<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-16270
File No. 811-5267
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.______ / /
Post-Effective Amendment No. 27 /X/
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AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 27
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VOYAGEUR FUNDS
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(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-1255
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Eric E. Miller, 1818 Market Street, Philadelphia, PA 19103
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(Name and Address of Agent for Service)
Approximate Date of Public Offering: February 18, 2000
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It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
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on (date) pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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X on February 18, 2000 pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 27 to Registration File No. 33-16270
includes the following:
1. Facing Page
2. Contents Page
3. Part A - Prospectus
4. Part B - Statement of Additional Information
5. Part C - Other Information
6. Signatures
<PAGE>
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
Delaware U.S. Government Securities Fund
Class A * Class B * Class C * Institutional Class
Prospectus
February 18, 2000
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.
<PAGE>
Table of Contents
Fund profile page
Delaware U.S. Government Securities Fund
How we manage the Fund page
Investment strategy
The risks of investing in the Fund
Who manages the Fund page
Investment manager and sub-adviser
Portfolio manager
Fund administration (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 Retirement plans
How to redeem shares
Account minimums
Special services
Dividends, distributions and taxes
Certain management considerations
Financial highlights page
2
<PAGE>
Profile: Delaware U.S. Government Securities Fund
What are the Fund's goals?
Delaware U.S. 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 in U.S. Treasury securities including bills, notes and bonds as well
as other debt securities that are:
o issued by the U.S. government;
o unconditionally guaranteed by the U.S. government; or
o 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 government agencies or instrumentalities, such as the Government
National Mortgage Association also known as GNMA. When we buy or sell individual
securities, we consider the security's yield, risk profile and average maturity
as well as its expected total return. We also consider how buying or selling
that security would affect the overall positioning of the portfolio. For
example, we may buy or sell Treasury securities to restructure the Portfolio's
overall maturity or buy or sell GNMA securities to alter the Portfolio's income
potential.
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. When interest rates rise, bond prices and the value of the
Fund's investments will generally fall. When interest rates fall, some of the
Fund's investments may be prepaid and the Fund would have to reinvest at lower
rates. For a more complete discussion of risk, please turn to page ____.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
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.
Who should invest in the Fund
o Investors with medium or long-range goals.
o Investors looking for regular income from their investments.
o Investors looking for a bond investment to help balance their investments
in stocks or more aggressive securities.
o Investors who are looking for an income investment that may provide total
return opportunities through the automatic reinvestment of income
dividends.
Who should not invest in the Fund
o Investors with very short-term financial goals.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors seeking long-term growth of capital.
3
<PAGE>
How has the Fund performed?
This bar chart 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. The Fund's
past performance is not necessarily an indication of how it will perform in the
future. The returns reflect voluntary expense caps. The returns would be lower
without the voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
Year-by-year total return (Class A)
1999
1998 8.01%
1997 9.17%
1996 2.19%
1995 19.92%
1994 -5.54%
1993 11.27%
1992 6.57%
1991 17.83%
1990 10.74%
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 0.00% for the quarter ended _______________ and its lowest quarterly
return was -0.00% for the quarter ended March 31, 1994.
The maximum Class A sales charge of 4.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
shown on page ___ do include the sales charge.
<TABLE>
<CAPTION>
Average annual return for periods ending 12/31/99
- ---------------------------------------------------------------------------------------------------------------------------
Lehman Brothers
Government/Corporate
CLASS A B (if redeemed)* C (if redeemed)* Institutional Class Bond Index**
- ---------------------------------------------------------------------------------------------------------------------------
(Inception 11/2/87) (Inception 6/7/94) (Inception 1/10/95) (Inception 6/7/94)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year
- ---------------------------------------------------------------------------------------------------------------------------
5 years
- ---------------------------------------------------------------------------------------------------------------------------
10 years or
Lifetime
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</TABLE>
The table above shows the Fund's average annual returns over various time
periods 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 reflect the actual costs of operating a mutual fund, such as the costs
of buying, selling, and holding the securities.
4
<PAGE>
* If shares were not redeemed, the returns for Class B would be 0.00%, 0.00%
and 0.00% for the one-year, five-year and lifetime periods, respectively.
Returns for Class C would be 0.00% and 0.00% for the one-year and lifetime
periods, respectively.
** Lifetime returns are shown if the Fund or Class existed for less than 10
years. Lehman Brothers Government/Corporate Bond Index returns are for 10
years. The Index return for Class B and Institutional Class lifetime was
0.00%. The Index return for Class C lifetime was 00.00%. Maximum sales
charges are included in the Fund returns in the table.
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.
<TABLE>
<CAPTION>
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CLASS A B C Institutional
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<S> <C> <C> <C> <C>
Maximum sales charge (load) imposed on purchases as 4.75% none none none
a percentage of offering price
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Maximum contingent deferred sales charge (load) as a none(1) 4%(2) 1%(3) none
percentage of original purchase price or redemption
price, whichever is lower
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Maximum sales charge (load) imposed on reinvested none none none none
dividends
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Redemption fees none none none none
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</TABLE>
Annual fund operating expenses are deducted from the Fund's assets.
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
Management fees 0.00% 0.00% 0.00% 0.00%
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Distribution and service (12b-1) fees 0.25% 1.00% 1.00% 0.00%(4)
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Other expenses 0.00% 0.00% 0.00% 0.00%
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Total operating expenses(5) 0.00% 0.00% 0.00% 0.00%
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</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. (6) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
5
<PAGE>
<TABLE>
<CAPTION>
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CLASS(7) A B B (if redeemed) C C (if redeemed) Institutional
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<S> <C> <C> <C> <C> <C> <C>
1 year
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3 years
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5 years
---------------------------------------------------------------------------------------------------------------------
10 years
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</TABLE>
- -------------------
(1) A purchase of Class A shares of $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 will apply to certain
redemptions. 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 within two years of purchase, you will pay a
CDSC of 4%, which declines to 3% during the third and fourth years, 2%
during the fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) 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.
(5) The investment manager has agreed to waive fees and pay expenses for the
period January 1, 1999 through December 31, 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.
(6) 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. This example does not include the expense cap discussed in footnote
5.
(7) The Class B example reflects the conversion of Class B shares to Class A
shares at the end of the eighth year. Information for the ninth and tenth
years reflects expenses of the Class A shares.
6
<PAGE>
How we manage the Fund
We research individual securities and analyze economic and market conditions,
seeking to identify the securities or market sectors that we think are the best
investments for the Fund. Following are descriptions of how the portfolio
management team pursues the Fund's investment goals.
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's investment objective is to provide its shareholders with a high level
of current income consistent with prudent investment risk. The Fund invests
primarily in:
o U.S. Treasury bills, notes, bonds;
o Other obligations issued or unconditionally guaranteed by government
agencies or instrumentalities, such as the U.S. government, or
otherwise backed by the full faith and credit of the U.S. government;
and
o Mortgage-backed securities issued or guaranteed by government agencies
and instrumentalities, especially the Government National Mortgage
Association (GNMA) Certificates.
We may invest more or less of the Fund's assets in each of these types of
securities, depending on our outlook for interest rates, inflation and economic
activity.
Although the principal and interest payments on securities in the Fund's
portfolio are generally guaranteed 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 will fluctuate, particularly when interest rates change. In general,
bonds with shorter maturities are less sensitive to interest rate changes than
bonds with longer maturities. However, longer maturity bonds generally offer
higher yields. We will strive to manage the average maturity of the bonds held
by the Fund in order to meet our investment objective without taking unnecessary
interest rate risks.
The Fund's investment objective is non-fundamental. This means that the Board of
Trustees may change the objective without obtaining shareholder approval. If the
objective were changed, we would notify shareholders before the change in the
objective became effective.
7
<PAGE>
The securities we typically invest in
Fixed-income securities typically offer the potential for greater income
payments than stocks, and also may provide capital appreciation.
<TABLE>
<CAPTION>
- ------------------------------------------------------- ------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------- ------------------------------------------------------------------
<S> <C>
Direct U.S. Treasury Obligations include Treasury We may invest without limit in U.S. Treasury securities.
bills, notes and bonds of varying maturities. U.S.
Treasury securities are backed by the "full faith and
credit" of the United States.
- ------------------------------------------------------- ------------------------------------------------------------------
Government Agency Obligations are securities issued We may invest without limit in the debt securities of U.S.
or backed by U.S. government agencies or government agencies or instrumentalities.
government-sponsored corporations such as the Federal
Housing Authority or the Export-Import Bank. These
securities may or may not be backed by the full faith
and credit of the U.S. governments.
- ------------------------------------------------------- ------------------------------------------------------------------
Mortgage-backed securities: Fixed-income securities There is no limit on government-related mortgage-backed
that represent pools of mortgages, with investors securities we may hold. We do not generally invest in privately
receiving principal and interest payments as the issued mortgage-backed securities.
underlying mortgage loans are paid back. Many are
issued and guaranteed against default by the U.S.
government or its agencies or instrumentalities, such
as the Government National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or the Fannie
Mae. Others are issued by private financial
institutions, with some fully collateralized by
certificates issued or guaranteed by the government
or its agencies or instrumentalities.
- ------------------------------------------------------- ------------------------------------------------------------------
Treasury Inflation Indexed Securities (TIPS). TIPS, We may invest without limit in Treasury Inflation Indexed
introduced for the first time in January 1997, are Securities, but would generally use them when we believed
inflation-protected securities whose rates of return inflation was likely to rise in the future or when they offered
are proportional to the rise and fall of the Consumer excellent value compared to other available securities.
Price Index.
- ------------------------------------------------------- ------------------------------------------------------------------
Zero coupon bonds: Zero coupon securities are debt We may invest in zero coupon bonds though we expect them to be a
obligations which do not entitle the holder to any less significant component of our strategy. When investing in
periodic payments of interest prior to maturity or a strips, the Fund only invests in strips of U.S. Treasury
specified date when the securities begin paying securities.
current interest. Therefore, they are issued and
traded at a price lower than their face amounts or
par value. The market prices of these bonds are
generally more volatile than the market prices of
securities that pay interest periodically and are
likely to react to changes in interest rates to a
greater degree than interest-paying bonds having
similar maturities and credit quality. Strips are
sold as zero coupon bonds. Brokerage firms,
investment bankers and the U.S. Treasury can
create strips by separating the principal and
interest of a regular bond. The interest and
principal components are then sold separately as
Zero Coupon Bonds and trade independently of each
other.
- ------------------------------------------------------- ------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------- ------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------- ------------------------------------------------------------------
<S> <C>
Repurchase agreements: An agreement between a buyer Typically, we use repurchase agreements as a short-term
and seller of securities in which the seller agrees investment for our cash position. We may invest in repurchase
to buy the securities back within a specified time at agreements that are fully collateralized by any securities that
the same price the buyer paid for them, plus an we are permitted to invest in.
amount equal to an agreed upon interest rate.
Repurchase agreements are often viewed as equivalent The Fund will only enter into repurchase agreements in which the
to cash. collateral is comprised of U.S. government securities.
- ------------------------------------------------------- ------------------------------------------------------------------
Illiquid securities: Securities that do not have a We may invest up to 10% of total assets in illiquid securities.
ready market, and cannot be easily sold within seven
days at approximately the price that a fund has
valued them.
- ------------------------------------------------------- ------------------------------------------------------------------
</TABLE>
Please see the Statement of Additional Information for additional descriptions
on the securities listed in the table above.
Borrowing from banks
The Fund may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions. To the extent that it does so, the Fund may be unable
to meet its investment objective.
Purchasing securities on a when-issued or delayed delivery basis
The Fund may buy or sell U.S. government securities on a when-issued or delayed
delivery basis; that is, paying for securities before delivery or taking
delivery at a later date.
Portfolio turnover
We intend to engage in short-term trading if we believe the transactions, net of
costs (including commission, if any) will improve the income or the capital
appreciation potential of the Fund. Therefore, we anticipate that the Fund's
annual portfolio turnover will exceed 100%. A turnover rate of 100% would occur
if the Fund sold and replaced securities valued at 100% of its net assets within
one year. High turnover can result in increased transaction costs and tax
liability for the Fund.
9
<PAGE>
The risks of investing in the Fund
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 the Fund you should
carefully evaluate the risks. Because of the nature of the Fund, you should
consider an investment to be a medium- or 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 investing in the 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
- -------------------------------------------- ----------------------------------------------------------------------------------
Delaware U.S. Government Securities Fund
- -------------------------------------------- ----------------------------------------------------------------------------------
<S> <C>
Interest rate risk is the risk that Interest rate risk is the most significant risk for this Fund. In striving to
securities will decrease in value if manage this risk, we monitor economic conditions and the interest rate
interest rates rise. The risk is generally environment. We attempt to keep the average maturity of the portfolio as short
greater for bonds with longer maturities as we believe is prudent, in keeping with our objective to provide high current
than for those with shorter maturities. income.
- -------------------------------------------- ----------------------------------------------------------------------------------
Market risk is the risk that all or a We focus on high quality individual bonds that we believe can provide a steady
majority of the securities in a certain stream of income.
market -- like the stock or bond market --
will decline in value because of factors We may hold a substantial part of the Funds assets in cash or cash equivalents
such as economic conditions, future as a temporary, defensive strategy.
expectations or investor confidence.
- -------------------------------------------- ----------------------------------------------------------------------------------
Prepayment risk is the risk that the Prepayment risk can be a significant risk to this Fund because we generally
principal on a bond that a fund owns will invest a large percentage of our holdings in mortgage securities issued by the
be prepaid prior to maturity at a time Government National Mortgage Association. Homeowners or others who have
when interest rates are lower than what mortgages are more likely to prepay them when interest rates are relatively
that bond was paying. A fund would then low. In order to manage this risk, when interest rates are low or when we
have to reinvest that money at a lower believe rates will be declining, we tend to hold discount mortgages. Discount
interest rate. mortgages have interest rates lower than the current rates, so there is little
incentive for homeowners to prepay their principal.
- -------------------------------------------- ----------------------------------------------------------------------------------
Credit risk is the possibility that a By investing exclusively in U.S. Treasury securities and other securities that
bonds issuer (or an entity that insures are backed by the U.S. government, its agencies or instrumentalities, we attempt
the bond) will be unable to make timely to minimize the possibility that any of the securities in our portfolio will not
payments of interest and principal. pay interest or principal. U.S. government securities are generally considered
to be of the highest quality.
- -------------------------------------------- ----------------------------------------------------------------------------------
Liquidity risk is the possibility that U.S. Treasuries and other U.S. government debt securities are typically the most
securities cannot be readily sold within liquid securities available. Therefore, liquidity risk is not a significant risk
seven days at approximately the price that for this Fund.
a fund values them.
- -------------------------------------------- ----------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
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
--------------------------------------------------------------------------
Delaware U.S. Government
Securities Fund
--------------------------------------------------------------------------
As a percentage of average daily net assets *
--------------------------------------------------------------------------
*Reflects a reduction in fees due to the manager's voluntary waivers.
Portfolio manager
Randal W. Harrison, Vice President, Fixed Income Portfolio Manager for Voyageur
Asset Management LLC, assumed day-to-day responsibility for making investment
decisions for the Fund on August 16, 1999. He holds a BS from Miami University
(Ohio) and an MBA from the University of Iowa. Prior to joining Voyageur in
1993, Mr. Harrison was a securities analysts and trader for AEON USA Insurance
Group. He is a CFA charterholder and has been in the investment industry since
1990.
11
<PAGE>
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]
<TABLE>
<CAPTION>
<S> <C> <C>
Board of Trustees
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 manager Distributor Service agent
(see page __ for details) Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
Financial advisers
Shareholders
</TABLE>
Board of Trustees A mutual fund is governed by a Board of Trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees 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 Trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective 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 daily 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.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
12
<PAGE>
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
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 also provide
customer service to shareholders.
Financial advisers Financial advisers provide 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 trustees. 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.
13
<PAGE>
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
o 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.
o If you invest $100,000 or more, your front-end sales charge will be reduced.
o 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.
o 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.
o Class A shares generally are not subject to a contingent deferred sales
charge.
Class A Sales Charges
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Amount of purchase Sales charge as % Sales charge as % of Dealer's commission
of offering price amount invested as % of offering price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.00%
- --------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.75% 3.00%
- --------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 2.50% 2.00%
- --------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1 million 2.00% 1.60%
- --------------------------------------------------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------------------------------------------------
Amount of purchase Sales charge as % Sales charge as % of Dealer's commission
of offering price amount invested as % of offering price
- --------------------------------------------------------------------------------------------------------------------------
$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>
14
<PAGE>
Class B
o 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.
o 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.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o 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 accounts.
o 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.
o 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%.
Conversion may occur as late as three months after the eighth anniversary of
purchase, during which time Class B's higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
Class C
o 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 of 1% if you redeem your shares within 12 months after you buy
them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o 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 services and maintaining
shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses and pay
lower dividends than Class A shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o 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.
15
<PAGE>
Institutional Class
o Institutional Class shares are available to the following group of
investors:
o officers and trustees of the Fund
o officers, trustees and full-time employees of the manager or
sub-adviser, and officers, trustees and full-time employees of parents
and subsidiaries of the foregoing companies
o officers, trustees 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, trustees
and full-time employees of parents, subsidiaries and corporate
affiliates of those investment advisers
o spouses and lineal ancestors and descendants of the officers,
trustees/trustees and employees referenced above, and lineal ancestors
and descendants of their spouses
o 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
o trust companies and bank trust departments for funds held in a
fiduciary, agency, advisory, custodial or similar capacity
o any state or any political subdivision thereof or any instrumentality,
department, authority or agency of any state or political subdivision
thereof
o partners and full-time employees of the Fund's counsel
o 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)
o tax-qualified employee benefit plans for employees of the Adviser or
Sub-Adviser and their subsidiaries
o 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)
o Institutional Class shares have no up-front sales charge, so the full
amount of your purchase is invested in the Fund.
o Institutional Class shares are not subject to a contingent deferred sales
charge.
o 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.
Each share class of the Fund has adopted a separate 12b-1 plan that allows it 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.
16
<PAGE>
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>
- -------------------------- -------------------------------------- -------------------------------------------------------------
Program How it works Share class
A B C
- -------------------------- -------------------------------------- ----------------- -------------------------------------------
<S> <C> <C> <C>
Letter of Intent Through a Letter of Intent you X Although the Letter of Intent and Rights
agree to invest a certain amount of Accumulation do not apply to the
in Delaware Investment Funds purchase of Class B and C shares, you can
(except money market funds with combine your purchase of Class A shares
no sales charge) over a 13-month with your purchase of B and C shares to
period to qualify for reduced fulfill your Letter of Intent or qualify
front-end sales charges. for Rights of Accumulation.
- -------------------------- -------------------------------------- -----------------
Rights of You can combine your holdings or X
Accumulation purchases of all funds in the
Delaware Investments family
(except money market funds with
no sales charge) as well as the
holdings and purchases of your
spouse and children under 21 to
qualify for reduced front-end
sales charges.
- -------------------------- -------------------------------------- ----------------- --------------------------- ---------------
Reinvestment of Up to 12 months after you redeem For Class A, For Class B, your Not
redeemed shares shares, you can reinvest the you will not account will be available.
proceeds with no additional have to pay credited with the
sales charge. an additional contingent deferred
front-end sales charge you
sales charge. previously paid on the
amount you are
reinvesting. Your
schedule for contingent
deferred sales charges
and conversion to Class
A will not start over
again; it will pick up
from the point at which
you redeemed your
shares.
- -------------------------- -------------------------------------- ----------------- -------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may X There is no reduction in sales charges
SARSEP, Prototype qualify for reduced sales for Class B or Class C shares for group
Profit Sharing, charges by combining the purchases by retirement plans.
Pension, 401(k), purchases of all members of the
SIMPLE 401(k), group. Members of these groups
403(b)(7), and 457 may also qualify to purchase
Retirement Plans shares without a front-end sales
charge and a waiver of any
contingent deferred sales
charges.
- -------------------------- -------------------------------------- ----------------- -------------------------------------------
</TABLE>
17
<PAGE>
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 separate 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 19103-3682. 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 2014 12893 4013. 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 you 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 are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800o523o1918.
[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.delawareinvestments.com. For more
information about how to sign up for these services, call our Shareholder
Service Center at 800o523o1918.
18
<PAGE>
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can generally open an account with
an initial investment of $1,000, and make additional investments at any time for
as little as $100. 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. The minimum for an Education IRA is $500.
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 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 fixed-income securities on the basis
of valuations provided to us by an independent pricing service that uses methods
approved by the board of trustees. Any fixed-income securities that have a
maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the board of trustees that are designed
to price securities at their fair market value.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, Class A, B and C 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 800o523o1918.
19
<PAGE>
How to redeem shares
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 separate 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 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
[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, a bank wire fee may 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 Center at 800o523o1918.
20
<PAGE>
About your account (continued)
How to redeem shares (continued)
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 on the business 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, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you 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 shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs, Uniform Gift to Minors Act accounts or
accounts with automatic investing plans, $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 does not reach the minimum balance, the Fund may redeem your account
after 60 days' written notice to you.
21
<PAGE>
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 or quarterly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as Social Security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) 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.
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. Delaware Investments does not charge a fee for this service;
however, your bank may assess one. This service is not available for retirement
plans, except for purchases into IRAs. MoneyLine has a minimum transfer of $25
and a maximum transfer of $50,000.
MoneyLine Direct Deposit Service
Through our MoneyLine 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 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 MoneyLine Direct Deposit Service.
22
<PAGE>
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 holders of Class A, B and C shares 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.
23
<PAGE>
Certain management considerations
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." Each Fund is taking steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the business of the Fund. The Year 2000 Problem may also
adversely affect the issuers of securities in which the Fund invests. The
portfolio manager and investment professionals of the Fund considers Year 2000
compliance (including, but not limited to, any or all of the following: impact
on business; cost of compliance plan review and contingency planning; and vendor
compliance) in the securities selection and investment process. However, there
can be no guarantee that, even with their due diligence efforts, they will be
able to predict the effect of Year 2000 on any company or the performance of its
securities.
24
<PAGE>
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. The information for the years ended October 31, 1999,
1998 and 1997 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. The information for the
fiscal periods ending on or before October 31, 1996 has been audited by the
Fund's previous independent auditors.
<TABLE>
<CAPTION>
- --------------------------------------------------------- ----------------------------------------------------------
Class A
- --------------------------------------------------------- ---------------------------- ---------- ------------------
Year Ended 10/31 Period
7/1/96
through Year Ended 6/30
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware U.S. Government Securities Fund 1999 1998 1997(1) 10/31/96(2) 1996 1995
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Net asset value, beginning of period $10.600 10.370 10.160 10.370 $9.760
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Income (loss) from investment operations
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Net investment income 0.555 0.590 0.210 0.630 0.620
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Net realized and unrealized gain (loss) on investments 0.351 0.240 0.210 (0.230) 0.630
----- ----- ----- ------- -----
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Total from investment operations 0.906 0.830 0.420 0.400 1.250
----- ----- ----- ----- -----
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Less dividends and distributions
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Dividends from net investment income (0.566) (0.600) (0.210) (0.610) (0.620)
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Distributions from net realized gain on investments None None None None (0.020)
---- ---- ---- ---- -------
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Total dividends and distributions (0.566) (0.600) (0.210) (0.610) (0.640)
------- ------- ------- ------- -------
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Net asset value, end of period $10.940 $10.600 $10.370 $10.160 $10.370
======= ======= ======= ======= =======
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Total return(3) 8.79%(4) 8.37%(4) 4.18% 3.88% 13.45%
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Ratios and supplemental data
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Net assets, end of period (000 omitted) $44,819 $52,213 $65,516 $68,442 $75,886
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Ratio of expenses to average net assets 1.00% 0.93% 0.98% 0.97% 0.95%
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Ratio of expenses to average net assets prior to 1.06% 1.01% 0.98% 0.97% 0.95%
expense limitation
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Ratio of net investment income to average net assets 5.21% 5.76% 6.03% 6.07% 6.38%
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Ratio of net investment income to average net assets 5.15% 5.68% 6.03% 6.07% 6.38%
prior to expense limitation
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
Portfolio turnover 280% 202% 66% 145% 144%
- --------------------------------------------------------- --------- --------- -------- ---------- -------- ---------
</TABLE>
- -------------------
(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; ratios have been annualized.
(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 and does not reflect the impact of a sales charge. Total return
for the period ended October 31, 1996 has not been annualized.
(4) Total return reflects expense limitations in effect during the period.
25
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------- ---------------------------------------------------------
Class B Shares
- ------------------------------------------------- ---------------------------- --------- ------------------
Year Ended 10/31 Period
7/1/96
through Year Ended 6/30
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware U.S. Government Securities Fund 1999 1998 1997(1) 10/31/96(2) 1996 1995
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Net asset value, beginning of period $10.610 10.380 $10.170 $10.380 $9.750
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Income (loss) from investment operations
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Net investment income 0.477 0.520 0.180 0.570 0.560
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Net realized and unrealized gain (loss) on 0.348 0.240 0.210 (0.230) 0.650
investments ----- ----- ----- ------- -----
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Total from investment operations 0.825 0.760 0.390 0.340 1.210
----- ----- ----- ----- -----
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Less dividends and distributions
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Dividends from net investment income (0.485) (0.530) (0.180) (0.550) (0.560)
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Distributions from net realized gain on None None None None (0.020)
investments ---- ---- ---- ---- -------
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Total dividends and distributions (0.485) (0.530) (0.180) (0.550) (0.580)
------- ------- ------- ------- -------
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Net asset value, end of period $10.950 $10.610 $10.380 $10.170 $10.380
======= ======= ======= ======= =======
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Total return (4) 7.97%(5) 7.59%(5) 3.91% 3.32%(5)12.90%(5)
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Ratios and supplemental data
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Net assets, end of period (000 omitted) $4,582 $2,257 $2,139 $1,780 $139
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Ratio of expenses to average net assets 1.75% 1.67% 1.73% 1.46% 1.54%
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Ratio of expenses to average net assets prior
to expense limitation 1.81% 1.75% 1.73% 1.63% 1.69%
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Ratio of net investment income to average net 4.46% 5.02% 5.24% 5.55% 5.56%
assets
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Ratio of net investment income to average net
assets prior to expense limitation 4.40% 4.94% 5.24% 5.38% 5.41%
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
Portfolio turnover 280% 202% 66% 145% 144%
- ------------------------------------------------- ---------- -------- -------- --------- --------- --------
</TABLE>
- -------------------
(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; ratios have been annualized.
(3) Date of initial 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 and does not reflect the impact of a sales charge. Total return
for periods less than 12 months have not been annualized.
(5) Total return reflects expense limitations in effect during the period.
(6) 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.
26
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------- -------------------------------------------------------------------
Class C Shares
- ----------------------------------------------------- -------------------------------------------------------------------
Period Period
7/1/96 1/10/95(3)
Year Ended 10/31 through Year Ended 6/30 through
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Delaware U.S. Government Securities Fund 1999 1998 1997(1) 10/31/96(2) 1996 6/30/95
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Net asset value, beginning of period $10.590 $10.360 $10.150 $10.360 $9.480
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Income (loss) from investment operations
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Net investment income 0.477 0.520 0.180 0.550 0.270
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Net realized and unrealized gain (loss) on 0.348 0.240 0.210 (0.230) 0.880
investments ----- ----- ----- ------- -----
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Total from investment operations 0.825 0.760 0.390 0.320 1.150
----- ----- ----- ----- -----
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Less dividends and distributions
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Dividends from net investment income (0.485) (0.530) (0.180) (0.530) (0.270)
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Distributions from net realized gain on None None None None None
investments ---- ---- ---- ---- ----
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Total dividends and distributions (0.485) (0.530) (0.180) (0.530) (0.270)
------- ------- ------- ------- -------
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Net asset value, end of period $10.930 $10.590 $10.360 $10.150 $10.360
======= ======= ======= ======= =======
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Total return (4) 7.98%(5) 7.60%(5) 3.92% 3.11% 12.73%
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Ratios and supplemental data
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Net assets, end of period (000 omitted) $385 $138 $234 $224 $221
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Ratio of expenses to average net assets 1.75% 1.68% 1.73% 1.70% 1.62%(6)
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Ratio of expenses to average net assets prior to 1.81% 1.76% 1.73% 1.70% 1.65%(6)
expense limitation
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Ratio of net investment income to average net 4.46% 5.02% 5.26% 5.33% 5.10%(6)
assets
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Ratio of net investment income to average net
assets prior to expense limitation 4.40% 4.94% 5.26% 5.33% 5.07%(6)
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
Portfolio turnover 280% 202% 66% 145% 144%
- ----------------------------------------------------- --------- --------- --------- --------- ---------------- ----------
</TABLE>
- -------------------
(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; ratios have been annualized.
(3) Date of initial 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 and does not reflect the impact of a sales charge. Total return
for periods less than 12 months have not been annualized.
(5) Total return reflects expense limitations in effect during the period.
(6) Annualized.
27
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------ ----------------------------------------------------------
Institutional Class Shares
- ------------------------------------------------ ----------------------------- --------- ------------------
Period
7/1/96
Year Ended 10/31 through Year Ended 6/30
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware U.S. Government Securities Fund 1999 1998 1997(1) 10/31/96(2) 1996 1995
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Net asset value, beginning of period $10.600 $10.370 $10.160 $10.370 $9.750
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Income (loss) from investment operations
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Net investment income 0.555 0.600 0.210 0.630 0.620
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Net realized and unrealized gain (loss) on 0.351 0.240 0.210 (0.230) 0.640
investments ----- ----- ----- ------- -----
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Total from investment operations 0.906 0.840 0.420 0.400 1.260
----- ----- ----- ----- -----
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Less dividends and distributions
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Dividends from net investment income (0.566) (0.610) (0.210) (0.610) (0.620)
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Distributions from net realized gain on None None None None (0.020)
investments ---- ---- ---- ---- -------
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Total dividends and distributions (0.566) (0.610) (0.210) (0.610) (0.640)
------- ------- ------- ------- -------
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Net asset value, end of period $10.940 $10.600 $10.370 $10.160 $10.370
======= ======= ======= ======= =======
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Total return(4) 8.79%(5) 8.39%(5) 4.17% 3.88% 13.57%
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Ratios and supplemental data
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Net assets, end of period (000 omitted) $37,097 $45,589 $50,066 $41,688 $54,445
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Ratio of expenses to average net assets 1.00% 0.93% 0.99% 0.97% 0.94%
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Ratio of expenses to average net assets prior
to expense limitation 1.06% 1.01% 0.99% 0.97% 0.94%
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Ratio of net investment income to average net 5.21% 5.76% 6.00% 6.07% 6.39%
assets
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Ratio of net investment income to average net
assets prior to expense limitation 5.15% 5.68% 6.00% 6.07% 6.39%
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
Portfolio turnover 280% 202% 66% 145% 144%
- ------------------------------------------------ ----------- --------- ------- --------- --------- --------
</TABLE>
- -------------------
(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; ratios have been annualized.
(3) Date of initial 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 the periods ended October 31, 1996 and June
30, 1994 have not been annualized.
(5) Total return reflects expense limitations in effect during the period.
(6) 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.
28
<PAGE>
How to read the financial highlights
Net investment loss
Net investment loss includes dividend and interest income earned from the Fund's
investments; it is after expenses have been deducted.
Net realized and unrealized gain on investments
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 net realized gain on
investments."
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 rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include applicable 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 a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets 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 loss to average 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.
29
<PAGE>
How to use this glossary
[runs along the bottom of the pages]
The glossary includes definitions of investment terms used throughout the
prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
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, bond
prices fall, and when interest rates fall, bond 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. See also Nationally recognized statistical rating
organization.
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.
Corporate bond
A debt security issued by a corporation. See "Bond."
Corporate bond
A debt security issued by a corporation. See "Bond."
30
<PAGE>
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
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.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Duration
A measurement of a fixed-income investment's price volatility. The larger the
number, the greater the likely price change for a given change in interest
rates.
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 and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
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 paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See "Bond."
Government securities
Securities issued by U.S. government or its agencies. They include Treasuries as
well as agency-backed securities such as Fannie Maes.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Lehman Brothers Government/Corporate Bond Index
An index composed of 5400 publicly issued corporate and US government debt rated
Baa or better, with at least one year to maturity and at least $25 million par
outstanding. The index is weighted by the market value of its bonds.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
31
<PAGE>
NASD Regulation, Inc. (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality 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,
Inc. (Moody's), Standard & Poor's Ratings Group (S&P), Duff & Phelps, Inc.
(Duff), and Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Principal
Amount of money you invest (also called capital). 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.
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 or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
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; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied 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.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as equities.
32
<PAGE>
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.
Treasury bills
Securities issued by the U.S. Treasury with maturities of one year or less.
Treasury bonds
Securities issued by the U.S. Treasury with maturities of 10 years or longer.
Treasury notes
Securities issued by the U.S. Treasury with maturities of one to 10 years.
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.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
33
<PAGE>
Delaware U.S 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 shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the report
period. 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
19103-3682, or call toll-free 800o523o1918. 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 1o800oSECo0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Shareholder Service Center
800o523o1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone redemptions
and telephone exchanges.
Delaphone Service
800o362oFUND (800o362o3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811-5267
Fund Symbols
- --------------------------------------------------------------
CUSIP NASDAQ
- --------------------------------------------------------------
Class A 929072106 VUSGX
- --------------------------------------------------------------
Class B 929072205 DVGBX
- --------------------------------------------------------------
Class C 929072403 DVUCX
- --------------------------------------------------------------
Institutional Class 929072304 VUSIX
- --------------------------------------------------------------
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
34
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 10, 2000
VOYAGEUR FUNDS
DELAWARE U.S. GOVERNMENT SECURITIES FUND
(formerly Delaware-Voyageur U.S. 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 is a professionally-managed mutual fund of the series
type which currently offers one series of shares: Delaware U.S. 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 dated February 10, 2000 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>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Table of Contents
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Cover Page Distributions and Taxes
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Investment Restrictions and Policies Investment Management Agreement and Sub-Advisory
Agreement
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Accounting and Tax Issues Officers and Trustees
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Performance Information General Information
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Trading Practices and Brokerage Financial Statements
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Purchasing Shares Appendix A--Description of Ratings
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Investment Plans Appendix B--General Characteristics and Risks of Options
and Futures
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Determining Offering Price and Net Asset Value Appendix C--Investment Objectives of the Other Funds in
the Delaware Investments Family
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
Redemption and Exchange
- ---------------------------------------------------- ------- --------------------------------------------------------- ------
</TABLE>
-1-
<PAGE>
INVESTMENT RESTRICTIONS AND POLICIES
Fundamental Restrictions - The Fund has adopted the following restrictions which
cannot be changed without approval by the holders of a "majority" of the Fund's
outstanding shares, which is a vote by the holders of the lesser of a) 67% or
more of the voting securities present in person or by proxy at a meeting, if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy; or b) more than 50% of the outstanding voting securities.
The percentage limitations contained in the restrictions and policies set forth
herein apply at the time of purchase of securities.
The Fund shall not:
1. Make investments that will result in the concentration (as that term
may be defined in the Investment Company Act of 1940 ("1940 Act"), any rule or
order thereunder, or U.S. Securities and Exchange Commission ("SEC") staff
interpretation thereof) of its investments in the securities of issuers
primarily engaged in the same industry, provided that this restriction does not
limit the Fund from investing in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or in tax-exempt securities or
certificates of deposit.
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
3. Underwrite the securities of other issuers, except that the Fund may
engage in transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933 (the "1933 Act").
4. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result
of ownership of securities or other instruments and provided that this
restriction does not prevent the Fund from engaging in transactions involving
futures contracts and options thereon or investing in securities that are
secured by physical commodities.
6. Make loans, provided that this restriction does not prevent the Fund
from purchasing debt obligations, entering into repurchase agreements, loaning
its assets to broker/dealers or institutional investors and investing in loans,
including assignments and participation interests.
-2-
<PAGE>
Non-fundamental Restrictions - In addition to the fundamental policies and
investment restrictions described above, and the various general investment
policies described in the prospectus, the Fund will be subject to the following
investment restrictions, which are considered non-fundamental and may be changed
by the Board of Trustees without shareholder approval.
1. The Fund is permitted to invest in other investment companies,
including open-end, closed-end or unregistered investment companies, either
within the percentage limits set forth in the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, or without regard to percentage
limits in connection with a merger, reorganization, consolidation or other
similar transaction. However, the Fund may not operate as a "fund of funds"
which invests primarily in the shares of other investment companies as permitted
by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
2. The Fund may not invest more than 15% of its net assets in
securities which it cannot sell or dispose of in the ordinary course of business
within seven days at approximately the value at which the Fund has valued the
investment.
The following are additional non-fundamental investment restrictions:
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 trustees of the Fund or officers and trustees 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.
-3-
<PAGE>
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.
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 virtually no risk to principal investments.
-4-
<PAGE>
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.
-5-
<PAGE>
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 in this section,
"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.
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 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.
-6-
<PAGE>
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 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;
-7-
<PAGE>
(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 Fund 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.
-8-
<PAGE>
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; and
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, 1999, 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, 1999. 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, 1999 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.
-9-
<PAGE>
Average Annual Total Return(1)
<TABLE>
<CAPTION>
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
Class A Class A Institutional Class B Class B Class C Class C
(at offer) (at NAV) Class (including (excluding (including (excluding
CDSC) CDSC) CDSC) CDSC)
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
3 years ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
5 years ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
10 years ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
Life of Fund(2)
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
</TABLE>
- -------------------
(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.
(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.
-10-
<PAGE>
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,
1999 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, 1999 for the
Fund was 00.00 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.
-11-
<PAGE>
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.
-12-
<PAGE>
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, 1999. 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.
-13-
<PAGE>
Cumulative Total Return(1)
<TABLE>
<CAPTION>
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
Class A Class A Institutional Class B Class B Class C Class C
(at offer) (at NAV) Class (including (excluding (including (excluding
CDSC) CDSC) CDSC) CDSC)
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
3 months ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
6 months ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
9 months ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
1 year ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
3 years ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
5 years ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
10 years ended
10/31/99
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
Life of Fund(2)
- ----------------- ------------ --------------- --------------- -------------- -------------- --------------- --------------
</TABLE>
- -------------------
(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.
(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.
-14-
<PAGE>
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
affiliates of the Manager, including the number of such clients serviced by such
affiliates.
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.
-15-
<PAGE>
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
execution. Best 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 the
Manager's 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, 1997, 1998 and 1999, 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.
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During the fiscal year ended October 31, 1999, 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
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 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 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'
Board of Trustees that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Conduct Rules of the NASD Regulation, Inc. (the
"NASD"), and subject to seeking best 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.
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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 280% for the fiscal year
ended October 31, 1998 and 000% for the fiscal year ended October 31, 1999.
PURCHASING SHARES
The Distributor serves as the national distributor for the Fund's shares
and has agreed to use its best efforts to sell shares of the 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 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, trustees 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 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 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.
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<PAGE>
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 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.
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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 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.
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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 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
the 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 the 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 a list of the instances in which the CDSC is waived.
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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 this
Part B. 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 the 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.
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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.
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Plan Under Rule 12b-1
Pursuant to Rule 12b-1 under the 1940 Act, Voyageur Funds 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' Board of Trustees
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 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 Trustees of Voyageur Funds, including a majority of the trustees
who are not "interested persons" (as defined in the 1940 Act) of Voyageur Funds
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 Trustees in the same manner
as specified above.
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Each year, the trustees 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 trustees 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 trustees who
are not "interested persons." Also, any material amendment to the Plan must be
approved by a majority vote of the trustees including a majority of the
noninterested trustees of Voyageur Funds having no interest in the Plan. In
addition, in order for the Plan to remain effective, the selection and
nomination of trustees who are not "interested persons" of Voyageur Funds must
be effected by the trustees 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 Trustees for their review.
For the fiscal year ended October 31, 1999, payments from the Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares pursuant
to their respective 12b-1 Plans amounted to $0,000,000, $000,000, $00,000 and
$00,000, respectively. Such amounts were used for the following purposes:
<TABLE>
<CAPTION>
- ------------------------------------------ --------------------- ---------------------- -------------------- --------------------
A Class B Class C Class Institutional
- ------------------------------------------ --------------------- ---------------------- -------------------- --------------------
<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>
-25-
<PAGE>
Other Payments to Dealers
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Fund 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, trustees 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,
trustees 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, trustees 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.
-26-
<PAGE>
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 the 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.
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 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.
-27-
<PAGE>
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 Voyageur Funds 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 Fund 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 the Fund and other Delaware Investments funds which offer
corresponding classes of shares may also be aggregated for this purpose.
-28-
<PAGE>
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 Fund, 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 the 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 and Class B Shares of a Fund (and of the
Institutional Class holding shares which were acquired through an exchange from
one of the other mutual funds in the Delaware Investments family 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 the same
Class of the Fund or in the same Class of any of the other funds in the Delaware
Investments family. In the case of Class A Shares, the reinvestment will not be
assessed a front-end sales charge and in the case of Class B Shares, the amount
of the CDSC previously charged on the redemption will be reimbursed by the
Distributor. The reinvestment will be subject to applicable eligibility and
minimum purchase requirements and must be in states where shares of such other
funds may be sold. This reinvestment 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 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. In the case of
Class B Shares, the time that the previous investment was held will be included
in determining any applicable CDSC due upon redemptions as well as the automatic
conversion into Class A Shares.
-29-
<PAGE>
A redemption and reinvestment of Class B Shares could have income tax
consequences. Shareholders will receive from the Distributor the amount of the
CDSC paid at the time of redemption as part of the reinvested shares, which may
be treated as a capital gain to the shareholder for tax purposes. 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 the 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 each Fund's shareholder servicing agent, about the
applicability of the Class A Limited CDSC 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, 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 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.
-30-
<PAGE>
The investors who may purchase Institutional Class Shares include: (a)
officers and trustees of the Fund; (b) officers, trustees and full-time
employees of the Manager or Sub-Adviser, and officers, trustees and full-time
employees of parents and subsidiaries of the foregoing companies; (c) officers,
trustees 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, trustees 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 Fund, 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.
-31-
<PAGE>
Subject to the following limitations, dividends and/or distributions
from other funds in Delaware Investments may be invested in shares of the Fund,
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.
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<PAGE>
Automatic Investing Plan--Shareholders of Class A Shares, Class B
Shares and Class C Shares may make automatic investments by authorizing, in
advance, monthly or quarterly 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 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 the 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.
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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.
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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 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.
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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.
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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.
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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 includable 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.
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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.
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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.
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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 Trustees. 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 Trustees.
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.
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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. 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 the 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.
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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 Agreement and Sub-Advisory Agreement);
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, the 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 has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which the 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 the Fund's investments is subject to changing market
prices. Thus, a shareholder reselling shares to the 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
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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 there may be a bank wiring
cost, neither the Fund 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 the 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 the 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 Fund requires 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"). The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund 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.
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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 Institutional 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. The 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 Fund 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 Fund nor its 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, the 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. A bank wire fee may be deducted from
redemption proceeds of Class A, B and C Shares. 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
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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 the 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)
Delaware Decatur Equity Income Fund, (2) Delaware Growth and Income Fund, (3)
Delaware Balanced Fund, (4) Delaware Limited-Term Government Fund, (5) Delaware
Tax-Free USA Fund, (6) Delaware Cash Reserve Fund, (7) Delaware Delchester Fund
and (8) Delaware 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.
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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 Fund does 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 Limited CDSC for Class A Shares and CDSC for Class B and C Shares
redeemed via a Systematic Withdrawal Plan will be waived if the annual amount
withdrawn in each year is less than 12% of the account balance on the date that
the Plan is established. If the annual amount withdrawn in any year exceeds 12%
of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subjected to the applicable
contingent deferred sales charge, including an assessment for previously
redeemed amounts under the Plan. Whether a waiver of the contingent deferred
sales charge is available or not, the first shares to be redeemed for each
Systematic Withdrawal Plan payment will be those not subject to a contingent
deferred sales charge because they have either satisfied the required holding
period or were acquired through the reinvestment of distributions. See Waiver of
Contingent Deferred Sales Charges, below.
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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 Fund reserves 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 Fund does 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.
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.
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Waivers of Contingent Deferred Sales Charges
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 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) 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; (viii) distributions form an account if the redemption results
from a death of a registered owner, or a registered joint owner, 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 disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed; and (ix) 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 a registered owner, or a registered joint owner, 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 a registered owner, or a
registered joint owner, of the account (in the case of accounts established
under the Uniform Gifts to Minors
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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 A Shares, 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.
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 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.
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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:
"Long-term capital gains": gains on securities sold after December 31,
1997 and held for more than 12 months as capital assets in the hands of
the holder are taxed at the 20% rate when distributed to shareholders
(15% for individual investors in the 15% tax bracket.
"Short -term capital gains": Gains on securities sold by a Fund that do
not meet the long-term holdings period are considered short term
capital gains and are taxable as ordinary income.
"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.
Any loss incurred on the redemption or exchange of shares held for six
months or less will be disallowed to the extent of any exempt-interest dividends
distributed to you with respect to your Fund shares and any remaining loss will
be treated as a long-term capital loss to the extent of any long-term capital
gains distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of
your Fund shares will be disallowed to the extent that you buy other shares in
the Fund (through reinvestment of dividends or otherwise) within 30 days before
or after your share redemption. Any loss disallowed under these rules will be
added to your tax basis in the new shares you buy.
If you redeem some or all of yours shares in a Fund, and then reinvest
the sales proceeds in such Fund or in another Delaware Investments fund within
90 days of buying the original shares, the sales
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charge that would otherwise apply to your reinvestment may be reduced or
eliminated. The IRS will require you to report gain or loss on the redemption of
your original shares in a Fund. In doing so, all or a portion of the sales
charge that you paid for your original shares in a Fund will be excluded from
your tax basis in the shares sold (for the purpose of determining gain or loss
upon the sale of such shares). The portion of the sales charge excluded will
equal the amount that the sales charge is reduced on your reinvestment. Any
portion of the sales charge excluded from your tax basis in the shares sold will
be added to the tax basis of the shares you acquire from your reinvestment.
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' Board of Trustees.
The Manager and its predecessors have been managing the funds in
Delaware Investments since 1938. On October 31, 1999, 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 $00,000,600,000)
and investment company (approximately $00,000,000,000) accounts.
The Investment Management Agreement for the Fund is dated November 23,
1999 and was approved by the initial shareholder on that date. The Agreement 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 Trustees or by vote of a majority of the outstanding voting securities of the
Fund, and only if the terms of and the renewal thereof have been approved by the
vote of a majority of the trustees of Voyageur Funds 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 trustees of Voyageur Funds or by the Manager.
The Agreement will terminate automatically in the event of its assignment.
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Under its Investment Management Agreement, the Manager is entitled to
receive an annual fee equal to the following schedule: 0.55% on first $500
million of average daily net assets; 0.50% on next $500 million of average daily
net assets; 0.45% on next $1,500 million of average daily net assets; 0.425% on
average daily net assets in excess of $2,500 million. For the period from May 1,
1999, through April 30 2001, the Manager has elected voluntarily to waive the
management fee to which it would otherwise be entitled under such Agreement to
ensure that such fees do not exceed 0.50% of 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 the Manager'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 to an annual fee equal
to 0.25% of the average daily net assets of the Fund.
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 Fund's investment advisory contracts with the Fund's 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.
In addition to the above limit, the Manager agreed for the period from
June 9, 1997 through December 31, 1997, 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, 0.75% of average daily net
assets. The Manager also agreed for the period from January 1, 1999 through
December 31, 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, 0.85% of average daily net assets.
On October 31, 1999, the total net assets of Voyageur Funds were
$00,000,000.
-53-
<PAGE>
Investment management fees incurred by the Fund for the last 3 fiscal
years follow:
Period Incurred Paid Waived
Year Ended
October 31, 1999
Year Ended
October 31, 1998 $455,622 $398,138 $57,484
Year Ended
October 31, 1997 $568,682 $476,490 $92,192
For the fiscal years ended October 31, 1997, 1998 and 1999, the
Manager paid the Sub-Adviser $000,000, $000,000 and $000,000, respectively, for
its services to the Fund.
Under the general supervision of the Board of Trustees, the Manager
makes and executes all investment decisions for the Fund. The Manager pays the
salaries of all trustees, officers and employees of Voyageur Funds who are
affiliated with the Manager. The Fund pays all of its other expenses.
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 trustees. 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 trustees of Voyageur Funds 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.
Beginning May 1, 1997, Delaware Management Company became the Fund's
Investment Manager and Voyageur Asset Management LLC became the sub-adviser.
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 November 23, 1999. 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
-54-
<PAGE>
transfer agent pursuant to a Shareholders Services Agreement dated as of
November 23, 1999. 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.
-55-
<PAGE>
OFFICERS AND TRUSTEES
The business and affairs of Voyageur Funds are managed under the
direction of its Board of Trustees.
Certain officers and trustees of Voyageur Funds hold identical
positions in each of the other funds in Delaware Investments. On January 31,
2000, [Voyageur Fund's officers and trustees owned less than 1% of the
outstanding shares of Class A, Class B, Class C and Institutional Class of the
Fund.]
As of January 31, 2000, management believes the following shareholders
held 5% or more of the outstanding shares of a Class:
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Securities City of Kentwood
Fund A Class Attn: Tom Chase
4900 Breton Avenue SE
P.O. Box 8848
Kentwood, MI 49508
U.S. Government Securities Merrill Lynch, Pierce, Fenner & Smith
Fund B Class For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, East - 2nd Floor
Jacksonville, FL 32246
BNC Partnership
Attn: Mike Schmitz
c/o BNC National Bank Trust Dept.
322 East Main Street
Bismarck, ND 58501
Volunteer Medical Service
Corps. of Lansdale
P.O. Box 208
175 Medical Campus Drive
Lansdale, PA 19446-0208
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Securities Paine Webber
Fund C Class For the Benefit of Paine Webber CDN FBO
Daniel W. Drake
P.O. Box 3321
Weehawken, NJ 07087
Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive, East - 2nd Floor
Jacksonville, FL 32246
DMTC Custodian for the IRA of
Theodore B. Pryor
P.O. Box 2096
Post Falls, ID 83877-2096
DMTC Custodian for the IRA of
Claudia J. Dixon-Pryor
P.O. Box 2096
Post Falls, ID 83877-2096
Donaldson, Lufkin, Jenrette
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
DMTC Custodian for the IRA of
Beverly J. Henderson
P.O. Box 2085
Post Falls, ID 83877-2085
U.S. Government Securities Bankers Trust Co. as Trustee for
Fund Institutional Class Public Service Electric & Gas Co.
Master Employee Benefit Plan
34 Exchange Place
Attn: Donna Dekowski
New Jersey, NJ 07303
</TABLE>
-57-
<PAGE>
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.
-58-
<PAGE>
Trustees and principal officers of Voyageur Funds 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 trustee is One Commerce Square,
Philadelphia, PA 19103.
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
Trustee and Officer Business Experience
<S> <C>
- ------------------------------------------- -------------------------------------------------------------------------------
*Wayne A. Stork (62) Chairman, Trustee/Director of Voyageur Funds and each of the other 32
investment companies in the Delaware Investments family.
Chairman and Director of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
Prior to January 1, 1999, Mr. Stork was Director of Delaware Capital
Management, Inc.; Chairman, President and Chief Executive Officer and
Director/Trustee of DMH Corp., Delaware Distributors, Inc. and Founders
Holdings, Inc.; Chairman, President, Chief Executive Officer, Chief
Investment Officer and Director/Trustee of Delaware Management Company,
Inc. and Delaware Management Business Trust; Chairman, President, Chief
Executive Officer and Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Chairman,
Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust);
Chairman and Chief Executive Officer of Delaware International Advisers
Ltd.; Chairman, Chief Executive Officer and Director of Delaware
International Holdings Ltd.; Chief Executive Officer of Delaware
Management Holdings, Inc.; President and Chief Executive Officer of
Delvoy, Inc.; Chairman of Delaware Distributors, L.P.; Director of
Delaware Service Company, Inc. and Retirement Financial Services, Inc.
In addition, during the five years prior to January 1, 1999, Mr. Stork
has served in various executive capacities at different times within
the Delaware organization.
- ------------------------------------------- -------------------------------------------------------------------------------
- ----------------------
* Trustee affiliated with Voyageur Funds' investment manager and considered an "interested person" as defined in the
1940 Act.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
-59-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Trustee and Officer Business Experience
- ------------------------------------------- -------------------------------------------------------------------------------
*David K. Downes (60) President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and Trustee/Director of Voyageur Funds and each of the other 32
investment companies in the Delaware Investments family.
President and Director of Delaware Management Company, Inc.
President of Delaware Management Company (a series of Delaware Management
Business Trust)
President, Chief Executive Officer and Director of Delaware Capital
Management, Inc.
Chairman, President, Chief Executive Officer and Director of Delaware
Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware International Holdings Ltd.
Chairman and Director of Delaware Management Trust Company and Retirement
Financial Services, Inc.
Executive Vice President, Chief Operating Officer, Chief Financial Officer
of Delaware Management Holdings, Inc., Founders CBO Corporation, Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors, L.P.
Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of DMH Corp., Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.
Executive Vice President and Trustee of Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Downes has served in various executive
capacities at different times within the Delaware organization.
- ------------------------------------------- -------------------------------------------------------------------------------
- ----------------------
* Trustee affiliated with Voyageur Fund's investment manager and considered an "interested person" as defined in the
1940 Act.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
-60-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
Trustee and Officer Business Experience
<S> <C>
- ------------------------------------------- -------------------------------------------------------------------------------
Walter P. Babich (72) Trustee/Director of Voyageur Funds and each of the other 32 investment
companies in the Delaware Investments 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 (61) Trustee/Director of Voyageur Funds and each of the 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 (59) Trustee/Director of Voyageur Funds and each of the other 32 other investment
companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Retired Treasurer, National Gallery of Art
From 1994 to 1999, Ms. Leven was Treasurer of the National Gallery of Art and
from 1990 to 1994, she was Deputy Treasurer of the National Gallery of Art. In
addition, 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.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
Trustee and Officer Business Experience
<S> <C>
- ------------------------------------------- -------------------------------------------------------------------------------
Thomas F. Madison (63) Trustee/Director of Voyageur Funds and each of the other 32 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 (74) Trustee/Director of Voyageur Funds and each of the other 32 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.
- ------------------------------------------- -------------------------------------------------------------------------------
Janet L. Yeomans (51) Trustee/Director of Voyageur Funds and 32 other investment companies in the
Delaware Investments family.
Building 220-13W-37, St. Paul, MN 55144
Vice President and Treasurer, 3M Corporation.
From 1987-1994, Ms. Yeomans was Director of Benefit Funds and Financial
Markets for the 3M Corporation; Manager of Benefit Fund Investments for
the 3M Corporation, 1985-1987; Manager of Pension Funds for the 3M
Corporation, 1983-1985; Consultant--Investment Technology Group of
Chase Econometrics, 1982-1983; Consultant for Data Resources,
1980-1982; Programmer for the Federal Reserve Bank of Chicago,
1970-1974.
- ------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
-62-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Officer Business Experience
- ------------------------------------------- -------------------------------------------------------------------------------
Richard G. Unruh, Jr. (60) Executive Vice President and Chief Investment Officer, Equity of
Voyageur Funds, each of the other 32 investment companies in the
Delaware Investments family
Chief Executive Officer/Chief Investment Officer of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
Executive Vice President of Delaware Management Holdings, Inc. and
Delaware Capital Management, Inc.
Executive Vice President/Chief Investment Officer of Delaware
Management Company (a series of Delaware Management Business Trust)
Executive Vice President and Trustee of 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.
- --------------------------------- -----------------------------------------------------------------------------------------
H. Thomas McMeekin (46) Executive Vice President and Chief Investment Officer, Fixed Income of
Voyageur Funds and each of the other 32 investment companies in the
Delaware Investments family.
Director of Delaware Management Holdings, Inc. and Founders CBO
Corporation.
Executive Vice President/Chief Investment Officer, DMC-Fixed Income of
Delaware Management Company (a series of Delaware Management Business
Trust)
Executive Vice President/Chief Investment Officer, DIA-Fixed Income of
Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Management Business Trust and
Delaware Capital Management, Inc.
Mr. McMeekin joined Delaware Investments in 1999. During the past five
years, he has also served in various executive capacities for Lincoln
National Corporation.
- ------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
-63-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Officer Business Experience
- ------------------------------------------- -------------------------------------------------------------------------------
Richard J. Flannery (42) Executive Vice President/General Counsel of Voyageur Funds and each of
the other 32 investment companies in the Delaware Investments family,
Delaware Management Holdings, Inc., 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 Founders CBO Corporation.
Executive Vice President/General Counsel and Director of Delaware
International Holdings Ltd., Founders Holdings, Inc., Delvoy, Inc., DMH
Corp., Delaware Management Company, Inc., Delaware Service Company,
Inc., Delaware Capital Management, Inc., Retirement Financial Services,
Inc., Delaware Distributors, Inc. and Delaware Management Trust
Company.
Executive Vice President and Trustee of Delaware Management Business
Trust.
Director of Delaware International Advisers Ltd.
Director of HYPPCO Finance Company Ltd.
During the past five years, Mr. Flannery has served in various
executive capacities at different times within the Delaware
organization.
- --------------------------------- -----------------------------------------------------------------------------------------
</TABLE>
-64-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Officer Business Experience
- ------------------------------------------- -------------------------------------------------------------------------------
Eric E. Miller (46) Senior Vice President/Deputy General Counsel and Secretary of Voyageur
Funds and each of the other 32 investment companies in Delaware
Investments.
Senior Vice President/Deputy General Counsel and Assistant Secretary of
Delaware Management Holdings, Inc., DMH Corp., Delvoy, Inc., Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business
Trust), Delaware Service Company, Inc., Delaware Capital Management,
Inc., Retirement Financial Services, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P. and Founders Holdings, Inc.
During the past five years, Mr. Miller has served in various executive
capacities at different times within Delaware Investments.
- ------------------------------------ --------------------------------------------------------------------------------------
Joseph H. Hastings (50) Senior Vice President/Corporate Controller of Voyageur Funds and each
of the other 32 investment companies in the Delaware Investments family
and Delaware Investment Advisers (a series of Delaware Management
Business Trust)
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delvoy , Inc., Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd., Founders Holdings, Inc. and Delaware
Management Business Trust
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Chief Financial Officer of Retirement Financial Services, Inc.
During the past five years, Mr. Hastings has served in various
executive capacities at different times within the Delaware
organization.
- --------------------------------- -----------------------------------------------------------------------------------------
</TABLE>
-65-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Michael P. Bishof (37) Senior Vice President and Treasurer of Voyageur Funds and each of the
other 32 investment companies in the Delaware Investments family.
Senior Vice President/Investment Accounting of Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Service Company, Inc. and Delaware Capital Management, Inc. and
Founders Holdings, Inc.
Senior Vice President and Treasurer/ Investment Accounting of Delaware
Distributors, L.P. and Delaware Investment Advisers (a series of
Delaware Management Business Trust)
Senior Vice President/Manager of Investment Accounting of Delaware
International Holdings, Inc.
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.
- ------------------------------------ --------------------------------------------------------------------------------------
</TABLE>
-66-
<PAGE>
The following is a compensation table listing for each trustee entitled
to receive compensation, the aggregate compensation received from Voyageur Funds
and the total compensation received from all investment companies in the
Delaware Investments family for which he or she serves as a trustee or trustee
for the fiscal year ended October 31, 1999 and an estimate of annual benefits to
be received upon retirement under the Delaware Investments Retirement Plan for
Directors/Trustees as of October 31, 1999. Only the independent trustees of
Voyageur Funds receive compensation from Voyageur Funds.
<TABLE>
<CAPTION>
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Total Compensation
from the Investment
Pension or Estimated Annual Companies in
Aggregate Retirement Benefits Benefits Delaware
Compensation from Accrued Upon Retirement(1) Investments(2)
Voyageur Funds as Part of
Name(3) Fund Expenses
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Walter P. Babich None $38,000
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
John H. Durham None $32,180
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Anthony D. Knerr None $38,000
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Ann R. Leven None $38,000
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Thomas F. Madison None $38,000
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Charles E. Peck None $38,000
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Jan L. Yeomans(4) None $38,000
--------------------------- ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
- -------------------
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested trustee/director 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 trustee/director for a period equal to the
lesser of the number of years that such person served as a trustee/director
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 trustees/directors of each investment company at the time of such
person's retirement. If an eligible trustee/director retired as of October
31, 1999, 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
trustee/director, based on the number of investment companies in the
Delaware Investments family as of that date.
(2) Each independent trustee/director (other than John H. Durham) currently
receives a total annual retainer fee of $38,000 for serving as a
trustee/director for all 33 investment companies in Delaware Investments,
plus $3,143 for each Board Meeting attended. John H. Durham currently
receives a total annual retainer fee of $32,180 for serving as a
trustee/director for 19 investment companies in Delaware Investments, plus
$1,810 for each Board Meeting attended. Ann R. Leven, Charles E. Peck,
Anthony D.
-67-
<PAGE>
Knerr and Thomas F. Madison serve on Voyageur Funds' 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.
(3) W. Thacher Longstreth served as an independent trustee of Voyageur Funds
during its last fiscal year for the period November 1, 1998 through March
17, 1999, the date on which he retired. For this period, Mr. Longstreth
received $__________ from Voyageur Funds and $___________ for all
investment companies in the Delaware Investments family.
(4) Jan L. Yeomans joined the Boards of all investment companies in the
Delaware Investments family in March 1999 for some funds and in April 1999
for other funds.
-68-
<PAGE>
GENERAL INFORMATION
Voyageur Funds is an open-end, registered management investment
company. The Fund's portfolio of assets is diversified as defined by the 1940
Act. Voyageur Funds was organized as a Minnesota corporation on April 15, 1987
and reorganized as a Delaware business trust on November 23, 1999.
Delaware or Delaware International also manages the investment options
for Delaware-Lincoln Choice Plus and Delaware Medallion (SM) IV Variable
Annuities. Choice Plus is issued and distributed by Lincoln National Life
Insurance Company. Choice Plus offers a variety of different investment styles
managed by leading money managers. Medallion is issued by Allmerica Financial
Life Insurance and Annuity Company (First Allmerica Financial Life Insurance
Company in New York and Hawaii). Delaware Medallion offers various investment
series ranging from domestic equity funds, international equity and bond funds
and domestic fixed income funds. Each investment series available through Choice
Plus and Medallion utilizes an investment strategy and discipline the same as or
similar to one of the Delaware Investments mutual funds available outside the
annuity. See Delaware Group Premium Fund, Inc., in Appendix B.
Access persons and advisory persons of the funds in the Delaware
Investments family, 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 by certain covered persons in certain
securities 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:
U.S. Government Securities Fund A Class
Total Amount of Amounts
Underwriting Reallowed Net Commission
Fiscal Year Ended Commission to Dealers to VFD/DDLP
----------------- --------------- ---------- --------------
10/31/99
10/31/98 $67,126 $55,344 $11,782
10/31/97 $34,104 $ 5,079 $29,025
-69-
<PAGE>
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 and CDSC payments with respect to the Fund's Class B and Class C Shares as
follows:
Class A Shares Class B Shares Class C Shares
Period Ended CDSC payments CDSC payments CDSC payments
- ------------ -------------- -------------- --------------
Year Ended 10/31/99
Year Ended 10/31/98 None $7,771 $155
Year Ended 10/31/97 None 5,058 6
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the 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 Trustees,
including a majority of the unaffiliated trustees. 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 has a present unlimited authorized number of shares of
beneficial interest with no par value allocated to each Class.
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.
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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.
Effective August 16, 1999, the name of Delaware-Voyageur U.S. Government
Securities Fund changed to Delaware U.S. Government Securities Fund. On November
23, 1999, the name of Voyageur Funds, Inc. changed to Voyageur Funds.
Noncumulative Voting
Voyageur Funds' shares have noncumulative voting rights which means
that the holders of more than 50% of the shares of Voyageur Funds voting for the
election of trustees can elect all the trustees if they choose to do so, and, in
such event, the holders of the remaining shares will not be able to elect any
trustees.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Voyageur
Funds and, in its capacity as such, audits the annual financial statements of
the Fund. The Fund's Statement of Net Assets, 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, 1999 are included in Voyageur Funds'
Annual Report to shareholders. The financial statements and financial
highlights, the notes relating thereto and the report of Ernst & Young LLP are
incorporated by reference from the Annual Report into this Part B. The Fund's
previous auditors audited the financial highlights of the Fund for the fiscal
periods ending on or before October 31, 1996.
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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 capitalize 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.
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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.
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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.
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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.
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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.
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APPENDIX B -- GENERAL CHARACTERISTICS AND RISKS OF OPTIONS AND FUTURES
General. As described in 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.
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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.
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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.
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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 positions, 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.
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APPENDIX C--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE INVESTMENTS
FAMILY
Following is a summary of the investment objectives of the funds in the Delaware
Investments family:
Delaware Balanced Fund seeks long-term growth by a balance of
Diversified Growth, 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
investment adviser believes have the potential for above average dividend
increases over time.
Delaware Trend Fund seeks long-term growth by investing in common
stocks issued by emerging growth companies exhibiting strong capital
appreciation potential.
Delaware 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.
Delaware 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.
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<PAGE>
Delaware Decatur Equity 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. Delaware Growth
and Income Fund seeks long-term growth by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk to
principal. Delaware 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. Delaware 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.
Delaware 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. Delaware 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. Delaware High-Yield Opportunities Fund seeks to provide
investors with total return and, as a secondary objective, high current income.
Delaware Corporate Bond Fund seeks to provide investors with total return by
investing primarily in corporate bonds. Delaware Extended Duration Bond Fund
seeks to provide investors with total return by investing primarily in corporate
bonds
Delaware American Government Bond 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.
Delaware 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 Fund 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.
Delaware 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.
Delaware Tax-Free USA Fund seeks high current income exempt from
federal income tax by investing in municipal bonds of geographically-diverse
issuers. Delaware 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. Delaware 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.
Delaware 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.
Delaware 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. Delaware 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.
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Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family (referred to as "Underlying Funds"). Foundation
Funds Delaware 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 Delaware 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 Delaware
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.
Delaware 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.
Delaware 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.
Delaware Global Equity Fund seeks to achieve long-term total return by investing
in global securities that provide the potential for capital appreciation and
income. Delaware Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities of issuers located or operating in
emerging countries.
Delaware 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. Delaware Overseas Equity Fund seeks to maximize total return (capital
appreciation and income), principally through investments in an internationally
diversified portfolio of equity securities. Delaware 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 offers various funds available
exclusively as funding vehicles for certain insurance company separate accounts.
Growth and Income 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 Balanced 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
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<PAGE>
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. Aggressive Growth
Series seeks long-term capital appreciation. The Series attempts to achieve its
investment objective by investing primarily in equity securities of companies
which the manager believes have the potential for high earnings growth. U.S.
Growth Series seeks to maximize capital appreciation. The Series seeks to
achieve its investment objective 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.
Delaware U.S. 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 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 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 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 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 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 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 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 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 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 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 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 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.
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Delaware 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 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 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 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
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. Delaware 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 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 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 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.
Delaware Select 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. Delaware 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. Delaware 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 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 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 the Portfolio's prospectus(es).
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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
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
<PAGE>
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DELAWARE U.S. GOVERNMENT SECURITIES FUND
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A CLASS
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B CLASS
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C CLASS
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INSTITUTIONAL CLASS
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VOYAGEUR FUNDS
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PART B
STATEMENT OF
ADDITIONAL INFORMATION
______________________________________________________________
February 18, 2000
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DELAWARE
INVESTMENTS
------------
<PAGE>
PART C
Other Information
Item 23. Exhibits
(a) Agreement and Declaration of Trust.
(1) Agreement and Declaration of Trust (December 17,
1998) incorporated into this filing by reference
to Post-Effective Amendment No. 26 filed November
22, 1999.
(2) Certificate of Trust (December 17, 1998)
incorporated into this filing by reference to
Post-Effective Amendment No. 26 filed November 22,
1999.
(b) By-Laws. By-Laws (December 17, 1998) incorporated
into this filing by reference to Post-Effective
Amendment No. 26 filed November 22, 1999.
(c) Copies of All Instruments Defining the Rights of
Holders.
(1) Agreement and Declaration of Trust. Articles III,
V and VI of Agreement and Declaration of Trust
incorporated into this filing by reference to
Post-Effective Amendment No. 26 filed November 22,
1999.
(2) By-Laws. Article II of By-Laws incorporated into
this filing by reference to Post-Effective
Amendment No. 26 filed November 22, 1999.
(d) Investment Management Agreement.
(1) Form of Investment Management Agreement
(November1999) between Delaware Management Company
and the Registrant on behalf of Delaware U.S.
Government Securities Fund incorporated into this
filing by reference to Post-Effective Amendment
No. 26 filed November 22, 1999.
(2) Form of Investment Sub-Advisory Agreement
(November 1999) between Delaware Management
Company and Voyageur Asset Management LLC on
behalf of Delaware U.S. Government Securities Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 26 filed November 22,
1999.
(e) (1) Distribution Agreement.
(i) Form of Distribution Agreement (November
1999) between Delaware Distributors, L.P.
and the Registrant on behalf of Delaware
U.S. 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 1999) (Module) incorporated into this
filing by reference to Post-Effective Amendment
No. 23 filed February 27, 1998.
(3) Dealer's Agreement. Form of Dealer's Agreement (as
amended November 1995) (Module) incorporated into
this filing by reference to Post-Effective
Amendment No. 23 filed February 27, 1998.
<PAGE>
(4) Form of 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) Inapplicable.
(g) Custodian Agreement.
(1) Form of Custodian Contract with Norwest Bank
Minnesota N.A. (November 1999) incorporated into
this filing by reference to Post-Effective Amendment
No. 17 filed October 31, 1995.
(h) Other Material Contracts.
(1) Form of Shareholders Services Agreement (November
1999) between Delaware Service Company, Inc. and the
Registrant on behalf of Delaware U.S. Government
Securities Fund incorporated into this filing by
reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
(2) Form of Fund Accounting Agreement (November 1999)
between Delaware Service Company, Inc. and the
Registrant on behalf of Delaware U.S. Government
Securities Fund incorporated into this filing by
reference to Post-Effective Amendment No. 23 filed
February 27, 1998.
(i) Legal Opinion. Incorporated into this filing by reference to
Post-Effective Amendment No. 26 filed November 22, 1999.
(j) Consent of Auditors. To be filed by Amendment.
(k) Inapplicable.
(l) Inapplicable.
(m) Plan under Rule 12b-1.
(1) Form of Plan under Rule 12b-1 incorporated into this
filing by reference to Post-Effective Amendment No. 17
filed November 1, 1995.
(n) Plan under Rule 18f-3.
(1) Form of Plan under Rule 18f-3 (November 1999)
incorporated into this filing by reference to
Post-Effective Amendment No. 23 filed February 27,
1998.
(o) Other: Trustees' Power of Attorney. Incorporated into this
filing by reference to Post-Effective Amendment
No. 26 filed November 22, 1999.
Item 24. Persons Controlled by or under Common Control with Registrant. None.
Item 25. Indemnification. Article VI of the By-Laws incorporated into this
filing by reference to Post-Effective Amendment No. 26 filed November
22, 1999.
<PAGE>
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, Delaware Group Equity Funds III, Delaware Group
Equity Funds IV, Delaware Group Equity Funds V, Delaware Group Government Fund,
Delaware Group Income Funds, Delaware Group Limited-Term Government Funds,
Delaware Group Cash Reserve, Delaware Group Tax-Free Fund, Delaware Group State
Tax-Free Income Trust, Delaware Group Tax-Free Money Fund, Delaware Group
Premium Fund, Delaware Group Global & International Funds, Delaware Pooled
Trust, Delaware Group Adviser Funds, Delaware Group Dividend and Income Fund,
Inc., Delaware Group Global Dividend and Income Fund, Inc., Delaware Group
Foundation Funds, Voyageur Tax-Free Funds, Voyageur Intermediate Tax-Free Funds,
Voyageur Insured Funds, Voyageur Investment Trust, Voyageur Mutual Funds,
Voyageur Mutual Funds II, Voyageur Mutual Funds III, 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 27 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:
<TABLE>
<CAPTION>
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Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
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<S> <C>
President of Delaware Management Company (a series of Delaware Management
David K. Downes Business Trust); President, Chief Executive Officer and Director of Delaware
Capital Management, Inc.; Director of Delaware International Advisers Ltd.;
President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and Director/Trustee of the Registrant and each of the other
investment companies in the Delaware Investments family; President and
Director of Delaware Management Company, Inc.; Chairman, President, Chief
Executive Officer and Director of Delaware Service Company, Inc.; President,
Chief Operating Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman and Director of Delaware Management
Trust Company and Retirement Financial Services, Inc.; Executive Vice
President, Chief Operating Officer, Chief Financial Officer of Delaware
Management Holdings, Inc., Founders CBO Corporation, Delaware Investment
Advisers (a series of Delaware Management Business Trust) and Delaware
Distributors, L.P.; Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Director of DMH Corp., Delaware Distributors, Inc.,
Founders Holdings, Inc. and Delvoy, Inc.; Executive Vice President and
Trustee of Delaware Management Business Trust
Chief Executive Officer and Director of Forewarn, Inc. since 1993, 8
Clayton Place, Newtown Square, PA
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates
and other Positions and Offices Held
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<S> <C>
Executive Vice President/General Counsel of the Registrant and each of the
Richard J. Flannery other investment companies in the Delaware Investments family, Delaware
Management Holdings, Inc., 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
Founders CBO Corporation; Director of Delaware International Advisers Ltd.;
Executive Vice President/General Counsel and Director of Delaware
International Holdings Ltd., Founders Holdings, Inc., Delvoy, Inc., DMH
Corp., Delaware Management Company, Inc., Delaware Service Company, Inc.,
Delaware Capital Management, Inc., Retirement Financial Services, Inc.,
Delaware Distributors, Inc. and Delaware Management Trust Company.;
Executive Vice President and Trustee of Delaware Management Business Trust;
Director of 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
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Executive Vice President/Chief Investment Officer of Delaware Management
Richard G. Unruh Company (a series of Delaware Management Business Trust); Director of
Delaware International Advisers Ltd.; Executive Vice President and Chief
Investment Officer, Equity of the Registrant and each of the other
investment companies in the Delaware Investments family; Chief Executive
Officer/Chief Investment Officer of Delaware Investment Advisers (a series
of Delaware Management Business Trust); Executive Vice President of Delaware
Management Holdings, Inc. and Delaware Capital Management, Inc.; Executive
Vice President and Trustee of Delaware Management Business Trust
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
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H. Thomas McMeekin(1) Executive Vice President of Delaware Management Business Trust; Executive
Vice President/Chief Investment Officer DMC-Fixed Income of Delaware
Management Company (a series of Delaware Management Business Trust);
Executive Vice President/Chief Investment Officer DIA-Fixed Income of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Executive Vice President of Delaware Capital Management, Inc.;
Executive Vice President and Director of Delaware Management Holdings, Inc.;
Executive Vice President and Chief Investment Officer, Fixed Income of the
Registrant and each of the other investment companies in the Delaware
Investments family.
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William E. Dodge(2) Executive Vice President/Chief Investment Officer, DMC-Equity of Delaware
Management Company (a series of Delaware Management Trust Company);
Executive Vice President of Delaware Management Business Trust;
President/Chief Investment Officer, DIA-Equity of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
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Douglas L. Anderson Senior Vice President/Operations of Delaware Management Company (a series of
Delaware Management Business Trust; Senior Vice President/Operations of
Delaware Service Company, Inc.; Senior Vice President/Operations of
Retirement Financial Services, Inc.; Senior Vice President/Operations of
Delaware Management Trust Company.
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
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<S> <C>
Michael P. Bishof Senior Vice President/Investment Accounting of Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Service Company,
Inc. and Delaware Capital Management, Inc. and Founders Holdings, Inc.;
Senior Vice President and Treasurer of the Registrant and each of the other
investment companies in the Delaware Investments family; Senior Vice
President and Treasurer/ Investment Accounting of Delaware Distributors,
L.P. and Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President/Manager of Investment Accounting of
Delaware International Holdings, Inc.; Senior Vice President and Assistant
Treasurer of Founders CBO Corporation
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Robert J. DiBraccio Senior Vice President/Head of Equity Trading of Delaware Management Company
(a series of Delaware Management Business Trust); Senior Vice President/Head
of Equity Trading of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President/Head of Equity Trading of
Delaware Capital Management, Inc.
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John B. Fields Senior Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Trustee of
Delaware Management Business Trust; Senior Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President/Senior Portfolio Manager of Delaware
Capital Management, Inc.; Senior Vice President/Senior Portfolio Manager of
the Registrant and each of the other investment companies in the Delaware
Investments family.
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Gerald S. Frey Senior Vice President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments family,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust) and Delaware Capital Management, Inc.
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Susan L. Hanson Senior Vice President/Global Marketing and Client Services of Delaware
Management Company (a series of Delaware Management Business Trust);Senior
Vice President/Global Marketing and Client Services of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
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Joseph H. Hastings Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delvoy , Inc., Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Capital Management, Inc., Delaware International Holdings
Ltd., Founders Holdings, Inc. and Delaware Management Business Trust; Senior
Vice President/Corporate Controller of the Registrant and each of the other
investment companies in the Delaware Investments family and Delaware
Investment Advisers (a series of Delaware Management Business Trust);
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company; Senior Vice President/Assistant Treasurer of
Founders CBO Corporation; Chief Financial Officer of Retirement Financial
Services, Inc.
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Joanne O. Hutcheson Senior Vice President/Human Resources of Delaware Management Company (a
series of Delaware Management Business Trust); Senior Vice President/Human
Resources of Delaware Management Holdings, Inc.; Senior Vice President/Human
Resources of DMH Corp.; Senior Vice President/Human Resources of Delvoy,
Inc.; Senior Vice President/Human Resources of Delaware Management Company,
Inc.; Senior Vice President/Human Resources of Delaware Management Business
Trust; Senior Vice President/Human Resources of Delaware Investment Advisers
(a series of Delaware Management Business Trust); Senior Vice
President/Human Resources of Delaware Service Company, Inc.; Senior Vice
President/Human Resources of Delaware Capital Management, Inc.; Senior Vice
President/Human Resources of Delaware Retirement Financial Services, Inc.;
Senior Vice President/Human Resources of Delaware Management Trust Company;
Senior Vice President/Human Resources of Delaware Distributors, Inc.;
Senior Vice President/Human Resources of Delaware Distributors, L.P.;
Senior Vice President/Human Resources of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richelle S. Maestro Senior Vice President, Deputy General Counsel and Secretary of Delaware
Management Company (a series of Delaware Management Business Trust); Senior
Vice President, Deputy General Counsel and Secretary of Delaware Management
Holdings, Inc.; Senior Vice President, Deputy General Counsel and Secretary
of DMH Corp.; Senior Vice President, Deputy General Counsel and Secretary of
Delaware Management Business Trust; Senior Vice President, Deputy General
Counsel and Secretary of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President, Deputy General Counsel
and Secretary of Retirement Financial Services, Inc.; Senior Vice President,
Deputy General Counsel and Secretary of Delaware Distributors, Inc.; Senior
Vice President, Deputy General Counsel and Assistant Secretary of Delaware
Distributors, L.P.; Senior Vice President, Secretary and Deputy General
Counsel of Delaware Management Trust Company; Senior Vice President,
Secretary and Deputy General Counsel of Delaware International Holdings
Ltd.; Senior Vice President, Secretary and Deputy General Counsel of Delvoy,
Inc.; Senior Vice President, Secretary and Deputy General Counsel of
Delaware Management Company, Inc.; Senior Vice President, Secretary and
Deputy General Counsel of Delaware Service Company, Inc.; Senior Vice
President, Secretary and Deputy General Counsel of Delaware Capital
Management, Inc.; Secretary of Founders CBO Corporation; Senior Vice
President, Deputy General Counsel and Secretary of Founders Holdings, Inc.;
Senior Vice President, Deputy General Counsel and Assistant Secretary of the
Registrant and each of the other investment companies in the Delaware
Investments family
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Lane,
Philadelphia, PA.
- --------------------------------------------------------------------------------------------------------------------------------
Eric E. Miller Senior Vice President, Deputy General Counsel and Assistant Secretary of
Delaware Management Company (a series of Delaware Management Business
Trust); Senior Vice President, Deputy General Counsel and Assistant
Secretary of Delaware Management Holdings, Inc.; Senior Vice President,
Deputy General Counsel and Assistant Secretary of DMH Corp.; Senior Vice
President, Deputy General Counsel and Assistant Secretary of Delvoy, Inc.;
Senior Vice President, Deputy General Counsel and Assistant Secretary of
Delaware Management Company, Inc.; Senior Vice President, Deputy General
Counsel and Assistant Secretary of Delaware Management Business Trust;
Senior Vice President, Deputy General Counsel and Assistant Secretary of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Senior Vice President, Deputy General Counsel and Assistant
Secretary of Delaware Service Company, Inc.; Senior Vice President, Deputy
General Counsel and Assistant Secretary of Delaware Capital Management,
Inc.; Senior Vice President, Deputy General Counsel and Assistant Secretary
of Retirement Financial Services, Inc.; Senior Vice President, Deputy
General Counsel and Assistant Secretary of Delaware Distributors, Inc.;
Senior Vice President, Deputy General Counsel and Assistant Secretary of
Delaware Distributors, L.P.; Senior Vice President, Deputy General Counsel
and Assistant Secretary of Founders Holdings, Inc.; Senior Vice President,
Deputy General Counsel and Secretary of the Registrant and each of the other
investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
James L. Shields Senior Vice President, Chief Information Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Senior Vice
President, Chief Information Officer of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Senior Vice President, Chief
Information Officer of Delaware Service Company, Inc.; Senior Vice
President, Chief Information Officer of Delaware Capital Management Company,
Inc.; Senior Vice President, Chief Information Officer of Retirement
Financial Services, Inc.; Senior Vice President, Chief Information Officer
of Delaware Distributors, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Gary T. Abrams Vice President/Equity Trading of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Trading of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Christopher S. Adams Vice President/Equity Analyst of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Analyst of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Robert L. Arnold Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of
Delaware Capital Management, Inc.; Vice President/Senior Portfolio Manager
of the Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Marshall T. Bassett Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of each fund in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Christopher S. Beck Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of each
fund in the Delaware Investments family.
Trustee of New Castle County Pension Board since October 1992, Wilmington DE.
- --------------------------------------------------------------------------------------------------------------------------------
Richard E. Beister Vice President/Trading Operations of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Trading Operations of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley Vice President/Compliance Director of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Compliance Director
of Delaware Management Holdings, Inc.; Vice President/Compliance Director of
DMH Corp.; Vice President/Compliance Director of Delvoy, Inc.; Vice
President/Compliance Director of Delaware Management Company, Inc.; Vice
President/Compliance Director of Delaware Management Business Trust; Vice
President/Compliance Director of Delaware Investment Advisers (a series of
Delaware Management Business Trust);Vice President/Compliance Director of
Delaware Service Company, Inc.; Vice President/Compliance Director of
Delaware Capital Management, Inc.; Vice President/Compliance Director of
Retirement Financial Services, Inc.; Vice President/Compliance
Director/Assistant Secretary of Delaware Management Business Trust; Vice
President/Compliance Director of Delaware Distributors, Inc.; Vice
President/Compliance Director of Delaware Distributors, L.P.; Vice
President/Compliance Director of the Registrant and each of the other
investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Michael P. Buckley Vice President/Portfolio Manager/Senior Municipal Analyst of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager/Senior Municipal Analyst of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager/Senior Municipal Analyst of the Registrant and
each of the other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
MaryEllen M. Carrozza Vice President/Client Services of Delaware Management Company (a series of
Delaware Management Business Trust);Vice President/Client Services of
Delaware Investment Advisers (a series of Delaware Management Business
Trust);Vice President/Client Services of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Stephen R. Cianci Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Mitchell L. Conery Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Timothy G. Connors Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of
Delaware Capital Management, Inc.; Vice President/Senior Portfolio Manager
of the Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
George E. Deming Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
James P. Dokas Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/ Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Michael J. Dugan Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Joel A. Ettinger Vice President/Taxation of Delaware Management Company (a series of Delaware
Management Business Trust);Vice President/Taxation of Delaware Management
Holdings, Inc.; Vice President/Taxation of DMH Corp.; Vice
President/Taxation of Delvoy, Inc.; Vice President/Taxation of Delaware
Management Company, Inc.; Vice President/Taxation of Delaware Management
Business Trust; Vice President/Taxation of Delaware Investment Advisers (a
series of Delaware Management Business Trust);Vice President/Taxation of
Delaware Service Company, Inc.; Vice President/Taxation of Delaware Capital
Management, Inc.; Vice President/Taxation of Retirement Financial Services,
Inc.; Vice President/Taxation of Delaware Distributors, Inc.; Vice
President/Taxation of Delaware Distributors, L.P.; Vice President/Taxation
of Founders Holdings, Inc.; Vice President/Taxation of Founders CBO
Corporation; Vice President/Taxation of the Registrant and each of the other
investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Joseph Fiorilla Vice President/Performance Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Performance Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
- --------------------------------------------------------------------------------------------------------------------------------
James A. Furgele Vice President/Investment Accounting of Delaware Management Company (a
series of Delaware Management Business Trust);Vice President/Investment
Accounting of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Investment Accounting of Delaware Service
Company, Inc.; Vice President/Investment Accounting of the Registrant and
each of the other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Thomas C. Gariepy(3) Vice President/Director of Corporate Communications of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Director of Corporate Communications of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Stuart M. George Vice President/Equity Trading of Delaware Management Company (a series of
Delaware Management Business Trust);Vice President/Equity Trading of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Barry Gladstein Vice President/Business Manager of Delaware Management Company (a series of
Delaware Management Business Trust);Vice President/Business Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Paul Grillo Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Brian T. Hannon Vice President of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President of Delaware Investment Advisers
(a series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of the Registrant and each of the other investment
companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
John A. Heffern Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Elizabeth H. Howell Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Jeffrey W. Hynoski Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust);Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust);Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Cynthia Isom Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Karina J. Ivstan Vice President/Strategic Planning of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Strategic Planning of
Delaware Management Holdings, Inc.; Vice President/Strategic Planning of
Delaware Management Business Trust; Vice President/Strategic Planning of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Strategic Planning of Delaware Service Company, Inc.;
Vice President/Strategic Planning of Delaware Capital Management, Inc.; Vice
President/Strategic Planning of Retirement Financial Services, Inc.; Vice
President/Strategic Planning of Delaware Management Trust Company; Vice
President/Strategic of Delaware Distributors, L.P.; Vice President/Strategic
Planning of the Registrant and each of the other investment companies in the
Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Audrey E. Kohart Vice President/Assistant Controller/Corporate Accounting of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President/Assistant Controller/Corporate Accounting of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Steven T. Lampe Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/ Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Philip Y. Lin Vice President, Associate General Counsel and Assistant Secretary of
Delaware Management Company (a series of Delaware Management Business
Trust); Vice President, Associate General Counsel and Assistant Secretary of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President, Associate General Counsel and Assistant Secretary of
Delaware Service Company, Inc.; Vice President, Associate General Counsel
and Assistant Secretary of Delaware Capital Management, Inc.; Vice
President, Associate General Counsel and Assistant Secretary of Retirement
Financial Services, Inc.; Vice President, Associate General Counsel and
Assistant Secretary of Delaware Management Trust Company; Vice President,
Associate General Counsel and Assistant Secretary of Delaware Distributors,
L.P.; Vice President, Associate General Counsel and Assistant Secretary of
the Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Michael D. Mabry Vice President, Associate General Counsel and Assistant Secretary of
Delaware Management Company (a series of Delaware Management Business
Trust); Vice President, Associate General Counsel and Assistant Secretary of
Delaware Investment Advisers (a series of Delaware Management Business
Trust);Vice President, Associate General Counsel and Assistant Secretary of
Delaware Service Company, Inc.; Vice President, Associate General Counsel
and Assistant Secretary of Delaware Capital Management, Inc.; Vice
President, Associate General Counsel and Assistant Secretary of Retirement
Financial Services, Inc.; Vice President, Associate General Counsel and
Assistant Secretary of Delaware Distributors, L.P.; Vice President,
Associate General Counsel and Assistant Secretary of the Registrant and each
of the other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of
Founders Holdings, Inc., President and Director of Founders CBO Corporation;
Vice President/Senior Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family.
- --------------------------------------------------------------------------------------------------------------------------------
Andrew M. McCullagh, Jr. Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Francis X. Morris Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of
Founders Holdings, Inc., Treasurer, Assistant Secretary and Director of
Founders CBO Corporation; Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Robert A. Norton, Jr. Vice President/Research Analyst of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Research Analyst of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
David P. O'Connor Vice President, Associate General Counsel and Assistant Secretary of
Delaware Management Company (a series of Delaware Management Business
Trust); Vice President, Associate General Counsel and Assistant Secretary of
Delaware Investment Advisers (a series of Delaware Management Business
Trust);Vice President, Associate General Counsel and Assistant Secretary of
Delaware Service Company, Inc.; Vice President, Associate General Counsel
and Assistant Secretary of Delaware Capital Management, Inc.; Vice
President, Associate General Counsel and Assistant Secretary of Retirement
Financial Services, Inc.; Vice President, Associate General Counsel and
Assistant Secretary of Delaware Distributors, L.P.; Vice President,
Associate General Counsel and Assistant Secretary of the Registrant and each
of the other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the Delaware
Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its affiliates
Name and Principal Business Address* and other Positions and Offices Held
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Vice President/Assistant Controller of Delaware Management Company (a series
Richard Salus of Delaware Management Business Trust); Vice President/Assistant Controller
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Assistant Controller of Delaware Management Trust
Company; Vice President/Assistant Controller of Delaware International
Holdings Ltd.
- --------------------------------------------------------------------------------------------------------------------------------
Richard D. Siedel Vice President/Assistant Controller/Manager, Payroll of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Assistant Controller/Manager, Payroll of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------------------------------------------------------
Michael T. Taggart Vice President/Facilities and Administration Services of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Facilities and Administration Services of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Facilities and Administration Services of Delaware Service
Company, Inc.; Vice President/Facilities and Administration Services of
Delaware Distributors, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Thomas J. Trotman Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
Lori P. Wachs Vice President/ Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/ Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/ Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Business Address is 1818 Market Street, Philadelphia, PA 19103.
- -------------------------------------------------------------------------------
1 PRESIDENT AND DIRECTOR, Lincoln Investment Management, Inc. 1987 to present.
EXECUTIVE VICE PRESIDENT/CHIEF INVESTMENT OFFICER of Lincoln National
Corporation 1992 to present.
2 PRESIDENT, DIRECTOR OF MARKETING AND SENIOR PORTFOLIO MANAGER, Marvin &
Palmer Associates, Wilmington, DE 1996-1998.
3 VICE PRESIDENT/DIRECTOR OF PUBLIC RELATIONS, Liberty Funds Distributor,
Inc., Boston, MA, 1996-1998.
- -------------------------------------------------------------------------------
(b) Voyageur Asset Management LLC serves as sub-adviser (the "Sub-Adviser") for
the Registrant. The Sub-Adviser is an indirect wholly-owned subsidiary of
Dougherty Financial Group LLC. The Sub-Adviser serves as adviser or
sub-adviser to other investment companies and administers numerous private
accounts. The Sub-Adviser's principal business address is 90 South Seventh
Street, Suite 4300, Minneapolis, Minnesota 55402. The following persons
serve as officers and or directors of the Sub-Adviser.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name Positions and Offices with the Voyageur Asset Management LLC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Frank C. Tonnemaker Chief Executive Officer, Board Chairman and Director
- ---------------------------------------------------------------------------------------------------------------------------------
James C. King Director, Chief Investment Officer of Equities and Member
- ---------------------------------------------------------------------------------------------------------------------------------
Louis V. Nanne Director, Executive Vice President and Member
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name Positions and Offices with the Voyageur Asset Management LLC
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Thomas J. Abood Secretary and Director
- ---------------------------------------------------------------------------------------------------------------------------------
Susan C. Beran Treasurer, Vice President of Operations, Controller
- ---------------------------------------------------------------------------------------------------------------------------------
Patrick M. Coleman Senior Vice President, Director of Research
- ---------------------------------------------------------------------------------------------------------------------------------
Toni H. Elavia Executive Vice President, Senior Equity Portfolio Manager
- ---------------------------------------------------------------------------------------------------------------------------------
Steven P. Eldredge Executive Vice President, Head of Tax-Exempt Fixed Income
- ---------------------------------------------------------------------------------------------------------------------------------
Jan M. Mowbray Vice President, Portfolio Manager
- ---------------------------------------------------------------------------------------------------------------------------------
Michael B. Rekas(1) Senior Analyst
- ---------------------------------------------------------------------------------------------------------------------------------
Randal W. Harrison Vice President, Fixed Income Portfolio Manager
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Equity Research Analyst, BancAmerica Robertson Stephens, San Francisco, CA.
prior to June 1998.
<PAGE>
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 Business Address* Positions and Offices with Underwriter Positions and Offices 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 Officer None
- ---------------------------------------------------------------------------------------------------------------------------------
David K. Downes Executive Vice President/Chief Operating President and Chief Executive
Officer/Chief Financial Officer Officer/Chief Financial Officer/Chief
Operating Officer and Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery Executive Vice President/General Counsel Executive Vice President/General Counsel
- ---------------------------------------------------------------------------------------------------------------------------------
Diane M. Anderson Senior Vice President/Retirement None
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof Senior Vice President/Treasurer/ Senior Vice President/Treasurer
Investment Accounting
- ---------------------------------------------------------------------------------------------------------------------------------
Daniel J. Brooks III Senior Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Terrence P. Cunningham Senior Vice President/National Sales None
Director, Financial Institutions
- ---------------------------------------------------------------------------------------------------------------------------------
Joseph H. Hastings Senior Vice President/Treasurer/ Senior Vice President/Corporate
Corporate Controller Controller
- ---------------------------------------------------------------------------------------------------------------------------------
Joanne O. Hutcheson Senior Vice President/Human Resources Senior Vice President/Human Resources
- ---------------------------------------------------------------------------------------------------------------------------------
Bradley L. Kolstoe Senior Vice President/Western Division None
Sales, Independent Plannner and Insurance
Channel
- ---------------------------------------------------------------------------------------------------------------------------------
Richelle S. Maestro Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/ Secretary Counsel/ Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Mac Macaulliffe Senior Vice President/Divisional Sales None
Manager
- ---------------------------------------------------------------------------------------------------------------------------------
J. Chris Meyer Senior Vice President/Director, Product None
Management
- ---------------------------------------------------------------------------------------------------------------------------------
Eric E. Miller Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/Assistant Secretary Counsel/Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Stephen C. Nell Senior Vice President/National Retirement None
Sales
- ---------------------------------------------------------------------------------------------------------------------------------
Henry W. Orvin Senior Vice President/Eastern Divisional None
Sales Manager
- ---------------------------------------------------------------------------------------------------------------------------------
Christopher H. Price Senior Vice President/Channel Manager, None
Insurance
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas E. Sawyer Senior Vice President/Director, National None
Sales
- ---------------------------------------------------------------------------------------------------------------------------------
James L. Shields Senior Vice President/Chief Information None
Officer
- ---------------------------------------------------------------------------------------------------------------------------------
Steven Sorenson Senior Vice President/National Director,
Independent Planner Channel None
- ---------------------------------------------------------------------------------------------------------------------------------
Richard P. Allen Vice President/Wholesaler, Midwest None
- ---------------------------------------------------------------------------------------------------------------------------------
David P. Anderson, Jr. Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Jeffrey H. Arcy Vice President/Wholesaler, None
South East Region
- ---------------------------------------------------------------------------------------------------------------------------------
Patrick A. Bearss Vice President/Wholesaler - Midwest None
- ---------------------------------------------------------------------------------------------------------------------------------
Gabriella Bercze Vice President/Wholesaler, Financial None
Institutions
- ---------------------------------------------------------------------------------------------------------------------------------
Larry D. Bridwell Vice President/Financial Institutions None
Wholesaler
- ---------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley Vice President/Compliance Director Vice President/Compliance Director
- ---------------------------------------------------------------------------------------------------------------------------------
Terrance L. Bussard Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Daniel H. Carlson Vice President/Marketing Services None
- ---------------------------------------------------------------------------------------------------------------------------------
Larry Carr Vice President/Variable Annuity Sales None
Manager
- ---------------------------------------------------------------------------------------------------------------------------------
William S. Carroll Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Matthew Coldren Vice President/National Accounts None
- ---------------------------------------------------------------------------------------------------------------------------------
Patrick A Connelly Vice President/Registered Investment None
Adviser Sales
- ---------------------------------------------------------------------------------------------------------------------------------
Jessie V. Emery Vice President/Marketing Communications None
- ---------------------------------------------------------------------------------------------------------------------------------
Joel A. Ettinger Vice President/Taxation Vice President/Taxation
- ---------------------------------------------------------------------------------------------------------------------------------
Edward A. Foley Vice President/Marketing Communications None
- ---------------------------------------------------------------------------------------------------------------------------------
Susan T. Friestedt Vice President/Retirement Services None
- ---------------------------------------------------------------------------------------------------------------------------------
Douglas R. Glennon Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Darryl S. Grayson Vice President/Director, Internal Sales None
- ---------------------------------------------------------------------------------------------------------------------------------
Rhonda J. Guido Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Ronald A. Haimowitz Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Edward J. Hecker Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
John R. Herron Vice President/Variable Annuity Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Steven N. Horton Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dinah J. Huntoon Vice President/Product Manager, Equities None
- ---------------------------------------------------------------------------------------------------------------------------------
Karina J. Istvan Vice President/Strategic Planning Vice President/Strategic Planning
- ---------------------------------------------------------------------------------------------------------------------------------
Christopher L. Johnston Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Michael J. Jordan Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Carolyn Kelly Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Richard M. Koerner Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Ellen M. Krott Vice President/Marketing None
- ---------------------------------------------------------------------------------------------------------------------------------
John LeBoeuf Vice President/Independent Planner and None
Insurance Sales-East
- ---------------------------------------------------------------------------------------------------------------------------------
SooHee Lee Vice President/Fixed Income & None
International Product Management
- ---------------------------------------------------------------------------------------------------------------------------------
Philip Y. Lin Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
John R. Logan Vice President/Wholesaler, Financial None
Institutions
- ---------------------------------------------------------------------------------------------------------------------------------
Michael D. Mabry Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Theodore T. Malone Vice President/ Independent Planner and None
Insurance Sales Wholesaler
- ---------------------------------------------------------------------------------------------------------------------------------
Debbie Marler Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Raymond G. McCarthy Vice President/National Accounts,
Independent Planner & Insurance Channel None
- ---------------------------------------------------------------------------------------------------------------------------------
Joanne C. McCranie Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Gregory J. McMillan Vice President/National Accounts None
- ---------------------------------------------------------------------------------------------------------------------------------
Nathan W. Medin Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Scott L. Metzger Vice President/Business Development None
- ---------------------------------------------------------------------------------------------------------------------------------
Jamie L. Meyer Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Roger J. Miller Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Christopher W. Moore Vice President/Variable Annuity Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Andrew F. Morris Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Patrick L. Murphy Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Scott E. Naughton Vice President/Independent Planner & None
Insurance Wholesaler
- ---------------------------------------------------------------------------------------------------------------------------------
Julie Nusbaum Vice President/Wholesaler, Financial None
Institutions
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Julie A. Nye Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Daniel J. O'Brien Vice President/Insurance Products None
- ---------------------------------------------------------------------------------------------------------------------------------
David P. O'Connor Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Joseph T. Owczarek Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Otis S. Page Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Eric Preus Vice President/Wrap Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Philip G. Rickards Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Laura E. Roman Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Robert A. Rosso Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Terri Lynn Sabby Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Richard Salus Vice President/Assistant Controller None
- ---------------------------------------------------------------------------------------------------------------------------------
Linda D. Shulz Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Gordon E. Searles Vice President/Client Services None
- ---------------------------------------------------------------------------------------------------------------------------------
Catherine A. Seklecki Vice President/Retirement Sales None
- ---------------------------------------------------------------------------------------------------------------------------------
John C. Shalloe Vice President/Wrap Fee Wholesaler, None
Western Region
- ---------------------------------------------------------------------------------------------------------------------------------
Edward B. Sheridan Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Kimberly Spangler Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Robert E. Stansbury Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
Stephanie R. Szabo Vice President/Retirement Marketing None
- ---------------------------------------------------------------------------------------------------------------------------------
Michael T. Taggart Vice President/Facilities and None
Administration Services
- ---------------------------------------------------------------------------------------------------------------------------------
Julia R. Vander Els Vice President/Retirement Plan None
Communications
- ---------------------------------------------------------------------------------------------------------------------------------
Wayne W. Wagner Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
John A. Wells Vice President/Marketing Technology None
- ---------------------------------------------------------------------------------------------------------------------------------
Courtney S. West Vice President/Institutional Sales None
- ---------------------------------------------------------------------------------------------------------------------------------
Andrew J. Whitaker Vice President/Wholesaler, Financial None
Institutions
- ---------------------------------------------------------------------------------------------------------------------------------
Scott Whitehouse Vice President/Wholesaler None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wesley Williams Vice President/Wholesaler
- ---------------------------------------------------------------------------------------------------------------------------------
Theodore V. Wood Vice President/Technical Systems Officer None
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(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. Not Applicable
<PAGE>
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 16th day of
December, 1999.
VOYAGEUR FUNDS
By /s/ David K. Downes
------------------------------
David K. Downes
President and Chief Executive Officer
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:
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------------------------ -------------------------------------- ------------------------
<S> <C> <C>
President/Chief Executive Officer
Chief Operating Officer/Chief
Financial Officer
(Principal Executive Officer, Principal
/s/ David K. Downes Financial Officer and Principal
- ----------------------------------------------- Accounting Officer) and Trustee December 16, 1999
David K. Downes
/s/ Wayne A. Stork * Trustee December 16, 1999
- -----------------------------------------------
Wayne A. Stork
/s/ Walter P. Babich * Trustee December 16, 1999
- -----------------------------------------------
Walter P. Babich
/s/ Anthony D. Knerr * Trustee December 16, 1999
- -----------------------------------------------
Anthony D. Knerr
/s/ Ann R. Leven * Trustee December 16, 1999
- -----------------------------------------------
Ann R. Leven
/s/Thomas F. Madison * Trustee December 16, 1999
- -----------------------------------------------
Thomas F. Madison
/s/Charles E. Peck * Trustee December 16, 1999
- -----------------------------------------------
Charles E. Peck
/s/ Janet L. Yeomans * Trustee December 16, 1999
- -----------------------------------------------
Janet L. Yeomans
</TABLE>
*By /s/ David K. Downes
----------------------
David K. Downes
as Attorney-in-Fact for
each of the persons indicated
