a meeting held in person on February
14, 1997, and called for a shareholders meeting to approve the new
agreements. At a meeting held on April 11, 1997, the shareholders of the
Fund approved its Investment Management Agreement with Voyageur, an
indirect wholly-owned subsidiary of Lincoln National, to become effective
after the close of business on April 30, 1997, the date the acquisition
was completed. On May 30, 1997, Voyageur was merged into the Manager and
the Manager became the investment manager for the Fund.
Beginning May 1, 1997, Delaware Management Company, Inc. became the Fund's
Investment Manager and Voyageur Asset Management LLC became the
sub-adviser. The Investment Management Agreement into which the Fund's
Manager has entered has an initial term of two years and may be renewed
each year only so long as such renewal and continuance are specifically
approved at least annually by the Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund, and only if the
terms and the renewal thereof have been approved by the vote of a majority
of the directors of Voyageur Funds, Inc. who are not parties thereto or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. The Agreement is terminable
without penalty on 60 days' notice by the directors of Voyageur Funds,
Inc. or by the Manager. The Agreement will terminate automatically in the
event of its assignment.
Under its Investment Management Agreement, the Manager is entitled to
receive an annual fee equal to 0.50% of the Fund's average daily net
assets.
Pursuant to the terms of a Sub-Advisory Agreement with the Manager, the
Sub-Adviser participates in the management of the Fund's assets, is
responsible for day-to-day investment management of the Fund, makes
investment decisions for the Fund in accordance with the Fund's investment
objectives and stated policies and places orders on behalf of the Fund to
effect the investment decisions made with Voyageur Funds, Inc.'s Trading
Department. The Manager continues to have ultimate responsibility for all
investment advisory services in connection with the management of the Fund
pursuant to the Investment Management Agreement and supervises the
Sub-Adviser's performance of such services. For the services provided to
the Manager, the Manager pays the Sub-Adviser a fee equal to one-half of
the actual fee paid to the Manager under the terms of the Investment
Management Agreement.
The Fund is responsible for all of its own expenses other than those borne
by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Distribution Agreement.
In connection with the merger transaction described above, the Manager has
agreed for the period from May 1, 1997 through April 30, 1999, to
voluntarily waive that portion, if any, of the annual management fees
payable by the Fund and to pay the Fund's expenses to the extent necessary
to ensure that the Fund's total operating expenses (excluding 12b-1 Plan
fees, interest expense, taxes, brokerage fees and commissions) do not
exceed, on an annual basis, 1.00% of the average daily net assets of each
Class of the Fund. This agreement replaces a similar provision in the
Funds' investment advisory contracts with the Funds' predecessor
investment adviser. The Manager and the Distributor reserve the right to
voluntarily waive their fees in whole or part and to voluntarily pay or
reimburse certain other of the Fund's expenses. This agreement replaces a
similar provision in the Fund's investment advisory contracts with the
Fund's predecessor investment adviser.
On October 31, 1998, the total net assets of Voyageur Funds, Inc. were
$000,000,000.
Investment management fees incurred by the Fund for the last 3 fiscal
years follow:
Period Incurred Paid Waived
Year Ended October 31, 1998
Year Ended October 31, 1997 $568,682 $476,490 $92,192
Period Ended October 31, 1996 $187,687 $187,687 $-0-
Year Ended June 30, 1996 $609,965 $608,359 $1,606
For the fiscal year ended October 31, 1998, the Manager paid the
Sub-Adviser $000,000.
Under the general supervision of the Board of Directors, the Manager makes
and executes all investment decisions for the Fund. The Manager pays the
salaries of all directors, officers and employees of Voyageur Funds, Inc.
who are affiliated with the Manager. The Fund pays all of its other
expenses.
Distribution and Service
The Distributor, Delaware Distributors, L.P., located at 1818 Market
Street, Philadelphia, PA 19103, serves as the national distributor of the
Fund's shares under a Distribution Agreement dated March 1, 1997. The
Distributor is an affiliate of the Manager and bears all of the costs of
promotion and distribution, except for payments by the Fund on behalf of
Class A Shares, Class B Shares and Class C Shares under the 12b-1 Plan.
See Distribution (12b-1) and Service under Purchasing Shares for a
discussion of the Distributor's waiver with respect to Institutional Class
Shares. The Distributor is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate of
the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves
as the Fund's shareholder servicing, dividend disbursing and transfer
agent pursuant to an Amended and Restated Shareholders Services Agreement
dated as of April 30, 1997. The Transfer Agent also provides accounting
services to the Fund pursuant to the terms of a separate Fund Accounting
Agreement. The Transfer Agent is also an indirect, wholly owned subsidiary
of Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such
brokers are authorized to designate other intermediaries to accept
purchase and redemption orders on the behalf of the Fund. For purposes of
pricing, the Fund will be deemed to have received a purchase or redemption
order when an authorized broker or, if applicable, a broker's authorized
designee, accepts the order.
OFFICERS AND DIRECTORS
The business and affairs of Voyageur Funds, Inc. are managed under the
direction of its Board of Directors.
Certain officers and directors of Voyageur Funds, Inc. hold identical
positions in each of the other funds in Delaware Investments. On January
31, 1999 Voyageur Funds, Inc.'s officers and directors owned ____________
of the outstanding shares of Class A, Class B, Class C and Institutional
Class of the Fund.
As of January 31, 1999 management believes the following shareholders held
5% or more of the outstanding shares of a Class:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class Name and Address of Account Share Amount Percentage
US Government MN State Armory Bldg. Commission
Securities Attn: Terry Palmer
Fund A Class Veterans Service Building
20 West 12th Street
St. Paul, MN 55155
City of Kentwood
Attn: Tom Chase
4900 Breton Avenue SE
P.O. Box 8848
Kentwood, MI 49508
Delta County MemorialHospital
100 Stafford Lane
P.O. Box 10100
Delta, CO 81416
US Government Merrill Lynch, Pierce, Fenner & Smith
Securities For the Sole Benefit of its Customers
Fund B Class Attn: Fund Administration
4800 Deer Lake Drive, East - 3rd Floor
Jacksonville, FL 32246
BNC Partnership
Attn: Mike Schmitz
c/o BNC National Bank Trust Dept.
322 East Main Street
Bismarck, ND 58501
US Government Jeanne K. Kinkade
Securities In Care of Allen Mitchem POA
Fund B Class 1375 High Street, Unit 1003
Denver, CO 80218
A.G. Edwards & Sons, Inc.C/F
Carl Troy Brown, Jr.
Rollover IRA Account
3509 South 88th East Avenue
Tulsa, OK 74145
US Government Paine Webber
Securities For the Benefit of Paine Webber CDN FBO
Fund C Class Daniel W. Drake
P.O. Box 3321
Weehawken, NJ 07087
Roselyn A. Jesme
Tod Paulette Wiesen et al.
202 8th Street West
Canby, MN 56220
Gerald J. Thompson
Charlotte B. Thompson JTTEN
110 East Fifth Street
Canby, MN 56220
US Government Bankers Trust Co. as Trustee for
Securities Public Service Electric & Gas Co.
Fund Master Employee Benefit Plan
Institutional 34 Exchange Place
Class Attn: Donna Dekowski
New Jersey, NJ 07303
City of Rapid City, SD
Attn: James Preston/Colleen Schmidt
300 Sixth Street
Rapid City, SD 57701
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Management Company, Inc., Delaware Investment Advisers (a series
of Delaware Management Business Trust), Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Retirement Financial Services, Inc. are direct or
indirect, wholly owned subsidiaries of Delaware Management Holdings, Inc.
("DMH"). On April 3, 1995, a merger between DMH and a wholly owned
subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
Directors and principal officers of Voyageur Funds, Inc. are noted below
along with their ages and their business experience for the past five
years. Unless otherwise noted, the address of each officer and director is
One Commerce Square, Philadelphia, PA 19103.
*Wayne A. Stork (61)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other 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 organization.
*Jeffrey J. Nick (45)
President, Chief Executive Officer, Chairman and Director and/or Trustee
of Voyageur Funds, Inc. and 32 other investment companies in the Delaware
Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation
Director of Delaware International Advisers Ltd.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National UK
plc and from 1989 to 1992, he was Senior Vice President responsible for
corporate planning and development for Lincoln National Corporation.
Richard G. Unruh, Jr. (58)
Executive Vice President of Voyageur Funds, Inc. and 32 other 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 organization.
______________________
* Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.
Paul E. Suckow (51)
Executive Vice President/Chief Investment Officer, Fixed Income of
Voyageur Funds, Inc. and 32 other investment companies in the Delaware
Investments family, Delaware Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and Delaware
Management Business Trust
Director of Founders CBO Corporation
Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was Executive
Vice President and Director of Fixed Income for Oppenheimer Management
Corporation, New York, NY from 1985 to 1992. Prior to that, Mr. Suckow was
a fixed-income portfolio manager for Delaware Investments.
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial Officer
of Voyageur Funds, Inc. and 32 other investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc, Founders CBO
Corporation, Delaware Capital Management, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief Administrative
Officer and Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of Delaware Management Company, Inc., DMH Corp., Delaware
Distributors, Inc., Founders Holdings, Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and Director
of Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director
of Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management
Trust Company and Retirement Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various executive
capacities at different times within the Delaware organization.
Walter P. Babich (70)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investment family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
Anthony D. Knerr (59)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he was also
a lecturer in English at the University. In addition, Mr. Knerr was
Chairman of The Publishing Group, Inc., New York, from 1988 to 1990. Mr.
Knerr founded The Publishing Group, Inc. in 1988.
Ann R. Leven (57)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, Washington, DC, and from 1975 to 1992, she was
Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (77)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman
Thomas F. Madison (62)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996.
From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance Company
and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
Charles E. Peck (72)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of
The Ryland Group, Inc., Columbia, MD.
George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of Voyageur Funds,
Inc. and 32 other 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
Senior Vice President and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
executive capacities at different times within the Delaware organization.
Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Voyageur Funds, Inc. and 32
other investment companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd., Delvoy, Inc. and Delaware Management Business
Trust
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
Treasurer of Lincoln Funds Corporation
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware organization.
Michael P. Bishof (36)
Senior Vice President/Treasurer of Voyageur Funds, Inc. and 32 other
investment companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series of
Delaware Management Business Trust)
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Senior Vice President 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.
The following is a compensation table listing for each director entitled
to receive compensation, the aggregate compensation received from the Fund
and the total compensation received from all investment companies in the
Delaware Investments family for which he or she serves as a director or
trustee for the fiscal year ended October 31, 1998 and an estimate of
annual benefits to be received upon retirement under the Delaware Group
Retirement Plan for Directors/Trustees as of October 31, 1998. Only the
independent directors of the Fund receive compensation from the Fund.
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Total
Accrued Estimated Compensation
Aggregate as Part of Annual from
Compensation Equity Benefits Delaware
from Voyageur Funds I, Inc. Upon Investments
Name Funds, Inc. Expenses Retirement(1) Companies(2)
<S> <C> <C> <C> <C>
W. Thacher Longstreth $0,000 None $38,500 $00,000
Ann R. Leven $0,000 None $38,500 $00,000
Walter P. Babich $0,000 None $38,500 $00,000
Anthony D. Knerr $0,000 None $38,500 $00,000
Charles E. Peck $0,000 None $38,500 $00,000
Thomas F. Madison $0,000 None $38,500 $00,000
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the time
of his or her retirement from the Board, has attained the age of 70 and
served on the Board for at least five continuous years, is entitled to
receive payments from each investment company in the Delaware Investments
family for which he or she serves as a director or trustee for a period
equal to the lesser of the number of years that such person served as a
director or trustee or the remainder of such person's life. The amount of
such payments will be equal, on an annual basis, to the amount of the
annual retainer that is paid to directors/trustees of each investment
company at the time of such person's retirement. If an eligible
director/trustee retired as of October 31, 1998 he or she would be
entitled to annual payments totaling the amount noted above, in the
aggregate, from all of the investment companies in the Delaware
Investments family for which he or she served as director or trustee,
based on the number of investment companies in the Delaware Investments
family as of that date.
(2) Each independent director/trustee currently receives a total annual
retainer fee of $38,500 for serving as a director or trustee for all 34
investment companies in Delaware Investments, plus $3,145 for each Board
Meeting attended. Ann R. Leven, Walter P. Babich, Anthony D. Knerr and
Thomas F. Madison serve on the Fund's audit committee; Ms. Leven is the
chairperson. Members of the audit committee currently receive additional
annual compensation of $5,000 from all investment companies, in the
aggregate, with the exception of the chairperson, who receives $6,000.
</TABLE>
GENERAL INFORMATION
Voyageur Funds, Inc. is an open-end, registered management investment
company. The Fund's portfolio of assets is diversified as defined by the
1940 Act. Voyageur Funds, Inc. was organized as a Minnesota corporation on
April 15, 1987.
The Manager is the investment manager of the Fund. The Manager also
provides investment management services to certain of the other funds in
the Delaware Investments family. An affiliate of the Manager also manages
private investment accounts. While investment decisions of the Fund are
made independently from those of the other funds and accounts, investment
decisions for such other funds and accounts may be made at the same time
as investment decisions for the Fund.
Access persons and advisory persons of the Delaware Investments family of
funds, as those terms are defined in SEC Rule 17j-1 under the 1940 Act,
who provide services to the Manager, Delaware International Advisers Ltd.
or their affiliates, are permitted to engage in personal securities
transactions subject to the exceptions set forth in Rule 17j-1 and the
following general restrictions and procedures: (1) certain blackout
periods apply to personal securities transactions of those persons; (2)
transactions must receive advance clearance and must be completed on the
same day as the clearance is received; (3) certain persons are prohibited
from investing in initial public offerings of securities and other
restrictions apply to investments in private placements of securities; (4)
opening positions may only be closed-out at a profit after a 60-day
holding period has elapsed; and (5) the Compliance Officer must be
informed periodically of all securities transactions and duplicate copies
of brokerage confirmations and account statements must be supplied to the
Compliance Officer.
The Distributor acts as national distributor for the Fund and for the
other mutual funds available from Delaware Investments. Prior to May 31,
1997, Voyageur Fund Distributors, Inc. ("VFD") served as the national
distributor for the Fund. The Distributor ("DDLP"), for all periods after
May 31, 1997, and, VFD, prior to May 31, 1997, received net commissions
from on behalf of the Fund's Class A Shares, after reallowances to
dealers, as follows:
US Government Securities Fund A Class
Total
Amount of Amounts Net
Underwriting Reallowed Commission
Fiscal Year Ended Commissions to Dealers to VFD/DDLP
10/31/98
10/31/97 $34,104 $5,079 $29,025
DDLP, after May 31, 1997, and VFD, for periods prior to May 31, 1997,
received in the aggregate Limited CDSC payments with respect to the Fund's
A Class as follows:
Period Ended Limited CDSC Payments
Year Ended 10/31/98
Year Ended 10/31/97 None
Four Months Ended 10/31/96 None
Year Ended 6/30/96 None
Year Ended 6/30/95 None
DDLP, after May 31, 1997, and VFD, for periods prior to May 31, 1997,
received in the aggregate CDSC payments with respect to the Fund's B Class
as follows:
Period Ended CDSC Payments
Year Ended 10/31/98
Year Ended 10/31/97 $5,058
Four Months Ended 10/31/96 1,460
Year Ended 6/30/96 1,047
Year Ended 6/30/95 896
DDLP, after May 31, 1997, and VFD, for periods prior to May 31, 1997,
received CDSC payments with respect to the Fund's C Class as follows:
Period Ended CDSC Payments
Year Ended 10/31/98
Year Ended 10/31/97 $6
Four Months Ended 10/31/96 4
Year Ended 6/30/96 2
Year Ended 6/30/95 None
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for each Fund and for
the other mutual funds available from Delaware Investments. The Transfer
Agent is paid a fee by the Fund for providing these services consisting of
an annual per account charge of $11.00 plus transaction charges for
particular services according to a schedule. Compensation is fixed each
year and approved by the Board of Directors, including a majority of the
unaffiliated directors. The Transfer Agent also provides accounting
services to the Fund. Those services include performing all functions
related to calculating the Fund's net asset value and providing all
financial reporting services, regulatory compliance testing and other
related accounting services. For its services, the Transfer Agent is paid
a fee based on total assets of all funds in Delaware Investments for which
it provides such accounting services. Such fee is equal to 0.25%
multiplied by the total amount of assets in the complex for which the
Transfer Agent furnishes accounting services, where such aggregate complex
assets are $10 billion or less, and 0.20% of assets if such aggregate
complex assets exceed $10 billion. The fees are charged to each fund,
including the Fund, on an aggregate pro-rata basis. The asset-based fee
payable to the Transfer Agent is subject to a minimum fee calculated by
determining the total number of investment portfolios and associated classes.
Norwest Bank Minnesota, N.A. ("Norwest"), Sixth Street & Marquette Avenue,
Minneapolis, Minnesota 55402 is custodian of the Fund's securities and
cash. As custodian for the Fund, Norwest maintains a separate account or
accounts for the Fund; receives, holds and releases portfolio securities
on account of the Fund; receives and disburses money on behalf of the
Fund; and collects and receives income and other payments and
distributions on account of the Fund's portfolio securities.
Capitalization
Voyageur Funds, Inc. has a present authorized capitalization of 10
trillion shares of capital stock with a $.01 par value per share.
The Board of Directors has allocated the following number of shares to the
Fund and its respective classes:
US Government Securities Fund 100 billion
Class A Shares 10 billion
Class B Shares 10 billion
Class C Shares 10 billion
All shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable and, except as described above,
have equal voting rights.
Each Class of the Fund represents a proportionate interest in the assets
of the Fund and has the same voting and other rights and preferences as
the other classes of the Fund. Shareholders of Class A Shares, Class B
Shares, Class C Shares and Institutional Class Shares of the Fund may vote
only on matters affecting the 12b-1 Plan that relates to the Class of
shares that they hold. However, Class B Shares may vote on any proposal to
increase materially the fees to be paid by the Fund under the 12b-1 Plan
relating to its Class A Shares. General expenses of the Fund will be
allocated on a pro-rata basis to the classes according to asset size,
except that expenses of the 12b-1 Plan of the Fund's Class A Shares, Class
B Shares and Class C Shares will be allocated solely to those classes.
Beginning June 9, 1997, the name of Voyageur U.S. Government Securities
Fund changed to Delaware-Voyageur US Government Securities Fund.
Noncumulative Voting
Voyageur Funds, Inc.'s shares have noncumulative voting rights which means
that the holders of more than 50% of the shares of Voyageur Funds, Inc.
voting for the election of directors can elect all the directors if they
choose to do so, and, in such event, the holders of the remaining shares
will not be able to elect any directors.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
APPENDIX A -- RATINGS
Earnings and Dividend Rankings for Common Stocks
Standard & Poor's Corporation. The investment process involves assessment
of various factors -- such as product and industry position, corporate
resources and financial policy -- with results that make some common
stocks more highly esteemed than others. In this assessment, Standard &
Poor's believes that earnings and dividend performance is the end result
of the interplay of these factors and that, over the long run, the record
of this performance has a considerable bearing on relative quality. The
rankings, however, do not pretend to reflect all of the factors, tangible
or intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection
for principal and interest, called creditworthiness, cannot be applied to
common stocks, and therefore rankings are not to be confused with bond
quality ratings which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common
stocks, which are designed to capsulize the nature of this record in a
single symbol. It should be noted, however, that the process also takes
into consideration certain adjustments and modifications deemed desirable
in establishing such rankings.
The point of departure in arriving at these rankings is a computerized
scoring system based on per-share earnings and dividend records of the
most recent ten years -- a period deemed long enough to measure
significant time segments of secular growth, to capture indications of
basic change in trend as they develop, and to encompass the full
peak-to-peak range of the business cycle. Basic scores are computed for
earnings and dividends, then adjusted as indicated by a set of
predetermined modifiers for growth, stability within long-term trend, and
cyclicality. Adjusted scores for earnings and dividends are then combined
to yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales
volume) are set for the various rankings, but the system provides for
making exceptions where the score reflects an outstanding
earnings-dividend record.
The final score for each stock is measured against a scoring matrix
determined by analysis of the scores of a large and representative sample
of stocks. The range of scores in the array of this sample has been
aligned with the following ladder of rankings:
A+ Highest B+ Average C Lowest
A High B Below Average D In Reorganization
A- Above Average B- Lower
NR signifies no ranking because of insufficient data or because the stock
is not amenable to the ranking process.
The positions as determined above may be modified in some instances by
special considerations, such as natural disasters, massive strikes, and
non-recurring accounting adjustments.
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends, and
relative current standing. These rankings must not be used as market
recommendations; a high-score stock may at times be so overpriced as to
justify its sale, while a low-score stock may be attractively priced for
purchase. Rankings based upon earnings and dividend records are no
substitute for complete analysis. They cannot take into account potential
effects of management changes, internal company policies not yet fully
reflected in the earnings and dividend record, public relations standing,
recent competitive shifts, and a host of other factors that may be
relevant to investment status and decision.
Commercial Paper Ratings
Standard & Poor's Corporation. Commercial paper ratings are graded into
four categories, ranging from "A" for the highest quality obligations to
"D" for the lowest. Issues assigned the A rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
further refined with designation 1, 2, and 3 to indicate the relative
degree of safety. The "A-1" designation indicates that the degree of
safety regarding timely payment is very strong.
Moody's Investors Service, Inc. Moody's commercial paper ratings are
opinions of the ability of the issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months.
Moody's makes no representation that such obligations are exempt from
registration under the 1933 Act, nor does it represent that any specific
note is a valid obligation of a rated issuer or issued in conformity with
any applicable law. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity
of rated issuers:
Prime-1 Superior capacity for repayment of short-term promissory
obligations.
Prime-2 Strong capacity for repayment of short-term promissory
obligations.
Prime-3 Acceptable capacity for repayment of short-term promissory
obligations.
Corporate Bond Ratings
Standard & Poor's Corporation. Its ratings for corporate bonds have the
following definitions:
Investment grade:
Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.
Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Speculative Grade:
Debt rated "BB", "B" "CCC" and "CC" and "C" is regarded, as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the
top four categories (AAA, AA, A, BBB, commonly known as "Investment Grade"
ratings) generally are regarded as eligible for bank investment. Also, the
laws of various states governing legal investments impose certain rating
or other standards for obligations eligible for investment by savings
banks, trust companies, insurance companies and fiduciaries generally.
Moody's Investors Service, Inc. Its ratings for corporate bonds include
the following:
Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risk appear
somewhat larger than in Aaa securities.
Bonds which are rated "A" possess many favorable attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
Bonds which are rated "B" generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Bonds which are rated "Ca" represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
Bonds which are rated "C" are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Preferred Stock Rating
Standard & Poor's Corporation. Its ratings for preferred stock have the
following definitions:
An issue rated "AAA" has the highest rating that may be assigned by
Standard & Poor's ("S&P") to a preferred stock issue and indicates an
extremely strong capacity to pay the preferred stock obligations.
A preferred stock issue rated "AA" also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated "AAA."
An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
An issue rated "BBB" is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the "A"
category.
Preferred stock rate "BB," "B," and "CCC" are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
preferred stock obligations. "BB" indicates the lowest degree of
speculation and "CCC" the highest degree of speculation. While such issues
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.
A preferred stock rated "C" is a non-paying issue.
A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.
"NR" indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Moody's Investors Service, Inc. Its ratings for preferred stock include
the following:
An issue which is rated "aaa" is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.
An issue which is rated "aa" is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and
asset protection will remain relatively well maintained in the foreseeable
future.
An issue which is rate "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
An issue which is rated "baa" is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
An issue which is rated "ba" is considered to have speculative elements
and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse
periods. Uncertainty of position characterizes preferred stocks in this
class.
An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payments.
An issue which is rated "ca" is speculative in a high degree and is likely
to be in arrears on dividends with little likelihood of eventual payment.
An issue rated "c" is the lowest rated class of preferred or preference
stock. Issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
APPENDIX B -- GENERAL CHARACTERISTICS AND RISKS OF OPTIONS AND FUTURES
General. As described in the Prospectus under "Investment Objectives and
Policies - Options and Futures," the Fund may purchase and sell options on
the securities in which it may invest and the Fund may purchase and sell
options on futures contracts (as defined below) and may purchase and sell
futures contracts. The Fund intend to engage in such transactions if it
appears advantageous to Voyageur to do so in order to pursue the Fund's
investment objectives, to seek to hedge against the effects of market
conditions and to seek to stabilize the value of its assets. The Fund will
engage in hedging and risk management transactions from time to time in
Voyageur's discretion, and may not necessarily be engaging in such
transactions when movements in interest rates that could affect the value
of the assets of the Fund occur.
Conditions in the securities, futures and options markets will determine
whether and in what circumstances the Fund will employ any of the
techniques or strategies described below. The Fund's ability to pursue
certain of these strategies may be limited by applicable regulations of
the Commodity Futures Trading Commission (the "CFTC") and the federal tax
requirements applicable to regulated investment companies. Transactions in
options and futures contracts may give rise to income that is subject to
regular federal income tax and, accordingly, in normal circumstances the
Fund does not intend to engage in such practices to a significant extent.
The use of futures and options, and the possible benefits and attendant
risks, are discussed below.
Futures Contracts and Related Options. The Fund may enter into contracts
for the purchase or sale for future delivery (a "futures contract") of
fixed-income securities or contracts based on financial indices including
any index of securities in which the Fund may invest. A "sale" of a
futures contract means the undertaking of a contractual obligation to
deliver the securities, or the cash value of an index, called for by the
contract at a specified price during a specified delivery period. A
"purchase" of a futures contract means the undertaking of a contractual
obligation to acquire the securities, or cash value of an index, at a
specified price during a specified delivery period. The Fund may also
purchase and sell (write) call and put options on financial futures
contracts. An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures contract
at a specified exercise price at any time during, or at the termination
of, the period specified in the terms of the option. Upon exercise, the
writer of the option delivers the futures contract to the holder at the
exercise price. The Fund would be required to deposit with its custodian
initial margin and maintenance margin with respect to put and call options
on futures contracts written by it.
Although some financial futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual commitment is closed out before delivery without having to
make or take delivery of the security. The offsetting of a contractual
obligation is accomplished by purchasing (or selling, as the case may be)
on a commodities exchange an identical futures contract calling for
delivery in the same period. The Fund's ability to establish and close out
positions in futures contracts and options on futures contracts will be
subject to the liquidity of the market. Although the Fund generally will
purchase or sell only those futures contracts and options thereon for
which there appears to be a liquid market, there is no assurance that a
liquid market on an exchange will exist for any particular futures
contract or option thereon at any particular time. Where it is not
possible to effect a closing transaction in a contract or to do so at a
satisfactory price, the Fund would have to make or take delivery under the
futures contract, or, in the case of a purchased option, exercise the
option. The Fund would be required to maintain initial margin deposits
with respect to the futures contract and to make variation margin payments
until the contract is closed. The Fund will incur brokerage fees when they
purchase or sell futures contracts.
At the time a futures contract is purchased or sold, the Fund must deposit
in a custodial account cash or securities as a good faith deposit payment
(known as "initial margin"). It is expected that the initial margin on
futures contracts the Fund may purchase or sell may range from
approximately 1 1/2% to approximately 5% of the value of the securities
(or the securities index) underlying the contract. In certain
circumstances, however, such as during periods of high volatility, the
Fund may be required by an exchange to increase the level of its initial
margin payment. Initial margin requirements may be increased generally in
the future by regulatory action. An outstanding futures contract is valued
daily in a process known as "marking to market." If the market value of
the futures contract has changed, the Fund will be required to make or
will be entitled to receive a payment in cash or specified high quality
debt securities in an amount equal to any decline or increase in the value
of the futures contract. These additional deposits or credits are
calculated and required on a daily basis and are known as "variation
margin."
There may be an imperfect correlation between movements in prices of the
futures contract the Fund purchases or sells and the portfolio securities
being hedged. In addition, the ordinary market price relationships between
securities and related futures contracts may be subject to periodic
distortions. Specifically, temporary price distortions could result if,
among other things, participants in the futures market elect to close out
their contracts through offsetting transactions rather than meet variation
margin requirements, investors in futures contracts decide to make or take
delivery of underlying securities rather than engage in closing
transactions or if, because of the comparatively lower margin requirements
in the futures market than in the securities market, speculators increase
their participation in the futures market. Because price distortions may
occur in the futures market and because movements in the prices of
securities may not correlate precisely with movements in the prices of
futures contracts purchased or sold by the Fund in a hedging transaction,
even if Voyageur correctly forecasts market trends the Fund's hedging
strategy may not be successful. If this should occur, the Fund could lose
money on the futures contracts and also on the value of its portfolio
securities.
Although the Fund believes that the use of futures contracts and options
thereon will benefit it, if Voyageur's judgment about the general
direction of securities prices or interest rates is incorrect, the Fund's
overall performance may be poorer than if it had not entered into futures
contracts or purchased or sold options thereon. For example, if the Fund
seeks to hedge against the possibility of an increase in interest rates,
which generally would adversely affect the price of fixed-income
securities held in its portfolio, and interest rates decrease instead, the
Fund will lose part or all of the benefit of the increased value of its
assets which it has hedged due to the decrease in interest rates because
it will have offsetting losses in its futures positions. In addition,
particularly in such situations, the Fund may have to sell assets from its
portfolio to meet daily margin requirements at a time when it may be
disadvantageous to do so.
Options on Securities. The Fund may purchase and sell (write) options on
securities, which options may be either exchange-listed or
over-the-counter options. The Fund may write call options only if the call
option is "covered." A call option written by the Fund is covered if the
Fund owns the securities underlying the option or has a contractual right
to acquire them or owns securities which are acceptable for escrow
purposes. The Fund may write put options only if the put option is
"secured." A put option written by the Fund is secured if the Fund, which
is obligated as a writer of a put option, invests an amount, not less than
the exercise price of a put option, in eligible securities.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or purchased, in
the case of a put option; the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or not an
option expires unexercised, the writer retains the amount of the premium.
This amount, of course, may, in the case of a covered call option, be
offset by a decline in the market value of the underlying security during
the option period. If a call option is exercised, the writer experiences a
profit or loss from the sale of the underlying security. If a put option
is exercised, the writer must fulfill the obligation to purchase the
underlying security at the exercise price which will usually exceed the
then market value of the underlying security.
The writer of an option that wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option
of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option. Likewise,
an investor who is the holder of an option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can
be effected.
Effecting a closing transaction in the case of a written call option will
permit the Fund to write another call option on the underlying security
with either a different exercise price or expiration date or both, or in
the case of a written put option will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by
deposited cash or short-term securities. Also, effecting a closing
transaction will permit the cash or proceeds from the concurrent sale of
any securities subject to the option to be used for other Fund
investments. If the Fund desires to sell a particular security from its
portfolio on which it has written a call option, it will effect a closing
transaction prior to or concurrent with the sale of the security.
The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option
or is more than the premium paid to purchase the option; the Fund will
realize a loss from a closing transaction if the price of the transaction
is more than the premium received from writing the option or is less than
the premium paid to purchase the option. Because increases in the market
price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from the repurchase
of a call option is likely to be offset in whole or in part by
appreciation of the underlying security owned by the Fund.
An option position may be closed out only where there exists a secondary
market for an option of the same series. If a secondary market does not
exist, it might not be possible to effect closing transactions in
particular options with the result that the Fund would have to exercise
the options in order to realize any profit. If the Fund is unable to
effect a closing purchase transaction in a secondary market, it will not
be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise. Reasons for the absence of
a liquid secondary market include the following: (i) there may be
insufficient trading interest in certain options, (ii) restrictions may be
imposed by a national securities exchange ("Exchange") on opening
transactions or closing transactions or both, (iii) trading halts,
suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities, (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or the Options Clearing
Corporation may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which
event the secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on that
Exchange that had been issued by the Options Clearing Corporation as a
result of trades on that Exchange would continue to be exercisable
in accordance with their terms.
The Fund may purchase put options to hedge against a decline in the value
of its portfolio. By using put options in this way, the Fund will reduce
any profit it might otherwise have realized in the underlying security by
the amount of the premium paid for the put option and by transaction
costs.
The Fund may purchase call options to hedge against an increase in the
price of securities that the Fund anticipates purchasing in the future.
The premium paid for the call option plus any transaction costs will
reduce the benefit, if any, realized by the Fund upon exercise of the
option, and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to the Fund.
The Fund may purchase and sell options that are exchange-traded or that
are traded over-the counter ("OTC options"). Exchange-traded options in
the United States are issued by a clearing organization affiliated with
the exchange on which the option is listed which, in effect, guarantees
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty with no clearing
organization guarantee. Thus, when the Fund purchases OTC options, it must
rely on the dealer from which it purchased the OTC option to make or take
delivery of the securities underlying the option. Failure by the dealer to
do so would result in the loss of the premium paid by the Fund as well as
the loss of the expected benefit of the transaction.
Although the Fund will enter into OTC options only with dealers that agree
to enter into, and which are expected to be capable of entering into,
closing transactions with the Fund, there can be no assurance that the
Fund will be able to liquidate an OTC option at a favorable price at any
time prior to expiration. Until the Fund is able to effect a closing
purchase transaction in a covered OTC call option the Fund has written, it
will not be able to liquidate securities used as cover until the option
expires or is exercised or different cover is substituted. This may impair
the Fund's ability to sell a portfolio security at a time when such a sale
might be advantageous. In the event of insolvency of the counterparty, the
Fund may be unable to liquidate an OTC option. In the case of options
written by the Fund, the inability to enter into a closing purchase
transaction may result in material losses to the Fund.
Regulatory Restrictions. To the extent required to comply with applicable
SEC releases and staff po sitions, when entering into futures contracts or
certain option transactions, such as writing a put option, the Fund will
maintain, in a segregated account, cash or liquid high-grade securities
equal to the value of such contracts. Compliance with such segregation
requirements may restrict the Fund's ability to invest in intermediate-
and long-term Tax Exempt Obligations.
The Fund intend to comply with CFTC regulations and avoid "commodity pool
operator" status. These regulations require that futures and options
positions be used (a) for "bona fide hedging purposes" (as defined in the
regulations) or (b) for other purposes so long as aggregate initial
margins and premiums required in connection with non-hedging positions do
not exceed 5% of the liquidation value of the Fund's portfolio. The Fund
currently does not intend to engage in transactions in futures contracts
or options thereon for speculation.
Accounting Considerations. When the Fund writes an option, an amount equal
to the premium received by it is included in the Fund's Statement of
Assets and Liabilities as a liability. The amount of the liability
subsequently is marked to market to reflect the current market value of
the option written. When the Fund purchases an option, the premium paid by
the Fund is recorded as an asset and subsequently is adjusted to the
current market value of the option.
In the case of a regulated futures contract purchased or sold by the Fund,
an amount equal to the initial margin deposit is recorded as an asset. The
amount of the asset subsequently is adjusted to reflected changes in the
amount of the deposit as well as changes in the value of the contract.
APPENDIX C--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE
INVESTMENTS FAMILY
Following is a summary of the investment objectives of the other funds in
the Delaware Investments family:
Delaware Fund seeks long-term growth by a balance of capital appreciation,
income and preservation of capital. It uses a dividend-oriented valuation
strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Devon
Fund seeks current income and capital appreciation by investing primarily
in income-producing common stocks, with a focus on common stocks the
Manager believes have the potential for above average dividend increases
over time.
Trend Fund seeks long-term growth by investing in common stocks issued by
emerging growth companies exhibiting strong capital appreciation
potential.
Small Cap Value Fund seeks capital appreciation by investing primarily in
common stocks whose market values appear low relative to their underlying
value or future potential.
DelCap Fund seeks long-term capital growth by investing in common stocks
and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
Decatur Income Fund seeks the highest possible current income by investing
primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return
Fund seeks long-term growth by investing primarily in securities that
provide the potential for income and capital appreciation without undue
risk to principal. Blue Chip Fund seeks to achieve long-term capital
appreciation. Current income is a secondary objective. It seeks to achieve
these objectives by investing primarily in equity securities and any
securities that are convertible into equity securities. Social Awareness
Fund seeks to achieve long-term capital appreciation. It seeks to achieve
this objective by investing primarily in equity securities of medium- to
large-sized companies expected to grow over time that meet the Fund's
"Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by investing
principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Strategic Income Fund seeks to
provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors
of the fixed-income securities markets: high yield, higher risk
securities, investment grade fixed-income securities and foreign
government and other foreign fixed-income securities. High-Yield
Opportunities Fund seeks to provide investors with total return and, as a
secondary objective, high current income. Corporate Bond Fund seeks to
provide investors with total return by investing primarily in corporate
bonds. Extended Duration Bond Fund seeks to provide investors with total
return by investing primarily in corporate bonds
U.S. Government Fund seeks high current income by investing primarily in
long-term debt obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities
and instruments secured by such securities.
Delaware Cash Reserve seeks the highest level of income consistent with
the preservation of capital and liquidity through investments in
short-term money market instruments, while maintaining a stable net asset
value.
REIT Fund seeks to achieve maximum long-term total return with capital
appreciation as a secondary objective. It seeks to achieve its objectives
by investing in securities of companies primarily engaged in the real
estate industry.
Tax-Free Money Fund seeks high current income, exempt from federal income
tax, by investing in short-term municipal obligations, while maintaining a
stable net asset value.
Tax-Free USA Fund seeks high current income exempt from federal income tax
by investing in municipal bonds of geographically-diverse issuers.
Tax-Free Insured Fund invests in these same types of securities but with
an emphasis on municipal bonds protected by insurance guaranteeing
principal and interest are paid when due. Tax-Free USA Intermediate Fund
seeks a high level of current interest income exempt from federal income
tax, consistent with the preservation of capital by investing primarily in
municipal bonds.
Tax-Free Pennsylvania Fund seeks a high level of current interest income
exempt from federal and, to the extent possible, certain Pennsylvania
state and local taxes, consistent with the preservation of capital.
Tax-Free New Jersey Fund seeks a high level of current interest income
exempt from federal income tax and New Jersey state and local taxes,
consistent with preservation of capital. Tax-Free Ohio Fund seeks a high
level of current interest income exempt from federal income tax and Ohio
state and local taxes, consistent with preservation of capital.
Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family (referred to as "Underlying Funds").
Foundation Funds Income Portfolio seeks a combination of current income
and preservation of capital with capital appreciation by investing
primarily in a mix of fixed income and domestic equity securities,
including fixed income and domestic equity Underlying Funds. Foundation
Funds Balanced Portfolio seeks capital appreciation with current income as
a secondary objective by investing primarily in domestic equity and fixed
income securities, including domestic equity and fixed income Underlying
Funds. Foundation Funds Growth Portfolio seeks long-term capital growth by
investing primarily in equity securities, including equity Underlying
Funds, and, to a lesser extent, in fixed income securities, including
fixed-income Underlying Funds.
International Equity Fund seeks to achieve long-term growth without undue
risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond
Fund seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that
may also provide the potential for capital appreciation. Global Equity
Fund seeks to achieve long-term total return by investing in global
securities that provide the potential for capital appreciation and income.
Emerging Markets Fund seeks long-term capital appreciation by investing
primarily in equity securities of issuers located or operating in emerging
countries.
U.S. Growth Fund seeks to maximize capital appreciation by investing in
companies of all sizes which have low dividend yields, strong balance
sheets and high expected earnings growth rates relative to their industry.
Overseas Equity Fund seeks to maximize total return (capital appreciation
and income), principally through investments in an internationally
diversified portfolio of equity securities. New Pacific Fund seeks
long-term capital appreciation by investing primarily in companies which
are domiciled in or have their principal business activities in the
Pacific Basin.
Delaware Group Premium Fund, Inc. offers 16 funds available exclusively as
funding vehicles for certain insurance company separate accounts. Decatur
Total Return Series seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. Delchester Series seeks as
high a current income as possible by investing in rated and unrated
corporate bonds, U.S. government securities and commercial paper. Capital
Reserves Series seeks a high stable level of current income while
minimizing fluctuations in principal by investing in a diversified
portfolio of short- and intermediate-term securities. Cash Reserve Series
seeks the highest level of income consistent with preservation of capital
and liquidity through investments in short-term money market instruments.
DelCap Series seeks long-term capital appreciation by investing its assets
in a diversified portfolio of securities exhibiting the potential for
significant growth. Delaware Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a
dividend-oriented valuation strategy to select securities issued by
established companies that are believed to demonstrate potential for
income and capital growth. International Equity Series seeks long-term
growth without undue risk to principal by investing primarily in equity
securities of foreign issuers that provide the potential for capital
appreciation and income. Small Cap Value Series seeks capital appreciation
by investing primarily in small-cap common stocks whose market values
appear low relative to their underlying value or future earnings and
growth potential. Emphasis will also be placed on securities of companies
that may be temporarily out of favor or whose value is not yet recognized
by the market. Trend Series seeks long-term capital appreciation by
investing primarily in small- cap common stocks and convertible securities
of emerging and other growth-oriented companies. These securities will
have been judged to be responsive to changes in the market place and to
have fundamental characteristics to support growth. Income is not an
objective. Global Bond Series seeks to achieve current income consistent
with the preservation of principal by investing primarily in global
fixed-income securities that may also provide the potential for capital
appreciation. Strategic Income Series seeks high current income and total
return by using a multi-sector investment approach, investing primarily in
three sectors of the fixed-income securities markets: high-yield, higher
risk securities; investment grade fixed-income securities; and foreign
government and other foreign fixed-income securities. Devon Series seeks
current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks that the
investment manager believes have the potential for above-average dividend
increases over time. Emerging Markets Series seeks to achieve long-term
capital appreciation by investing primarily in equity securities of
issuers located or operating in emerging countries. Convertible Securities
Series seeks a high level of total return on its assets through a
combination of capital appreciation and current income by investing
primarily in convertible securities. Social Awareness Series seeks to
achieve long-term capital appreciation by investing primarily in equity
securities of medium to large-sized companies expected to grow over time
that meet the Series' "Social Criteria" strategy. REIT Series seeks to
achieve maximum long-term total return, with capital appreciation as
a secondary objective, by investing in securities of companies primarily
engaged in the real estate industry.
Delaware-Voyageur US Government Securities Fund seeks to provide a high
level of current income consistent with the prudent investment risk by
investing in U.S. Treasury bills, notes, bonds, and other obligations
issued or unconditionally guaranteed by the full faith and credit of the
U.S. Treasury, and repurchase agreements fully secured by such
obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Minnesota Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to provide a
high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with preservation of capital.
The Fund seeks to reduce market risk by maintaining an average weighted
maturity from five to ten years.
Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a high
level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high
level of current income exempt from federal income tax, consistent with
the preservation of capital. The Fund will seek to select investments that
will enable its shares to be exempt from the Florida intangible personal
property tax. Delaware-Voyageur Tax-Free Florida Fund seeks to provide a
high level of current income exempt from federal income tax, consistent
with the preservation of capital. The Fund will seek to select investments
that will enable its shares to be exempt from the Florida intangible
personal property tax. Delaware-Voyageur Tax-Free Kansas Fund seeks to
provide a high level of current income exempt from federal income tax, the
Kansas personal income tax and the Kansas intangible personal property
tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Missouri Insured Fund seeks to provide a high level of current
income exempt from federal income tax and the Missouri personal income
tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free New Mexico Fund seeks to provide a high level of current income
exempt from federal income tax and the New Mexico personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Oregon Insured Fund seeks to provide a high level of current income exempt
from federal income tax and the Oregon personal income tax, consistent
with the preservation of capital. Delaware-Voyageur Tax-Free Utah Fund
seeks to provide a high level of current income exempt from federal income
tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Washington Insured Fund seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level of
current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free California Fund seeks to provide a high level of current income
exempt from federal income tax and the California personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Iowa Fund seeks to provide a high level of current income exempt from
federal income tax and the Iowa personal income tax, consistent with the
preservation of capital. Delaware- Voyageur Tax-Free Idaho Fund seeks to
provide a high level of current income exempt from federal income tax and
the Idaho personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Minnesota High Yield Municipal Bond Fund seeks
to provide a high level of current income exempt from federal income tax
and the Minnesota personal income tax primarily through investment in
medium and lower grade municipal obligations. National High Yield
Municipal Fund seeks to provide a high level of income exempt from federal
income tax, primarily through investment in medium and lower grade
municipal obligations. Delaware-Voyageur Tax-Free New York Fund seeks to
provide a high level of current income exempt from federal income tax and
the personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Wisconsin Fund seeks to provide a high level of current income exempt from
federal income tax and the Wisconsin personal income tax, consistent with
the preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high level of
current income exempt from federal income tax and the Colorado personal
income tax, consistent with the preservation of capital.
Aggressive Growth Fund seeks long-term capital appreciation, which the
Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the
Fund, in seeking its objective, may receive current income from dividends
and interest, income is only an incidental consideration in the selection
of the Fund's investments. Growth Stock Fund has an objective of long-term
capital appreciation. The Fund seeks to achieve its objective from equity
securities diversified among individual companies and industries.
Tax-Efficient Equity Fund seeks to obtain for taxable investors a high
total return on an after-tax basis. The Fund will attempt to achieve this
objective by seeking to provide a high long-term after-tax total return
through managing its portfolio in a manner that will defer the realization
of accrued capital gains and minimize dividend income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free North Dakota Fund seeks to provide a high level of current income
exempt from federal income tax and the North Dakota personal income tax,
consistent with the preservation of capital.
For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a
prospectus from the Distributor. Read it carefully before you invest or
forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
FINANCIAL STATEMENTS
Beginning May 1, 1997, Ernst & Young LLP began serving as the independent
auditors for Voyageur Funds, Inc. and, in its capacity as such, audits the
annual financial statements of the Fund. KPMG Peat Marwick LLP previously
served as the independent auditors for the Fund and, in its capacity as
such, audited the annual financial statements of the Fund. The Fund's
Statement of Net Assets, Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets, Financial Highlights and
Notes to Financial Statements, as well as the report of Ernst & Young LLP,
independent auditors, for the fiscal year ended October 31, 1997 are
included in Voyageur Funds, Inc.'s Annual Report to shareholders. The
financial statements and financial highlights, the notes relating thereto
and the report of Ernst & Young LLP listed above are incorporated by
reference from the Annual Report into this Part B. The Statements of
Changes in Net Assets for the periods ended June 30, 1996 through October
31, 1996, and the Financial Highlights for the periods ended June 30,
1994, through October 31, 1996, were audited by KPMG Peat Marwick LLP
whose report, dated December 6, 1996, expressed an unqualified opinion on
those statements and financial highlights.
Delaware Investments includes funds with a wide range of investment
objectives. Stock funds, income funds, national and state-specific
tax-exempt funds, money market funds, global and international funds and
closed-end funds give investors the ability to create a portfolio that
fits their personal financial goals. For more information, shareholders
should contact their financial adviser or call Delaware Investments at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
SUB-ADVISER
Voyageur Asset Management LLC
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, MN 55402
DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND
A CLASS
B CLASS
C CLASS
INSTITUTIONAL CLASS
CLASSES OF VOYAGEUR FUNDS, INC.
PART B
STATEMENT OF
ADDITIONAL INFORMATION
March 1, 1999
[LOGO OMITTED: DELAWARE INVESTMENTS]
PART C
Other Information
Item 23. Exhibits
(a) Articles of Incorporation.
(1) Amended and Restated Articles of Incorporation
(November 22, 1993) incorporated into this filing by
reference to Post-Effective Amendment No. 17 filed
October 31, 1995.
(2) Certification of Designation (May 17, 1994) incorporated
into this filing by reference to Post-Effective Amendment
No. 17 filed October 31, 1995.
(3) Certification of Designation (August 30, 1994) incorporated
into this filing by reference to Post-Effective Amendment
No. 17 filed October 31, 1995.
(4) Articles of Correction to Amended and Restated Articles of
Incorporation (July 27, 1994) incorporated into this filing
by reference to Post-Effective Amendment No. 17 filed
October 31, 1995.
(5) Certification of Designation (March 8, 1996) incorporated
into this filing by reference to Post-Effective Amendment
No. 19 filed March 15, 1996.
(b) By-Laws. By-Laws, as amended (October 24, 1995) incorporated
into this filing by reference to Post-Effective Amendment No. 18
filed January 3, 1996.
(c) Instruments Defining the Rights of Security Holders.
(1) Articles of Incorporation and Articles Supplementary.
(i) Amended and Restated Articles of Incorporation
(November 22, 1993) incorporated into this filing by
reference to Post-Effective Amendment No. 17 filed
October 31, 1995.
(ii) Certification of Designation (May 17, 1994)
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed October 31, 1995.
(iii) Certification of Designation (August 30, 1994)
incorporated into this filing by reference to Post-
Effective Amendment No. 17 filed October 31, 1995.
(iv) Articles of Correction to Amended and Restated Articles
of Incorporation (July 27, 1994) incorporated into this
filing by reference to Post-Effective Amendment No. 17
filed October 31, 1995.
(v) Certification of Designation (March 8, 1996)
incorporated into this filing by reference to Post-
Effective Amendment No. 19 filed March 15, 1996.
(2) By-Laws. By-Laws, as amended (October 24, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 18 filed January 3, 1996.
(d) Investment Management Agreement.
(1) Executed Investment Management Agreement (April 30, 1997)
between Delaware Management Company, Inc. and the
Registrant on behalf of US Government Securities Fund
incorporated into this filing by reference to Post-Effective
Amendment No. 23 filed February 27, 1998.
(2) Executed Investment Sub-Advisory Agreement (April 30, 1997)
between Delaware Management Company, Inc. and Voyageur
Asset Management LLC on behalf of US Government Securities
Fund incorporated into this filing by reference to Post-
Effective Amendment No.23 filed February 27, 1998.
(e)(1) Distribution Agreement.
(i) Executed Distribution Agreement (March 1, 1997) between
Delaware Distributors, L.P. and the Registrant on
behalf of US Government Securities Fund incorporated into
this filing by reference to Post-Effective Amendment
No. 23 filed February 27, 1998.
(2) Administration and Service Agreement Form of
Administration and Service Agreement (as amended
November 1995) (Module) incorporated into this filing by
reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
(3) Dealer's Agreement. Dealer's Agreement (as amended
November 1995) (Module) incorporated into this filing by
reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
(4) Mutual Fund Agreement for the Delaware Group of Funds
(as amended December 1995) (Module) incorporated into
this filing by reference to Post-Effective Amendment
No. 23 filed February 27, 1998.
(f) Bonus, Profit Sharing, Pension Contracts. Inapplicable.
(g) Custodian Agreement.
(1) Custodian Contract with Norwest Bank Minnesota N.A.
(April 20, 1992) incorporated into this filing by reference
to Post-Effective Amendment No. 17 filed October 31, 1995.
(h) Other Material Contracts.
(1) Executed Shareholders Services Agreement (May 1, 1997)
between Delaware Service Company, Inc. and the Registrant
on behalf of US Government Securities Fund incorporated
into this filing by reference to Post-Effective Amendment
No. 23 filed February 27, 1998.
(2) Executed Fund Accounting Agreement (August 16, 1996) between
Delaware Service Company, Inc. and the Registrant on behalf
of US Government Securities Fund incorporated into this
filing by reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
(i) Executed Amendment No. 9 (March 31, 1998) to Delaware
Group of Funds Fund Accounting Agreement attached as
Exhibit.
(ii) Executed Amendment No. 10 (August 31, 1998) to Delaware
Group of Funds Fund Accounting Agreement attached as
Exhibit.
(iii) Executed Amendment No. 11 (September 14, 1998) to
Delaware Group of Funds Fund Accounting Agreement
attached as Exhibit.
(iv) Executed Amendment No. 12 (1998) to Delaware Group of
Funds Fund Accounting Agreement attached as Exhibit.
(v) Executed Amendment No. 13 (1998) to Delaware Group of
Funds Fund Accounting Agreement attached as Exhibit.
(i) Legal Opinion. Filed with letter relating to Rule 24f-2.
(j) Consent of Auditors. To be filed by Amendment.
(k) Inapplicable.
(l) Inapplicable.
(m) Plan under Rule 12b-1.
(1) Plan under Rule 12b-1 incorporated into this filing by
reference to Post-Effective Amendment No. 17 filed
November 1, 1995.
(n) Financial Data Schedules. To be filed by Amendment.
(o) Plan under Rule 18f-3.
(1) Plan under Rule 18f-3 (June 19, 1997) incorporated into this
filing by reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
(p) Other: Directors' Power of Attorney. Incorporated into this
filing by reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
Item 25. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed February 28, 1997.
Item 26. Business and Other Connections of Investment Adviser. Delaware
Management Company (the "Manager"), a series of Delaware Management
Business Trust, serves as investment manager to the Registrant and also
serves as investment manager or sub-adviser to certain of the other
funds in the Delaware Investments family (Delaware Group Equity Funds I,
Inc., Delaware Group Equity Funds II, Inc., Delaware Group Equity Funds
III, Inc., Delaware Group Equity Funds IV, Inc., Delaware Group Equity
Funds V, Inc., Delaware Group Government Fund, Inc., Delaware Group Income
Funds, Inc., Delaware Group Limited-Term Government Funds, Inc., Delaware
Group Cash Reserve, Inc., Delaware Group Tax-Free Fund, Inc., Delaware
Group State Tax-Free Income Trust, Delaware Group Tax-Free Money Fund,
Inc., Delaware Group Premium Fund, Inc., Delaware Group Global &
International Funds, Inc., Delaware Pooled Trust, Inc., Delaware Group
Adviser Funds, Inc., Delaware Group Dividend and Income Fund, Inc., Delaware
Group Global Dividend and Income Fund, Inc., Delaware Group Foundation
Funds, Inc., Voyageur Tax-Free Funds, Inc., Voyageur Intermediate Tax-Free
Funds, Inc., Voyageur Insured Funds, Inc., Voyageur Investment Trust,
Voyageur Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual
Funds II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Arizona
Municipal Income Fund, Inc., Voyageur Colorado Insured Municipal Income
Fund, Inc., Voyageur Florida Insured Municipal Income Fund, Voyageur
Minnesota Municipal Fund, Inc., Voyageur Minnesota Municipal Fund II,
Inc. and Voyageur Minnesota Municipal Fund III, Inc.) and provides
investment advisory services to institutional accounts, primarily
retirement plans and endowment funds. In addition, certain directors
of the Manager also serve as directors/trustees of the other funds in
the Delaware Investments family, and certain officers are also officers
of these other funds. A company owned by the Manager's parent company
acts as principal underwriter to the mutual funds in the Delaware
Investments family (see Item 29 below) and another such company acts as
the shareholder services, dividend disbursing, accounting servicing and
transfer agent for all of the mutual funds in the Delaware Investments
family.
The following persons serving as directors or officers of the Manager
Have held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and Director/
Trustee of Delaware Management Company, Inc. and
Delaware Management Business Trust; Chairman of
the Board, President, Chief Executive Officer,
Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business
Trust); Chairman of the Board, President, Chief
Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings,
Inc.; 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 Holdings Ltd. And Delaware
International Advisers Ltd.; Chairman of the Board
and Director of Delaware Management Holdings, Inc.,
and Delaware Capital Management, Inc.; Chairman of
Delaware Distributors, L.P.; President and Chief
Executive Officer of Delvoy, Inc.; and Director
and/or Trustee of the Registrant, each of the other
funds in the Delaware Investments family, Delaware
Service Company, Inc. and Retirement Financial
Services, Inc.
Richard G.
Unruh, Jr. Executive Vice President of the Registrant, each of
the other funds in the Delaware Investments family,
Delaware Management Holdings, Inc., Delaware
Capital Management, Inc. and Delaware Management
Company (a series of Delaware Management Business
Trust); Executive Vice President and Director/
Trustee of Delaware Management Company, Inc. and
Delaware Management Business Trust; President of
Delaware Investment Advisers (a series of Delaware
Management Business Trust); and Director of
Delaware International Advisers Ltd.
Board of Directors, Chairman of Finance Committee,
Keystone Insurance Company since 1989, 2040
Market Street, Philadelphia, PA; Board of
Directors, Chairman of Finance Committee, AAA Mid
Atlantic, Inc. since 1989, 2040 Market Street,
Philadelphia, PA; Board of Directors, Metron, Inc.
since 1995, 11911 Freedom Drive, Reston, VA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Paul E. Suckow Executive Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), the Registrant, each of the other funds in
the Delaware Investments family and Delaware
Management Holdings, Inc.; Executive Vice President
and Director of Founders Holdings, Inc.; Executive
Vice President of Delaware Capital Management, Inc.
and Delaware Management Business Trust; and
Director of Founders CBO Corporation
Director, HYPPCO Finance Company Ltd.
David K. Downes 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.; Executive Vice President, Chief
Financial Officer, Chief Administrative Officer and
Trustee of Delaware Management Business Trust;
Executive Vice President, Chief Operating Officer
and Chief Financial Officer of the Registrant and
each of the other funds 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.; 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, Chief Executive Officer and Director of
Retirement Financial Services, Inc.; Chairman and
Director of Delaware Management Trust Company; and
Director of Delaware International Advisers Ltd.
Chief Executive Officer and Director of Forewarn,
Inc. since 1993, 8 Clayton Place, Newtown Square, PA
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Richard J.
Flannery Executive Vice President and General Counsel of
Delaware Management Holdings, Inc., DMH Corp.
Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Distributors, L.P.
Delaware Management Trust Company, Delaware Capital
Management, Inc., Delaware Service Company, Inc.
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business
Trust), Founders CBO Corporation and Retirement
Financial Services, Inc.; Executive Vice President/
General Counsel and Director of Delaware
International Holdings Ltd., Founders Holdings
Inc. and Delvoy, Inc.; Senior Vice President of
the Registrant and each of the other funds in the
Delaware Investments family; Director of Delaware
International Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991
Bulltown Rd., Elverton, PA; Director and Member of
Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA
George M.
Chamberlain, Jr. Senior Vice President, Secretary and Director/
Trustee of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc.,
Delaware Capital Management, Inc., Retirement
Financial Services, Inc., Delvoy, Inc. and Delaware
Management Business Trust; Senior Vice President,
Secretary and General Counsel of the Registrant and
each of the other funds 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
and Director of Delaware International Holdings
Ltd.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company; and
Director of Delaware International Advisers Ltd.
Michael P. Bishof Senior Vice President and Treasurer of the
Registrant, each of the other funds in the Delaware
Investments family and Founders Holdings, Inc.;
Senior Vice President/Investment Accounting of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust) and Delaware Service Company, Inc.;
Senior Vice President and Treasurer/Manager,
Investment Accounting of Delaware Distributors,
L.P. and Delaware Investment Advisers Accounting of
Delaware Distributors, L.P. and Delaware Investment
Advisers (a series of Delaware Management Business
Trust); Senior Vice President and Assistant
Treasurer of Founders CBO Corporation; and Senior
Vice President and Manager of Investment Accounting
of Delaware International Holdings Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., Delaware
International Holdings Ltd., Delaware Management
Company (a series of Delaware Management Business
Trust), Delvoy, Inc. and Delaware Management
Business Trust; Senior Vice President/Corporate
Controller of the Registrant, each of the other
funds in the Delaware Investments family and
Founders Holdings, Inc.; Executive Vice President,
Chief Financial Officer and Treasurer of Delaware
Management Trust Company; Chief Financial Officer
and Treasurer of Retirement Financial Services,
Inc.; and Senior Vice President/Assistant Treasurer
of Founders CBO Corporation
Susan L. Hanson Senior Vice President/Global Marketing & Client
Services of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Service
Company, Inc.
Michael T. Taggart Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc. and Delaware Management Company
(a series of Delaware Management Business Trust)
Douglas L.
Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Retirement Financial Services, Inc. and
Delaware Service Company, Inc.; Senior Vice
President/Operations and Director of Delaware
Management Trust Company
James L. Shields Senior Vice President/Chief Information Officer of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Service Company, Inc. and
Retirement Financial Services, Inc.
Eric E. Miller Vice President, Assistant Secretary and Deputy
General Counsel of the Registrant and each of the
other funds in the Delaware Investments family,
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust),
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors
Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Founders Holdings, Inc.,
Delaware Capital Management, Inc. and Retirement
Financial Services, Inc.; Assistant Secretary of
Delaware Management Business Trust; and Vice
President and Assistant Secretary of Delvoy, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Richelle S.
Maestro Vice President and Assistant Secretary of the
Registrant, each of the other funds in the Delaware
Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware
Management Business Trust), Delaware Management
Holdings, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service
Company, Inc., DMH Corp., Delaware Management
Trust Company, Delaware Capital Management, Inc.,
Retirement Financial Services, Inc., Founders
Holdings, Inc. and Delvoy, Inc.; Vice President and
Secretary of Delaware International Holdings Ltd.;
and Secretary of Founders CBO Corporation
Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA
Richard Salus Vice President/Assistant Controller of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Management Trust Company
Bruce A. Ulmer Vice President/Director of LNC Internal Audit of
the Registrant, each of the other funds in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Trust Company and Retirement
Financial Services, Inc.; Vice President/Director
of Internal Audit of Delvoy, Inc.
Joel A. Ettinger1 Vice President/Director of Taxation of the
Registrant, each of the other funds in the Delaware
Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of
Delaware Management Business Trust) and Delaware
Management Holdings, Inc., Founders Holdings, Inc.
and Founders CBO Corporation
Christopher Adams Vice President/Business Manager, Equity Department
of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management
Business Trust) and Delaware Service Company, Inc.
Dennis J. Mara2 Vice President/Acquisitions of Delaware Management
Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust) and Delaware Service Company, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Lisa O. Brinkley Vice President/Compliance of the Registrant,
Delaware Management Company, Inc., each of the
other funds in the Delaware Investments family,
Delaware Management Company (a series of Delaware
Management Business Trust), DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware Capital Management, Inc.
and Retirement Financial Services, Inc.; Vice
President/Compliance Officer of Delaware Management
Business Trust; and Vice President of Delvoy, Inc.
Mary Ellen Carrozza Vice President/Client Services of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and the
Registrant
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant
and the other fixed-income investment companies in
the Delaware Investments family; Vice President of
Founders Holdings, Inc.; and Treasurer, Assistant
Secretary and Director of Founders CBO Corporation
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant
and the other fixed-income investment companies in
the Delaware Investments family; Vice President of
Founders Holdings, Inc.; and President and Director
of Founders CBO Corporation
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant,
The other fixed-income investment companies in the
Delaware Investments family and Delaware Capital
Management, Inc.
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant,
the other fixed-income investment companies in the
Delaware Investments family and Delaware Capital
Management, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Roger A. Early Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the Registrant,
and the other fixed-income other investment companies
in the Delaware Investments family
Mitchell L. Conery Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, the other
fixed-income investment companies in the Delaware
Investments family and Delaware Capital Management, Inc.
George H. Burwell Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
the equity investment companies in the Delaware
Investments family
John B. Fields Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), the equity
Investment companies in the Delaware Investments
family, Delaware Capital Management, Inc. and
Trustee of Delaware Management Business Trust
Gerald S. Frey Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and the equity investment
companies in the Delaware Investments family
Christopher Beck3 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust) and the equity investment
companies in the Delaware Investments family
Elizabeth H.
Howell4 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust), and
the other fixed-income investment companies in the
Delaware Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Andrew M. Vice President/Senior Portfolio Manager of Delaware
McCullagh, Jr.5 Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
the other fixed-income investment companies in the
Delaware Investments family
Babak Zenouzi Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
the equity investment companies in the Delaware
Investments family
J. Paul Dokas6 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and
the equity investment companies in the Delaware
Investments family
Cynthia Isom Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), the Registrant and the other fixed-income
investment companies in the Delaware Investments
family
Paul Grillo Vice PresidentSenior /Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant and the
other fixed-income investment companies in the
Delaware Investments family
Marshall T.
Bassett7 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant and the
equity investment companies in the Delaware
Investments family
John A. Heffern8 Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust), the
Registrant and the equity investment companies in the
Delaware Investments family
Lori P. Wachs Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust), the
Registrant and the equity investment companies in the
Delaware Investments family
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
1 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
2 CORPORATE CONTROLLER, IIS prior to July 1997.
3 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
4 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to May 1997.
5 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
6 DIRECTOR OF TRUST INVESTMENTS, Bell Atlantic Corporation prior to
February 1997.
7 VICE PRESIDENT, Morgan Stanley Asset Management prior to March 1997.
8 SENIOR VICE PRESIDENT, EQUITY RESEARCH, NatWest Securities Corporation
prior to March 1997.
Item 27. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter
for all the mutual funds in the Delaware Investments family.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Investment
Advisers Limited Partner None
Delaware Capital
Management, Inc. Limited Partner None
Bruce D. Barton President and Chief Executive None
Officer
David K. Downes Executive Vice President, Executive Vice
Chief Operating Officer President,
and Chief Financial Officer Chief Operating
Officer and Chief
Financial Officer
Richard J. Flannery Executive Vice President/ Senior Vice
General Counsel President
George M.
Chamberlain, Jr. Senior Vice President/ Senior Vice
Secretary President/
Secretary/
General Counsel
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Joseph H. Hastings Senior Vice President/ Senior Vice
Corporate Controller President/
Controller & Treasurer Corporate
Controller
Terrence P. Cunningham Senior Vice President/ None
Financial Institutions/
National Sales Manager
Thomas E. Sawyer Senior Vice President/ None
National Sales Director
Mac McAuliffe Senior Vice President/ None
Sales Manager,
Western Division
J. Chris Meyer Senior Vice President/ None
Director Product
Management
William M. Kimbrough Senior Vice President/ None
Wholesaler
Daniel J. Brooks Senior Vice President/ None
Wholesaler
Bradley L. Kolstoe Senior Vice President/ None
Wholesaler Division
Sales Manager
Henry W. Orvin Senior Vice President/ None
Eastern Division
Sales Manager
Michael P. Bishof Senior Vice President Senior Vice
and Treasurer/Manager, President/
Investment Accounting Treasurer
Eric E. Miller Vice President/ Vice President/
Assistant Secretary/ Assistant
Deputy General Secretary/
Counsel Deputy General
Counsel
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant
Secretary
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Daniel H. Carlson Vice President/ None
Strategic Marketing
Diane M. Anderson Vice President/ None
Plan Record Keeping
and Administration
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Anthony J. Scalia Vice President/ None
Defined Contribution
Sales, SW Territory
Courtney S. West Vice President/ None
Defined Contribution
Sales, NE Territory
Denise F. Guerriere Vice President/ None
Client Services
Gordon E. Searles Vice President/ None
Client Services
Lori M. Burgess Vice President/ None
Client Services
Julia R. Vander Els Vice President/ None
Participant Services
Jerome J. Alrutz Vice President/ None
Retail Sales
Scott Metzger Vice President/ Vice President/
Business Development Business
Development
Larry Carr Vice President/ None
Sales Manager
Stephen C. Hall Vice President/ None
Institutional Sales
Gregory J. McMillan Vice President/ None
National Accounts
Holly W. Reimel Senior Vice None
President/Manager,
National Accounts
Christopher H. Price Vice President/Manager, None
Insurance
Stephen J. DeAngelis Senior Vice President, None
National Director/
Manager Account Services
Andrew W. Whitaker Vice President/ None
Financial Institutions
Jessie Emery Vice President/ None
Marketing Communications
Darryl S. Grayson Vice President, Broker/ None
Dealer Internal Sales
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Dinah J. Huntoon Vice President/Product None
Manager Equity
Soohee Lee Vice President/Fixed None
Income Product Management
Michael J. Woods Vice President/Financial None
Institutions
Ellen M. Krott Vice President/Marketing None
Dale L. Kurtz Vice President/Marketing None
Support
David P. Anderson Vice President/Wholesaler None
Lee D. Beck Vice President/Wholesaler None
Gabriella Bercze Vice President/Wholesaler None
Larry D. Birdwell Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Joseph Gallagher Vice President/Wholesaler None
Thomas C. Gallagher Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Ronald A. Haimowitz Vice President/Wholesaler None
Edward J. Hecker Vice President/Wholesaler None
Christopher L. Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Jeffrey A. Keinert Vice President/Wholesaler None
Thomas P. Kennett Vice President/Wholesaler None
Theodore T. Malone Vice President/Wholesaler None
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
Andrew Morris Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Scott Naughton Vice President/Wholesaler None
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye Vice President/Wholesaler None
Joseph T. Owczarek Vice President/Wholesaler None
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
Linda Schulz Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Julia A. Stanton Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------- ---------------------- ---------------------
Edward J. Wagner Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
John A. Wells Vice President/Marketing None
Technology
Scott Whitehouse Vice President/Wholesaler None
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
</TABLE>
(c) Not Applicable.
Item 28. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at 1818 Market
Street, Philadelphia, PA 19103 or One Commerce Square, Philadelphia,
PA 19103 or 90 South Seventh Street, Suite 4400, Minneapolis,
Minnesota 55402.
Item 29. Management Services. None.
Item 30. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each person
to whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
(d) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting upon
the question of removal of any director when requested
in writing to do so by the record holders of not less
than 10% of the outstanding shares.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Philadelphia and Commonwealth
of Pennsylvania on this 23rd day of December, 1998.
VOYAGEUR FUNDS, INC.
By /s/Jeffrey J. Nick
------------------
Jeffrey J. Nick
Chairman
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
Signature Title Date
- ------------------ -------------- ----------
<S> <C> <C>
/s/ Jeffrey J. Nick President, Chief Executive Officer, December 23, 1998
- ------------------ Chairman and Director
Jeffrey J. Nick
/s/ David K. Downes Executive Vice President/Chief Operating December 23, 1998
- ------------------ Officer/Chief Financial Officer
David K. Downes (Principal Financial Officer and
Principal Accounting Officer)
/s/ Walter A. Babich * Director December 23, 1998
- ------------------
Walter A. Babich
/s/ Anthony D. Knerr * Director December 23, 1998
- ------------------
Anthony D. Knerr
/s/ Ann R. Leven * Director December 23, 1998
- ------------------
Ann R. Leven
/s/W. Thacher
- ------------------
Longstreth * Director December 23, 1998
- ------------------
W. Thacher
Longstreth
/s/ Thomas F. Madison * Director December 23, 1998
- ------------------
Thomas F. Madison
/s/ Charles E. Peck * Director December 23, 1998
- ------------------
Charles E. Peck
/s/ Wayne A. Stork * Director December 23, 1998
- ------------------
Wayne A. Stork
*By /s/ Jeffrey J. Nick
Jeffrey J. Nick
as Attorney-in-Fact for
each of the persons indicated
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ---------- ------------
EX-99.H2I Executed Amendment No. 9 (March 31, 1998) to Delaware
Group of Funds Fund Accounting Agreement
EX-99.H2II Executed Amendment No. 10 (August 31, 1998) to Delaware
Group of Funds Fund Accounting Agreement
EX-99.H2III Executed Amendment No. 11 (September 14, 1998) to
Delaware Group of Funds Fund Accounting Agreement
EX-99.H2IV Executed Amendment No. 12 (1998) to Delaware Group of
Funds Fund Accounting Agreement
EX-99.H2V Executed Amendment No. 13 (1998) to Delaware Group of
Funds Fund Accounting Agreement
AMENDMENT NO. 9
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
__________________
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated as
of August 19, 1996 ("Agreement"). All portfolios added to this Schedule
A by amendment executed by a Company on behalf of such Portfolio hereof
shall be a New Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free Income
Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of March 31, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:_____________________________________________________
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/ Wayne A. Stork
By:_____________________________________________________
Wayne A. Stork
Chairman
AMENDMENT NO. 10
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
__________________
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated
as of August 19, 1996 ("Agreement"). All portfolios added to this
Schedule A by amendment executed by a Company on behalf of such
Portfolio hereof shall be a New Portfolio for purposes of Schedule B
to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of August 31, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:_____________________________________________________
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/ Wayne A. Stork
By:_____________________________________________________
Wayne A. Stork
Chairman
AMENDMENT NO. 11
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Diversified Value Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
__________________
*Except as otherwise noted, all Portfolios included on this Schedule
A are Existing Portfolios for purposes of the compensation described on
Schedule B to that Fund Accounting Agreement between Delaware Service
Company, Inc. and the Delaware Group of Funds dated as of August 19, 1996
("Agreement"). All portfolios added to this Schedule A by amendment
executed by a Company on behalf of such Portfolio hereof shall be a New
Portfolio for purposes of Schedule B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of September 14, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:_____________________________________________________
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/Wayne A. Stork
By:_____________________________________________________
Wayne A. Stork
Chairman
AMENDMENT NO. 12
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Diversified Value Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
__________________
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated
as of August 19, 1996 ("Agreement"). All portfolios added to this
Schedule A by amendment executed by a Company on behalf of such
Portfolio hereof shall be a New Portfolio for purposes of Schedule
B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Corporate Bond Fund (New)
Extended Duration Bond Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of September 14, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:_____________________________________________________
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/Wayne A. Stork
By:_____________________________________________________
Wayne A. Stork
Chairman
AMENDMENT NO. 13
to
SCHEDULE A
of
DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund (liquidated September 19, 1997)
Enterprise Fund (liquidated September 19, 1997)
Federal Bond Fund (liquidated September 19, 1997)
New Pacific Fund
U.S. Growth Fund
Overseas Equity Fund (formerly World Growth Fund)
Delaware Group Cash Reserve, Inc.
Delaware Group Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Social Awareness Fund (formerly Quantum Fund) (New)
Diversified Value Fund (New)
Delaware Group Equity Funds III, Inc. (formerly Trend)
Trend Fund
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Small Cap Value Fund (formerly Value Fund)
Retirement Income Fund (New)
Mid-Cap Value Fund (New)
Small Cap Contrarian Fund (New)
__________________
*Except as otherwise noted, all Portfolios included on this
Schedule A are Existing Portfolios for purposes of the compensation
described on Schedule B to that Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Group of Funds dated
as of August 19, 1996 ("Agreement"). All portfolios added to this
Schedule A by amendment executed by a Company on behalf of such
Portfolio hereof shall be a New Portfolio for purposes of Schedule
B to the Agreement.
Delaware Group Foundation Funds (New)
Balanced Portfolio (New)
Growth Portfolio (New)
Income Portfolio (New)
The Asset Allocation Portfolio (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government Fund)
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
New Europe Fund (New)
Latin America Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Corporate Bond Fund (New)
Extended Duration Bond Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Mid-Cap Growth Equity Portfolio (formerly The Aggressive Growth
Portfolio)
The Large-Cap Value Equity Portfolio
(formerly The Defensive Equity Portfolio)
The Small/Mid-Cap Value Equity Portfolio (New)
(formerly The Defensive Equity Small/Mid-Cap Portfolio)
The Defensive Equity Utility Portfolio (deregistered
January 14, 1997)
The Emerging Markets Portfolio (New)
The Intermediate Fixed Income Portfolio
(formerly The Fixed Income Portfolio)
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
The Global Equity Portfolio (New)
The Real Estate Investment Trust Portfolio II (New)
The Diversified Core Fixed Income Portfolio (New)
The Aggregate Fixed Income Portfolio (New)
The Small-Cap Growth Equity Portfolio (New)
The Growth and Income Portfolio (New)
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Social Awareness Series (formerly Quantum Series) (New)
REIT Series (New)
Strategic Income Series (New)
Trend Series
Small Cap Value Series (formerly Value Series)
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group State Tax-Free Income Trust (formerly DMCT Tax-Free
Income Trust-Pennsylvania)
Tax-Free Pennsylvania Fund
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Voyageur Funds, Inc.
Voyageur US Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New) (liquidated
November 18, 1998)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of December 18, 1998
DELAWARE SERVICE COMPANY, INC.
/s/David K. Downes
By:_____________________________________________________
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP FOUNDATION FUNDS
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
/s/Wayne A. Stork
By:_____________________________________________________
Wayne A. Stork
Chairman
