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
Pre-Effective Amendment No. ----
Post-Effective Amendment No. 25
----
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25
----
VOYAGEUR FUNDS, INC.
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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) 255-2923
--------------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
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(Name and Address of Agent for Service)
Approximate Date of Public Offering: March 1, 1999
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It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ X ] on March 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment
Title of Securities Being Registered
--------------------------------------
US Government Securities Fund Class A Shares,
US Government Securities Fund Class B Shares,
US Government Securities Fund Class C Shares and
US Government Securities Fund Institutional Class Shares
--- C O N T E N T S ---
This Post-Effective Amendment No. 24 to Registration File
No. 33-16270 includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheets
4. Part A - Prospectus
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
CROSS-REFERENCE SHEET
---------------------
PART A
-----------
Item Location in
No. Description Prospectus
- ------- ---------------------------- --------------
1 Front and Back Cover Pages Same
2 Risk/Return Summary; Fund Profile
Investments, Risks and Performances
3 Risk/Return Summary; Fee Table Fund Profile
4 Investment Objectives; Principal How we manage
Investment Strategies and Related Risks the Fund;
Other investment
strategies and
risk considerations
5 Management's Discussion of Performance N/A
6 Management, Organization and Who manages
Capital Structure the Fund
7 Shareholder Information How to buy shares;
How to redeem shares;
Special services;
Dividends,
distributions and taxes
all under About
your account
8 Distribution Arrangements Choosing a share class;
How to reduce sales charges
under About your account
9 Financial Highlights Information Financial Highlights
CROSS-REFERENCE SHEET
-------------------------
PART B
----------
Item Location in Statement
No. Description of Additional Information
- ---- ---------------------------- --------------------------
10 Cover Page and Table of Contents Same
11 Fund History General Information
12 Description of the Fund and Its Investment Restrictions
Investments and Risks and Policies
13 Management of the Fund Officers and Directors;
Purchasing Shares
14 Control Persons and Principal Officers and Directors
Holders of Securities
15 Investment Advisory and Officers and Directors;
Other Services Purchasing Shares; Investment
Management Agreement;
General Information;
Financial Statements
16 Brokerage Allocation and Trading Practices
Other Practices and Brokerage
17 Capital Stock and Other Securities Capitalization and
Noncumulative Voting
(under General Information)
18 Purchase, Redemption and Pricing
of Shares Purchasing Shares; Redemption
and Exchange; Determining
Offering Price and
Net Asset Value;
19 Taxation of the Fund Accounting and Tax Issues;
Taxes
20 Underwriters Purchasing Shares
21 Calculation of Performance Data Performance Information
22 Financial Statements Financial Statements
CROSS-REFERENCE SHEET
------------------------------
PART C
----------
Item Location in
No. Description Part C
- ---- ------------------------------------- -----------
23 Exhibits Item 23
24 Persons Controlled by or under Common
Control with Registrant Item 24
25 Indemnification Item 25
26 Business and Other Connections of the
Investment Adviser Item 26
27 Principal Underwriters Item 27
28 Location of Accounts and Records Item 28
29 Management Services Item 29
30 Undertakings Item 30
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
Delaware-Voyageur
U.S. Government Securities Fund
Class A (bullet) Class B (bullet) Class C (bullet) Institutional Class
Prospectus
March 1, 1999
Current Income Fund
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
[inside front cover]
Table of Contents
Fund profile page 1
U.S. Government Securities Fund 2
How we manage the Fund page 4
Investment strategy 4
The risks of investing in the Fund 5
Who manages the Fund page 6
Investment manager and sub-adviser 6
Portfolio manager 6
Fund administration (Who's
who?) 7
About your account page 8
Investing in the Fund 8
Choosing a share class 8
How to reduce your sales charge 12
How to buy shares 13
Retirement plans 14
How to redeem shares 15
Account minimum 16
Special services 17
Dividends, distributions and taxes 18
Other investment strategies and
risk considerations page 19
Certain management considerations page 23
Financial information page 24
[sidebar copy at bottom of page]
How to use this prospectus
Here are guidelines to help you use this prospectus to make well-informed
investment decisions about our funds. If you're looking for a specific
piece of information, the table of contents can guide you directly to the
appropriate section.
Step 1
Take a look at the fund profile for an overview of the Fund.
Step 2
Learn in-depth information about how the Fund invests, the risks involved
and the people and organizations responsible for the Fund's day-to-day
operations.
Step 3
Determine which fund features and services you would like to take
advantage of.
Step 4
Use the glossary that begins on page 4 to find definitions of words
printed in bold type in the text throughout the prospectus.
Fund Profile:
An investment overview
When choosing a mutual fund to invest in, you have a variety of options
and important information to consider. This prospectus provides
information about U.S. Government Securities Fund, a mutual fund from the
Delaware Investments Family of Funds.
Before evaluating individual funds, however, your first step is to define
your personal financial goals. Knowing your goals and determining your
investment time horizon in advance can help you make a more appropriate
fund selection. It is also important to select a fund in the context of
your entire investment program. Diversification, or spreading your money
among different types of investments, is usually a sound investment
strategy. This is commonly called "asset allocation." The way you choose
to allocate your money depends on a number of factors. A professional
financial adviser can help you build an investment portfolio that fits
your financial situation, your investment objectives and your risk
tolerance.
Investing for current income with U.S. Government Securities Fund
Investors with medium range or long-term goals often choose mutual funds
designed to provide current income. These funds may invest in various
types of bonds including corporate, government or municipal bonds. These
funds generally involve less risk than stock funds but more risk than
money market funds. Like all mutual funds, current income funds allow you
to invest conveniently in a diversified portfolio without having to select
and monitor individual securities on your own.
[House Graphic - Highlighting the Current Income section]
Building Blocks of Asset Allocation
Aggressive Growth Equity Funds
Growth Equity Funds
International and Global Funds
Asset Allocation Funds
Total Return Funds
Fixed Income Funds for...
Current Income
These funds invest in corporate and/or U.S. government bonds and seek
current income, which is typically taxable. Risk levels vary with maturity
and quality of the bonds in the portfolio.
Taxable Bond Funds
Tax-Exempt Bond Funds
Money Market Funds (Taxable and Tax-Exempt)
Profile: U.S. Government Securities Fund
What are the Fund's goals?
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 primarily in U.S. Treasury securities including bills, notes and
bonds as well as other debt securities that are:
(bullet) issued by the U.S. government,
(bullet) unconditionally guaranteed by the U.S. government or
(bullet) backed by the full faith and credit of the U.S. government.
We may invest a significant portion of our portfolio in debt obligations
guaranteed by government agencies or instrumentalities, such as the
Government National Mortgage Association also known as GNMA.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you
may lose part or all of the money you invest. The price of Fund shares
will increase and decrease according to changes in the value of the Fund's
investments. This Fund will be affected by changes in bond prices,
particularly as a result of changes in interest rates. For a more complete
discussion of risk, please turn to page 5.
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
(bullet) Investors with medium or long-range goals.
(bullet) Investors looking for regular income from their investments.
(bullet) Investors looking for a bond investment to help balance their
investments in stocks or more aggressive securities.
(bullet) Investors who are looking for an income investment that may
provide total return opportunities through the automatic reinvestment of
income dividends.
Who should not invest in the Fund
(bullet) Investors with very short-term financial goals.
(bullet) Investors who are unwilling to accept share prices that may
fluctuate, sometimes significantly, over the short term.
(bullet) Investors seeking long-term growth of capital.
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of
investing in the Fund. We show how returns for the Fund's Class A shares
have varied over the past ten calendar years, as well as average annual
returns of all share classes for the one, five and ten years and since
inception, if applicable -- all compared to the performance of the Lehman
Brothers Government/Corporate Bond Index. You should remember that unlike
the Fund, the index is unmanaged and doesn't include the costs of
operating a mutual fund, such as the costs of buying, selling, and holding
the securities. 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)
* U.S. Government Securities Fund A Class
* Lehman Brothers Government/Corporate Bond Index
Lehman Brothers U.S. Government
Government/Corporate Securities
Bond Index Fund
1998 8.01% 9.47%
1997 9.17% 9.76%
1996 2.19% 2.90%
1995 19.92% 19.24%
1994 -5.54% -3.51%
1993 11.27% 11.03%
1992 6.57% 7.58%
1991 17.83% 16.13%
1990 10.74% 8.28%
1989 12.53% 14.23%
As of December 31, 1998, the Fund's Class A shares had a year-to-date
return of 8.01%. During the periods illustrated in this bar chart, Class
A's highest return was 6.54% for the quarter ended September 30, 1991 and
its lowest return was -4.55% 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 3 do include the sales charge.
<TABLE>
<CAPTION>
Average annual return for periods ending 12/31/98
Lehman
Brothers
Government/
CLASS A B C Institutional Corporate
(if redeemed)* (if redeemed)* Class Bond Index**
(Inception (Inception (Inception (Inception
11/2/87) 6/7/94) 1/10/95) 6/7/94)
<S> <C> <C> <C> <C> <C>
1 year 2.88% 3.29% 6.31% 8.00% 9.47%
5 years 5.39% N/A N/A N/A 7.30%
10 years or
Lifetime 8.51% 6.93% 9.06% 7.99% 9.33%
* If redeemed at end of period shown. If shares were not redeemed, the returns for
Class B would be 7.29% and 7.27% for the one-year and lifetime periods,
respectively. Returns for Class C would be 7.31% and 9.06% 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 Index returns are for 10 years. Lehman Brothers Index returns for
Class B, Class C and Institutional Class lifetimes were 8.72%, 10.19% and 8.72%,
respectively. Maximum sales charges are included in the Fund returns in the table.
</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. The Fund may waive or reduce sales charges;
please see the Statement of Additional Information for details.
<TABLE>
<CAPTION>
CLASS A B C Institutional
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases as a
percentage of offering
price 4.75% none none none
Maximum contingent deferred
sales charge (load) as a
percentage of original
purchase price or
redemption price, whichever
is lower none (1) 4% (2) 1% (3) none
Maximum sales charge (load)
imposed on reinvested
dividends none none none none
Redemption fees none none none none
</TABLE>
Annual fund operating expenses are deducted from the Fund's assets before
it pays dividends and before its net asset value and total return are
calculated. We will not charge you separately for these expenses. These
expenses are based on amounts incurred during the Fund's most recent
fiscal year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Management fees 0.50% 0.50% 0.50% 0.50%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00% 0.25%(4)
Other expenses 0.31% 0.31% 0.31% 0.31%
Total operating expenses(5) 1.06% 1.81% 1.81% 1.06%
</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.
<TABLE>
<CAPTION>
CLASS(7) A B B C C Institutional
(if redeemed) (if redeemed)
<S> <C> <C> <C> <C> <C> <C>
1 year $578 $184 $584 $184 $284 $108
3 years $796 $569 $869 $569 $569 $337
5 years $1,032 $980 $1,180 $980 $980 $585
10 years $1,708 $1,930 $1,930 $2,127 $2,127 $1,294
</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, 1998 through June 30, 1999 in order to prevent total
operating expenses (excluding any taxes, interest, brokerage fees,
extraordinary expenses and 12b-1 fees) from exceeding 0.85% of average
daily net assets. See the Statement of Additional Information for a
further discussion of expense caps.
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.
How we manage the Fund
The Fund's investment objective is to provide its shareholders with a high
level of current income consistent with prudent investment risk. The
Fund's investment objective is fundamental and may not be changed without
shareholder approval. There can, of course, be no assurance that the Fund
will achieve its objective.
We take a disciplined approach to investing, combining investment
strategies and risk management techniques that may help shareholders meet
their goals.
Investment strategy
The Fund investments in the following:
(bullet) U.S. Treasury bills, notes, bonds and other obligations issued or
unconditionally guaranteed by government agencies or instrumentalities,
such as the U.S. government, or otherwise backed by the full faith and
credit of the U.S. government (U.S. Government Securities)
(bullet) Repurchase agreements fully secured by such obligations
(bullet) A significant portion of the Fund's assets are invested in
mortgage participation certificates issued or guaranteed by government
agencies and instrumentalities, especially the Government National
Mortgage Association (GNMA Certificates)
The Board of Directors may change any investment policy not designated as
fundamental.
Securities guaranteed by the full faith and credit of the U.S. government
include a variety of securities, which differ in their interest rates,
maturities and dates of issuance. For example, Treasury bills have
maturities of one year or less, Treasury notes have maturities of one to
ten years and Treasury bonds generally have maturities of greater than ten
years at the date of issuance. GNMA Certificates are also backed by the
full faith and credit of the U.S. Treasury. Certain other obligations
issued by federal agencies or instrumentalities may not be supported by
the full faith and credit of the U.S. Treasury, depending on the
circumstances of the issue. The Fund may invest in Treasury Inflation
Indexed Securities (TIPS). TIPS, introduced for the first time in January
1997, are inflation-protected securities whose rates of return are
proportional to the rise and fall of the Consumer Price Index.
Although the securities in the Fund's portfolio are generally guaranteed
as to principal and interest by the U.S. government or otherwise backed by
the full faith and credit of the U.S. government, the market value of
these securities upon which the Fund's daily net asset value is based will
fluctuate and will tend to vary inversely with changes in prevailing
interest rates. As a result, the price per share a shareholder receives on
redemption may be more or less than the price originally paid for the
shares. In general, shorter term bonds are less sensitive to interest rate
changes, but longer term bonds generally offer higher yields. The
dividends per share paid by the Fund may also vary.
For additional information about the Fund's investment policies and
certain risks associated with investments in certain types of securities,
see "Other investment policies and risk considerations." The Statement of
Additional Information provides more information concerning the Fund's
investment policies, restrictions and risk factors.
How to use this glossary
Words found in the glossary are printed in boldface only the first time
they appear in the prospectus. So if you would like to know the meaning of
a word that isn't in boldface, you might still find it in the glossary.
Glossary A-B
Amortized cost
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.
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
- ------------------------------------------------------------------------------------
<S> <C>
US Government Securities Fund
----------------------------------------------
Interest rate risk is the risk that Interest rate risk is the most significant
securities will decrease in value risk for this Fund. In striving to manage
if interest rates rise. The risk this risk, we monitor economic conditions and
is generally greater for bonds with the interest rate environment. We do not,
longer maturities than for those however, try to predict overall interest rate
with shorter maturities. movements. We attempt to keep the average
maturity of the portfolio as short as we
believe is prudent, in keeping with our
objective to provide high current income.
- ------------------------------------------------------------------------------------
Market risk is the risk that all We maintain a long-term investment approach
or a majority of the securities in and focus on high quality individual bonds
a certain market -- like the stock that we believe can provide a steady stream of
or bond market -- will decline in income regardless of interim fluctuations in
value because of factors such as the bond market. We do not buy and sell
economic conditions, future securities for short-term purposes.
expectations or investor confidence.
We may hold a substantial part of the Fund's
assets in cash or cash equivalents as a temporary,
defense strategy.
- ------------------------------------------------------------------------------------
Prepayment risk is the risk that Prepayment risk can be a significant risk to
the principal on a bond that the this Fund because we generally invest a large
Fund owns will be prepaid prior to percentage of our holdings in mortgage
maturity at a time when interest securities issued by the Government National
rates are lower than what that Mortgage Association. Homeowners or others who
bond was paying. The Fund would then have mortgages are more likely to prepay them
have to reinvest that money at a when interest rates are relatively low. In
lower interest rate. order to manage this risk, when interest rates
are low or when we believe rates will be
declining, we tend to hold discount mortgages.
Discount mortgages have interest rates lower
than the current rates, so there is little
incentive for homeowners to prepay their
principal.
- ------------------------------------------------------------------------------------
Credit Risk The possibility that By focusing exclusively on U.S. Treasury
a bond's issuer (or an entity that securities and other securities that are
insures the bond) will be unable backed by the U.S. government, its agencies, or
to make timely payments of interest instrumentalities, we attempt to minimize the
and principal. possibility that any of the securities in our
portfolio will not pay interest or principal.
U.S. government securities are generally
considered to be of the highest quality.
- ------------------------------------------------------------------------------------
Liquidity risk is the possibility U.S. Treasuries and other U.S. government debt
that securities cannot be readily securities are typically the most liquid
sold, if at all, at approximately securities available. Therefore, liquidity
the price that a Fund values them. risk is not a significant risk for this Fund.
- ------------------------------------------------------------------------------------
</TABLE>
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. Bonds rated Ba/BB or lower are commonly known
as junk bonds. See also Nationally recognized statistical rating organization.
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
U.S. Government
Securities Fund
As a percentage of average daily net assets 0.44%
Portfolio Manager
Mark Simenstad, Senior Portfolio Manager of Voyageur Asset Management LLC
since August 1996, has had primary responsibility for making day-to-day
investment decisions for the Fund since October 6, 1997. Mr. Simenstad
holds a bachelor's degree from St. Olaf College and an MBA from the
University of Minnesota. Prior to August 1996, Mr. Simenstad was a Vice
President/Portfolio Manager of Investment Advisors, Inc. and prior to
August 1993, he was an Assistant Vice President/Portfolio Manager of
Lutheran Brotherhood. Mr. Simenstad is a CFA and has 15 years of
investment management experience.
C-C
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
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.
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
Board of Directors
Investment manager The Fund Custodian
Delaware Management Company Norwest Bank Minnesota, N.A.
One Commerce Square Sixth Street & Marquette Avenue
Philadelphia, PA 19103 Minneapolis, MN 55402
Sub-Adviser
Voyageur Asset Management LLC
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
Portfolio Distributor Service agent
managers Delaware Service Company, Inc. Delaware Distributors, L.P.
(see page 6 1818 Market Street 1818 Market Street
for details) Philadelphia, PA 19103 Philadelphia, PA 19103
Financial advisers
Shareholders
Board of directors A mutual fund is governed by a board of directors which
has oversight responsibility for the management of the fund's business
affairs. Directors establish procedures and oversee and review the
performance of the investment manager, the distributor and others that
perform services for the fund. At least 40% of the board of directors must
be independent of the fund's investment manager or distributor. These
independent fund directors, in particular, are advocates for shareholder
interests.
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 typically place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject
to National Association of Securities Dealers, Inc. (NASD) rules governing
mutual fund sales practices.
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
directors. Material changes in the terms of a fund's management contract
must be approved by a shareholder vote, and funds seeking to change
fundamental investment objectives or policies must also seek shareholder
approval.
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.
About your account
Investing in the Fund
You can choose from a number of share classes for the Fund. Because each
share class has a different combination of sales charges, fees, and other
features, you should consult your financial adviser to determine which
class best suits your investment goals and time frame.
Choosing a share class
Class A
(bullet) Class A shares have an up-front sales charge of up to 4.75% that
you pay when you buy the shares. The offering price for Class A
shares includes the front-end sales charge.
(bullet) If you invest $100,000 or more, your front-end sales charge will
be reduced.
(bullet) You may qualify for other reduced sales charges, as described in
"How to reduce your sales charge," and under certain
circumstances the sales charge may be waived; please see the
Statement of Additional Information.
(bullet) Class A shares are also subject to an annual 12b-1 fee no
greater than 0.25% of average daily net assets, which is lower
than the 12b-1 fee for Class B and Class C shares.
(bullet) Class A shares generally are not subject to a contingent
deferred sales charge.
<TABLE>
<CAPTION>
Class A Sales Charges
Dealer's
Amount of purchase Sales charge Sales charge commission as
as % as % of amount %
of offering price invested of offering price
<S> <C> <C> <C>
Less than 4.75% 5.03% 4.00%
$100,000
$100,000 but 3.75% 3.93% 3.00%
under $250,000
$250,000 but 2.50% 2.56% 2.00%
under $500,000
$500,000 but 2.00% 2.01% 1.60%
under $1 million
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.
<CAPTION>
Dealer's
Amount of purchase Sales charge Sales charge commission as
as % as % of amount %
of offering price invested of offering price
<S> <C> <C> <C>
$1million 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>
D-F
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.
Class B
(bullet) Class B shares have no up-front sales charge, so the full amount
of your purchase is invested in the Fund. However, you will pay
a contingent deferred sales charge if you redeem your shares
within six years after you buy them.
(bullet) If you redeem Class B shares during the first two years after
you buy them, the shares will be subject to a contingent
deferred sales charge of 4%. The contingent deferred sales
charge is 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(bullet) Under certain circumstances the contingent deferred sales charge
may be waived; please see the Statement of Additional
Information.
(bullet) For approximately eight years after you buy your Class B shares,
they are subject to annual 12b-1 fees no greater than 1% of
average daily net assets, of which 0.25% are service fees paid
to the distributor, dealers or others for providing services and
maintaining accounts.
(bullet) Because of the higher 12b-1 fees, Class B shares have higher
expenses and any dividends paid on these shares are lower than
dividends on Class A shares.
(bullet) Approximately eight years after you buy them, Class B shares
automatically convert into Class A shares with a 12b-1 fee of no
more than 0.25%. 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.
(bullet) You may purchase up to $250,000 of Class B shares at any one
time. The limitation on maximum purchases varies for retirement
plans.
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 bonds.
About your account (continued)
Class C
(bullet) Class C shares have no up-front sales charge, so the full amount
of your purchase is invested in the Fund. However, you will pay
a contingent deferred sales charge if you redeem your shares
within 12 months after you buy them.
(bullet) Under certain circumstances the contingent deferred sales charge
may be waived; please see the Statement of Additional
Information.
(bullet) Class C shares are subject to an annual 12b-1 fee which may not
be greater than 1% of average daily net assets, of which 0.25%
are service fees paid to the distributor, dealers or others for
providing services and maintaining shareholder accounts.
(bullet) Because of the higher 12b-1 fees, Class C shares have higher
expenses and pay lower dividends than Class A shares.
(bullet) Unlike Class B shares, Class C shares do not automatically
convert into another class.
(bullet) You may purchase any amount less than $1,000,000 of Class C
shares at any one time. The limitation on maximum purchases
varies for retirement plans.
Institutional Class
(bullet) Institutional Class shares are available to the following group
of investors:
(bullet) officers and directors of the Fund
(bullet) officers, directors and full-time employees of the
manager or or sub-adviser, and officers, directors and
full-time employees of parents and subsidiaries of the
foregoing companies
(bullet) officers, directors and full-time employees of
investment advisers of other mutual funds subject to a
sales charge and included in any other family of mutual
funds that includes any Voyageur Fund or Delaware
Investments Fund as a member (other load funds), and
officers, directors and full-time employees of parents,
subsidiaries and corporate affiliates of those
investment advisers
(bullet) spouses and lineal ancestors and descendants of the
officers, directors/trustees and employees referenced
above, and lineal ancestors and descendants of their
spouses
(bullet) investment executives and other employees of banks and
dealers that have selling agreements with the
Underwriter and parents, spouses and children under the
age of 21 of such investment executives and other
employees
(bullet) trust companies and bank trust departments for funds
held in a fiduciary, agency, advisory, custodial or
similar capacity
I-N
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.
(bullet) any state or any political subdivision thereof or any
instrumentality, department, authority or agency of any
state or political subdivision thereof
(bullet) partners and full-time employees of the Fund's counsel
(bullet) managed account clients of the manager or sub-adviser,
clients of investment advisers affiliated with the
Adviser or Sub-Adviser and other registered investment
advisers and their clients (the Fund may be available
through a broker-dealer which charges a transaction fee
for purchases and sales)
(bullet) tax-qualified employee benefit plans for employees of
the Adviser or Sub-Adviser and their subsidiaries and
(bullet) employee benefit plans qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (which
does not include Individual Retirement Accounts) and
custodial accounts under Section 403(b)(7) of the Code
(also known as tax-sheltered annuities)
(bullet) Institutional Class shares have no up-front sales charge, so the
full amount of your purchase is invested in the Fund.
(bullet) Institutional Class shares are not subject to a ontingent
deferred sales charge.
(bullet) Institutional Class shares are subject to an annual 12b-1 fee
which may not be greater than 0.25%. The distributor has agreed
to waive 12b-1 fees for Institutional Class shares acquired by
shareholders on or after March 1, 1998.
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.
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.
Maturity
The length of time until a bond issuer must repay the underlying loan
principal to bondholders.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the
actions of its members.
About your account (continued)
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on Class
A, B and C shares. Please refer to the Statement of Additional Information
for detailed information and eligibility requirements. You can also get
additional information from your financial adviser. You or your financial
adviser must notify us at the time you purchase shares if you are eligible
for any of these programs.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Share class
Program How it works A B C
- ------------------------------------------------------------------------------------
Letter of Intent Through a Letter of Intent X Although the
you agree to invest a Letter of Intent
certain amount in Delaware and Rights of
Investment Funds (except Accumulation do
money market funds with no not apply to the
sales charge) over a 13-month purchase of Class
period to qualify for reduced B and C shares,
front-end sales charges. you can combine
your purchase of
Class B and C
shares to fulfill
your Letter of
Intent or qualify
for Rights of
Accumulation.
- ------------------------------------------------------------------------------------
Rights of Accumulation You can combine your holdings X
or 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 Redeemed Up to 12 months after you X Not available.
shares redeem shares, you can reinvest
the proceeds without paying a
front-end sales charge.
- ------------------------------------------------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may X Not available.
SARSEP, Prototype Profit qualify for reduced sales
Sharing, Pension, 401(k), charges by combining the
SIMPLE 401(k), 403(b)(7), purchases of all members
and 457 Retirement Plans of the group. Members of
these groups may also qualify
to purchase shares without a
front-end sales charge and a
waiver of any contingent
deferred sales charges.
- ------------------------------------------------------------------------------------
</TABLE>
N-R
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 (Moody's), Standard & Poor's Corporation
(S&P), Duff & Phelps, Inc. (Duff), and Fitch Investor Services, 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.
How to buy shares
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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.
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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.
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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.
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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
800.523.1918.
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Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated
telephone service, or through our web site, www.delawarefunds.com. For
more information about how to sign up for these services, call our
Shareholder Service Center at 800.523.1918.
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.
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.
Currently the Exchange is closed 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. We reserve the right to reject any purchase order.
We determine the Fund's net asset value (NAV) per share at the close of
trading of the New York Stock Exchange each business day that the Exchange
is open. We calculate this value by adding the market value of all the
securities and assets in the Fund's portfolio, deducting all liabilities,
and dividing the resulting number by the number of shares outstanding. The
result is the net asset value per share. We price securities and other
assets for which market quotations are available at their market value. We
price fixed-income securities on the basis of valuations provided to us by
an independent pricing service that uses methods approved by the board of
directors. Any fixed-income securities that have a maturity of less than
60 days we price at amortized cost. We price all other securities at their
fair market value using a method approved by the board of directors.
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
800.523.1918.
S-S
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.
How to redeem shares
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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
$50,000 or more, 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.
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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.
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By wire
You can redeem $1,000 or more of your shares and have the proceeds
deposited directly to your bank account the next business day after we
receive your request. If you request a wire deposit, the First Union Bank
fee (currently $7.50) will be deducted from your proceeds. Bank
information must be on file before you request a wire redemption.
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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
800.523.1918.
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.
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.
T-V
Total return
An investment performance measurement, expressed as a percentage, based on
the combined earnings from dividends, capital gains and change in price
over a given period.
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.
Special services
To help make investing with us as easy as possible, and to help you build
your investments, we offer the following special services to Class A, B
and C share accounts.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, 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.
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.
About your account (continued)
Special services (continued)
MoneyLineSM On Demand Service
Through our MoneyLineSM On Demand Service, you or your financial adviser
may transfer money between your Fund account and your predesignated bank
account by telephone request. This service is not available for retirement
plans, 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.
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.
Other investment policies and risk considerations
GNMA certificates
The Fund may invest in certificates of the Government National Mortgage
Association (GNMA). GNMA Certificates are mortgage-backed securities. Each
Certificate evidences an interest in a specific pool of mortgages insured
by the Federal Housing Administration or the Farmers Home Administration
or guaranteed by the Veterans Administration. GNMA Certificates differ
from bonds in that principal is scheduled to be paid back by the borrower
over the length of the loan rather than returned in a lump sum at
maturity. Scheduled payments of principal and interest are made to the
registered holders of GNMA Certificates. Interest on GNMA Certificates is
paid monthly rather than semi-annually as for most traditional bonds. The
GNMA Certificates in which the Fund will generally invest are of the
modified pass-through type. The Fund may also purchase "variable rate"
GNMA Certificates and may purchase other types of certificates which may
be issued with GNMA's guarantee. U.S. Government GNMA guarantees the
timely payment of monthly installments of principal and interest on
modified pass-through certificates at the time such payments are due,
whether or not such amounts are collected by the issuer on the underlying
mortgages. The National Housing Act provides that the full faith and
credit of the United States is pledged to the timely payment of principal
and interest by GNMA of amounts due on these GNMA Certificates. GNMA may
borrow U.S. Treasury funds to the extent needed to make payments under its
guarantee.
The average life of GNMA Certificates varies with the maturities of the
underlying mortgage instruments with maximum maturities of 30 years. The
average life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of
prepayments of refinancing of such mortgages or foreclosure. Such
prepayments are passed through to the registered holder with the regular
monthly payments of principal and interest, and have the effect of
reducing future payments. Due to the GNMA guarantee, foreclosures impose
virtually no risk to principal investments.
The average life of pass-through pools varies with the maturities of the
underlying mortgage instruments. In addition, a pool's term may be
shortened by unscheduled or early payments of principal and interest on
the underlying mortgages. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates, general
economic conditions, the location and age of the mortgage and other social
and demographic conditions. As prepayment rates vary widely, it is not
possible to accurately predict the average life of a particular pool.
However, statistics indicate that the average life of the type of
mortgages backing the majority of GNMA Certificates is approximately 12
years. For this reason, it is standard practice to treat GNMA Certificates
as 30-year mortgage-backed securities which prepay fully in the twelfth
year. Pools of mortgages with other maturities or different
characteristics will have varying assumptions for average life. The
assumed average life of pools of mortgages having terms of less than 30
years is less than 12 years, but typically not less than five years.
The coupon rate of interest of GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages
underlying the Certificates, but only by the amount of the fees paid to
GNMA and the issuer. Such fees in the aggregate usually amount to
approximately 1/2 of 1%.
Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments
and the associated average life assumption. In periods of falling interest
rates, the rate of prepayment tends to increase, thereby shortening the
actual average life of a pool of mortgage-related securities. Conversely,
in periods of rising rates, the rate of prepayment tends to decrease,
thereby lengthening the actual average life of the pool. Prepayments
generally occur when interest rates have fallen. Reinvestments of
prepayments will be at lower rates. Historically, actual average life has
been consistent with the 12-year assumption referred to above. The actual
yield of each GNMA Certificate is influenced by the prepayment experience
of the mortgage pool underlying the Certificates and may differ from the
yield based on the assumed average life. Moreover, any premium paid on the
purchase of a GNMA Certificate will be lost if the obligation is prepaid.
In periods of falling interest rates, this potential for prepayment may
reduce the general upward price increase of GNMAs which might otherwise
occur. Price changes of the GNMAs held by the Fund have a direct impact on
the net asset value per share of the Fund.
Zero-coupon securities
The Fund may invest in "zero-coupon" Treasury securities, which are U.S.
Treasury bills, notes and bonds that have been stripped of their unmatured
interest coupons. Zero-coupon securities do not entitle the holder to any
periodic payment of interest prior to maturity. Rather, such securities
usually trade at a deep discount from their face value and pay their
entire face value at maturity. The difference between the face value of
the security (at maturity) and the amount at which the security was
purchased (i.e., the "discount") represents interest income to the holder.
STRIPs are a type of zero-coupon security in which the Fund may invest.
STRIPs are securities where the principal and interest components are
traded independently under the Separate Trading of Registered Interest and
Principal Securities Program (STRIPs). Under STRIPs, the principal and
interest components are individually numbered and separately issued by the
U.S. Treasury at the request of depository financial institutions, which
then trade the component parts independently. The market prices of
zero-coupon securities are generally more volatile than the market prices
of securities that pay interest periodically and are likely to respond to
changes in interest rates to a greater degree than do non-zero-coupon
securities having similar maturities and credit quality. Current federal
income tax law requires that a holder of a taxable zero-coupon security
report as income each year the portion of the original issue discount of
such security that accrues that year, even though the holder receives no
cash payments of interest during the year. The Fund intends to qualify as
a regulated investment company under the Code. Accordingly, during periods
when the Fund receives no interest payments on its zero-coupon securities,
it will be required, in order to maintain its desired tax treatment, to
distribute cash approximating the income attributable to such securities.
Such distribution may require the sale of portfolio securities to meet the
distribution requirements and such sales may be subject to the risk factor
discussed above.
When-issued and delayed delivery
The Fund may purchase U.S. Government Securities on a when-issued or
delayed delivery basis. The settlement dates for these types of
transactions are determined by mutual agreement of the parties and may
occur a month or more after the parties have agreed to the transaction,
except that in no case will the period from the trade date to the
settlement date exceed 120 days. Securities purchased on a when-issued or
delayed delivery basis are subject to market fluctuation and may decrease
in value prior to their maturity, and no interest accrues to the purchaser
during the period prior to settlement.
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.
Repurchase agreements
The Fund will also seek to achieve its investment objective through
investing in repurchase agreements with banks or broker/dealers deemed to
be creditworthy by the manager, under guidelines approved by the Board of
Directors. A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a debt security and the
seller agrees to repurchase the obligation at a future time and set price,
thereby determining the yield during the purchaser's holding period.
Generally, repurchase agreements are of short duration, often less than
one week but on occasion for longer periods. Not more than 10% of the
Fund's assets may be invested in illiquid securities, including repurchase
agreements of over seven-days' maturity. Should an issuer of a repurchase
agreement fail to repurchase the underlying security, the loss to the
Fund, if any, would be the difference between the repurchase price and the
market value of the security. The Fund will limit its investments in
repurchase agreements to those which the manager under guidelines of the
Board of Directors determines to present minimal credit risks and which
are of high quality. In addition, the Fund must have collateral of at
least 102% of the repurchase price, including the portion representing the
Fund's yield under such agreements, which is monitored on a daily basis.
Repurchase agreements may be considered loans under the 1940 Act, but the
Fund considers repurchase agreements contracts for the purchase and sale
of securities, and it seeks to perfect a security interest in the
collateral securities so that it has the right to keep and dispose of the
underlying collateral in the event of default.
The funds in Delaware Investments have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow
Delaware Investments funds jointly to invest cash balances. The Fund may
invest cash balances in a joint repurchase agreement in accordance with
the terms of the Order and subject generally to the conditions described
above.
* * *
The Statement of Additional Information describes certain of these
investment policies and risk considerations. The Statement of Additional
Information also sets describes other investment policies, risk
considerations and more specific investment restrictions.
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." The 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.
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, 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 period ending on or before
October 31, 1996 has been audited by the Fund's previous independent
auditors.
<TABLE>
<CAPTION>
Class A
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.600 $10.370 $10.160
Income (loss) from
investment operations
Net investment income 0.555 0.590 0.210
Net realized and unrealized
gain (loss) on investments 0.351 0.240 0.210
------- ------- -------
Total from investment
operations 0.906 0.830 0.420
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.566) (0.600) (0.210)
Distributions from net
realized gain on
investments none none none
------- ------- -------
Total dividends and
distributions (0.566) (0.600) (0.210)
------- ------- -------
Net asset value, end of
period $10.940 $10.600 $10.370
======= ======= =======
Total return(3) 8.79%(4) 8.37%(4) 4.18%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $44,819 $52,213 $65,516
Ratio of expenses to average
net assets 1.00% 0.93% 0.98%
Ratio of expenses to average
net assets prior to expense
limitation 1.06% 1.01% 0.98%
Ratio of net investment
income to average net
assets 5.21% 5.76% 6.03%
Ratio of net investment
income to average net
assets prior to expense
limitation 5.15% 5.68% 6.03%
Portfolio turnover 280% 202% 66%
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(3)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 8.79%(4) 8.37%(4) 4.18%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A
- ------------------------------------------------------------------------------------
Year ended 6/30
U.S. Government Securities Fund 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.370 $9.760 $10.990
Income (loss) from
investment operations
Net investment income 0.630 0.620 0.550
Net realized and unrealized
gain (loss) on investments (0.230) 0.630 (0.940)
------- ------- -------
Total from investment
operations 0.400 1.250 (0.390)
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.610) (0.620) (0.550)
Distributions from net
realized gain on
investments none (0.020) (0.290)
------- ------- -------
Total dividends and
distributions (0.610) (0.640) (0.840)
------- ------- -------
Net asset value, end of
period $10.160 $10.370 $9.760
======= ======= =======
Total return(3) 3.88% 13.45% (3.95%)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $68,442 $75,886 $84,660
Ratio of expenses to average
net assets 0.97% 0.95% 0.96%
Ratio of expenses to average
net assets prior to expense
limitation 0.97% 0.95% 0.96%
Ratio of net investment
income to average net
assets 6.07% 6.38% 5.10%
Ratio of net investment
income to average net
assets prior to expense
limitation 6.07% 6.38% 5.10%
Portfolio turnover 145% 144% 124%
- ------------------------------------------------------------------------------------
Year ended 6/30
1996 1995 1994
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(3)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 3.88% 13.45% -3.95%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.610 $10.380 $10.170
Income (loss) from
investment operations
Net investment income 0.477 0.520 0.180
Net realized and unrealized
gain (loss) on investments 0.348 0.240 0.210
------- ------- -------
Total from investment
operations 0.825 0.760 0.390
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.485) (0.530) (0.180)
Distributions from net
realized gain on
investments none none none
------- ------- -------
Total dividends and
distributions (0.485) (0.530) (0.180)
------- ------- -------
Net asset value, end of
period $10.950 $10.610 $10.380
======= ======= =======
Total return(4) 7.97%(5) 7.59%(5) 3.91%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $4,582 $2,257 $2,139
Ratio of expenses to average
net assets 1.75% 1.67% 1.73%
Ratio of expenses to average net
assets prior to expense limitation 1.81% 1.75% 1.73%
Ratio of net investment
income to average net
assets 4.46% 5.02% 5.24%
Ratio of net investment income to
average net assets prior to
expense limitation 4.40% 4.94% 5.24%
Portfolio turnover 280% 202% 66%
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(4)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 7.97%(5) 7.59%(5) 3.91%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B
- ------------------------------------------------------------------------------------
Period
6/7/94 (3)
Year ended 6/30 through
U.S. Government Securities Fund 1996 1995 6/30/94
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.380 $9.750 $10.050
Income (loss) from
investment operations
Net investment income 0.570 0.560 0.010
Net realized and unrealized
gain (loss) on investments (0.230) 0.650 (0.280)
------- ------- -------
Total from investment
operations 0.340 1.210 (0.270)
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.550) (0.560) (0.010)
Distributions from net
realized gain on
investments none (0.020) (0.020)
------- ------- -------
Total dividends and
distributions (0.550) (0.580) (0.030)
------- ------- -------
Net asset value, end of
period $10.170 $10.380 $9.750
======= ======= =======
Total return(4) 3.32%(5) 12.90%(5) (2.68%)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,780 $139 $24
Ratio of expenses to average
net assets 1.46% 1.54% 0.30%(6)
Ratio of expenses to average net
assets prior to expense limitation 1.63% 1.69% 0.30%(6)
Ratio of net investment
income to average net
assets 5.55% 5.56% 0.11%(6)
Ratio of net investment income
to average net assets prior to
expense limitation 5.38% 5.41% 0.11%(6)
Portfolio turnover 145% 144% 124%
- ------------------------------------------------------------------------------------
Period
6/7/94 (3)
Year ended 6/30 through
1996 1995 6/30/94
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(4)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 3.32%(5) 12.90%(5) -2.68%
- ------------------------------------------------------------------------------------
1 On May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
2 Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31; 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.
</TABLE>
Financial information (Continued)
Financial highlights (Continued)
<TABLE>
<CAPTION>
Class C
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.590 $10.360 $10.150
Income (loss) from
investment operations
Net investment income 0.477 0.520 0.180
Net realized and unrealized
gain (loss) on investments 0.348 0.240 0.210
------- ------- -------
Total from investment
operations 0.825 0.760 0.390
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.485) (0.530) (0.180)
Distributions from net
realized gain on
investments none none none
------- ------- -------
Total dividends and
distributions (0.485) (0.530) (0.180)
------- ------- -------
Net asset value, end of
period $10.930 $10.590 $10.360
======= ======= =======
Total return(4) 7.98%(5) 7.60%(5) 3.92%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $385 $138 $234
Ratio of expenses to average
net assets 1.75% 1.68% 1.73%
Ratio of expenses to average
net assets prior to expense
limitation 1.81% 1.76% 1.73%
Ratio of net investment
income to average net
assets 4.46% 5.02% 5.26%
Ratio of net investment income
to average net assets prior to
expense limitation 4.40% 4.94% 5.26%
Portfolio turnover 280% 202% 66%
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(4)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 7.98%(5) 7.60%(5) 3.92%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C
- ------------------------------------------------------------------------------------
Period
1/10/95(3)
Year ended through
U.S. Government Securities Fund 6/30/96 6/30/95
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning
of period $10.360 $9.480
Income (loss) from
investment operations
Net investment income 0.550 0.270
Net realized and unrealized
gain (loss) on investments (0.230) 0.880
Total from investment
operations 0.320 1.150
Less dividends and
distributions
Dividends from net
investment income (0.530) (0.270)
Distributions from net
realized gain on
investments none none
------- -------
Total dividends and
distributions (0.530) (0.270)
------- -------
Net asset value, end of
period $10.150 $10.360
======= =======
Total return(4) 3.11% 12.73%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $224 $221
Ratio of expenses to average
net assets 1.70% 1.62%(6)
Ratio of expenses to average
net assets prior to expense
limitation 1.70% 1.65%(6)
Ratio of net investment
income to average net
assets 5.33% 5.10%(6)
Ratio of net investment income
to average net assets prior to
expense limitation 5.33% 5.07%(6)
Portfolio turnover 145% 144%
- ------------------------------------------------------------------------------------
Period
1/10/95(3)
Year ended through
6/30/96 6/30/95
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(4)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 3.11% 12.73%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Institutional Class
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
U.S. Government Securities Fund 1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.600 $10.370 $10.160
Income (loss) from
investment operations
Net investment income 0.555 0.600 0.210
Net realized and unrealized
gain (loss) on investments 0.351 0.240 0.210
------- ------- -------
Total from investment
operations 0.906 0.840 0.420
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.566) (0.610) (0.210)
------- ------- -------
Distributions from net
realized gain on
investments none none none
------- ------- -------
Total dividends and
distributions (0.566) (0.610) (0.210)
------- ------- -------
Net asset value, end of
period $10.940 $10.600 $10.370
======= ======= =======
Total return(4) 8.79%(5) 8.39%(5) 4.17%
Ratios and supplemental data
Net assets, end of period
(000 omitted) $37,097 $45,589 $50,066
Ratio of expenses to average
net assets 1.00% 0.93% 0.99%
Ratio of expenses to average
net assets prior to
expense limitation 1.06% 1.01% 0.99%
Ratio of net investment
income to average net
assets 5.21% 5.76% 6.00%
Ratio of net investment income
to average net assets prior to
expense limitation 5.15% 5.68% 6.00%
Portfolio turnover 280% 202% 66%
- ------------------------------------------------------------------------------------
Period
7/1/96
Year ended 10/31 through
1998 1997(1) 10/31/96(2)
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(4)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 8.79%(5) 8.39%(5) 4.17%
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Institutional Class
- ------------------------------------------------------------------------------------
Period
6/7/94(3)
Year ended 6/30 through
U.S. Government Securities Fund 1996 1995 6/30/94
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning
of period $10.370 $9.750 $10.050
Income (loss) from
investment operations
Net investment income 0.630 0.620 0.010
Net realized and unrealized
gain (loss) on investments (0.230) 0.640 (0.280)
------- ------- -------
Total from investment
operations 0.400 1.260 (0.270)
------- ------- -------
Less dividends and
distributions
Dividends from net
investment income (0.610) (0.620) (0.010)
Distributions from net
realized gain on
investments None (0.020) (0.020)
------- ------- -------
Total dividends and
distributions (0.610) (0.640) (0.030)
------- ------- -------
Net asset value, end of
period $10.160 $10.370 $9.750
======= ======= =======
Total return(4) 3.88% 13.57% (2.64%)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $41,688 $54,445 $49,898
Ratio of expenses to average
net assets 0.97% 0.94% 0.25%(6)
Ratio of expenses to average
net assets prior to expense
limitation 0.97% 0.94% 0.25%(6)
Ratio of net investment
income to average net
assets 6.07% 6.39% 0.16%(6)
Ratio of net investment income
to average net assets prior to
expense limitation 6.07% 6.39% 0.16%(6)
Portfolio turnover 145% 144% 124%
- ------------------------------------------------------------------------------------
Period
6/7/94(3)
Year ended 6/30 through
1996 1995 6/30/94
- ------------------------------------------------------------------------------------
Volatility
Volatility, as indicated by
year-by-year return(4)
Volatility chart is not part
of the Financial Highlights
and has not been audited by
Ernst & Young LLP. 3.88% 13.57% -2.64%
- ------------------------------------------------------------------------------------
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 less than 12 months have not
been annualized.
5 Total return reflects expense limitations in effect during the period.
6 Annualized.
7 Ratios presented for the period from June 7, 1994 to June 30, 1994 are
not annualized as they are not indicative of anticipated annual results.
</TABLE>
How to read the Financial Highlights
Net investment income
Net investment income includes dividend and interest income earned from
the Fund's securities; it is after expenses have been deducted.
Net realized and unrealized gain (loss) 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 dividends and
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 the Fund. In calculating this figure for the financial
highlights table, we include fee waivers, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all
dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in the Fund's
portfolio, less any liabilities, that are attributable to that class of
the Fund.
(continues on page 26)
How to read the financial highlights
(begins on page 24)
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 income 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.
Delaware-Voyageur
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 800.523.1918. You may also
obtain additional information about the Fund from your financial adviser.
You can find reports and other information about the Fund on the SEC web
site (http://www.sec.gov), or you can get copies of this information,
after payment of a duplicating fee, by writing to the Public Reference
Section of the SEC, Washington, D.C. 20549-6009. Information about the
Fund, including its Statement of Additional Information, can be reviewed
and copied at the Securities and Exchange Commission's Public Reference
Room in Washington, D.C. You can get information on the public reference
room by calling the SEC at 1.800.SEC.0330.
Web site
www.delawarefunds.com
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m.
Eastern time:
(bullet) For fund information; literature; price, yield and performance
figures.
(bullet) For information on existing regular investment accounts and
retirement plan accounts including wire investments; wire
redemptions; telephone redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
(bullet) 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
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
P-002 [--] PP 2/99
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1999
VOYAGEUR FUNDS, INC.
DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND
1818 Market Street
Philadelphia, PA 19103
For Prospectus, Performance and Information on Existing Accounts:
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY) Nationwide 800-362-7500
Voyageur Funds, Inc. is a professionally-managed mutual fund of
the series type which currently offers one series of shares:
Delaware-Voyageur US Government Securities Fund (the "Fund").
The Fund offers four classes: Class A Shares, Class B Shares,
Class C Shares and Institutional Class Shares.
This Statement of Additional Information ("Part B" of the
registration statement) supplements the information contained in the
current Prospectus for the Fund Classes dated March 1, 1999 as it
may be amended from time to time. Part B should be read in
conjunction with the Prospectus. Part B is not itself a prospectus
but is, in its entirety, incorporated by reference into Prospectus.
The Prospectus may be obtained by writing or calling your investment
dealer or by contacting the Fund's national distributor, Delaware
Distributors, L.P. (the "Distributor"), at the above address or by
calling the above phone numbers. The Fund's financial statements,
the notes relating thereto, the financial highlights and the report
of independent auditors are incorporated by reference from the
Annual Report into this Part B. The Annual Report will accompany any
request for Part B. The Annual Report can be obtained, without charge, by
calling 800-523-1918.
TABLE OF CONTENTS
Cover Page
Investment Restrictions and Policies
Accounting and Tax Issues
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Investment Plans
Determining Offering Price and Net Asset Value
Redemption and Exchange
Distributions and Taxes
Investment Management Agreement and
Sub-Advisory Agreement
Officers and Directors
General Information
Appendix A--Description of Ratings
Appendix B - General Characteristics and Risks of Options and Futures
Appendix C--Investment Objectives of the Other Funds in the Delaware
Investments Family
Financial Statements
INVESTMENT RESTRICTIONS AND POLICIES
Investment Restrictions
The Fund has adopted certain investment restrictions set forth
below which, together with the investment objectives of the Fund and
other policies which are specifically identified as fundamental in the
Prospectus or herein cannot be changed without approval by holders of a
majority of the outstanding voting shares of the Fund. As defined in the
Investment Company Act of 1940 (the "1940 Act"), this means the lesser of
the vote of (1) 67% of the shares of the Fund at a meeting where more
than 50% of the outstanding shares of the Fund are present in person or
by proxy or (2) more than 50% of the outstanding shares of the Fund.
The following investment restrictions apply to the Fund. The Fund will
not:
1. Borrow money, except from banks for temporary or emergency
purposes in an amount not exceeding 5% of the value of the Fund=s total
assets. The Fund will not borrow for leverage purposes, and securities
will not be purchased while borrowings are outstanding. Interest paid
on any money borrowed will reduce the Fund=s net income.
2. Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 5% of its total assets (taken at the lower of cost or current
value) and then only to secure borrowings permitted by restriction (1)
above.
3. Purchase securities on margin, except such short-term credits as
may be necessary for the clearance of purchases and sales of securities.
4. Make short sales of securities or maintain a short position for
the account of the Fund unless at all times when a short position is
open it owns an equal amount of such securities or owns securities which,
without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to,
the securities sold short.
5. Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it
may be deemed to be an underwriter under federal securities laws.
6. Purchase or sell real estate, although it may purchase securities
which are secured by or represent interests in real estate.
7. Purchase or sell commodities or commodity contracts.
8. Make loans, except by purchase of debt obligations in which the
Fund may invest consistent with its investment policies and through
repurchase agreements.
9. Invest in securities of any issuer if, to the knowledge of the
Fund, officers and directors of the Fund or officers and directors of
the Fund=s investment adviser who beneficially own more than 1/2 of 1%
of the securities of that issuer together own more than 5%.
10. Purchase securities restricted as to resale.
11. Invest more than 25% of its assets in the securities of issuers
in any single industry; provided that there shall be no limitation on
the purchase of securities issued by banks and obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
12. Invest in (a) securities which in the opinion of the Fund=s
investment adviser at the time of such investment are not readily
marketable, and (b) securities the disposition of which is restricted
under federal securities laws (as described in fundamental restriction
(10) above).
13. Invest in securities of other investment companies, except as
part of a merger, consolidation or acquisition of assets.
14. Purchase options or puts, calls, straddles, spreads or
combinations thereof; in connection with the purchase of fixed-income
securities, however, the Fund may acquire attached warrants or other
rights to subscribe for securities of companies issuing such fixed-income
securities or securities of parents or subsidiaries of such companies.
(The Fund=s investment policies do not currently permit it to exercise
warrants or rights with respect to equity securities.)
15. Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
Any investment restriction or limitation which involves a maximum
percentage of securities or assets shall not be considered to be violated
unless an excess over the percentage occurs immediately after an
acquisition of securities or a utilization of assets and such excess
results therefrom.
When Issued and Delayed Delivery Securities
When issued and delayed delivery transactions permit the Fund to
lock-in a price or yield on a security it intends to purchase, regardless
of future changes in interest rates. At the time the Fund commits to
purchase securities on a when-issued or delayed delivery basis, it will
record the transaction and thereafter reflect the value, each day, of
such security in determining its net asset value. At the time of
delivery of the securities, the value may be more or less than the
purchase price. The Fund will also establish a segregated account with
its custodian in which it will maintain cash or cash equivalents or
other portfolio securities equal in value to its commitments for such
when-issued or delayed delivery securities. The Fund generally will
enter into agreements to purchase securities on a when-issued or
delayed delivery basis only with the intention of actually acquiring
the securities. The purchase of securities on a when-issued or delayed
delivery basis exposes the Fund to risk because the securities may
decrease in value prior to their delivery. Purchasing securities on a
when-issued or delayed delivery basis involves the additional risk that
the return available in the market when the delivery takes place will
be higher than that obtained in the transaction itself. Although the
Fund dos not presently intend to do so, these risks could result in
increased volatility of the Fund=s net asset value to the extent that
the Fund purchases securities on a when-issued or delayed delivery
basis while remaining substantially fully invested.
Repurchase Agreements
The Fund will also follow the collateral custody, protection and
perfection guidelines recommended by the Comptroller of the Currency for
the use of national banks in their direct repurchase agreement activities.
As an additional safety measure, the Fund will enter into repurchase
agreements only with primary dealers that report to the Federal Reserve
Bank of New York or with the 100 largest U. S. commercial banks, as
measured by domestic deposits.
ACCOUNTING AND TAX ISSUES
When the Fund writes a call option, an amount equal to the premium
received by it is included in the section of the Fund's assets and
liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently "marked to market" to reflect the current market
value of the option written. The current market value of a written option
is the last sale price on the principal Exchange on which such option is
traded or, in the absence of a sale, the mean between the last bid and
asked prices. If an option which the Fund has written expires on its
stipulated expiration date, the Fund reports a realized gain. If the Fund
enters into a closing purchase transaction with respect to an option which
the Fund has written, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. Any such gain
or loss is a short-term capital gain or loss for federal income tax
purposes. If a call option which the Fund has written is exercised, the
Fund realizes a capital gain or loss (long-term or short-term, depending
on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale are increased by the
premium originally received.
Other Tax Requirements -- The Fund has qualified and intends to
continue to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). As such,
the Fund will not be subject to federal income tax, or to any excise tax,
to the extent its earnings are distributed as provided in the Code and it
satisfies other requirements relating to the sources of its income and
diversification of its assets.
In order to qualify as a regulated investment company for federal
income tax purposes, the Fund must meet certain specific requirements,
including:
(i) The Fund must maintain a diversified portfolio of securities,
wherein no security (other than U.S. government securities and securities
of other regulated investment companies) can exceed 25% of the Fund's
total assets, and, with respect to 50% of the Fund's total assets, no
investment (other than cash and cash items, U.S. Government securities
and securities of other regulated investment companies) can exceed 5% of
the Fund's total assets;
(ii) The Fund must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and
gains from the sale or disposition of stock and securities or foreign
currencies, or other income derived with respect to its business of
investing in such stock, securities, or currencies;
(iii) The Fund must distribute to its shareholders at least 90% of
its investment company taxable income and net tax-exempt income for each
of its fiscal years, and
(iv) The Fund must realize less than 30% of its gross income for
each fiscal year from gains from the sale of securities and certain
other assets that have been held by the Fund for less than three months
("short-short income"). The Taxpayer Relief Act of 1997 (the "1997 Act")
repealed the 30% short-short income test for tax years of regulated
investment companies beginning after August 5, 1997; however, this rule
may have continuing effect in some states for purposes of classifying
the Fund as a regulated investment company.
The Code requires the Funds to distribute at least 98% of its
taxable ordinary income earned during the calendar year and 98% of its
capital gain net income earned during the 12 month period ending
October 31 (in addition to amounts from the prior year that were
neither distributed nor taxed to the Fund) to you by December 31 of
each year in order to avoid federal excise taxes. The Fund intends as
a matter of policy to declare and pay sufficient dividends in December
or January (which are treated by you as received in December) but does
not guarantee and can give no assurances that its distributions will be
sufficient to eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the
straddle provisions require the deferral of losses to the extent of
unrecognized gains related to the offsetting positions in the straddle.
Excess losses, if any, can be recognized in the year of loss. Deferred
losses will be carried forward and recognized in the year that
unrealized losses exceed unrealized gains.
The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions."
Under these rules, the Fund must recognize gain (but not loss) on any
constructive sale of an appreciated financial position in stock, a
partnership interest or certain debt instruments. The Fund will
generally be treated as making a constructive sale when it: 1) enters
into a short sale on the same or substantially identical property; 2)
enters into an offsetting notional principal contract; or 3) enters
into a futures or forward contract to deliver the same or substantially
identical property. Other transactions (including certain financial
instruments called collars) will be treated as constructive sales as
provided in Treasury regulations to be published. There are also certain
exceptions that apply for transactions that are closed before the end
of the 30th day after the close of the taxable year.
PERFORMANCE INFORMATION
From time to time, the Fund may state each of its Classes' total
return in advertisements and other types of literature. Any statement
of total return performance data for a Class will be accompanied by
information on the average annual compounded rate of return for that
Class over, as relevant, the most recent one-, five- and ten-year, or
life-of-fund periods, as applicable. The Fund may also advertise
aggregate and average total return information for its Classes over
additional periods of time. In addition, the Fund may include
illustrations showing the power of compounding in advertisements and
other types of literature.
In presenting performance information for Class A Shares, the
Limited CDSC applicable to only certain redemptions of those shares will
not be deducted from any computation of total return. See the Prospectus
for a description of the Limited CDSC, or other CDSC, and the limited
instances in which it applies. All references to a CDSC in this
Performance Information section will apply to Class B Shares or Class C
Shares of the Fund.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be
used for the actual computations:
n
P(1 + T) = ERV
Where: P = a hypothetical initial purchase order of
$1,000 from which, in the case of only
Class A Shares, the maximum front-end
sales charge is deducted;
T = average annual total return;
n = number of years; 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, 1998, computed as described
above. The average annual total return for Class A Shares at offer
reflects the maximum front-end sales charges paid on the purchase of
shares. The average annual total return for Class A Shares at net
asset value (NAV) does not reflect the payment of the maximum front-end
sales charge of 4.75%. The average annual total return for Class B
Shares and Class C Shares including deferred sales charge reflects the
deduction of the applicable CDSC that would be paid if the shares were
redeemed at October 31, 1998. The average annual total return for Class B
Shares and Class C Shares excluding deferred sales charge assumes the
shares were not redeemed at October 31, 1998 and therefore does not
reflect the deduction of a CDSC.
Securities prices fluctuated during the periods covered, and past
results should not be considered as representative of future performance.
Average Annual Total Return(1)
Class A Class A Institutional Class
(at offer) (at NAV)
1 year ended
10/31/98 3.60% 8.79% 8.78%
Class B Class B Class C
(including CDSC) (excluding CDSC) (including CDSC)
1 year ended
10/31/98 3.97% 7.97% 6.98%
Class C
(excluding CDSC)
1 year ended
10/31/98 7.98%
10/31/98
3 years ended
10/31/98 5.57% 7.29% 7.28%
3 years ended
10/31/98 5.63% 6.52% 6.49%
3 years ended
10/31/98 6.49%
5 years ended
10/31/98 5.06% 6.08% N/A
5 years ended
10/31/98 N/A N/A N/A
5 years ended
10/31/98 N/A
10 years ended
10/31/98 8.33% 8.85% N/A
10 years ended
10/31/98 N/A N/A N/A
10 years ended
10/31/98 N/A
Life of Fund(2) 8.43% 8.92% 8.16%
Life of Fund(2) 7.08% 7.43% 9.33%
Life of Fund(2) 9.33%
(1) Reflects fee waivers and payment of expenses in effect during
the periods. Performance would have been lower without the fee
waivers and expense payments. See Plan under Rule 12b-1 under
Purchasing Shares and Investment Management Agreement and
Sub-Advisory Agreement for information about voluntary fee waivers
and expense payments in effect through April 30, 1999.
(2) Class A Shares commenced operation on November 2, 1987;
Institutional Class Shares commenced operations on June 7, 1994;
Class B Shares commenced operations on June 7, 1994; Class C
Shares commenced operations on January 10, 1995.
As stated in the Prospectus, the Fund may also quote the current
yield for each Class in advertisements and investor communications.
The yield computation is determined by dividing the net investment
income per share earned during the period by the maximum offering price
per share on the last day of the period and annualizing the resulting
figure, according to the following formula:
a--b 6
YIELD = 2[(-------- + 1) -- 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of
the period.
The above formula will be used in calculating quotations of yield
of each Class, based on specified 30-day periods identified in
advertising by the Fund. Using this formula, the yields for Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares
for the 30-day period ended October 31, 1998 were 4.64%, 4.11%, 4.12%
and 4.87%, respectively. Yield calculations assume the maximum
front-end sales charge, if any, and do not reflect the deduction of any
CDSC or Limited CDSC and also reflect voluntary waivers in effect during
the period. Actual yield may be affected by variations in front-end
sales charges on investments. Past performance, such as is reflected
in quoted yields, should not be considered as a representation of the
results which may be realized from an investment in any class of the
Fund in the future.
The average weighted portfolio maturity at October 31, 1998 for
the Fund was 21.30 years.
Investors should note that the income earned and dividends paid by
the Fund will vary with the fluctuation of interest rates and
performance of the portfolio. The net asset value of the fund may change.
Unlike money market funds, the Fund invests in longer-term securities
that fluctuate in value and do so in a manner inversely correlated with
changing interest rates. The Fund's net asset value will tend to rise
when interest rates fall.
Conversely, the Fund's net asset value will tend to fall as interest
rates rise. Normally, fluctuations in interest rates have a greater
effect on the prices of longer-term bonds. The value of the securities
held in the Fund will vary from day to day and investors should consider
the volatility of the Fund's net asset value as well as its yield before
making a decision to invest.
From time to time, the Fund may quote actual total return and/or
yield performance for its Classes in advertising and other types of
literature. This information may be compared to that of other mutual
funds with similar investment objectives and to stock, bond an other
relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance
of mutual funds. For example, the performance of the Fund (or Class)
may be compared to data prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc. or the performance of unmanaged indices compiled or
maintained by statistical research firms such as Lehman Brothers or
Salomon Brothers, Inc.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed
mutual funds. Morningstar, Inc. is a mutual fund rating service that
rates mutual funds on the basis of risk-adjusted performance. Rankings
that compare the Fund's performance to another fund in appropriate
categories over specific time periods also may be quoted in advertising
and other types of literature. The total return performance reported
for these indices will reflect the reinvestment of all distributions on
a quarterly basis and market price fluctuations. The indices do not
take into account any sales charge or other fees. A direct investment
in an unmanaged index is not possible.
Salomon Brothers and Lehman Brothers are statistical research firms
that maintain databases of international market, bond market, corporate
and government-issued securities of various maturities. This
information, as well as unmanaged indices compiled and maintained by
these firms, will be used in preparing comparative illustrations. In
addition, the performance of multiple indices compiled and maintained
by these firms may be combined to create a blended performance result
for comparative purposes. Generally, the indices selected will be
representative of the types of securities in which the Fund may invest
and the assumptions that were used in calculating the blended
performance will be described.
Comparative information on the Consumer Price Index may also be
included in advertisements or other literature. The Consumer Price
Index, as prepared by the U.S. Bureau of Labor Statistics, is the most
commonly used measure of inflation. It indicates the cost fluctuations
of a representative group of consumer goods. It does not represent a
return from an investment.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the Consumer Price Index), and combinations of various capital markets.
The performance of these capital markets is based on the returns of
different indices. The Fund may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a
hypothetical investment in any of these capital markets. The risks
associated with the security types in any capital market may or may
not correspond directly to those of the Fund. The Fund may also
compare performance to that of other compilations or indices that
may be developed and made available in the future.
The Fund may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that
describe general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting, questionnaires
designed to help create a personal financial profile, worksheets used to
project savings needs based on assumed rates of inflation and
hypothetical rates of return and action plans offering investment
alternatives), investment management techniques, policies or investment
suitability of the Fund (such as value investing, market timing, dollar
cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments), economic and political
conditions, the relationship between sectors of the economy and the
economy as a whole, the effects of inflation and historical performance
of various asset classes, including but not limited to, stocks, bonds
and Treasury bills. From time to time advertisements, sales literature,
communications to shareholders or other materials may summarize the
substance of information contained in shareholder reports (including
the investment composition of the Fund), as well as the views as to
current market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to the Fund. In addition,
selected indices may be used to illustrate historic performance of
selected asset classes. The Fund may also include in advertisements,
sales literature, communications to shareholders or other materials,
charts, graphs or drawings which illustrate the potential risks and
rewards of investment in various investment vehicles, including but
not limited to, domestic stocks, and/or bonds, treasury bills and shares
of the Fund. In addition, advertisements, sales literature,
communications to shareholders or other materials may include a
discussion of certain attributes or benefits to be derived by an
investment in the Fund and/or other mutual funds, shareholder profiles
and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning (such as information on Roth
IRAs and Education IRAs) and investment alternatives to certificates
of deposit and other financial instruments. Such sales literature,
communications to shareholders or other materials may include symbols,
headlines or other material which highlight or summarize the information
discussed in more detail therein.
Materials may refer to the CUSIP numbers of the Fund and may
illustrate how to find the listings of the Fund in newspapers and
periodicals. Materials may also include discussions of other funds,
products, and services.
The Fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Fund may compare these
measures to those of other funds. Measures of volatility seek to
compare the historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how
valid a comparative benchmark may be. Measures of volatility and
correlation may be calculated using averages of historical data. The
Fund may advertise its current interest rate sensitivity, duration,
weighted average maturity or similar maturity characteristics.
Advertisements and sales materials relating to the Fund may include
information regarding the background and experience of its portfolio
managers.
Total return performance for each Class of the Fund will reflect
the appreciation or depreciation of principal, reinvestment of income
and any capital gains distributions paid during any indicated period,
and, in thecase of Class A Shares, the impact of the maximum front-end
sales charge, if any, paid on the illustrated investment amount,
annualized. Performance of Class A Shares may also be shown without
reflecting the impact of any front-end sales charge. The results will
not reflect any income taxes, if applicable, payable by shareholders on
the reinvested distributions included in the calculations. The
performance of Class B Shares and Class C Shares will be calculated both
with the applicable CDSC included and excluded. The net asset values
of the Fund fluctuate so shares, when redeemed, may be worth more or
less than the original investment, and the Fund's results should not
be considered a guarantee of future performance.
The following tables present examples, for purposes of illustration
only, of cumulative total return performance for each Class of the Fund
through October 31, 1998 For these purposes, the calculations reflect
maximum sales charges, if any, and assume the reinvestment of any
realized securities profits distributions and income dividends paid
during the indicated periods. The performance does not reflect any
income taxes payable by shareholders on the reinvested distributions
included in the calculations. The performance of Class A Shares
reflects the maximum front-end sales charge paid on the purchase of
shares but may also be shown without reflecting the impact of any
front-end sales charge. The performance of Class B Shares and Class C
Shares is calculated both with the applicable CDSC included and excluded.
<TABLE>
<CAPTION>
Cumulative Total Return(1)
Class A Class A Institutional Class B
(at offer) (at NAV) Class (including CDSC)
<S> <C> <C> <C> <C>
3 months ended
10/31/98 (1.38%) 3.51% 3.51% (0.69%)
6 months ended
10/31/98 0.54%(2) 5.56% 5.55% 1.15%
9 months ended
10/31/98 1.02% 6.02% 5.92% 1.32%
1 year ended
10/31/98 3.60% 8.79% 8.78% 3.97%
3 years ended
10/31/98 17.66% 23.49% 23.48% 17.87%
5 years ended
10/31/98 28.00% 34.34% N/A N/A
10 years ended
10/31/98 122.51% 133.60% N/A N/A
Life of Fund(3) 143.61% 155.79% 41.23% 35.13%
<CAPTION>
Class B Class C Class C
(excluding CDSC) (including CDSC) (excluding CDSC)
<S> <C> <C> <C>
3 months ended
10/31/98 3.31% 2.32% 3.32%
6 months ended
10/31/98 5.15% 4.16% 5.16%
9 months ended
10/31/98 5.32% 4.43% 5.43%
1 year ended
10/31/98 7.97% 6.98% 7.98%
3 years ended
10/31/98 20.87% 20.77% 20.77%
5 years ended
10/31/98 N/A N/A N/A
10 years ended
10/31/98 N/A N/A N/A
Life of Fund(3) 37.13% 40.46% 40.46%
</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. See Plan under Rule 12b-1 under
Purchasing Shares and Investment Management Agreement and
Sub-Advisory Agreement for information about voluntary fee
waivers and expense payments in effect through April 30, 1999.
(2) For the six-month period ended October 31, 1998, cumulative total
return for Class A Shares at net asset value was 5.56%.
(3) Class A Shares commenced operation on November 2, 1987;
Institutional Class Shares commenced operations on June 7, 1994;
Class B Shares commenced operations on June 7, 1994; Class C
Shares commenced operations on January 10, 1995.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds available
from Delaware Investments, will provide general information about
investment alternatives and scenarios that will allow investors to assess
their personal goals. This information will include general material
about investing as well as materials reinforcing various industry-accepted
principles of prudent and responsible personal financial planning. One
typical way of addressing these issues is to compare an individual's goals
and the length of time the individual has to attain these goals to his or
her risk threshold. In addition, the Distributor will provide information
that discusses the Manager's and Sub-Adviser's overriding investment
philosophy and how that philosophy impacts the Fund's, and other Delaware
Investments funds', investment disciplines employed in seeking their
objectives. The Distributor may also from time to time cite general or
specific information about the institutional clients of Delaware or the
Manager, including the number of such clients serviced by Delaware or the
Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and
logic says to invest when prices are low. However, even experts can't
always pick the highs and the lows. By using a strategy known as
dollar-cost averaging, you schedule your investments ahead of time. If
you invest a set amount on a regular basis, that money will always buy
more shares when the price is low and fewer when the price is high. You
can choose to invest at any regular interval--for example, monthly or
quarterly--as long as you stick to your regular schedule. Dollar-cost
averaging looks simple and it is, but there are important things to
remember.
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining
markets. If you need to sell your investment when prices are low, you
may not realize a profit no matter what investment strategy you utilize.
That's why dollar-cost averaging can make sense for long-term goals.
Since the potential success of a dollar-cost averaging program depends
on continuous investing, even through periods of fluctuating prices,
you should consider your dollar-cost averaging program a long-term
commitment and invest an amount you can afford and probably won't need
to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of high fund share prices.
Delaware Investments offers three services -- Automatic Investing Plan,
Direct Deposit Purchase Plan and the Wealth Builder Option -- that can
help to keep your regular investment program on track. See Investing
by Electronic Fund Transfer - Direct Deposit Purchase Plan and
Automatic Investing Plan under Investment Plans and Wealth Builder
Option under Investment Plans for a complete description of these
services, including restrictions or limitations.
The example below illustrates how dollar-cost averaging can work.
In a fluctuating market, the average cost per share over a period of
time will be lower than the average price per share for the same time
period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 20
Month 4 $100 $10.00 10
- -------------------------------------------------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended
to represent the actual performance of any stock or bond fund available
from the Delaware Investments family of funds.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's
called the Power of Compounding. The Fund may include illustrations
showing the power of compounding in advertisements and other types of
literature.
TRADING PRACTICES AND BROKERAGE
Brokers, dealers and banks are selected to execute transactions for
the purchase or sale of portfolio securities on the basis of the
Manager's and Sub-Adviser's (collectively referred to in this section as
the "Manager") judgment of their professional capability to provide the
service. The primary consideration is to have brokers, dealers or banks
execute transactions at best price and execution. Best price and
execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability
of execution, the confidentiality and placement accorded the order and
other factors affecting the overall benefit obtained by the account on
the transaction. Trades are generally made on a net basis where
securities are either bought or sold directly from or to a broker,
dealer or bank. In these instances, there is no direct commission
charged, but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission
is paid, the Fund pays reasonably competitive brokerage commission rates
based upon the professional knowledge of its trading department as to
rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty.
During the fiscal years ended October 31, 1996, 1997 and 1998, no
brokerage commissions were paid by the Fund.
The Manager may allocate out of all commission business generated
by all of the funds and accounts under its management, brokerage
business to brokers or dealers who provide brokerage and research
services. These services include advice, either directly or through
publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends;
assisting in determining portfolio strategy; providing computer
software and hardware used in security analyses; and providing
portfolio performance evaluation and technical market analyses.
Such services are used by the Manager in connection with its investment
decision-making process with respect to one or more funds and accounts
managed by it, and may not be used, or used exclusively, with respect to
the fund or account generating the brokerage.
During the fiscal year ended October 31, 1998, there were no
portfolio transactions of the Fund resulting in brokerage commissions
directed to brokers for brokerage and research services.
As provided in the Securities Exchange Act of 1934 (the "1934 Act")
and the Fund's Investment Management Agreement and Sub-Advisory
Agreement, higher commissions are permitted to be paid to broker/dealers
who provide brokerage and research services than to broker/dealers who
do not provide such services, if such higher commissions are deemed
reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers
who provide such brokerage and research services, Voyageur Funds, Inc.
believes that the commissions paid to such broker/dealers are not, in
general, higher than commissions that would be paid to broker/dealers
not providing such services and that such commissions are reasonable in
relation to the value of the brokerage and research services provided.
In some instances, services may be provided to the Manager which
constitute in some part brokerage and research services used by the
Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment
decision-making process. In such cases, the Manager will make a good
faith allocation of brokerage and research services and will pay out
of its own resources for services used by the Manager in connection
with administrative or other functions not related to its investment
decision-making process. In addition, so long as no fund is
disadvantaged, portfolio transactions which generate commissions or
their equivalent are allocated to broker/dealers who provide daily
portfolio pricing services to the Fund and to other funds available
from Delaware Investments. Subject to best price and execution,
commissions allocated to brokers providing such pricing services may
or may not be generated by the funds receiving the pricing service.
The Manager may place a combined order for two or more accounts
or funds engaged in the purchase or sale of the same security if, in
its judgment, joint execution is in the best interest of each
participant and will result in best price and execution. Transactions
involving commingled orders are allocated in a manner deemed equitable
to each account or fund. When a combined order is executed in a series
of transactions at different prices, each account participating in the
order may be allocated an average price obtained from the executing
broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts
and funds. Although it is recognized that, in some cases, the joint
execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the
opinion of the Manager and Voyageur Funds, Inc.'s Board of Directors
that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best
price and execution, the Fund may place orders with broker/dealers that
have agreed to defray certain expenses of the funds in the Delaware
Investments family of funds, such as custodian fees, and may, at the
request of the Distributor, give consideration to sales of shares of
such funds as a factor in the selection of brokers and dealers to
execute portfolio transactions.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish the
Fund's objective in relation to anticipated movements in the general
level of interest rates. The Fund is free to dispose of portfolio
securities at any time, subject to complying with the Code and the 1940
Act, when changes in circumstances or conditions make such a move
desirable in light of the investment objective. The Fund will not
attempt to achieve or be limited to a predetermined rate of portfolio
turnover, such a turnover always being incidental to transactions
undertaken with a view to achieving the Fund's investment objective.
The degree of portfolio activity may affect brokerage costs of the
Fund and taxes payable by the Fund's shareholders to the extent of any
net realized capital gains. The Fund's portfolio turnover rate may
exceed 100%. A turnover rate of 100% would occur, for example, if all
the investments in the Fund's portfolio at the beginning of the year
were replaced by the end of the year. The Fund's portfolio turnover
rate is calculated by dividing the lesser of purchases or sales of
portfolio securities for the particular fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund
during the particular fiscal year, exclusive of securities whose
maturities at the time of acquisition are one year or less.
The Fund may hold securities for any period of time. The Fund's
portfolio turnover will be increased if the Fund writes a large number
of call options which are subsequently exercised. The portfolio
turnover rate also may be affected by cash requirements from
redemptions and repurchases of Fund shares. Total brokerage costs
generally increase with higher portfolio turnover rates.
The portfolio turnover rate of the Fund was 202% for the fiscal
year ended October 31, 1997 and 280% for the fiscal year ended October
31, 1998.
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's
shares and has agreed to use its best efforts to sell shares of each
Fund. See the Prospectus for information on how to invest. Shares of
the Fund are offered on a continuous basis and may be purchased through
authorized investment dealers or directly by contacting Voyageur Funds,
Inc. or the Distributor.
The minimum initial investment generally is $1,000 for Class A
Shares, Class B Shares and Class C Shares. Subsequent purchases of such
Classes generally must be at least $100. There are no minimum purchase
requirements for the Institutional Classes, but certain eligibility
requirements must be satisfied. The initial and subsequent investment
minimums for Class A Shares will be waived for purchases by officers,
directors and employees of any Delaware Investments fund, the Manager or
any of the Manager's affiliates if the purchases are made pursuant to a
payroll deduction program. Shares purchased pursuant to the Uniform
Gifts to Minors Act or Uniform Transfers to Minors Act and shares
purchased in connection with an Automatic Investing Plan are subject to
a minimum initial purchase of $250 and a minimum subsequent purchase of
$25. Accounts opened under the Delaware Investments Asset Planner
service are subject to a minimum initial investment of $2,000 per Asset
Planner Strategy selected.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an
amount that is less than $1,000,000. See Investment Plans for purchase
limitations applicable to retirement plans. Voyageur Funds, Inc. will
reject any purchase order for more than $250,000 of Class B Shares and
$1,000,000 or more of Class C Shares. An investor may exceed these
limitations by making cumulative purchases over a period of time. In
doing so, an investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $50,000 or more in
Class A Shares, and that Class A Shares are subject to lower annual
12b-1 Plan expenses than Class B Shares and Class C Shares and generally
are not subject to a CDSC.
Selling dealers are responsible for transmitting orders promptly.
Voyageur Funds, Inc. reserves the right to reject any order for the
purchase of its shares of the Fund if in the opinion of management such
rejection is in the Fund's best interest. If a purchase is canceled
because your check is returned unpaid, you are responsible for any loss
incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future
purchases in any of the funds in the Delaware Investments family. The
Fund reserves the right to reject purchase orders paid by third-party
checks or checks that are not drawn on a domestic branch of a United
States financial institution. If a check drawn on a foreign financial
institution is accepted, you may be subject to additional bank charges
for clearance and currency conversion.
The Fund also reserves the right, following shareholder
notification, to charge a service fee on non-retirement accounts that,
as a result of redemption, have remained below the minimum stated
account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account
balance and advised that they have until the end of the current
calendar quarter to raise their balance to the stated minimum. If the
account has not reached the minimum balance requirement by that time,
the Fund will charge a $9 fee for that quarter and each subsequent
calendar quarter until the account is brought up to the minimum balance.
The service fee will be deducted from the account during the first week
of each calendar quarter for the previous quarter, and will be used to
help defray the cost of maintaining low-balance accounts. No fees
will be charged without proper notice, and no CDSC will apply to such
assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial
purchase amount as a result of redemptions. An investor making the
minimum initial investment may be subject to involuntary redemption
without the imposition of a CDSC or Limited CDSC if he or she redeems
any portion of his or her account.
The NASD has adopted amendments to its Conduct Rules, as amended,
relating to investment company sales charges. Voyageur Funds, Inc. and
the Distributor intend to operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales
charges apply for larger purchases. See the table in the Prospectus.
Class A Shares are also subject to annual 12b-1 Plan expenses for the
life of the investment.
Class B Shares are purchased at net asset value and are subject to
a CDSC of: (i) 4% if shares are redeemed within the first two years of
purchase; (ii) 3% if shares are redeemed during the third or fourth year
following purchase; (iii) 2% if shares are redeemed during the fifth
year following purchase; and (iv) 1% if shares are redeemed during the
sixth year following purchase. Class B Shares will automatically
convert to Class A Shares at the end of approximately eight years after
purchase and, thereafter, be subject to annual 12b-1 Plan expenses of
up to a maximum of 0.25% of average daily net assets of such shares.
See Automatic Conversion of Class B Shares below.
Class C Shares are purchased at net asset value and are subject to
a CDSC of 1% if shares are redeemed within 12 months following purchase.
Class C Shares are also subject to annual 12b-1 Plan expenses for the
life of the investment which are equal to those to which Class B Shares
are subject.
Institutional Class Shares are purchased at net asset value without
the imposition of a front-end or contingent deferred sales charge.
Institutional Class Shares are subject to annual 12b-1 Plan expenses for
the life of the investment. However, the Distributor has voluntarily
elected to waive its right to receive 12b-1 fees with respect to
Institutional Class Shares acquired by shareholders on or after March 1,
1998. See Plan Under Rule 12b-1 under Purchasing Shares, and Determining
Offering Price and Net Asset Value in this Part B.
Class A Shares, Class B Shares, Class C Shares and Institutional
Class Shares represent a proportionate interest in the Fund's assets and
will receive a proportionate interest in the Fund's income, before
application, as to Class A Shares, Class B Shares, Class C Shares and
Institutional Class Shares, of any expenses under the Fund's 12b-1 Plan.
Certificates representing shares purchased are not ordinarily
issued unless, in the case of Class A Shares or Institutional Class
shares, a shareholder submits a specific request. Certificates are not
issued in the case of Class B Shares or Class C Shares or in the case of
any retirement plan account including self-directed IRAs. However,
purchases not involving the issuance of certificates are confirmed to the
investor and credited to the shareholder's account on the books maintained
by Delaware Service Company, Inc. (the "Transfer Agent"). The investor
will have the same rights of ownership with respect to such shares as if
certificates had been issued. An investor that is permitted to obtain a
certificate may receive a certificate representing full share
denominations purchased by sending a letter signed by each owner of the
account to the Transfer Agent requesting the certificate. No charge is
assessed by Voyageur Funds, Inc. for any certificate issued. A
shareholder may be subject to fees for replacement of a lost or stolen
certificate, under certain conditions, including the cost of obtaining a
bond covering the lost or stolen certificate. Please contact the Fund for
further information. Investors who hold certificates representing any of
their shares may only redeem those shares by written request. The
investor's certificate(s) must accompany such request.
Alternative Purchase Arrangements
The alternative purchase arrangements described above permit
investors to choose the method of purchasing shares that is most suitable
given the amount of their purchase, the length of time they expect to hold
their shares and other relevant circumstances. Investors should determine
whether, given their particular circumstances, it is more advantageous to
purchase Class A Shares and incur a front-end sales charge, purchase Class
B Shares and have the entire initial purchase amount invested in the Fund
with their investment being subject to a CDSC if they redeem shares within
six years of purchase, purchase Class C Shares and have the entire initial
purchase amount invested in the Fund with their investment being subject
to a CDSC if they redeem shares within 12 months of purchase, or whether
they qualify to purchase Institutional Class Shares. In addition,
investors should consider the level of annual 12b-1 Plan expenses
applicable to each Class. The higher 12b-1 Plan expenses on Class B
Shares and Class C Shares will be offset to the extent a return is
realized on the additional money initially invested upon the purchase of
such shares. However, there can be no assurance as to the return, if any,
that will be realized on such additional money. In addition, the effect
of any return earned on such additional money will diminish over time. In
comparing Class B Shares to Class C Shares, investors should consider the
duration of the annual 12b-1 Plan expenses to which each of the Classes is
subject and the desirability of an automatic conversion feature, which is
available only for Class B Shares.
The higher 12b-1 Plan expenses on Class B Shares and Class C Shares
will be offset to the extent a return is realized on the additional money
initially invested upon the purchase of such shares. However, there can
be no assurance as to the return, if any, that will be realized on such
additional money. In addition, the effect of any return earned on such
additional money will diminish over time. In comparing Class B Shares to
Class C Shares, investors should also consider the duration of the annual
12b-1 Plan expenses to which each of the classes is subject and the
desirability of an automatic conversion feature, which is available only
for Class B Shares.
For the distribution and related services provided to, and the
expenses borne on behalf of, the Fund, the Distributor and others will be
paid, in the case of Class A Shares, from the proceeds of the front-end
sales charge and 12b-1 Plan fees, in the case of Class B Shares and Class C
Shares, from the proceeds of the 12b-1 Plan fees and, if applicable, the
CDSC incurred upon redemption and, in the case of Institutional Class
Shares, from the proceeds of the 12b-1 Plan fees. Financial advisers may
receive different compensation for selling Class A Shares, Class B Shares,
Class C Shares and Institutional Class Shares. Investors should
understand that the purpose and function of the Classes' 12b-1 Plan and
the CDSCs applicable to Class B Shares and Class C Shares are the same as
those of the 12b-1 Plan and the front-end sales charge applicable to Class
A Shares and the 12b-1 Plan applicable to Institutional Class Shares in
that such fees and charges are used to finance the distribution of the
respective Classes. See Plans Under Rule 12b-1 for the Fund Classes.
Dividends, if any, paid on Class A Shares, Class B Shares, Class C
Shares and Institutional Class Shares, to the extent any dividends are
paid, will be calculated in the same manner, at the same time and on the
same day and will be in the same amount, except that the additional amount
of 12b-1 Plan expenses relating to Class B Shares and Class C Shares will
be borne exclusively by such shares. See Determining Offering Price and
Net Asset Value.
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the table in the Fund
Classes' Prospectus, and may include a series of purchases over a 13-month
period under a Letter of Intention signed by the purchaser. See Special
Purchase Features - Class A Shares, below for more information on ways in
which investors can avail themselves of reduced front-end sales charges
and other purchase features.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which
the Distributor may reallow to dealers up to the full amount of the
front-end sales. In addition, certain dealers who enter into an agreement
to provide extra training and information on Delaware Investments products
and services and who increase sales of Delaware Investments funds may
receive an additional commission of up to 0.15% of the offering price in
connection with sales of Class A Shares. Such dealers must meet certain
requirements in terms of organization and distribution capabilities and
their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and
circumstances upon which the additional commission will be paid.
Participating dealers may be deemed to have additional responsibilities
under the securities laws. Dealers who receive 90% or more of the sales
charge may be deemed to be underwriters under the 1933 Act.
Dealer's Commission
As described in the Prospectus, for initial purchases of Class A
Shares of $1,000,000 or more, a dealer's commission may be paid by the
Distributor to financial advisers through whom such purchases are effected.
For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of
the first purchase. In determining a financial adviser's eligibility for
the dealer's commission, purchases of Class A Shares of other Delaware
Investments funds as to which a Limited CDSC applies (see Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased
at Net Asset Value under Redemption and Exchange) may be aggregated with
those of the Class A Shares of a Fund. Financial advisers also may be
eligible for a dealer's commission in connection with certain purchases
made under a Letter of Intention or pursuant to an investor's Right of
Accumulation. Financial advisers should contact the Distributor
concerning the applicability and calculation of the dealer's commission in
the case of combined purchases.
An exchange from other Delaware Investments funds will not qualify
for payment of the dealer's commission, unless a dealer's commission or
similar payment has not been previously paid on the assets being exchanged.
The schedule and program for payment of the dealer's commission are subject
to change or termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end
sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth above, and Class C Shares
redeemed within 12 months of purchase may be subject to a CDSC of 1%.
CDSCs are charged as a percentage of the dollar amount subject to the
CDSC. The charge will be assessed on an amount equal to the lesser of the
net asset value at the time of purchase of the shares being redeemed or
the net asset value of those shares at the time of redemption. No CDSC
will be imposed on increases in net asset value above the initial purchase
price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestment of dividends or capital gains distributions. For
purposes of this formula, the "net asset value at the time of purchase"
will be the net asset value at purchase of Class B Shares or Class C
Shares of a Fund, even if those shares are later exchanged for shares of
another Delaware Investments fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption"
will be the net asset value of the shares that were acquired in the
exchange. See Waiver of Contingent Deferred Sales Charge--Class B Shares
and Class C Shares under Redemption and Exchange for the Fund Classes for
a list of the instances in which the CDSC is waived.
During the seventh year after purchase and, thereafter, until
converted automatically into Class A Shares, Class B Shares will still
be subject to the annual 12b-1 Plan expenses of up to 1% of average daily
net assets of those shares. At the end of approximately eight years after
purchase, the investor's Class B Shares will be automatically converted
into Class A Shares of the same Fund. See Automatic Conversion of Class B
Shares under Classes of Shares in the Fund Classes' Prospectus. Such
conversion will constitute a tax-free exchange for federal income tax
purposes. See Taxes. Investors are reminded that the Class A Shares
into which Class B Shares will convert are subject to ongoing annual
12b-1 Plan expenses of up to a maximum of 0.25% of average daily net
assets of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during the
six-year period. With respect to Class C Shares, it will be assumed that
shares held for more than 12 months are redeemed first followed by shares
acquired through the reinvestment of dividends or distributions, and
finally by shares held for 12 months or less.
All investments made during a calendar month, regardless of what day
of the month the investment occurred, will age one month on the last day of
that month and each subsequent month.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently
compensates dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the
dollar amount purchased. In addition, from time to time, upon written
notice to all of its dealers, the Distributor may hold special promotions
for specified periods during which the Distributor may pay additional
compensation to dealers or brokers for selling Class B Shares at the time
of purchase. As discussed below, however, Class B Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within six years of purchase,
a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services,
and bearing related expenses, in connection with the sale of Class B
Shares. These payments support the compensation paid to dealers or
brokers for selling Class B Shares. Payments to the Distributor and
others under the Class B 12b-1 Plan may be in an amount equal to no more
than 1% annually. The combination of the CDSC and the proceeds of the
12b-1 Plan fees makes it possible for a Fund to sell Class B Shares
without deducting a front-end sales charge at the time of purchase.
Holders of Class B Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for
Class B Shares described in this Part B, even after the exchange.
Such CDSC schedule may be higher than the CDSC schedule for Class B
Shares acquired as a result of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class
A Shares will occur only four times in any calendar year, on the last
business day of the second full week of March, June, September and
December (each, a "Conversion Date"). If the eighth anniversary after a
purchase of Class B Shares falls on a Conversion Date, an investor's Class
B Shares will be converted on that date. If the eighth anniversary occurs
between Conversion Dates, an investor's Class B Shares will be converted
on the next Conversion Date after such anniversary. Consequently, if a
shareholder's eighth anniversary falls on the day after a Conversion Date,
that shareholder will have to hold Class B Shares for as long as three
additional months after the eighth anniversary of purchase before the
shares will automatically convert into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the
case of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve
Consultant Class) pro-rata with Class B Shares of that fund not acquired
through dividend reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently
compensates dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the
dollar amount purchased. As discussed below, Class C Shares are subject
to annual 12b-1 Plan expenses and, if redeemed within 12 months of
purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services,
and bearing related expenses, in connection with the sale of Class C
Shares. These payments support the compensation paid to dealers or
brokers for selling Class C Shares. Payments to the Distributor and
others under the Class C 12b-1 Plan may be in an amount equal to no more
than 1% annually.
Holders of Class C Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for
Class C Shares as described in this Part B. See Redemption and Exchange.
Plan Under Rule 12b-1
Pursuant to Rule 12b-1 under the 1940 Act, Voyageur Funds, Inc. has
adopted a plan for each Class (the "Plan"). The Plan permits the Fund to
pay for certain distribution, promotional and related expenses involved in
the marketing of the respective Class of shares.
The Plan permits the Fund, pursuant to its Distribution Agreement,
to pay out of the assets of Class A Shares, Class B Shares, Class C Shares
and Institutional Class Shares monthly fees to the Distributor for its
services and expenses in distributing and promoting sales of shares of
such classes. These expenses include, among other things, preparing and
distributing advertisements, sales literature and prospectuses and reports
used for sales purposes, compensating sales and marketing personnel, and
paying distribution and maintenance fees to securities brokers and dealers
who enter into agreements with the Distributor. The Plan expenses
relating to Class B Shares and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to
the initial sale of such shares.
In addition, the Fund may make payments out of the assets of Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares
directly to other unaffiliated parties, such as banks, who either aid in
the distribution of shares of, or provide services to, such classes.
The maximum aggregate fee payable by the Fund under its Plan, and the
Fund's Distribution Agreement, is on an annual basis, up to 0.25% of each
of the Class A Shares' and Institutional Class Shares' average daily net
assets for the year, and up to 1% (0.25% of which are service fees to be
paid to the Distributor, dealers and others for providing personal service
and/or maintaining shareholder accounts) of each of the Class B Shares'
and Class C Shares' average daily net assets for the year. Voyageur
Funds, Inc.'s Board of Directors may reduce these amounts at any time.
The Distributor has elected voluntarily to waive its right to receive
12b-1 Plan fees with respect to Institutional Class Shares acquired by
shareholders on or after March 1, 1998. Thus, so long as the
Distributor's voluntary waiver is in effect, the formula for determining
the annual fee payable on a monthly basis under the Plan with respect to
Institutional Class Shares will be the amount obtained by multiplying
0.25% by the average daily net assets represented by shares of the Class
that were acquired before March 1, 1998. While this is the method for
calculating the 12b-1 Plan fee payable by the Institutional Class, the
12b-1 Plan fee is an Institutional Class expense. As a result, all
Institutional Class shareholders, regardless of when they purchase their
shares, will bear 12b-1 Plan expenses at the same share rate. As the
portion of assets attributable to Institutional Class Shares acquired by
shareholders on or after March 1, 1998 increases, and so long as the
Distributor's voluntary waiver is in effect, this figure will decrease.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf
of Class A Shares, Class B Shares, Class C Shares and Institutional Class
Shares would be borne by such persons without any reimbursement from the
Classes. Subject to seeking best price and execution, the Fund may, from
time to time, buy or sell portfolio securities from or to firms which
receive payments under the Plan.
From time to time, the Distributor may pay additional amounts from
its own resources to dealers for aid in distribution or for aid in
providing administrative services to shareholders.
The Plan and the Distribution Agreement, as amended, have been
approved by the Board of Directors of Voyageur Funds, Inc., including a
majority of the directors who are not "interested persons" (as defined in
the 1940 Act) of Voyageur Funds, Inc. and who have no direct or indirect
financial interest in the Plan, by vote cast in person at a meeting duly
called for the purpose of voting on the Plan and such Agreements.
Continuation of the Plan and the Distribution Agreements, as amended,
must be approved annually by the Board of Directors in the same manner as
specified above.
Each year, the directors must determine whether continuation of the
Plan is in the best interest of shareholders of the Classes of the Fund and
that there is a reasonable likelihood of the Plan providing a benefit to
the Classes. The Plan and the Distribution Agreement, as amended, may be
terminated at any time without penalty by a majority of those directors
who are not "interested persons" or by a majority vote of the outstanding
voting securities of the Classes. Any amendment materially increasing the
percentage payable under the Plan must likewise be approved by a majority
vote of the outstanding voting securities of the Classes, as well as by a
majority vote of those directors who are not "interested persons." Also,
any material amendment to the Plan must be approved by a majority vote of
the directors including a majority of the noninterested directors of
Voyageur Funds, Inc. having no interest in the Plan. In addition, in
order for the Plan to remain effective, the selection and nomination of
directors who are not "interested persons" of Voyageur Funds, Inc. must be
effected by the directors who themselves are not "interested persons" and
who have no direct or indirect financial interest in the Plan. Persons
authorized to make payments under the Plan must provide written reports at
least quarterly to the Board of Directors for their review.
For the fiscal year ended October 31, 1998, payments from Class A
Shares, Class B Shares, Class C Shares and Institutional Class Shares of
the Fund amounted to $323,997, $114,414, $15,160 and $45,374, respectively.
These payments were used for the following purposes:
<TABLE>
<CAPTION>
Institutional
A Class B Class C Class Class
------- ------- ------- -------------
<S> <C> <C> <C> <C>
Advertising $1,155 $214
Annual/Semi-Annual Reports 14,917
Broker Trails 252,917 27,838 $6,313 $20,458
Broker Sales Charges 38,766 5,990
Dealer Service Expenses 145 656
Interest on Broker Sales
Charges 41,325 1,410
Commissions to Wholesalers 13,392 5,543 1,158 11,925
Promotional-Broker Meetings 258 148 2,987
Promotional-Other 23,634 716
Prospectus Printing 16,857
Telephone
Wholesaler Expenses 980 470 141 8,632
Other
</TABLE>
Other Payments to Dealers
From time to time, at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of Fund Classes exceed
certain limits as set by the Distributor, may receive from the Distributor
an additional payment of up to 0.25% of the dollar amount of such sales.
The Distributor may also provide additional promotional incentives or
payments to dealers that sell shares of the Delaware Investments family
of funds. In some instances, these incentives or payments may be offered
only to certain dealers who maintain, have sold or may sell certain amounts
of shares. The Distributor may also pay a portion of the expense of
preapproved dealer advertisements promoting the sale of Delaware
Investments fund shares.
Subject to pending amendments to the NASD's Conduct Rules, in
connection with the promotion of Delaware Investments fund shares, the
Distributor may, from time to time, pay to participate in dealer-sponsored
seminars and conferences, reimburse dealers for expenses incurred in
connection with preapproved seminars, conferences and advertising and may,
from time to time, pay or allow additional promotional incentives to
dealers, which shall include non-cash concessions, such as certain luxury
merchandise or a trip to or attendance at a business or investment seminar
at a luxury resort, as part of preapproved sales contests. Payment of
non-cash compensation to dealers is currently under review by the NASD and
the Securities and Exchange Commission. It is likely that the NASD's
Conduct Rules will be amended such that the ability of the Distributor to
pay non-cash compensation as described above will be restricted in some
fashion. The Distributor intends to comply with the NASD's Conduct Rules
as they may be amended.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Investments Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment
Privilege.
Purchases of Class A Shares may be made at net asset value by current
and former officers, directors and employees (and members of their
families) of the Manager, any affiliate, any of the funds in the Delaware
Investments family, certain of their agents and registered representatives
and employees of authorized investment dealers and by employee benefit
plans for such entities. Individual purchases, including those in
retirement accounts, must be for accounts in the name of the individual or
a qualifying family member. Class A Shares may also be purchased at net
asset value by current and former officers, directors and employees (and
members of their families) of the Dougherty Financial Group LLC.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value
within 12 months after the registered representative changes employment,
if the purchase is funded by proceeds from an investment where a front-end
sales charge, contingent deferred sales charge or other sales charge has
been assessed. Purchases of Class A Shares may also be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of
shares of funds in the Delaware Investments family. Officers, directors
and key employees of institutional clients of the Manager or any of its
affiliates may purchase Class A Shares at net asset value. Moreover,
purchases may be effected at net asset value for the benefit of the
clients of brokers, dealers and registered investment advisers affiliated
with a broker or dealer, if such broker, dealer or investment adviser has
entered into an agreement with the Distributor providing specifically for
the purchase of Class A Shares in connection with special investment
products, such as wrap accounts or similar fee based programs. Investors
may be charged a fee when effecting transactions in Class A Shares through
a broker or agent that offers these special investment products.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their
trust customers if they are not eligible to purchase shares of the
Institutional Class of a Fund; any group retirement plan (excluding
defined benefit pension plans), or such plans of the same employer, for
which plan participant records are maintained on the Retirement Financial
Services, Inc. (formerly known as Delaware Investment & Retirement
Services, Inc.) proprietary record keeping system that (i) has in excess
of $500,000 of plan assets invested in Class A Shares of funds in the
Delaware Investments family and any stable value account available to
investment advisory clients of the Manager or its affiliates; or (ii) is
sponsored by an employer that has at any point after May 1, 1997 had more
than 100 employees while such plan has held Class A Shares of a fund in
the Delaware Investments family and such employer has properly represented
to, and received written confirmation back from, Retirement Financial
Services, Inc. in writing that it has the requisite number of employees.
See Group Investment Plans for information regarding the applicability of
the Limited CDSC.
Purchases of Class A Shares at net asset value may also be made by
bank sponsored retirement plans that are no longer eligible to purchase
Institutional Class Shares or purchase interests in a collective trust as
a result of a change in distribution arrangements.
Investors in Delaware Investments Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Investments family at net asset
value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from
such accounts will be made at net asset value. Loan repayments made to a
fund account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset
value.
Voyageur Funds, Inc. must be notified in advance that the trade
qualifies for purchase at net asset value.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made
available under a joint venture agreement between the Distributor and
another institution through which mutual funds are marketed and which
allow investments in Class A Shares of designated Delaware Investments
funds ("eligible Delaware Investments fund shares"), as well as shares of
designated classes of non-Delaware Investments funds ("eligible
non-Delaware Investments fund shares"). Class B Shares, Class C Shares
and Institutional Class Shares are not eligible for purchase by Allied
Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Investments and eligible non-Delaware
Investments fund shares held by the Allied Plan may be combined with the
dollar amount of new purchases by that Allied Plan to obtain a reduced
front-end sales charge on additional purchases of eligible Delaware
Investments fund shares. See Combined Purchases Privilege, below.
Participants in Allied Plans may exchange all or part of their
eligible Delaware Investments fund shares for other eligible Delaware
Investments fund shares or for eligible non-Delaware Investments fund
shares at net asset value without payment of a front-end sales charge.
However, exchanges of eligible fund shares, both Delaware Investments and
non-Delaware Investments, which were not subject to a front end sales
charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Investments fund shares to which a sales charge applies.
No sales charge will apply if the eligible fund shares were previously
acquired through the exchange of eligible shares on which a sales charge
was already paid or through the reinvestment of dividends. See Investing
by Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Investments fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value
purchases of eligible Delaware Investments fund shares in connection with
Allied Plans, all participant holdings in the Allied Plan will be
aggregated. See Class A Shares.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited
Contingent Deferred Sales Charge - Class A Shares under Redemption and
Exchange, apply to redemptions by participants in Allied Plans except in
the case of exchanges between eligible Delaware Investments and
non-Delaware Investments fund shares. When eligible Delaware Investments
fund shares are exchanged into eligible non-Delaware Investments fund
shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the Limited
CDSC will be paid by the financial adviser or selling dealer. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases
made within a 13-month period pursuant to a written Letter of Intention
provided by the Distributor and signed by the purchaser, and not legally
binding on the signer or Adviser Funds, Inc. which provides for the
holding in escrow by the Transfer Agent, of 5% of the total amount of
Class A Shares intended to be purchased until such purchase is completed
within the 13-month period. A Letter of Intention may be dated to include
shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the
intended investment is not completed, except as noted below, the purchaser
will be asked to pay an amount equal to the difference between the
front-end sales charge on Class A Shares purchased at the reduced rate and
the front-end sales charge otherwise applicable to the total shares
purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to
realize the difference. Such purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of
all their shares of the Funds and of any class of any of the other mutual
funds in Delaware Investments (except shares of any Delaware Investments
fund which do not carry a front-end sales charge, CDSC or Limited CDSC
other than shares of Delaware Group Premium Fund, Inc. beneficially owned
in connection with the ownership of variable insurance products, unless
they were acquired through an exchange from a Delaware Investments fund
which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention
toward the completion of such Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge
on investments of Class A Shares made by the plan. The aggregate
investment level of the Letter of Intention will be determined and
accepted by the Transfer Agent at the point of plan establishment. The
level and any reduction in front-end sales charge will be based on actual
plan participation and the projected investments in Delaware Investments
funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust
the signed Letter of Intention based on this acceptance criteria. The
13-month period will begin on the date this Letter of Intention is
accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for
further discounts, any front-end sales charges will be automatically
adjusted. In the event this Letter of Intention is not fulfilled within
the 13-month period, the plan level will be adjusted (without completing
another Letter of Intention) and the employer will be billed for the
difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at
offering price at the level designated in their Letter of Intention) of
all their shares intended for purchase that are offered with a front-end
sales charge, CDSC or Limited CDSC of any class. Class B Shares and Class
C Shares of a Fund and other Delaware Investments funds which offer
corresponding classes of shares may also be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may
combine the total amount of any combination of Class A Shares, Class B
Shares and/or Class C Shares of the Funds, as well as shares of any other
class of any of the other Delaware Investments funds (except shares of any
Delaware Investments fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund,
Inc. beneficially owned in connection with the ownership of variable
insurance products, unless they were acquired through an exchange from a
Delaware Investments fund which carried a front-end sales charge, CDSC or
Limited CDSC). In addition, assets held by investment advisory clients of
the Manager or its affiliates in a stable value account may be combined
with other Delaware Investments fund holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
21; or a trustee or other fiduciary of trust estates or fiduciary accounts
for the benefit of such family members (including certain employee benefit
programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to the Class A Shares, purchasers may also combine any
subsequent purchases of Class A Shares, Class B Shares and Class C Shares
of a Fund, as well as shares of any other class of any of the other Delaware
Investments funds which offer such classes (except shares of any Delaware
Investments fund which do not carry a front-end sales charge, CDSC or
Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware
Investments fund which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and
still holds Class A Shares and/or shares of any other of the classes
described in the previous sentence with a value of $40,000 and
subsequently purchases $60,000 at offering price of additional shares of
Class A Shares, the charge applicable to the $60,000 purchase would
currently be 3.75%. For the purpose of this calculation, the shares
presently held shall be valued at the public offering price that would
have been in effect were the shares purchased simultaneously with the
current purchase. Investors should refer to the table of sales charges
for Class A Shares to determine the applicability of the Right of
Accumulation to their particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares of a Fund (and of Institutional Classes
holding shares which were acquired through an exchange from one of the
other mutual funds in Delaware Investments offered with a front-end sales
charge) who redeem such shares have one year from the date of redemption
to reinvest all or part of their redemption proceeds in Class A Shares of
that Fund or in Class A Shares of any of the other funds in the Delaware
Investments family, subject to applicable eligibility and minimum purchase
requirements, in states where shares of such other funds may be sold, at
net asset value without the payment of a front-end sales charge. This
privilege does not extend to Class A Shares where the redemption of the
shares triggered the payment of a Limited CDSC. Persons investing
redemption proceeds from direct investments in mutual funds in the
Delaware Investments family offered without a front-end sales charge will
be required to pay the applicable sales charge when purchasing Class A
Shares. The reinvestment privilege does not extend to a redemption of
either Class B Shares or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made
at the net asset value next determined after receipt of remittance. A
redemption and reinvestment could have income tax consequences. It is
recommended that a tax adviser be consulted with respect to such
transactions. Any reinvestment directed to a fund in which the investor
does not then have an account will be treated like all other initial
purchases of a fund's shares. Consequently, an investor should obtain and
read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus
contains more complete information about the fund, including charges and
expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Funds' shareholder servicing agent, about
the applicability of the Limited CDSC (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange) in connection with the features described
above.
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of
the Institutional Classes may also benefit from the reduced front-end sales
charges for investments in Class A Shares set forth in the table on page
00, based on total plan assets. If a company has more than one plan
investing in the Delaware Investments family of funds, then the total
amount invested in all plans would be used in determining the applicable
front-end sales charge reduction upon each purchase, both initial and
subsequent, upon notification to the Fund in which the investment is being
made at the time of each such purchase. Employees participating in such
Group Investment Plans may also combine the investments made in their plan
account when determining the applicable front-end sales charge on
purchases to non-retirement Delaware Investments investment accounts if
they so notify the Fund in which they are investing in connection with
each purchase. See Retirement Plans for the Fund Classes under Investment
Plans for information about Retirement Plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from a fund in the Delaware Investments
family. See Contingent Deferred Sales Charge for Certain Redemptions of
Class A Shares Purchased at Net Asset Value under Redemption and Exchange.
Institutional Class
Institutional Class Shares are available to a limited group of
investors with no sales charge at the time of purchase and no contingent
deferred sales charge upon redemption. Institutional Class Shares are
subject to a Rule 12b-1 fee payable at an annual rate of 0.25% of the
Fund=s average daily net assets attributable to Institutional Class Shares.
See Distribution (12b-1) and Service under Purchasing Shares for a
discussion of the Distributor's voluntary waiver of the fee with respect to
Institutional Class Shares acquired on or after March 1, 1998.
The investors who may purchase Institutional Class Shares include: (a)
officers and directors of the Fund; (b) officers, directors and full-time
employees of the Manager or Sub-Adviser, and officers, directors and
full-time employees of parents and subsidiaries of the foregoing
companies; (c) officers, directors and full-time employees of investment
advisers of other mutual funds subject to a sales charge and included in
any other family of mutual funds that includes any Voyageur Fund or
Delaware Investments Fund as a member ("Other Load Funds"), and officers,
directors and full-time employees of parents, subsidiaries and corporate
affiliates of such investment advisers; (d) spouses and lineal ancestors
and descendants of the officers, directors/trustees and employees
referenced in clauses (a), (b) and (c), and lineal ancestors and
descendants of their spouses; (e) investment executives and other
employees of banks and dealers that have selling agreements with the
Underwriter and parents, spouses and children under the age of 21 of such
investment executives and other employees; (f) trust companies and bank
trust departments for funds held in a fiduciary, agency, advisory,
custodial or similar capacity; (g) any state or any political subdivision
thereof or any instrumentality, department, authority or agency of any
state or political subdivision thereof; (h) partners and full-time
employees of the Fund=s counsel; (i) managed account clients of the
Adviser or Sub-Adviser, clients of investment advisers affiliated with the
Adviser or Sub-Adviser and other registered investment advisers and their
clients (the Fund may be available through a broker-dealer which charges a
transaction fee for purchases and sales); (j) tax-qualified employee
benefit plans for employees of the Adviser or Sub-Adviser and their
subsidiaries and (k) employee benefit plans qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code") (which does
not include Individual Retirement Accounts) and custodial accounts under
Section 403(b)(7) of the Code (also known as tax-sheltered annuities).
INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of a Class
(based on the net asset value in effect on the reinvestment date) and will
be credited to the shareholder's account on that date. All dividends and
distributions of Institutional Classes are reinvested in the accounts of
the holders of such shares (based on the net asset value in effect on the
reinvestment date). A confirmation of each dividend payment from net
investment income will be mailed to shareholders quarterly. A
confirmation of any distributions from realized securities profits will be
mailed to shareholders in the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase
and add full and fractional shares to their plan accounts at any time
either through their investment dealers or by sending a check or money
order to the Class in which shares are being purchased. Such purchases,
which must meet the minimum subsequent purchase requirements set forth in
the Prospectus and this Part B, are made for Class A Shares at the public
offering price, and for Class B Shares, Class C Shares and Institutional
Classes at the net asset value, at the end of the day of receipt. A
reinvestment plan may be terminated at any time. This plan does not
assure a profit nor protect against depreciation in a declining market.
Reinvestment of Dividends in Other Delaware Investments Family of Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A
Shares, Class B Shares and Class C Shares may automatically reinvest
dividends and/or distributions in any of the mutual funds in the Delaware
Investments, including the Funds, in states where their shares may be
sold. Such investments will be at net asset value at the close of
business on the reinvestment date without any front-end sales charge or
service fee. The shareholder must notify the Transfer Agent in writing
and must have established an account in the fund into which the dividends
and/or distributions are to be invested. Any reinvestment directed to a
fund in which the investor does not then have an account will be treated
like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in
which the investment is intended to be made before investing or sending
money. The prospectus contains more complete information about the fund,
including charges and expenses.
Subject to the following limitations, dividends and/or distributions
from other funds in Delaware Investments may be invested in shares of the
Funds, provided an account has been established. Dividends from Class A
Shares may not be directed to Class B Shares or Class C Shares. Dividends
from Class B Shares may only be directed to other Class B Shares and
dividends from Class C Shares may only be directed to other Class C
Shares. Dividends from Institutional Class Shares may be directed only to
Institutional Class Shares of the Fund.
Capital gains and/or dividend distributions for participants in the
following retirement plans are automatically reinvested into the same
Delaware Investments fund in which their investments are held: SAR/SEP,
SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457
Deferred Compensation Plans.
Investing by Exchange
If you have an investment in another mutual fund in Delaware
Investments, you may write and authorize an exchange of part or all of
your investment into Class A Shares, Class B Shares and Class C Shares of
the Fund. If you wish to open an account by exchange, call the Shareholder
Service Center for more information. All exchanges are subject to the
eligibility and minimum purchase requirements set forth in each fund's
prospectus. See Redemption and Exchange for more complete information
concerning your exchange privileges.
Holders of Class A Shares of the Fund may exchange all or part of
their shares for certain of the shares of other funds available from
Delaware Investments, including other Class A Shares, but may not exchange
their Class A Shares for Institutional Class Shares of the Fund, or for
Class B Shares or Class C Shares of the Fund or of any other fund available
from Delaware Investments. Holders of Class B Shares of the Fund are
permitted to exchange all or part of their Class B Shares only into Class B
Shares of other Delaware Investments funds. Similarly, holders of Class C
Shares of the Fund are permitted to exchange all or part of their Class C
Shares only into Class C Shares of other Delaware Investments funds.
Class B Shares of the Fund and Class C Shares of the Fund acquired by
exchange will continue to carry the CDSC and, in the case of Class B
Shares, the automatic conversion schedule of the fund from which the
exchange is made. The holding period of Class B Shares of the Fund
acquired by exchange will be added to that of the shares that were
exchanged for purposes of determining the time of the automatic conversion
into Class A Shares of the Fund. Holders of Institutional Class Shares of
the Fund may not exchange their shares for any Class of the Fund or for
any other fund available from Delaware Investments.
Permissible exchanges into Class A Shares of the Fund will be made
without a front-end sales charge, except for exchanges of shares that were
not previously subject to a front-end sales charge (unless such shares were
acquired through the reinvestment of dividends). Permissible exchanges
into Class B Shares or Class C Shares of the Fund will be made without the
imposition of a CDSC by the fund from which the exchange is being made at
the time of the exchange.
See Allied Plans for information on exchanges by participants in an
Allied Plan.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Fund to
accept for investment in Class A Shares, Class B Shares or Class C Shares,
through an agent bank, preauthorized government or private recurring
payments. This method of investment assures the timely credit to the
shareholder's account of payments such as social security, veterans'
pension or compensation benefits, federal salaries, Railroad Retirement
benefits, private payroll checks, dividends, and disability or pension
fund benefits. It also eliminates lost, stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A Shares, Class B
Shares and Class C Shares may make automatic investments by authorizing,
in advance, monthly payments directly from their checking account for
deposit into their Fund account. This type of investment will be handled
in either of the following ways. (1) If the shareholder's bank is a member
of the National Automated Clearing House Association ("NACHA"), the amount
of the investment will be electronically deducted from his or her account
by Electronic Fund Transfer ("EFT"). The shareholder's checking account
will reflect a debit each month at a specified date although no check is
required to initiate the transaction. (2) If the shareholder's bank is
not a member of NACHA, deductions will be made by preauthorized checks,
known as Depository Transfer Checks. Should the shareholder's bank become
a member of NACHA in the future, his or her investments would be handled
electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or
457 Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent
investments under such plans must be for $25 or more. An investor wishing
to take advantage of either service must complete an authorization form.
Either service can be discontinued by the shareholder at any time without
penalty by giving written notice.
Payments to the Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after
such payments should have been terminated by reason of death or otherwise.
Any such payments are subject to reclamation by the federal government or
its agencies. Similarly, under certain circumstances, investments from
private sources may be subject to reclamation by the transmitting bank.
In the event of a reclamation, the Fund may liquidate sufficient shares
from a shareholder's account to reimburse the government or the private
source. In the event there are insufficient shares in the shareholder's
account, the shareholder is expected to reimburse the Fund.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Class A, B and C Shares account.
The Fund will accept these investments, such as bank-by-phone, annuity
payments and payroll allotments, by mail directly from the third party.
Investors should contact their employers or financial institutions who in
turn should contact Voyageur Funds, Inc. for proper instructions.
MoneyLine (SM) On Demand
You or your investment dealer may request purchases of Class A, B or C
Shares by phone using MoneyLine (SM) On Demand. When you authorize a Fund
to accept such requests from you or your investment dealer, funds will be
withdrawn from (for share purchases) your predesignated bank account.
Your request will be processed the same day if you call prior to 4 p.m.,
Eastern time. There is a $25 minimum and $50,000 maximum limit for
MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account Services
form. If your name and address are not identical to the name and address
on your Fund account, you must have your signature guaranteed. The Fund
does not charge a fee for this service; however, your bank may charge a
fee.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in Class A,
B or C Shares through regular liquidations of shares in their accounts
in other mutual funds in the Delaware Investments family. Class A, B and C
shareholders also may elect to invest in one or more of the other mutual
funds in Delaware Investments family through the Wealth Builder Option.
If in connection with the election of the Wealth Builder Option, you wish
to open a new account to receive the automatic investment, such new
account must meet the minimum initial purchase requirements described in
the prospectus of the fund that you select. All investments under this
option are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated
from their account and invested automatically into other mutual funds in
the Delaware Investments family, subject to the conditions and limitations
set forth in the Prospectus. The investment will be made on the 20th day
of each month (or, if the fund selected is not open that day, the next
business day) at the public offering price or net asset value, as
applicable, of the fund selected on the date of investment. No investment
will be made for any month if the value of the shareholder's account is
less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the
fund into which investments are made could fluctuate. Since this program
involves continuous investment regardless of such fluctuating value,
investors selecting this option should consider their financial ability to
continue to participate in the program through periods of low fund share
prices. This program involves automatic exchanges between two or more fund
accounts and is treated as a purchase of shares of the fund into which
investments are made through the program. See Exchange Privilege for a
brief summary of the tax consequences of exchanges. Shareholders can
terminate their participation in Wealth Builder at any time by giving
written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or
457 Deferred Compensation Plans. This option also is not available to
shareholders of the Institutional Classes.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete an Asset Planner Account
Registration Form, which is available only from a financial adviser or
investment dealer. Effective September 1, 1997, the Asset Planner Service
is only available to financial advisers or investment dealers who have
previously used this service. The Asset Planner service offers a choice
of four predesigned asset allocation strategies (each with a different
risk/reward profile) in predetermined percentages in Delaware Investments
funds. With the help of a financial adviser, you may also design a
customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and
their percentage allocation in the selected Strategy. Exchanges from
existing Delaware Investments accounts into the Asset Planner service may
be made at net asset value under the circumstances described under
Investing by Exchange. Also see Buying Class A Shares at Net Asset Value.
The minimum initial investment per Strategy is $2,000; subsequent
investments must be at least $100. Individual fund minimums do not apply
to investments made using the Asset Planner service. Class A, Class B and
Class C Shares are available through the Asset Planner service. Class A,
B and C Shares are available through the Asset Planner Service.
Generally, only shares within the same class may be used within the same
Strategy. However, Class A Shares of the Fund and of other funds in the
Delaware Investments family may be used in the same Strategy with
consultant class shares that are offered by certain other Delaware
Investments funds.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year.
The fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if
not paid by September 30. However, effective November 1, 1996, the annual
maintenance fee is waived until further notice. Investors who utilize the
Asset Planner for an IRA will continue to pay an annual IRA fee of $15 per
Social Security number. Investors will receive a customized quarterly
Strategy Report summarizing all Asset Planner investment performance and
account activity during the prior period. Confirmation statements will be
sent following all transactions other than those involving a reinvestment
of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include
Delaphone, Checkwriting, Wealth Builder Option and Letter of Intention.
Systematic Withdrawal Plans are available after the account has been open
for two years.
Retirement Plans
An investment in Class A, Class B andClass C Shares may be suitable
for tax-deferred retirement plans. Delaware Investments offers a full
spectrum of retirement plans, including the 401(k) Defined Contribution
Plan, Individual Retirement Account ("IRA") and the new Roth IRA and
Education IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs,
Roth IRAs, Education IRAs, Simplified Employee Pension Plans, Salary
Reduction Simplified Employee Pension Plans, and 403(b)(7) and 457
Deferred Compensation Plans. The CDSC may be waived on certain
redemptions of Class B Shares and Class C Shares. See Waiver of
Contingent Deferred Sales Charge - Class B Shares and Class C Shares under
Redemption and Exchange in the Prospectus for the Fund Classes for a list
of the instances in which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares
must be in an amount that is less than $1,000,000 for such plans. The
maximum purchase limitations apply only to the initial purchase of shares
by the retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts,
for which there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25, regardless of which Class is selected.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are
based upon the number of participants in the plan as well as the services
selected. Additional information about fees is included in retirement
plan materials. Fees are quoted upon request. Annual maintenance fees
may be shared by Delaware Management Trust Company, the Transfer Agent,
other affiliates of the Manager and others that provide services to such
Plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders.
Certain retirement plans may qualify to purchase shares of the
Institutional Class shares. See Institutional Class, above. For
additional information on any of the plans and Delaware's retirement
services, call the Shareholder Service Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a
qualified retirement plan consultant. For further details, including
applications for any of these plans, contact your investment dealer or the
Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the Plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations.
These plans can be maintained as Section 401(k), profit sharing or money
purchase pension plans. Contributions may be invested only in Class A
Shares and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish
an IRA and make contributions which may be tax-deductible, even if the
individual is already participating in an employer-sponsored retirement
plan. Even if contributions are not deductible for tax purposes, as
indicated below, earnings will be tax-deferred. In addition, an
individual may make contributions on behalf of a spouse who has no
compensation for the year; however, participation may be restricted based
on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts
that can be utilized depending on the individual's circumstances. A new
Roth IRA and Education IRA are available in addition to the existing
deductible IRA and non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active
participant in an employer sponsored retirement plan. Even if a taxpayer
is an active participant in an employer sponsored retirement plan, the
full $2,000 is still available if the taxpayer's AGI is below $30,000
($50,000 for taxpayers filing joint returns) for years beginning after
December 31, 1997. A partial deduction is allowed for married couples
with income between $50,000 and $60,000, and for single individuals with
incomes between $30,000 and $40,000. These income phase-out limits reach
$80,000-$100,000 in 2007 for joint filers and $50,000-$60,000 in 2005 for
single filers. No deductions are available for contributions to IRAs by
taxpayers whose AGI after IRA deductions exceeds the maximum income limit
established for each year and who are active participants in an employer
sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still
can make non-deductible IRA contributions of as much as $2,000 for each
working spouse and defer taxes on interest or other earnings from the
IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI
is below $150,000. The maximum deductible IRA contribution for a married
individual who is not an active participant, but whose spouse is, is
phased out for combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or
another IRA may rollover the distribution tax-free to a Conduit IRA. The
rollover of the eligible distribution must be completed by the 60th day
after receipt of the distribution; however, if the rollover is in the form
of a direct trustee-to-trustee transfer without going through the
distributee's hand, the 60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and
does not constitute one of the following:
(1) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(2) Substantially equal installment payments for a period certain of
10 or more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
(4) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee;
and
(5) A distribution of after-tax contributions which is not includable
in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As
a result of the Internal Revenue Service Restructuring and Reform Act of
1998 (the "1998 Act"), the $2,000 annual limit will not be reduced by any
contributions to a deductible or nondeductible IRA for the same year. The
maximum contribution that can be made to a Roth IRA is phased out for
single filers with AGI between $95,000 and $110,000, and for couples
filing jointly with AGI between $150,000 and $160,000. Qualified
distributions from a Roth IRA would be exempt from federal taxes.
Qualified distributions are distributions (1) made after the five-taxable
year period beginning with the first taxable year for which a contribution
was made to a Roth IRA and (2) that are (a) made on or after the date on
which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time
homebuyer expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated
earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA.
Earnings and contributions from a deductible IRA are subject to a tax
upon conversion; however, no 10% excise tax for early withdrawal would
apply. If the conversion is done prior to January 1, 1999, then the
income from the conversion can be included in income ratably over a
four-year period beginning with the year of conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to
$500 per year per beneficiary. The $500 annual limit is in addition to
the $2,000 annual contribution limit applicable to IRAs and Roth IRAs.
Eligible contributions must be in cash and made prior to the date the
beneficiary reaches age 18. Similar to the Roth IRA, earnings would
accumulate tax-free. There is no requirement that the contributor be
related to the beneficiary, and there is no limit on the number of
beneficiaries for whom one contributor can establish Education IRAs. In
addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a
single beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and
$110,000, and for couples filing jointly with modified AGI of between
$150,000 and $160,000. Individuals with modified AGI above the phase-out
range are not allowed to make contributions to an Education IRA
established on behalf of any other individual.
Distributions from an Education IRA are excludable from gross income
to the extent that the distribution does not exceed qualified higher
education expenses incurred by the beneficiary during the year the
distribution is made regardless of whether the beneficiary is enrolled at
an eligible educational institution on a full-time, half-time, or less
than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such
a distribution will be includible in gross income of the beneficiary and
subject to an additional 10% penalty tax if the distribution is not for
qualified higher educations expenses. Tax-free (and penalty-free)
transfers and rollovers of account balances from one Education IRA
benefiting one beneficiary to another Education IRA benefiting a different
beneficiary (as well as redesignations of the named beneficiary) is
permitted, provided that the new beneficiary is a member of the family of
the old beneficiary and that the transfer or rollover is made before the
time the old beneficiary reaches age 30 and the new beneficiary reaches
age 18.
A company or association may establish a Group IRA or Group Roth IRA
for employees or members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in
order to avoid premature distribution penalties, but distributions
generally must commence no later than April 1 of the calendar year
following the year in which the participant reaches age 70 1/2.
Individuals are entitled to revoke the account, for any reason and
without penalty, by mailing written notice of revocation to Delaware
Management Trust Company within seven days after the receipt of the IRA
Disclosure Statement or within seven days after the establishment of the
IRA, except, if the IRA is established more than seven days after receipt
of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the
year received. Excess contributions removed after the tax filing
deadline, plus extensions, for the year in which the excess
contributions were made are subject to a 6% excise tax on the amount of
excess. Premature distributions (distributions made before age 59 1/2,
except for death, disability and certain other limited circumstances) will
be subject to a 10% excise tax on the amount prematurely distributed, in
addition to the income tax resulting from the distribution. For
information concerning the applicability of a CDSC upon redemption of
Class B Shares and Class C Shares, see Contingent Deferred Sales Charge -
Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical
expenses in excess of 7.5% of adjusted gross income or to pay health
insurance premiums by an individual who has received unemployment
compensation for 12 consecutive weeks. In addition, effective January 1,
1998, the new law allows for premature distribution without a 10% penalty
if (i) the amounts are used to pay qualified higher education expenses
(including graduate level courses) of the taxpayer, the taxpayer's spouse
or any child or grandchild of the taxpayer or the taxpayer's spouse, or
(ii) used to pay acquisition costs of a principle residence for the
purchase of a first-time home by the taxpayer, taxpayer's spouse or any
child or grandchild of the taxpayer or the taxpayer's spouse. A qualified
first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution
for first-time home purchases cannot exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Class A, B and C Shares are available for investment
by a SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25
or fewer employees. An employer may elect to make additional contributions
to such existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans.
Plan documents are available to enable employers to establish a plan. An
employer may also elect to make profit sharing contributions and/or
matching contributions with investments in only Class A Shares and Class C
Shares or certain other funds in the Delaware Investments family.
Purchases under the Plan may be combined for purposes of computing the
reduced front-end sales charge applicable to Class A Shares as set forth
in the table the Prospectus.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and
certain non-profit organizations to use mutual fund shares held in a
custodial account to fund deferred compensation arrangements for their
employees. A custodial account agreement is available for those employers
who wish to purchase shares of any of the Classes in conjunction with such
an arrangement. Purchases under the Plan may be combined for purposes of
computing the reduced front-end sales charge applicable to Class A Shares
as set forth in the table the Prospectus.
Deferred Compensation Plan for State and Local Government Employees
("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation
plan for their employees who wish to participate. This enables employees
to defer a portion of their salaries and any federal (and possibly state)
taxes thereon. Such plans may invest in shares of the Fund. Although
investors may use their own plan, there is available a Delaware
Investments 457 Deferred Compensation Plan. Interested investors should
contact the Distributor or their investment dealers to obtain further
information. Purchases under the Plan may be combined for purposes of
computing the reduced front-end sales charge applicable to Class A Shares
as set forth in the table in the Prospectus.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k)
Plan but is easier to administer than a typical 401(k) Plan. It requires
employers to make contributions on behalf of their employees and also has
a salary deferral feature that permits employees to defer a portion of
their salary into the plan on a pre-tax basis. A SIMPLE IRA is available
only to plan sponsors with 100 or fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory
plan sponsor contributions, discrimination testing is no longer required.
Class B Shares are not available for purchase by such plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund or its agent. Orders for purchases of
Class B Shares, Class C Shares and the Institutional Classes are effected
at the net asset value per share next calculated after receipt of the
order by the Fund in which shares are being purchased or its agent. See
Distribution and Service under Investment Management Agreement and
Sub-Advisory Agreement. Selling dealers have the responsibility of
transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset
value are computed as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open. The New York Stock Exchange is scheduled to be open
Monday through Friday throughout the year except for days when the
following holidays are observed: New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the Fund will generally be closed, pricing
calculations will not be made and purchase and redemption orders will not
be processed.
An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in
the Fund's financial statements which are incorporated by reference into
this Part B.
The Fund's net asset value per share is computed by adding the value
of all the Fund's securities and other assets, deducting any liabilities of
the Fund, and dividing by the number of Fund shares outstanding. Expenses
and fees are accrued daily. Portfolio securities, except for bonds, which
are primarily traded on a national or foreign securities exchange are
valued at the last sale price on that exchange. Options are valued at the
last reported sales price or, if no sales are reported, at the mean
between bid and asked prices. Securities not traded on a particular day,
over-the-counter securities and government and agency securities are
valued at the mean value between bid and asked prices. Money market
instruments having a maturity of less than 60 days are valued at amortized
cost. Debt securities (other than short-term obligations) are valued on
the basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Use of a pricing
service has been approved by the Board of Directors. Prices provided by a
pricing service take into account appropriate factors such as
institutional trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other
market data. If no quotations are available, all other securities and
assets are valued at fair value as determined in good faith and in a
method approved by the Board of Directors.
Each Class of the Fund will bear, pro-rata, all of the common expenses
of the Fund. The net asset values of all outstanding shares of each Class
of the Fund will be computed on a pro-rata basis for each outstanding share
based on the proportionate participation in the Fund represented by the
value of shares of that Class. All income earned and expenses incurred by
the Fund will be borne on a pro-rata basis by each outstanding share of a
Class, based on each Class' percentage in the Fund represented by the
value of shares of such Classes. Due to the specific distribution
expenses and other costs that may be allocable to each Class, the
dividends paid to each Class may vary. The net asset value per share of
each Class is expected to be equivalent.
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and
you want an easy way to invest in other equity funds, tax-advantaged funds,
bond funds or money market funds. This service is also useful if you are
anticipating a major expenditure and want to move a portion of your
investment into a fund that has the checkwriting feature. Exchanges are
subject to the requirements of each fund and all exchanges of shares
constitute taxable events. [See Taxes.] Further, in order for an
exchange to be processed, shares of the fund being acquired must be
registered in the state where the acquiring shareholder resides. You may
want to consult your financial adviser or investment dealer to discuss
which funds in Delaware Investments will best meet your changing
objectives, and the consequences of any exchange transaction. You may
also call the Delaware Investments directly for fund information.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after a Fund receives your request in good
order, subject, in the case of a redemption, to any applicable CDSC or
Limited CDSC. For example, redemption or exchange requests received in
good order after the time the offering price and net asset value of shares
are determined will be processed on the next business day. A shareholder
submitting a redemption request may indicate that he or she wishes to
receive redemption proceeds of a specific dollar amount. In the case of
such a request, and in the case of certain redemptions from retirement
plan accounts, the Fund will redeem the number of shares necessary to
deduct the applicable CDSC in the case of Class B Shares and Class C
Shares, and, if applicable, the Limited CDSC in the case of Class A Shares
and tender to the shareholder the requested amount, assuming the
shareholder holds enough shares in his or her account for the redemption
to be processed in this manner. Otherwise, the amount tendered to the
shareholder upon redemption will be reduced by the amount of the
applicable CDSC or Limited CDSC. Redemption proceeds will be distributed
promptly, as described below, but not later than seven days after receipt
of a redemption request.
Except as noted below, for a redemption request to be in "good
order," you must provide your account number, account registration, and
the total number of shares or dollar amount of the transaction. For
exchange requests, you must also provide the name of the fund in which you
want to invest the proceeds. Exchange instructions and redemption requests
must be signed by the record owner(s) exactly as the shares are registered.
You may request a redemption or an exchange by calling the Shareholder
Service Center at 800-523-1918. The Fund may suspend, terminate, or amend
the terms of the exchange privilege upon 60 days' written notice to
shareholders.
In addition to redemption of Fund shares, the Distributor, acting as
agent of the Fund, offers to repurchase Fund shares from broker/dealers
acting on behalf of shareholders. The redemption or repurchase price,
which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order
by the respective Fund, its agent, or certain authorized persons, subject
to applicable CDSC or Limited CDSC. This is computed and effective at the
time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Fund and the
Distributor end their business days at 5 p.m., Eastern time. This offer
is discretionary and may be completely withdrawn without further notice by
the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the
net asset value per share computed that day (subject to the applicable
CDSC or Limited CDSC), if the repurchase order was received by the
broker/dealer from the shareholder prior to the time the offering price
and net asset value are determined on such day. The selling dealer has
the responsibility of transmitting orders to the Distributor promptly.
Such repurchase is then settled as an ordinary transaction with the
broker/dealer (who may make a charge to the shareholder for this service)
delivering the shares repurchased.
Payment for shares redeemed will ordinarily be mailed the next
business day, but in no case later than seven days, after receipt of a
redemption request in good order by the Fund or certain other authorized
persons (see Distribution and Service under Investment Management
Agreements and Sub-Advisory Agreements); provided, however, that each
commitment to mail or wire redemption proceeds by a certain time, as
described below, is modified by the qualifications described in the next
paragraph.
The Fund will process written and telephone redemption requests to
the extent that the purchase orders for the shares being redeemed have
already settled. The Fund will honor redemption requests as to shares
for which a check was tendered as payment, but the Fund will not mail or
wire the proceeds until it is reasonably satisfied that the purchase check
has cleared, which may take up to 15 days from the purchase date. You can
avoid this potential delay if you purchase shares by wiring Federal Funds.
The Fund reserves the right to reject a written or telephone redemption
request or delay payment of redemption proceeds if there has been a recent
change to the shareholder's address of record.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other
reason, the Fund involved will automatically redeem from the shareholder's
account the shares purchased by the check plus any dividends earned
thereon. Shareholders may be responsible for any losses to the Fund or to
the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a
result of which disposal by the Fund of securities owned by it is not
reasonably practical, or it is not reasonably practical for the Fund
fairly to value its assets, or in the event that the SEC has provided for
such suspension for the protection of shareholders, a Fund may postpone
payment or suspend the right of redemption or repurchase. In such case,
the shareholder may withdraw the request for redemption or leave it
standing as a request for redemption at the net asset value next
determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities
paid or distributed in kind would be valued as described in Determining
Offering Price and Net Asset Value. Subsequent sale by an investor
receiving a distribution in kind could result in the payment of brokerage
commissions. However, Voyageur Funds, Inc. has elected to be governed by
Rule 18f-1 under the 1940 Act pursuant to which each Fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
asset value of such Fund during any 90-day period for any one shareholder.
The value of a Fund's investments is subject to changing market
prices. Thus, a shareholder reselling shares to a Fund may sustain either
a gain or loss, depending upon the price paid and the price received for
such shares.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value, below. Class B Shares are subject to a CDSC of: (i) 4% if shares
are redeemed within the first two years of purchase; (ii) 3% if shares are
redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; and (iv) 1%
if shares are redeemed during the sixth year following purchase. Class C
Shares are subject to a CDSC of 1% if shares are redeemed within 12 months
following purchase. See Contingent Deferred Sales Charge - Class B Shares
and Class C Shares under Purchasing Shares. Except for the applicable
CDSC or Limited CDSC and, with respect to the expedited payment by wire
described below for which, in the case of the Fund Classes, there is
currently a $7.50 bank wiring cost, neither the Funds nor the Distributor
charges a fee for redemptions or repurchases, but such fees could be
charged at any time in the future.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Investments
(in each case, "New Shares") in a permitted exchange, will not be subject
to a CDSC that might otherwise be due upon redemption of the Original
Shares. However, such shareholders will continue to be subject to the
CDSC and, in the case of Class B Shares, the automatic conversion schedule
of the Original Shares as described in this Part B and any CDSC assessed
upon redemption will be charged by the fund from which the Original Shares
were exchanged. In an exchange of Class B Shares from a Fund, the Fund's
CDSC schedule may be higher than the CDSC schedule relating to the New
Shares acquired as a result of the exchange. For purposes of computing
the CDSC that may be payable upon a disposition of the New Shares, the
period of time that an investor held the Original Shares is added to the
period of time that an investor held the New Shares. With respect to
Class B Shares, the automatic conversion schedule of the Original Shares
may be longer than that of the New Shares. Consequently, an investment in
New Shares by exchange may subject an investor to the higher 12b-1 fees
applicable to Class B Shares of a Fund for a longer period of time than if
the investment in New Shares were made directly.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your shares. The request must be signed
by all owners of the account or your investment dealer of record. For
redemptions of more than $50,000, or when the proceeds are not sent to the
shareholder(s) at the address of record, the Funds require a signature by
all owners of the account and a signature guarantee for each owner. A
signature guarantee can be obtained from a commercial bank, a trust
company or a member of a Securities Transfer Association Medallion Program
("STAMP"). Each Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The
Funds may require further documentation from corporations, executors,
retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of
your redemption request. If your Class A Shares are in certificate form,
the certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares and Institutional Class Shares
only if a shareholder submits a specific request. Certificates are not
issued for Class B Shares or Class C Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia,
PA 19103) to request an exchange of any or all of your Class A, B or C
Shares into another mutual fund in Delaware Investments, subject to the
same conditions and limitations as other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without
charge) for you. If you choose to have your Class A Shares or
Insitutional Class Shares in certificate form, you may redeem or, in the
case of Class A Shares, exchange only by written request and you must
return your certificates.
The Telephone Redemption - Check to Your Address of Record service
and the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your
account in writing that you do not wish to have such services available
with respect to your account. Each Fund reserves the right to modify,
terminate or suspend these procedures upon 60 days' written notice to
shareholders. It may be difficult to reach the Funds by telephone during
periods when market or economic conditions lead to an unusually large
volume of telephone requests. The Telephone Exchange service is not
available to Institutional Class Shares.
Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions
for redemption or exchange of Fund shares which are reasonably believed to
be genuine. With respect to such telephone transactions, each Fund will
follow reasonable procedures to confirm that instructions communicated by
telephone are genuine (including verification of a form of personal
identification) as, if it does not, the Fund or the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent transactions.
Telephone instructions are generally tape recorded, and a written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone. By exchanging shares by telephone,
you are acknowledging prior receipt of a prospectus for the fund into
which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption
proceeds of $50,000 or less mailed to you at your address of record.
Checks will be payable to the shareholder(s) of record. Payment is
normally mailed the next business day after receipt of the redemption
request. This service is only available to individual, joint and
individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If
you request a wire, your funds will normally be sent the next business
day. If the proceeds are wired to the shareholder's account at a bank
which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.
First Union National Bank's fee (currently $7.50 for Class A, B and C
Shares) will be deducted from redemption proceeds. If you ask for a
check, it will normally be mailed the next business day after receipt of
your redemption request to your predesignated bank account. There are no
separate fees for this redemption method, but the mail time may delay
getting funds into your bank account. Simply call the Shareholder Service
Center prior to the time the offering price and net asset value are
determined, as noted above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and
investment objectives change. You or your investment dealer of record
can exchange your shares into other funds in Delaware Investments under
the same registration, subject to the same conditions and limitations as
other exchanges noted above. As with the written exchange service,
telephone exchanges are subject to the requirements of each fund, as
described above. Telephone exchanges may be subject to limitations as to
amounts or frequency.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on
short-term swings in the securities market through frequent transactions
in and out of the funds in the Delaware Investments family. Telephone
exchanges may be subject to limitations as to amounts or frequency. The
Transfer Agent and each Fund reserve the right to record exchange
instructions received by telephone and to reject exchange requests at any
time in the future. This service is not available to Institutional Class
Shares.
MoneyLine (SM) On Demand
You or your investment dealer may request redemptions of Fund shares
by phone using MoneyLine (SM) On Demand. When you authorize the Fund to
accept such requests from you or your investment dealer, funds will be
deposited to (for share redemptions) your predesignated bank account.
Your request will be processed the same day if you call prior to 4 p.m.,
Eastern time. There is a $25 minimum and $50,000 maximum limit for
MoneyLine (SM) On Demand transactions. See MoneyLine (SM) On Demand under
Investment Plans.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing
services ("Timing Firms") to purchase or redeem shares based on changing
economic and market conditions ("Timing Accounts"), the Funds will refuse
any new timing arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Investments funds from Timing Firms. The Fund
reserves the right to temporarily or permanently terminate the exchange
privilege or reject any specific purchase order for any person whose
transactions seem to follow a timing pattern who: (i) makes an exchange
request out of the Fund within two weeks of an earlier exchange request
out of the Fund, or (ii) makes more than two exchanges out of the Fund per
calendar quarter, or (iii) exchanges shares equal in value to at least $5
million, or more than 1/4 of 1% of the Fund's net assets. Accounts under
common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market
indicators, will be aggregated for purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds:
(1) Decatur Equity Income Fund, (2) Growth and Income Fund, (3) Delaware
Balanced Fund, (4) Limited-Term Government Fund, (5) USA Fund, (6)
Delaware Cash Reserve, (7) Delchester Fund and (8) Tax-Free Pennsylvania
Fund. No other Delaware Investments funds are available for timed
exchanges. Assets redeemed or exchanged out of Timing Accounts in
Delaware Investments funds not listed above may not be reinvested back
into that Timing Account. The Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to
follow a time pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the
Manager's judgment, the Fund would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A shareholder's purchase exchanges may
be restricted or refused if the Fund receives or anticipates simultaneous
orders affecting significant portions of the Fund's assets. In
particular, a pattern of exchanges that coincide with a "market timing"
strategy may be disruptive to the Fund and therefore may be refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price, or net
asset value, as applicable, for which certificates have not been issued may
establish a Systematic Withdrawal Plan for monthly withdrawals of $25 or
more, or quarterly withdrawals of $75 or more, although the Funds do not
recommend any specific amount of withdrawal. This is particularly useful
to shareholders living on fixed incomes, since it can provide them with a
stable supplemental amount. This $5,000 minimum does not apply for a
Fund's prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized
securities profits distributions will be credited to the shareholder's
account and sufficient full and fractional shares will be redeemed at the
net asset value calculated on the third business day preceding the mailing
date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and
are normally mailed within two business days. Both ordinary income
dividends and realized securities profits distributions will be
automatically reinvested in additional shares of the Class at net asset
value. This plan is not recommended for all investors and should be
started only after careful consideration of its operation and effect upon
the investor's savings and investment program. To the extent that
withdrawal payments from the plan exceed any dividends and/or realized
securities profits distributions paid on shares held under the plan, the
withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
Shareholders should not purchase additional shares while participating in
a Systematic Withdrawal Plan.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on
the holding period for the specific shares liquidated. Premature
withdrawals from retirement plans may have adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of
Class A Shares through a periodic investment program in a fund managed by
the Manager must be terminated before a Systematic Withdrawal Plan with
respect to such shares can take effect, except if the shareholder is a
participant in one of our retirement plans or is investing in Delaware
Investments funds which do not carry a sales charge. Redemptions of Class
A Shares pursuant to a Systematic Withdrawal Plan may be subject to a
Limited CDSC if the purchase was made at net asset value and a dealer's
commission has been paid on that purchase. The applicable CDSC for Class
B Shares and Class C Shares redeemed via a Systematic Withdrawal Plan will
be waived if, on the date that the Plan is established, the annual amount
selected to be withdrawn is less than 12% of the account balance. If the
annual amount selected to be withdrawn exceeds 12% of the account balance
on the date that the Systematic Withdrawal Plan is established, all
redemptions under the Plan will be subject to the applicable CDSC.
Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not
subject to a CDSC because they have either satisfied the required holding
period or were acquired through the reinvestment of distributions. The
12% annual limit will be reset on the date that any Systematic Withdrawal
Plan is modified (for example, a change in the amount selected to be
withdrawn or the frequency or date of withdrawals), based on the balance
in the account on that date. See Waiver of Contingent Deferred Sales
Charge - Class B Shares and Class C Shares, below.
An investor wishing to start a Systematic Withdrawal Plan must
complete an authorization form. If the recipient of Systematic Withdrawal
Plan payments is other than the registered shareholder, the shareholder's
signature on this authorization must be guaranteed. Each signature
guarantee must be supplied by an eligible guarantor institution. The
Funds reserve the right to reject a signature guarantee supplied by an
eligible institution based on its creditworthiness. This plan may be
terminated by the shareholder or the Transfer Agent at any time by giving
written notice.
Systematic Withdrawal Plan payments are normally made by check. In
the alternative, you may elect to have your payments transferred from your
Fund account to your predesignated bank account through the MoneyLine (SM)
Direct Deposit Service. Your funds will normally be credited to your bank
account up to four business days after the payment date. There are no
separate fees for this redemption method. It may take up to four business
days for the transactions to be completed. You can initiate this service
by completing an Account Services form. If your name and address are not
identical to the name and address on your Fund account, you must have your
signature guaranteed. The Funds do not charge a fee for any this service;
however, your bank may charge a fee. This service is not available for
retirement plans.
The Systematic Withdrawal Plan is not available for the Institutional
Class. Shareholders should consult with their financial advisers to
determine whether a Systematic Withdrawal Plan would be suitable for them.
Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value
For purchases of $1,000,000 or more made on or after July 1, 1998, a
Limited CDSC will be imposed on certain redemptions of Class A Shares (or
shares into which such Class A Shares are exchanged) according to the
following schedule: (1) 1.00% if shares are redeemed during the first year
after the purchase; and (2) 0.50% if such shares are redeemed during the
second year after the purchase, if such purchases were made at net asset
value and triggered the payment by the Distributor of the dealer's
commission described above.
The Limited CDSC will be paid to the Distributor and will be assessed
on an amount equal to the lesser of : (1) the net asset value at the time
of purchase of the Class A Shares being redeemed or (2) the net asset value
of such Class A Shares at the time of redemption. For purposes of this
formula, the "net asset value at the time of purchase" will be the net
asset value at purchase of the Class A Shares even if those shares are
later exchanged for shares of another Delaware Investments fund and, in
the event of an exchange of Class A Shares, the "net asset value of such
shares at the time of redemption" will be the net asset value of the
shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years will
not be subjected to the Limited CDSC and an exchange of such Class A Shares
into another Delaware Investments fund will not trigger the imposition of
the Limited CDSC at the time of such exchange. The period a shareholder
owns shares into which Class A Shares are exchanged will count towards
satisfying the two-year holding period. The Limited CDSC is assessed if
such two year period is not satisfied irrespective of whether the
redemption triggering its payment is of Class A Shares of a Fund or Class
A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed
by other shares held for the longest period of time. The Limited CDSC will
not be imposed upon shares representing reinvested dividends or capital
gains distributions, or upon amounts representing share appreciation. All
investments made during a calendar month, regardless of what day of the
month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that
result from a Fund's right to liquidate a shareholder's account if the
aggregate net asset value of the shares held in the account is less than
the then-effective minimum account size; (ii) distributions to
participants from a retirement plan qualified under section 401(a) or
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), or
due to death of a participant in such a plan; (iii) redemptions pursuant
to the direction of a participant or beneficiary of a retirement plan
qualified under section 401(a) or 401(k) of the Code with respect to that
retirement plan; (iv) periodic distributions from an IRA, SIMPLE IRA, or
403(b)(7) or 457 Deferred Compensation Plan due to death, disability, or
attainment of age 59 1/2, and IRA distributions qualifying under Section
72(t) of the Internal Revenue Code; (v) returns of excess contributions to
an IRA; (vi) distributions by other employee benefit plans to pay
benefits; (vii) distributions described in (ii), (iv), and (vi) above
pursuant to a systematic withdrawal plan; and (viii) redemptions by the
classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying Class A Shares
at Net Asset Value under Purchasing Shares).
Waiver of Contingent Deferred Sales Charge - Class B Shares and Class C
Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result
from the Fund's right to liquidate a shareholder's account if the aggregate
net asset value of the shares held in the account is less than the
then-effective minimum account size; (ii) returns of excess contributions
to an IRA, SIMPLE IRA, SEP/IRA, or 403(b)(7) or 457 Deferred Compensation
Plan; (iii) periodic distributions from an IRA, SIMPLE IRA, SAR/SEP,
SEP/IRA, or 403(b)(7) or 457 Deferred Compensation Plan due to death,
disability or attainment of age 59 1/2, and IRA distributions qualifying
under Section 72(t) of the Internal Revenue Code; and (iv) distributions
from an account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Code) of
all registered owners occurring after the purchase of the shares being
redeemed.
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the
shares held in the account is less than the then-effective minimum account
size; (ii) returns of excess contributions to an IRA, SIMPLE IRA,
403(b)(7) or 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan, or 401(k) Defined Contribution plan; (iii) periodic
distributions from a 403(b)(7) or 457 Deferred Compensation Plan upon
attainment of age 59 1/2, Profit Sharing Plan, Money Purchase Plan, 401(k)
Defined Contribution Plan upon attainment of age 70 1/2, and IRA
distributions qualifying under Section 72(t) of the Internal Revenue Code;
(iv) distributions from a 403(b)(7) or 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a
401(k) Defined Contribution Plan upon attainment of normal retirement age
under the plan or upon separation from service; (vi) periodic
distributions from an IRA or SIMPLE IRA on or after attainment of age 59
1/2; and (vii) distributions from an account if the redemption results
from the death of all registered owners of the account (in the case of
accounts established under the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts or trust accounts, the waiver applies upon the
death of all beneficial owners) or a total and permanent disability (as
defined in Section 72 of the Code) of all registered owners occurring
after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B Shares and Class C
Shares redeemed in accordance with a Systematic Withdrawal Plan if the
annual amount selected to be withdrawn under the Plan does not exceed 12%
of the value of the account on the date that the Systematic Withdrawal
Plan was established or modified.
DISTRIBUTIONS AND TAXES
The Fund declares a dividend to shareholders of each Class from net
investment income on a daily basis. Dividends are declared each day the
Fund is open and paid monthly. Net investment income earned on days when
the Fund is not open will be declared as a dividend on the next business
day. Purchases of shares of the Fund by wire begin earning dividends when
converted into Federal Funds and are available for investment, normally
the next business day after receipt. However, if the Fund is given prior
notice of Federal Funds wire and an acceptable written guarantee of timely
receipt from an investor satisfying the Fund's credit policies, the
purchase will start earning dividends on the date the wire is received.
Investors desiring to guarantee wire payments must have an acceptable
financial condition and credit history in the sole discretion of the Fund.
Voyageur Funds, Inc. reserves the right to terminate this option at any
time. Purchases by check earn dividends upon conversion to Federal Funds,
normally one business day after receipt.
Each Class of shares of the Fund will share proportionately in the
investment income and expenses of the Fund, except that Class A Shares,
Class B Shares, Class C Shares and Institutional Class Shares will each
bear distribution fees payable under their respective 12b-1 Plans.
Dividends are automatically reinvested in additional shares of the
same Class of the Fund at net asset value, unless, in the case of Class A
Shares, Class B Shares and Class C Shares, an election to receive
dividends in cash has been made. Payment by check of cash dividends will
ordinarily be mailed within three business days after the payable date.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If
such a shareholder's dividends increase to greater than $1.00, the
shareholder would have to file a new election in order to begin receiving
dividends in cash again. If a shareholder redeems an entire account, all
dividends accrued to the time of the withdrawal will be paid by separate
check at the end of that particular monthly dividend period, consistent
with the payment and mailing schedule described above. Any check in
payment of dividends or other distributions which cannot be delivered by
the United States Post Office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's account at the
then-current net asset value and the dividend option may be changed from
cash to reinvest. The Fund may deduct from a shareholder's account the
costs of the Fund's effort to locate a shareholder if a shareholder's mail
is returned by the United States Post Office or the Fund is otherwise
unable to locate the shareholder or verify the shareholder's mailing
address. These costs may include a percentage of the account when a
search company charges a percentage fee in exchange for their location
services.
Any distributions from net realized securities profits will be made
twice a year. Payment would be made during the first quarter of the next
fiscal year. Such distributions will be reinvested in shares, unless the
shareholders elect to receive them in cash. The Fund will mail a
quarterly statement showing the dividends paid and all the transactions
made during the period.
Under the 1997 Act, as revised by the 1998 Act and the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, a Fund is
required to track its sales of portfolio securities and to report its
capital gain distributions to you according to the following categories of
holding periods:
"Mid-term capital gains" or "28 percent rate gain": securities sold
by a Fund after July 28, 1997 that were held more than one year but not
more than 18 months. These gains will be taxable to individual investors
at a maximum rate of 28%. This category of gains applied only to gains
and distributions in 1997.
"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold between May 7, 1997 and July 28, 1997 that were held for
more than 12 months, and securities sold by the Fund after July 28, 1997
that were held for more than 18 months. As revised by the 1998 Act, this
rate applies to securities held for more than 12 months and sold in tax
years beginning after December 1, 1997. These gains will be taxable to
individual investors at a maximum rate of 20% for investors in the 28% or
higher federal income tax brackets, and at a maximum rate of 10% for
investors in the 15% federal income tax bracket. The Omnibus Consolidated
and Emergency Supplemental Appropriations Act passed in October of 1998
included technical corrections to the 1998 Act. The effect of this
correction is that essentially all capital gain distributions paid to
shareholders during 1998 will be taxed at a maximum rate of 20%.
"Qualified 5-year gains": For individuals in the 15% bracket,
qualified five-year gains are net gains on securities held for more than 5
years which are sold after December 31, 2000. For individual who are
subject to tax at higher rate brackets, qualified five-year gains are net
gains on securities which are purchased after December 31, 2000 and are
held for more than five years. Taxpayers subject to tax at a higher rate
brackets may also make an election for shares held on January 1, 2001 to
recognize gain on their shares in order to qualify such shares as qualified
five-year property. These gains will be taxable to individual investors
at a maximum rate of 18% for investors in the 28% or higher federal income
tax brackets, and at a maximum rate of 8% for investors in the 15% federal
income tax bracket when sold after the five-year holding period.
See also Accounting and Tax Issues in this Part B.
INVESTMENT MANAGEMENT AGREEMENT AND SUB-ADVISORY AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the
supervision and direction of Voyageur Funds, Inc.'s Board of Directors.
The Manager and its predecessors have been managing the funds in
Delaware Investments since 1938. On October 31, 1998, the Manager and its
affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than $42 billion in
assets in the various institutional or separately managed (approximately
$24,854,600,000) and investment company (approximately $17,780,970,000)
accounts.
Prior to May 1, 1997, Voyageur Fund Managers, Inc. ("Voyageur") had
been retained under an investment advisory contract to act as the Fund's
investment adviser, subject to the authority of the board of directors.
Voyageur was an indirect, wholly-owned subsidiary of Dougherty Financial
Group, Inc. ("DFG"). After the close of business on April 30, 1997,
Voyageur became an indirect, wholly owned subsidiary of Lincoln National
as a result of Lincoln National's acquisition of DFG.
Because Lincoln National's acquisition of DFG resulted in a change of
control of Voyageur, the Fund's previous investment advisory agreement
with Voyageur was "assigned", as that term is defined by the 1940 Act, and
the previous agreement therefore terminated upon the completion of the
acquisition. The board of directors of Voyageur Funds, Inc. unanimously
approved new advisory agreements at a meeting held in person on February
14, 1997, and called for a shareholders meeting to approve the new
agreements. At a meeting held on April 11, 1997, the shareholders of the
Fund approved its Investment Management Agreement with Voyageur, an
indirect wholly-owned subsidiary of Lincoln National, to become effective
after the close of business on April 30, 1997, the date the acquisition
was completed. On May 30, 1997, Voyageur was merged into the Manager and
the Manager became the investment manager for the Fund.
Beginning May 1, 1997, Delaware Management Company became the Fund's
Investment Manager and Voyageur Asset Management LLC became the
sub-adviser. The Investment Management Agreement into which the Fund's
Manager has entered has an initial term of two years and may be renewed
each year only so long as such renewal and continuance are specifically
approved at least annually by the Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund, and only if the
terms and the renewal thereof have been approved by the vote of a majority
of the directors of Voyageur Funds, Inc. who are not parties thereto or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. The Agreement is terminable
without penalty on 60 days' notice by the directors of Voyageur Funds,
Inc. or by the Manager. The Agreement will terminate automatically in the
event of its assignment.
Under its Investment Management Agreement, the Manager is entitled to
receive an annual fee equal to 0.50% of the Fund's average daily net
assets.
Pursuant to the terms of a Sub-Advisory Agreement with the Manager,
the Sub-Adviser participates in the management of the Fund's assets, is
responsible for day-to-day investment management of the Fund, makes
investment decisions for the Fund in accordance with the Fund's investment
objectives and stated policies and places orders on behalf of the Fund to
effect the investment decisions made with Voyageur Funds, Inc.=s Trading
Department. The Manager continues to have ultimate responsibility for all
investment advisory services in connection with the management of the Fund
pursuant to the Investment Management Agreement and supervises the
Sub-Adviser's performance of such services. For the services provided to
the Manager, the Manager pays the Sub-Adviser a fee equal to one-half of
the actual fee paid to the Manager under the terms of the Investment
Management Agreement.
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those
borne by the Distributor under the Distribution Agreement.
In connection with the merger transaction described above, the
Manager has agreed for the period from May 1, 1997 through April 30, 1999,
to voluntarily waive that portion, if any, of the annual management fees
payable by the Fund and to pay the Fund's expenses to the extent necessary
to ensure that the Fund's total operating expenses (excluding 12b-1 Plan
fees, interest expense, taxes, brokerage fees and commissions) do not
exceed, on an annual basis, 1.00% of the average daily net assets of each
Class of the Fund. This agreement replaces a similar provision in the
Funds' investment advisory contracts with the Funds' predecessor
investment adviser. The Manager and the Distributor reserve the right to
voluntarily waive their fees in whole or part and to voluntarily pay or
reimburse certain other of the Fund=s expenses. This agreement replaces a
similar provision in the Fund's investment advisory contracts with the
Fund's predecessor investment adviser.
On October 31, 1998, the total net assets of Voyageur Funds, Inc.
were $86,883,024.
Investment management fees incurred by the Fund for the last 3 fiscal
years follow:
Period Incurred Paid Waived
Year Ended
October 31, 1998 $455,622 $398,138 $57,484
Year Ended
October 31, 1997 $568,682 $476,490 $92,192
Period Ended
October 31, 1996 $187,687 $187,687 $-0-
Year Ended
June 30, 1996 $609,965 $608,359 $1,606
For the fiscal year ended October 31, 1998, the Manager did not pay
any fees to the Sub-Adviser.
Under the general supervision of the Board of Directors, the Manager
makes and executes all investment decisions for the Fund. The Manager
pays the salaries of all directors, officers and employees of Voyageur
Funds, Inc. who are affiliated with the Manager. The Fund pays all of
its other expenses.
Distribution and Service
The Distributor, Delaware Distributors, L.P., located at 1818 Market
Street, Philadelphia, PA 19103, serves as the national distributor of the
Fund's shares under a Distribution Agreement dated March 1, 1997. The
Distributor is an affiliate of the Manager and bears all of the costs of
promotion and distribution, except for payments by the Fund on behalf of
Class A Shares, Class B Shares and Class C Shares under the 12b-1 Plan.
See Distribution (12b-1) and Service under Purchasing Shares for a
discussion of the Distributor's waiver with respect to Institutional Class
Shares. The Distributor is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103,
serves as the Fund's shareholder servicing, dividend disbursing and
transfer agent pursuant to an Amended and Restated Shareholders Services
Agreement dated as of April 30, 1997. The Transfer Agent also provides
accounting services to the Fund pursuant to the terms of a separate Fund
Accounting Agreement. The Transfer Agent is also an indirect, wholly
owned subsidiary of Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such
brokers are authorized to designate other intermediaries to accept
purchase and redemption orders on the behalf of the Fund. For purposes of
pricing, the Fund will be deemed to have received a purchase or redemption
order when an authorized broker or, if applicable, a broker's authorized
designee, accepts the order.
OFFICERS AND DIRECTORS
The business and affairs of Voyageur Funds, Inc. are managed under the
direction of its Board of Directors.
Certain officers and directors of Voyageur Funds, Inc. hold identical
positions in each of the other funds in Delaware Investments. On
January 31, 1999 Voyageur Funds, Inc.'s officers and directors owned
less than 1% of the outstanding shares of Class A, Class B, Class C
and Institutional Class of the Fund.
As of January 31, 1999 management believes the following shareholders
held 5% or more of the outstanding shares of a Class:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class Name and Address of Account Share Amount Percentage
US Government Securities City of Kentwood 290,225.410 7.39%
Fund A Class Attn: Tom Chase
4900 Breton Avenue SE
P.O. Box 8848
Kentwood, MI 49508
US Government Securities Merrill Lynch, Pierce,
Fund B Class Fenner & Smith 29,311.990 5.87%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Drive, East -
2nd Floor
Jacksonville, FL 32246
BNC Partnership 27,002.950 5.40%
Attn: Mike Schmitz
c/o BNC National Bank Trust Dept.
322 East Main Street
Bismarck, ND 58501
Volunteer Medical Service 25,372.940 5.08%
Corps. of Lansdale
P.O. Box 208
175 Medical Campus Drive
Lansdale, PA 19446-0208
<CAPTION>
<S> <C> <C> <C>
Class Name and Address of Account Share Amount Percentage
US Government Securities Paine Webber 7,937.070 12.98%
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 7,451.580 12.19%
& 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 4,857.310 7.94%
Theodrick B. Pryor
P.O. Box 2096
Post Falls, ID 83877-2096
DMTC Custodian for the IRA of 4,779.850 7.82%
Claudia J. Dixon-Pryor
P.O. Box 2096
Post Falls, ID 83877-2096
Donaldson, Lufkin, Jenrette 3,334.030 5.45%
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
DMTC Custodian for the IRA of 3,088.730 5.05%
Beverly J. Henderson
P.O. Box 2085
Post Falls, ID 83877-2085
US Government Securities Bankers Trust Co. as Trustee 3,247,487.340 87.94%
Fund Institutional Class for Public Service Electric
& Gas Co.
Master Employee Benefit Plan
34 Exchange Place
Attn: Donna Dekowski
New Jersey, NJ 07303
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Management Company, Inc., Delaware Investment Advisers (a series
of Delaware Management Business Trust), Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Retirement Financial Services, Inc. are direct or
indirect, wholly owned subsidiaries of Delaware Management Holdings, Inc.
("DMH"). On April 3, 1995, a merger between DMH and a wholly owned
subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.
Directors and principal officers of Voyageur Funds, Inc. are noted
below along with their ages and their business experience for the past
five years. Unless otherwise noted, the address of each officer and
director is One Commerce Square, Philadelphia, PA 19103.
*Wayne A. Stork (61)
[Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family and Delaware Capital
Management, Inc. Chairman, President, Chief Executive Officer and Director
of DMH Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer and
Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust
Chairman, President, Chief Executive Officer and Chief Investment Officer
of Delaware Management Company (a series of Delaware Management Business
Trust)
Chairman, Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd., Delaware International Holdings Ltd. and Delaware Management
Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Retirement Financial
Services, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.]
*Jeffrey J. Nick (45)
President, Chief Executive Officer, Chairman and Director and/or Trustee
of Voyageur Funds, Inc. and 32 other investment companies in the Delaware
Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation
Director of Delaware International Advisers Ltd.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National UK
plc and from 1989 to 1992, he was Senior Vice President responsible for
corporate planning and development for Lincoln National Corporation.
Richard G. Unruh, Jr. (58)
Executive Vice President of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family, Delaware Management
Holdings, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Capital Management, Inc.
President of Delaware Investment Advisers (a series of Delaware Management
Business Trust)
Executive Vice President and Director/Trustee of Delaware Management
Company, Inc. and Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
- -------------------
* Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.
Paul E. Suckow (51)
Executive Vice President/Chief Investment Officer, Fixed Income of
Voyageur Funds, Inc. and 32 other investment companies in the Delaware
Investments family, Delaware Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and Delaware
Management Business Trust
Director of Founders CBO Corporation
Director of HYPPCO Finance Company Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was Executive
Vice President and
Director of Fixed Income for Oppenheimer Management Corporation, New York,
NY from 1985 to 1992. Prior to that, Mr. Suckow was a fixed-income
portfolio manager for Delaware Investments.
David K. Downes (58)
Executive Vice President, Chief Operating Officer, Chief Financial Officer
of Voyageur Funds, Inc. and 32 other investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc, Founders CBO
Corporation, Delaware Capital Management, Inc., Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business Trust) and Delaware
Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief Administrative
Officer and Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of Delaware Management Company, Inc., DMH Corp., Delaware
Distributors, Inc., Founders Holdings, Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and Director
of Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director
of Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management
Trust Company and Retirement Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various executive
capacities at different times within the Delaware organization.
Walter P. Babich (70)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investment family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
Anthony D. Knerr (59)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he was
also a lecturer in English at the University. In addition, Mr. Knerr was
Chairman of The Publishing Group, Inc., New York, from 1988 to 1990.
Mr. Knerr founded The Publishing Group, Inc. in 1988.
Ann R. Leven (57)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, Washington, DC, and from 1975 to 1992, she was
Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (77)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman
Thomas F. Madison (62)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996.
From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance
Company and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
Charles E. Peck (72)
Director and/or Trustee of Voyageur Funds, Inc. and 32 other investment
companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of
The Ryland Group, Inc., Columbia, MD.
George M. Chamberlain, Jr. (51)
Senior Vice President, Secretary and General Counsel of Voyageur Funds,
Inc. and 32 other investment companies in the Delaware Investments family.
Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust) and Delaware Management Holdings, Inc.
Senior Vice President and Secretary of DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc., Delaware Service Company,
Inc., Founders Holdings, Inc., Retirement Financial Services, Inc. ,
Delaware Capital Management, Inc., Delvoy, Inc. and Delaware Management
Business Trust
Executive Vice President, Secretary and Director of Delaware Management
Trust Company
Senior Vice President and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Secretary of Lincoln Funds Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
executive capacities at different times within the Delaware organization.
Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Voyageur Funds, Inc. and 32
other investment companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd., Delvoy, Inc. and Delaware Management Business
Trust
Chief Financial Officer/Treasurer of Retirement Financial Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Treasurer of Lincoln Funds Corporation
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware organization.
Michael P. Bishof (36)
Senior Vice President/Treasurer of Voyageur Funds, Inc. and 32 other
investment companies in the
Delaware Investments family and Founders Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust) and
Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting of
Delaware
Distributors, L.P. and Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Senior Vice President and Assistant Treasurer of Founders CBO Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a Vice
President for CS First Boston Investment Management, New York, NY from
1993 to 1994 and an Assistant Vice President for Equitable Capital
Management Corporation, New York, NY from 1987 to 1993.
The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received
from the Fund and the total compensation received from all investment
companies in the Delaware Investments family for which he or she serves
as a director or trustee for the fiscal year ended October 31, 1998 and
an estimate of annual benefits to be received upon retirement under the
Delaware Group Retirement Plan for Directors/Trustees as of October 31,
1998. Only the independent directors of the Fund receive compensation
from the Fund.
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Total
Aggregate Accrued Estimated Compensation
Compensation as Part of Annual From all 34
from Voyageur Benefits Delaware
Voyageur Funds, Inc. Upon Investments
Name Funds, Inc. Expenses Retirement(1) Companies(2)
<S> <C> <C> <C> <C>
W. Thacher Longstreth $898 None $38,500 $60,384
Ann R. Leven $933 None $38,500 $66,545
Walter P. Babich $928 None $38,500 $65,384
Anthony D. Knerr $928 None $38,500 $65,384
Charles E. Peck $898 None $38,500 $60,384
Thomas F. Madison $910 None $38,500 $62,467
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the
time of his or her retirement from the Board, has attained the age
of 70 and served on the Board for at least five continuous years, is
entitled to receive payments from each investment company in the
Delaware Investments family for which he or she serves as a director
or trustee for a period equal to the lesser of the number of years
that such person served as a director or trustee or the remainder of
such person's life. The amount of such payments will be equal, on an
annual basis, to the amount of the annual retainer that is paid to
directors/trustees of each investment company at the time of such
person's retirement. If an eligible director/trustee retired as of
October 31, 1998 he or she would be entitled to annual payments
totaling the amount noted above, in the aggregate, from all of the
investment companies in the Delaware Investments family for which he
or she served as director or trustee, based on the number of
investment companies in the Delaware Investments family as of that
date.
(2) Each independent director/trustee currently receives a total annual
retainer fee of $38,500 for serving as a director or trustee for all
34 investment companies in Delaware Investments, plus $3,145 for
each Board Meeting attended. Ann R. Leven, Walter P. Babich,
Anthony D. Knerr and Thomas F. Madison serve on the Fund's audit
committee; Ms. Leven is the chairperson. Members of the audit
committee currently receive additional annual compensation of
$5,000 from all investment companies, in the aggregate, with the
exception of the chairperson, who receives $6,000.
GENERAL INFORMATION
Voyageur Funds, Inc. is an open-end, registered management investment
company. The Fund's portfolio of assets is diversified as defined by the
1940 Act. Voyageur Funds, Inc. was organized as a Minnesota corporation
on April 15, 1987.
The Manager is the investment manager of the Fund. The Manager also
provides investment management services to certain of the other funds in
the Delaware Investments family. An affiliate of the Manager also manages
private investment accounts. While investment decisions of the Fund are
made independently from those of the other funds and accounts, investment
decisions for such other funds and accounts may be made at the same time
as investment decisions for the Fund.
Access persons and advisory persons of the Delaware Investments
family of funds, as those terms are defined in SEC Rule 17j-1 under the
1940 Act, who provide services to the Manager, Delaware International
Advisers Ltd. or their affiliates, are permitted to engage in personal
securities transactions subject to the exceptions set forth in Rule 17j-1
and the following general restrictions and procedures: (1) certain
blackout periods apply to personal securities transactions of those
persons; (2) transactions must receive advance clearance and must be
completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of
securities and other restrictions apply to investments in private
placements of securities; (4) opening positions may only be closed-out
at a profit after a 60-day holding period has elapsed; and (5) the
Compliance Officer must be informed periodically of all securities
transactions and duplicate copies of brokerage confirmations and account
statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for the Fund and for the
other mutual funds available from Delaware Investments. Prior to May 31,
1997, Voyageur Fund Distributors, Inc. ("VFD") served as the national
distributor for the Fund. The Distributor ("DDLP"), for all periods after
May 31, 1997, and, VFD, prior to May 31, 1997, received net commissions
from on behalf of the Fund's Class A Shares, after reallowances to
dealers, as follows:
US Government Securities Fund A Class
Total
Amount of Amounts Net
Underwriting Reallowed Commission
Fiscal Year Ended Commission to Dealers to VFD/DDLP
10/31/98 $67,126 $55,344 $11,782
10/31/97 $34,104 $5,079 $29,025
DDLP, after May 31, 1997, and VFD, for periods prior to May 31, 1997,
received in the aggregate Limited CDSC payments with respect to the Fund's
A Class as follows:
Period Ended Limited CDSC Payments
Year Ended
10/31/98 None
Year Ended
10/31/97 None
Four Months
Ended
10/31/96 None
Year Ended
6/30/96 None
Year Ended
6/30/95 None
DDLP, after May 31, 1997, and VFD, for periods prior to May 31, 1997,
received in the aggregate CDSC payments with respect to the Fund's B Class
as follows:
Period Ended CDSC Payments
Year Ended
10/31/98 $7,771
Year Ended
10/31/97 5,058
Four Months
Ended
10/31/96 1,460
Year Ended
6/30/96 1,047
Year Ended
6/30/95 896
DDLP, after May 31, 1997, and VFD, for periods prior to May 31, 1997,
received CDSC payments with respect to the Fund's C Class as follows:
Period Ended CDSC Payments
Year Ended
10/31/98 $155
Year Ended
10/31/97 6
Four Months
Ended
10/31/96 4
Year Ended
6/30/96 2
Year Ended
6/30/95 None
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for each Fund and for
the other mutual funds available from Delaware Investments. The Transfer
Agent is paid a fee by the Fund for providing these services consisting of
an annual per account charge of $11.00 plus transaction charges for
particular services according to a schedule. Compensation is fixed each
year and approved by the Board of Directors, including a majority of the
unaffiliated directors. The Transfer Agent also provides accounting
services to the Fund. Those services include performing all functions
related to calculating the Fund's net asset value and providing all
financial reporting services, regulatory compliance testing and other
related accounting services. For its services, the Transfer Agent is paid
a fee based on total assets of all funds in Delaware Investments for which
it provides such accounting services. Such fee is equal to 0.25%
multiplied by the total amount of assets in the complex for which the
Transfer Agent furnishes accounting services, where such aggregate complex
assets are $10 billion or less, and 0.20% of assets if such aggregate
complex assets exceed $10 billion. The fees are charged to each fund,
including the Fund, on an aggregate pro-rata basis. The asset-based fee
payable to the Transfer Agent is subject to a minimum fee calculated by
determining the total number of investment portfolios and associated
classes.
Norwest Bank Minnesota, N.A. ("Norwest"), Sixth Street & Marquette
Avenue, Minneapolis, Minnesota 55402 is custodian of the Fund's securities
and cash. As custodian for the Fund, Norwest maintains a separate account
or accounts for the Fund; receives, holds and releases portfolio securities
on account of the Fund; receives and disburses money on behalf of the
Fund; and collects and receives income and other payments and
distributions on account of the Fund's portfolio securities.
Capitalization
Voyageur Funds, Inc. has a present authorized capitalization of 10
trillion shares of capital stock with a $.01 par value per share.
The Board of Directors has allocated the following number of shares
to the Fund and its respective classes:
US Government Securities Fund 100 billion
Class A Shares 10 billion
Class B Shares 10 billion
Class C Shares 10 billion
All shares have no preemptive rights, are fully transferable and,
when issued, are fully paid and nonassessable and, except as described
above, have equal voting rights.
Each Class of the Fund represents a proportionate interest in the
assets of the Fund and has the same voting and other rights and preferences
as the other classes of the Fund. Shareholders of Class A Shares, Class B
Shares, Class C Shares and Institutional Class Shares of the Fund may vote
only on matters affecting the 12b-1 Plan that relates to the Class of
shares that they hold. However, Class B Shares may vote on any proposal
to increase materially the fees to be paid by the Fund under the 12b-1
Plan relating to its Class A Shares. General expenses of the Fund will be
allocated on a pro-rata basis to the classes according to asset size,
except that expenses of the 12b-1 Plan of the Fund's Class A Shares, Class
B Shares and Class C Shares will be allocated solely to those classes.
Beginning June 9, 1997, the name of Voyageur U.S. Government
Securities Fund changed to Delaware-Voyageur US Government Securities Fund.
Noncumulative Voting
Voyageur Funds, Inc.'s shares have noncumulative voting rights
which means that the holders of more than 50% of the shares of Voyageur
Funds, Inc. voting for the election of directors can elect all the
directors if they choose to do so, and, in such event, the holders of the
remaining shares will not be able to elect any directors.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
APPENDIX A -- RATINGS
Earnings and Dividend Rankings for Common Stocks
Standard & Poor's Corporation. The investment process involves
assessment of various factors -- such as product and industry position,
corporate resources and financial policy -- with results that make some
common stocks more highly esteemed than others. In this assessment,
Standard & Poor=s believes that earnings and dividend performance is the
end result of the interplay of these factors and that, over the long run,
the record of this performance has a considerable bearing on relative
quality. The rankings, however, do not pretend to reflect all of the
factors, tangible or intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of
protection for principal and interest, called creditworthiness, cannot be
applied to common stocks, and therefore rankings are not to be confused
with bond quality ratings which are arrived at by a necessarily different
approach.
Growth and stability of earnings and dividends are deemed key elements
in establishing Standard & Poor=s earnings and dividend rankings for common
stocks, which are designed to capsulize the nature of this record in a
single symbol. It should be noted, however, that the process also takes
into consideration certain adjustments and modifications deemed desirable
in establishing such rankings.
The point of departure in arriving at these rankings is a computerized
scoring system based on per-share earnings and dividend records of the
most recent ten years -- a period deemed long enough to measure
significant time segments of secular growth, to capture indications of
basic change in trend as they develop, and to encompass the full
peak-to-peak range of the business cycle. Basic scores are computed for
earnings and dividends, then adjusted as indicated by a set of
predetermined modifiers for growth, stability within long-term trend, and
cyclicality. Adjusted scores for earnings and dividends are then combined
to yield a final score.
Further, the ranking system makes allowance for the fact that, in
general, corporate size imparts certain recognized advantages from an
investment standpoint. Conversely, minimum size limits (in terms of
corporate sales volume) are set for the various rankings, but the system
provides for making exceptions where the score reflects an outstanding
earnings-dividend record.
The final score for each stock is measured against a scoring matrix
determined by analysis of the scores of a large and representative sample
of stocks. The range of scores in the array of this sample has been
aligned with the following ladder of rankings:
A+ Highest B+ Average C Lowest
A High B Below Average D In Reorganization
A- Above Average B- Lower
NR signifies no ranking because of insufficient data or because the
stock is not amenable to the ranking process.
The positions as determined above may be modified in some instances by
special considerations, such as natural disasters, massive strikes, and
non-recurring accounting adjustments.
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends, and
relative current standing. These rankings must not be used as market
recommendations; a high-score stock may at times be so overpriced as to
justify its sale, while a low-score stock may be attractively priced for
purchase. Rankings based upon earnings and dividend records are no
substitute for complete analysis. They cannot take into account potential
effects of management changes, internal company policies not yet fully
reflected in the earnings and dividend record, public relations standing,
recent competitive shifts, and a host of other factors that may be
relevant to investment status and decision.
Commercial Paper Ratings
Standard & Poor=s Corporation. Commercial paper ratings are graded
into four categories, ranging from "A" for the highest quality obligations
to "D" for the lowest. Issues assigned the A rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
further refined with designation 1, 2, and 3 to indicate the relative
degree of safety. The "A-1" designation indicates that the degree of
safety regarding timely payment is very strong.
Moody=s Investors Service, Inc. Moody=s commercial paper ratings are
opinions of the ability of the issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months.
Moody=s makes no representation that such obligations are exempt from
registration under the 1933 Act, nor does it represent that any specific
note is a valid obligation of a rated issuer or issued in conformity with
any applicable law. Moody=s employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity
of rated issuers:
Prime-1 Superior capacity for repayment of short-term promissory
obligations.
Prime-2 Strong capacity for repayment of short-term promissory
obligations.
Prime-3 Acceptable capacity for repayment of short-term promissory
obligations.
Corporate Bond Ratings
Standard & Poor=s Corporation. Its ratings for corporate bonds have
the following definitions:
Investment grade:
Debt rated "AAA" has the highest rating assigned by Standard & Poor=s.
Capacity to pay interest and repay principal is extremely strong.
Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.
Debt rated "A" has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Speculative Grade:
Debt rated "BB", "B" "CCC" and "CC" and "C" is regarded, as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. ABB@ indicates the least degree of
speculation and "C" the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the
top four categories (AAA, AA, A, BBB, commonly known as "Investment Grade"
ratings) generally are regarded as eligible for bank investment. Also,
the laws of various states governing legal investments impose certain
rating or other standards for obligations eligible for investment by
savings banks, trust companies, insurance companies and fiduciaries
generally.
Moody=s Investors Service, Inc. Its ratings for corporate bonds
include the following:
Bonds which are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risk appear
somewhat larger than in Aaa securities.
Bonds which are rated "A" possess many favorable attributes and are
to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Bonds which are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
Bonds which are rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Bonds which are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Bonds which are rated "Ca" represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
Bonds which are rated "C" are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Preferred Stock Rating
Standard& Poor=s Corporation. Its ratings for preferred stock have
the following definitions:
An issue rated "AAA" has the highest rating that may be assigned by
Standard& Poor=s ("S&P") to a preferred stock issue and indicates an
extremely strong capacity to pay the preferred stock obligations.
A preferred stock issue rated "AA" also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations
is very strong, although not as overwhelming as for issues rated AAAA.@
An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the "A"
category.
Preferred stock rate "BB," "B," and "CCC" are regarded, on balance, as
predominantly speculative with respect to the issuer=s capacity to pay
preferred stock obligations. "BB" indicates the lowest degree of
speculation and "CCC" the highest degree of speculation. While such
issues will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.
A preferred stock rated "C" is a non-paying issue.
A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.
"NR" indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Moody=s Investors Service, Inc. Its ratings for preferred stock
include the following:
An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred stocks.
An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance that
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
An issue which is rate "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in
the "aaa" and "aa" classifications, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
An issue which is rated "baa" is considered to be medium-grade,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length
of time.
An issue which is rated "ba" is considered to have speculative
elements and its future cannot be considered well assured. Earnings and
asset protection may be very moderate and not well safeguarded during
adverse periods. Uncertainty of position characterizes preferred stocks
in this
class.
An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
An issue which is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payments.
An issue which is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of eventual
payment.
An issue rated "c" is the lowest rated class of preferred or
preference stock. Issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
APPENDIX B -- GENERAL CHARACTERISTICS AND RISKS OF OPTIONS AND FUTURES
General. As described in the Prospectus under "Investment Objectives
and Policies C Options and Futures," the Fund may purchase and sell options
on the securities in which it may invest and the Fund may purchase and sell
options on futures contracts (as defined below) and may purchase and sell
futures contracts. The Fund intend to engage in such transactions if it
appears advantageous to Voyageur to do so in order to pursue the Fund's
investment objectives, to seek to hedge against the effects of market
conditions and to seek to stabilize the value of its assets. The Fund will
engage in hedging and risk management transactions from time to time in
Voyageur=s discretion, and may not necessarily be engaging in such
transactions when movements in interest rates that could affect the value
of the assets of the Fund occur.
Conditions in the securities, futures and options markets will
determine whether and in what circumstances the Fund will employ any of
the techniques or strategies described below. The Fund's ability to pursue
certain of these strategies may be limited by applicable regulations of
the Commodity Futures Trading Commission (the "CFTC") and the federal tax
requirements applicable to regulated investment companies. Transactions in
options and futures contracts may give rise to income that is subject to
regular federal income tax and, accordingly, in normal circumstances the
Fund does not intend to engage in such practices to a significant extent.
The use of futures and options, and the possible benefits and
attendant risks, are discussed below.
Futures Contracts and Related Options. The Fund may enter into
contracts for the purchase or sale for future delivery (a "futures
contract") of fixed-income securities or contracts based on financial
indices including any index of securities in which the Fund may invest.
A "sale" of a futures contract means the undertaking of a contractual
obligation to deliver the securities, or the cash value of an index,
called for by the contract at a specified price during a specified
delivery period. A "purchase" of a futures contract means the undertaking
of a contractual obligation to acquire the securities, or cash value of
an index, at a specified price during a specified delivery period. The
Fund may also purchase and sell (write) call and put options on financial
futures contracts. An option on a futures contract gives the purchaser
the right, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time during, or at
the termination of, the period specified in the terms of the option.
Upon exercise, the writer of the option delivers the futures contract to
the holder at the exercise price. The Fund would be required to deposit
with its custodian initial margin and maintenance margin with respect to
put and call options on futures contracts written by it.
Although some financial futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual commitment is closed out before delivery without having to
make or take delivery of the security. The offsetting of a contractual
obligation is accomplished by purchasing (or selling, as the case may be)
on a commodities exchange an identical futures contract calling for
delivery in the same period. The Fund's ability to establish and close out
positions in futures contracts and options on futures contracts will be
subject to the liquidity of the market. Although the Fund generally will
purchase or sell only those futures contracts and options thereon for
which there appears to be a liquid market, there is no assurance that a
liquid market on an exchange will exist for any particular futures
contract or option thereon at any particular time. Where it is not
possible to effect a closing transaction in a contract or to do so at a
satisfactory price, the Fund would have to make or take delivery under the
futures contract, or, in the case of a purchased option, exercise the
option. The Fund would be required to maintain initial margin deposits
with respect to the futures contract and to make variation margin payments
until the contract is closed. The Fund will incur brokerage fees when they
purchase or sell futures contracts.
At the time a futures contract is purchased or sold, the Fund must
deposit in a custodial account cash or securities as a good faith deposit
payment (known as "initial margin"). It is expected that the initial margin
on futures contracts the Fund may purchase or sell may range from
approximately 1 1/2 % to approximately 5% of the value of the securities
(or the securities index) underlying the contract. In certain
circumstances, however, such as during periods of high volatility, the
Fund may be required by an exchange to increase the level of its initial
margin payment. Initial margin requirements may be increased generally in
the future by regulatory action. An outstanding futures contract is valued
daily in a process known as "marking to market." If the market value of
the futures contract has changed, the Fund will be required to make or
will be entitled to receive a payment in cash or specified high quality
debt securities in an amount equal to any decline or increase in the value
of the futures contract. These additional deposits or credits are
calculated and required on a daily basis and are known as "variation
margin."
There may be an imperfect correlation between movements in prices of
the futures contract the Fund purchases or sells and the portfolio
securities being hedged. In addition, the ordinary market price
relationships between securities and related futures contracts may be
subject to periodic distortions. Specifically, temporary price distortions
could result if, among other things, participants in the futures market
elect to close out their contracts through offsetting transactions rather
than meet variation margin requirements, investors in futures contracts
decide to make or take delivery of underlying securities rather than
engage in closing transactions or if, because of the comparatively lower
margin requirements in the futures market than in the securities market,
speculators increase their participation in the futures market. Because
price distortions may occur in the futures market and because movements
in the prices of securities may not correlate precisely with movements in
the prices of futures contracts purchased or sold by the Fund in a hedging
transaction, even if Voyageur correctly forecasts market trends the Fund's
hedging strategy may not be successful. If this should occur, the Fund
could lose money on the futures contracts and also on the value of its
portfolio securities.
Although the Fund believes that the use of futures contracts and
options thereon will benefit it, if Voyageur=s judgment about the general
direction of securities prices or interest rates is incorrect, the Fund's
overall performance may be poorer than if it had not entered into futures
contracts or purchased or sold options thereon. For example, if the Fund
seeks to hedge against the possibility of an increase in interest rates,
which generally would adversely affect the price of fixed-income
securities held in its portfolio, and interest rates decrease instead, the
Fund will lose part or all of the benefit of the increased value of its
assets which it has hedged due to the decrease in interest rates because
it will have offsetting losses in its futures positions. In addition,
particularly in such situations, the Fund may have to sell assets from its
portfolio to meet daily margin requirements at a time when it may be
disadvantageous to do so.
Options on Securities. The Fund may purchase and sell (write)
options on securities, which options may be either exchange-listed or
over-the-counter options. The Fund may write call options only if the call
option is "covered." A call option written by the Fund is covered if the
Fund owns the securities underlying the option or has a contractual right
to acquire them or owns securities which are acceptable for escrow
purposes. The Fund may write put options only if the put option is
"secured." A put option written by the Fund is secured if the Fund, which
is obligated as a writer of a put option, invests an amount, not less than
the exercise price of a put option, in eligible securities.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or purchased, in
the case of a put option; the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or not an
option expires unexercised, the writer retains the amount of the premium.
This amount, of course, may, in the case of a covered call option, be
offset by a decline in the market value of the underlying security during
the option period. If a call option is exercised, the writer experiences
a profit or loss from the sale of the underlying security. If a put
option is exercised, the writer must fulfill the obligation to purchase
the underlying security at the exercise price which will usually exceed
the then market value of the underlying security.
The writer of an option that wishes to terminate its obligation may
effect a "closing purchase transaction." This is accomplished by buying an
option of the same series as the option previously written. The effect of
the purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option. Likewise,
an investor who is the holder of an option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by selling
an option of the same series as the option previously purchased. There is
no guarantee that either a closing purchase or a closing sale transaction
can be effected.
Effecting a closing transaction in the case of a written call option
will permit the Fund to write another call option on the underlying
security with either a different exercise price or expiration date or both,
or in the case of a written put option will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by deposited cash or short-term securities. Also, effecting a
closing transaction will permit the cash or proceeds from the concurrent
sale of any securities subject to the option to be used for other Fund
investments. If the Fund desires to sell a particular security from its
portfolio on which it has written a call option, it will effect a closing
transaction prior to or concurrent with the sale of the security.
The Fund will realize a profit from a closing transaction if the
price of the transaction is less than the premium received from writing
the option or is more than the premium paid to purchase the option; the
Fund will realize a loss from a closing transaction if the price of the
transaction is more than the premium received from writing the option or
is less than the premium paid to purchase the option. Because increases
in the market price of a call option will generally reflect increases in
the market price of the underlying security, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security owned by the Fund.
An option position may be closed out only where there exists a
secondary market for an option of the same series. If a secondary market
does not exist, it might not be possible to effect closing transactions in
particular options with the result that the Fund would have to exercise
the options in order to realize any profit. If the Fund is unable to
effect a closing purchase transaction in a secondary market, it will not
be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise. Reasons for the absence
of a liquid secondary market include the following: (i) there may be
insufficient trading interest in certain options, (ii) restrictions may be
imposed by a national securities exchange ("Exchange") on opening
transactions or closing transactions or both, (iii) trading halts,
suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities, (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or the Options Clearing
Corporation may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which
event the secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on that
Exchange that had been issued by the Options Clearing Corporation as a
result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
The Fund may purchase put options to hedge against a decline in the
value of its portfolio. By using put options in this way, the Fund will
reduce any profit it might otherwise have realized in the underlying
security by the amount of the premium paid for the put option and by
transaction costs.
The Fund may purchase call options to hedge against an increase in
the price of securities that the Fund anticipates purchasing in the
future. The premium paid for the call option plus any transaction costs
will reduce the benefit, if any, realized by the Fund upon exercise of the
option, and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to the Fund.
The Fund may purchase and sell options that are exchange-traded or
that are traded over-the counter ("OTC options"). Exchange-traded options
in the United States are issued by a clearing organization affiliated with
the exchange on which the option is listed which, in effect, guarantees
every exchange-traded option transaction. In contrast, OTC options are
contracts between the Fund and its counterparty with no clearing
organization guarantee. Thus, when the Fund purchases OTC options, it
must rely on the dealer from which it purchased the OTC option to make or
take delivery of the securities underlying the option. Failure by the
dealer to do so would result in the loss of the premium paid by the Fund
as well as the loss of the expected benefit of the transaction.
Although the Fund will enter into OTC options only with dealers that
agree to enter into, and which are expected to be capable of entering into,
closing transactions with the Fund, there can be no assurance that the
Fund will be able to liquidate an OTC option at a favorable price at any
time prior to expiration. Until the Fund is able to effect a closing
purchase transaction in a covered OTC call option the Fund has written, it
will not be able to liquidate securities used as cover until the option
expires or is exercised or different cover is substituted. This may
impair the Fund's ability to sell a portfolio security at a time when such
a sale might be advantageous. In the event of insolvency of the
counterparty, the Fund may be unable to liquidate an OTC option. In the
case of options written by the Fund, the inability to enter into a closing
purchase transaction may result in material losses to the Fund.
Regulatory Restrictions. To the extent required to comply with
applicable SEC releases and staff 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.
APPENDIX C--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE
INVESTMENTS FAMILY
Following is a summary of the investment objectives of the other
funds in the Delaware Investments family:
Delaware Balanced Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a
dividend-oriented valuation strategy to select securities issued by
established companies that are believed to demonstrate potential for
income and capital growth. Devon Fund seeks current income and capital
appreciation by investing primarily in income-producing common stocks,
with a focus on common stocks the Manager believes have the potential for
above average dividend increases over time.
Trend Fund seeks long-term growth by investing in common stocks issued
by emerging growth companies exhibiting strong capital appreciation
potential.
Small Cap Value Fund seeks capital appreciation by investing primarily
in common stocks whose market values appear low relative to their
underlying value or future potential.
DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have
a demonstrated history of growth and have the potential to support continued
growth.
Decatur 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. 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. Blue Chip Fund seeks to achieve long-term
capital appreciation. Current income is a secondary objective. It seeks
to achieve these objectives by investing primarily in equity securities
and any securities that are convertible into equity securities. Social
Awareness Fund seeks to achieve long-term capital appreciation. It seeks
to achieve this objective by investing primarily in equity securities of
medium- to large-sized companies expected to grow over time that meet the
Fund's "Social Criteria" strategy.
Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also
in U.S. government securities and commercial paper. Strategic Income Fund
seeks to provide investors with high current income and total return by
using a multi-sector investment approach, investing principally in three
sectors of the fixed-income securities markets: high yield, higher risk
securities, investment grade fixed-income securities and foreign
government and other foreign fixed-income securities. High-Yield
Opportunities Fund seeks to provide investors with total return and, as a
secondary objective, high current income. Corporate Bond Fund seeks to
provide investors with total return by investing primarily in corporate
bonds. Extended Duration Bond Fund seeks to provide investors with total
return by investing primarily in corporate bonds
U.S. Government Fund seeks high current income by investing primarily
in long-term debt obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities
and instruments secured by such securities.
Delaware Cash Reserve seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in
short-term money market instruments, while maintaining a stable net asset
value.
REIT Fund seeks to achieve maximum long-term total return with
capital appreciation as a secondary objective. It seeks to achieve its
objectives by investing in securities of companies primarily engaged in the
real estate industry.
Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while
maintaining a stable net asset value.
Tax-Free USA Fund seeks high current income exempt from federal
income tax by investing in municipal bonds of geographically-diverse
issuers. Tax-Free Insured Fund invests in these same types of securities
but with an emphasis on municipal bonds protected by insurance guaranteeing
principal and interest are paid when due. Tax-Free USA Intermediate Fund
seeks a high level of current interest income exempt from federal income
tax, consistent with the preservation of capital by investing primarily in
municipal bonds.
Tax-Free Pennsylvania Fund seeks a high level of current interest
income exempt from federal and, to the extent possible, certain
Pennsylvania state and local taxes, consistent with the preservation of
capital. Tax-Free New Jersey Fund seeks a high level of current interest
income exempt from federal income tax and New Jersey state and local taxes,
consistent with preservation of capital. Tax-Free Ohio Fund seeks a high
level of current interest income exempt from federal income tax and Ohio
state and local taxes, consistent with preservation of capital.
Foundation Funds are "fund of funds" which invest in other funds in
the Delaware Investments family (referred to as "Underlying Funds").
Foundation Funds Income Portfolio seeks a combination of current income
and preservation of capital with capital appreciation by investing
primarily in a mix of fixed income and domestic equity securities,
including fixed income and domestic equity Underlying Funds. Foundation
Funds Balanced Portfolio seeks capital appreciation with current income as
a secondary objective by investing primarily in domestic equity and fixed
income securities, including domestic equity and fixed income Underlying
Funds. Foundation Funds Growth Portfolio seeks long-term capital growth
by investing primarily in equity securities, including equity Underlying
Funds, and, to a lesser extent, in fixed income securities, including
fixed-income Underlying Funds.
International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities
that provide the potential for capital appreciation and income. Global
Bond Fund seeks to achieve current income consistent with the preservation
of principal by investing primarily in global fixed-income securities that
may also provide the potential for capital appreciation. Global Equity
Fund seeks to achieve long-term total return by investing in global
securities that provide the potential for capital appreciation and income.
Emerging Markets Fund seeks long-term capital appreciation by investing
primarily in equity securities of issuers located or operating in emerging
countries.
U.S. Growth Fund seeks to maximize capital appreciation by investing
in companies of all sizes which have low dividend yields, strong balance
sheets and high expected earnings growth rates relative to their industry.
Overseas Equity Fund seeks to maximize total return (capital appreciation
and income), principally through investments in an internationally
diversified portfolio of equity securities. New Pacific Fund seeks
long-term capital appreciation by investing primarily in companies which
are domiciled in or have their principal business activities in the
Pacific Basin.
Delaware Group Premium Fund, Inc. offers the following funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return Series seeks the highest possible total
rate of return by selecting issues that exhibit the potential for capital
appreciation while providing higher than average dividend income.
Delchester Series seeks as high a current income as possible by investing
in rated and unrated corporate bonds, U.S. government securities and
commercial paper. Capital Reserves Series seeks a high stable level of
current income while minimizing fluctuations in principal by investing in
a diversified portfolio of short- and intermediate-term securities. Cash
Reserve Series seeks the highest level of income consistent with
preservation of capital and liquidity through investments in short-term
money market instruments. DelCap Series seeks long-term capital
appreciation by investing its assets in a diversified portfolio of
securities exhibiting the potential for significant growth. Delaware
Series seeks a balance of capital appreciation, income and preservation of
capital. It uses a dividend-oriented valuation strategy to select
securities issued by established companies that are believed to
demonstrate potential for income and capital growth. International Equity
Series seeks long-term growth without undue risk to principal by investing
primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. Small Cap Value Series
seeks capital appreciation by investing primarily in small-cap common
stocks whose market values appear low relative to their underlying value
or future earnings and growth potential. Emphasis will also be placed on
securities of companies that may be temporarily out of favor or whose
value is not yet recognized by the market. Trend Series seeks long-term
capital appreciation by investing primarily in small-cap common stocks and
convertible securities of emerging and other growth-oriented companies.
These securities will have been judged to be responsive to changes in the
market place and to have fundamental characteristics to support growth.
Income is not an objective. Global Bond Series seeks to achieve current
income consistent with the preservation of principal by investing
primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Strategic Income Series seeks high
current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income
securities markets: high-yield, higher risk securities; investment grade
fixed-income securities; and foreign government and other foreign
fixed-income securities. Devon Series seeks current income and capital
appreciation by investing primarily in income-producing common stocks,
with a focus on common stocks that the investment manager believes have
the potential for above-average dividend increases over time. Emerging
Markets Series seeks to achieve long-term capital appreciation by
investing primarily in equity securities of issuers located or operating
in emerging countries. Convertible Securities Series seeks a high level
of total return on its assets through a combination of capital
appreciation and current income by investing primarily in convertible
securities. Social Awareness Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series'
"Social Criteria" strategy. REIT Series seeks to achieve maximum
long-term total return, with capital appreciation as a secondary
objective, by investing in securities of companies primarily engaged in
the real estate industry.
Delaware-Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk
by investing in U.S. Treasury bills, notes, bonds, and other obligations
issued or unconditionally guaranteed by the full faith and credit of the
U.S. Treasury, and repurchase agreements fully secured by such
obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Minnesota Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax and
the Minnesota personal income tax, consistent with preservation of capital.
The Fund seeks to reduce market risk by maintaining an average weighted
maturity from five to ten years.
Delaware-Voyageur Tax-Free California Insured Fund seeks to provide
a high level of current income exempt from federal income tax and the
California personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Tax-Free Florida Insured Fund seeks to
provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to select
investments that will enable its shares to be exempt from the Florida
intangible personal property tax. Delaware-Voyageur Tax-Free Florida Fund
seeks to provide a high level of current income exempt from federal income
tax, consistent with the preservation of capital. The Fund will seek to
select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. Delaware-Voyageur Tax-Free
Kansas Fund seeks to provide a high level of current income exempt from
federal income tax, the Kansas personal income tax and the Kansas
intangible personal property tax, consistent with the preservation of
capital. Delaware-Voyageur Tax-Free Missouri Insured Fund seeks to
provide a high level of current income exempt from federal income tax and
the Missouri personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Tax-Free New Mexico Fund seeks to provide a
high level of current income exempt from federal income tax and the New
Mexico personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Oregon Insured Fund seeks to provide a high
level of current income exempt from federal income tax and the Oregon
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Utah Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Washington Insured
Fund seeks to provide a high level of current income exempt from federal
income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level
of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free California Fund seeks to provide a high level
of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Iowa Fund seeks to provide a high level of
current income exempt from federal income tax and the Iowa personal income
tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Idaho Fund seeks to provide a high level of current income exempt
from federal income tax and the Idaho personal income tax, consistent with
the preservation of capital. Delaware-Voyageur Minnesota High Yield
Municipal Bond Fund seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax primarily
through investment in medium and lower grade municipal obligations.
National High Yield Municipal Fund seeks to provide a high level of income
exempt from federal income tax, primarily through investment in medium and
lower grade municipal obligations. Delaware-Voyageur Tax-Free New York
Fund seeks to provide a high level of current income exempt from federal
income tax and the personal income tax of the state of New York and the
city of New York, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Wisconsin Fund seeks to provide a high level of
current income exempt from federal income tax and the Wisconsin personal
income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high level of
current income exempt from federal income tax and the Colorado personal
income tax, consistent with the preservation of capital.
Aggressive Growth Fund seeks long-term capital appreciation, which the
Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the
Fund, in seeking its objective, may receive current income from dividends
and interest, income is only an incidental consideration in the selection
of the Fund's investments. Growth Stock Fund has an objective of
long-term capital appreciation. The Fund seeks to achieve its objective
from equity securities diversified among individual companies and
industries. Tax-Efficient Equity Fund seeks to obtain for taxable
investors a high total return on an after-tax basis. The Fund will
attempt to achieve this objective by seeking to provide a high long-term
after-tax total return through managing its portfolio in a manner that
will defer the realization of accrued capital gains and minimize dividend
income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free North Dakota Fund seeks to provide a high level
of current income exempt from federal income tax and the North Dakota
personal income tax, consistent with the preservation of capital.
For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a
prospectus from the Distributor. Read it carefully before you invest or
forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Voyageur
Funds, Inc. 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, 1998
are included in Voyageur Funds, Inc.'s Annual Report to shareholders.
The financial statements and financial highlights, the notes relating
thereto and the report of Ernst & Young LLP listed above are incorporated
by reference from the Annual Report into this Part B. The Fund's previous
auditors audited the financial highlights of the Fund for the fiscal
periods ending on or before October 31, 1996.
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
DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND
A CLASS
B CLASS
C CLASS
INSTITUTIONAL CLASS
CLASSES OF VOYAGEUR FUNDS, INC.
PART B
STATEMENT OF
ADDITIONAL INFORMATION
March 1, 1999
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------]
PART C
--------
Other Information
-------------------
Item 23. Exhibits
(a) Articles of Incorporation.
(1) Amended and Restated Articles of Incorporation (November
22, 1993) incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed October 31, 1995.
(2) Certification of Designation (May 17, 1994) incorporated
into this filing by reference to Post-Effective Amendment
No. 17 filed October 31, 1995.
(3) Certification of Designation (August 30, 1994) incorporated
into this filing by reference to Post-Effective Amendment
No. 17 filed October 31, 1995.
(4) Articles of Correction to Amended and Restated Articles of
Incorporation (July 27, 1994) incorporated into this filing
by reference to Post-Effective Amendment No. 17 filed
October 31, 1995.
(5) Certification of Designation (March 8, 1996) incorporated
into this filing by reference to Post-Effective Amendment
No. 19 filed March 15, 1996.
(b) By-Laws. By-Laws, as amended (October 24, 1995) incorporated
into this filing by reference to Post-Effective Amendment No.
18 filed January 3, 1996.
(c) Instruments Defining the Rights of Security Holders.
(1) Articles of Incorporation and Articles Supplementary.
(i) Amended and Restated Articles of Incorporation
(November 22, 1993) incorporated into this filing by
reference to Post-Effective Amendment No. 17 filed
October 31, 1995.
(ii) Certification of Designation (May 17, 1994)
incorporated into this filing by reference to Post-
Effective Amendment No. 17 filed October 31, 1995.
(iii) Certification of Designation (August 30, 1994)
incorporated into this filing by reference to Post-
Effective Amendment No. 17 filed October 31, 1995.
(iv) Articles of Correction to Amended and Restated
Articles of Incorporation (July 27, 1994)
incorporated into this filing by reference to Post-
Effective Amendment No. 17 filed October 31, 1995.
(v) Certification of Designation (March 8, 1996)
incorporated into this filing by reference to Post-
Effective Amendment No. 19 filed March 15, 1996.
(2) By-Laws. By-Laws, as amended (October 24, 1995)
incorporated into this filing by reference to Post-
Effective Amendment No. 18 filed January 3, 1996.
(d) Investment Management Agreement.
(1) Executed Investment Management Agreement (April 30,
1997) between Delaware Management Company, Inc. and the
Registrant on behalf of US Government Securities Fund
incorporated into this filing by reference to Post-
Effective Amendment No. 23 filed February 27, 1998.
(2) Executed Investment Sub-Advisory Agreement (April 30, 1997)
between Delaware Management Company, Inc. and Voyageur
Asset Management LLC on behalf of US Government Securities
Fund incorporated into this filing by reference to Post-
Effective Amendment No. 23 filed February 27, 1998.
(e) (1) Distribution Agreement.
(i) Executed Distribution Agreement (March 1, 1997) between
Delaware Distributors, L.P. and the Registrant on
behalf of US Government Securities Fund incorporated
into this filing by reference to Post-Effective
Amendment No. 23 filed February 27, 1998.
(2) Administration and Service Agreement Form of
Administration and Service Agreement (as amended November
1995) (Module) incorporated into this filing by reference
to Post-Effective Amendment No. 23 filed February 27, 1998.
(3) Dealer's Agreement. Dealer's Agreement (as amended
November 1995) (Module) incorporated into this filing by
reference to Post-Effective Amendment No. 23 filed February
27, 1998.
(4) Mutual Fund Agreement for the Delaware Group of Funds (as
amended December 1995) (Module) incorporated into this
filing by reference to Post-Effective Amendment No. 23
filed February 27, 1998.
(f) Bonus, Profit Sharing, Pension Contracts. Inapplicable.
(g) Custodian Agreement.
(1) Custodian Contract with Norwest Bank Minnesota N.A. (April
20, 1992) incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed October 31, 1995.
(h) Other Material Contracts.
(1) Executed Shareholders Services Agreement (May 1, 1997)
between Delaware Service Company, Inc. and the Registrant
on behalf of US Government Securities Fund incorporated
into this filing by reference to Post-Effective Amendment
No. 23 filed February 27, 1998.
(2) Executed Fund Accounting Agreement (August 16, 1996)
between Delaware Service Company, Inc. and the Registrant
on behalf of US Government Securities Fund incorporated
into this filing by reference to Post-Effective Amendment
No. 23 filed February 27, 1998.
(i) Executed Amendment No. 9 (March 31, 1998) to Delaware
Group of Funds Fund Accounting Agreement into this
filing by reference to Post-Effective Amendment No.
24 December 30, 1998.
(ii) Executed Amendment No. 10 (August 31, 1998) to
Delaware Group of Funds Fund Accounting Agreement
into this filing by reference to Post-Effective
Amendment No. 24 December 30, 1998.
(iii) Executed Amendment No. 11 (September 14, 1998) to
Delaware Group of Funds Fund Accounting Agreement
into this filing by reference to Post-Effective
Amendment No. 24 December 30, 1998.
(iv) Executed Amendment No. 12 (1998) to Delaware Group of
Funds Fund Accounting Agreement ainto this filing by
reference to Post-Effective Amendment No. 24 December
30, 1998.
(v) Executed Amendment No. 13 (1998) to Delaware Group of
Funds Fund Accounting Agreement into this filing by
reference to Post-Effective Amendment No. 24
December 30, 1998.
(i) Legal Opinion. Attached as Exhibit.
(j) Consent of Auditors. Attached as Exhibit.
(k) Inapplicable.
(l) Inapplicable.
(m) Plan under Rule 12b-1.
(1) Plan under Rule 12b-1 incorporated into this filing by
reference to Post-Effective Amendment No. 17 filed
November 1, 1995.
(n) Financial Data Schedules. Attached as Exhibit.
(o) Plan under Rule 18f-3.
(1) Plan under Rule 18f-3 (June 19, 1997) incorporated into
this filing by reference to Post-Effective Amendment No. 23
filed February 27, 1998.
(p) Other: Directors' Power of Attorney. Incorporated into this
filing by reference to Post- Effective Amendment No. 23 filed
February 27, 1998.
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
Item 25. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed February 28, 1997.
Item 26. Business and Other Connections of Investment Adviser.
Delaware Management Company (the "Manager"), a series of Delaware
Management Business Trust, serves as investment manager to the
Registrant and also serves as investment manager or sub-adviser to
certain of the other funds in the Delaware Investments family (Delaware
Group Equity Funds I, Inc., Delaware Group Equity Funds II, Inc.,
Delaware Group Equity Funds III, Inc., Delaware Group Equity Funds IV,
Inc., Delaware Group Equity Funds V, Inc., Delaware Group Government
Fund, Inc., Delaware Group Income Funds, Inc., Delaware Group Limited-
Term Government Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware
Group Tax-Free Fund, Inc., Delaware Group State Tax-Free Income Trust,
Delaware Group Tax-Free Money Fund, Inc., Delaware Group Premium Fund,
Inc., Delaware Group Global & International Funds, Inc., Delaware Pooled
Trust, Inc., Delaware Group Adviser Funds, Inc., Delaware Group Dividend
and Income Fund, Inc., Delaware Group Global Dividend and Income Fund,
Inc., Delaware Group Foundation Funds, Inc., Voyageur Tax-Free Funds,
Inc., Voyageur Intermediate Tax-Free Funds, Inc., Voyageur Insured
Funds, Inc., Voyageur Investment Trust, Voyageur Investment Trust II,
Voyageur Mutual Funds, Inc., Voyageur Mutual Funds II, Inc., Voyageur
Mutual Funds III, Inc., Voyageur Arizona Municipal Income Fund, Inc.,
Voyageur Colorado Insured Municipal Income Fund, Inc., Voyageur
Florida Insured Municipal Income Fund, Voyageur Minnesota Municipal
Fund, Inc., Voyageur Minnesota Municipal Fund II, Inc. and Voyageur
Minnesota Municipal Fund III, Inc.) and provides investment advisory
services to institutional accounts, primarily retirement plans
and endowment funds. In addition, certain directors of the Manager also
serve as directors/trustees of the other funds in the Delaware
Investments family, and certain officers are also officers of these
other funds. A company owned by the Manager's parent company acts
as principal underwriter to the mutual funds in the Delaware Investments
family (see Item 29 below) and another such company acts as the
shareholder services, dividend disbursing, accounting servicing and
transfer agent for all of the mutual funds in the Delaware
Investments family.
The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
Jeffrey J. Nick1 Chairman of the Board, President, Chief Executive
Officer and Director/Trustee of the Registrant
and each of the other investment companies in the
Delaware Investments family, Delaware Management
Company, Inc., Delaware Management Business
Trust, Delvoy, Inc., DMH Corp. and Founders
Holdings, Inc.; Chairman and Chief Executive
Officer and Director of Delaware Management
Company (a series of Delaware Management Business
Trust); Chairman and Director of Delaware Capital
Management, Inc. and Retirement Financial
Services, Inc.; Chairman of Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and Delaware Distributors, L.P.;
Director of Delaware Service Company, Inc.,
President, Chief Executive Officer and Director
of Lincoln National Investment Companies, Inc.
and Delaware Management Holdings, Inc.; Director
of Vantage Global Advisors, Inc. and Lynch &
Mayer Inc.
Wayne A. Stork Director and/or Trustee of the Registrant and
each of the other investment companies in the
Delaware Investments family and Delaware
International Advisers Ltd., Chairman of the
Board and Director of Delaware Management
Holdings, Inc.
David K. Downes Executive Vice President, Chief Operating Officer
and Chief Financial Officer of the Registrant and
each of the other funds in the Delaware
Investments family, Delaware Management Holdings,
Inc., Founders CBO Corporation, Delaware Capital
Management, Inc., Delaware Management
Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware
Distributors, L.P.; Executive Vice President,
Chief Operating Officer, Chief Financial Officer
and Director of Delaware Management Company,
Inc., DMH Corp, Delaware Distributors, Inc.,
Founders Holdings, Inc. and Delvoy, Inc.;
Executive Vice President, Chief Financial
Officer, Chief Administrative Officer and Trustee
of Delaware Management Business Trust; President,
Chief Executive Officer, Chief Financial Officer
and Director of Delaware Service Company, Inc.;
President, Chief Operating Officer, Chief
Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman, Chief
Executive Officer and Director of Retirement
Financial Services, Inc.; Chairman and Director
of Delaware Management Trust Company; and
Director of Delaware International Advisers Ltd.
Richard G. Unruh, Jr. Executive Vice President and Chief Investment
Officer, Equities of the Registrant, each of the
other funds in the Delaware Investments family
and Delaware Management Company (a series of
Delaware Management Business Trust); Executive
Vice President of Delaware Management
Holdings, Inc. and Delaware Capital Management,
Inc. and Delaware Management Business Trust;
Executive Vice President/Chief Investment
Officer, Equities and Director/Trustee of
Delaware Management Company, Inc.; Chief
Executive Officer/Chief Investment Officer,
Equities of Delaware Investment Advisers (a
series of Delaware Management Business Trust);
and Director of Delaware International Advisers
Ltd. Board of Directors, Chairman of Finance
Committee, Keystone Insurance Company since
1989, 2040 Market Street, Philadelphia, PA;
Board of Directors, Chairman of Finance
Committee, AAA Mid Atlantic, Inc. since 1989,
2040 Market Street, Philadelphia, PA; Board of
Directors, Metron, Inc. since 1995, 11911
Freedom Drive, Reston, VA
Paul E. Suckow Executive Vice President/Chief Investment
Officer, Fixed Income of the Registrant and each
of the other investment companies in the
Delaware Investments family; Delaware Management
Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of
Delaware Management Business Trust); Executive
Vice President and Director of Founders
Holdings, Inc.; Executive Vice President of
Delaware Management Holdings, Inc., Delaware
Capital Management, Inc. and Delaware Management
Business Trust; and Director of Founders CBO
Corporation
Director, HYPPCO Finance Company Ltd.
Richard J. Flannery Executive Vice President and General Counsel of
Delaware Management Holdings,Inc., Delaware
Distributors, L.P., Delaware Management Trust
Company, Delaware Capital Management, Inc.,
Delaware Service Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and Founders CBO Corporation;
Executive Vice President/General Counsel and
Director of DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc.,
Delaware International Holdings Ltd., Founders
Holdings, Inc., Delvoy, Inc. and Retirement
Financial Services, Inc.; Executive Vice
President of the Registrant and each of the
other funds in the Delaware Investments family;
Director of Delaware International Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since
1991, Bulltown Rd., Elverton, PA; Director and
Member of Executive Committee of Stonewall
Links, Inc. since 1991, Bulltown Rd., Elverton,
PA
George M. Senior Vice President/Secretary and General
Chamberlain, Jr. Counsel of the Registrant and each of the
investment companies in the Delaware Investments
family; Senior Vice President and Secretary of
Delaware Distributors, L.P., Delaware Management
Company (a series of Delaware Management
Business Trust) and Delaware Management
Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Retirement
Financial Services, Inc., Delaware Capital
Management, Inc. and Delvoy, Inc.; Executive
Vice President, Secretary and Director of
Delaware Management Trust Company; Senior Vice
President and Director of Founders Holdings,
Inc.; Senior Vice President of Delaware
International Holdings Ltd.
Michael P. Bishof Senior Vice President/Investment Accounting of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust) and Delaware Service
Company, Inc.; Senior Vice President and
Treasurer of the Registrant, each of the other
funds in the Delaware Investments family and
Founders Holdings, Inc.; Senior Vice President
and Treasurer/Manager, Investment Accounting of
Delaware Distributors, L.P. and Delaware
Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice
President and Assistant Treasurer of Founders
CBO Corporation; and Senior Vice President and
Manager of Investment Accounting of Delaware
International Holdings Ltd.
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Capital
Management, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc., Delaware
International Holdings Ltd., Delaware Management
Company (a series of Delaware Management
Business Trust) and Delvoy, Inc.; Senior Vice
President/Corporate Controller of the
Registrant, each of the other funds in the
Delaware Investments family and Founders
Holdings, Inc.; Chief Financial Officer and
Treasurer of Retirement Financial Services,
Inc.; and Senior Vice President/Assistant
Treasurer of Founders CBO Corporation
Joanne O. Hutcheson Senior Vice President/Human Resources of
Delaware Management Company, Inc., Delaware
Management Holdings, Inc., Delaware Investment
Advisers (a series of Delaware Management
Business Trust), Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Service
Company, Inc., the Registrant, each of the other
funds in the Delaware Investments family,
Delvoy, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust), Retirement Financial Services,
Inc. and Delaware Service Company, Inc.; Senior
Vice President/ Operations and Director of
Delaware Management Trust Company
James L. Shields Senior Vice President/Chief Information Officer
of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Service
Company, Inc. and Retirement Financial Services,
Inc.
Eric E. Miller Senior Vice President, Assistant Secretary and
Deputy General Counsel of the Registrant and
each of the other funds in the Delaware
Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware
Management Business Trust), Delaware Management
Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors Inc.,
Delaware Service Company, Inc., Founders
Holdings, Inc., Delaware Capital Management,
Inc. and Retirement Financial Services, Inc.;
and Senior Vice President, Assistant Secretary
and Deputy General Counsel of Delvoy, Inc.
Richelle S. Maestro Senior Vice President, Assistant Secretary and
Deputy General Counsel of the Registrant, each
of the other funds in the Delaware Investments
family, Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), Delaware Management Holdings,
Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company,
Inc., DMH Corp., Delaware Capital Management,
Inc., Retirement Financial Services, Inc.,
Founders Holdings, Inc. and Delvoy, Inc.; Senior
Vice President, Deputy General Counsel and
Secretary of Delaware International Holdings
Ltd.; and Secretary of Founders CBO Corporation
General Partner of Tri-R Associates since 1989,
10001 Sandmeyer Lane, Philadelphia, PA.
Michael T. Taggart Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust)
Richard Salus Vice President/Assistant Controller of Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and Delaware Management Trust
Company
Bruce A. Ulmer Vice President/Year 2000 of the Registrant, each
of the other funds in the Delaware Investments
family, Delaware Management Company (a series of
Delaware Management Business Trust), Delaware
Management Holdings, Inc. and Retirement
Financial Services, Inc., Delvoy,Inc. and
Delaware Management Trust Company
Joel A. Ettinger2 Vice President/Taxation of the Registrant, each
of the other funds in the Delaware Investments
family, Delaware Management Company, Inc.,
Delaware Investment Advisers (a series of
Delaware Management Business Trust), Delaware
Management Company (a series of Delaware
Management Business Trust) and Delaware
Management Holdings, Inc., Founders Holdings,
Inc., Delaware Distributors, Inc., Delaware
Distributors, L.P., Delaware Service Company,
Inc., Retirement Financial Services, Inc.,
Delaware Capital Management, Inc., Delvoy, Inc.
and Founders CBO Corporation
Christopher Adams Vice President/Business Manager, Equity
Department of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
and Delaware Management Company (a series of
Delaware Management Business Trust)
Scott Metzger Vice President/Business Development of Delaware
Distributors, L.P. and Delaware Service Company,
Inc.
Lisa O. Brinkley Vice President/Compliance Director of Delaware
Management Company, Inc., the Registrant, each
of the other funds in the Delaware Investments
family, Delaware Management Company (a series of
Delaware Management Business Trust), DMH Corp.,
Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company,
Inc., Delaware Capital Management, Inc., Delvoy,
Inc., Retirement Financial Services, Inc. and
Delaware Management Business Trust; and Vice
President/Compliance Director and Assistant
Secretary of Delaware Management Trust Company
Mary Ellen Carrozza Vice President/Client Services of Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and each of the other investment
companies in the Delaware Investments family
Gerald T. Nichols Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), the Registrant, and of the
fixed- income investment companies in the
Delaware Investments family; Vice President of
Founders Holdings, Inc.; and Treasurer,
Assistant Secretary and Director of Founders CBO
Corporation
Paul A. Matlack Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), and of the fixed-income
investment companies in the Delaware Investments
family; Vice President of Founders Holdings,
Inc.; and President and Director of Founders CBO
Corporation
Gary A. Reed Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), Delaware Capital Management,
Inc. and of the fixed-income investment
companies in the Delaware Investments family
Patrick P. Coyne Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), Delaware Capital Management,
Inc. and of the fixed-income investment
companies in the Delaware Investments family
Roger A. Early Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), the Registrant, and of the
fixed- income investment companies in the
Delaware Investments family
Mitchell L. Conery3 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), Delaware Capital Management,
Inc. and of the fixed-income investment
companies in the Delaware Investments family
George H. Burwell Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), and each of the
equity investment companies in the Delaware
Investments family and Delaware Investment
Advisers (a series of Delaware Management
Business Trust)
John B. Fields Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust), Delaware Capital Management,
Inc. and each of the equity investment companies
in the Delaware Investments family, and Trustee
of Delaware Management Business Trust
Gerald S. Frey Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and each of the equity
investment companies in the Delaware Investments
family
Christopher Beck4 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and each of the investment
companies in the Delaware Investments family
Trustee of New Castle County Pension Board since
October 1992, Wilmington DE.
Elizabeth H. Howell5 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and each of the fixed-income
investment companies in the Delaware Investments
family
Andrew M.
McCullagh, Jr.6 Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust) the Registrant and
each of the fixed-income investment companies in
the Delaware Investments family
Babak Zenouzi Vice President/Senior Portfolio Manager of
Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware
Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management
Business Trust) and each of the equity
investment companies in the Delaware Investments
family
J. Paul Dokas7 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust)
and each of the equity investment companies in
the Delaware Investments family
Cynthia Isom Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust) and of the fixed-income
investment companies in the Delaware Investments
family; and Vice President/Senior Trader of
Delaware Investment Advisers (a series of
Delaware Management Business Trust)
Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust),
and the fixed-income investment companies in the
Delaware Investments family
Marshall T. Bassett8 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust),
and each of the equity investment companies in
the Delaware Investments family
John A. Heffern9 Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust) and each of the funds in the
Delaware Investments family
Lori P. Wachs Vice President/Portfolio Manager of Delaware
Management Company, Inc., Delaware Management
Company (a series of Delaware Management
Business Trust) and each of the equity
investment companies in the Delaware Investments
family
Richard E. Beister Vice President/Trading Operations of and
Delaware Management Company (a series of
Delaware Management Business Trust)
Jeffrey W. Hynoski Vice President/Research Analyst of Delaware
Management Company (a series of Delaware
Management Business Trust)
Audrey E. Kohart Vice President/Assistant Controller/Corporate
Accounting of Delaware Management Company (a
series of Delaware Management Business Trust)
Steven T. Lampe Vice President/Research Analyst of Delaware
Management Company (a series of Delaware
Management Business Trust)
Richard D. Seidel Vice President/Assistant Controller/Manager,
Payroll of Vice President/Research Analyst of
Delaware Management Company (a series of
Delaware Management Business Trust)
Karina J. Istvan Vice President/Strategic Planning of Delaware
Management Company (a series of Delaware
Management Business Trust)
Steven R. Cianci Vice President/Portfolio Manager of the fixed
income investment companies in the Delaware
Investments family.
* Business address of each is 1818 Market Street, Philadelphia, PA
19103.
1 MANAGING DIRECTOR, Lincoln National UK plc prior to 1992.
2 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
3 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
4 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
5 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to
May 1997.
6 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
7 DIRECTOR OF TRUST INVESTMENTS, Bell Atlantic Corporation prior to
February 1997.
8 VICE PRESIDENT, Morgan Stanley Asset Management prior to March 1997.
9 SENIOR VICE PRESIDENT, EQUITY RESEARCH, NatWest Securities Corporation
prior to March 1997.
Item 27. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter for
all the mutual funds in the Delaware Investments family.
(b) Information with respect to each director, officer or partner
of principal underwriter:
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------------------------------- --------------------
Delaware
Distributors, Inc. General Partner None
Delaware Investment Advisers Limited
Partner None
Delaware Capital
Management, Inc. Limited Partner None
Jeffrey J. Nick Chairman Chairman, President,
Chief Executive
Officer and
Director/Trustee
Wayne A. Stork None Director
Bruce D. Barton President and Chief
Executive Officer None
David K. Downes Executive Vice Executive Vice
President, Chief President, Chief
Operating Officer Operating Officer and
and Chief Financial Chief Financial
Officer Officer
Richard J. Flannery Executive Vice Senior
President/ General Vice President
Counsel
George M.
Chamberlain, Jr. Senior Vice Senior Vice
President/Secretary President/
Secretary/
General Counsel
Joseph H. Hastings Senior Vice Senior Vice
President/Corporate President/
Controller & Corporate Controller
Treasurer
Terrence P.
Cunningham Senior Vice None
President/Financial
Institutions/National
Sales Manager
Thomas E. Sawyer Senior Vice None
President/National
Sales Director
Mac McAuliffe Senior Vice None
President/Sales
Manager, Western
Division
J. Chris Meyer Senior Vice None
President/Director,
Product Management
William M. Kimbrough Senior Vice None
President/Wholesaler
Daniel J. Brooks Senior Vice
President/Wholesaler None
Bradley L. Kolstoe Senior Vice
President/Western None
Division Sales
Manager
Henry W. Orvin Senior Vice None
President/Eastern
Division Sales
Manager
Michael P. Bishof Senior Vice Senior Vice
President and President/Treasurer
Treasurer/
Manager, Investment
Accounting
Stephen J. DeAngelis Senior Vice None
President/National
Director/Managed
Account Services
Dana B. Hall Senior Vice None
President/Key
Accounts
Joanne O. Hutcheson Senior Vice Senior Vice
President/Human President/Human
Resources Resources
Holly W. Reimel Senior Vice None
President/National
Accounts
Eric E. Miller Senior Vice Senior Vice
President/Assistant President/Assistant
Secretary/Deputy Secretary/Deputy
General Counsel General Counsel
Richelle S. Maestro Senior Vice Senior Vice
President/Assistant President/Assistant
Secretary/Deputy Secretary/Deputy
General Counsel General Counsel
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Daniel H. Carlson Vice President/ None
Marketing Services
Diane M. Anderson Senior Vice None
President/Retirement
Operations
Courtney S. West Vice President/ None
Institutional Sales
Gordon E. Searles Vice President/ None
Client Services
Julia R. Vander Els Vice President/ None
Retirement Plan
Contributions
Jerome J. Alrutz Vice President/ None
Retail Sales
Scott Metzger Vice President/ None
Business Development
Larry Carr Vice President/ None
Variable Annuity Sales
Manager
James R. Searles Vice President/Variable None
Annuity Sales Manager
Gregory J. McMillan Vice President/ None
National Accounts
Christopher H. Price Vice President/Manager, None
Insurance
Christopher W. Moore Vice President/Variable None
Annuity Wholesaler
Daniel J. O'Brien Vice President/Insurance None
Products
Andrew W. Whitaker Vice President/Wholesaler None
Financial Institutions
Jessie Emery Vice President/Marketing None
Communications
Darryl S. Grayson Vice President, Broker/ None
Dealer Internal Sales
Director
Dinah J. Huntoon Vice President/Product None
Manager, Equities
Soohee Lee Vice President/Fixed None
Income and International
Product Management
Joel A. Ettinger Vice President/Taxation Vice President/
Taxation
Michael J. Woods Vice President/National None
Sales Manager
Susan T. Friestedt Vice President/Retirement None
Services
Ellen M. Krott Vice President/Marketing None
John A. Wells Vice President/Marketing None
Technology
Theodore V. Wood, III Vice President/Technical None
Systems Officer
Richard P. Allen Vice President/Wholesaler, None
Midwest Region
David P.
Anderson, Jr. Vice President/Wholesaler None
Jeffrey H. Arcy Vice President/Wholesaler, None
Southeast Region
Patrick A. Bearss Vice President/Wholesaler,
Midwest Region
Gabriella Bercze Vice President/Financial None
Institution Wholesaler
Larry D. Bridwell Vice President/Financial None
Institution Wholesaler
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Ronald A. Haimowitz Vice President/Wholesaler None
Edward J. Hecker Vice President/Wholesaler None
John R. Herron Vice President/Variable None
Annuity Wholesaler
Christopher L.
Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
Carolyn Kelly Vice President/Wholesaler None
Richard M. Koerner Vice President/Wholesaler None
Theodore T. Malone Vice President/IPI None
Wholesaler
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
Andrew F. Morris Vice President/Wholesaler, None
East Division
Patrick L. Murphy Vice President/Wholesaler None
Scott E. Naughton Vice President/IPI None
Wholesaler
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye Vice President/Wholesaler None
Joseph T. Owczarek Vice President/Wholesaler None
Otis S. Page Vice President/Wholesaler None
Scott P. Passias Vice President/Associate None
Wholesaler
Mary Ellen
Pernice-Fadden Vice President/Wholesaler None
Nadya S. Phillips Vice President/Financial None
Institution Wholesaler
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
Robert A. Rosso Vice President/Wholesaler None
Linda Schulz Vice President/Wholesaler None
John C. Shalloe Vice President/Wrap Fee None
Wholesaler, Western Region
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
Scott Whitehouse Vice President/Wholesaler None
* 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.
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting
of shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by
the record holders of not less than 10% of the outstanding
shares.
SIGNATURES
---------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Registrant certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and 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 22nd day of February, 1999.
VOYAGEUR FUNDS, INC.
By /s/Jeffrey J. Nick
------------------
Jeffrey J. Nick
Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signature Title Date
- --------------------- ---------------------------- --------------
/s/ Jeffrey J. Nick President, Chief Executive
Jeffrey J. Nick Officer, Chairman and Director February 22, 1999
/s/ David K. Downes Executive Vice President/Chief
David K. Downes Operating Officer/Chief Financial
Officer (Principal Financial
Officer and Principal
Accounting Officer) February 22, 1999
/s/ Walter A. Babich* Director February 22, 1999
Walter A. Babich
/s/ Anthony D. Knerr* Director February 22, 1999
Anthony D. Knerr
/s/ Ann R. Leven * Director February 22, 1999
Ann R. Leven
/s/ W. Thacher
Longstreth * Director February 22, 1999
W. Thacher
Longstreth
/s/ Thomas F.
Madison * Director February 22, 1999
Thomas F. Madison
/s/ Charles E. Peck * Director February 22, 1999
Charles E. Peck
/s/ Wayne A. Stork * Director February 22, 1999
Wayne A. Stork
*By /s/ Jeffrey J. Nick
Jeffrey J. Nick
as Attorney-in-Fact for
each of the persons indicated
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ------------ ------------------------
EX-99.I Legal Opinion
EX-99.J Consent of Auditors
EX-27 Financial Data Schedules
Law Office
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8115
February 24, 1999
Voyageur Funds, Inc.
1818 Market Street
Philadelphia, PA 19103
Re: Legal Opinion-Securities Act of 1933
Ladies and Gentlemen:
We have examined the Articles of Incorporation, as amended and
supplemented (the "Articles"), of Voyageur Funds, Inc. (the "Fund"), a
series corporation organized under Minnesota law, the By-Laws of the
Fund, and its proposed form of Share Certificates (if any), all as
amended to date, and the various pertinent corporate proceedings we deem
material. We have also examined the Notification of Registration and
the Registration Statements filed under the Investment Company Act of
1940 as amended, (the "Investment Company Act") and the Securities Act
of 1933 as amended, (the "Securities Act"), all as amended to date, as
well as other items we deem material to this opinion.
The Fund is authorized by the Articles to issue ten trillion shares of
common stock at a par value of $0.01 and currently issues shares of the
Delaware-Voyageur US Government Securities Fund series of shares. The
Articles also empower the Board to designate any additional series or
classes and allocate shares to such series or classes.
The Fund has filed with the U.S. Securities and Exchange Commission, a
registration statement under the Securities Act, which registration
statement is deemed to register an indefinite number of shares of the
Fund pursuant to the provisions of Section 24(f) of the Investment
Company Act. You have further advised us that the Fund has filed, and
each year hereafter will timely file, a Notice pursuant to Rule 24f-2
under the Investment Company Act perfecting the registration of the
shares sold by the Fund during each fiscal year during which such
registration of an indefinite number of shares remains in effect.
You have also informed us that the shares of the Fund have been, and
will continue to be, sold in accordance with the Fund's usual method of
distributing its registered shares, under which prospectuses are made
available for delivery to offerees and purchasers of such shares in
accordance with Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, so long as the
Fund remains a valid and subsisting entity under the laws of its state
of organization, and the registration of an indefinite number of shares
of the Fund remains effective, the authorized shares of the Fund when
issued for the consideration set by the Board of Directors pursuant to
the Articles, and subject to compliance with Rule 24f-2, will be legally
outstanding, fully-paid, and non-assessable shares, and the holders of
such shares will have all the rights provided for with respect to such
holding by the Articles and the laws of the State of Minnesota.
We hereby consent to the use of this opinion, in lieu of any other, as
an exhibit to the Registration Statement of the Fund, along with any
amendments thereto, covering the registration of the shares of the Fund
under the Securities Act and the applications, registration statements
or notice filings, and amendments thereto, filed in accordance with the
securities laws of the several states in which shares of the Fund are
offered, and we further consent to reference in the registration
statement of the Fund to the fact that this opinion concerning the
legality of the issue has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /s/ Bruce G. Leto
----------------------
Bruce G. Leto
Consent of Ernst & Young LLP, Independent Auditors
We consent to the references to our firm under the caption "Financial
Highlights" in the Prospectus and "Financial Statements" in the
Statement of Additional Information and to the incorporation by
reference in this Post-Effective Amendment No. 25 to the Registration
Statement (Form N-1A) (No. 33-16270) of Voyageur Funds, Inc. of our
report dated December 4, 1998, included in the 1998 Annual Report to
shareholders.
Philadelphia, Pennsylvania
February 22, 1999
/s/Ernst & Young LLP
- --------------------
Ernst & Young LLP
Report of Independent Auditors
To the Shareholders and Board of Directors
Voyageur Funds, Inc. - Delaware-Voyageur U.S. Government Securities Fund
We have audited the accompanying statement of net assets of Voyageur
Funds, Inc. - Delaware-Voyageur U.S. Government Securities Fund (the
"Fund") as of October 31, 1998, and the related statement of operations
for the year then ended and the statements of changes in net assets and
the financial highlights for each of the two years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for the
periods ended June 30, 1994 through October 31, 1996 were audited by
other auditors whose report dated December 6, 1996 expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of October 31,
1998, by correspondence with the Fund's custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Voyageur Funds, Inc. - Delaware-Voyageur U.S.
Government Securities Fund at October 31, 1998, the results of its
operations for the year then ended and the changes in its net assets and
its financial highlights for each of the two years in the period then
ended, in conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
December 4, 1998
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<ACCUMULATED-NII-PRIOR> 82,004
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 455,622
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<GROSS-EXPENSE> 989,306
<AVERAGE-NET-ASSETS> 48,934,293
<PER-SHARE-NAV-BEGIN> 10.600
<PER-SHARE-NII> .555
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<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 10.940
<EXPENSE-RATIO> 1.060
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<NUMBER> 012
<NAME> DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND B CLASS
<S> <C>
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<TABLE> <S> <C>
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<CIK> 0000819799
<NAME> VOYAGEUR FUNDS, INC.
<SERIES>
<NUMBER> 013
<NAME> DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND C CLASS
<S> <C>
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<TABLE> <S> <C>
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<CIK> 0000819799
<NAME> VOYAGEUR FUNDS, INC.
<SERIES>
<NUMBER> 014
<NAME> DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND INSTITUTIONAL CLASS
<S> <C>
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</TABLE>
