<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
DELAWARE POOLED TRUST, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:________________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________
<PAGE>
Delaware Pooled Trust, Inc.
Proxy Statement and
Notice of Annual/Special Meeting of Shareholders
March 17, 1999
<PAGE>
[GRAPHIC OMITTED]
January 27, 1999
Dear Shareholder:
An Annual/Special Meeting of Shareholders of Delaware Pooled Trust, Inc. and
its various portfolios is being held in Philadelphia on March 17, 1999. We ask
that each shareholder take the time to review the enclosed proxy statement and
vote on the important issues affecting the company and any portfolios that they
own.
The enclosed proxy statement describes seven separate proposals. Certain
proposals affect only some of the portfolios, while other proposals affect the
company as a whole. In addition to the election of Board members and
ratification of the selection of auditors, the proxy statement includes
proposals to change the designation of investment objectives and current
investment restrictions of certain portfolios from "fundamental" to "non-
fundamental," as well as a proposal to adopt new standardized "fundamental"
investment restrictions for those portfolios. The meaning of the terms
"fundamental" and "non-fundamental" is explained in the proxy statement. While
management does not currently intend to materially change any portfolio's
objective or restrictions, the proposed changes will allow the Board of
Directors to approve future changes in objectives and investment restrictions
without the delay and expense of holding a shareholder meeting.
The proxy statement also contains proposals to approve new, standardized
investment management agreements. Some of the proposed investment management
agreements contain fee reductions, while others contain minimal increases that
would result from discontinuing the current practice of reducing management
fees paid to a portfolio's investment manager by an amount equal to the fees
paid to independent directors. The minimal increases, however, would have
virtually no impact on reportable expenses. Also, new standardized sub-advisory
agreements are proposed for the portfolios having those arrangements. Finally,
shareholders are being asked to approve management's proposal to reorganize the
company into a Delaware business trust to take advantage of various advantages
under Delaware law.
We realize that this proxy statement will take time to read, but each
shareholder's vote is very important. Please review the proposals presented and
mark, sign and return the proxy card (or cards) in the enclosed postage-paid
envelope. Shareholders may also call toll-free to vote by telephone, or may
vote using the internet. The insert accompanying this proxy statement describes
how to vote using these methods.
If we do not receive completed proxy cards after several weeks, shareholders
may be contacted by representatives of the company, who will remind
shareholders to vote their shares and will review the various ways in which a
vote can be registered.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
/s/ Jeffrey J. Nick
- ------------------------
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
<PAGE>
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
We encourage each shareholder to read the attached proxy statement in full;
however, the following are some typical questions that shareholders might have
regarding this proxy statement.
Q: WHY IS DELAWARE INVESTMENTS PROVIDING THIS PROXY STATEMENT TO SHAREHOLDERS?
Investment companies are required to obtain shareholders' votes for certain
types of action. Shareholders have a right to vote on certain major policy
decisions, such as those included here.
Q: WHAT ARE THE ISSUES CONTAINED IN THIS PROXY STATEMENT?
There are seven different proposals presented here and they are outlined in the
Notice at the beginning of the proxy statement. The Notice describes which
proposals apply to the entire company and which proposals apply to individual
portfolios within the company.
Q: HOW WOULD THE PROPOSALS AFFECT SHAREHOLDERS?
o Changing the designation of a portfolio's investment objective from
"fundamental" to "non-fundamental" will not alter any portfolio's current
investment objective, but it will allow the Board of Directors to make
future adjustments to the investment objective without having to obtain
shareholder approval. Shareholders would, however, receive advance written
notice of any proposed changes. Management does not currently intend to
recommend any material changes to the investment objective of any
portfolio.
o Adopting a standardized list of "fundamental" investment restrictions for
all portfolios would modernize the restrictions to meet current regulatory
requirements, would provide operational efficiencies and would make it
easier to monitor compliance with these restrictions.
o Designating all existing investment restrictions as "non-fundamental" would
not change the way a portfolio is currently managed or operated, but would
allow the Board of Directors to analyze and approve changes to the
portfolio's existing investment restrictions, without having to obtain
additional shareholder approval. Over time, management expects to recommend
that the Board evaluate each portfolio's investment restrictions so that
those restrictions can be modernized and standardized, if appropriate.
o Approval of new standardized investment management agreements for each
portfolio (and standardized sub-advisory agreements where applicable) would
help provide operational efficiencies.
o The restructuring of the company from a Maryland corporation into a Delaware
business trust would provide both consistency across the Delaware
Investments family of funds and greater flexibility of operations.
Q: HOW DO THE BOARD MEMBERS RECOMMEND THAT SHAREHOLDERS VOTE?
Management recommended the operational changes to the portfolios. The Board,
most of the members of which are independent of management, reviewed the
operational and other proposals, and unanimously approved all proposals,
consistent with its duty to protect shareholders. Accordingly, the Board
members recommend that shareholders vote in favor of, or FOR, all of the
proposals described above.
Q: WHOM SHOULD SHAREHOLDERS CALL FOR MORE INFORMATION ON HOW TO
REGISTER THEIR VOTES?
Please call the company at 1-800-523-1918 for additional information on how
shareholders can place their votes.
PLEASE VOTE
EACH SHAREHOLDER'S VOTE IS IMPORTANT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
NOTICE OF ANNUAL/SPECIAL MEETING OF SHAREHOLDERS ......................................... ii
PROXY STATEMENT .......................................................................... 1
Proposal One: To Elect a Board of Directors for the Company ........................... 2
Proposal Two: To Approve the Redesignation of the Portfolio's Investment Objective from
Fundamental to Non-Fundamental .......................................... 6
Proposal Three: To Approve Standardized Fundamental Investment Restrictions for the
Portfolio (Includes Seven Sub-Proposals) .............................................. 7
3A: Industry Concentration ............................................................ 8
3B: Borrowing Money and Issuing Senior Securities ..................................... 9
3C: Underwriting of Securities ........................................................ 10
3D: Investing in Real Estate .......................................................... 10
3E: Investing in Commodities .......................................................... 11
3F: Making Loans ...................................................................... 11
3G: Redesignation of all Current Fundamental Investment Restrictions as
Non-Fundamental ...................................................................... 12
Proposal Four: To Approve a New Investment Management Agreement for the Portfolio ..... 13
Proposal Five: To Approve a New Sub-Advisory Agreement for the Portfolio ............. 18
Proposal Six: To Ratify the Selection of Ernst & Young LLP as Independent Auditors
for the Company ....................................................................... 19
Proposal Seven: To Approve the Restructuring of the Company from a Maryland
Corporation into a Delaware Business Trust ............................................ 20
</TABLE>
<TABLE>
<S> <C> <C>
EXHIBITS
Exhibit A: Outstanding Shares as of Record Date (December 21, 1998) ...................... A-1
Exhibit B: Shareholders Owning 5% or More of a Portfolio as of October 31, 1998 .......... B-1
Exhibit C: Executive Officers of the Company ............................................. C-1
Exhibit D: Shareholdings by Directors and Nominees in the Delaware Investments Funds
as of October 31, 1998 ....................................................... D-1
Exhibit E: Lists of Current Fundamental Investment Restrictions .......................... E-1
Exhibit F: Information Relating to Investment Management and Sub-Advisory Agreements ..... F-1
Exhibit G: Similar Funds Managed by the Investment Managers and Sub-Advisers ............. G-1
Exhibit H: Form of Investment Management Agreement ....................................... H-1
Exhibit I: Form of Sub-Advisory Agreement ................................................ I-1
Exhibit J: Form of Agreement and Plan of Reorganization .................................. J-1
Exhibit K: Comparison and Significant Differences Between Delaware Business Trusts and
Maryland Corporations ........................................................ K-1
</TABLE>
i
<PAGE>
[GRAPHIC OMITTED]
1818 Market Street
Philadelphia, PA 19103
Proxy Statement and
Notice of Annual/Special Meeting of Shareholders
to be Held on March 17, 1999
To the shareholders of the following portfolios of Delaware Pooled Trust, Inc.:
<TABLE>
<S> <C>
The Aggregate Fixed Income Portfolio The International Fixed Income Portfolio
The Diversified Core Fixed Income The Labor Select International
Portfolio Equity Portfolio
The Emerging Markets Portfolio The Large-Cap Value Equity Portfolio
The Global Equity Portfolio The Mid-Cap Growth Equity Portfolio
The Global Fixed Income Portfolio (formerly The Aggressive Growth Portfolio)
The Growth and Income Portfolio The Mid-Cap Value Equity Portfolio
The High-Yield Bond Portfolio (formerly The Small/Mid-Cap Value Equity Portfolio)
The International Equity Portfolio The Real Estate Investment Trust Portfolio II
The Intermediate Fixed Income Portfolio The Small-Cap Growth Equity Portfolio
</TABLE>
This is your official Notice that an Annual/Special Meeting of Shareholders of
Delaware Pooled Trust, Inc. (the "Company"), will be held on Wednesday, March
17, 1999 at 10:00 a.m. at the Union League of Philadelphia, 140 South Broad
Street, Philadelphia, Pennsylvania. Each separate portfolio within the Company
that will participate at the meeting is referred to as a "Portfolio." The
purpose of the meeting is to consider and act upon the following Proposals and
Sub-Proposals that apply either to the entire Company or particular Portfolios
within the Company, and to transact any other business that properly comes
before the meeting and any adjournments thereof.
<TABLE>
<S> <C>
Proposal One: To Elect a Board of Directors for
the Company ..................................... Proposal One applies to the entire Company
(all Portfolios).
Proposal Two: To Approve the Redesignation
of the Portfolio's Investment Objective from
Fundamental to Non-Fundamental ................... Proposal Two applies to all Portfolios except the following:
The Growth and Income Portfolio
The Labor Select International Equity Portfolio
The Small-Cap Growth Equity Portfolio
Proposal Three: To Approve Standardized
Fundamental Investment Restrictions for the
Portfolio (Includes Seven Sub-Proposals) ......... Proposal Three applies to all Portfolios except the following:
3A: Industry Concentration The Growth and Income Portfolio
3B: Borrowing Money and Issuing Senior The Labor Select International Equity Portfolio
Securities The Small-Cap Growth Equity Portfolio
3C: Underwriting of Securities
3D: Investing in Real Estate
3E: Investing in Commodities
3F: Making Loans
3G: Redesignation of all Current
Fundamental Investment Restrictions
as Non-Fundamental
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Proposal Four: To Approve a New Investment
Management Agreement for the Portfolio ......... Proposal Four applies to all Portfolios.
Proposal Five: To Approve a New Sub-Advisory
Agreement for the Portfolio .................... Proposal Five applies only to the following Portfolios:
The Diversified Core Fixed Income Portfolio
The Global Equity Portfolio
The Real Estate Investment Trust Portfolio II
Proposal Six: To Ratify the Selection of Ernst
& Young LLP as Independent Auditors for
the Company .................................... Proposal Six applies to the entire Company
(all Portfolios).
Proposal Seven: To Approve the Restructuring of
the Company from a Maryland Corporation
into a Delaware Business Trust ................. Proposal Seven applies to the entire Company
(all Portfolios).
</TABLE>
Please note that a separate vote is required for each Proposal or Sub-Proposal
that applies to the Company or to a particular Portfolio. Please vote the Proxy
promptly to avoid the need for further mailings. Each shareholder's vote is
important.
/s/ Jeffrey J. Nick
- -----------------------------------
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
iii
<PAGE>
[GRAPHIC OMITTED]
1818 Market Street
Philadelphia, PA 19103
1-800-523-1918
PROXY STATEMENT
ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1999
Meeting Information. The Board of Directors of Delaware Pooled Trust, Inc., an
open-end registered investment company within the Delaware Investments family
(the "Company"), is soliciting your proxy to be voted at the Annual/Special
Meeting of Shareholders to be held on Wednesday, March 17, 1999 at 10:00 a.m.
at the Union League of Philadelphia, 140 South Broad Street, Philadelphia,
Pennsylvania or any adjournments of the meeting (hereafter, the "Meeting").
Purpose of Meeting. The purpose of the Meeting is to consider a number of
Proposals and Sub-Proposals that either apply to the entire Company, or to
individual portfolios within the Company (each a "Portfolio"). The accompanying
Notice describes which Proposals and Sub-Proposals apply to the Company and/or
its Portfolios.
The Board of Directors urges shareholders to complete, sign and return the
Proxy Card (or Cards) included with this Proxy Statement, or use one of the
other voting methods described in the insert accompanying this Proxy Statement,
whether or not shareholders intend to be present at the Meeting. It is
important that sharehoders promptly return the signed Proxy Card(s), or use one
of the other voting methods described in the insert accompanying this Proxy
Statement, to help assure a quorum for the Meeting.
General Voting Information. The persons designated on the Proxy Card(s) as
proxies will vote your shares as you instruct on each Proxy Card. If your
signed Proxy Card is returned without any voting instructions, your shares will
be voted "FOR" each of the nominees for election as Director and "FOR" each
other Proposal or Sub-Proposal concerning the Company or your Portfolio. The
persons designated as proxies will also be authorized to vote in their
discretion on any other matters which may come before the Meeting. If you sign
and return a Proxy Card, you may still attend the Meeting to vote your shares
in person. If your shares are held of record by a broker-dealer and you wish to
vote in person at the Meeting, you should obtain a Legal Proxy from your broker
of record and present it at the Meeting. You may also revoke your proxy at any
time before the Meeting: (i) by notifying Delaware Investments in writing at
1818 Market Street, Philadelphia PA 19103; (ii) by submitting a later signed
Proxy Card; or (iii) by voting your shares in person at the Meeting. If your
shares are held in the name of your broker, you will have to make arrangements
with your broker to revoke a previously executed proxy.
Each shareholder may cast one vote for each full share and a partial vote for
each partial share of a Portfolio that they owned on the record date, which was
December 21, 1998. Exhibit A shows the number of shares of each Portfolio and
the Company that were outstanding on the record date and Exhibit B lists the
shareholders who own 5% or more of each Portfolio. It is expected that this
Proxy Statement and the accompanying Proxy Card(s) will be mailed to
shareholders of record on or about January 30, 1999.
This proxy solicitation is being made largely by mail, but may also be made by
officers or employees of the Company or their investment managers or
affiliates, through telephone, facsimile, oral or other communications.
Shareholders may provide proxy instructions by returning their Proxy Card(s) by
mail or fax and may also communicate proxy instructions through the internet or
by telephone via touch-tone voting.
Votes Required to Approve each Proposal or Sub-Proposal. Three Proposals within
this Proxy Statement affect all shareholders of the Company, regardless of the
fact that the Company consists of a number of individual Portfolios. These
Proposals are the election of Directors, the ratification of the selection of
the independent auditors and the restructuring of the Company from a Maryland
corporation to a Delaware business trust. All shareholders of the Company vote
together on these Proposals. In addition to the Portfolios, The Real Estate
<PAGE>
Investment Trust Portfolio is one of the portfolios within the Company. With
regard to the Proposals that apply to the entire Company, shareholders of The
Real Estate Investment Trust Portfolio have received a separate proxy statement
relating to the same proposals and their votes will be combined with the votes
of shareholders of the Portfolios who are voting at this meeting. The remaining
Proposals or Sub-Proposals contained in this Proxy Statement only affect
particular Portfolios and, therefore, only shareholders of those Portfolios are
permitted to vote on those Proposals or Sub-Proposals.
The amount of votes of the Company or a Portfolio that are needed to approve
the different Proposals or Sub-Proposals varies. The voting requirements are
described within each Proposal or Sub-Proposal.
Abstentions and broker non-votes will likely be included for purposes of
determining whether a quorum is present at the Meeting. They will likely be
treated as votes present at the Meeting, but will likely not be treated as
votes cast. They therefore would have no effect on Proposals which require a
plurality of votes cast for approval, but would have the same effect as a vote
"AGAINST" on Proposals requiring a majority of votes present or a majority of
outstanding voting securities for approval. (These different voting standards
are explained in the various Proposals.) Delaware Management Company ("DMC"), a
series of Delaware Management Business Trust, or Delaware International
Advisers Ltd. ("DIAL") will reimburse banks, brokers or dealers for their
reasonable expenses in forwarding soliciting materials to shareholders.
Each Portfolio's most recent Annual Report and Semi-Annual Report to
Shareholders were previously mailed to shareholders. Copies of these reports
are available upon request, without charge, by writing or calling the Company
at the address and telephone number shown on the top of the previous page of
the Proxy Statement.
Proposal One: To Elect a Board of Directors for the Company
This Proposal applies to the entire Company (all Portfolios).
You are being asked to vote to elect each of the following nominees to the
Board: Jeffrey J. Nick, Walter P. Babich, John H. Durham, Anthony D. Knerr, Ann
R. Leven, Thomas F. Madison, Charles E. Peck, Wayne A. Stork and Jan R.
Yeomans. With the exception of Jan R. Yeomans, each nominee is currently a
member of the Board of Directors. If elected, these persons will serve as
Directors until the next Annual or Special Meeting of Shareholders called for
the purpose of electing Directors, and/or until their successors have been
elected and qualify for office. It is not expected that any nominee will
withdraw or become unavailable for election, but in such a case, the power
given by you in the Proxy Card may be used to vote for a substitute nominee or
nominees as recommended by the existing Board.
Directors and Nominees. Presented below is information about the age, position
with the Company, principal occupation and past business experience of each
nominee and current Director.
Jeffrey J. Nick* (45), Chairman (since 1998), President, Chief Executive
Officer and Director and/or Trustee (since 1997) of each of the 34 investment
companies in the Delaware Investments family, including the Company. As of
January 1, 1999, Chairman, President, Chief Executive Officer and
Director/Trustee of DMH Corp., Delvoy, Inc., Delaware Management Company, Inc.,
Delaware Management Business Trust, Founders Holdings, Inc.; Chairman, Chief
Executive Officer and Director of Delaware Distributors, Inc., Delaware
International Holdings, Ltd., Delaware International Advisers Ltd. (Director of
Delaware International Advisers Ltd. since 1998); Chairman and Chief Executive
Officer of Delaware Management Company (a series of Delaware Management
Business Trust); Chairman of Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware Distributors L.P.; Chairman and
Director of Delaware Capital Management, Inc. and Retirement Financial
Services, Inc.; President, Chief Executive Officer and Director of Delaware
Management Holdings, Inc. (President and Director of Delaware Management
Holdings, Inc. since 1997); Director of Delaware Service Company, Inc.;
President, Chief Executive Officer and Director of Lincoln National Investment
- ------------
* This nominee is considered to be an "interested person" of the Company, as
that term is defined in the Investment Company Act of 1940, as amended, because
he is affiliated with the investment manager and distributor of the Company.
2
<PAGE>
Companies, Inc., 1996 to present; Director of Vantage Global Advisors, Inc.,
1996 to present; Director of Lynch & Mayer Inc. (investment adviser), 1997 to
present; Managing Director of Lincoln National UK plc, 1992-1996; Senior Vice
President of Lincoln National Corporation responsible for corporate planning
and development, 1989-1992.
Walter P. Babich (71), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and first became a Director of the
Company in 1991; Board Chairman of Citadel Constructors, Inc. (commercial
building construction), 1988 to present; Partner of I&L Investors, 1988-1991;
Partner of Irwin & Leighton Partnership (building construction), 1986-1988.
John H. Durham (61), Director and/or Trustee of 19 investment companies in the
Delaware Investments family (including the Company) and first became a Director
of the Company in 1991. Consultant to Delaware Investments, 1991-1997; Partner
of Complete Care Services, 1995 to present; Chairman of the Board of each
investment company in the Delaware Investments family from 1986 to 1991;
Director Emeritus from 1995 through 1998 of all investment companies in the
Delaware Investments family (including the Company); reappointed to the Boards
of the 19 investment companies for which he currently serves as Director in
1998; President of each company from 1977 to 1990; and Chief Executive Officer
of each company in the Delaware Investments family from 1984 to 1990. Prior to
1992, with respect to Delaware Management Holdings, Inc., Delaware Management
Company, Delaware Distributors, Inc. and Delaware Service Company, Inc., Mr.
Durham served as a director and in various executive capacities at different
times within the Delaware Investments organization.
Anthony D. Knerr (60), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and first became a Director of the
Company in 1991; Founder and Managing Director, Anthony Knerr & Associates
(strategic consulting company to major non-profit institutions and
organizations), 1991 to present; Founder and Chairman of the Publishing Group,
Inc. 1988-1990; Executive Vice President/Finance and Treasurer of Columbia
University, 1982-1988; Lecturer of English at Columbia University, 1987-1989.
Ann R. Leven (58), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and first became a Director of the
Company in 1991; Treasurer, National Gallery of Art, 1994 to present; Director
of four investment companies sponsored by Acquila Management Corporation, 1985
to February, 1998; Deputy Treasurer of the National Gallery of Art, 1990 to
1994; Treasurer and Chief Fiscal Officer of the Smithsonian Institution,
1984-1990; Adjunct Professor at Columbia Business School, 1975-1992.
W. Thacher Longstreth* (78), Director and/or Trustee of each of the 34
investment companies in the Delaware Investments family and first became a
Director of the Company in 1991; Philadelphia City Councilman, 1984 to present;
Consultant, Packard Press, 1988 to present; Senior Partner, MLW Associates
(business consulting), 1983 to present; Director, Healthcare Services Group,
1983 to present; Director Emeritus, Tasty Baking Company, 1991 to present;
Director, MicroLeague Micromedia, Inc. (computer game publisher), 1996 to
present; Director, Tasty Baking Company, 1968-1991; Vice Chairman, The Winchell
Company (financial printing), 1983-1988.
Thomas F. Madison (62), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and first became a Director of the
Company in 1997; President and Chief Executive Officer of MLM Partners, Inc.,
1993 to present; Chairman of the Board of Communications Holdings, Inc., 1996
to present; Vice Chairman--Office of the CEO of The Minnesota Mutual Life
Insurance Company, February to September, 1994; Director of Valmont Industries
(irrigation systems and steel manufacturing), 1987 to present; Director of
Eltrax Systems, Inc. (data communications integration), 1993 to present;
Director of Minnegasco, Span Link Communications (software), 1995 to present;
Director of ACI Telecentrics (outbound telemarketing and telecommunications),
1997 to present; Director of Aon Risk Services, 1996 to present; Director of
Digital River, 1997 to present.
- ------------
* This Director will be retiring from service on the Board of Directors
following election of the new Board and, therefore, is not a nominee.
3
<PAGE>
Charles E. Peck (72), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and first became a Director of the
Company in 1991; Retired; Secretary/Treasurer, Enterprise Homes, Inc., 1992 to
present; Chairman and Chief Executive Officer of The Ryland Group, Inc., 1981
to 1990.
Wayne A. Stork* (61), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family and first became a Director of the
Company in 1991; Chairman and Director of Delaware Management Holdings, Inc.;
and Director of Delaware International Advisers Ltd. In addition, until
December 31, 1998, Chairman of each of the 34 investment companies in the
Delaware Investments family; Director of Delaware Capital Management, Inc.;
Chairman, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman, President,
Chief Executive Officer, Chief Investment Officer and Director/Trustee of
Delaware Management Company, Inc. and Delaware Management Business Trust;
Chairman, President, Chief Executive Officer and Chief Investment Officer of
Delaware Management Company (a series of Delaware Management Business Trust);
Chairman, Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Chairman
and Chief Executive Officer of Delaware International Advisers Ltd.; Chairman,
Chief Executive Officer and Director of Delaware International Holdings Ltd.;
Chief Executive Officer of Delaware Management Holdings, Inc.; President and
Chief Executive Officer of Delvoy, Inc.; Chairman of Delaware Distributors,
L.P.; and Director of Delaware Service Company, Inc. and Retirement Financial
Services, Inc. During the past five years, Mr. Stork has served in various
executive capacities at different times within the Delaware Investments
organization.
Jan R. Yeomans (50), Vice President and Treasurer of the 3M Corporation, 1994
to present; Director of Benefit Funds and Financial Markets for the 3M
Corporation, 1987-1994; Manager of Benefit Fund Investments for the 3M
Corporation, 1985-1987; Manager of Pension Funds for the 3M Corporation,
1983-1985; Consultant for Investment Technology Group of Chase Econometrics,
1982-1983; Consultant for Data Resources, 1980-1982; Programmer for the Federal
Reserve Bank of Chicago, 1970-1974.
Board and Committee Meetings. During the twelve months ended October 31, 1998,
the Company held seven Board meetings.
The Board has an Audit Committee for the purpose of meeting, at least annually,
with the Company's independent auditors and officers to oversee the quality of
financial reporting and the internal controls of the Company, and for such
purposes as the Board may from time to time direct. The Audit Committee
consists of the following four Directors, all of whom are considered to be
independent because they are not "interested persons" as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"): Ann R. Leven,
Chairperson, Walter P. Babich, Anthony D. Knerr and Thomas F. Madison. Members
of the Audit Committee are appointed by the Board and serve for three years or
until their successors have been appointed and qualified. The Audit Committee
held six meetings during the twelve months ended October 31, 1998.
The Board also has a Nominating Committee that meets for the purpose of
proposing nominees to serve as Directors. Nominees are considered by the full
Board and, when appropriate, by shareholders at annual or special shareholder
meetings. The Nominating Committee of the Company currently consists of the
following three Directors appointed by the Board: Anthony D. Knerr and Charles
E. Peck, both of whom are independent, and Wayne A. Stork. W. Thacher
Longstreth, whose term as a Committee member would have expired in November
1998, continued to serve until the nominating process for this Meeting of
shareholders was completed. This Committee met three times during the past year
for the purpose of determining the proposed list of nominees for this Meeting.
The selection and nomination of the independent Director nominees is committed
to the discretion of the present independent Directors. The Nominating
Committee will consider suggestions for Board nominations from shareholders.
Shareholders who wish to suggest candidates for nomination to the Board of
Directors at any future annual meeting should identify the candidate and
furnish a written statement of the person's qualifications to the Nominating
Committee at the principal executive offices of the Company.
- ------------
* This nominee is considered to be an "interested person"of the Company, as
that term is defined in the Investment Company Act of 1940, as amended, because
he is affiliated with the investment manager and distributor of the Company.
4
<PAGE>
Board Compensation. The interested Directors are compensated by the investment
manager and do not receive compensation from the Company. Each independent
Director (other than John H. Durham) currently receives a total annual retainer
fee of $38,000 for serving as a Director for all 34 companies within the
Delaware Investments family, plus $3,145 for each set of fund complex Board
meetings attended (seven regular meetings). John H. Durham currently receives a
total annual retainer fee of $31,180 for serving as a Director for 19 Companies
within the Delaware Investments family, plus $1,810 for each set of Board
meetings attended. Members of the Audit Committee currently receive additional
annual compensation of $5,000 from all Companies, in the aggregate, with the
exception of the chairperson, who receives $6,000.
Under the terms of the Company's retirement plan for Directors, each
independent Director who, at the time of his or her retirement from the Board,
has attained the age of 70 and served on the Board for at least five continuous
years, is entitled to receive payments from the Company for a period of time
equal to the lesser of the number of years that such person served as a
Director or the remainder of such person's life. The annual amount of such
payments will be equal to the amount of the annual retainer that is paid to
Directors of the Company at the time of such person's retirement. The following
table indicates the amount each Director received from the Company and from the
Delaware Investments fund complex as a whole during the 12 months ending
October 31, 1998.
<TABLE>
<CAPTION>
Jeffrey J. Walter P. John H. Anthony D.
Company Name Nick Babich Durham(1) Knerr
- ----------------------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
Total compensation from
Delaware Pooled Trust, Inc.
during the last fiscal year None $ 4,127 $ 2,221 $ 4,127
Total compensation from all
companies in the Delaware
Investments family for the
12 months ended October
31, 1998 ................... None $65,384 $25,935 $65,384
<CAPTION>
Ann R. W. Thacher Thomas F. Charles E. Wayne A.
Company Name Leven Longstreth Madison(2) Peck Stork
- ----------------------------- ---------- ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Total compensation from
Delaware Pooled Trust, Inc.
during the last fiscal year $ 4,207 $ 3,729 $ 3,898 $ 3,729 None
Total compensation from all
companies in the Delaware
Investments family for the
12 months ended October
31, 1998 ................... $66,545 $60,384 $62,467 $60,384 None
</TABLE>
- ------------
(1) Mr. Durham re-joined the Board on April 16, 1998.
(2) Mr. Madison joined the Board on May 1, 1997.
<PAGE>
Officers. The Board and the senior management of the Company appoint officers
each year, and from time to time as necessary. The following individuals are
executive officers of the Company: Jeffrey J. Nick, David K. Downes, Richard G.
Unruh, Paul E. Suckow, Richard J. Flannery, Michael P. Bishof, George M.
Chamberlain, Jr., Joseph H. Hastings, George E. Deming, Paul A. Matlack, Gary
A. Reed, Babak Zenouzi, Gerald T. Nichols, George H. Burwell, Robert L. Arnold,
Gerald S. Frey, Roger A. Early, Frank X. Morris and J. Paul Dokas. Exhibit C
includes biographical information and the past business experience of such
officers, except for Mr. Nick, whose information is set forth above along with
the other Directors and nominees. The Exhibit also identifies which officers
are also officers of DMC or DIAL. The above officers of the Company own shares
of common stock and/or options to purchase shares of common stock of Lincoln
National Corporation ("LNC"), the ultimate parent of DMC and DIAL. As a result,
they are considered to be "interested persons" of the Company under the 1940
Act.
While in the employ of Oppenheimer Management Corporation, Mr. Paul E. Suckow
was the subject of an Administrative Proceeding brought by the U.S. Securities
and Exchange Commission. As a result of this proceeding, Mr. Suckow was found
to have violated Section 34(b) of the 1940 Act by failing properly to disclose
material facts in certain books and records by order of the SEC dated December
1, 1992. Mr. Suckow was suspended from the business for 120 days.
Management's Ownership of Delaware Investments Funds. Attached to this Proxy
Statement as Exhibit D is a list of the Directors' and nominees' shareholdings
of the various funds within the Delaware Investments family on an individual
basis. As of October 31, 1998, the Company's Directors and Officers did not own
shares of any of the Portfolios. On October 31, 1998, however, the Directors
and Officers did own in the aggregate, approximately 40,604 shares of The Real
Estate Investment Trust Portfolio (as noted on page 2, shareholders of The Real
Estate Investment Trust Portfolio were mailed a separate proxy statement).
Despite their holdings in The Real Estate Investment Trust Portfolio, the
Company's Directors and Officers owned less than 1% of that portfolio and less
than 1% of the Company as of October 31, 1998.
Required Vote. Each Director of the Company shall be elected by a plurality of
votes cast by shareholders of the Company. This means that the nine nominees
receiving the largest number of votes will be elected to fill the available
Board positions.
5
<PAGE>
Proposal Two: To Approve the Redesignation of the Portfolio's Investment
Objective from Fundamental to Non-Fundamental
<TABLE>
<S> <C>
This Proposal applies all Portfolios except the following: The Growth and Income Portfolio
The Labor Select International Equity Portfolio
The Small-Cap Growth Equity Portfolio
</TABLE>
The investment objective of each Portfolio to which this Proposal applies, like
many of the older Delaware Investments funds, is designated as "fundamental,"
which means that any modifications, even those not resulting in significant
changes in the way a fund is managed or the risks to which it is subject, may
require shareholder approval. Under the 1940 Act, a fund's investment objective
is not required to be fundamental. However, many funds have elected to
designate their investment objectives as fundamental. This practice arose
largely as a result of comments provided by state securities regulators in
their review of fund registration statements during the state registration
process, as well as because of historical drafting conventions.
In light of the enactment of National Securities Markets Improvement Act of
1996 ("NSMIA"), which eliminated state review of investment company
registration statements, and in order to provide the Board with enhanced
flexibility to respond to market, industry or regulatory changes, the Board has
approved the redesignation of each Portfolio's investment objective from
fundamental to non-fundamental. A "non-fundamental" investment objective may be
changed at any time by the Directors without the delay and expense of
soliciting proxies and holding a shareholder meeting.
For a complete description of the investment objective of your Portfolio,
please consult your Portfolio's prospectus. The redesignation from fundamental
to non-fundamental will not alter any Portfolio's current investment objective.
If this Proposal is approved, however, management expects to request that the
Directors consider a number of modifications to the language used to describe
some of the Portfolios' investment objectives. The requested modifications are
designed to modernize and standardize the expression of such investment
objectives, but if these modifications are implemented, neither the principal
investment design nor the day-to-day management of the Portfolios would be
materially altered. If at any time in the future, the Directors approve a
change in a Portfolio's non-fundamental investment objective, either in
connection with the currently anticipated modernization and standardization or
otherwise, shareholders will be given notice of the change prior to its
implementation.
Required Vote. Approval of this proposal for a Portfolio requires the vote of a
"majority of the outstanding voting securities" of the Portfolio, which means
the vote of: (i) more than 50% of the outstanding voting securities of the
Portfolio; or (ii) 67% or more of the voting securities of the Portfolio
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, whichever is less. If the
redesignation of any Portfolio's investment objective from fundamental to
non-fundamental is not approved by shareholders of a particular Portfolio, that
Portfolio's investment objective will remain "fundamental" and shareholder
approval (and its attendant costs and delays) will continue to be required
prior to any change in the investment objective.
At Board meetings held in July and September, 1998, the Directors considered
the enhanced flexibility to respond to market, industry or regulatory changes
that would accrue to the Board if each Portfolio's fundamental investment
objective was redesignated as non-fundamental and the Board unanimously
approved the proposed change.
The Board unanimously recommends that shareholders vote FOR the redesignation
of the investment objective of their Portfolio as "non-fundamental."
6
<PAGE>
Proposal Three: To Approve Standardized Fundamental Investment Restrictions for
the Portfolio (This Proposal involves separate votes on Sub-Proposals 3A
through 3G)
<TABLE>
<S> <C>
This Proposal applies to all Portfolios except the following: The Growth and Income Portfolio
The Labor Select International
Equity Portfolio The Small-Cap
Growth Equity Portfolio
</TABLE>
Proposal Overview
Each Portfolio is subject to investment restrictions which establish percentage
and other limits that govern the Portfolio's investment activities. Under the
1940 Act, investment restrictions relating to certain activities are required
to be "fundamental," which means that any changes require shareholder approval.
Funds, like the Portfolios, are permitted to deem other restrictions
fundamental, and they may also adopt "non-fundamental" restrictions, which can
be changed by the Board without shareholder approval. Of course, any change in
a Portfolio's investment restrictions, whether fundamental or not, would be
approved by the Board and reflected in a Portfolio's prospectus or other
offering documents.
Unlike investment objectives and policies, which are often different for each
fund, investment restrictions for funds tend to be the same or similar, because
they are based on legal or regulatory requirements that apply to all funds.
Over the years, however, as new Portfolios were created or added, investment
restrictions relating to the same activities were expressed in a variety of
different ways. Many older Portfolios are subject to investment restrictions
that were adopted in response to regulatory, business or industry conditions
that no longer exist. In addition, a number of Portfolios adopted fundamental
restrictions in response to state laws and regulations that no longer apply
because they were preempted by NSMIA. As a result, a number of fundamental
restrictions are no longer required to be fundamental, and some previously
required restrictions are no longer required at all.
The Directors, together with management of the Company and the investment
managers and sub-advisers, have analyzed the current fundamental investment
restrictions of each Portfolio, and have concluded that six new standardized
fundamental investment restrictions should be adopted for each Portfolio. The
proposed investment restrictions relate only to activities that are required
under the 1940 Act to be the subject of fundamental policies and restrictions.
Management believes that a modern, standardized list of restrictions will
enhance the ability of the Portfolios to achieve their objectives because the
Portfolios will have greater investment management flexibility to respond to
changes in market, industry or regulatory conditions. In addition, standardized
restrictions are expected to enable the Portfolios to operate more efficiently
and to more easily monitor compliance with investment restrictions.
Each Portfolio currently has fundamental investment restrictions that govern
the same activities covered by the proposed fundamental investment
restrictions, and a number of Portfolios currently have other fundamental
investment restrictions that govern additional activities. Management is
recommending that shareholders approve the redesignation of each Portfolio's
current fundamental investment restrictions as non-fundamental at the same time
that the six new standardized fundamental investment restrictions are adopted
for each Portfolio. If the current fundamental restrictions are redesignated as
non-fundamental, the Directors would be able to modify or eliminate the current
restrictions without the costs or delays associated with a shareholder vote.
The proposed changes will not affect any Portfolio's investment objective and
will not change the way any Portfolio is currently being managed or operated,
since all current investment restrictions will remain in place as
non-fundamental restrictions. If, as proposed, the current investment
restrictions are designated as non-fundamental, management expects in the
future to recommend that the Board approve certain modifications designed to
result in a more modern and standardized list of investment restrictions for
the various Portfolios. Management's recommendations will likely involve the
elimination of certain current restrictions. The Board will determine
separately for each Portfolio whether elimination or modification of an
investment restriction is appropriate for that Portfolio.
7
<PAGE>
The six new proposed fundamental investment restrictions are described below
within the relevant Sub-Proposals. Unless all of the Sub-Proposals are approved
by shareholders of a Portfolio, none of the Sub-Proposals will be adopted for
that Portfolio.
Exhibit E contains a list of the current "fundamental" investment restrictions
for each Portfolio which are proposed to be redesignated as "non-fundamental."
That Exhibit includes the current restrictions relating to the activities which
are the subject of the new proposed restrictions and shareholders are
encouraged to compare the current and proposed restrictions.
Required Vote. Approval of each Sub-Proposal for a Portfolio requires the vote
of a "majority of the outstanding voting securities" of the Portfolio, which
means the vote of: (i) more than 50% of the outstanding voting securities of
the Portfolio; or (ii) 67% or more of the voting securities of the Portfolio
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, whichever is less.
The Directors have voted to adopt each of the proposed standardized
"fundamental" investment restrictions for the Portfolios, as well as to approve
the redesignation of the existing "fundamental" investment restrictions as
"non-fundamental," and unanimously recommend that shareholders vote FOR each
Sub-Proposal 3A through 3G for their Portfolio.
Sub-Proposal 3A: To adopt a new fundamental investment restriction concerning
the concentration of the Portfolio's investments in the same industry.
Under the 1940 Act, a Portfolio's policy of concentrating its investments in
securities of companies in the same industry must be fundamental. A mutual fund
concentrates its investments, for purposes of the SEC, if it invests more than
25% of its "net" assets (exclusive of cash, U.S. government securities and
tax-exempt securities) in a particular industry or group of industries. Having
the concentration policy apply to "net" assets represents a recent change by
the SEC staff from its previous concentration standard which applied to 25% of
a Portfolio's "total" assets. The change would slightly reduce a Portfolio's
ability to concentrate, since the "net" assets figure is lower than "total"
assets of a Portfolio because liabilities are subtracted.
Each Portfolio other than The Real Estate Investment Trust Portfolio II
currently has a fundamental investment restriction prohibiting it from
concentrating its investments in the same industry. There are however,
variations in the way that the investment restriction is described in the
Portfolios' offering documents. In addition, most restrictions define
concentration in terms of a percentage of "total" assets, rather than in
accordance with the new "net" assets standard.
The Real Estate Investment Trust Portfolio II has adopted a fundamental
investment policy requiring that it concentrate its investments in securities
of issuers in the real estate industry. The proposed fundamental concentration
restriction for this Portfolio would include language that would preserve its
current policy but otherwise would be consistent with the standardized
restriction set forth below.
With the variation concerning The Real Estate Investment Trust Portfolio II
noted above, the Board recommends that shareholders vote FOR the approval of
the proposed standardized fundamental investment restriction regarding
concentration set forth below. In approving the proposed investment restriction
and concluding that it would recommend the investment restriction to Portfolio
shareholders, the Directors considered that the proposed investment restriction
will standardize the concentration restriction for the Portfolios and is
intended to provide flexibility for Portfolios to respond to changes in the SEC
staff's position on concentration of investments or to other relevant legal,
regulatory or market developments without the delay or expense of a shareholder
vote.
Adoption of the proposed fundamental restriction will not affect the way the
Portfolios are currently managed or operated because the existing concentration
restrictions will remain in place as non-fundamental policies unless and until
the Board modifies them in the future.
Proposed Concentration Restriction: The Portfolio will not make investments
that will result in the concentration (as that term may be defined in the 1940
Act, any rule or order thereunder, or SEC staff interpretation
8
<PAGE>
thereof) of its investments in the securities of issuers primarily engaged in
the same industry, provided that this restriction does not limit the Portfolio
from investing in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or in tax-exempt securities or certificates of
deposit.
The Board has also approved a related non-fundamental policy for the
Portfolios, which will be adopted if the new fundamental restriction is
approved and which provides that, in applying the concentration restriction:
(i) utility companies will be divided according to their services, for example,
gas, gas transmission, electric and telephone will each be considered a
separate industry; (ii) financial service companies will be classified
according to the end users of their services, for example, automobile finance,
bank finance and diversified finance will each be considered a separate
industry; and (iii) asset backed securities will be classified according to the
underlying assets securing such securities. This non-fundamental policy is
intended to keep the concentration restriction from unnecessarily limiting a
Portfolio's investments.
Sub-Proposal 3B: To adopt a new fundamental investment restriction concerning
borrowing money and issuing senior securities.
Introduction to Sub-Proposal. The 1940 Act imposes certain limits on investment
companies with respect to borrowing money and issuing senior securities. A
"senior security" is defined as an obligation of a fund with respect to its
earnings or assets that takes precedence over the claims of the fund's
shareholders with respect to the same earnings or assets. The 1940 Act
generally prohibits funds from issuing senior securities, in order to limit
their ability to use leveraging. In general, a fund uses leveraging when it
enters into securities transactions with borrowed money or money to which it
has only a temporary entitlement.
The limitations on borrowing and issuing senior securities are generally
designed to protect shareholders and their investments by restricting a fund's
ability to subject its assets to any claims of creditors or senior security
holders who would be entitled to dividends or rights on liquidation of the fund
that take precedence over the rights of shareholders. Borrowing money and
issuing senior securities are related activities under the 1940 Act in that, if
a fund fails to adhere to the restrictions applicable to borrowing, the fund
will be considered to have issued an impermissible senior security. Under the
1940 Act, a fund's investment restrictions relating to borrowing and senior
securities must be "fundamental."
The current investment restrictions concerning borrowing and senior securities
vary somewhat among the Portfolios and are set forth in Exhibit E. Shareholders
of each Portfolio are being asked to approve a new standardized "fundamental"
restriction that covers both borrowing and senior securities and which is
designed to reflect current regulatory requirements.
Senior Securities. SEC staff interpretations under the 1940 Act allow open-end
funds like the Portfolios to engage in a number of types of transactions which
might be considered to raise "senior securities" or "leveraging" concerns, so
long as the funds meet certain collateral requirements established by the SEC
staff. These requirements are designed to protect shareholders. For example,
some of the transactions that may raise senior security concerns include short
sales, certain options and futures transactions, reverse repurchase agreements
and securities transactions that obligate a fund to pay money at a future date
(these transactions may be referred to collectively as "Leveraging-Type
Transactions"). Funds that engage in Leveraging-Type Transactions must set
aside money or securities or engage in certain offsetting securities
transactions, to meet the SEC staff's collateralization requirements.
Consistent with SEC staff positions, the senior security restrictions for the
Portfolios specifically permit the Portfolios to engage in Leveraging-Type
Transactions.
Borrowing. Under the 1940 Act, an open-end fund, like the Portfolios, is
permitted to borrow up to 5% of its total assets for temporary purposes from
any person so long as the borrowing is privately arranged, and also to borrow
from banks, provided that if such bank borrowings exceed 5%, the fund must have
assets totaling at least 300% of the borrowing when the amount of the borrowing
is added to the fund's other assets. The effect of this latter provision is to
allow an open-end fund to borrow from banks amounts up to one-third (331/3%) of
its total assets (including the amount borrowed). Funds typically borrow money
to meet redemptions so that they can avoid being forced to sell portfolio
securities before they would have otherwise been sold. This technique allows
funds greater flexibility to buy and sell portfolio securities for investment
or tax considerations, rather than for cash flow considerations.
9
<PAGE>
The borrowing restrictions for the Portfolios permit borrowing to the extent
allowed under the 1940 Act, but that authority is limited in various ways. A
number of the Portfolios are permitted only to borrow "as a temporary measure
for extraordinary purposes;" others are prevented from purchasing securities
while borrowings are outstanding; and still others are prevented from pledging
more than 10% of their net assets.
Effects of the Proposed Investment Restriction. Since the proposed investment
restriction would provide greater flexibility for the Portfolios to engage in
borrowing and in Leveraging-Type Transactions, the Portfolios may be subject to
additional costs and risks. For example, the costs of borrowing can reduce a
Portfolio's total return. Further, upon engaging in Leveraging-Type
Transactions, the Portfolios could experience increased risks due to the
effects of leveraging. The SEC staff's collateralization requirements are
designed to address such risks.
The Board recommends that shareholders of each Portfolio vote FOR the approval
of the proposed standardized fundamental investment restriction regarding
borrowing and issuing senior securities set forth below. The proposed
investment restriction will establish a standardized borrowing and senior
securities restriction which is written to provide flexibility for Portfolios
to respond to changes in legal, regulatory or market developments. Adoption of
the new restriction, however, will not affect the way such Portfolios are
currently managed or operated because the existing restrictions will remain as
non-fundamental policies unless and until the Board modifies them in the
future.
Proposed Borrowing and Senior Securities Restriction: The Portfolio may not
borrow money or issue senior securities, except as the 1940 Act, any rule or
order thereunder, or SEC staff interpretation thereof, may permit.
Sub-Proposal 3C: To adopt a new fundamental investment restriction concerning
underwriting.
Each Portfolio is currently subject to a fundamental investment restriction
prohibiting it from acting as an underwriter of the securities of other
issuers. Under the 1940 Act, a fund's policy or restriction relating to
underwriting must be fundamental. A person or company is generally considered
an underwriter under the federal securities laws if it participates in the
public distribution of securities of other issuers, usually by purchasing the
securities from the issuer and re-selling the securities to the public.
Underwriters are subject to stringent regulatory requirements and often are
exposed to substantial liability. Thus, virtually all funds, like the
Portfolios, operate in a manner that allows them to avoid acting as
underwriters. From time to time, a fund may purchase a security for investment
purposes which it later sells or re-distributes to institutional investors or
others under circumstances where the fund could possibly be considered to be an
underwriter under the technical definition contained in the securities laws.
The current underwriting restriction for each Portfolio specifically permits
such re-sales. Management, consistent with SEC staff interpretations, believes
that the Portfolios legally would not be regulated as underwriters in these
circumstances.
The Board recommends that shareholders of each Portfolio vote FOR the approval
of the proposed standardized fundamental investment restriction regarding
underwriting set forth below. The proposed restriction is substantially similar
to the current restriction for most Portfolios. The new restriction is proposed
for each Portfolio because it will help to achieve the goal of standardization
of the language of the investment restrictions among all Portfolios. Adoption
of the proposed restriction will not affect the way the Portfolios are
currently managed or operated.
Proposed Underwriting Restriction: The Portfolio may not underwrite the
securities of other issuers, except that the Portfolio may engage in
transactions involving the acquisition, disposition or resale of its portfolio
securities under circumstances where it may be considered to be an underwriter
under the Securities Act of 1933.
Sub-Proposal 3D: To adopt a new fundamental investment restriction concerning
investments in real estate.
Each Portfolio currently has a fundamental investment restriction prohibiting
the purchase or sale of real estate. The Real Estate Investment Trust Portfolio
II, however, may own real estate directly as a result of a default on
securities it owns. Most Portfolios' current restrictions allow the Portfolios
to invest in companies that deal in real estate, or to invest in securities
that are secured by real estate. Under the 1940 Act, a fund's policy or
restrictions regarding investments in real estate must be fundamental.
10
<PAGE>
The Board recommends that shareholders of each Portfolio vote FOR the approval
of the proposed standardized fundamental investment restriction regarding real
estate set forth below. The proposed investment restriction is designed to
standardize the language of the real estate restriction among the various
Portfolios. The proposed investment restriction will permit Portfolios to
purchase securities whose payments of interest or principal are secured by
mortgages or other rights to real estate in the event of default. The
investment restriction will also enable the Portfolios to invest in companies
within the real estate industry, provided such investments are consistent with
the Portfolio's investment objective and policies. Adoption of the proposed
restriction will not affect the way the Portfolios are managed or operated
because the current restrictions will remain as non-fundamental policies unless
and until the Board modifies them in the future.
Proposed Real Estate Restriction: The Portfolio may not purchase or sell real
estate unless acquired as a result of ownership of securities or other
instruments and provided that this restriction does not prevent the Portfolio
from investing in issuers which invest, deal, or otherwise engage in
transactions in real estate or interests therein, or investing in securities
that are secured by real estate or interests therein.
Sub-Proposal 3E: To adopt a new fundamental investment restriction concerning
investments in
commodities.
The Portfolios currently are subject to fundamental investment restrictions
prohibiting the purchase or sale of commodities or commodity contracts. Under
the 1940 Act, policies and restrictions regarding commodities must be
fundamental. The most common types of commodities are physical commodities such
as wheat, cotton, rice and corn. However, under federal law, futures contracts
are considered to be commodities and, therefore, financial futures contracts,
such as futures contracts related to currencies, stock indices or interest
rates, are considered to be commodities. If a fund, like the Portfolios, buys a
financial futures contract, it obtains the right to receive (or, if the fund
sells the contract, the fund is obligated to pay) the cash difference between
the contract price for an underlying asset or index and the future market
price, if the market price is higher. If the future price is lower, the fund is
obligated to pay (or, if the fund sold the contract, the fund is entitled to
receive) the amount of the decrease. Funds often desire to invest in financial
futures contracts and options related to such contracts for hedging or for
investment reasons.
The Board recommends that shareholders of each Portfolio vote FOR the approval
of the proposed standardized fundamental investment restriction regarding
commodities set forth below. The proposed restriction would standardize the
language of the restriction among the various Portfolios and provide
appropriate flexibility for the Portfolios to invest in financial futures
contracts and related options. As proposed, the restriction is broad enough to
permit investment in financial futures instruments for either investment or
hedging purposes and, thus is broader than many Portfolios' current
restrictions. Using financial futures instruments can involve substantial
risks, and will be utilized only if the investment manager determines that such
investments are advisable and such practices are affirmatively authorized by
the Board. Adoption of the restriction will not affect the way the Portfolios
are currently managed or operated because the existing commodities restrictions
will remain as "non-fundamental" policies unless and until the Board modifies
them in the future.
Proposed Commodities Restriction: The Portfolio may not purchase or sell
physical commodities, unless acquired as a result of ownership of securities or
other instruments and provided that this restriction does not prevent the
Portfolio from engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical commodities.
Sub-Proposal 3F: To adopt a new fundamental investment restriction concerning
lending by the Portfolio.
Securities lending is a practice that has become common in the mutual fund
industry and involves the temporary loan of portfolio securities to parties who
use the securities for the settlement of securities transactions. The
collateral delivered to a fund, like the Portfolios, in connection with a
lending transaction is then invested to provide the fund with additional
income. Each Portfolio is currently subject to a fundamental investment
restriction limiting its ability to make such loans. In order to ensure that
the Portfolios may invest in certain debt securities or repurchase agreements,
which could be characterized as the making of loans, most Portfolios' current
fundamental restrictions specifically permit these investments. In addition, a
number of Portfolios' fundamental restrictions explicitly permit Portfolios to
lend their portfolio securities to broker-dealers or institutional investors.
11
<PAGE>
The Board recommends that shareholders of each Portfolio vote FOR the approval
of the proposed standardized fundamental investment restriction regarding
lending set forth below. The proposed restriction prohibits loans by the
Portfolios except in the circumstances described above and, in some cases,
would provide more flexibility than the current lending restriction because of
the authority to engage in securities lending. Although securities lending
involves certain risks if the borrower fails to return the securities,
management believes that increased flexibility to engage in securities lending
does not materially increase the risk to which the Portfolios are currently
subject. Also, the adoption of the restriction will not affect the way the
Portfolios are currently managed or operated, because the existing lending
restrictions will remain in place as non-fundamental policies unless and until
the Board modifies them in the future.
Proposed Lending Restriction: The Portfolio may not make loans, provided that
this restriction does not prevent the Portfolio from purchasing debt
obligations, entering into repurchase agreements, loaning its assets to
broker/dealers or institutional investors and investing in loans, including
assignments and participation interests.
Sub-Proposal 3G: To redesignate all current fundamental investment restrictions
as non-fundamental.
Each Portfolio is currently subject to its own list of fundamental and
non-fundamental investment restrictions. Exhibit E lists the current
fundamental investment restrictions of each Portfolio. As described in the
previous Sub-Proposals, each Portfolio has a fundamental investment restriction
governing concentration, borrowing and senior securities, underwriting, real
estate, commodities and lending. Many of the Portfolios, especially the older
Portfolios, have additional fundamental investment restrictions governing
activities that are no longer required to be subject to fundamental investment
restrictions.
The Directors and management of the Portfolios recognize that many of the
current fundamental investment restrictions cover the same activities as the
proposed, standardized fundamental investment restrictions so that there will
be overlapping restrictions. However, rather than asking shareholders for
approval to eliminate the current restrictions at this time in favor of the new
standardized restrictions, the Board is recommending that all current
fundamental restrictions be redesignated as non-fundamental. Approval of the
proposed redesignation will not change any of the current restictions. If the
current investment restrictions are made non-fundamental, however, management
and the Directors expect to analyze and evaluate each Portfolio's investment
restrictions on an individual basis given the particular investment objective
and policies of the Portfolio. Over time, the Portfolios' investment
restrictions can be standardized, if appropriate. With the exception of the
Portfolios which are classified as "diversified" funds for purposes of the 1940
Act, the proposed redesignation of the current investment restrictions as
non-fundamental will provide the Directors with the authority and ability to
make such changes without being required to seek an additional shareholder
vote. The 1940 Act requires shareholder approval of any proposal to convert a
diversified Portfolio to a non-diversified Portfolio.
The conversion of investment restrictions to non-fundamental will provide
management of the Portfolios with the flexibility to respond to industry
changes and also to take advantage of unique pricing and distribution
structures that have developed over the past ten years. For example,
eliminating certain fundamental restrictions and redesignating them as
non-fundamental would permit the Portfolios to operate in a "master-feeder"
structure at some point in the future should management determine that such a
structure were appropriate.
In a "master-feeder" structure, investors purchase shares of one or more feeder
funds which, in turn, invest all of their assets in corresponding master funds
which have identical investment objectives, policies and restrictions as the
feeder funds. The assets are collectively managed at the master fund level and
the different feeder funds can have varying distribution and expense
structures. The principal advantage of the master-feeder structure is the
consolidation of investment management of multiple identical investment pools
into one investment pool. The structure is also sufficiently flexible to permit
offshore feeder funds' assets to be managed at the master fund level.
12
<PAGE>
By making the investment restrictions non-fundamental, the Board will have the
flexibility to ensure that the investment restrictions of a Portfolio will not
limit the Portfolio's ability to operate in a master-feeder structure. Before
any existing Portfolio would convert to a master-feeder structure, shareholders
would be notified of such a change and the prospectus of the particular
Portfolio would be amended to disclose the ability to operate in a
master-feeder structure.
The Board of Directors recommends that shareholders of each Portfolio vote FOR
the approval of the proposal to redesignate all current "fundamental"
investment restrictions as "non-fundamental."
Proposal Four: To Approve a New Investment Management Agreement for the
Portfolio
This Proposal applies to all Portfolios.
Proposal Overview
Shareholders of each Portfolio are being asked to approve a new Investment
Management Agreement with their current investment manager -- either Delaware
Management Company (previously defined as "DMC") or Delaware International
Advisers Ltd. (previously defined as "DIAL"). Exhibit F to this Proxy Statement
lists the current investment manager for each Portfolio. The new Investment
Management Agreements will reflect one or more of the following changes, all of
which are explained in further detail below.
o Decrease in management fee
o Minimal management fee increase equal to the dollar amount of
independent Director fees
o Elimination of a provision concerning shareholder approval of amendments
o Elimination of a provision concerning a Portfolio trading desk
o Addition of a provision concerning the use of a sub-adviser
o Miscellaneous changes to the form of the Agreement designed to
standardize the language of the Agreements among all Delaware
Investments funds
To determine which proposed changes apply to the various Portfolios, please
check the table on page 16.
Required Vote. Approval of this Proposal for a Portfolio requires the vote of a
"majority of the outstanding voting securities" of the Portfolio, which means
the vote of: (i) more than 50% of the outstanding voting securities of the
Portfolio, or (ii) 67% or more of the voting securities of the Portfolio
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, whichever is less.
If shareholders approve the new Agreements, any modified management fees will
take effect on April 1, 1999, or at a later date if the Meeting is postponed or
adjourned. If a new Agreement is not approved for a particular Portfolio, the
current Agreement will continue in effect.
The Board of Directors has unanimously approved the proposed Agreements and
recommends that shareholders vote FOR the new Investment Management Agreement
for each Portfolio.
Proposed Changes in Management Fees
Under the current Investment Management Agreements, the portfolio management
team from DMC or DIAL regularly decides which securities or instruments to buy
or sell for a Portfolio and the investment manager directly or indirectly
arranges for the placement and execution of orders for the purchase or sale of
such securities and instruments. The investment manager is also responsible for
each Portfolio's regulatory compliance and general administrative operations
and provides regular reports to the Board. The management fees paid by a
Portfolio, in part, are used by its investment manager to pay for the
personnel, equipment, office space and facilities that are needed to manage the
assets of the Portfolio and to administer its affairs.
13
<PAGE>
Management Fee Review and Proposed Changes. At the request of the Board,
management recently undertook a complete review of the level and structure of
the management fees for each fund within the Delaware Investments family. The
extensive review process was performed with the guidance of an outside
consultant to help ensure the accuracy of the results and conclusions. The
process involved the comparison of each fund with its own universe of
"competing" funds, which were identified based on investment objective, asset
type and distribution channel. Once competing funds were identified, management
compared fee rates at various asset sizes to evaluate the level and structure
of fee rates. Management's goal was to establish a consistent fee structure for
the various categories of Delaware Investments funds that would be competitive
with funds with a similar investment objective, size and distribution channel
in the current marketplace.
As a result of its analysis, management identified a number of different
management fee pricing levels to be established for the Portfolios, each
reflecting the dynamics and complexity of managing the assets of particular
investment categories based on asset type (such as equity or fixed-income)
and/or geography (such as domestic or international). For two Portfolios, the
analysis suggested that a decrease in the management fee rate would be
appropriate.
In addition, five of the Portfolios' Agreements provide that the management
fees paid by the Portfolio will be reduced by the dollar amount of independent
Director fees. The proposed standard form of Agreement for these Portfolios
(and all Delaware Investments funds) does not provide for such a provision.
This change would result in a minimal increase in the management fees paid by
these Portfolios, but will have virtually no impact on their reportable
expenses.
The chart included in Exhibit F shows the current and proposed management fee
rates for each Portfolio and the dollar amounts paid to the investment manager
and its affiliates during the last fiscal year. The chart also shows whether
DMC or DIAL has waived any management fees.
Board Consideration of Proposed Management Fee Changes. In considering whether
to recommend management fee changes, the Directors reviewed extensive materials
concerning the methodology used by management to identify competitive peer
groups for comparison and to develop proposed management fee pricing levels and
structures for the various categories of Delaware Investments funds, including
the Portfolios. The Directors reviewed separate reports for each Portfolio
containing detailed comparative management fee and expense information of each
Portfolio and other funds in the relevant peer group, as well as expense ratio
comparisons with relevant mutual fund indices. The Directors assessed how
current management fee levels, along with any proposed changes, would position
each Portfolio within its peer group. The Directors also reviewed and
considered performance and ranking data for each Portfolio along with other
comparative funds within the investment objective category, as well as a
performance comparison to a relevant securities index for each Portfolio. In
addition to the expense and performance information, the Directors reviewed the
investment manager's historical profitability with respect to each Portfolio
and the anticipated effects of any management fee changes.
The Directors also considered the reasons presented by management with respect
to all proposed management fee levels, including the anticipated impact of
management fee decreases and the minimal increases described above on
shareholders of the various Portfolios. Following consideration of all of the
information and factors discussed above, the Directors for each Portfolio,
including all of the independent Directors, unanimously approved the proposed
management fee changes.
Other Proposed Changes to Investment Management Agreements
In addition to modifications to the management fee structure, certain other
changes to the Investment Management Agreements are proposed, one or more of
which may apply to a particular Portfolio. The proposed changes are designed to
eliminate provisions that appear in some of the older Portfolios' Agreements
and to standardize the form of Agreement among all funds within the Delaware
Investments family. Please refer to the table on page 16 to determine which
changes are proposed for a particular Portfolio's Agreement.
Shareholder Approval of Amendments to Investment Management Agreements. Under
the 1940 Act, shareholder approval is normally required before any fund
investment management agreement can be materially amended. The purpose of this
requirement is to allow shareholders to make decisions concerning provisions of
an investment management agreement that could affect their investment.
14
<PAGE>
Funds are, however, permitted to amend such agreements without shareholder
approval if, for example, the change involves a decrease in the management fee.
In such a case, the SEC staff believes that mutual funds should not be required
to experience the delay and costs of seeking shareholder approval, since
shareholders are generally assumed to be in favor of management fee decreases.
Some of the current Investment Management Agreements of the Portfolios require
shareholder approval of any amendment to the Agreement, regardless of whether
shareholder approval would be required under federal law. Management proposes
to change the Agreements to permit amendments without shareholder approval in
appropriate circumstances like those described above.
Elimination of Portfolio Trading Desk. In order for the Portfolios to buy and
sell securities, written instructions must be provided to brokers or dealers
who execute portfolio transactions. Although most investment management
agreements in the mutual fund industry provide that the investment manager is
responsible for selecting and instructing brokers or dealers to effect such
transactions, the Agreements for some of the Portfolios provide that the
Company's employees are responsible for providing those instructions to brokers
or dealers. As a result, the Company maintains a trading desk for these
Portfolios staffed by Company personnel. Management believes that the
investment manager or sub-adviser should be responsible for placing portfolio
transactions rather than Company employees and has concluded that the
Agreements should be modified accordingly.
Authority to Use Sub-Advisers. As the investment management industry has grown
increasingly specialized, it has become more common for mutual funds whose
portfolios include investments in a particular specialized asset class to use
the services of sub-advisers with particular expertise in managing the asset
class. Typically, such sub-advisory arrangements are established through
contracts between the investment manager and the sub-adviser, with the
investment manager retaining supervision over the portfolio. For example, DMC
utilizes sub-advisers in managing Portfolios that invest primarily in foreign
securities and real estate investment trusts.
The Investment Management Agreements for some of the Portfolios do not contain
a provision authorizing the use of a sub-adviser. While management has no
current intention to propose new sub-advisers for any of the Portfolios, it
would like to be in a position to do so in the future without first having to
obtain shareholder approval to amend the Investment Management Agreement.
Therefore, management is proposing that the new Agreements for these Portfolios
contain the sub-adviser provision, in order to standardize the Agreements with
the other Delaware Investments funds. Under current federal securites law, the
appointment of a new sub-adviser and the Sub-Advisory Agreement executed in
connection with that appointment require shareholder approval.
Miscellaneous Changes. In addition to the changes discussed above, there are
certain miscellaneous changes designed to standardize the form of Agreement
among all Delaware Investments funds. First, the Agreements for the Portfolios
will reflect non-material language and structural changes to conform to the
standard Delaware Investments model Agreement. Second, each new Agreement will
contain a provision permitting the names "Delaware," "Delaware Investments" or
"Delaware Group" to be used by other funds, series or classes, whether already
existing or to be created in the future, which are, or may be, sponsored or
advised by DMC or DIAL. The first Delaware Investments fund to use the word
"Delaware" in its name was the Delaware Balanced Fund (formerly Delaware Fund)
series of Delaware Group Equity Funds I, Inc., which was originally established
in 1938. Although management has reached no conclusion as to whether the
Delaware Balanced Fund may have a claim to the use of the name "Delaware," each
Agreement will recognize the ability of the Portfolios to use the words
described above in their names.
15
<PAGE>
Summary of Changes to Investment Management Agreements
The following table lists each Portfolio and summarizes the types of changes
that are proposed for each Agreement.
<TABLE>
<CAPTION>
Elimination
of
Proposed Shareholder
Management Approval for
Portfolio Name Fee Change Amendments
- ------------------------------------------- ------------------- --------------
<S> <C> <C>
The Aggregate Fixed Income Portfolio ..... None
The Diversified Core Fixed
Income Portfolio ....................... None
The Emerging Markets Portfolio ........... 0.20% Decrease
The Global Equity Portfolio .............. None
The Global Fixed Income Portfolio ........ Minimal Increase* X
The Growth and Income Portfolio .......... None
The High-Yield Bond Portfolio ............ None X
The Intermediate Fixed Income Portfolio Minimal Increase* X
The International Equity Portfolio ....... Minimal Increase* X
The International Fixed-Income Portfolio None X
The Labor Select International
Equity Portfolio ....................... None X
The Large-Cap Value Equity Portfolio ..... Minimal Increase* X
The Mid-Cap Growth Equity Portfolio ...... 0.05% Decrease* X
The Mid-Cap Value Equity Portfolio ....... None X
The Real Estate Investment Trust
Portfolio II ........................... None
The Small-Cap Growth Equity Portfolio . None
<CAPTION>
Elimination of Authority to
Portfolio Trading Use Miscellaneous
Portfolio Name Desk Sub-Adviser Changes
- ------------------------------------------- ------------------- ------------- --------------
<S> <C> <C> <C>
The Aggregate Fixed Income Portfolio ..... X X X
The Diversified Core Fixed
Income Portfolio ....................... X X
The Emerging Markets Portfolio ........... X X
The Global Equity Portfolio .............. X
The Global Fixed Income Portfolio ........ X X
The Growth and Income Portfolio .......... X
The High-Yield Bond Portfolio ............ X X X
The Intermediate Fixed Income Portfolio X X X
The International Equity Portfolio ....... X X
The International Fixed-Income Portfolio X X
The Labor Select International
Equity Portfolio ....................... X X
The Large-Cap Value Equity Portfolio ..... X X X
The Mid-Cap Growth Equity Portfolio ...... X X X
The Mid-Cap Value Equity Portfolio ....... X X X
The Real Estate Investment Trust
Portfolio II ........................... X X
The Small-Cap Growth Equity Portfolio . X
</TABLE>
- ------------
* The current Investment Management Agreement provides that the fees paid by
the Portfolio will be reduced by the amount of the independent Director
fees. The proposed Agreement would eliminate such a reduction. This change
would result in a minimal increase in fees paid by the Portfolio, but would
have virtually no impact on reportable expenses.
<PAGE>
Information About the Investment Managers
DMC serves as investment manager for many of the Portfolios that are
participating in this Meeting and as sub-adviser for others. DMC is registered
as an investment adviser under the Investment Advisers Act of 1940 (the
"Advisers Act") and, together with its predecessors, has been managing funds
within the Delaware Investments family since 1938. DMC is located at One
Commerce Square, Philadelphia, Pennsylvania 19103.
DIAL serves as investment manager for certain Portfolios that are participating
in this Meeting and as sub-adviser for others. DIAL is a United Kingdom
affiliate of DMC, is an investment adviser registered in the United States
under the Advisers Act and is a member of the Investment Management Regulatory
Organisation (IMRO) in the United Kingdom. Since 1990, DIAL has managed the
overseas assets of the funds within the Delaware Investments family. DIAL is
located at Third Floor, 80 Cheapside, London, England EC2V 6EE.
On November 1, 1998, DMC was managing approximately $15.8 billion in assets in
various open-end and closed-end investment company accounts. DIAL was managing
approximately $10.5 billion in institutional or separately managed accounts
(approximately $8.5 billion) and mutual fund accounts (approximately $2
billion) on the same date. Other affiliates of DMC and DIAL were managing
additional institutional and separate account assets in the amount of
approximately $17.3 billion on that date.
16
<PAGE>
Both DMC and DIAL are indirect, wholly owned subsidiaries of Lincoln National
Corporation, also known as Lincoln Financial Group. Lincoln National
Corporation, with headquarters currently in Fort Wayne, Indiana, is a
diversified organization involved in many aspects of the financial services
industry, including insurance and investment management.
DMC and DIAL also provide investment management or sub-advisory services to
other funds within the Delaware Investments family which have investment
objectives that are similar to those of the Portfolios to which this proxy
statement applies. For the names of these other funds, together with their
current (and proposed, in some cases) management or sub-advisory fee rates, see
Exhibit G.
DMC is a series of Delaware Management Business Trust. The Trustees who operate
the business and their principal occupations (which are positions with DMC) are
as follows: Jeffery J. Nick, Chairman and Chief Executive Officer; Richard G.
Unruh, Jr., Executive Vice President; David K. Downes, Executive Vice
President, Chief Operating Officer and Chief Financial Officer; Richard J.
Flannery, Executive Vice President and General Counsel; and John B. Fields,
Vice President/Senior Portfolio Manager.
Jeffery J. Nick is the Chairman, Chief Executive Officer and a Director of
DIAL. David G. Tilles is the Managing Director, Chief Investment Officer and a
Director of DIAL. In addition to Mr. Nick and Mr. Tilles, the present directors
of DIAL and their principal occupations (unless noted in the paragraph above
relating to DMC) are as follows: Wayne A. Stork, Chairman of Delaware
Management Holdings, Inc.; G. Roger H. Kitson, Vice Chairman of DIAL; Richard
G. Unruh; David K. Downes; Richard J. Flannery; John C. E. Campbell, Executive
Vice President of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Hamish O. Parker, Senior Portfolio Manager/Director of DIAL;
Timothy W. Sanderson, Chief Investment Officer, Equities of DIAL; Clive A.
Gillmore, Senior Portfolio Manager/Director of DIAL; Ian G. Sims, Deputy
Managing Director/Chief Investment Officer/Global Fixed Income of DIAL; George
E. Deming, Vice President/Senior Portfolio Manager of Delaware Investment
Advisers; John Emberson, Company Secretary and Finance Director of DIAL; Nigel
G. May, Senior Portfolio Manager/Director of DIAL; Elizabeth A. Desmond, Senior
Portfolio Manager/Director of DIAL.
Other Information Relevant to Approval of
Investment Management Agreements
The form of proposed Investment Management Agreement for the Portfolios is
attached as Exhibit H. Each current and proposed Agreement has an initial term
of two years and provides that it will thereafter continue in effect from year
to year only if such continuation is specifically approved at least annually
with respect to each Portfolio by (i) a vote of a majority of the Board, or
(ii) a vote of a majority of the outstanding voting securities of the
Portfolio, and (iii) in either case, separately by a majority of the Directors
who are not "interested persons" (as defined in the 1940 Act). Each current and
proposed Agreement may be terminated without penalty by (i) the Portfolio, by a
vote of a majority of the Board, or (ii) by a vote of a majority of the
outstanding voting securities of a Portfolio, or (iii) by DMC or DIAL, as
relevant, at any time on 60 days written notice. Each Agreement will also
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
Under each of the current and proposed Agreements, best efforts are used to
obtain the best available price and most favorable execution for portfolio
transactions. Orders may be placed with brokers or dealers who provide
brokerage and research services to the investment manager or their advisory
clients. To the extent consistent with the requirements of the rules of the SEC
and the National Association of Securities Dealers, Inc., these orders may be
placed with brokers who sell shares of the Portfolios. The services these
brokers provide may include advice, either directly or through publications or
writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on economic
factors and trends; assisting in determining portfolio strategy; providing
computer software and hardware used in security analyses; and providing
portfolio performance evaluation and technical market analyses. Such services
are used by the investment manager in connection with its investment
decision-making process with respect to one or more funds or accounts that it
manages, and need not be used exclusively with respect to the Portfolio or
account generating the brokerage.
17
<PAGE>
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide those services, if the higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In some
instances, part of the services constitute brokerage and research services used
in connection with the investment decision-making process and the remainder of
the services constitute services used in connection with administrative or
other functions not related to the investment decision-making process. In these
cases, the investment managers will make a good faith allocation of brokerage
and research services and will pay out of its own resources for services used
by it in connection with administrative or other functions not related to the
investment decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Portfolio, the investment manager shall not be
liable to the Portfolio or any shareholder of the Portfolio for any action or
omission in the course of, or in connection with, rendering services under a
current or proposed Agreement, or for any losses that may be sustained in the
purchase, holding or sale of any security or otherwise.
Other Agreements with the Company
The Company is currently party to a Distribution Agreement relating to the
Portfolios with Delaware Distributors, L.P. (the "Distributor"), an affiliate
of DMC and DIAL. The Distributor's principal address is 1818 Market Street,
Philadelphia, PA 19103. Pursuant to the Distribution Agreement, the Distributor
provides underwriting, distribution and marketing services to the Portfolios.
The Company is also a party to a Shareholders Services Agreement and a Fund
Accounting Agreement with Delaware Service Company, Inc. ("DSC"), an affiliate
of DMC and DIAL, pursuant to which DSC provides fund accounting, shareholder
servicing, dividend disbursing and transfer agency services. Exhibit F to this
Proxy Statement lists the amount of payments made to such affiliates pursuant
to service agreements, for each Portfolio's most recently completed fiscal
year.
Proposal Five: To Approve a New Sub-Advisory Agreement
for the Portfolio
<TABLE>
<S> <C>
This Proposal applies only to the following Portfolios: The Diversified Core Fixed Income Portfolio
The Global Equity Portfolio
The Real Estate Investment Trust Portfolio II
</TABLE>
Shareholders of each of the Portfolios listed above are being asked to approve
a new Sub-Advisory Agreement with their Portfolio's existing sub-adviser. New
Agreements are being proposed at this time because the existing Agreements will
terminate if the new Investment Management Agreements described in Proposal
Four are approved.
The proposed Sub-Advisory Agreements do not contain any changes in sub-advisory
fee rates and are largely identical to the current Sub-Advisory Agreements.
There are a number of minor changes in language and in the form of the
Agreement, which are designed to result in a single, standardized Agreement
among all Delaware Investments funds that use sub-advisers. Exhibit F to this
proxy statement lists the current sub-adviser for each Portfolio, along with
the sub-advisory fee rates and other information about the current Sub-Advisory
Agreements.
One new provision of the proposed Sub-Advisory Agreements provides for the
calculation of the sub-advisory fees based on a percentage of assets of the
Portfolio. The new provision would require the sub-adviser to share in any fee
waiver or expense limitation arrangement entered into by the Portfolio's
investment manager. This provision would not affect the amounts to be paid by
the Portfolio, but the sub-adviser may receive less, depending on management
fee waivers or expense limitations.
Required Vote. Approval of this Proposal for a Portfolio requires the vote of a
"majority of the outstanding voting securities" of the Portfolio, which means
the vote of: (i) more than 50% of the outstanding voting securities of the
Portfolio; or (ii) 67% or more of the voting securities of the Portfolio
present at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, whichever is less.
18
<PAGE>
If approved by shareholders, the proposed Sub-Advisory Agreement for a
Portfolio will take effect following such approval. If a proposed Sub-Advisory
Agreement is not approved for a Portfolio, but the proposed Investment
Management Agreement is approved, the investment manager will take
responsibility for all aspects of investment management until such time as a
new sub-advisory arrangement is approved by the Board and by shareholders. If
neither the proposed Investment Management Agreement nor the proposed
Sub-Advisory Agreement for a Portfolio is approved by shareholders, the current
Agreements will remain in place.
The Board has unanimously approved the proposed Sub-Advisory Agreements and
recommends that shareholders vote FOR the new Sub-Advisory Agreement for each
Portfolio.
Information About the Sub-Advisers
DMC and DIAL. DMC serves as the sub-adviser for The Global Equity Portfolio and
DIAL serves as the sub-adviser for The Diversified Core Fixed Income Portfolio.
The background of each firm, along with the professionals responsible for
operating each business, are described in Proposal Four in connection with the
proposed Investment Management Agreements.
Lincoln Investment Management, Inc. ("LIM"). LIM serves as sub-adviser for The
Real Estate Investment Trust Portfolio II. LIM is a wholly owned subsidiary of
Lincoln National Corporation and an affiliate of DMC and DIAL. The firm is
registered as an investment adviser under the Advisers Act and is located at
200 E. Berry Street, Fort Wayne, Indiana 46802.
LIM's primary activity is institutional fixed-income investment management and
consulting. Such activity includes fixed-income portfolios, private placements,
real estate debt and equity management and asset/liability management. On
November 30, 1998, LIM was managing approximately $41 billion in assets.
H. Thomas McMeekin serves as President and Chief Investment Officer and as a
Board Member of LIM. In addition to Mr. McMeekin, the other directors, who also
serve as officers are J. Michael Keefer, Vice President and General Counsel and
Steven R. Brody, Vice President.
Other Information Relevant to Approval of
Sub-Advisory Agreements
The form of proposed Sub-Advisory Agreement for the Portfolios listed above is
attached as Exhibit I. Each current and proposed Sub-Advisory Agreement has an
initial term of two years and provides that it will thereafter continue in
effect from year to year only if such continuation is specifically approved at
least annually with respect to each Portfolio by (i) a vote of a majority of
the Board, or (ii) a vote of a majority of the outstanding voting securities of
the Portfolio, and (iii) in either case, separately by a majority of the
Directors who are not "interested persons" (as defined in the 1940 Act). Each
current and proposed Agreement may be terminated without penalty by (i) the
Company, by a vote of a majority of the Board, or (ii) by a vote of a majority
of the outstanding voting securities of a Portfolio, or (iii) by the
sub-adviser at any time on 60 days' written notice. Each Agreement will also
terminate automatically upon its "assignment," as that term is defined in the
1940 Act and upon the termination of the Investment Management Agreement to
which it relates.
The specific terms of the current and proposed Sub-Advisory Agreements that
relate to the provision of advisory services are virtually identical to the
terms of the corresponding Investment Management Agreements, which are
described in Proposal Four under "Other Information Relevant to Approval of
Investment Management Agreements."
Proposal Six: To Ratify the Selection of Ernst & Young LLP
as Independent Auditors for the Company
This Proposal applies to the entire Company (all Portfolios).
The Board has selected Ernst & Young LLP as independent auditors of the Company
for the current fiscal year and shareholders are asked to ratify this
selection. Ernst & Young LLP's principal address is Two Commerce
19
<PAGE>
Square, Philadelphia, PA 19103. A representative from Ernst & Young LLP is
expected to be present at the Meeting and will have an opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions. The Company's Audit Committee meets periodically with
the representatives of Ernst & Young LLP to receive reports from Ernst & Young
LLP and plan for the Company's audits.
Required Vote. A simple majority (more than 50%) of the outstanding voting
securities of the Company, regardless of individual Portfolios within the
Company, is required to ratify the selection of Ernst & Young LLP as
independent auditors for the Company.
The Board unanimously recommends that shareholders ratify the selection of
Ernst & Young LLP as independent auditors for such Company for the current
fiscal year.
Proposal Seven: To Approve the Restructuring of the Company from a
Maryland Corporation into a Delaware Business Trust
This Proposal applies to the entire Company (all Portfolios).
The Board of Directors of the Company has approved an Agreement and Plan of
Reorganization (the "Plan") substantially in the form attached to this Proxy
Statement as Exhibit J. The Plan provides for a reorganization (hereafter, the
"Reorganization") pursuant to which the Company will change its state and form
of organization from a Maryland corporation into a Delaware business trust.
The Reorganization involves the continuation of the Company in the form of a
newly created Delaware business trust. The corresponding new Delaware business
trust will be referred to as the "New Company." The Portfolios of the Company
will become corresponding new Portfolios ("New Portfolios") of the New Company.
Under the Reorganization, the investment objective of each New Portfolio will
be the same as those of its corresponding Portfolio; the portfolio securities
of each Portfolio will be transferred to its corresponding New Portfolio; and
shareholders will own interests in the New Company that are equivalent to their
interests in the Company on the closing date of the Reorganization. The
directors, officers and employees of the Company on the effective date of the
Reorganization will become the trustees, officers and employees, respectively,
of the New Company and will operate the New Company in the same manner as they
previously operated the Company. The investment manager responsible for the
investment management of each New Portfolio will be the same as the investment
manager for the corresponding Portfolio. For those Portfolios with sub-advisory
arrangements, the sub-adviser for each New Portfolio will be the same as the
sub-adviser for the corresponding Portfolio. The New Company and each New
Portfolio will have substantially the same name as the Company and its
corresponding Portfolio. The New Company will have the same fiscal year as the
Company, and the mailing address and telephone number of the principal
executive offices of the New Company will be the same as the Company. For all
practical purposes, a shareholder's investment in the Company will not change.
Background and Reasons for the Reorganization. The Board unanimously recommends
conversion of the Company into a Delaware business trust because it has
determined that the Delaware business trust form of organization is an
inherently flexible form of organization and would provide certain
administrative advantages to the Company. Delaware business trust law contains
provisions specifically designed for mutual funds and there is a well
established body of corporate legal precedent that may be relevant in deciding
issues pertaining to the trust . Those provisions take into account the unique
structure and operation of mutual funds, and allow mutual funds to simplify
their operations by reducing administrative burdens so that, in general, they
may operate more efficiently.
Under Delaware business trust law, the New Company will have more flexibility
to respond to future business contingencies. For example, the New Company will
have the power to cause each New Portfolio to become a separate trust, and to
change the New Company's domicile without a shareholder vote, unless such vote
is required under the 1940 Act or other applicable law. This flexibility may
permit the New Company to operate under the most advanced form of organization
and could help reduce the expense and frequency of future shareholders'
meetings for non-investment related issues.
20
<PAGE>
The Reorganization also will increase uniformity among the mutual funds within
the Delaware Investments family. Increased uniformity among the mutual funds,
many of which share common directors, trustees, officers and service providers,
is expected to reduce the costs and resources devoted to compliance with
various state law requirements and also reduce administrative burdens.
For these reasons, the Board believes it is in the best interests of the
shareholders to reorganize the Company into a Delaware business trust. The
Board reserves the right to abandon the Reorganization if it determines that
such action is in the best interests of the Company.
Consequences and Procedures of the Reorganization. The net asset value of the
shares of each Portfolio will not be affected by the Reorganization. The New
Company and each New Portfolio has been organized specifically for the purpose
of effecting the Reorganization. The Reorganization will not result in the
recognition of income, gain or loss for Federal income tax purposes to the
Company or its shareholders or to the New Company. (See "Certain Federal Income
and State Tax Consequences of the Plan, below.")
To accomplish the Reorganization, the Plan provides that the Company will
transfer all of the assets of each of its Portfolios, subject to its related
liabilities, to the New Company and to each of its corresponding New
Portfolios. The New Company will establish an account for each shareholder and
will credit to that account the exact number of full and fractional shares of
the New Portfolio that such shareholder previously held in the corresponding
Portfolio on the effective date of the Reorganization. Each shareholder will
retain the right to any declared but undistributed dividends or other
distributions payable on the shares of the Portfolio that he or she owned as of
the effective date of the Reorganization. On the date of the Reorganization,
the net asset value per share of each Portfolio will be the same as the net
asset value per share of its corresponding New Portfolio. The New Company will
assume all liabilities and obligations of the Company.
On the effective date of the Reorganization, each certificate representing
shares of a Portfolio will represent an identical number of shares of the
corresponding New Portfolio. Shareholders will have the right to exchange their
certificates of the Company for certificates of the New Company.
The Plan may be terminated and the Reorganization abandoned at any time prior
to the effective date of the Reorganization by the Board. If the Reorganization
is not approved by shareholders or if the Board determines to terminate or
abandon the Reorganization, the Company will continue to operate as a Maryland
corporation.
Capitalization and Structure. The New Company was established pursuant to an
Agreement and Declaration of Trust ("Trust Document") under the laws of the
State of Delaware. The New Company is organized as a series company. The Trust
Document permits the Trustees to issue an unlimited number of shares of
beneficial interest, with no par value. The Board of Trustees of the New
Company has the power to divide such shares into an unlimited number of series
or classes of beneficial interest without shareholder approval. The New Company
has designated the same number of series and classes as the Company. Each share
of a New Portfolio represents an equal proportionate interest in the assets and
liabilities belonging to that series (or class).
Shares of each New Portfolio have substantially the same dividend, redemption,
voting, exchange and liquidation rights, and terms of conversion as the shares
of its corresponding Portfolio. Please see Exhibit K, "Comparison and
Significant Differences Between Delaware Business Trusts and Maryland
Corporations." Shares of each Portfolio are, and when issued, shares of its
corresponding New Portfolio will be, fully paid, non-assessable, and freely
transferable and have no preemptive or subscription rights.
At the Reorganization, shares of each Portfolio will be exchanged for an
identical number of shares of the corresponding New Portfolio. Thereafter,
shares of the New Portfolios will be available for issuance at their net asset
value applicable at the time of sale. The New Company will adopt the Company's
existing registration statement under the Securities Act of 1933 and the 1940
Act.
Effects of Shareholder Approval of the Reorganization. An investment company
registered under the 1940 Act is required to: (i) submit the selection of the
company's independent auditors to all shareholders for their ratification; (ii)
call a special meeting to elect directors (trustees) within 60 days if, at any
time, less than one half
21
<PAGE>
of the directors (trustees) holding office have been elected by all
shareholders; and (iii) submit any proposed investment management agreement and
sub-advisory agreement relating to a particular series of the investment
company to the shareholders of that series for approval.
The Board believes that it is in the best interest of the shareholders of the
Company (who will become the shareholders of the New Company if the
Reorganization is approved) to avoid the considerable expense of another
shareholders' meeting for the New Company to obtain the shareholder approvals
described above shortly after the closing of the Reorganization. The Board also
believes that it is not in the best interest of the shareholders to carry out
the Reorganization if the surviving New Company would not have a Board of
Trustees, independent auditors, and investment management agreements or
sub-advisory agreements complying with the 1940 Act.
The Board will, therefore, consider approval of the Reorganization by the
requisite vote of the shareholders of the Company to constitute the approval of
the Plan contained in Exhibit J, and also to constitute, for the purposes of
the 1940 Act: (i) ratification of the independent auditors for the Company as
the New Company's independent auditors (please see Proposal Six); (ii) election
of the Directors of the Company as the trustees of the New Company (please see
Proposal One); (iii) approval by the shareholders of each Portfolio of the
investment management agreement between the New Company on behalf of the New
Portfolio and the current investment manager to the Portfolio, which will be
substantially identical to the agreement that is in place between the Company
and the current investment manager to the Portfolio (please see Proposal Four);
and (iv) for those Portfolios subject to a sub-advisory agreement, approval by
the shareholders of a Portfolio of the sub-advisory agreement between the
current investment manager to the Portfolio and the current sub-adviser to the
Portfolio relating to the New Portfolio, which will be substantially identical
to the agreement that is in place between the current investment manager to the
Portfolio and the current sub-adviser to the Portfolio (please see Proposal
Five).
Assuming approval of the Reorganization by shareholders, the New Company will
issue a single share of each New Portfolio to the Company. Prior to the
Reorganization, the officers of the Company will cause the Company, as the sole
shareholder of the New Company, to vote those shares "FOR" the matters
specified in the above paragraph. The New Company will then consider the
requirements of the 1940 Act referred to above to have been satisfied.
Investment Objective, Policies and Restrictions. The investment objective,
policies and restrictions for each New Portfolio will be the investment
objective, policies and restrictions of the of the corresponding Portfolio
immediately prior to the Reorganization. That is, each New Portfolio's
investment objective, policy and restriction will reflect the results of the
shareholders' votes on Proposal Two and Sub-Proposals 3A-3G.
Investment Management Agreements. If the proposed new investment management
agreement relating to a Portfolio as proposed and described in Proposal Four (a
"New Agreement") is approved by the shareholders of the Portfolio, the terms of
the investment management agreement for the corresponding New Portfolio will be
substantially identical to the New Agreement for the Portfolio. For each
Portfolio for which the New Agreement described in Proposal Four is not
approved, if any, the investment management agreement for the corresponding New
Portfolio will be substantially identical to the existing investment management
agreement currently in place for that Portfolio.
Sub-Advisory Agreements. For each Portfolio with sub-advisory arrangements, if
the proposed new sub-advisory agreement relating to the Portfolio, as proposed
and described in Proposal Five (a "New Sub-Advisory Agreement"), is approved by
the shareholders of the Portfolio, the terms of the sub-advisory agreement for
the corresponding New Portfolio will be substantially identical to the New
Sub-Advisory Agreement for the Portfolio. For each Portfolio for which the New
Sub-Advisory Agreement described in Proposal Five is not approved, if any, the
sub-advisory agreement for the corresponding New Portfolio will be
substantially identical to the existing sub-advisory agreement currently in
place for that Portfolio unless the Investment Management Agreement to which it
relates is approved. In that instance, the investment manager will take
responsibility for all aspects of investment management until such time as a
new sub-advisory arrangement is approved by the Board and shareholders.
22
<PAGE>
Certain Federal Income and State Tax Consequences of the Plan. It is
anticipated that the transactions contemplated by the Plan will be tax-free for
federal income tax purposes. Consummation of the Reorganization is subject to
receipt of a legal opinion from the law firm of Stradley, Ronon, Stevens &
Young, LLP, counsel to the Company and the New Company, that, under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the
exchange of assets of the Company for the shares of the New Company, the
transfer of those shares to the holders of shares of the Company, and the
liquidation and dissolution of the Company pursuant to the Plan will not give
rise to the recognition of a gain or loss for federal income tax purposes to
the Company, the New Company, or shareholders of the Company or the New
Company. A shareholder's adjusted basis for tax purposes in the shares of the
New Company after the exchange and transfer will be the same as his or her
adjusted basis for tax purposes in the shares of the Company immediately before
the exchange.
As a business, trust, the New Company (or, in certain circumstances, its
shareholders who are Pennsylvania residents) would be subject to the
Pennsylvania county personal property tax. However, at present, Pennsylvania
counties generally have stopped assessing personal property taxes. This is due,
in part, to ongoing litigation challenging the validity of the tax. However, if
the personal property tax were reinstituted, or any similar state or local tax
were imposed, the New Company's options would be reevaluated at that time.
Each shareholder should consult his or her own tax adviser with respect to the
details of these tax consequences and with respect to state and local tax
consequences of the proposed transaction.
Shareholder Servicing and Distribution Arrangements. The New Company will enter
into agreements with DSC for transfer agency, dividend disbursing, shareholder
servicing and fund accounting services that are substantially identical to the
agreements currently in effect for the Company for such services. Delaware
Distributors, L.P. will serve as the distributor for the shares of the New
Portfolios under a separate distribution agreement that is substantially
identical to the distribution agreement currently in effect for the Portfolios.
Requests for Redemption of the Company. Any request to redeem shares of the
Company that is received and processed prior to the Reorganization will be
treated as a redemption of shares of the Company. Any request to redeem shares
of the Company received or processed after the Reorganization will be treated
as a request for the redemption of shares of the New Company.
Expenses of the Reorganization. Because the Reorganization will benefit the
Company and its shareholders, the Board has authorized that the expenses
incurred by the Company in the Reorganization or arising out of the
Reorganization shall be paid by the Company, whether or not the Reorganization
is approved by the shareholders.
Comparison of Legal Structures. A comparison of the Delaware Business Trust Act
with the Maryland General Corporation Law, including a comparison of relevant
provisions of the governing documents of the Company and the New Company, is
included in Exhibit K, which is entitled "Comparison And Significant
Differences Between Delaware Business Trusts And Maryland Corporations."
Required Vote. The Plan and the transactions contemplated thereby, including
the liquidation and dissolution of the Company, require the approval of a
majority of all votes entitled to be cast.
The Board unanimously recommends that shareholders vote FOR the approval of the
Reorganization.
23
<PAGE>
EXHIBIT A
OUTSTANDING SHARES AS OF RECORD DATE (December 21, 1998)
<TABLE>
<CAPTION>
Shares Outstanding on
Record Date*
----------------------
<S> <C>
The Aggregate Fixed Income Portfolio ......................... 720,312.351
The Diversified Core Fixed Income Portfolio .................. 394,788.014
The Emerging Markets Portfolio ............................... 5,964,468.585
The Global Equity Portfolio .................................. 366,911.372
The Global Fixed Income Portfolio ............................ 61,084,571.786
The Growth and Income Portfolio .............................. 235,910.430
The High-Yield Bond Portfolio ................................ 2,226,417.420
The Intermediate Fixed Income Portfolio ...................... 2,645,620.594
The International Equity Portfolio ........................... 40,321,098.872
The International Fixed Income Portfolio ..................... 8,484,711.141
The Labor Select International Equity Portfolio .............. 7,571,940.764
The Large-Cap Value Equity Portfolio ......................... 7,535,958.298
The Mid-Cap Growth Equity Portfolio
(formerly The Aggressive Growth Portfolio) .................. 889,359.188
The Mid-Cap Value Equity Portfolio
(formerly The Small/Mid-Cap Value Equity Portfolio) ......... 358,456.898
The Real Estate Investment Trust Portfolio II ................ 427,714.671
The Small-Cap Growth Equity Portfolio ........................ 353,776.161
</TABLE>
- ------------
* The shares outstanding on the record date include all shares purchased in
transactions that have settled by the record date.
A-1
<PAGE>
EXHIBIT B
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
The following accounts held of record 5% or more of the outstanding shares
of the Portfolios listed below as of October 31, 1998. Management does not have
knowledge of beneficial owners.
<TABLE>
<CAPTION>
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- ------------------------------- ------------------------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
The Large-Cap Value Equity Northern Trust 1,286,941 19.42% 0.92%
Portfolio Trust PHH Group
P.O. Box 92956
Chicago, IL 60675
The Mid-Cap Growth Equity Crestar Bank as Custodian for 209,024 31.94% 0.15%
Portfolio (formerly The The College of William and
Aggressive Growth Portfolio) Mary
Attn: William Copland, Jr.
P.O. Box 8795
Private Funds Office
Williamsburg, VA 23187
The City of Groton 126,514 19.33% 0.09%
295 Meridian Street
Groton, CT 06340
NCSC Staff Pension Plan 116,356 17.78% 0.08%
Defined Benefit
8403 Colesville Road --
Ste. 1200
Silver Spring, MD 20910
Philadelphia Association of 90,480 13.83% 0.06%
Zeta Psi Fraternity
613 Kirsch Avenue
Wayne, PA 19087
Our Sunday Visitor, Inc. 38,126 5.83% 0.03%
200 Noll Plaza
Huntington, IL 46750
The International Equity Norwest Bank Minnesota, NA 3,077,124 7.92% 2.19%
Portfolio FBO Father Flanagan's FDN
FD
P.O. Box 1533
Minneapolis, MN 55480
The Salvation Army 2,849,134 7.33% 2.03%
Eastern Territory
440 West Nyack Road
West Nyack, NY 10994
The Intermediate Fixed Northumberland City Empl. 672,458 22.66% 0.48%
Income Portfolio Ret. Fund as
Custodian under Agreement
with Northern Central Bank
c/o Keystone Financial Trust
Operations
P.O. Box 2450
Altoona, PA 16603
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- -------------------------- -------------------------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Patterson and Co. 399,644 13.46% 0.29%
c/o CoreStates Bank
P.O. Box 7829
Philadelphia, PA 19101
The City of Groton 364,630 12.28% 0.26%
295 Meridian Street
Groton, CT 06340
Crestar Bank as Custodian for 340,106 11.46% 0.24%
the College of William and
Mary
Attn: William Copland, Jr.
P.O. Box 8795
Private Funds Office
Williamsburg, VA 23187
NCSC Staff Pension Plan 328,326 11.06% 0.23%
Defined Benefit
8403 Colesville Road --
Ste. 1200
Silver Spring, MD 20910
Our Sunday Visitor, Inc. 207,261 6.98% 0.15%
200 Noll Plaza
Huntington, IL 46750
Fleet National Bank TTE 165,208 5.56% 0.12%
FBO International Terminal
Operating Pension
P.O. Box 92800
Rochester, NY 14692
Philadelphia Association of 151,188 5.09% 0.11%
Zeta Psi Fraternity
613 Kirsch Avenue
Wayne, PA 19087
The Limited Term Delaware Management 2,100 100.00% 0.0015%
Maturity Portfolio Business Trust
Attn: Joseph Hastings
1818 Market St.
Philadelphia, PA 19103
The Global Fixed Income Public School Retirement 6,735,644 11.26% 4.80%
Portfolio System of the City of St. Louis
One Mercantile Center
Suite 2607
St. Louis, MO 63101
Banker's Trust Company 4,514,815 7.55% 3.22 %
FBO SLU Delaware Fund
Attn: Julie Druhe
500 Washington Avenue
St. Louis, MO 63101
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- -------------------------- ------------------------------ ----------- -------------- -----------
<S> <C> <C> <C> <C>
Saxon & Company 4,393,735 7.35% 3.13%
FBO Western Pennsylvania
Teamsters and Employers
Pension Fund
P.O. Box 7780-1888
Philadelphia, PA 19183
Bost & Company 4,062,695 6.79% 2.89%
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230
WA Suburban Sanitary 3,235,867 5.41% 2.30%
Commission Employees'
Retirement Plan
14501 Sweitzer Lane
Laurel, MD 20707
The International Fixed Montgomery County Public 1,842,475 22.50% 1.31%
Income Portfolio Schools
Employees' Pension &
Retirement System
850 Hungerford Drive,
Room 154
Rockville, MD 20850
Adventist Health System 1,840,074 22.46% 1.31%
Sunbelt Healthcare Corp --
Core
111 North Orlando Avenue
Winter Park, FL 32789
Comerica Bank Trustee 1,354,171 16.53% 0.96%
Oakwood Pension Plan
P.O. Box 75000
Detroit, MI 48275
El Paso Firemen's and 1,216,582 14.85% 0.87%
Policemen's Pension Fund
Policemen's Division
8201 Lockheed Drive, Ste 229
El Paso, TX 79925
El Paso Firemen's and 760,364 9.28% 0.54%
Policemen's Pension Fund
Policemen's Division
8201 Lockheed Drive, Ste 229
El Paso, TX 79925
The Bank of New York ITF 752,529 9.18% 0.54%
Unisource Group Trust
One Wall Street -- 12th Floor
New York, NY 10005
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- -------------------------------- -------------------------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
The Mid-Cap Value Equity The Lincoln National Life 352,941 99.99% 0.25%
Portfolio Insurance Company
(formerly The Small/Mid- 1300 South Clinton Street
Cap Value Equity Portfolio) Fort Wayne, IN 46802
The Labor Select International Maritime Association ILA 2,076,571 26.77% 1.48%
Equity Portfolio Pension Fund
1550 Fuqua Street, Ste. 425
Houston, TX 77034
Oper. Engineers Local 101 1,038,446 13.38% 0.74%
Pension Fund
301 East Armour Blvd.,
Ste. 203
Kansas City, MO 64111
Carpenter's Pension Fund of 788,229 10.16% 0.56%
Western PA
495 Mansfield Avenue
Pittsburgh, PA 15205
Local 25 S.E.I.U. and 571,693 7.37% 0.41%
Participating Employers
Pension Trust
111 West Jackson Blvd.,
Ste. 2102
Chicago, IL 60604
Inlandboatmen's Union of the 459,192 5.92% 0.33%
Pacific National Pension Plan
1220 SW Morrison Street,
Ste. 300
Portland, OR 97205
Oper. Engineer's Pension Trust 432,244 5.57% 0.31%
8401 Corporate Drive, Ste. 300
Landover, MD 20785
Keystone District Council of 422,457 5.44% 0.30%
Carpenter's Pension Fund
524 South 22nd Street
Harrisburg, PA 17104
The High-Yield Bond Portfolio The Bank of New York ITF 688,944 33.51% 0.49%
Unisource Group Trust
One Wall Street, 12th Floor
New York, NY 10005
Schwartz 1996 Charitable 353,244 17.18% 0.25%
Remainder Unitrust
c/o TCS Group, LLC
1200 Shermer Road, Ste. 212
Northbrook, IL 60062
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- ---------------------- -------------------------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Chicago Trust Co. 352,355 17.14% 0.25%
FBO Lincoln National Corp.
Empl. Ret. Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201
Mac & Co. LCWF 195,844 9.52% 0.14%
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230
Melhorn & Co. 182,420 8.87% 0.13%
FBO Shopmen's Iron
Worker's Union #502
Pension Fund
c/o PNC Bank
1600 Market Street,
Lower Level 2
Philadelphia, PA 19103
Trust Four Hundred Thirty 126,947 6.17% 0.09%
c/o TCS Group, LLC
1200 Shermer Road, Ste. 212
Northbrook, IL 60062
Trust Seven Hundred Thirty 126,947 6.17% 0.09%
c/o TCS Group, LLC
1200 Shermer Road, Ste. 212
Northbrook, IL 60062
The Emerging Markets Conagra Master Pension Trust 1,675,978 28.75% 1.20%
Portfolio One Conagra Drive
Omaha, NE 68102
Burlington Northern Santa Fe 1,024,093 17.57% 0.73%
Retirement Plan
Attn: Blaine A. Mineman
1700 East Golf Road
Schaumburg, IL 60173
Norwest Bank Minnesota N.A. 904,395 15.51% 0.64%
as Custodian for
FBO Father Flanagan's
FDN FD
P.O. Box 1533
Minneapolis, MN 55480
Mac & Co. 588,235 10.09% 0.42%
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- ----------------------------- ------------------------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Chicago Trust Company 549,182 9.42% 0.39%
FBO Lincoln National Corp.
Employees Retirement Trust
1000 Water Street TR 14
Milwaukee, WI 53202
M.J. Murdock Charitable Trust 297,619 5.10% 0.21%
703 Broadway, Ste. 710
Vancouver, WA 98660
The Small-Cap Growth Equity Conagra Master Pension Trust 1,675,978 28.75% 1.20%
Portfolio One Conagra Drive
Omaha, NE 68102
Burlington Northern Santa Fe 1,024,093 17.57% 0.73%
Retirement Plan
Attention: Blaine A. Mineman
1700 East Golf Road
Schaumburg, IL 60173
Norwest Bank Minnesota, N.A. 904,395 15.51% 0.64%
as Custodian for
FBO Father Flanagan's
FDN FD
P.O. Box 1533
Minneapolis, MN 55480
Mac & Co. 588,235 10.09% 0.42%
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230
Chicago Trust Company 549,182 9.42% 0.39%
FBO Lincoln National Corp.
Employees' Retirement Trust
1000 N. Water Street
Milwaukee, WI 53202
M.J. Murdock Charitable Trust 297,619 5.10% 0.21%
703 Broadway, Ste. 710
Vancouver, WA 98660
The Growth and Income Lincoln National Life 235,294 99.99% 0.17%
Portfolio Insurance Co.
1300 South Clinton Street
Fort Wayne, IN 46802
The Global Equity Portfolio Lincoln National Life 354,721 99.99% 0.25%
Insurance Co.
1300 South Clinton Street
Fort Wayne, IN 46802
</TABLE>
B-6
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDERS OWNING 5% OR MORE OF A PORTFOLIO AS OF OCTOBER 31, 1998
Shareholder Number Percent Percent
Portfolio Name Name and Address of Shares of Portfolio of Company
- ---------------------------- ----------------------------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
The Real Estate Investment The Philadelphia 124,422 30.72% 0.0885%
Trust Portfolio II Orchestra Assoc.
1420 Locust Street, Ste. 400
Philadelphia, PA 19102
Lincoln National Life 123,304 30.45% 0.877%
Insurance Co.
1300 South Clinton Street
Fort Wayne, IN 46802
City of Groton 71,786 17.72% 0.0511%
295 Meridian Street
Groton, CT 06340
Marian and Speros Martel 63,475 15.67% 0.452%
Foundation, Inc.
1001 Fannin Suite
Houston, TX 77002
Family Health Council, Inc. 21,904 5.40% 0.0156%
Money Purchase Pension Plan
c/o H. L. Zeve Associates
2400 CNG Tower
Pittsburgh, PA 15222
The Aggregate Fixed Income Lincoln National 235,294 99.99% 0.17%
Portfolio Life Insurance Co.
1300 South Clinton Street
Fort Wayne, IN 46802
The Diversified Core Fixed Lincoln National Life 352,941 99.99% 0.25%
Income Portfolio Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46802
</TABLE>
B-7
<PAGE>
EXHIBIT C
EXECUTIVE OFFICERS OF THE COMPANY
David K. Downes (59) Executive Vice President, Chief Operating Officer and
Chief Financial Officer of each of the 34 investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc, Founders CBO
Corporation, Delaware Capital Management, Inc., Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust) and Delaware Distributors, L.P.;
Executive Vice President, Chief Financial Officer, Chief Administrative Officer
and Trustee of Delaware Management Business Trust; Executive Vice President,
Chief Operating Officer, Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp., Delaware Distributors, Inc., Founders
Holdings, Inc. and Delvoy, Inc.; President, Chief Executive Officer, Chief
Financial Officer and Director of Delaware Service Company, Inc.; President,
Chief Operating Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman and Director of Delaware Management Trust
Company; Chairman, Chief Executive Officer and Director of Retirement Financial
Services, Inc.; Director of Delaware International Advisers Ltd.; and Vice
President of Lincoln Funds Corporation. During the past five years, Mr. Downes
has served in various executive capacities at different times in the Delaware
Investments organization.
Richard G. Unruh (59) Executive Vice President/Chief Investment Officer,
Equities of each of the 34 investment companies in the Delaware Investments
family and Delaware Management Company (a series of Delaware Management
Business Trust); Executive Vice President of Delaware Management Holdings,
Inc., Delaware Capital Management, Inc. and Delaware Management Business Trust;
Executive Vice President/Chief Investment Officer, Equities and
Director/Trustee of Delaware Management Company, Inc.; and Director of Delaware
International Advisers Ltd. During the past five years, Mr. Unruh has served in
various executive capacities at different times within the Delaware
organization.
Paul E. Suckow (51) Executive Vice President/Chief Investment Officer, Fixed
Income of each of the 34 investment companies in the Delaware Investments
family, Delaware Management Company, Inc., Delaware Management Company (a
series of Delaware Management Business Trust) and Delaware Investment Advisers
(a series of Delaware Management Business Trust); Executive Vice President and
Director of Founders Holdings, Inc.; Executive Vice President of Delaware
Capital Management, Inc., Delaware Management Business Trust and Delaware
Management Holdings, Inc.; Director of Founders CBO Corporation; and Director
of Hyppco Finance Company Ltd. During the past five years, Mr. Suckow has
served in various executive capacities at different times within the Delaware
Investments organization.
Richard J. Flannery (41) Senior Vice President of each of the 34 investment
companies in the Delaware Investments family; Executive Vice President and
General Counsel of Delaware Management Holdings, Inc., Delaware Investment
Advisers (a series of Delaware Management Business Trust), Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Distributors, L.P., Founders CBO Corporation; Executive Vice President/General
Counsel and Director/Trustee of DMH Corp., Delaware Management Company, Inc.,
Delaware Management Business Trust, Delaware Service Company, Inc., Delaware
Capital Management, Inc., Retirement Financial Services, Inc., Delaware
Management Trust Company, Delaware Distributors, Inc., Delaware International
Holdings Ltd., Founders Holdings, Inc., and Delvoy, Inc.; and Director of
Delaware International Advisers Ltd. and Hyppco Finance Company Ltd. During the
last five years, Mr. Flannery has served in various executive capacities at
different times within the Delaware Investments organization.
Michael P. Bishof (36) Senior Vice President/Treasurer of each of the 34
investment companies in the Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware Management
Business Trust) and Delaware Service Company, Inc.; Senior Vice President and
Treasurer/Manager of Investment Accounting of Delaware Distributors, L.P. and
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.; and Senior Vice President/Assistant Treasurer of
Founders CBO Corporation. Before joining Delaware
C-1
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Investments in 1995, Mr. Bishof was a Vice President for Bankers Trust, New
York, NY, from 1994 to 1995, a Vice President for CS First Boston Investment
Management, New York, NY, from 1993 to 1994, and an Assistant Vice President
for Equitable Capital Management Corporation, New York, NY, from 1987 to 1993.
George M. Chamberlain, Jr. (51) Senior Vice President, Secretary and General
Counsel of each of the 34 investment companies in the Delaware Investments
family; Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc. DMH Corp., Delaware Management Company,
Inc., Delaware Distributors, Inc., Delaware Service Company, Inc., Retirement
Financial Services, Inc., Delaware Capital Management, Inc. and Delvoy, Inc.;
Executive Vice President, Secretary and Director of Delaware Management Trust
Company; Senior Vice President and Director of Founders Holdings, Inc.; Senior
Vice President and Director of Delaware International Holdings Ltd.; and
Director of Delaware International Advisers Ltd. During the past five years,
Mr. Chamberlain has served in various executive capacities at different times
within the Delaware Investments organization.
Joseph H. Hastings (49) Senior Vice President/Corporate Controller of each of
the 34 investment companies in the Delaware Investments family and Founders
Holdings, Inc.; Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Capital Management, Inc., Delaware
International Holdings Ltd. and Delvoy, Inc.; Chief Financial Officer/Treasurer
of Retirement Financial Services, Inc.; Executive Vice President/Chief
Financial Officer/Treasurer of Delaware Management Trust Company; and Senior
Vice President/Assistant Treasurer of Founders CBO Corporation. During the past
five years, Mr. Hastings has served in various executive capacities at
different times within the Delaware Investments organization.
Paul A. Matlack (39) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust) and of the fixed-income investment companies in the
Delaware Investments family; Vice President of Founders Holdings, Inc.;
President and Director of Founders CBO Corporation. During the past five years,
Mr. Matlack has served in various capacities at different times within the
Delaware Investments organization.
Frank X. Morris (37) Vice President/Senior Portfolio Manager of Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and the
equity investment companies in the Delaware Investments family. Mr. Morris
joined Delaware Investments in 1997. He previously served as vice president and
director of equity research at PNC Asset Management. He is president of the
Financial Analysis Society of Philadelphia and is a member of the Association
of Investment Management and Research and the National Association of Petroleum
Investment Analysts.
Gary A. Reed (44) 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 the
fixed-income investment companies in the Delaware Investments family. During
the past five years, Mr. Reed has served in various capacities at different
times within the Delaware Investments organization.
Babak Zenouzi (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and of the equity investment companies in the
Delaware Investments family. During the past five years, Mr. Zenouzi has served
in various capacities at different times within the Delaware Investments
organization.
Gerald T. Nichols (40) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment
C-2
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Advisers (a series of Delaware Management Business Trust), and the fixed-income
investment companies in the Delaware Investments family; Vice President of
Founders Holdings, Inc.; Treasurer, Assistant Secretary and Director of
Founders CBO Corporation. During the past five years, Mr. Nichols has served in
various capacities at different times within the Delaware Investments
organization.
George H. Burwell (37) 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. During the past five years, Mr. Burwell has served
in various capacities at different times within the Delaware Investments
organization.
Gerald S. Frey (52) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), and the equity investment companies in the Delaware
Investments family. Before joining the Delaware Investments organization in
1996, Mr. Frey was a Senior Director with Morgan Grenfell Capital Management,
New York, NY from 1986 to 1995.
Roger A. Early (44) 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 funds in the Delaware
Investments family. Before joining the Delaware Investments organization, Mr.
Early was a portfolio manager for Federated Investor's fixed-income group.
George E. Deming (57) Vice President/Senior Portfolio Manager of Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and of the
equity investment companies in the Delaware Investments family. During the past
five years, Mr. Deming has served in various capacities at different times
within the Delaware Investments organization.
Robert L. Arnold (34) Vice President/Portfolio Manager of the equity investment
companies in the Delaware Investments family and Delaware Investment Advisers
(a series of Delaware Management Business Trust). During the past five years,
Mr. Arnold has served in various capacities at different times within the
Delaware Investments organization.
J. Paul Dokas (38) Vice President/Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware Management
Business Trust) and the equity investment companies in the Delaware Investments
family; and Vice President/DIA Equity of Delaware Investment Advisers (a series
of Delaware Management Business Trust). Before joining the Delaware Investments
organization in 1997, he was Director of Trust Investments for Bell Atlantic
Corporation in Philadelphia.
C-3
<PAGE>
EXHIBIT D
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
- ------------------------------------------------------------- -------------- --------------------------
<S> <C> <C>
JEFFREY J. NICK
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund (Growth and Income
Fund after 1/99) ....................................... 1,270.806 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc. ........................ 31,403.410 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund ................................ 19,012.257 4.32%/Less than 1%
WALTER P. BABICH
Delaware Group Cash Reserve, Inc. ........................ 7,896.800 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund (Growth and Income
Fund after 1/99) ....................................... 9,651.044 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................................... 4,314.040 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund .................................. 6,938.292 Less than 1%/Less than 1%
JOHN H. DURHAM
Delaware Group Cash Reserve, Inc. ........................ 63,271.060 Less than 1%/Less than 1%
Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio .............. 1,971.351 Less than 1%/Less than 1%
ANTHONY D. KNERR
None
ANN R. LEVEN
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ......... 750.665 Less than 1%/Less than 1%
Devon Fund .............................................. 254.789 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund (Decatur Equity Income
Fund after 1/99) ....................................... 2,025.428 Less than 1%/Less than 1%
Decatur Total Return Fund (Growth and Income
Fund after 1/99) ....................................... 2,036.432 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund .............................................. 2,527.037 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................................... 994.566 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund ............................... 1,174.926 Less than 1%/Less than 1%
</TABLE>
D-1
<PAGE>
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
- ------------------------------------------------------------ -------------- --------------------------
<S> <C> <C>
W. THACHER LONGSTRETH
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ........ 40,815.950 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund (Decatur Equity Income
Fund after 1/99) ...................................... 67,652.453 Less than 1%/Less than 1%
Decatur Total Return Fund (Growth and Income
Fund after 1/99) ...................................... 4,161.893 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund ............................................. 5,296.988 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund ............................................ 1,942.898 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund ................................... 934.814 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund ........................................ 60,197.084 Less than 1%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund ................................... 96.057 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
U.S. Government Money Fund ............................. 90.100 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc. ....................... 40,105.860 Less than 1%/Less than 1%
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund ...................................... 40,050.721 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund ............................. 221.143 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc. ................ 470.830 Less than 1%/Less than 1%
Delaware Group Dividend and Income Fund, Inc. ........... 1,000.000 Less than 1%/Less than 1%
Delaware Group Global Dividend and Income Fund, Inc...... 1,274.000 Less than 1%/Less than 1%
THOMAS F. MADISON
Delaware Group Equity Funds I, Inc.
Devon Fund ............................................. 246.327 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund .............................. 159.373 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund ................................. 132.162 Less than 1%/Less than 1%
</TABLE>
D-2
<PAGE>
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
<TABLE>
<CAPTION>
Percentage of
Company Shares Owned Fund/Company Owned
- ------------------------------------------------------------- ----------------- --------------------------
<S> <C> <C>
CHARLES E. PECK
Delaware Group Equity Funds I, Inc.
Delaware Balanced Fund (formerly Delaware Fund) ......... 16,151.178 Less than 1%/Less than 1%
Devon Fund .............................................. 12,876.107 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund (Growth and Income
Fund after 1/99) ....................................... 9,633.481 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund .............................................. 21,771.736 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund ............................................. 7,583.990 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................................... 7,248.518 Less than 1%/Less than 1%
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund ........................................ 17,898.466 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund ......................................... 67,477.705 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund ............................ 16,939.372 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund ............................... 8,691.150 Less than 1%/Less than 1%
WAYNE A. STORK
Delaware Group Equity Funds I, Inc.
Devon Fund .............................................. 65,720.574 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund (Decatur Equity Income
Fund after 1/99) ....................................... 1,125.446 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund .................................... 142,009.027 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund ......................................... 619,259.389 Less than 1%/Less than 1%
High-Yield Opportunities Fund ........................... 1,091,608.340 28.5%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund .................................... 5,322.055 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc. ........................ 3,706,011.960 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc. ................. 1,081.950 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund .............................. 887,532.832 33.30% Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund ............................... 11,838.599 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund .................................. 9,273.539 Less than 1%/Less than 1%
JAN R. YEOMANS
None
</TABLE>
D-3
<PAGE>
EXHIBIT E
LISTS OF CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
Table of Contents
<TABLE>
<S> <C>
The Aggregate Fixed Income Portfolio .................................................. E-2
The Diversified Core Fixed Income Portfolio ........................................... E-2
The Emerging Markets Portfolio ........................................................ E-2
The Global Equity Portfolio ........................................................... E-3
The Global Fixed Income Portfolio ..................................................... E-4
The High-Yield Bond Portfolio ......................................................... E-6
The International Equity Portfolio .................................................... E-4
The Intermediate Fixed-Income Portfolio ............................................... E-4
The International Fixed Income Portfolio .............................................. E-7
The Large-Cap Value Equity Portfolio .................................................. E-4
The Mid-Cap Growth Equity Portfolio (formerly The Aggressive Growth Portfolio) ........ E-9
The Mid-Cap Value Equity Portfolio (formerly The Small/Mid-Cap Value Equity Portfolio) E-2
The Real Estate Investment Trust Portfolio II ......................................... E-7
</TABLE>
E-1
<PAGE>
The Aggregate Fixed Income Portfolio
The Diversified Core Fixed Income Portfolio
The Emerging Markets Portfolio
The Mid-Cap Value Equity Portfolio (formerly The Small/Mid-Cap Value Equity
Portfolio)
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification The Portfolio shall not as to 75% of its total assets, invest more than 5% of
its total assets in the securities of any one issuer (other than obligations
issued, or guaranteed by, the U.S. government, its agencies or
instrumentalities).
Concentration The Portfolio shall not invest 25% or more of its total assets in any one
industry provided that there is no limitation with respect to investments in
obligations issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities.
Borrowing* The Portfolio shall not borrow money or issue senior securities, except to the
extent permitted by the Investment Company Act of 1940 or any rule or order
thereunder or interpretation thereof. Subject to the foregoing, the Portfolio
may engage in short sales, purchase securities on margin, and write put and
call options.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Portfolio shall not engage in underwriting of securities of other issuers,
except that portfolio securities, including securities purchased in private
placements, may be acquired under circumstances where, if sold, the Portfolio
might be deemed to be an underwriter under the Securities Act of 1933. No
limit is placed on the proportion of a Portfolio's assets which may be invested
in such securities.
Real Estate The Portfolio shall not purchase or sell real estate; provided that the Portfolio
may invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
Commodities The Portfolio shall not purchase or sell physical commodities or physical
commodity contracts, including physical commodity options or futures
contracts in a contract market or other futures market.
Lending The Portfolio shall not make loans other than by the purchase of all or a
portion of a publicly or privately distributed issue of bonds, debentures or
other debt securities of the types commonly offered publicly or privately and
purchased by financial institutions (including repurchase agreements), whether
or not the purchase was made upon the original issuance of the securities, and
except that the Portfolio may loan its assets to qualified broker/dealers or
institutional investors.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options See "Borrowing."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-2
<PAGE>
The Global Equity Portfolio
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification The Portfolio shall not, as to 75% of its total assets, invest more than 5% of its total assets
in the securities of any one issuer (other than obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities).
Concentration The Portfolio shall not invest 25% or more of its total assets in any one industry provided that
there is no limitation with respect to investments in obligations issued or guaranteed as to
principal or interest by the U.S. Government, its agencies or instrumentalities.
Borrowing* The Portfolio shall not borrow money or issue senior securities, except to the extent permitted
by the Investment Company Act of 1940 or any rule or order thereunder or interpretation thereof.
Subject to the foregoing, the Portfolio may engage in short sales, purchase securities on margin,
and write put and call options.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* See "Borrowing."
Underwriting The Portfolio shall not engage in underwriting of securities of other issuers, except that
portfolio securities, including securities purchased in private placements, may be acquired under
circumstances where, if sold, the Portfolio might be deemed to be an underwriter under the
Securities Act of 1933. No limit is placed on the proportion of the Portfolio's assets which may
be invested in such securities.
Real Estate The Portfolio shall not purchase or sell real estate; provided that the Portfolio may invest in
securities secured by real estate or interests therein or issued by companies which invest in
real estate or interests therein.
Commodities The Portfolio shall not purchase or sell physical commodities or physical commodity contracts,
including physical commodity options or futures contracts in a contract market or other futures
market.
Lending The Portfolio shall not make loans other than by the purchase of all or a portion of a publicly
or privately distributed issue of bonds, debentures or other debt securities of the types commonly
offered publicly or privately and purchased by financial institutions (including repurchase
agreements), whether or not the purchase was made upon the original issuance of the securities,
and except that the Portfolio may loan its assets to qualified broker/dealers or institutional
investors.
Illiquid Securities The Portfolio shall not invest more than 10% of its total assets in repurchase agreements
maturing in more than seven days and other illiquid assets.
Investment Companies The Portfolio shall not invest in securities of other investment companies, except by purchase in
the open market involving only customary brokers' commissions or in connection with a merger,
consolidation or other acquisition or as may otherwise be permitted by the Investment Company
Act of 1940.
Control or Management The Portfolio shall not purchase more than 10% of the outstanding voting securities of any
issuer, or invest in companies for the purpose of exercising control or management.
Options The Portfolio shall not write, purchase or sell options, puts, calls or combinations thereof with
respect to securities.
Futures See "Commodities."
Unseasoned Issuers The Portfolio shall not invest more than 5% of the value of its total assets in securities of
companies less than three years old. Such three-year period shall include the operation of any
predecessor company or companies.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
</TABLE>
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-3
<PAGE>
The Global Fixed Income Portfolio
The International Equity Portfolio
The Intermediate Fixed Income Portfolio
The Large-Cap Value Equity Portfolio
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification The Portfolio shall not as to 75% of its respective total assets, (50% for
Global Fixed Income) invest more than 5% of its respective total assets in the
securities of any one issuer (other than obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities).
Concentration The Portfolio shall not make any investment which would cause more than
25% of the market or other fair value of its respective total assets to be
invested in the securities of issuers all of which conduct their principal
business activities in the same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
Borrowing* The Portfolio shall not borrow money, except as a temporary measure for
extraordinary purposes or to facilitate redemptions. Any borrowing will be
done from a bank and to the extent that such borrowing exceeds 5% of the
value of its respective net assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%, the
Portfolio shall, within three days thereafter (not including Sunday or holidays)
or such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. No investment securities will be purchased while the Portfolio has an
outstanding borrowing. The Portfolio will not pledge more than 10% of its
respective net assets. The Portfolio will not issue senior securities as defined
in the Investment Company Act of 1940 except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Portfolio shall not make short sales of securities, or purchase securities
on margin.
Underwriting The Portfolio shall not engage in the underwriting of securities of other
issuers, except that in connection with the disposition of a security, the
Portfolio may be deemed to be an "underwriter" as that term is defined in the
Securities Act of 1933.
Real Estate The Portfolio shall not purchase or sell real estate or real estate limited
partnerships, but this shall not otherwise prevent a Portfolio from investing in
securities secured by real estate or interests therein.
Commodities The Portfolio shall not purchase or sell commodities or commodity contracts.
Lending The Portfolio shall not make loans, except to the extent that purchases of debt
obligations (including repurchase agreements), in accordance with the
Portfolio's investment objective and policies, are considered loans, and except
that the Portfolio may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other security
transactions.
Illiquid Securities The Portfolio shall not invest more than 10% of its total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-4
<PAGE>
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Investment Companies The Portfolio shall not invest in securities of other investment companies,
except by purchase in the open market involving only customary brokers'
commissions or in connection with a merger, consolidation or other
acquisition or as may otherwise be permitted by the Investment Company Act
of 1940.
Control or Management The Portfolio shall not purchase more than 10% of the outstanding voting
securities of any issuer, or invest in companies for the purpose of exercising
control or management.
Options The Portfolio shall not write, purchase or sell options, puts, calls or
combinations thereof with respect to securities.
Futures The Portfolio shall not enter into futures contracts or options thereon.
Unseasoned Issuers The Portfolio shall not invest more than 5% of the value of its respective total
assets in securities of companies less than three years old. Such three-year
period shall include the operation of any predecessor company or companies.
Warrants The Portfolio shall not in addition to the restrictions set forth above, in
connection with the qualification of the Portfolio's shares for sale in certain
states, invest in warrants if such warrants, valued at the lower of cost or
market, would exceed 5% of the value of the Portfolio's net assets. Included
within such amount, but not to exceed 2% of the Portfolio's net assets may be
warrants which are not listed on the New York Stock Exchange or American
Stock Exchange. Warrants acquired by the Portfolio in units or attached to
securities may be deemed to be without value.
Holdings by Affiliates The Portfolio shall not purchase or retain the securities of any issuer which
has an officer, director or security holder who is a director or officer of
Delaware Pooled Trust, Inc. or of either of the investment advisers if or so
long as the directors and officers of Delaware Pooled Trust, Inc. and of the
investment advisers together own beneficially more than 5% of any class of
securities of such issuer.
Oil or Gas The Portfolio shall not invest in interests in oil, gas and other mineral leases
or other mineral exploration or development programs.
Miscellaneous None.
</TABLE>
E-5
<PAGE>
The High-Yield Bond Portfolio
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification The Portfolio shall not, as to 75% of its total assets, invest more than 5% of its total assets
in the securities of any one issuer (other than obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities).
Concentration The Portfolio shall not make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of issuers all of which
conduct their principal business activities in the same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities.
Borrowing* The Portfolio shall not borrow money, except as a temporary measure for extraordinary purposes
or to facilitate redemptions. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of its net assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%, the Portfolio shall,
within three days thereafter (not including Sunday or holidays) or such longer period as the
Securities and Exchange Commission ("Commission") may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that the asset coverage of such borrowings shall be at
least 300%. No investment securities will be purchased while the Portfolio has an outstanding
borrowing. The Portfolio will not pledge more than 10% of its net assets. The Portfolio will not
issue senior securities as defined in the Investment Company Act of 1940, except for notes to
banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Portfolio shall not make short sales of securities, or purchase securities on margin.
Underwriting The Portfolio shall not engage in the underwriting of securities of other issuers, except that in
connection with the disposition of a security, the Portfolio may be deemed to be an "underwriter"
as that term is defined in the Securities Act of 1933.
Real Estate The Portfolio shall not purchase or sell real estate or real estate limited partnerships, but
this shall not otherwise prevent the Portfolio from investing in securities secured by real estate or
interests therein.
Commodities The Portfolio shall not purchase or sell commodities or commodity contracts.
Lending The Portfolio shall not make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with the Portfolio's investment objective and
policies, are considered loans, and except that each Portfolio may loan up to 25% of its
respective assets to qualified broker/dealers or institutional investors for their use relating to
short sales or other security transactions.
Illiquid Securities None.
Investment Companies None.
Control or Management None.
Options None.
Futures The Portfolio shall not enter into futures contracts or options thereon.
Unseasoned Issuers None.
Warrants The Portfolio shall not in addition to the restrictions set forth above, in connection with the
qualification of a Portfolio's shares for sale in certain states, the Portfolio may not invest in
warrants if such warrants, valued at the lower of cost or market, would exceed 5% of the value of
a Portfolio's net assets. Included within such amount, but not to exceed 2% of a Portfolio's net
assets may be warrants which are not listed on the New York Stock Exchange or American Stock
Exchange. Warrants acquired by a Portfolio in units or attached to securities may be deemed to be
without value.
Holdings by Affiliates The Portfolio shall not purchase or retain the securities of any issuer which has an officer,
director or security holder who is a director or officer of Delaware Pooled Trust, Inc. or of either
of the investment advisers if or so long as the directors and officers of Delaware Pooled Trust, Inc.
and of the investment advisers together own beneficially more than 5% of any class of securities of
such issuer.
Oil or Gas The Portfolio shall not invest in interests in oil, gas and other mineral leases or other mineral
exploration or development programs.
Miscellaneous None.
</TABLE>
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-6
<PAGE>
The International Fixed Income Portfolio
The Real Estate Investment Trust Portfolio II
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification None.
Concentration The Portfolio shall not make any investment which would cause more than
25% of the market or other fair value of its total assets to be invested in the
securities of issuers all of which conduct their principal business activities in
the same industry except that the Real Estate Investment Trust Portfolio II
shall invest in excess of 25% of its total assets in securities of issuers in the
real estate industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
Borrowing* The Portfolio shall not borrow money, except as a temporary measure for
extraordinary purposes or to facilitate redemptions. Any borrowing will be
done from a bank and to the extent that such borrowing exceeds 5% of the
value of its respective net assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%, the
Portfolio shall, within three days thereafter (not including Sunday or holidays)
or such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. No investment securities will be purchased while a Portfolio has an
outstanding borrowing. The Portfolio will not pledge more than 10% of its
respective net assets. The Portfolio will not issue senior securities as defined
in the Investment Company Act of 1940, except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Portfolio shall not make short sales of securities, or purchase securities
on margin. The Portfolio may satisfy margin requirements with respect to
futures transactions.
Underwriting The Portfolio shall not engage in the underwriting of securities of other
issuers, except that in connection with the disposition of a security, the
Portfolio may be deemed to be an "underwriter" as that term is defined in the
Securities Act of 1933.
Real Estate The Portfolio shall not purchase or sell real estate or real estate limited
partnerships, but this shall not otherwise prevent the Portfolio from investing
in securities secured by real estate or interests therein, except that the Real
Estate Investment Trust Portfolio II may own real estate directly as a result of
a default on securities the Portfolio owns.
Commodities The Portfolio shall not purchase or sell commodities or commodity contracts.
The Portfolio may enter into futures contracts and may purchase and sell
options on futures contracts in accordance with the related prospectus subject
to the investment restrictions listed under "Futures."
Lending The Portfolio shall not make loans, except to the extent that purchases of debt
obligations (including repurchase agreements), in accordance with the
Portfolio's investment objective and policies, are considered loans, and except
that the Portfolio may loan up to 25% of its respective assets to qualified
broker/dealers or institutional investors for their use relating to short sales or
other security transactions.
Illiquid Securities None.
Investment Companies None.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-7
<PAGE>
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Control or Management None.
Options None.
Futures The Portfolio may enter into futures contracts and options thereon to the
extent that not more than 5% of its assets are required as futures contract
margin deposits and premiums on options and only to the extent that
obligations under such contracts and transactions represent not more than 20%
of its total assets. See also "Short Sales/Margin" and "Commodities."
Unseasoned Issuers None.
Warrants The Portfolio shall not in addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in certain states, the
Portfolio may not invest in warrants if such warrants, valued at the lower of
cost or market, would exceed 5% of the value of the Portfolio's net assets.
Included within such amount, but not to exceed 2% of the Portfolio's net
assets may be warrants which are not listed on the New York Stock Exchange
or American Stock Exchange. Warrants acquired by the Portfolio in units or
attached to securities may be deemed to be without value.
Holdings by Affiliates The Portfolio shall not purchase or retain the securities of any issuer which
has an officer, director or security holder who is a director or officer of
Delaware Pooled Trust, Inc. or of either of the investment advisers if or so
long as the directors and officers of Delaware Pooled Trust, Inc. and of the
investment advisers together own beneficially more than 5% of any class of
securities of such issuer.
Oil or Gas The Portfolio shall not invest in interests in oil, gas and other mineral leases
or other mineral exploration or development programs.
Miscellaneous None.
</TABLE>
E-8
<PAGE>
The Mid-Cap Growth Equity Portfolio
(formerly The Aggressive Growth Portfolio)
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Diversification The Portfolio shall not, as to 75% of its respective total assets, invest more
than 5% of its respective total assets in the securities of any one issuer (other
than obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities).
Concentration The Portfolio shall not make any investment which would cause more than
25% of the market or other fair value of its respective total assets to be
invested in the securities of issuers all of which conduct their principal
business activities in the same industry. This restriction does not apply to
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
Borrowing* The Portfolio shall not borrow money, except as a temporary measure for
extraordinary purposes or to facilitate redemptions. Any borrowing will be
done from a bank and to the extent that such borrowing exceeds 5% of the
value of its respective net assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%, the
Portfolio shall, within three days thereafter (not including Sunday or holidays)
or such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. No investment securities will be purchased while the Portfolio has an
outstanding borrowing. The Portfolio will not pledge more than 10% of its
respective net assets. The Portfolio will not issue senior securities as defined
in the Investment Company Act of 1940, except for notes to banks.
Issuing Senior Securities* See "Borrowing."
Short Sales/Margin* The Portfolio shall not make short sales of securities, or purchase securities
on margin, except that the Portfolio may satisfy margin requirements with
respect to futures transactions.
Underwriting The Portfolio shall not engage in the underwriting of securities of other
issuers, except that in connection with the disposition of a security, the
Portfolio may be deemed to be an "underwriter" as that term is defined in the
Securities Act of 1933.
Real Estate The Portfolio shall not purchase or sell real estate or real estate limited
partnerships, but this shall not otherwise prevent the Portfolio from investing
in securities secured by real estate or interests therein.
Commodities The Portfolio shall not purchase or sell commodities or commodity contracts,
except that the Portfolio may enter into futures contracts and may purchase
and sell options on futures contracts in accordance with the related
Prospectus, subject to the investment restrictions under "Futures."
Lending The Portfolio shall not make loans, except to the extent that purchases of debt
obligations (including repurchase agreements), in accordance with the
Portfolio's investment objective and policies, are considered loans, and except
that the Portfolio may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other security
transactions.
Illiquid Securities The Portfolio shall not invest more than 10% of its total assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
</TABLE>
- ------------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-9
<PAGE>
<TABLE>
<CAPTION>
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
<S> <C>
Investment Companies The Portfolio shall not invest in securities of other investment companies,
except by purchase in the open market involving only customary brokers'
commissions or in connection with a merger, consolidation or other
acquisition or as may otherwise be permitted by the Investment Company Act
of 1940.
Control or Management The Portfolio shall not purchase more than 10% of the outstanding voting
securities of any issuer, or invest in companies for the purpose of exercising
control or management.
Options The Portfolio shall not write, purchase or sell options, puts, calls or
combinations thereof with respect to securities, except that the Portfolio may:
(a) write covered call options with respect to any or all parts of its portfolio
securities; (b) purchase call options to the extent that the premiums paid on all
outstanding call options do not exceed 2% of the Portfolio's total assets; (c)
write secured put options; and (d) purchase put options, if the Portfolio owns
the security covered by the put option at the time of purchase, and provided
that premiums paid on all put options outstanding do not exceed 2% of its
total assets. The Portfolio may sell call or put options previously purchased
and enter into closing transactions with respect to the activities noted above.
Futures The Portfolio shall not enter into futures contracts or options thereon, except
that the Portfolio may enter into futures contracts and options thereon to the
extent that not more than 5% of its assets are required as futures contract
margin deposits and premiums on options and only to the extent that
obligations under such contracts and transactions represent not more than 20%
of its total assets.
Unseasoned Issuers The Portfolio shall not invest more than 5% of the value of its respective total
assets in securities of companies less than three years old. Such three-year
period shall include the operation of any predecessor company or companies.
Warrants The Portfolio shall not in addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in certain states, the
Portfolio may not invest in warrants if such warrants, valued at the lower of
cost or market, would exceed 5% of the value of the Portfolio's net assets.
Included within such amount, but not to exceed 2% of the Portfolio's net
assets may be warrants which are not listed on the New York Stock Exchange
or American Stock Exchange. Warrants acquired by the Portfolio in units or
attached to securities may be deemed to be without value.
Holdings by Affiliates The Portfolio shall not purchase or retain the securities of any issuer which
has an officer, director or security holder who is a director or officer of
Delaware Pooled Trust, Inc. or of either of the investment advisers if or so
long as the directors and officers of Delaware Pooled Trust, Inc. and of the
investment advisers together own beneficially more than 5% of any class of
securities of such issuer.
Oil or Gas The Portfolio shall not invest in interests in oil, gas and other mineral leases
or other mineral explorations or development programs.
Miscellaneous None.
</TABLE>
E-10
<PAGE>
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Delaware Pooled Investment Asset Size Fee Rate Based
Trust, Inc. Manager or Date of as of On Average Daily
Portfolios Sub-Adviser Agreement 12/31/98 Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Aggregate Fixed Delaware 12/24/97(1) $ 6,492,082 0.40% per year
Income Portfolio Management
Company
("DMC")
- ---------------------------------------------------------------------------------------------
The Diversified Core DMC 12/24/97(1) $ 3,303,897 0.43% per year
Fixed Income
Portfolio (Investment
Management)
- ---------------------------------------------------------------------------------------------
The Diversified Core Delaware 12/24/97(1) $ 3,303,897 Fee equal to portion
Fixed Income International of management fee
Portfolio Advisers Ltd. attributable to foreign
(Sub-Advisory) ("DIAL") investments.
- ---------------------------------------------------------------------------------------------
The Emerging DIAL 4/14/97(2) $ 33,444,254 1.20% per year
Markets Portfolio
- ---------------------------------------------------------------------------------------------
The Global Equity DIAL 10/14/97(3) $ 3,277,674 0.75% per year
Portfolio (Investment
Management)
- ---------------------------------------------------------------------------------------------
The Global Equity DMC 10/14/97(3) $ 3,277,674 50% of management fee
Portfolio paid to DIAL
(Sub-Advisory)
- ---------------------------------------------------------------------------------------------
The Global Fixed DIAL 4/3/95(4) $659,129,865 0.50% per year less
Income Portfolio directors' fees
- ---------------------------------------------------------------------------------------------
The Growth and DMC 8/31/98(5) $ 2,373,603 0.55% per year
Income Portfolio
- ---------------------------------------------------------------------------------------------
The High-Yield Bond DMC 11/29/95(6) $ 26,571,322 0.45% per year
Portfolio
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Management
Fees that
Would Have
Management Been Due
Fees Due During The Servicing
Proposed and/or Last Fiscal /Distribution
Management Waived Year Under Fees Paid
(or Sub-Advisory) Last Proposed Percentage Last Fiscal
Delaware Pooled Fee Rate Based Fiscal Management Difference Year to
Trust, Inc. On Average Daily Year Fee Rate Between Affiliates of
Portfolios Net Assets A B A & B Manager
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Aggregate Fixed No Change $6,901 due N/A N/A $ 250
Income Portfolio All waived
- --------------------------------------------------------------------------------------------------------------
The Diversified Core No Change $11,289 due N/A N/A $ 200
Fixed Income All waived
Portfolio (Investment
Management)
- --------------------------------------------------------------------------------------------------------------
The Diversified Core No Change $1,821 due N/A N/A N/A
Fixed Income
Portfolio
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------
The Emerging 1.00% per year $431,051 due $359,000 due -17% $ 2,550
Markets Portfolio $50,753 waived
- --------------------------------------------------------------------------------------------------------------
The Global Equity No Change $23,131 due N/A N/A $ 1,294
Portfolio (Investment All waived
Management)
- --------------------------------------------------------------------------------------------------------------
The Global Equity No Change $11,566 due N/A N/A N/A
Portfolio
(Sub-Advisory)
- --------------------------------------------------------------------------------------------------------------
The Global Fixed 0.50% per year $2,649,961 due N/A N/A $34,698
Income Portfolio $122,948 waived
- --------------------------------------------------------------------------------------------------------------
The Growth and No Change N/A N/A N/A N/A
Income Portfolio
- --------------------------------------------------------------------------------------------------------------
The High-Yield Bond No Change $80,874 due N/A N/A $ 8,079
Portfolio $28,960 waived
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(1) Approved by the Fund's initial shareholder on December 24, 1997.
(2) Approved by the Fund's initial shareholder on April 14, 1997.
(3) Approved by the Fund's initial shareholder on October 14, 1997.
(4) Last submitted to shareholders for approval on March 29, 1995 in
connection with Lincoln National Corporation's acquisition of DMC and DIAL.
(5) Approved by the Fund's initial shareholder on August 31, 1998.
(6) Approved by the Fund's initial shareholder on November 30, 1995.
F-1
<PAGE>
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
Current
Management
(or Sub-Advisory)
Delaware Pooled Investment Asset Size Fee Rate Based
Trust, Inc. Manager or Date of as of On Average Daily
Portfolios Sub-Adviser Agreement 12/31/98 Net Assets
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The International DIAL 4/3/95(1) $661,187,674 0.75% per year less
Equity Portfolio directors' fees
- ----------------------------------------------------------------------------------------------
The Intermediate DMC 4/3/95(1) $ 26,571,322 0.40% per year less
Fixed Income directors' fees
Portfolio
- ----------------------------------------------------------------------------------------------
The International DIAL 4/3/95(1) $ 88,295,317 0.50% per year
Fixed Income
Portfolio
- ----------------------------------------------------------------------------------------------
The Labor Select DIAL 11/29/95(2) $105,776,536 0.75% per year
International Equity
Portfolio
- ----------------------------------------------------------------------------------------------
The Large-Cap Value DMC 4/3/95(1) $124,365,131 0.55% per year less
Equity Portfolio directors' fees
- ----------------------------------------------------------------------------------------------
The Mid-Cap Growth DMC 4/3/95(1) $ 6,284,704 0.80% per year
Equity Portfolio less directors' fees
(formerly The
Aggressive Growth
Portfolio)
- ----------------------------------------------------------------------------------------------
The Mid-Cap Value DMC 11/29/95(2) $ 2,901,624 0.75% per year
Equity Portfolio
(formerly The
Small/Mid-Cap Value
Equity Portfolio)
- ----------------------------------------------------------------------------------------------
The Real Estate DMC 10/14/97(3) $ 5,942,731 0.75% per year
Investment Trust
Portfolio II
(Investment
Management)
- ----------------------------------------------------------------------------------------------
The Real Estate Lincoln 10/14/97(3) $ 5,942,731 30% of management fee
Investment Trust Investment paid to DMC
Portfolio II Management, Inc.
(Sub-Advisory)
- ----------------------------------------------------------------------------------------------
The Small-Cap DMC 8/31/98(4) $ 4,009,987 0.75% per year
Growth
Equity Portfolio
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Management
Fees that
Would Have
Management Been Due
Fees Due During The Servicing
Proposed and/or Last Fiscal /Distribution
Management Waived Year Under Fees Paid
(or Sub-Advisory) Last Proposed Percentage Last Fiscal
Delaware Pooled Fee Rate Based Fiscal Management Difference Year to
Trust, Inc. On Average Daily Year Fee Rate Between Affiliates of
Portfolios Net Assets A B A & B Manager
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The International 0.75% per year $4,214,740 N/A N/A $37,670
Equity Portfolio $0 waived
- ----------------------------------------------------------------------------------------------------------
The Intermediate 0.40% per year $119,736 due N/A N/A $12,799
Fixed Income All waived
Portfolio
- ----------------------------------------------------------------------------------------------------------
The International No Change $292,924 due N/A N/A $ 6,580
Fixed Income $41,774 waived
Portfolio
- ----------------------------------------------------------------------------------------------------------
The Labor Select No Change $658,651 due N/A N/A $ 7,099
International Equity $44,876 waived
Portfolio
- ----------------------------------------------------------------------------------------------------------
The Large-Cap Value 0.55% per year $522,423 due N/A N/A $ 7,210
Equity Portfolio $38,036 waived
- ----------------------------------------------------------------------------------------------------------
The Mid-Cap Growth 0.75% per year $46,880 due $43,535 due -7% $ 3,330
Equity Portfolio All waived
(formerly The
Aggressive Growth
Portfolio)
- ----------------------------------------------------------------------------------------------------------
The Mid-Cap Value No Change $18,902 due N/A N/A $ 167
Equity Portfolio $12,514 waived
(formerly The
Small/Mid-Cap Value
Equity Portfolio)
- ----------------------------------------------------------------------------------------------------------
The Real Estate No Change $41,303 due N/A N/A $ 359
Investment Trust $31,367 waived
Portfolio II
(Investment
Management)
- ----------------------------------------------------------------------------------------------------------
The Real Estate No Change $12,391 due N/A N/A N/A
Investment Trust
Portfolio II
- ----------------------------------------------------------------------------------------------------------
(Sub-Advisory)
The Small-Cap No Change N/A N/A N/A N/A
Growth
Equity Portfolio
- ----------------------------------------------------------------------------------------------------------
- ------------
</TABLE>
(1) Last submitted to shareholders for approval on March 29, 1995 in connection
with Lincoln National Corporation's acquisition of DMC and DIAL.
(2) Approved by the Fund's initial shareholder on November 30, 1995.
(3) Approved by the Fund's initial shareholder on October 14, 1997.
(4) Approved by the Fund's initial shareholder on August 31, 1998.
F-2<PAGE>
EXHIBIT G
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
Domestic Equity Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------------- -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Aggressive Growth Fund DMC $150,863,195 1.00% per year 0.75% on first $500 million
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Blue Chip Fund DMC $17,847,453 0.65% on first $500 million 0.65% on first $500 million
(Investment Management) 0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000 million; all per year 0.50% on assets in excess of
$2,500 million; all per year
Capital Appreciation Fund DMC $2,563,644 0.75% on first $500 million 0.75% on first $500 million
0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
Convertible Securities Series DMC $8,133,077 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Decatur Income Fund (Decatur DMC $2,384,398,634 0.60% on first $100 million 0.65% on first $500 million
Equity Income Fund 0.525% on next $150 million 0.60% on next $500 million
after 1/99) 0.50% on next $250 million 0.55% on next $1,500 million
0.475% on assets in excess 0.50% on assets in excess of
of $500 million; all per $2,500 million; all per year
year less directors' fees
Decatur Total Return Fund DMC $1,402,172,696 0.60% on first $500 million 0.65% on first $500 million
(Growth and Income 0.575% on next $250 million 0.60% on next $500 million
Fund after 1/99) 0.55% on assets in excess 0.55% on next $1,500 million
of $750 million; all per 0.50% on assets in excess of
year less directors' fees $2,500 million; all per year
Decatur Total Return Series DMC $577,896,429 0.60% per year less 0.65% on first $500 million
(Variable Annuity) directors' fees 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-1
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ---------------------------- -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Delaware Balanced Fund DMC $1,045,205,203 0.60% on first $100 million 0.65% on first $500 million
(formely Delaware Fund) 0.525% on next $150 million 0.60% on next $500 million
0.50% on next $250 million 0.55% on next $1,500 million
0.475% on assets in excess 0.50% on assets in excess of
of $500 million; all per year $2,500 million; all per year
less directors' fees
Delaware Series DMC $201,539,215 0.60% per year less 0.65% on first $500 million
(Variable Annuity) directors' fees 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
DelCap Fund DMC $817,570,752 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
DelCap Series DMC $130,546,133 0.75% per year less 0.75% on first $500 million
(Variable Annuity) directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Devon Fund DMC $302,046,021 0.60% on first $500 million 0.65% on first $500 million
0.50% on assets in excess of 0.60% on next $500 million
$500 million; all per year 0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Devon Series DMC $68,595,698 0.60% per year
(Variable Annuity) 0.65% on first $500 million
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Diversified Value Fund DMC $2,316,078 0.65% on first $500 million N/A
0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Growth Stock Fund DMC $48,755,899 1.00% per year 0.65% on first $500 million
(Investment Management) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Mid Cap Value Fund DMC $2,095,162 0.75% on first $500 million N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
The Real Estate Investment DMC $71,589,077 0.75% per year 0.75% on first $500 million
Trust Portfolio 0.70% on next $500 million
(Investment Management) 0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-2
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ---------------------------- -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
The Real Estate Investment LIM $71,589,077 30% of management fees paid N/A
Trust Portfolio to DMC
(Sub-Advisory)
REIT Series DMC $5,519,384 0.75% on first $500 million N/A
(Variable Annuity) 0.70% on next $500 million
(Investment Management) 0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
REIT Series LIM $5,519,384 30% of management fees paid N/A
(Variable Annuity) to DMC
(Sub-Advisory)
Retirement Income Fund DMC $2,911,467 0.65% on first $500 million 0.65% on first $500 million
0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000 million; all per year 0.50% on assets in excess of
$2,500 million; all per year
Small Cap Contrarian Fund DMC $2,084,138 0.75% on first $500 million N/A
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Small Cap Value Fund DMC $525,102,433 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Small Cap Value Series DMC $103,942,295 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Social Awareness Fund DMC $87,050,940 0.75% on first $500 million 0.75% on first $500 million
(Investment Management) 0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
Social Awareness Series DMC $26,942,787 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
(Investment Management) 0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-3
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- --------------------------- -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Tax-Efficient Equity Fund DMC $66,275,684 0.75% on first $500 million 0.75% on first $500 million
0.725% on next $500 million 0.70% on next $500 million
0.70% on assets in excess of 0.65% on next $1,500 million
$1,000 million; all per year 0.60% on assets in excess of
$2,500 million; all per year
Trend Fund DMC $594,971,007 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Trend Series DMC $170,364,972 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
U.S. Growth Fund DMC $62,656,068 0.70% per year 0.65% on first $500 million
(Investment Management) 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Lincoln National LIM $107,643,507 0.875% per year N/A
Convertible Securities
Fund, Inc.
Lincoln National LIM $300,098,000 0.75% on first $200 million N/A
Aggressive Growth 0.70% on next $200 million
Fund 0.65% on assets in excess of
$400 million; all per year
Lincoln National Capital LIM $636,124,000 0.80% per year N/A
Appreciation Fund
Lincoln National Equity LIM $945,271,000 0.95% per year N/A
Income Fund
Lincoln National Growth LIM $3,941,773,000 0.48% on first $200 million N/A
& Income Fund 0.40% on next $200 million
0.30% on assets in excess
of $400 million; all per year
Lincoln National LIM $1,698,006,000 0.48% on first $200 million N/A
Social Awareness 0.40% on next $200 million
Fund 0.30% on assets in excess
of $400 million; all per year
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-4
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ---------------------------- -------------- ---------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Lincoln National LIM $844,084,000 0.48% on first $20 million N/A
Special Opportunities 0.40% on next $200 million
Fund 0.30% on assets in excess
of $400 million; all per year
Corporate Bond Fund DMC $38,399,310 0.50% on first $500 million N/A
0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delaware Group Dividend DMC $221,141,148 0.55% per year N/A
and Income Fund, Inc.**
Delaware-Voyageur US DMC $88,356,710 0.50% per year 0.55% on first $500 million
Government Securities Fund 0.50% on next $500 million
(Investment Management) 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Delchester Fund DMC $1,382,947,497 0.60% on first $500 million 0.65% on first $500 million
0.575% on next $250 million 0.60% on next $500 million
0.55% on assets in excess of 0.55% on next $1,500 million
$750 million; all per year 0.50% on assets in excess of
less directors' fees $2,500 million; all per year
Delchester Series DMC $120,628,573 0.60% per year less 0.65% on first $500 million
(Variable Annuity) directors' fees 0.60% on next $500 million
0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Extended Duration Bond DMC $32,255,272 0.55% on first $500 million N/A
Fund 0.50% on next $500, million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
High-Yield Opportunities DMC $20,748,401 0.65% on first $500 million 0.65% on first $500 million
Fund 0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000 million; all per year 0.50% on assets in excess of
$2,500 million; all per year
Limited-Term Government DMC $357,445,604 0.50% per year less 0.50% on first $500 million
Fund directors' fees 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
Strategic Income Fund DMC $48,014,522 0.65% on first $500 million 0.65% on first $500 million
(Investment Management) 0.625% on next $500 million 0.60% on next $500 million
0.60% on assets in excess of 0.55% on next $1,500 million
$1,000 million; all per year 0.50% on assets in excess of
$2,500 million; all per year
Strategic Income Fund DIAL $48,014,522 1/3 of management fees paid N/A
(Sub-Advisory) to DMC
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
** Closed-end fund that does not accept new investments; therefore, there are no
breakpoints in the management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-5
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Strategic Income Series DMC $20,496,651 0.65% per year 0.65% on first $500 million
(Variable Annuity) 0.60% on next $500 million
(Investment Management) 0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
Strategic Income Series DIAL $20,496,651 1/3 of management fees paid N/A
(Variable Annuity) to DMC
(Sub-Advisory)
U.S. Government Fund DMC $181,655,118 0.60% per year less 0.55% on first $500 million
directors' fees 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-6
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
Global and International Funds
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- --------------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Delaware Group Global DMC $103,589,183 0.70% per year N/A
Dividend and Income Fund,
Inc.**
(Investment Management)
Delaware Group Global DIAL $103,589,183 40% of management fees paid N/A
Dividend and Income Fund, to DMC
Inc.**
(Sub-Advisory)
Emerging Markets Fund DIAL $9,134,933 1.25% per year 1.25% on first $500 million
1.20% on next $500 million
1.15% on next $1,500 million
1.10% on assets in excess of
$2,500 million; all per year
Emerging Markets Series DIAL $5,351,370 1.25% per year 1.25% on first $500 million
(Variable Annuity) 1.20% on next $500 million
1.15% on next $1,500 million
1.10% on assets in excess of
$2,500 million; all per year
Global Equity Fund (formerly DIAL $17,242,496 0.75% per year less 0.85% on first $500 million
Global Assets Series) directors' fees 0.80% on next $500 million
(Investment Management) 0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
Global Equity Fund (formerly DMC $17,242,496 25% of fees paid to DIAL N/A
Global Assets Series)
(Sub-Advisory)
Global Bond Fund DIAL $19,560,850 0.75% per year less 0.75% on first $500 million
directors' fees 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Global Bond Series DIAL $21,711,261 0.75% per year 0.75% on first $500 million
(Variable Annuity) 0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
Global Opportunities Fund DIAL $3,308,258 0.80% per year 0.85% on first $500 million
(formerly Global Equity Series) 0.80% on next $500 million
(Investment Management) 0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
Global Opportunities Fund DMC $3,308,258 50% of fees paid to DIAL N/A
(formerly Global Equity Series)
(Sub-Advisory)
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company, ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
** Closed-end fund that does not accept new investments; therefore, there are no
breakpoints in the management fees.
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-7
<PAGE>
SIMILAR FUNDS MANAGED BY THE INVESTMENT MANAGERS
AND SUB-ADVISERS
<TABLE>
<CAPTION>
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 12/31/98 on Average Daily Net Assets on Average Daily Net Assets++
- ----------------------------- -------------- ---------------- ------------------------------ -------------------------------
<S> <C> <C> <C> <C>
International Equity Fund DIAL $343,751,258 0.75% per year less 0.85% on first $500 million
directors' fees 0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
international Equity Series DIAL $243,531,043 0.75% per year less 0.85% on first $500 million
(Variable Annuity) directors' fees 0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
International Small Cap Fund DIAL $3,205,799 1.25% per year 1.25% on first $500 million
1.20% on next $500 million
1.15% on next $1,500 million
1.10% on assets in excess of
$2,500 million; all per year
Latin America Fund DIAL $2,487,419 1.25% per year N/A
New Europe Fund DIAL $2,488,362 1.25% per year N/A
New Pacific Fund DMC $9,712,287 0.80% per year 0.85% on first $500 million
(Investment Management) 0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
Overseas Equity Fund DMC $3,542,666 1.00% per year 0.85% on first $500 million
(Investment Management) 0.80% on next $500 million
0.75% on next $1,500 million
0.70% on assets in excess of
$2,500 million; all per year
Overseas Equity Fund DIAL $3,542,666 80% of fees paid to DMC N/A
(Sub-Advisory)
</TABLE>
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
++ Proposed fee rates reflect increases, decreases or other changes which have
been, or will be presented to shareholders in a separate shareholder meeting,
and which have not yet taken effect.
G-8
<PAGE>
EXHIBIT H
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [REGISTRANT], a[ ] ("Fund") on behalf of the
[Portfolio] ("Series"), and [MANAGER NAME] , a [ ] ("Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 and is currently comprised
of [ ] series, including the Series; as a separate series of the Fund, each
series engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager is a registered investment adviser under the
Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and
WHEREAS, the Fund on behalf of the Series and the Investment Manager desire to
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment
and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Fund's Board and officers of the Fund for
the period and on the terms hereinafter set forth. The Investment Manager
hereby accepts such employment and agrees during such period to render the
services and assume the obligations herein set forth for the compensation
herein provided. The Investment Manager shall for all purposes herein be
deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or
represent the Fund in any way, or in any way be deemed an agent of the
Fund. The Investment Manager shall regularly make decisions as to what
securities and other instruments to purchase and sell on behalf of the
Series and shall effect the purchase and sale of such investments in
furtherance of the Series' objectives and policies and shall furnish the
Board of the Fund with such information and reports regarding the Series'
investments as the Investment Manager deems appropriate or as the Directors
of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not
in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders;
calling and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and accounting fees;
taxes; and federal and state registration fees. Directors, officers and
employees of the Investment Manager may be directors, officers and
employees of any of the investment companies within the Delaware
Investments family (including the Fund). Directors, officers and employees
of the Investment Manager who are directors, officers and/or employees of
these investment companies shall not receive any compensation from such
companies for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and in
the performance of this Agreement, the Fund and Investment Manager may
share facilities common to each, which may include legal and accounting
personnel, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for
which the Investment Manager or any such Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or
who sell shares of any other fund for which the Investment
H-1
<PAGE>
Manager or any such Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the funds of which the Investment Manager
or Sub-Adviser is investment manager or sub-adviser, shall only receive
orders for the purchase or sale of portfolio securities to the extent that
the placing of such orders is in compliance with the Rules of the
Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board and officers of
the Fund, the Investment Manager may ask the Fund and the Fund may agree to
pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction, in such instances where the Fund and the
Investment Manager have determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such member, broker or dealer, viewed in
terms of either that particular transaction or the Investment Manager's
overall responsibilities with respect to the Fund and to other funds and
other advisory accounts for which the Investment Manager or any
Sub-Adviser, as defined in Paragraph 5 hereof, exercises investment
discretion.
4. As compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets, a fee based
on the average daily net assets of the Series during the month. Such fee
shall be calculated in accordance with the following schedule:
Annual
Monthly Rate Average Daily Net Assets
--------- ------- -------------------------
If this Agreement is terminated prior to the end of any calendar month, the
management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The Investment Manager may, at its expense, select and contract with one
or more investment advisers registered under the Investment Advisers Act of
1940 ("Sub-Advisers") to perform some or all of the services for the Series
for which it is responsible under this Agreement. The Investment Manager
will compensate any Sub-Adviser for its services to the Series. The
Investment Manager may terminate the services of any Sub-Adviser at any
time in its sole discretion, and shall at such time assume the
responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected and the requisite approval of the Series'
shareholders is obtained. The Investment Manager will continue to have
responsibility for all advisory services furnished by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund under
the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different
services to others so long as its ability to render the services provided
for in this Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to
the Fund or to any other investment company, corporation, association, firm
or individual.
8. It is understood and agreed that so long as the Investment Manager
and/or its advisory affiliates shall continue to serve as the Fund's
investment adviser, other mutual funds as may be sponsored or advised by
the Investment Manager or its affiliates shall have the right permanently
to adopt and to use the words "Delaware," "Delaware Investments" or
"Delaware Group" in their names and in the names of any series or class of
shares of such funds.
H-2
<PAGE>
9. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as the Investment
Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security, or otherwise.
10. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period
of two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board or by
the vote of a majority of the outstanding voting securities of the Series
and only if the terms and the renewal hereof have been approved by the vote
of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. Notwithstanding the foregoing,
this Agreement may be terminated by the Fund at any time, without the
payment of a penalty, on sixty days' written notice to the Investment
Manager of the Fund's intention to do so, pursuant to action by the Board
of the Fund or pursuant to the vote of a majority of the outstanding voting
securities of the Series. The Investment Manager may terminate this
Agreement at any time, without the payment of a penalty, on sixty days'
written notice to the Fund of its intention to do so. Upon termination of
this Agreement, the obligations of all the parties hereunder shall cease
and terminate as of the date of such termination, except for any obligation
to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Fund to pay to the
Investment Manager the fee provided in Paragraph 4 hereof, prorated to the
date of termination. This Agreement shall automatically terminate in the
event of its assignment.
11. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
12. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to be
affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , 19 .
[MANAGER NAME]
[REGISTRANT NAME]
for the [SERIES NAME]
By: ----------------------------------
Name: --------------------------------
Title: -------------------------------
By: ----------------------------------
Name: --------------------------------
Title: -------------------------------
Attest: ------------------------------
Name: --------------------------------
Title: -------------------------------
Attest: ------------------------------
Name: --------------------------------
Title: -------------------------------
H-3
<PAGE>
EXHIBIT I
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT, made by and between [MANAGER NAME] ("Investment Manager"), and
[SUB-ADVISER NAME] ("Sub-Adviser").
W I T N E S S E T H:
WHEREAS, [REGISTRANT NAME], a [ ] ("Fund"), has been organized and operates
as an investment company registered under the Investment Company Act of 1940
and engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager and the Fund on behalf of the [Portfolio]
("Series") have entered into an agreement of even date herewith ("Investment
Management Agreement") whereby the Investment Manager will provide investment
advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Management Agreement permits the Investment Manager to
hire one or more sub-advisers to assist the Investment Manager in providing
investment advisory services to the Fund on behalf of the Series; and
WHEREAS, the Investment Manager and the Sub-Adviser are registered Investment
Advisers under the Investment Advisers Act of 1940 and engage in the business
of providing investment management services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Investment Manager hereby employs the Sub-Adviser, subject always to
the Investment Manager's control and supervision, to manage the investment
and reinvestment of that portion of the Series' assets as the Investment
Manager shall designate from time to time and to furnish the Investment
Manager with investment recommendations, asset allocation advice, research,
economic analysis and other investment services with respect to securities
in which the Series may invest, subject to the direction of the Board and
officers of the Fund for the period and on the terms hereinafter set forth.
The Sub-Adviser hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent
of the Fund. The Sub-Adviser shall regularly make decisions as to what
securities to purchase and sell on behalf of the Series with respect to
that portion of the Series' assets designated by the Investment Manager,
shall effect the purchase and sale of such investments in furtherance of
the Series' objectives and policies and shall furnish the Board of the Fund
with such information and reports regarding its activities as the
Investment Manager deems appropriate or as the Directors of the Fund may
reasonably request in the performance of its duties and obligations under
this Agreement, the Sub-Adviser shall act in conformity with the Articles
of Incorporation, By-Laws and Prospectus of the Fund and with the
instructions and directions of the Investment Manager and of the Board of
the Fund and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986 and all other applicable federal and
state laws and regulations consistent with the provisions of Section 15(c)
of the Investment Company Act of 1940.
2. Under the terms of the Investment Management Agreement, the Fund shall
conduct its own business and affairs and shall bear the expenses and
salaries necessary and incidental thereto including, but not in limitation
of the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of
stock, including issuance and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and federal
and state registration fees.
I-1
<PAGE>
Without limiting the foregoing, except as the Investment Manager and the
Sub-Adviser may agree in writing from time to time, the Sub-Adviser shall
have no responsibility for record maintenance and preservation obligations
under Section 31 of the Investment Company Act of 1940.
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser
as sub-adviser or investment manager. Directors, officers and employees of
the Sub-Adviser who are Directors, officers and/or employees of the Fund,
shall not receive any compensation from the Fund for acting in such dual
capacity.
In the conduct of the respective business of the parties hereto and in the
performance of this Agreement, the Fund, the Investment Manager and the
Sub-Adviser may share facilities common to each, which may include legal
and accounting personnel, with appropriate proration of expenses between
and among them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Sub-Adviser will place orders for the purchase
and sale of portfolio securities and other instruments with such
broker/dealers who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, to the Sub-Adviser or
to any other Fund for which the Investment Manager or Sub-Adviser provides
investment advisory services and/or with broker/dealers who sell shares of
the Fund or who sell shares of any other Fund for which the Investment
Manager or Sub-Adviser provides investment advisory services.
Broker/dealers who sell shares of the Funds for which the Investment
Manager or Sub-Adviser provides advisory services shall only receive orders
for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the rules of the Securities
and Exchange Commission and the National Association of Securities Dealers,
Inc.
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board and officers of
the Fund, the Sub-Adviser may ask the Fund and the Fund may agree to pay a
member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction, in such instances where it and the Sub-Adviser
have determined in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or the Sub-Adviser's overall responsibilities with respect to
the Fund and to other funds and other advisory accounts for which the
Investment Manager or the Sub-Adviser exercises investment discretion.
4. As compensation for the services to be rendered to the Fund for the
benefit of the Series by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser a monthly
fee equal to [ %] of the fee paid to the Investment Manager under the terms
of the Investment Management Agreement.
If this Agreement is terminated prior to the end of any calendar month, the
Sub-Advisory fee shall be prorated for the portion of any month in which
this Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Sub-Adviser to the Fund for the
benefit of the Series under the provisions of this Agreement are not to be
deemed to be exclusive, and the Sub-Adviser shall be free to render similar
or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby;
provided, however, except for advisory arrangements implemented prior to
the date of this Agreement, during the term of this Agreement, the
Sub-Adviser, will not, without the written consent of the Investment
Manager, which consent will not be unreasonably withheld, render investment
company (or portfolio thereof) which the Investment manger reasonably
determines would be in competition with and which has investment policies
similar to those of the Portfolio.
I-2
<PAGE>
6. Subject to the limitation set forth in Paragraph 5, the Sub-Adviser, its
directors, officers, employees, agents and shareholders may engage in other
businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual,
and may render underwriting services to the Fund or to any other investment
company, corporation, association, firm or individual.
The Investment Manager agrees that it shall not use the Sub-Adviser's name
or otherwise refer to the Sub-Adviser in any materials distributed to third
parties, including the Series' shareholders, without the prior written
consent of the Sub-Adviser.
7. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as Sub-Adviser to the
Fund, the Sub-Adviser shall not be subject to liability to the Fund, to the
Investment Manager or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security, or otherwise.
8. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding
voting securities of the Series. It shall continue in effect for a period
of two years and may be renewed thereafter only so long as such renewal and
continuance is specifically approved at least annually by the Board or by
the vote of a majority of the outstanding voting securities of the Series
and only if the terms and the renewal hereof have been approved by the vote
of a majority of the Directors of the Fund who are not parties hereto or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. Notwithstanding the foregoing,
this Agreement may be terminated by the Investment Manager or the Fund at
any time, without the payment of a penalty, on sixty days' written notice
to the Sub-Adviser, of the Investment Manager's or the Fund's intention to
do so, in the case of the Fund pursuant to action by the Board of the Fund
or pursuant to the vote of a majority of the outstanding voting securities
of the Series. The Sub-Adviser may terminate this Agreement at any time,
without the payment of a penalty on sixty days' written notice to the
Investment Manager and the Fund of its intention to do so. Upon termination
of this Agreement, the obligations of all the parties hereunder shall cease
and terminate as of the date of such termination, except for any obligation
to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Investment Manager to pay
to the Sub-Adviser the fee provided in Paragraph 4 hereof, prorated to the
date of termination. This Agreement shall automatically terminate in the
event of its assignment. This Agreement shall automatically terminate upon
the termination of the Investment Management Agreement.
9. This Agreement shall extend to and bind the successors of the parties
hereto.
10. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested person"; and "assignment"
shall have the meaning defined in the Investment Company Act of 1940.
I-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to be
affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of , 19 .
[MANAGER NAME]
By: ----------------------------------
Name:
Title:
Attest: ------------------------------
[SUB-ADVISER NAME]
By: ----------------------------------
Name:
Title:
Attest: ------------------------------
Agreed to and accepted as of the day and year first above written:
[REGISTRANT NAME]
on behalf of the [SERIES NAME]
By: ----------------------------------
Chairman
Attest: ------------------------------
I-4
<PAGE>
EXHIBIT J
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of this
___ day of ______________, ____ by and between Delaware Pooled Trust, a
Delaware business trust ("Fund"), and Delaware Pooled Trust, Inc., a Maryland
corporation ("Corporation") (the Fund and the Corporation are hereinafter
collectively referred to as the "parties").
In consideration of the mutual promises contained herein, and intending to
be legally bound, the parties hereto agree as follows:
1. Plan of Reorganization.
(a) Upon satisfaction of the conditions precedent described in Section 3
hereof, the Corporation will convey, transfer and deliver to the Fund at the
closing provided for in Section 2 (hereinafter referred to as the "Closing")
all of the Corporation's then-existing assets, the assets belonging to each
series of the Corporation to be conveyed, transferred and delivered to the
corresponding series of the Fund. In consideration thereof, the Fund agrees at
the Closing (1) to assume and pay, to the extent that they exist on or after
the Effective Date of the Reorganization (as defined in Section 2 hereof), all
of the Corporation's obligations and liabilities, whether absolute, accrued,
contingent or otherwise, including all fees and expenses in connection with the
Agreement, which fees and expenses shall in turn include, without limitation,
costs of legal advice, accounting, printing, mailing, proxy solicitation and
transfer taxes, if any, the obligations and liabilities allocated to each
series of the Corporation to become the obligations and liabilities of the
corresponding series of the Fund, and (2) to deliver, in accordance with
paragraph (b) of this Section 1, full and fractional shares of beneficial
interest, no par value, of each of the Fund's separate series and the
respective classes of those series, if any, all as set forth in the Appendix
attached hereto (hereinafter, the series are individually and collectively
referred to as "Series of the Fund" and the classes are individually referred
to as a "Class of the Fund" and collectively as "Classes of the Fund"), equal
in number to the number of full and fractional shares of common stock, ______
par value, of, respectively, each of the Corporation's separate series and the
respective classes of those series, all as set forth in the Appendix attached
hereto (hereinafter, the series are referred to individually and collectively
as "Series of the Corporation" and the classes are referred to individually as
a "Class of the Corporation" and collectively as "Classes of the Corporation")
outstanding immediately prior to the Effective Date of the Reorganization. The
transactions contemplated hereby are intended to qualify as a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended ("Code").
(b) In order to effect such delivery, the Fund will establish an open
account for each shareholder of each Series of the Corporation and, on the
Effective Date of the Reorganization, will credit to such account full and
fractional shares of such Series and Class of the Fund equal to the number of
full and fractional shares such shareholder holds in the corresponding Series
and Class of the Corporation at the close of regular trading on the New York
Stock Exchange on the business day immediately preceding the Effective Date of
the Reorganization; fractional shares of each Class of the Fund will be carried
to the third decimal place. On the Effective Date of the Reorganization, the
net asset value per share of beneficial interest of each Class of the Fund
shall be deemed to be the same as the net asset value per share of the
corresponding Class of the Corporation at the close of regular trading on the
New York Stock Exchange on the business day immediately preceding the Effective
Date of the Reorganization. On the Effective Date of the Reorganization, each
certificate representing shares of a Series and Class of the Corporation will
represent the same number of shares of the corresponding Series and Class of
the Fund. Each shareholder of the Corporation will have the right to exchange
his (her) share certificates for share certificates of the Fund. However, a
shareholder need not make this exchange of certificates unless he (she) so
desires. Simultaneously with the crediting of the shares of the Series and
Classes of the Fund to the shareholders of record of the Corporation, the
shares of the Series and Classes of the Corporation held by such shareholder
shall be cancelled.
(c) As soon as practicable after the Effective Date of the Reorganization,
the Corporation shall take all necessary steps under Maryland law to effect a
complete dissolution of the Corporation.
J-1
<PAGE>
2. Closing and Effective Date of the Reorganization.
The Closing shall consist of (i) the conveyance, transfer and delivery of
the Corporation's assets to the Fund, in exchange for the assumption and
payment by the Fund of the Corporation's liabilities; and (ii) the issuance and
delivery of the Fund's shares in accordance with Section 1(b), together with
related acts necessary to consummate such transactions. The Closing shall occur
either on (a) the business day immediately following the later of receipt of
all necessary regulatory approvals and the final adjournment of the meeting of
shareholders of the Corporation at which this Agreement will be considered or
(b) such later date as the parties may mutually agree ("Effective Date of the
Reorganization").
3. Conditions Precedent.
The obligations of the Corporation and the Fund to effectuate the
reorganization hereunder shall be subject to the satisfaction of each of the
following conditions:
(a) Such authority and orders from the Securities and Exchange Commission
("Commission") as may be necessary to permit the parties to carry out the
transactions contemplated by this Agreement shall have been received;
(b) (i) One or more post-effective amendments to the Corporation's
Registration Statement on Form N-1A ("Registration Statement") under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended ("1940 Act"), containing such amendments to the Registration Statement
as are determined by the Trustees of the Fund to be necessary and appropriate
as a result of this Agreement shall have been filed with the Commission; (ii)
the Fund shall have adopted as its own such Registration Statement, as so
amended; (iii) the most recent post-effective amendment to the Registration
Statement filed with the Commission relating to the Fund shall have become
effective, and no stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the Commission (other than any such stop-order,
proceeding or threatened proceeding that shall have been withdrawn or
terminated); and (iv) an amendment of the Form N-8A Notification of
Registration filed pursuant to Section 8(a) of the 1940 Act ("Form N-8A")
reflecting the change in legal form of the Corporation to a Delaware business
trust shall have been filed with the Commission and the Fund shall have
expressly adopted such amended Form N-8A as its own for purposes of the 1940
Act;
(c) Each party shall have received an opinion of Stradley, Ronon, Stevens
& Young, LLP, Philadelphia, Pennsylvania, to the effect that the reorganization
contemplated by this Agreement qualifies as a "reorganization" under Section
368 of the Code, and thus will not give rise to the recognition of income, gain
or loss for federal income tax purposes to the Corporation, the Fund, or the
shareholders of the Corporation or the Fund;
(d) The Corporation shall have received an opinion of Stradley, Ronon,
Stevens & Young, LLP, dated the Effective Date of the Reorganization, addressed
to and in form and substance satisfactory to the Corporation, to the effect
that (i) the Fund is duly formed as a business trust under the laws of the
State of Delaware; (ii) this Agreement and the reorganization provided for
herein and the execution and delivery of this Agreement have been duly
authorized and approved by all requisite action of the Fund and this Agreement
has been duly executed and delivered by the Fund and is a legal, valid and
binding agreement of the Fund in accordance with its terms; and (iii) the
shares of the Fund to be issued in the reorganization have been duly authorized
and, upon issuance thereof in accordance with this Agreement, will have been
validly issued and fully paid and will be non-assessable by the Fund;
(e) The Fund shall have received the opinion of Stradley, Ronon, Stevens &
Young, LLP, dated the Effective Date of the Reorganization, addressed to and in
form and substance satisfactory to the Fund, to the effect that: (i) the
Corporation is a corporation, duly organized and validly existing under the
laws of the State of Maryland; (ii) the Corporation is an open-end investment
company of the management type registered under the 1940 Act; and (iii) this
Agreement and the reorganization provided for herein and the execution and
delivery of this Agreement have been duly authorized and approved by all
requisite corporate action of the Corporation and this Agreement has been duly
executed and delivered by the Corporation and is a legal, valid and binding
agreement of the Corporation in accordance with its terms;
J-2
<PAGE>
(f) The shares of each Series and Class of the Fund are eligible for
offering to the public in those states of the United States and jurisdictions
in which the shares of their corresponding Series and Class of the Corporation
are presently eligible for offering to the public so as to permit the issuance
and delivery of shares contemplated by this Agreement to be consummated;
(g) This Agreement and the reorganization contemplated hereby shall have
been adopted and approved by the appropriate action of the shareholders of the
Corporation at an annual or special meeting or any adjournment thereof;
(h) The shareholders of the Corporation shall have voted to direct the
Corporation to vote, and the Corporation shall have voted, as sole shareholder
of the Fund, to:
(i) Elect as Trustees of the Fund the following individuals: Jeffrey J.
Nick, Walter P. Babich, John H. Durham, Anthony D. Knerr, Ann R. Leven,
Charles E. Peck, Thomas F. Madison, Wayne A. Stork, and Jan R. Yeomans;
(ii) Select Ernst & Young LLP as the independent auditors for the Fund
for the fiscal year ending October 31, 1999;
(iii) (A) With respect to each Series, if at the annual or special
meeting specified in paragraph (g) of this Section 3 (or any adjournment
thereof) the shareholders of a Series of the Corporation (x) approve a
proposal for a new investment management agreement ("New Investment
Management Agreement") between the current investment advisor to the Series
(the "Advisor") and the Corporation on behalf of such Series, approve an
investment management agreement between the Advisor and the Fund on behalf
of such Series that is substantially identical to the New Investment
Management Agreement, or (y) do not approve a proposal for a New Investment
Management Agreement between the Advisor and the Corporation on behalf of
such Series, approve an investment management agreement between the Advisor
and the Fund on behalf of such Series that is substantially identical to
the then-current investment management agreement between the Advisor and
the Corporation on behalf of such Series;
(B) With respect to each Series that is subject to a sub-advisory
agreement, if any, if at the annual or special meeting specified in
paragraph (g) of this Section 3 (or any adjournment thereof) the
shareholders of such Series of the Corporation (x) approve a proposal for a
new sub-advisory agreement ("New Sub-Advisory Agreement") between the
Advisor and the current sub-advisor (the "Sub-Advisor") with respect to the
assets of such Series, approve a New Sub-Advisory Agreement between the
Advisor and the Sub-Advisor with respect to the assets of such Series that
is substantially identical to the New Sub-Advisory Agreement, or (y) do not
approve a proposal for a New Sub-Advisory Agreement between the Advisor and
the Sub-Advisor, approve a sub-advisory agreement between the Advisor and
the Sub-Advisor with respect to the assets of such Series that is
substantially identical to the then-current sub-advisory agreement between
the Advisor and the Sub-Advisor with respect to the assets of such Series;
(i) The Trustees of the Fund shall have taken the following actions at a
meeting duly called for such purposes:
(i) Approval of the investment management agreements and the
sub-advisory agreements, if any, described in paragraph (h) of this Section
3 hereof for each Series of the Fund;
(ii) Approval of a distribution plan, if any, for each Class of each
Series of the Fund, as adopted pursuant to Rule 12b-1 under the 1940 Act,
that is substantially identical to the then-current distribution plan, if
any, as adopted pursuant to Rule 12b-1 under the 1940 Act for each Class of
each corresponding Series of the Corporation;
(iii) Approval of the assignment of the Corporation's Custodian
Agreement with The Chase Manhattan Bank to the Fund;
(iv) Selection of Ernst & Young LLP as the Fund's independent auditors
for the fiscal year ending October 31, 1999;
J-3
<PAGE>
(v) Approval of the Fund's Shareholders Services Agreement with Delaware
Service Company, Inc.;
(vi) Approval of the Fund Accounting Agreement with Delaware Service
Company, Inc. that covers the funds comprising the Delaware Investments
Family of Funds;
(vii) Approval of the Distribution Agreement between the Fund and
Delaware Distributors, L.P. on behalf of the Series and Classes;
(viii) Authorization of the issuance by the Fund, prior to the Effective
Date of the Reorganization, of one share of each Series and Class of the
Fund to the Corporation in consideration for the payment of $10.00 per
share for the purpose of enabling the Corporation to vote on the matters
referred to in paragraph (h) of this Section 3 hereof;
(ix) Submission of the matters referred to in paragraph (h) of this
Section 3 to the Corporation as sole shareholder of each Series of the
Fund; and
(x) Authorization of the issuance and delivery by the Fund of shares of
each Series and Class of the Fund on the Effective Date of the
Reorganization in exchange for the assets of the corresponding Series of
the Corporation pursuant to the terms and provisions of this Agreement.
At any time prior to the Closing, any of the foregoing conditions may be
waived by the Board of Directors of the Corporation if, in the judgment of
such Board, such waiver will not affect in a materially adverse way the
benefits intended to be accorded the shareholders of the Corporation under
this Agreement.
4. Termination.
The Board of Directors of the Corporation may terminate this Agreement and
abandon the reorganization contemplated hereby, notwithstanding approval
thereof by the shareholders of the Corporation, at any time prior to the
Effective Date of the Reorganization if, in the judgment of such Board, the
facts and circumstances make proceeding with this Agreement inadvisable.
5. Entire Agreement.
This Agreement embodies the entire agreement between the parties and there
are no agreements, understandings, restrictions or warranties among the parties
other than those set forth herein or herein provided for.
6. Further Assurances.
The Corporation and the Fund shall take such further action as may be
necessary or desirable and proper to consummate the transactions contemplated
hereby.
7. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument.
8. Governing Law.
This Agreement and the transactions contemplated hereby shall be governed
by and construed and enforced in accordance with the laws of the State of
Maryland.
J-4
<PAGE>
IN WITNESS WHEREOF, the Fund and the Corporation have each caused this
Agreement and Plan of Reorganization to be executed on its behalf by its
Chairman, President or a Vice President and attested by its Secretary or an
Assistant Secretary, all as of the day and year first-above written.
DELAWARE POOLED TRUST, INC.
(a Maryland Corporation)
Attest:
By:___________________________________ By____________________________________
George M. Chamberlain, Jr. Jeffrey J. Nick
Secretary President and Chief Executive
Officer
DELAWARE POOLED TRUST
(a Delaware business trust)
Attest:
By:___________________________________ By:___________________________________
Eric E. Miller Jeffrey J. Nick
Assistant Secretary President and Chief Executive
Officer
J-5
<PAGE>
APPENDIX
<TABLE>
<CAPTION>
Series and Classes of Delaware Pooled Trust, Inc. Corresponding Series and Classes of Delaware Pooled Trust
- --------------------------------------------------- ----------------------------------------------------------
<S> <C>
The Large-Cap Value Equity Portfolio The Large-Cap Value Equity Portfolio
The Mid-Cap Growth Equity Portfolio The Mid-Cap Growth Equity Portfolio
The International Equity Portfolio The International Equity Portfolio
The Intermediate Fixed Income Portfolio The Intermediate Fixed Income Portfolio
The Limited-Term Maturity Portfolio The Limited-Term Maturity Portfolio
The Global Fixed Income Portfolio The Global Fixed Income Portfolio
The International Fixed Income Portfolio The International Fixed Income Portfolio
The Mid-Cap Value Equity Portfolio The Mid-Cap Value Equity Portfolio
The High-Yield Bond Portfolio The High-Yield Bond Portfolio
The Labor Select International Equity Portfolio The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio The Real Estate Investment Trust Portfolio
The Real Estate Investment Trust Portfolio class The Real Estate Investment Trust Portfolio class
REIT Fund A Class REIT Fund A Class
REIT Fund B Class REIT Fund B Class
REIT Fund C Class REIT Fund C Class
REIT Fund Institutional Class REIT Fund Institutional Class
The Emerging Markets Portfolio The Emerging Markets Portfolio
The Global Equity Portfolio The Global Equity Portfolio
The Real Estate Investment Trust Portfolio II The Real Estate Investment Trust Portfolio II
The Aggregate Fixed Income Portfolio The Aggregate Fixed Income Portfolio
The Diversified Core Fixed Income Portfolio The Diversified Core Fixed Income Portfolio
The International Mid-Cap Sub Portfolio The International Mid-Cap Sub Portfolio
The Growth and Income Portfolio The Growth and Income Portfolio
The Small-Cap Growth Equity Portfolio The Small-Cap Growth Equity Portfolio
</TABLE>
J-6
<PAGE>
EXHIBIT K
COMPARISON AND SIGNIFICANT DIFFERENCES BETWEEN DELAWARE BUSINESS TRUSTS
AND MARYLAND CORPORATIONS
Unless otherwise defined in this Exhibit, capitalized
terms have the meanings set forth in Proposal Seven.
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ------------------- ---------------------------------------------------- -------------------------------------------------
<S> <C> <C>
GOVERNING DOCUMENTS -- Created by a governing instrument (which may -- A corporation's articles of incorporation must
consist of one or more instruments, including an be filed with the State Department of Assessments
agreement and declaration of trust and By-Laws) and Taxation of the State of Maryland in order to
and a Certificate of Trust, which must be filed form a Maryland corporation.
with the Delaware Secretary of State. The
Delaware Business Trust ("DBT") statutes found -- Under Maryland law, the business and affairs
at Del. Code. Ann. title Section12, ss.3801, et seq. of a corporation are governed by its articles of
are referred to in this chart as the "Delaware Act." incorporation and By-Laws (the "charter
documents"). A Board of Directors manages or
-- A DBT is an unincorporated association directs the business and affairs of a Maryland
organized under the Delaware Act which operates corporation.
similar to a typical corporation. A DBT's
operations are governed by a trust instrument and -- A Maryland corporation organized as an
By-Laws. The business and affairs of a DBT are open-end investment company is subject to the
managed by or under the direction of a Board of 1940 Act.
Trustees.
-- DBTs are organized as an open-end investment
company subject to the Investment Company Act
of 1940, as amended (the "1940 Act").
Shareholders own shares of "beneficial interest" as
compared to the shares of "common stock" issued
by corporations. There is however, no practical
difference between the two types of shares.
-- As described in this chart, DBTs are granted a
significant amount of organizational and
operational flexibility. The Delaware Act makes it
easier to obtain needed shareholder approvals, and
also permits management of a DBT to take
various actions without being required to make
state filings or obtain shareholder approval. The
Delaware Act also contains favorable limitations
on shareholder and Trustee liability, and provides
for indemnification out of trust property for any
shareholder or Trustee that may be held personally
liable for the obligations of a DBT.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-1
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- -------------------- ---------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
MULTIPLE SERIES AND -- Under the Delaware Act, a declaration of trust -- Maryland law permits a corporation to issue
CLASSES may provide for classes, groups or series of shares, one or more classes of stock and, if the stock is
or classes, groups or series of trustees or divided into classes, the charter is required to
shareholders, having such relative rights, powers describe each class, including any preferences,
and duties as the declaration of trust may provide. conversion or other rights, voting powers,
The series and classes of a DBT may be described in restrictions, limitations as to dividends,
the declaration of trust or in resolutions adopted qualifications and terms or conditions of
by the board of trustees. Neither state filings nor redemption. The charter documents which describe
shareholder approval is required to create series or a new series or classes, or a change to an existing
classes. The New Company's Agreement and Declaration series or class, are amendments to the fund's
of Trust (the "Declaration of Trust") permits the charter documents and must be filed with the State
creation of multiple series and classes and of Maryland. Although a charter amendment is
establishes the provisions relating to shares. involved, Maryland law allows a fund's board to
exchange, classify, reclassify, cancel any of its
-- The Delaware Act explicitly provides for a issued or unissued stock, or increase or decrease
reciprocal limitation of interseries liability. The the aggregate number of shares of stock without
debts, liabilities, obligations and expenses shareholder approval by filing Articles
incurred, contracted for or otherwise existing with Supplementary in the State of Maryland. Maryland
respect to a particular series of a multiple series law also permits a board to change the
investment company registered under the 1940 Act are preferences, conversion and other rights, voting
enforceable only against the assets of such series, powers, restrictions, limitation as to dividends,
and not against the assets of the trust, or any qualifications, and terms and conditions of
other series, generally, provided that: (i) the redemption of any of its issued or unissued stock
governing instrument creates one or more series; without shareholder approval.
(ii) separate and distinct records are maintained
for any such series; (iii) the series' assets are -- Maryland law does not contain specific
held and accounted for separately from the trust's statutory provisions addressing series liability with
other assets or any series thereof; (iv) notice of respect to a multiple series investment company;
the limitation on liabilities of the series is set however, if the stock of a corporation is divided
forth in the certificate of trust; and (v) the into classes, Maryland law requires the
governing instrument so provides. The Declaration of corporation's charter documents to set forth any
Trust for the New Company provides that each of its preferences or restrictions relating to such classes.
series shall not be charged with the liabilities of As a result, the Company's charter documents
any other series. Further, it states that any state that the liabilities of any series shall be
general assets or liabilities not readily charged only to the assets of that particular series.
identifiable as to a particular series will be
allocated or charged by the Trustees of the New -- The Articles of Incorporation and By-Laws of
Company to and among any one or more series in such the Company are consistent with Maryland law.
manner, and on such basis, as the Trustees deem fair
and equitable in their sole discretion. As required -- A court applying federal securities law may not
by the Delaware Act, the New Company's Certificate respect provisions that serve to limit the liability
of Trust specifically limits the debts, liabilities, of one series of an investment company's shares
obligations and expenses incurred, contracted for or for the liabilities of another series. Accordingly,
otherwise existing with respect to a particular provisions relating to series liability contained in
series of the New Company as enforceable against the the Company's charter documents may be
assets of that series of the New Company, and not preempted by the way in which the courts
against the assets of the New Company generally. interpret the 1940 Act.
<PAGE>
-- Use of the DBT structure could potentially
provide greater flexibility with respect to a "fund
of funds" operating format as compared with the
Maryland corporate structure. Under Maryland law,
when one series of a fund purchases shares issued by
another series of the same fund, the shares of the
purchased series are retired. Thus, it is
impractical for a fund organized as a Maryland
corporation to operate as a fund of funds when one
of its underlying funds is a series of the same
Maryland corporation. By comparison, under the New
Company's Declaration of Trust, as permitted by
Delaware law, any beneficial interest held by the
beneficial owners of a DBT that is acquired by such
DBT, by purchase, redemption or otherwise, is deemed
cancelled unless the governing documents provide
otherwise. The New Company's Declaration of Trust
contains this exemptive provision, and states that
any series may acquire, hold, sell or otherwise deal
in, for purposes of investment or otherwise, the
shares of any other series or shares. The
Declaration of Trust further provides that such
shares are not deemed cancelled. Thus, a DBT may
issue additional series to operate or separate
mutual funds which in turn would serve as underlying
investments for the fund of fund series.
-- A court applying federal securities law may not
respect provisions that serve to limit the liability
of one series of an investment company's shares for
the liabilities of another series. Accordingly,
provisions relating to series liability contained in
the Declaration of Trust may be preempted by the way
in which the courts interpret the 1940 Act.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-2
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ------------------- ---------------------------------------------------- -------------------------------------------------
<S> <C> <C>
SHAREHOLDER VOTING -- The governing instrument determines -- The charter of the Company, consistent with
RIGHTS AND PROXY shareholders' rights. The Declaration of Trust for Maryland law, provides that the holder of each
REQUIREMENTS the New Company provides that shareholders of share of stock of a fund is entitled to one vote for
record of each share are entitled to one vote for each full share, and a fractional vote for each
each full share, and a fractional vote for each fractional share of stock, irrespective of the series
fractional shares. In addition, shareholders are not or class. In addition, shareholders are not entitled
entitled to cumulative voting for electing a to cumulative voting for electing director(s) or for
trustee(s) or for any other matter. The Declaration any other matter. The charter of the Company
of Trust further provides that voting by the New further states that, on any matter submitted to a
Company will occur separately by series, and if vote of shareholders, all shares of the corporation
applicable, by class, subject to: (1) requirements of then issued and outstanding and entitled to vote,
the 1940 Act where shares of the Trust must be irrespective of series or class, shall be voted in the
voted in the aggregate without reference to series aggregate and not by series or class except when
or class, and (2) where the matter affects only a (1) otherwise expressly required by Maryland law;
particular series or class. (2) required by the 1940 Act; and/or (3) the matter
does not affect any interest of the particular series
-- The Delaware Act and By-Laws for the New or class, then only shareholders of the affected
Company also permits the New Company to series or class shall be entitled to vote thereon,
accept proxies by any electronic, telephonic, unless otherwise expressly provided in the
computerized, telecommunications or other corporation's charter.
reasonable alternative to the execution of a written
instrument authorizing the proxy to act, provided -- Maryland law permits shareholders to vote in
such authorization is received within eleven (11) person at the meeting or by proxy through a
months before the meeting. signed writing. The signature may be achieved
through any reasonable means including facsimile.
Although Maryland law permits certain telephone
solicitations, it currently does not provide the level
of flexibility available under the Delaware Act.
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' -- The governing instrument determines beneficial -- Maryland law provides for a special meeting
MEETINGS owners' rights to call meetings. The Declaration of upon the written request of 25% or more of all
Trust for the New Company provides that the eligible votes, unless the corporate charter or
Board of Trustees shall call shareholder meetings By-Laws contain a provision setting a greater or
for the purpose of (1) electing trustees, (2) taking lesser percentage (but not more than a majority) of
action upon matters prescribed by law, the votes necessary to call the special meeting. The
Declaration of Trust or By-Laws, or (3) taking Company's By-Laws are more favorable to
action upon any other matter deemed necessary or shareholders than Maryland law because they
desirable by the Board of Trustees. An annual require a special meeting upon the written request
shareholders' meeting is not required. of the holders of at least ten percent (10%) of the
capital stock of the corporation entitled to vote at
such meeting. Thus, it is easier for the
shareholders of the Company to call a special
meeting.
-- Under Maryland law, annual shareholder's
meetings of a registered investment company are
not required if the charter or By-Laws of the
company so provide; however, an annual meeting
is required to be held when the 1940 Act requires
the election of directors to be acted upon by
shareholders. The By-Laws of the Company are
consistent with Maryland law.
- ------------------------------------------------------------------------------------------------------------------------------------
QUORUM REQUIREMENT -- The Declaration of Trust of the New Company, -- Maryland law and the By-Laws of the
consistent with the Delaware Act, establishes a Company provide that the presence in person or
quorum when thirty-three and one-third percent by proxy of the holders of record of a majority of
(331/3%) of the shares entitled to vote are present the outstanding shares of stock entitled to vote
in person or by proxy. For purposes of constitute a quorum. Maryland law provides that
determining whether a quorum exists, the abstentions and broker non-votes are included and
Declaration of Trust provides that abstentions and treated as votes present at the meeting but are not
broker non-votes are included and treated as votes treated as votes cast.
present at the shareholders' meeting but are not
treated as votes cast.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-3
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ---------------- ---------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
ACTION WITHOUT -- Delaware law permits the governing instrument -- Under Maryland law, any action required to be
SHAREHOLDERS' to set forth the procedure whereby action required approved at a meeting of the shareholders may
MEETING to be approved by shareholders at a meeting may also be approved by the unanimous written
be done by consent. The Declaration of Trust for consent of the shareholders entitled to vote at such
the New Company allows an action to be taken meeting.
absent a shareholder meeting if the shareholders
having not less than the minimum number of votes
that would be necessary to authorize or take that
action at a meeting at which all shares entitled to
vote on the matter were present and voted, consent
to the action in writing.
- ------------------------------------------------------------------------------------------------------------------------------------
MATTERS REQUIRING -- The Delaware Act affords Trustees the ability -- Consistent with Maryland law, the Company's
SHAREHOLDER to easily adapt a DBT to future contingencies. For Articles of Incorporation require shareholder
APPROVAL example, Trustees may be authorized to approval by a majority of all votes entitled to be
incorporate a DBT to merge or consolidate with cast to approve the following: (1) amendments or
another entity, to cause multiple series of a DBT restatements of the articles; (2) reduction of stated
to become separate trusts, to change the domicile capital; (3) a consolidation, merger, share
or to liquidate a DBT, all without having to obtain exchange or transfer of assets, including a sale of
a shareholder vote. More importantly, in cases all or substantially all the assets of the
where funds are required or elect to seek corporation; (4) distribution in partial liquidation;
shareholder approval for transactions, the or (5) a voluntary dissolution. Unless the charter
Delaware Act provides great flexibility with provides for a lesser standard, Maryland law by
respect to the quorum and voting requirements for itself requires an affirmative vote of two-thirds
approval of such transactions. (2/3) of all votes entitled to be cast when approving
these extraordinary corporate transactions. The
-- The Declaration of Trust for the New Company's By-Laws provide that a majority of
Company, consistent with the Delaware Act, shares voting at the meeting is sufficient to
affords shareholders the power to vote on the approve other matters properly before shareholders
following matters: (1) the election of trustees except for an election of directors, which require a
(including the filling of any vacancies); (2) as plurality.
required by the Declaration of Trust, By-Laws, the
1940 Act or registration statement; and (3) other
matters deemed by the Board of Trustees to be
necessary or desirable.
-- The Declaration of Trust provides that when a
quorum is present, a majority of votes cast shall
decide any issues, and a plurality shall elect a
Trustee(s), unless a different vote is required by
the Declaration of Trust, By-Laws or under
applicable law.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-4
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- -------------------- ----------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
AMENDMENTS TO -- The Delaware Act provides broad flexibility -- Under Maryland law, the charter of a Maryland
GOVERNING DOCUMENTS with respect to amendments of governing corporation may be amended only (i) upon
documents of a DBT. The New Company's adoption of a resolution by the Directors which
Declaration of Trust states that, if shares have sets forth the proposed amendments; and (ii)
been issued, shareholder approval to adopt approval of the proposed amendment by the
amendments to the Declaration of Trust is only holders of a majority of the corporations
required if such adoption would adversely affect to outstanding shares entitled to vote. Maryland law
a material degree the rights and preferences of the does, however, permit investment companies to
shares of any series (or class) already issued. amend their charter documents without shareholder
Before adopting any amendment to the Declaration approval in order to create additional series or
of Trust relating to shares without shareholder classes of shares, increase or decrease the
approval, the Trustees are required to determine aggregate number of shares of stock that the
that the amendment is: (i) consistent with the fair corporation has authority to issue, or reflect
and equitable treatment of all shareholders, and changes in the names of the corporation, its series
(ii) shareholder approval is not required by the or classes. The Company's charter documents are
1940 Act or other applicable law. consistent with Maryland law. Because shareholder
approval is required for most other amendments to
-- The New Company's By-Laws may be adopted, amended charter documents, Maryland law is more
or repealed by the Board of Trustees. restrictive than the Delaware Act.
-- The By-Laws of a Maryland corporation may
also be amended. Maryland law provides that,
after the organizational meeting of the board of
directors, the power to adopt, alter or repeal the
By-Laws is vested in the shareholders, except to
the extent that the charter or By-Laws vest such
power in the board of directors. Consistent with
Maryland law, the Company's By-Laws provide
that they may be amended, altered or repealed by
the affirmative vote of the holders of a majority of
shares entitled to vote thereon, or by a majority of
the Board of Directors, as the case may be.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-5
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ----------------------- -------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
RECORD DATE -- The Delaware Act permits a governing -- Maryland law contains provisions by which a
instrument to contain provisions that provide for corporation may determine which shareholders are
the establishment of record dates for determining entitled to notice of a meeting, to vote at a
voting rights. meeting, or to any other rights. Maryland law
requires that the record date be not more than
-- The Declaration of Trust for the New Company ninety (90) days and not less than ten (10) days
provides that the Board of Trustees may fix in before the date on which the action requiring
advance a record date which shall not be more determination will be taken. If a Maryland
than one hundred eighty (180) days, nor less than corporation does not set a record date, Maryland
seven (7) days, before the date of any such law requires that the date be the later of: (1) thirty
meeting. The Declaration of Trust for the New (30) days before the meeting or (2) the close of
Company also establishes procedures by which a business on the day the notice was mailed.
record date can be set if the Board fails to Consistent with Maryland law, the Company's
establish a record date in accordance with the By-Laws allow the corporation to close the
above procedures. In such situations, the record transfer books twenty (20) days before a meeting
date for determining which shareholders are or set a date not more than ninety (90) days before
entitled to notice of or to vote at any meeting, a meeting for determining such rights.
is set at the close of business on the first
business day that precedes the day on which
notice is given or, if notice is waived, at the
close of business on the business day which is
five (5) days next preceding the day on which the
meeting is held. The Declaration of Trust
provides that the record date for determining
shareholders entitled to give consent to action
in writing without a meeting is determined in the
following manner; (i) when the Board of Trustees
has not taken prior action, the record date will
be set on the day on which the first written
consent is given; or (ii) when the Board of
Trustees has taken prior action, the record date
will be set at the close of business on the day
on which the Board of Trustees adopts the
resolution relating to that action or the
seventy-fifth (75th) day before the date of such
other action, whichever is later.
-- The By-Laws for the New Company provide that
all notices of shareholder meetings shall be sent
or otherwise given to shareholders not less than
seven (7) or more than ninety-three (93) days
before the date of the meeting.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
REMOVAL OF DIRECTORS/ -- The Delaware Act is silent with respect to the -- Under Maryland law, shareholders may remove
TRUSTEES removal of Trustees. However, the Declaration of a director with or without cause. Unless the
Trust states that the Board of Trustees, by action charter provides otherwise, Maryland law requires
of a majority of the then Trustees at a duly the affirmative vote of a majority of all votes
constituted meeting, may fill vacancies in the entitled to be cast for the election of directors to
Board of Trustees or remove Trustees with or remove a director. Unless the charter provides
without cause. otherwise, if a class or series is entitled to elect
one or more directors separately, such director
may not be removed without cause except by the
affirmative vote of a majority of all the votes of
that series or class. The Company's Articles of
Incorporation and By-Laws are silent regarding the
removal of directors.
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Pursuant to the By-Laws of the New Company, regular meetings of the Board of Trustees may be held without notice. Special
meetings of the Board of Trustees require at least seven (7) days notice, if given by United States mail, and at least
forty-eight (48) hours notice, if notice is delivered personally, by telephone, by courier, to the telegraph company, or by
express mail, facsimile, electronic mail or similar service.
</TABLE>
K-6
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ------------------- ---------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
SHAREHOLDER RIGHTS -- The Delaware Act sets forth the rights of -- Maryland law provides that during usual
OF INSPECTION shareholders to gain access to and receive copies business hours a shareholder may inspect and copy
of certain Trust documents and records. This right the following corporate documents: By-Laws;
is qualified by the extent otherwise provided in the minutes of shareholders meetings; annual
governing instrument of the Trust as well as a statements of affairs; and voting trust agreements.
reasonable demand standard related to the Moreover, one or more persons who together are,
shareholder's interest as an owner of the DBT. and for at least six months have been,
shareholders of record of at least five percent of
-- Consistent with Delaware law, the By-Laws of the outstanding stock of any class are entitled to
the New Company provide that at reasonable inspect and copy the corporations books of
times during office hours, a shareholder may account and stock ledger and to review a
inspect the share registry and By-Laws. The statement of affairs and a list of shareholders.
By-Laws further permit at any reasonable time
during usual business hours for a purpose
reasonably related to the shareholder's interests,
that a shareholder inspect and copy accounting
books and records and minutes of proceedings of
the shareholders and the Board of Trustees and
any committee or committees of the Board of
Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND OTHER -- The Delaware Act does not contain any -- Maryland law allows the payment of a
DISTRIBUTIONS statutory limitations on the payment of dividends dividend or other distribution unless, after giving
and other distributions. effect to the dividend or other distribution, (1)
the corporation would not be able to pay its debts
-- The New Company's By-Laws specify that the as they become due in the usual course of business
declaration of dividends is subject to the or (2) the corporations total assets would be less
Declaration of Trust and applicable law. In than the corporations total liabilities plus (unless
addition, the By-Laws provide that prior to the corporations charter provides otherwise) the
payment of dividends, the New Company may set amount that would be needed, if the corporation
aside a reserve(s) to meet contingencies, were to be dissolved at the time of the
equalizing dividends, repairing or maintaining distribution, to satisfy the preferential rights
property or for other purposes deemed by the upon dissolution of shareholders whose preferential
Trustees to be in the best interest of the New rights upon dissolution are superior to those
Company. receiving the distribution.
-- The Company's By-Laws provide that prior to
payment of dividends, the Company may set aside
a reserve to meet contingencies, equalizing
dividends, repairing, or maintaining property or for
other purposes deemed by the directors to be in
the best interest of the Company.
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER/BENEFICIAL -- Personal liability is limited by the Delaware -- As a general matter, the shareholders of a
OWNER LIABILITY Act to the amount of investment in the trust and Maryland corporation are not personally liable for
may be further limited or restricted by the the obligations of the corporation. Under Maryland
governing instrument. law, a shareholder of a Maryland corporation may,
however, be liable in the amount of any
-- Consistent with Delaware law, the Declaration distribution he or she accepts knowing that the
of Trust for the New Company provides that the distribution was made in violation of the
DBT, its trustees, officers, employees, and agents corporations charter or Maryland law. The charter
do not have the power to personally bind a for the Company is consistent with Maryland law.
shareholder. Shareholders of the DBT are entitled
to the same limitation of personal liability
extended to stockholders of a private corporation
organized for profit under the general corporation
law of the State of Delaware.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-7
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ------------------ ----------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
DIRECTOR/ TRUSTEE -- Subject to the declaration of trust, the -- Maryland law requires a director to perform his
LIABILITY Delaware Act provides that a trustee, when acting or her duties in good faith, in a manner he or she
in such capacity, may not be held personally liable reasonably believes to be in the best interests of
to any person other than the DBT or a beneficial the corporation and with the care that an ordinarily
owner for any act, omission, or obligation of the prudent person in a like position would use under
DBT or any trustee. A trustees duties and similar circumstances. A director who performs his
liabilities to the DBT and its beneficial owners or her duties in accordance with this standard has
may be expanded or restricted by the provisions of no liability by reason of being or having been a
the declaration of trust. director. If it is established that a director did not
meet the foregoing standard, the director, for
-- The Declaration of Trust for the New Company example, may be personally liable to the
provides that the Trustees shall not be liable or corporation for (i) voting or assenting to a
responsible in any event for any neglect or distribution of assets to shareholders which is in
wrongdoing of any officer, agent, employee, violation of either the Company's charter
manager or principal underwriter of the New documents or Maryland law; and (ii) voting or
Company, nor shall any Trustee be responsible for assenting to a repurchase of the corporations
the act or omission of any other Trustee. In shares in violation of Maryland law. Maryland law
addition, the Declaration of Trust also provides as well as the Company's charter documents
that the Trustees acting in their capacity as provide that to the fullest extent that liability is
Trustees, shall not be personally liable for acts limited under Maryland law, no director or officer
done by or on behalf of the New Company. will be liable to the corporation or its shareholders
for damages; however, the charter documents do
not limit a director's liability in circumstances
where said director would otherwise be subject to
liability by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of
one's duties.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-8
<PAGE>
<TABLE>
<CAPTION>
DELAWARE BUSINESS TRUST MARYLAND CORPORATION
- ---------------- ------------------------------------------------------- ----------------------------------------------------
<S> <C> <C>
INDEMNIFICATION -- The Delaware Act permits a DBT to indemnify -- Under Maryland law, a director or officer who
and hold harmless any trustee, beneficial owner or is threatened or made a party to a proceeding, may
agent from and against any and all claims and be indemnified against judgments, penalties, fines,
demands. Consistent with the Delaware Act, both settlements and reasonable expenses actually
the Declaration of Trust and By-Laws for the New incurred by the director in connection with the
Company provides for the indemnification of proceeding. Indemnification will not be permitted
officers and trustees from and against any and all if the act or omissions of the Director or officer:
claims and demands arising out of or related to the (1) was material to the matter giving rise to the
performance of duties as an officer or Trustee. The proceeding and was committed in bad faith or the
New Company will not indemnify, hold harmless result of active and deliberate dishonesty; (2)
or relieve from liability trustees or officers for resulted in an improper benefit to the individual;
those acts or omissions for which they are liable if or (3) was committed when the director or officer
such conduct constitutes willful misfeasance, bad had reasonable cause to believe that the act or
faith, gross negligence or reckless disregard of omission was unlawful.
their duties. In addition, the New Company's
By-Laws provide that a trustee is not entitled to
indemnification from liability: (i) with respect to
any claim, issue or matter as to which such trustee
shall have been adjudged to be liable in the
performance of his or her duty to the New
Company, unless the court in which that action
was brought shall determine that the trustee is
fairly and reasonably entitled to indemnity; or (ii)
with respect to any claim, issue or matter as to
which the trustee shall have been adjudged to be
liable on the basis that personal benefit was
improperly received by the trustee, whether or not
the benefit resulted from an action taken in the
trustee's official capacity; or (iii) with respect to
amounts paid in settling or otherwise disposing of
a threatened or pending action which settled or
was otherwise disposed of without court approval,
unless the New Company's Board of Trustees has
found that the trustee has acted in accordance with
the appropriate standard of conduct.
-- The Declaration of Trust also provides that any
shareholder or former shareholder that is exposed
to liability by reason of a claim or demand related
to having been a shareholder, and not because of
his or her acts or omissions, shall be entitled or
beheld harmless and indemnified out of the assets
of the DBT.
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE -- The Delaware Act does not contain a provision -- Under Maryland Law, a corporation may
specifically related to insurance. The Trust's purchase insurance on behalf of any director,
Declaration of Trust provides that the Trustees officer or employee against any liability asserted
shall be entitled and have the authority to purchase against and incurred by such person in any such
with Trust assets insurance for liability and for all capacity or arising out of such persons position,
expenses reasonably incurred or paid or expected whether or not the corporation would have the
to be paid by a Trustee or officer in connection power to indemnify such person against such
with any claim, or proceeding in which he or she liability. Under Maryland law, insurance also may
becomes involved by virtue of his or her capacity be purchased under the corporate by-laws on
(or former capacity) with the Trust. The By-Laws behalf of agents of a fund. The Company's
of the New Company permit such insurance By-Laws are silent with respect to this issue.
coverage to extend to employees and other agents
of the DBT.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
K-9
<PAGE>
DELAWARE
INVESTMENTS
===========
DELAWARE INVESTMENTS
1818 MARKET STREET
PHILADELPHIA, PA 19103
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The Undersigned
hereby appoints Jeffrey J. Nick and David K. Downes, or any of them, with the
right of substitution, proxies of the undersigned at the Annual/Special
Meeting of Shareholders of the above Fund to be held at The Union League, 140
South Broad Street, Philadelphia, Pennsylvania, on March 17, 1999 at 10:00
A.M., or at any postponement or adjournments thereof, with all the powers
which the undersigned would possess, if personally present, and instructs them
to vote upon any matters which may properly be acted upon at this meeting and
specifically as indicated on the lower portion of this form. Please refer to
the proxy statement for a discussion of each of these matters.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
<PAGE>
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: DELA12 KEEP THIS PORTION FOR YOUR RECORDS
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Vote On Directors
1. To elect the following nominees as Directors of the Company For Withhold For All To withhold authority to vote, mark
01) JEFFREY J. NICK 06) THOMAS F. MADISON All All Except "For All Except" and write the
02) WALTER P. BABICH 07) CHARLES E. PECK nominees's number on the line below.
03) JOHN H. DURHAM 08) WAYNE A. STORK
04) ANTHONY D. KNERR 09) JAN R. YEOMANS / / / / / / _____________________________________
05) ANN R. LEVEN
Vote on Proposals For Against Abstain For Against Abstain
2. To approve the redesignation of the 3G. To redesignate all current
Fund's investment objective from / / / / / / fundamental investment / / / / / /
fundamental to non-fundamental restrictions as non-fundamental
3. To approve standardized fundamental 4. To approve a new investment
investment restrictions for the management agreement for the Fund / / / / / /
Fund (proposal involves separate
votes on sub-proposals 3A-3G) 5. To approve a new sub-advisory
agreement for the Fund / / / / / /
3A. To adopt a new fundamental
investment restriction concerning / / / / / / 6. To ratify the selection of Ernst &
concentration of the Fund's Young LLP, as independent auditors / / / / / /
investments in the same industry for the Company
3B. To adopt a new fundamental 7. To approve the restructuring of the
investment restriction concerning / / / / / / Company from a Maryland corporation / / / / / /
borrowing money and issuing into a Delaware busines trust
senior securities
3C. To adopt a new fundamental
investment restriction concerning / / / / / /
underwriting
3D. To adopt a new fundamental investment
restriction concerning investments / / / / / /
in real estate PLEASE DATE AND SIGN NAME OR NAMES
BELOW AS PRINTED ABOVE TO AUTHORIZE
3E. To adopt a new fundamental investment THE VOTING OF YOUR SHARES AS
restriction concerning investments / / / / / / INDICATED ABOVE, WHERE SHARES ARE
in commodities REGISTERED WITH JOINT OWNERS, ALL
OWNERS SHOULD SIGN. PERSONS SIGNING
3F. To adopt a new fundamental AS EXECUTOR, ADMINISTRATOR, TRUSTEE
investment restriction concerning / / / / / / OR OTHER REPRESENTATIVE SHOULD GIVE
lending by the Fund FULL TITLE AS SUCH.
- ------------------------------------------ ------------------------------------------
- ------------------------------------------ ------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
</TABLE>