SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTIONProxy Statement Pursuant to Section 14(a) OF THE SECURITIES EXCHANGE ACT OFof the
Securities Exchange Act of 1934 (AMENDMENT NO.(Amendment No. )
Filed by the Registrant [X]/X/
Filed by a Party other than the Registrant [ ]/ /
Check the appropriate box:
[X]/X/ Preliminary Proxy Statement
[ ]/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ]/ / Definitive Proxy Statement
[ ]/ / Definitive Additional Materials
[ ]/ / Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Voyageur Tax Free Funds, Inc.
Voyageur Intermediate Tax Free Funds, Inc.
Voyageur Insured Funds, Inc.
Voyageur Investment Trust
Voyaguer Investment Trust II
Voyaguer Mutual Funds, Inc.
Voyageur Mutual Funds II, Inc.
Voyageur Mutual Funds III, Inc.
---------------------------------------------------VOYAGEUR FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in itsIts Charter)
[Insert Name]
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ]/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.
[X] No fee required.
(1)1) Title of each class of securities to which transaction applies:
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(2)----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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(3)----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set(set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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(5)----------------------------------------------------------------------
5) Total fee paid:
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[ ]----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1)1) Amount Previously Paid:
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(2)___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
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(3)___________________________________________________________________________
3) Filing Party:
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(4)___________________________________________________________________________
4) Date Filed:
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[PRELIMINARY COPY]___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VOYAGEUR TAX FREEINSURED FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VOYAGEUR MUTUAL FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VOYAGEUR MUTUAL FUNDS II, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VOYAGEUR MUTUAL FUNDS III, INC.
90- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VOYAGEUR TAX FREE FUNDS, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
LOGO
January 28, 1998
Dear Shareholder:
A Joint Meeting of Shareholders of certain funds within the Delaware Investments
family of funds is being held in Philadelphia on March 17, 1999. This proxy
statement relates to funds that were previously part of the Voyageur fund
family. We ask that you take the time to review the enclosed proxy statement and
provide us with your vote on the important issues affecting your fund.
The enclosed proxy statement describes eight separate proposals that affect some
or all of the funds. In addition to the election of Board members and
ratification of the selection of auditors, the proposals include a change in the
designation of investment objectives from "fundamental" to non-fundamental, a
change in the fundamental policy concerning diversification of investments,
approval of new, standardized investment management agreements which contain fee
increases, fee decreases or potential fee decreases, and approval of new,
standardized sub-advisory agreements. Also, new standardized "fundamental"
investment restrictions are proposed for the funds and the current restrictions
are proposed to be made "non-fundamental." The proposed changes will allow the
Boards to modify the objectives and "non-fundamental" restrictions in the future
without the delay and expense of holding a shareholder meeting. Finally,
shareholders are being asked to approve management's proposal to reorganize the
funds into Delaware business trusts to take advantage of various advantages
under Delaware law.
We realize that this proxy statement will take time to review, but your vote is
very important. Please familiarize yourself with the proposals presented and
mark, sign and return your proxy card (or cards) in the enclosed postage-paid
envelope. You may also call toll-free to vote by telephone, or you may vote
using the Internet. The insert accompanying this proxy statement describes how
to vote using these methods.
If we do not receive your completed proxy card(s) after several weeks, you may
be contacted by our proxy solicitor, Shareholder Communications Corporation, who
will remind you to vote your shares and will review with you the various ways in
which you can register your vote.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
LOGO
Jeffrey J. Nick
Chairman and President
Chief Executive Officer
i
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
We encourage you to read the attached proxy statement in full; however, the
following are some typical questions that shareholders might have regarding this
proxy statement.
Q: WHY IS DELAWARE INVESTMENTS SENDING ME THIS PROXY STATEMENT?
Investment companies are required to obtain shareholders' votes for certain
types of action. As a shareholder, you have a right to vote on certain major
policy decisions, such as those included here.
Q: WHAT ARE THE ISSUES CONTAINED IN THIS PROXY STATEMENT?
There are eight different proposals presented here and they are outlined in the
Notice at the beginning of the proxy statement. The Notice describes which
proposals apply to which funds.
Q: HOW WOULD THE BROAD-BASED PROPOSALS AFFECT ME AS A FUND SHAREHOLDER?
o Changing the designation of a fund's investment objective from
"fundamental" to "non-fundamental" would allow the a Fund's Board of
Directors, without additional shareholder approval, to make future
adjustments to the investment objective to give greater flexibility to
respond to market, regulatory or industry changes. Approval of this change
would not alter any fund's current investment objective.
o Allowing certain state - specific tax-free funds to change their
diversification status from diversified to non-diversified would give those
funds greater flexibility in selecting appropriate investments from a
smaller universe of available choices.
o Adopting a standardized list of "fundamental" investment restrictions
across all funds would help provide operational efficiencies and make it
easier to monitor compliance with these restrictions.
o Converting all existing investment restrictions to "non-fundamental" would
allow a Fund's Board of Directors to analyze and approve changes to the
fund's existing investment restrictions, without additional shareholder
approval, to further the goal of standardization of investment
restrictions.
o Approval of the proposed fee increases, fee decreases or fee breakpoints
for certain funds would ensure management fee levels that will enable those
funds to continue to receive high quality investment management services.
o Approval of new standardized investment management agreements for each fund
(and standardized sub-advisory agreements where applicable) would help
provide operational efficiencies.
o The reorganization of funds from Minnesota corporations into Delaware
business trusts would provide both consistency across the Delaware
Investments fund family and flexibility of fund operations.
Q: HOW DO THE BOARD MEMBERS FOR MY FUND RECOMMEND THAT I VOTE?
The Board members for all the funds recommend that you vote in favor of, or FOR,
all of the proposals described above.
Q: WHOM DO I CALL FOR MORE INFORMATION ON HOW TO PLACE MY VOTE?
Please call your fund at 1-800-523-1918 or call Shareholder Communications at
1-800-858-0073 for additional information on how to place your vote.
PLEASE VOTE
YOUR VOTE IS IMPORTANT
ii
LOGO
1818 Market Street
Philadelphia, PA 19103
Combined Proxy Statement and
Notice of Joint Annual/Special Meeting of Shareholders
to be Held on March 17, 1999
To the Shareholders of:
Voyageur Funds, Inc. Voyageur Mutual Funds II, Inc.
Delaware-Voyageur US Government Securities Fund Delaware-Voyageur Tax-Free Colorado Fund
Voyageur Insured Funds, Inc. Voyageur Mutual Funds III, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Aggressive Growth Fund
Delaware-Voyageur Minnesota Insured Fund Growth Stock Fund
Voyageur Intermediate Tax Free Funds, Inc. Tax-Efficient Equity Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund Voyageur Tax Free Funds, Inc.
Voyageur Mutual Funds, Inc. Delaware-Voyageur Tax-Free Minnesota Fund
Delaware Voyageur Tax-Free Arizona Fund Delaware-Voyageur Tax-Free North Dakota Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Minnesota High Yield Municipal Bond
Fund
Delaware-Voyageur Tax-Free New York Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
This is your official Notice that a Joint Annual/Special Meeting of Shareholders
of each open-end registered investment company within the Delaware Investments
family listed in bold faced type above (each a "Company") will be held on
Wednesday, March 17, 1999 at 10:00 a.m. at the Union League, 140 South SeventhBroad
Street, Minneapolis,Philadelphia, Pennsylvania. Each separate fund within a Company may be
referred to as a "Fund." The purpose of the meeting is to consider and act upon
the following Proposals and Sub-Proposals that apply either to particular
Companies or Funds, and to transact any other business that properly comes
before the meeting and any adjournments thereof.
Proposal One: To Elect a Board of Directors for the Company
Proposal One applies to all Companies.
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective
from Fundamental to Non-Fundamental
Proposal Two applies to all Funds
Proposal Three: To Approve a Change in the Fund's Fundamental Policy
Concerning Diversification of Investments
Proposal Three only applies to the following Funds:
Voyageur Insured Funds, Inc. Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Delaware-Voyageur Tax-Free Colorado Fund
Delaware-Voyageur Minnesota Insured Fund Voyageur Tax Free Funds, Inc.
Voyageur Intermediate Tax Free Funds, Inc. Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Proposal Four: To Approve Standardized Fundamental Investment Restrictions for
the Fund (Includes Seven Sub-Proposals)
iii
4A: Industry Concentration 4E: Investing in Commodities
4B: Borrowing Money and Issuing Senior 4F: Making Loans
Securities 4G: Redesignation of all Current Fundamental
4C: Underwriting of Securities Investment Restrictions as Non-Fundamental
4D: Investing in Real Estate
Proposal Four applies to all Funds.
Proposal Five: To Approve a New Investment Management Agreement for the Fund
Proposal Five applies to all Funds.
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund
Proposal Six only applies to the following Funds:
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund
Voyageur Mutual Funds III, Inc.
Growth Stock Fund
Proposal Seven: To Ratify the Selection of Ernst & Young LLP as Independent
Auditors for the Company
Proposal Seven applies to all Companies.
Proposal Eight: To Approve the Restructuring of the Company from a Minnesota
55402
NOTICECorporation into a Delaware Business Trust
Proposal Eight applies to all Companies.
Please note that a separate vote is required for each Proposal or Sub-Proposal
that applies to your Company or your Fund. Please vote your Proxy promptly to
avoid the need for further mailings. Your vote is important.
LOGO
Jeffrey J. Nick
Chairman, President and Chief Executive Officer
TABLE OF CONTENTS
Page
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NOTICE OF JOINT ANNUAL/SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
Proposal One: To Elect a Board of Directors for the Company
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective from
Fundamental to Non-Fundamental
Proposal Three: To Approve a Change in the Fund's Fundamental Policy Concerning
Diversification of Investments
Proposal Four: To Approve Standardized Fundamental Investment Restrictions for the Fund
(Includes Seven Sub-Proposals)
4A: Investing in Concentration
4B: Borrowing Money and Issuing Senior Securities
4C: Underwriting of Securities
4D: Investing in Real Estate
4E: Investing in Commodities
4F: Making Loans
4G: Resdesignation of all Current Fundamental Investment Restrictions
as Non-Fundamental
Proposal Five: To Approve a New Investment Management Agreement for the Fund
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund
Proposal Seven: To Ratify the Selection of Ernst & Young LLP as Independent Auditors
for the Company
Proposal Eight: To Approve the Restructuring of the Company from a Minnesota
Corporation Into a Delaware Business Trust and the Dissolution of the
Minnesota Corporation
EXHIBITS
Exhibit A: Outstanding Shares as of Record Date A-1
Exhibit B: Shareholders Owning 5% or More of a Fund as of October 31, 1998 B-1
Exhibit C: Executive Officers of the Companies C-1
Exhibit D: Shareholdings by Directors and Nominees in the Delaware
Investments Funds as of October 31, 1998 D-1
Exhibit E: Lists of Current Fundamental Investment Restrictions E-1
Exhibit F: Information Relating to Investment Management and
Sub-Advisory Agreements F-1
Exhibit G: Actual and Hypothetical Expense Tables G-1
Exhibit H: Similar Funds Managed by the Investment Managers and Sub-Advisers H-1
Exhibit I: Form of Investment Management Agreement I-1
Exhibit J: Form of Sub-Advisory Agreement J-1
Exhibit K: Form of Agreement and Plan of Reorganization K-1
Exhibit L: Comparison and Significant Differences for Delaware Business Trusts L-1
and Minnesota Corporations
LOGO
1818 Market Street
Philadelphia, PA 19103
1-800-523-1918
PROXY STATEMENT
JOINT ANNUAL/SPECIAL JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 11, 1997
A special joint meeting of shareholders will be held at 9:00 a.m. on
Friday, April 11, 1997 at [90 SOUTH SEVENTH STREET, SUITE 4400, MINNEAPOLIS,
MINNESOTA 55402] for the following mutual funds (individually a "Fund" and
collectively the "Funds"), each of which is a series of one of the registered
investment companies listed above (individually a "Company" and collectively the
"Companies"):
VOYAGEUR TAX FREE FUNDS, INC.
Minnesota Tax Free Fund
North Dakota Tax Free Fund
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
Minnesota Limited Term Tax Free Fund
National Limited Term Tax Free Fund
VOYAGEUR INSURED FUNDS, INC.
Arizona Insured Tax Free Fund
Minnesota Insured Fund
National Insured Tax Free Fund
VOYAGEUR INVESTMENT TRUST
California Insured Tax Free Fund
Florida Insured Tax Free Fund
Florida Tax Free Fund
Kansas Tax Free Fund
Missouri Insured Tax Free Fund
New Mexico Tax Free Fund
Oregon Insured Tax Free Fund
Utah Tax Free Fund
Washington Insured Tax Free Fund
VOYAGEUR INVESTMENT TRUST II
Florida Limited Term Tax Free Fund
VOYAGEUR MUTUAL FUNDS, INC.
Arizona Tax Free Fund
California Tax Free Fund
Iowa Tax Free Fund
Idaho Tax Free Fund
Minnesota High Yield Municipal Bond Fund
National High Yield Municipal Bond Fund
National Tax Free Fund
New York Tax Free Fund
Wisconsin Tax Free Fund
VOYAGEUR MUTUAL FUNDS II, INC.
Colorado Tax Free Fund
VOYAGEUR MUTUAL FUNDS III, INC.
Aggressive Growth Fund
Growth Stock Fund
Growth and Income Fund
International Equity FundMARCH 17, 1999
Meeting Information. The meeting will be held for the following purposes:
1. For shareholders of each Company to elect a Board of Directors or Trustees.
2. For shareholders of each Fund to approve a new Investment
Advisory Agreement, except for International Equity Fund,
National Insured Tax Free Fund, National Limited Term Tax Free
Fund, National Tax Free Fund and Growth and Income Fund.
3. For shareholders of Growth Stock Fund only, to approve a
Sub-Advisory Agreement.
4. For shareholders of each of International Equity Fund,
National Insured Tax Free Fund, National Limited Term Tax Free
Fund and National Tax Free Fund, to approve the liquidation of
their respective Fund and the distribution of such Fund's net
assets to shareholders. For each Fund, approval of the
liquidation will be considered approval of an amendment to the
articles of incorporation of such Fund's Company required to
effect the liquidation.
5. For shareholders of Growth and Income Fund, a series of
Voyageur Mutual Funds III, Inc., to approve an Agreement and
Plan of Reorganization pursuant to which all of the assets of
the Fund would be acquired by a newly formed series of VAM
Institutional Funds, Inc., also called Growth and Income Fund
("New Growth and Income Fund") and shareholders of the Fund
would become shareholders of New Growth and Income Fund. A
vote in favor of the Plan will be considered a vote in favor
of an amendment to the articles of incorporation of Voyageur
Mutual Funds III required to effect the Plan.
6. For shareholders of each Company, to ratify the Board of
Directors'/Trustees' selection of _______________ as the
independent public accountants of such Company for the current
fiscal year.
7. To transact such other business as may properly come before
the meeting.
EACH COMPANY'S BOARD OF DIRECTORS OR TRUSTEES UNANIMOUSLY RECOMMENDS
APPROVAL OF EACH ITEM LISTED ON THIS NOTICE OF SPECIAL MEETING OF SHAREHOLDERS.
Shareholders of record on February 10, 1997 are the only persons
entitled to notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. We hope you
can attend. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE UPCOMING MEETING,
PLEASE FILL IN, SIGN, DATE AND MAIL THE ENCLOSED PROXY OR PROXIES AS PROMPTLY AS
POSSIBLE IN ORDER TO SAVE FURTHER SOLICITATION EXPENSE. WE RESPECTFULLY ASK FOR
YOUR COOPERATION IN RETURNING YOUR PROXY PROMPTLY. A stamped return envelope is
included for your convenience. If you are present at the meeting, you may then
revoke your proxy and vote in person, as explained in the Proxy Statement in the
section entitled "SPECIAL JOINT MEETING OF SHAREHOLDERS--APRIL 11, 1997."
Dated: February 21, 1997 Thomas J. Abood
Secretary
[PRELIMINARY COPY]
PROXY STATEMENT
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
SPECIAL JOINT MEETING OF SHAREHOLDERS--APRIL 11, 1997
The enclosed proxy is solicited by the Board of Directors or Trustees
(hereafter referred to as "Board of Directors") of each open-end registered
investment company within the Delaware Investments family listed above (individuallyon the
accompanying Notice (each a "Company" and collectively) is soliciting your proxy to be voted at
the "Companies")
in connection with a special joint meetingJoint Annual/Special Meeting of shareholders of each CompanyShareholders to be held on April 11, 1997, andWednesday, March
17, 1999 at 10:00 a.m. at the Union League, 140 South Broad Street,
Philadelphia, Pennsylvania or any adjournments thereof (theof the meeting (hereafter, the
"Meeting").
Purpose of Meeting. The seriespurpose of the Meeting is to consider a number of
Proposals and Sub-Proposals that either apply to particular Companies, or to
individual funds within the Companies (each a "Fund"). The Proposals and
Sub-Proposals, as well as the Companies or Funds to which they apply, are listed
in the accompanying Notice.
The Board of Directors urges you to complete, sign and return the Proxy Card (or
Cards) included with this Proxy Statement, or use one of the other voting
methods described in the insert accompanying this Proxy Statement, whether or
not you intend to be present at the Meeting. It is important that you return the
signed Proxy Card(s) or use one of the other voting methods described in the
insert accompanying this Proxy Statement, promptly to help assure a quorum for
the Meeting.
General Voting Information. The persons designated on the Proxy Card as proxies
will vote your shares as you instruct on each Proxy Card. If your signed Proxy
Card is returned without any voting instructions, your shares will be voted
"FOR" each of the nominees for election as Director and "FOR" each other
Proposal or Sub-Proposal concerning your Company or Fund. The persons designated
as proxies will also be authorized to vote in their discretion on any other
matters which may come before the Meeting. If you sign and return a Proxy Card,
you may still attend the Meeting to vote your shares in person. If your shares
are held of record by a broker-dealer and you wish to vote in person at the
Meeting, you should obtain a Legal Proxy from your broker of record and present
it at the Meeting. You may also revoke your proxy at any time before the
Meeting: (i) by notifying Delaware Investments in writing; (ii) by submitting a
later signed Proxy Card; or (iii) by voting your shares in person at the
Meeting.
Each shareholder may cast one vote for each full share and a partial vote for
each partial share of a Fund or Company that they own on the record date, which
is January 18, 1999. Exhibit A shows the number of shares of each Fund and
Company that were outstanding on the record date and Exhibit B lists the
shareholders who own 5% or more of each Fund. It is expected that this Proxy
Statement and the accompanying Proxy Card(s) will be mailed to shareholders of
record on or about January 28, 1999.
This proxy solicitation is being made largely by mail, but may also be made by
officers or employees of the Companies (individually a "Fund"or their investment managers or
affiliates, through telephone, facsimile, oral or other communications.
Shareholders may provide proxy instructions by returning their Proxy Card by
mail or fax and collectivelymay also communicate proxy instructions through the "Funds"Internet or
by telephone via touch-tone voting. Delaware Management Company ("DMC") are set
forth in, the
table below. The costs of solicitation, including the cost of
preparing and mailing the Notice of Meeting of Shareholders and this Proxy
Statement, will be borne by Lincoln National Corporation ("LNC") and will not be
an expenseinvestment manager for each of the Funds, and the mailing will take place on approximately
February 21, 1997. Representatives of Voyageur Fund Managers, Inc. ("VFM"), the
current investment adviser of each Fund, may, without cost to the Funds, solicit
proxies on behalf of management ofitself and the Funds by means of mail, telephone or
personal calls. The address of VFM is that of the Companies, as listed above. VFM
has engaged Shareholder Communications Corporation ("SCC") to assist in the
solicitation. Representatives of SCC may telephone shareholders who have not
voted, encouraging them to vote. The estimated cost of engaging SCC, all of
which will be paidshared by LNCDMC
and the Companies, is set forth below:
Range
-----
Voyageur Funds, Inc..................................................................................$_____ to $_____
Voyageur Insured Funds, Inc..........................................................................$_____ to $_____
Voyageur Intermediate Tax Free Funds, Inc............................................................$_____ to $_____
Voyageur Mutual Funds, Inc...........................................................................$_____ to $_____
Voyageur Mutual Funds II, Inc........................................................................$_____ to $_____
Voyageur Mutual Funds III, Inc.......................................................................$_____ to $_____
Voyageur Tax Free Funds, Inc.........................................................................$_____ to $_____
Votes Required to Approve each Proposal or Sub-Proposal. Three Proposals within
this Proxy Statement affect all shareholders of a Company as a whole, regardless
of whether or not by your Fund, is $_____.
A proxy may be revoked before the Meeting by giving written noticeCompany consists of revocation to the Secretarya number of the applicable Company, or at the Meeting prior
to voting. Unless revoked, properly executed proxies in which choicesindividual Funds. These
Proposals are not
specified by the shareholders will be voted "for" each item for which no choice
is specified, in accordance with the recommendation of the applicable Company's
Board of Directors. In instances where choices are specified by the shareholders
in the proxy, those proxies will be voted or the vote will be withheld in
accordance with the shareholder's choice. With regard to the election of directors,Directors, the ratification of the selection of
the independent auditors and the reorganization of the Company
from a Minnesota corporation to a Delaware business trust. All shareholders of a
Company will vote together on these Proposals. The remaining Proposals or
Sub-Proposals contained in this Proxy Statement only affect particular Funds
and, therefore, only shareholders of those Funds are permitted to vote on those
Proposals or Sub-Proposals.
The amount of votes may be cast in favorof a Company or withheld; votesFund that are withheldneeded to approve the
different Proposals or Sub-Proposals varies. The voting requirements are
described within each Proposal or Sub-Proposal.
Abstentions and broker non-votes will be excluded entirely from the vote and will have no effect. Abstentions may be
specified on all proposals other than the election of directors and will be
counted as presentincluded for purposes of determining
whether a quorum of shares is present at the Meeting. They will be treated as votes
present at the Meeting, with respect to the itembut will not be treated as votes cast. They therefore
would have no effect on Proposals which the abstention is
noted, and willrequire a plurality or majority of votes
cast for approval, but would have the same effect as a vote "against" such item. Under"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 Rulesvarious Proposals.) DMC will reimburse banks, brokers or dealers for
their reasonable expenses in forwarding soliciting materials to shareholders.
Each Fund's most recent Annual Report and Semi-Annual Report to Shareholders
were previously mailed to shareholders. Copies of these reports are available
upon request, without charge, by writing or calling the Funds at the address and
telephone number shown on the top of the New York Stock Exchange, ifprevious page of the Proxy Statement.
Proposal One: To Elect a proposal is considered
"non-discretionary," then brokers who hold Fund shares in street name for
customers are not authorized to vote on such proposal on behalf of their
customers who have not furnished the broker specific voting instructions. If a
broker returns a "non-vote" proxy, indicating a lack of authority to vote on a
proposal, then the shares covered by such non-vote shall not be counted as
present for purposes of calculating the vote with respect to such proposal. So
far as the Board of Directors is aware, no matter other than those described in
this Proxy Statement will be acted upon at the Meeting. Should any other matters
properly come before the Meeting calling for a vote of shareholders, it is the
intention of the persons named as proxies in the enclosed proxy to act upon such
matters according to their best judgment.
Only shareholders of record of each Fund on February 10, 1997, may vote
at the Meeting or any adjournment thereof. As of that date, there were issued
and outstanding common shares of each Fund (shares of beneficial interest with
respect to series of Voyageur Investment Trust and Voyageur Investment Trust II)
as follows:
Common Shares
-------------
VOYAGEUR TAX FREE FUNDS, INC.
Minnesota Tax Free Fund ("Minnesota Fund")
North Dakota Tax Free Fund ("North Dakota Fund")
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
Minnesota Limited Term Tax Free Fund ("Minnesota Limited Term Fund")
National Limited Term Tax Free Fund ("National Limited Term Fund")
VOYAGEUR INSURED FUNDS, INC.
Arizona Insured Tax Free Fund ("Arizona Insured Fund")
Minnesota Insured Fund ("Minnesota Insured Fund")
National Insured Tax Free Fund ("National Insured Fund")
VOYAGEUR INVESTMENT TRUST
California Insured Tax Free Fund ("California Insured Fund")
Florida Insured Tax Free Fund ("Florida Insured Fund")
Florida Tax Free Fund ("Florida Fund")
Kansas Tax Free Fund ("Kansas Fund")
Missouri Insured Tax Free Fund ("Missouri Insured Fund")
New Mexico Tax Free Fund ("New Mexico Fund")
Oregon Insured Tax Free Fund ("Oregon Insured Fund")
Utah Tax Free Fund ("Utah Fund")
Washington Insured Tax Free Fund ("Washington Insured Fund")
VOYAGEUR INVESTMENT TRUST II
Florida Limited Term Tax Free Fund ("Florida Limited Term Fund")
VOYAGEUR MUTUAL FUNDS, INC.
Arizona Tax Free Fund ("Arizona Fund")
California Tax Free Fund ("California Fund")
Iowa Tax Free Fund ("Iowa Fund")
Idaho Tax Free Fund ("Idaho Fund")
Minnesota High Yield Municipal Bond Fund ("Minnesota High Yield Fund")
National High Yield Municipal Bond Fund ("National High Yield Fund")
National Tax Free Fund ("National Fund")
New York Tax Free Fund ("New York Fund")
Wisconsin Tax Free Fund ("Wisconsin Fund")
VOYAGEUR MUTUAL FUNDS II, INC.
Colorado Tax Free Fund ("Colorado Fund")
VOYAGEUR MUTUAL FUNDS III, INC.
Aggressive Growth Fund ("Aggressive Growth Fund")
Growth Stock Fund ("Growth Fund")
Growth and Income Fund ("Growth and Income Fund")
International Equity Fund ("International Fund")
Each shareholder of a Fund is entitled to one vote for each share held. None of
the matters to be presented at the meeting will entitle any shareholder to
cumulative voting or appraisal rights. A list of those persons who, to the
knowledge of Fund management, beneficially owned more than 5% of the voting
shares of any class of any of the Funds as of ________, 1997, is set forth in
Schedule 1 to this Proxy Statement.
In the event that sufficient votes are not received for the adoption of
any proposal, an adjournment or adjournments of the Meeting may be sought. Any
adjournment would require a vote in favor of the adjournment by the holders of a
majority of the shares present at the Meeting (or any adjournment thereof) in
person or by proxy. In such circumstances, the persons named as proxies will
vote in favor of any proposed adjournment.
COPIES OF EACH FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS ARE
AVAILABLE TO SHAREHOLDERS UPON REQUEST. IF YOU WOULD LIKE TO RECEIVE A COPY,
PLEASE CONTACT THE FUNDS AT 90 SOUTH SEVENTH STREET, MINNEAPOLIS, MINNESOTA
55402 OR CALL (800) 553-2143 AND ONE WILL BE SENT, WITHOUT CHARGE, BY
FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF YOUR REQUEST.
The following table illustrates which Proposals areCompany
This Proposal applies to be voted upon by
shareholders of a Fund:
Proposal Number
-----------------------------------
Fund 1 2 3 4 5 6
- --------------------------------------------------------------------------------
Aggressive Growth Fund X X X
- --------------------------------------------------------------------------------
Arizona Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
Arizona Tax Free Fund X X X
- --------------------------------------------------------------------------------
California Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
California Tax Free Fund X X X
- --------------------------------------------------------------------------------
Colorado Tax Free Fund X X X
- --------------------------------------------------------------------------------
Florida Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
Florida Limited Term Tax Free Fund X X X
- --------------------------------------------------------------------------------
Florida Tax Free Fund X X X
- --------------------------------------------------------------------------------
Growth and Income Fund X X X
- --------------------------------------------------------------------------------
Growth Stock Fund X X X X
- --------------------------------------------------------------------------------
Idaho Tax Free Fund X X X
- --------------------------------------------------------------------------------
International Equity Fund X X X
- --------------------------------------------------------------------------------
Iowa Tax Free Fund X X X
- --------------------------------------------------------------------------------
Kansas Tax Free Fund X X X
- --------------------------------------------------------------------------------
Minnesota High Yield Municipal Bond Fund X X X
- --------------------------------------------------------------------------------
Minnesota Insured Fund X X X
- --------------------------------------------------------------------------------
Minnesota Limited Term Tax Free Fund X X X
- --------------------------------------------------------------------------------
Minnesota Tax Free Fund X X X
- --------------------------------------------------------------------------------
Missouri Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
National High Yield Municipal Bond Fund X X X
- --------------------------------------------------------------------------------
National Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
National Limited Term Tax Free Fund X X X
- --------------------------------------------------------------------------------
National Tax Free Fund X X X
- --------------------------------------------------------------------------------
New Mexico Tax Free Fund X X X
- --------------------------------------------------------------------------------
New York Tax Free Fund X X X
- --------------------------------------------------------------------------------
North Dakota Tax Free Fund X X X
- --------------------------------------------------------------------------------
Oregon Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
Utah Tax Free Fund X X X
- --------------------------------------------------------------------------------
Washington Insured Tax Free Fund X X X
- --------------------------------------------------------------------------------
Wisconsin Tax Free Fund X X X
- --------------------------------------------------------------------------------
BACKGROUND
INTRODUCTION
The Meeting has been called as a result of the proposed Merger, as
defined and discussed below. If the Merger is consummated, it will result in the
automatic termination of the investment advisory agreements between the Funds
and VFM, necessitating shareholder approval of new agreements. In addition,
shareholders are being asked to elect eight members to each Company's Board of
Directors, including one director from the current Boards who has been nominated
for reelection. The remaining members of the current Boards are expected to
resign immediately prior to closing of the Merger. All of the proposals on which
shareholdersall Companies.
You are being asked to vote other than the reorganization of Growth
and Income Fund, are contingent upon consummationto elect each of the Merger.following nominees to the Board
of Directors for your Company: Jeffrey J. Nick, Walter P. Babich, Anthony D.
Knerr, Ann R. Leven, Thomas F. Madison, Charles E. Peck, Wayne A. Stork, and Jan
R. Yoemans. With the exception of Jan R. Yeomans, each nominee is currently a
member of the Board of Directors for each Company. If elected, these persons
will serve as Directors until the Mergernext 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 consummated,expected that any nominee will
withdraw or become unavailable for election, but in such a case, the currentpower given
by you in the Proxy Card may be used to vote for a substitute nominee or
nominees as recommended by the existing Boards of Directors.
Directors will remain in office,and Nominees. Presented below is information about the current Investment Advisoryage, position
with the Companies, principal occupation and Sub-Advisory Agreements will remain in effect,
International Equity Fund, National Insured Tax Free Fund, National Limited Term
Tax Free Fund and National Tax Free Fund will not be liquidated and KPMG Peat
Marwick LLP will remain the Funds' independent public accountants.
THE PROPOSED MERGER
VFM currently serves as the investment adviser to each Fund and
provides the Funds with administrative, accounting, transfer agency and dividend
disbursing services. Voyageur Fund Distributors, Inc. ("VFD"), a wholly owned
subsidiary of VFM, acts as the distributorpast business experience of each
Fund's shares. VFM is an
indirect wholly owned subsidiarycurrent Director and nominee. With the exception of Dougherty Financial Group, Inc. ("DFG"),
which is owned 49.83% by Michael E. Dougherty and 49.83% equally by James O.
Pohlad, Robert C. Pohlad and William M. Pohlad (the "Pohlads").
On January 15, 1997, DFG, Mr. Dougherty, and the Pohlads entered into
an Agreement and Plan of Merger with LNC (the "Merger Agreement"). The Merger
Agreement provides that a wholly owned subsidiary of LNC will be merged with and
into DFG, causing DFG to become a wholly owned subsidiary o f LNC. This
transaction is referred to herein as the "Merger." Prior to the closing date of
the Merger (the "Closing Date") a reorganization will be completed (the
"Reorganization") whereby certain assets of DFG and its subsidiaries, including
all of the assets of VFM used solely or primarilyThomas F. Madison, each
current Director joined each Company's Board in the private accounts
investment advisory business of VFM, will be sold by DFG to certain newly
organized limited liability companies. Thus, these assets will not be acquired
by LNC in connection with the Merger.
LNC, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management. Delaware Management Company, Inc.
("DMC"), an indirect wholly owned subsidiary of LNC, and its affiliate, Delaware
International Advisers Ltd., serve as the investment advisers to the investment
companies in the Delaware Group of Investment Companies (the "Delaware Group"),
which currently includes 16 open-end funds and two closed-end funds (comprising
48 separate investment portfolios). Delaware Distributors, L.P. ("Delaware
Distributors"), also an indirect wholly owned subsidiary of LNC, serves as the
national distributor for each open-end fund in the Delaware Group. DMC through
its Delaware Investment Advisers division, Delaware International Advisers Ltd.
and certain other subsidiaries of Delaware Management Holdings, Inc. ("DMH")
also provides investment advice with respect to separately managed accounts of
institutional and other clients. DMH, through its subsidiaries, is responsible
for the management of approximately $32 billion.
Under the Merger Agreement, holders of DFG common stock will receive
LNC common stock with a value of approximately $69 million. This amount is
subject to certain adjustments, including a downward adjustment in the event
that the aggregate net assets of the Funds, other than those Funds for which
liquidation has been proposed, and certain other investment companies managed by
VFM (collectively, the "Voyageur Funds") as of the Closing Date is less than 90%
but equal to or greater than 80% of the aggregate net assets of the Voyageur
Funds as of January 14, 1997. In connection with the Reorganization, all issued
and outstanding shares of DFG common stock other than those owned by Mr.
Dougherty and the Pohlads will be redeemed and all outstanding options (other
than those held by certain optionholders receiving compensation under the Merger
Agreement) will be canceled. As a result, immediately prior to consummation of
the Merger, the issued and outstanding shares of DFG will be owned 50% by
Michael E. Dougherty, 16 2/3% by James O. Pohlad, 16 2/3% by Robert C. Pohlad
and 16 2/3% by William M. Pohlad.
The closing of the Merger (the "Closing") is subject to a number of
conditions, including a condition that Voyageur Funds which collectively
represent at least 90% of the aggregate net assets of the Voyageur Funds as of
the Closing Date will, by shareholder vote, have approved new investment
advisory agreements and, with respect to the open-end Voyageur Funds, the Boards
of Directors of such Funds shall have approved new distribution agreements. In
addition, the aggregate net assets of the Voyageur Funds as of the Closing Date
shall not be less than 80% of the aggregate net assets of the Voyageur Funds as
of January 14, 1997, and the net assets of each of Minnesota Insured Fund,
Minnesota Tax Free Fund, Florida Insured Tax Free Fund, Colorado Tax Free Fund
and Arizona Insured Tax Free Fund as of the Closing Date shall not be less than
80% of their net assets as of January 14, 1997.
CONSUMMATION OF THE MERGER
If the Merger is consummated, LNC will own indirectly all of the
outstanding voting securities of VFM, which in turn will own all of the
outstanding voting securities of VFD. Such new ownership will constitute a
change in control of VFM and VFD and will cause the current investment advisory
agreements and distribution agreements of each Fund to terminate automatically
in accordance with their terms, as required by the Investment Company Act of
1940, as amended (the "1940 Act"). Such terminations will necessitate adoption
of new agreements for the provision of investment advisory and distribution
services. Shareholder approvals of the new investment advisory agreements are
required under the 1940 Act and are proposed and described below under "Proposal
Two--Proposal to Approve New Investment Advisory Agreements."
Shareholder approvals of new distribution agreements are not required.
However, such agreements have been approved byThomas F. Madison joined
the Board of Directors of each Company effective as of such approval. Each Company, on behalf of the Funds in such Company, will enter into new distribution agreements with both VFD1994.
Jeffrey J. Nick* (45), Chairman, President, Chief Executive Officer and
Delaware Distributors that will be identical in all material respects to such
Company's current distribution agreement. Delaware Distributors and VFD will act
as the co-principal distributors of the Funds' shares. Delaware Distributors, an
indirect wholly owned subsidiary of LNC, is the national distributor for all of
the mutual funds in the Delaware Group. Under their distribution agreements, VFD
and Delaware Distributors will receive payments pursuant to the Funds' Rule
12b-1 Plans of Distribution. The Plans of Distribution, including the Rule 12b-1
fees payable thereunder, will not change as a result of the Merger.
Each Company has also entered into an administrative services agreement
with VFM which, pursuant to its terms, will terminate automatically upon
consummation of the Merger. Under the administrative services agreements, VFM
acts as the Funds' dividend disbursing, transfer, administrative and accounting
services agent to perform dividend-paying functions, to calculate each Fund's
daily share price, to maintain shareholder records and to perform certain
regulatory and compliance related services for the Funds. Following consummation
of the Merger, each Company will enter into a shareholder services agreement
with Delaware Service Company, Inc. ("Delaware Service") pursuant to which
Delaware Service will serve as the shareholder servicing, dividend disbursing
and transfer agent for each Fund and a fund accounting agreement with Delaware
Service pursuant to which Delaware Service will serve as the accounting agent
for each Fund. Delaware Service is an indirect, wholly owned subsidiary of LNC.
In order to provide continuity in the provision of these services to the Funds,
the Merger Agreement requires Dougherty Financial Group LLC ("DFG LLC"), one of
the limited liability companies to be formed in the Reorganization discussed
above, to provide certain transition services to LNC or one of its subsidiaries
after Closing. Accordingly, upon Closing, DFG LLC will enter into a Transition
Services Agreement with DMH, an indirect parent company of Delaware Service and
a wholly owned subsidiary of LNC, pursuant to which, for a period of up to two
years following the Closing Date, DFG LLC shall provide to DMH certain specified
services which may include the following: (a) human resources, supervision,
general administrative, accounting and employee benefits; (b) fund accounting;
(c) transfer agency; (d) legal, tax and compliance; (e) support services for
brokers, wholesalers, marketing, customer support, fulfillment, securities
trading, investment management, the unit investment trust business and the
closed-end funds businesses; (f) hardware and software systems and maintenance;
and (g) third-party vendor relationships. Payments under the Transition Services
Agreement will be the responsibility of DMH and not of the Funds.
To provide continuity of management of the Funds, LNC has offered
employment contracts to Andrew McCullagh and Elizabeth Howell, which have been
accepted. Either Mr. McCullagh or Ms. Howell acts as the portfolio manager for
each of the Funds that is being asked to approve a new investment advisory
agreement other than the following: Florida Limited Term Tax Free Fund, Florida
Insured Tax Free Fund, Florida Tax Free Fund, Iowa Tax Free Fund, New York Tax
Free Fund, Wisconsin Tax Free Fund, National High Yield Municipal Bond Fund,
Growth Stock Fund and Aggressive Growth Fund. LNC has also offered employment to
and received acceptances from others involved in the investment process with Mr.
McCullagh and Ms. Howell, including assistant portfolio managers and research
analysts. In addition, Frank C. Tonnemaker, current president of VFD, has
accepted an employment contract with LNC. Mr. Tonnemaker is expected to serve in
a senior marketing role with responsibility for overseeing the transition of the
Funds' management and distribution.
PROPOSAL ONE
ELECTION OF DIRECTORS
Listed below are the nominees for director to be elected by the
shareholders of each Company. Current members of each Company's Board of
Directors are Clarence G. Frame, Thomas F. Madison, Richard F. McNamara, James
W. Nelson and Robert J. Odegard. Upon closing of the Merger, all of such
individuals other than Mr. Madison will resign, and the nominees set forth below
will take office. Such individuals have been nominated for election by the
current disinterested directors of the Companies. The election of such nominees
is contingent upon consummation of the Merger. It is intended that the enclosed
proxy will be voted for the shares represented thereby for the election of the
persons named below as directors of each Company unless such authority has been
withheld in the proxy. The term of office of each person elected will be until
the next regular meeting of shareholders or until his or her successor is duly
elected and shall qualify. Mr. Madison has been a director of each Company since
May 1, 1994. Messrs. Babich, Knerr, Longstreth, Peck and Stork and Ms. Leven are
currently directors of each investment company in the Delaware Group. Pertinent
information regarding each nominee for the past five years is set forth
following his or her name below.
Principal Occupation and Business Experience
Name and Age During Past 5 Years
- --------------------------------------------------------------------------------
Walter P. Babich (age 69) Director
and/or Trustee of each of the 1834 investment companies in the Delaware
Group;Investments family; President and Director of Delaware Management Holdings,
Inc., 1997 to present; President, Chief Executive Officer and Director of
Lincoln National Investment Companies, Inc., 1996 to present; Director of
Delaware International Advisers Ltd., 1998 to present; Director of Vantage
Global Advisors, Inc., 1996 to present; Director of Lynch & Mayer Inc.
(investment adviser), 1997 to present; Managing Director of Lincoln National UK
plc, 1992-1996; Senior Vice President of Lincoln National Corporation
responsible for corporate planning and development, 1989-1992.
Walter P. Babich (71), Director and/or Trustee of each of the 34 investment
companies in the Delaware Investments family; Board Chairman of Citadel
Constructors, Inc. (commercial building construction), 1988 to present; Partner
of I&L Investors, 1988 to
1991;1988-1991; Partner of Irwin & Leighton 1986 to
1988.Partnership (building
construction), 1986-1988.
Anthony D. Knerr (age 58)(59), Director and/or Trustee of each of the 1834 investment
companies in the Delaware Group; founderInvestments family; Founder and Managing Director,
Anthony Knerr & Associates (strategic consulting company to major non-profit
institutions and organizations), 1991 to present; founderFounder and Chairman of Thethe
Publishing Group, Inc., 1988
to 1990; 1988-1990; Executive Vice President/Finance and Treasurer
of Columbia University, 1982 to
1988; lecturer in1982-1988; Lecturer of English at Columbia University,
1987 to 1989.1987-1989.
Ann R. Leven (age 56)(57), Director and/or Trustee of each of the 1834 investment
companies in the Delaware Group; Director of
_________ investment companies sponsored by
Aquila Management Corporation, 1985 to
present;Investments family; Treasurer, National Gallery of
Art, 1994 to present; Director of four investment companies sponsored by Acquila
Management Corporation, 1985 to February, 1998; Deputy Treasurer of the National
Gallery of Art, 1990 to 1994; Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, 1984 to 1990;1984-1990; Adjunct Professor at Columbia Business
School, 1975 to
1992.1975-1992.
-2-
W. Thacher Longstreth (age 76)Longstreth(1) (77), Director and/or Trustee of each of the 1834
investment companies in the Delaware Group;Investments family; Philadelphia City
Councilman, 1984 to present; Consultant,Consultant20 , Packard Press, 1988 to present;
President,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 to
1991;1968-1991; Vice
Chairman, The Winchell Company 1983 to 1988.(financial printing), 1983-1988.
Thomas F. Madison (age 60)(62), Director and/or Trustee of each of the 16 Voyageur34 investment
companies since 1994;in the Delaware Investments family; President and CEOChief Executive
Officer of MLM Partners, Inc. since 1993;, 1993 to present; Chairman of the Board of
Communications Holdings, Inc., since 1996; previously,1996 to present; Vice Chairman--Office of the CEO
of The Minnesota Mutual Life Insurance Company, from February to September, 1994;
President of U.S. WEST
Communications-- Markets from 1988 to 1993.
Mr. Madison currently serves on the board of
directorsDirector of Valmont Industries Inc. (irrigation systems and steel manufacturing),
1987 to present; Director of Eltrax Systems, Inc. (data communications
integration), 1993 to present; Director of Minnegasco, and Span Link Communications
(software).
*Jeffrey J. Nick (age 43) President, Chief Executive Officer and, 1995 to present; Director of Lincoln National Investment
Companies, Inc.; Managing Director, Lincoln
National UK plc, 1992ACI Telecentrics (outbound
telemarketing and telecommunications), 1997 to present; responsible for corporate planning and
development, Lincoln National Corporation,
1989Director of Aon Risk
Services, 1996 to 1992; previously, Arthur D. Little,
Inc. (management consultancy); Chase
Investment Bank (merchant banking).present; Director of Digital River, 1997 to present.
Charles E. Peck (age 71)(72), Director and/or Trustee of each of the 1834 investment
companies in the Delaware Group;Investments family; Retired; Secretary/Treasurer,
Enterprise Homes, Inc., 1992 to present; Chairman and Chief Executive Officer of
The Ryland Group, Inc., 1981 to 1990.
*WayneWayne A. Stork (age 59)Stork* (61), Chairman President, Chief Executive
Officer,and Director and/or Trustee of 17each of the 34
investment companies in the Delaware Group
(which excludes Delaware Pooled Trust,
Inc.), Delaware Management Holdings, Inc.,
DMH Corp., Delaware International Holdings
Ltd. and Founders Holdings, Inc.; Chairman
and Director of Delaware Pooled Trust, Inc.,
Delaware Distributors, Inc.Investments family and Delaware Capital
Management, Inc.; Chairman, President, Chief Executive Officer and Director of
DMH Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman,
President, Chief Executive Officer, Chief Investment Officer and
DirectorDirector/Trustee of Delaware Management Company, Inc. and Delaware Management
Business Trust; Chairman, President, Chief Executive Officer and Chief
Investment Officer of Delaware Management Company (a series of Delaware
Management Business Trust); Chairman, Chief Executive Officer and Chief
Investment Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Chairman, Chief Executive Officer and Director of
Delaware International Advisers Ltd., Delaware International Holdings Ltd. and
Delaware Management Holdings, Inc.; President and Chief Executive Officer of
Delvoy, Inc.; Chairman of Delaware Distributors, L.P.; Director of Delaware
Service Company, Inc. and Delaware
Investment & Retirement Financial Services, Inc.;
during 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 - ----------------------
* Denotes directors who will beInvestment Technology Group of Chase Econometrics, 1982-1983;
Consultant for Data Resources, 1980-1982; Programmer for the Federal Reserve
Bank of Chicago, 1970-1974.
Board and Committee Meetings. During the twelve months ended October 31, 1998,
each Company held [(Delaware to advise:) _________] Board meetings.
Each Board of Directors has an Audit Committee for the purpose of meeting, at
least annually, with the Company's independent auditors and officers to oversee
the quality of financial reporting and the internal controls of the Company, and
for such purposes as the Board of Directors may from time to time direct. The
Audit Committee of each Company consists of the following four Directors
appointed by the Board, all of whom are considered to be independent because
they are not "interested persons" (asas defined byin the Investment Company Act of
1940, Act)as amended (the "1940 Act"): Ann R. Leven, Chairperson, Walter P. Babich,
Anthony D. Knerr and Thomas F. Madison. Members of the Companies upon closing ofAudit Committee serve for
three years or until their successors have been appointed and qualified. The
Audit Committee held [(Delaware to advise:) ________] meetings for each Company
during the Merger.
As of Januarytwelve months ended October 31, 1997, the current officers and directors of each Fund
as a group beneficially owned less than 1% of each class of outstanding shares
of such Fund, except for John G. Taft who owns beneficially approximately 2% of
Voyageur Aggressive Growth Fund's Class A shares and 4% of International Equity
Fund's Class A shares.
The1998.
Each Board of Directors also has a Nominating Committee, which meets for the
purpose of proposing nominees to serve as Directors. Nominees are considered by
the full Board of Directors for each Fund and, when appropriate, by shareholders
at annual or special shareholder meetings. The Nominating Committee of each
Company has established an Audit
Committee which consists of eachthe following three Directors appointed by the Boards, two
of whom are considered to be independent Directors: Wayne A. Stork, Anthony D.
Knerr and W. Thacher Longstreth. [(Delaware please confirm:) This Committee met
once during the past year for the purpose of determining the proposed list of
nominees for this Meeting.] The selection and nomination of the current directors. Ifindependent
Director nominees is committed to the nominees named
above are elected anddiscretion of the Merger is consummated, it is expected that the Auditpresent independent
Directors. Each Nominating Committee will be reconstituted atconsider suggestions for the
first meeting- -------------
(1) W. Thacher Longstreth is a current member of the BoardsBoard of Directors
following the Closing. The Audit Committee met two times during the most
recently ended fiscal year for
each Company. The Companies doMr. Longstreth is retiring from each Company's Board and,
therefore, is not have
nominating or compensation committees.
The functionsa nominee.
*This nominee is considered to be performed byan "interested person" of each Company, as
that term is defined in the Audit Committee areInvestment Company Act of 1940, as amended,
because he is affiliated with the investment manager and distributor of the
Companies.
-3-
Board of Directors nominations from shareholders. Shareholders who wish to
recommend
annuallysuggest candidates for nomination to the Board of Directors for a firmCompany at any
future annual meeting should identify the candidate and furnish a written
statement of the person's qualifications to the Nominating Committee at the
principal executive offices of the Companies.
Board Compensation. Each independent certified public accountants to
audit the books and records ofDirector receives compensation from each
Company for the ensuing year; to monitor
that firm's performance; to review with the firm the scope and results of each
audit and determine the need, if any, to extend audit procedures; to confer with
the firm and representatives of each Company on matters concerning the Funds'
financial statements and reports including the appropriateness of its accounting
practices and of its financial controls and procedures; to evaluate the
independence of the firm; to review procedures to safeguard portfolio
securities; to review the purchase by each Company from the firm of non-audit
services; to review all fees paid to the firm; and to facilitate communications
between the firm and each Company's officers and directors.
For the most recently ended fiscal year of each Company, there were
five meetingswhich he/she is a member of the Board of Directors. The only nomineeinterested
Directors are compensated by the investment manager and do not receive
compensation from the Companies. Each independent Director currently receives a
total annual retainer fee of $38,500 for directorserving as a Director for all 34
Companies within the Delaware Investments family, plus $3,145 for each set of
Board meetings attended (generally, seven sets of regular meetings). Members of
the Audit Committee currently receive additional annual compensation of $5,000
from all Companies, in the aggregate, with the exception of the chairperson, who
receives $6,000.
Under the terms of each Company's retirement plan for Directors, each
independent Director who, at this
Meeting, Mr. Madison, attended all meetingsthe time of his or her retirement from the Board of
Directors, has attained the age of 70 and of
committees of which he was a member that were held while he was servingserved on the Board of Directors for
at least five continuous years, is entitled to receive payments from the Company
for a period of time equal to the lesser of the number of years that such person
served as a Director or onthe remainder of such committee.
No compensationperson's life. The annual amount
of such payments will be equal to the amount of the annual retainer that is paid
by any Company or Fund to its officers or
directors, except that each director who is not an employee of VFM or any of its
affiliates currently receives an annual fee of $26,000 for serving as a director
of allDirectors of the open-end and closed-end investment companies for which VFM actsCompany at the time of such person's retirement. If an
eligible Director of each Company within the Delaware Investments family had
retired as investment adviser, plus a $500of October 31, 1998, he or she would have been entitled to annual
payments in an amount equal to the annual retainer fee fornoted in the previous
paragraph. The following table identifies the amount each special in-person meeting attended
by such director. Set forth below is the compensationDirector received by each current
director from
each Company forduring its most recently endedlast fiscal year andyear. Each Director other than Thomas
Madison joined the aggregate compensation received by each such director from all closed-end and
open-end investment companies managed by VFM duringboard of Directors of the calendar year ended
December 31, 1996.Companies on May 1, 1997.
DIRECTOR
COMPENSATION ------------------------------------------------------------------------
FROM EACH COMPANY MR. FRAME MR. McNAMARA MR. MADISON MR. NELSON MR. ODEGARD
- ------------------------ ------------------------------------------------------------------------Jeffrey J. Walter P. Anthony D. Ann R. W. Thacher Thomas F. Charles E. Wayne A.
Company Name Nick Babich Knerr Leven Longstreth Madison Peck Stork
------------ ---- ------ ----- ----- ---------- -------- ---- -----
Tax Free
Voyageur Funds, Inc. None $ $ $ $ $ Intermed. Tax Free$ None
Voyageur Insured Funds, Inc. None $ $ $ $ $ Insured$ None
Voyageur Intermediate Tax Free
Funds, Inc. None $ $ $ $ $ $ None
Voyageur Mutual Funds, Inc. None $ $ $ $ $ $ None
Voyageur Mutual Funds II, Inc. None $ $ $ $ $ $ None
Voyageur Mutual Funds III, Inc. None $ $ $ $ $ Investment TrustNone
Voyageur Tax Free Funds, Inc. None $ $ $ $ $ Investment Trust II $ None
Total Compensation From All $ $ $ $
TOTAL COMPENSATION
FROM FUND COMPLEXNone
Companies in the Delaware
Investments Family for the 12 months
ended December 31, 1998 None $ $ $ $ $
AfterOfficers. Each Board of Directors and the Merger,senior management of the Companies
appoint officers each director whoyear, and from time to time as necessary. The following
individuals are executive officers of one or more of the Companies: Jeffrey J.
Nick, Wayne A. Stork, David K. Downes, Richard G. Unruh, Paul E. Suckow, Michael
P. Bishof, George M. Chamberlain, Jr., Joseph H. Hastings, Patrick P. Coyne,
Mitchell L. Conery, Paul A. Matlack, Gary A. Reed, Babak Zenouzi, Gerald T.
Nichols, Christopher S. Beck, George H. Burwell, Robert L. Arnold, Gerald S.
Frey, Roger A. Early, John B. Fields, Paul Grillo, Cynthia L. Isom, Frank X.
Morris, James F. Stanley and Paul Dokas. Exhibit C includes biographical
information and the past business experience of such officers, except for Mr.
Nick and Mr. Stork, whose information is set forth above along with the other
Directors and nominees. The Exhibit also identifies which officers are also
officers of DMC. The above officers of the Companies own shares of common stock
and/or options to purchase shares of common stock of Lincoln National
Corporation ("LNC"), the ultimate parent of DMC.
While in the employ of Oppenheimer Management Corporation, Mr. Paul E. Suckow
was the subject of an Administrative Proceeding brought by the U.S. Securities
and Exchange Commission ("SEC"). As a result of this proceeding, Mr. Suckow was
found to have violated Section 34(b) of the 1940 Act by failing properly to
disclose material facts in certain books and records by order of the SEC dated
December 1, 1992. Mr. Suckow was suspended from the business for 120 days.
Management's Ownership of the Funds. Attached to this Proxy Statement as Exhibit
D is a list of the Directors' and nominees' shareholdings of the various Funds
within the Delaware Investments family on an individual basis. Exhibit A lists
the aggregate holdings by all of the Directors, nominees and executive officers
as a group.
Required Vote. Each Director of a Company shall be elected by a plurality of
votes cast by shareholders of a Company, regardless of the votes of individual
Funds within the Company. This means that the nominees receiving the largest
number of votes will be elected to fill the available Board positions.
-4-
Proposal Two: To Approve the Redesignation of the Fund's Investment Objective
from Fundamental to Non-Fundamental
This Proposal applies all Funds.
The investment objective of each Fund is designated as "fundamental," which
means that any changes, even those not resulting in significant changes in the
way a fund is managed or to risks to which it is subject, require shareholder
approval. Under the 1940 Act, a Fund's investment objective is not an employeerequired to
be fundamental. However, many investment companies have elected to designate
their investment objectives as fundamental. This practice arose largely as a
result of DMCcomments provided by state securities regulators in their review of
fund registration statements during the state registration process, as well as
because of historical drafting conventions.
In light of the enactment of the National Securities Markets Improvement Act of
1996, which eliminated state securities administrative review of investment
company registration statements, and in order to provide the Boards of Directors
with enhanced flexibility to respond to market, industry or regulatory changes,
each Fund's Board of Directors has approved the redesignation from fundamental
to non-fundamental of each Fund's investment objective. Directors may change a
non-fundamental investment objective at any time without the delay and expense
of soliciting proxies and holding a shareholder meeting.
For a complete description of the investment objective of your Fund, please
consult your Fund's prospectus. The redesignation from fundamental to
non-fundamental will not alter any Fund's current investment objective. If this
Proposal is approved, however, Fund management intends to request that the
Directors consider a number of modifications to the language used to define
certain Funds' investment objectives. The requested modifications are designed
to modernize and standardize the expression of such investment objectives, but
if the modifications are implemented, neither the principal investment design
nor the day-to-day management of the Funds would be materially altered. If at
any time in the future, the Directors approve a change in a Fund's
non-fundamental investment objective, either in connection with the currently
anticipated modernization and standardization or otherwise, shareholders will be
given notice of the change prior to its affiliates will receive an annual feeimplementation.
Required Vote. Approval of $_____.
VOTE REQUIRED
EACH COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF
SUCH COMPANY VOTE IN FAVOR OF THE FOREGOING NOMINEES TO SERVE AS NEW DIRECTORS
OF SUCH COMPANY. Thethis proposal for a Fund requires the vote of a
majority of shares of each Company represented at
the meeting and entitled to vote, provided at least a quorum (10%"majority of the outstanding shares) isvoting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented in person or by proxy, whichever is sufficient forless. If the electionreclassification of any Fund's
investment objective from fundamental to non-fundamental is not approved by
shareholders of a particular Fund, that Fund's investment objective will remain
fundamental and shareholder approval (and its attendant costs and delays) will
continue to be required prior to any change in investment objective.
At meetings of the above nominees. Unless otherwise instructed,Directors held in July and September, 1998, the proxies will
vote forDirectors
considered the above nominees. In the event any of the above nominees are not
candidates for election at the meeting, the proxies will vote for such other
persons asenhanced management flexibility to respond to market, industry or
regulatory changes that would accrue to the Board of Directors if each relevant
Fund's fundamental investment objective were redesignated as non-fundamental and
each Fund's Board of Directors unanimously approved the proposed change.
The Board of Directors unanimously recommends that you vote FOR the
redesignation of the investment objective of your Fund as non-fundamental.
Proposal Three: To Approve a Change in the Fund's Fundamental Policy Concerning
Diversification of Investments
This Proposal applies only to the following Funds:
Voyageur Insured Funds, Inc. Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Delaware-Voyageur Tax-Free Colorado Fund
Delaware-Voyageur Tax-Free Minnesota Insured Fund Voyageur Tax Free Funds, Inc.
Voyageur Intermediate Tax Free Funds, Inc. Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Mutual funds generally diversify their investments among many different
securities. They are, however, free to choose the extent to which they will
diversify their investments, provided they meet certain minimum limits set forth
in the 1940 Act and/or the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"). Generally, in order to be diversified under the 1940
-5-
Act, a fund may designate. Nothingnot invest more than 5% of its total assets in a single issuer
(except U.S. government securities, as defined in the 1940 Act), or purchase
more than 10% of the outstanding securities of a single issuer. This limit only
applies to 75% of the fund's total assets, which means that any fund which is
diversified under the 1940 Act may invest up to 25% of its assets in a single
security. If a fund elects to be "non-diversified" under the 1940 Act, it must
still operate within the diversification requirements of the Internal Revenue
Code, which are similar to the 1940 Act diversification requirements, but apply
only to 50% of a fund's assets, rather than 75%. As to the remaining 50% of fund
assets, a fund may buy as few as two separate securities, each representing 25%
of the value of the fund.
The Funds listed above currently indicatesare classified and operate as "diversified"
funds, as that such a situation will arise.
PROPOSAL TWO
PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION
As discussed above, the Merger will cause the current investment
advisory agreement of each Fund (individually a "Current Agreement" and
collectively the "Current Agreements") to terminate automaticallyterm is defined in accordance
with its terms, as required by the 1940 Act. Such terminationsManagement has recommended to
the Directors that the Funds change their classification to "non-diversified,"
which means that they will necessitate
adoptionoperate within the more flexible diversification
restrictions contained in the Internal Revenue Code.
Each of the above Funds seeks to achieve its objective through investment in
fixed income securities, the interest on which is exempt from federal income
taxation and income taxation in the relevant state ("municipal securities").
Funds with this investment profile are often referred to as "state-specific
tax-free funds." Many state-specific tax-free funds operate as non-diversified
funds for 1940 Act purposes because the universe of available investments for
such funds is relatively small. These funds, however, continue to meet the
diversification requirements of the Internal Revenue Code.
Management of the Funds listed above has recommended to the Directors that those
Funds change their diversification policies from diversified to non-diversified.
This change requires shareholder approval under the 1940 Act. In approving the
proposed change and concluding that it would recommend such a change to the
Funds' respective shareholders, the Directors considered: (i) the relatively
small market for municipal securities; (ii) the fact that many state-specific
tax-free funds, including most of the other Delaware-Voyageur state-specific
tax-free Funds within the Delaware Investments family, operate as
non-diversified funds under the 1940 Act; and (iii) the previous experience of
the Funds' investment manager in managing the Funds and the relative difficulty
it experienced in locating attractive investments. At their September, 1998
Board meetings, the Directors unanimously approved the proposed change.
The Funds' diversification policies are found in their prospectuses. In the
event that shareholders approve the proposed change, each of the Funds listed
above would amend its current prospectus disclosure describing its
diversification policy. Any future change from non-diversified to diversified
status by eacha Fund would not require shareholder approval under the 1940 Act. If
the proposed change is not approved, the Funds will continue to operate within
the 1940 Act limitations.
Required Vote. Approval of this proposal for a Fund requires the vote of a
new investment advisory agreement"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
The Board of Directors unanimously recommends that you vote FOR the change in
diversification policy.
Proposal Four: To Approve Standardized Fundamental Investment Restrictions for
the provision
of such services (individually a "New Agreement"Fund (This Proposal involves separate votes on Sub-Proposals 4A through 4G)
This Proposal applies to all Funds.
Proposal Overview
Each Fund is subject to investment restrictions which establish percentage and
collectivelyother limits that govern the "New
Agreements").Fund's investment activities. Under the 1940 Act,
each Fund's New Agreement mustinvestment restrictions relating to certain activities are required to be
"fundamental," which means that any changes require shareholder approval. Funds,
in their discretion, are permitted to deem other restrictions fundamental, and
they may also adopt "non-fundamental" restrictions, which can be changed by the
board of directors without shareholder approval. Of course, any change in a
fund's investment restrictions, whether fundamental or not, would be approved by
the board of directors and reflected in the fund's prospectus or other offering
documents.
Unlike investment objectives and policies, which are often different for each
Fund, investment restrictions for Funds tend to be the same or similar, because
they are based on legal or regulatory requirements that apply to all Funds. Over
the years, however, as new Funds were created or added to the Delaware
Investments family (including Voyageur Funds within this proxy statement),
investment restrictions relating to the same activities were expressed in a
variety of different ways. Many older Funds are subject to investment
restrictions that were adopted in response to regulatory, business or industry
conditions that no longer exist. In
-6-
addition, a number of Funds adopted fundamental restrictions in response to
state laws and regulations that no longer apply because they were preempted by
the National Securities Markets Improvement Act of 1996. As a result, a number
of fundamental restrictions are no longer required to be fundamental, and some
previously required restrictions are no longer required at all.
The Directors, together with Fund management and the investment managers and
sub-advisers, have analyzed the current fundamental investment restrictions of
each Fund, and have concluded that six new standardized fundamental investment
restrictions should be adopted for each Fund. The proposed investment
restrictions relate only to activities that are required under the 1940 Act to
be the subject of fundamental policies and restrictions. Management believes
that a modern, standardized list of restrictions will enhance the ability of the
Funds to achieve their objectives because the Funds will have greater investment
management flexibility to respond to changes in market, industry or regulatory
conditions. In addition, standardized restrictions are expected to enable the
Funds to operate more efficiently and to more easily monitor compliance with
investment restrictions.
Most of the Funds currently have fundamental investment restrictions that govern
the same activities covered by the proposed fundamental investment restrictions,
and a number of Funds currently have other fundamental investment restrictions
governing additional activities. Management is recommending that all current
fundamental investment restrictions for each Fund be re-classified as
non-fundamental, at the same time that the six new standardized fundamental
investment restrictions are adopted for each Fund. If the current fundamental
restrictions are made non-fundamental, the Directors would be able to modify or
eliminate the current restrictions without the costs or delays associated with a
shareholder vote.
The proposed changes will not affect any Fund's investment objective and will
not change the way any Fund is currently being managed or operated, since all
current investment restrictions will remain in place as non-fundamental
restrictions. If, as proposed, the current fundamental investment restrictions
are reclassified as non-fundamental, management intends in the future to
recommend that the Board of Directors approve certain modifications designed to
result in a more modern and standardized list of investment restrictions for the
various Delaware Investments Funds. The recommendations by management will
likely involve the modification or elimination of current restrictions. The
Board of Directors will determine separately for each Fund whether elimination
or modification of a common investment restriction is appropriate for that Fund.
The six new proposed fundamental investment restrictions are described below
within the relevant Sub-Proposals. In addition, Exhibit E contains a list of the
current fundamental investment restrictions for each Fund which are proposed to
be reclassified as non-fundamental. Unless all of the Sub-Proposals are approved
by shareholders of a particular Fund, none of the Sub-Proposals will be adopted
for that Fund.
Required Vote. Approval of each Sub-Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
The Directors have voted to adopt each of the proposed standardized fundamental
investment restrictions for the Funds, as well as to approve the
reclassification of the existing fundamental investment restrictions as
non-fundamental, and unanimously recommend that you vote FOR each Sub-Proposal
4A through 4G for your Fund.
Sub-Proposal 4A: To adopt a new fundamental investment restriction concerning
the concentration of the Fund's investments in the same industry.
Under the 1940 Act, a Fund's policy of concentrating its investments in
securities of companies in the same industry must be fundamental. A mutual fund
concentrates its investments, for purposes of the SEC, if it invests more than
25% of its "net" assets (exclusive of cash, U.S. government securities and
tax-exempt securities) in a particular industry or group of industries. Having
the concentration policy apply to "net" assets represents a recent change by the
SEC staff from its previous concentration standard which applied to 25% of a
Fund's "total" assets. The change would slightly reduce a Fund's ability to
concentrate, since the "net" assets figure is lower than "total" assets of a
Fund because liabilities are subtracted.
Each Fund currently has a fundamental investment restriction prohibiting it from
concentrating its investments in the same industry. There are, however, numerous
variations in the way that the investment restriction is described in the Funds'
offering documents. In addition, most restrictions define concentration in terms
of a percentage of "total assets," rather than in accordance with the new "net
assets" standard.
The Board of Directors recommends that shareholders approve the standardized
fundamental investment restriction set forth below for each Fund. In approving
the proposed investment restriction and concluding that it would recommend the
investment restriction to Fund shareholders, the Directors considered that the
proposed investment restriction will standardize the
-7-
concentration restriction
for the Funds and is intended to provide flexibility for Funds to respond to
changes in the SEC staff's position on concentration of investments or to other
relevant legal, regulatory or market developments without the delay or expense
of a shareholder vote.
Adoption of the proposed fundamental restriction will not materially affect the
way the Funds are currently managed or operated because the existing
concentration restrictions will remain in place as non-fundamental policies
unless and until a Fund's Board of Directors modifies them in the future.
Proposed Concentration Restriction: The Fund will not make investments that
will result in the concentration (as that term may be defined in the 1940
Act, any rule or order thereunder, or SEC staff interpretation thereof) of
its investments in the securities of issuers primarily engaged in the same
industry, provided that this restriction does not limit the Fund from
investing in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or in tax-exempt securities or certificates
of deposit.
The Board of Directors has also approved a related non-fundamental policy, which
will be adopted for each Fund if the new fundamental restriction is approved and
which provides that, in applying the concentration restriction: (i) utility
companies will be divided according to their services, for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii) asset
backed securities will be classified according to the underlying assets securing
such securities. This non-fundamental policy is intended to keep the
concentration restriction from unnecessarily limiting a Fund's investments.
Sub-Proposal 4B: To adopt a new fundamental investment restriction concerning
borrowing money and issuing senior securities.
Introduction to Sub-Proposal. The 1940 Act imposes certain limits on investment
companies with respect to borrowing money and issuing senior securities. A
"senior security" is defined as an obligation of a fund with respect to its
earnings or assets that takes precedence over the claims of the fund's
shareholders with respect to the same earnings or assets. The 1940 Act generally
prohibits funds from issuing senior securities, in order to limit their ability
to use leveraging. In general, a fund uses leveraging when it enters into
securities transactions with borrowed money or money to which it has only a
temporary entitlement.
The limitations on borrowing and issuing senior securities are generally
designed to protect shareholders and their investments by restricting a fund's
ability to subject its assets to any claims of creditors or senior security
holders who would be entitled to dividends or rights on liquidation of the fund
that take precedence over the rights of shareholders. Borrowing money and
issuing senior securities are related activities under the 1940 Act in that, if
a fund fails to adhere to the restrictions applicable to borrowing, the fund
will be considered to have issued an impermissible senior security. Under the
1940 Act, a fund's investment restrictions relating to borrowing and senior
securities must be fundamental.
The current investment restrictions concerning borrowing and senior securities
vary considerably from Fund to Fund and are set forth in Exhibit E. Shareholders
of each Fund are being asked to approve the following new standardized
fundamental restriction that covers both borrowing and senior securities and
which is designed to reflect all current regulatory requirements.
Senior Securities. SEC staff interpretations under the 1940 Act allow open-end
funds to engage in a number of types of transactions which might be considered
to raise "senior securities" or "leveraging" concerns, so long as the funds meet
certain collateral requirements set by the SEC staff. These collateral
requirements are designed to protect shareholders. For example, some of the
transactions that may raise senior security concerns include short sales,
certain options and futures transactions, reverse repurchase agreements and
securities transactions that obligate the fund to pay money at a future date
(these transactions may be referred to collectively as "Leveraging-Type
Transactions"). Funds that engage in Leveraging-Type Transactions must set aside
money or securities or engage in certain offsetting securities transactions, to
meet the SEC staff's collateralization requirements. Consistent with SEC staff
positions, the senior security restrictions for most of the Funds specifically
permit the funds to engage in Leveraging-Type transactions.
Borrowing. Under the 1940 Act, an open-end fund is permitted to borrow up to 5%
of its total assets for temporary purposes from any person so long as the
borrowing is privately arranged, and may also borrow from banks, provided that
if such bank borrowings exceed 5%, the fund must have assets totaling at least
300% of the borrowing when the amount of the borrowing is added to the fund's
other assets. The effect of this latter provision is to allow an open-end fund
to borrow from banks amounts up
-8-
to one-third (33 1/3%) of its total assets (including the amount borrowed).
Open-end funds typically borrow money to meet redemptions to avoid being forced
to sell portfolio securities before they would have otherwise been sold. This
technique allows open-end funds greater flexibility to buy and sell portfolio
securities for investment or tax considerations, rather than for cash flow
considerations.
The borrowing restrictions for Funds limit borrowings to 20%, 10% or 5% of
assets, rather than the 33 1/3% allowed by law. Further, a number of older Funds
only permit borrowing "as a temporary measure for extraordinary purposes" and
most provide that the Fund may not borrow for leveraging purposes or purchase
securities while borrowings are outstanding.
Effects of the Proposed Investment Restrictions. Since the proposed investment
restriction would provide greater flexibility for such Funds to engage in
borrowing and to engage in Leveraging-Type Transactions, the Funds may be
subject to additional costs and risks. For example, the costs of borrowing can
reduce a Fund's total return. Further, upon engaging in Leveraging-Type
Transactions, such Funds could experience increased risks due to the effects of
leveraging. The SEC staff's collateralization requirements are designed to
address such risks.
Board Recommendation. The Board of Directors recommends that shareholders
approve the proposed fundamental investment restriction for each Fund. The
proposed investment restriction will establish a standardized borrowing and
senior securities restriction which is written to provide flexibility for Funds
to respond to changes in legal, regulatory or market developments. Adoption of
the new restriction, however, will not affect the way such Funds are currently
managed or operated because the existing restrictions will remain as
non-fundamental policies unless and until the Board of Directors modifies them
in the future.
Proposed Borrowing and Senior Securities Restriction: The Fund may not
borrow money or issue senior securities, except as the 1940 Act, any rule or
order thereunder, or SEC staff interpretation thereof, may permit.
Sub-Proposal 4C: To adopt a new fundamental investment restriction concerning
underwriting.
Each Fund is currently subject to a fundamental investment restriction
prohibiting it from acting as an underwriter of the securities of other issuers.
Under the 1940 Act, a fund's policy or restriction relating to underwriting must
be fundamental. A person or company is generally considered an underwriter under
the federal securities laws if it participates in the public distribution of
securities of other issuers, usually by purchasing the securities from the
issuer and re-selling the securities to the public. Underwriters are subject to
stringent regulatory requirements and often are exposed to substantial
liability. Thus, virtually all mutual funds operate in a manner that allows them
to avoid acting as underwriters.
From time to time, a mutual fund may purchase a security for investment purposes
which it later sells or re-distributes to institutional investors or others
under circumstances where the fund could possibly be considered to be an
underwriter under the technical definition of underwriter contained in the
securities laws. The current underwriting restriction for each funds
specifically permits such re-sales. Management, consistent with SEC staff
interpretations, believes that the Funds legally would not be regulated as
underwriters in these circumstances.
The Board of Directors recommends that the shareholders of each Fund approve the
standardized fundamental investment restriction regarding underwriting set forth
below. The proposed restriction is substantially similar to the current
restriction for most Funds. The new restriction is proposed for each Fund
because it will help to achieve the goal of standardization of the language of
the investment restrictions among all Funds. Adoption of the proposed
restriction will not affect the way the Funds are currently managed or operated.
Proposed Underwriting Restriction: The Fund may not underwrite the
securities of other issuers, except that the Fund may engage in transactions
involving the acquisition, disposition or resale of its portfolio
securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933.
Sub-Proposal 4D: To adopt a new fundamental investment restriction concerning
investments in real estate.
Each Fund currently has a fundamental investment restriction prohibiting the
purchase or sale of real estate. All of the Funds' restrictions allow the Funds
to invest in companies that deal in real estate, or to invest in securities that
are secured by real estate. Under the 1940 Act, a fund's policy or restrictions
regarding investment in real estate must be fundamental.
The Board of Directors recommends that shareholders of each Fund approve the
fundamental investment restriction concerning real estate set forth below. The
proposed investment restriction is designed to standardize the language of the
real estate restriction among the various Funds. The proposed investment
restriction will permit Funds to purchase securities whose payments of interest
or principal are secured by mortgages or other rights to real estate in the
event of default. The investment restriction will also enable the Funds to
invest in companies within the real estate industry, provided such investments
are consistent with the Fund's investment objectives and policies. Adoption of
the proposed restriction will not affect the way the
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Funds are managed or operated because the current restrictions will remain as
non-fundamental policies unless and until the Board of Directors modifies them
in the future.
Proposed Real Estate Restriction: The Fund may not purchase or sell real
estate unless acquired as a result of ownership of securities or other
instruments and provided that this restriction does not prevent the Fund
from investing in issuers which invest, deal, or otherwise engage in
transactions in real estate or interests therein, or investing in securities
that are secured by real estate or interests therein.
Sub-Proposal 4E: To adopt a new fundamental investment restriction concerning
investments in commodities.
All of the Funds currently are subject to fundamental restrictions prohibiting
the purchase or sale of commodities or commodity contracts. Under the 1940 Act,
policies and restrictions regarding commodities must be fundamental. The most
common types of commodities are physical commodities such as wheat, cotton, rice
and corn. However, under federal law, futures contracts are considered to be
commodities and, therefore, financial futures contracts, such as futures
contracts related to currencies, stock indices or interest rates are considered
to be commodities. If a Fund buys a financial futures contract, it obtains the
right to receive (or, if the Fund sells the contract, the Fund is obligated to
pay) the cash difference between the contract price for an underlying asset or
index and the future market price, if the market price is higher. If the future
price is lower, the Fund is obligated to pay (or, if the Fund sold the contract,
the Fund is entitled to receive) the amount of the decrease. Funds often desire
to invest in financial futures contracts and options related to such contracts
for hedging or other investment reasons.
The Board of Directors recommends that shareholders of each Fund approve the
fundamental investment restriction concerning commodities set forth below for
each Fund. The proposed restriction would standardize the language of the
restriction among the various Funds and provide appropriate flexibility for the
Funds to invest in financial futures contracts and related options. As proposed,
the restriction is broad enough to permit investment in financial futures
instruments for either investment or hedging purposes, and, thus is broader than
many Funds' current restrictions. Using financial futures instruments can
involve substantial risks, and will be utilized only if the investment manager
determines that such investments are advisable and such practices are later
affirmatively authorized by the Board of Directors. Adoption of the restriction
will not affect the way the Funds are currently managed or operated because the
existing commodities restrictions will remain as non-fundamental policies unless
and until the Board of Directors modifies them in the future.
Proposed Commodities Restriction: The Fund may not purchase or sell physical
commodities, unless acquired as a result of ownership of securities or other
instruments and provided that this restriction does not prevent the Fund
from engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical commodities.
Sub-Proposal 4F: To adopt a new fundamental investment restriction concerning
lending by the Fund.
Each of the Funds is currently subject to a fundamental investment restriction
limiting its ability to make loans. In order to ensure that the Funds may invest
in certain debt securities or repurchase agreements, which could be
characterized as the making of loans, the Funds current fundamental restrictions
specifically permit such investments. Securities lending is a practice that has
become common in the mutual fund industry and involves the temporary loan of
portfolio securities to parties who use the securities for the settlement of
securities transactions. The collateral delivered to a Fund in connection with
such a transaction is then invested to provide the Fund with additional income.
The Board of Directors recommends that shareholders approve the standardized
fundamental investment restriction concerning lending described below for each
Fund. The proposed restriction prohibits loans by the Funds except in the
circumstances described above and, in some cases, would provide more flexibility
than the current lending restriction because of the authority to engage in
securities lending. Although securities lending involves certain risks if the
borrower fails to return the securities, management believes that increased
flexibility to engage in securities lending does not materially increase the
risk to which the Funds are currently subject. Also, the adoption of the
restriction will not affect the way the Funds are currently managed or operated,
because the existing lending restrictions will remain in place as
non-fundamental policies unless and until the Board of Directors modifies them
in the future.
Proposed Lending Restriction: The Fund may not make loans, provided that
this restriction does not prevent the Fund from purchasing debt obligations,
entering into repurchase agreements, loaning its assets to broker/dealers or
institutional investors and investing in loans, including assignments and
participation interests.
Sub-Proposal 4G: To redesignate all current fundamental investment restrictions
as non-fundamental.
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Each Fund currently is subject to its own list of fundamental investment
restrictions, which are set forth in Exhibit E. Certain Funds are also subject
to their own list of non-fundamental investment restrictions. As described in
the previous Sub-Proposals, all Funds have a fundamental investment restriction
governing concentration, borrowing, underwriting, real estate, commodities and
lending and most Funds have a fundamental investment restriction governing
senior securities. Many of the Funds, especially the older Funds, have
additional fundamental investment restrictions governing activities that are no
longer required to be subject to fundamental investment restrictions.
The Directors and Fund management recognize that many of the current fundamental
investment restrictions cover the same activities as the proposed, standardized
fundamental investment restrictions so that there will be overlapping
restrictions. However, rather than asking shareholders for approval to eliminate
the current restrictions at this time in favor of the new standardized
restrictions, the Board of Directors for each Fund is recommending that all
current fundamental restrictions be reclassified as non-fundamental. After the
current investment restrictions are made non-fundamental, Fund management and
the Directors will analyze and evaluate each Fund's investment restrictions on
an individual basis while considering the particular investment objective and
policies of the Fund. Over time, the Funds' investment restrictions can be
standardized, if appropriate. With the exception of a Fund's classification as a
diversified fund for purposes of the 1940 Act, the proposed reclassification of
the current investment restrictions as non-fundamental will provide the
Directors with the authority and ability to make such changes without being
required to seek an additional shareholder vote.
The conversion of investment restrictions to non-fundamental will provide
management of the Funds with the flexibility to respond to industry changes and
also to take advantage of unique pricing and distribution structures that have
developed over the past ten years. For example, eliminating certain fundamental
restrictions and converting them to non-fundamental would permit the Funds to
operate in a "master-feeder" structure at some point in the future should
management determine that such a structure were appropriate.
In a "master-feeder" structure, investors purchase shares of one or more feeder
funds which, in turn, invest all of their assets in corresponding master funds
which have identical investment objectives, policies and restrictions as the
feeder funds. The assets are collectively managed at the master fund level and
the different feeder funds can have varying distribution and expense structures.
The principal advantage of the master-feeder structure is the consolidation of
investment management of multiple identical investment pools into one investment
pool. The structure is also sufficiently flexible to permit offshore feeder
funds' assets to be managed at the master fund level.
By making the investment restrictions non-fundamental, management will have the
flexibility to ensure that the investment restrictions of a Fund will not limit
the Fund's ability to operate in a master-feeder structure. Before any existing
Fund would convert to a master-feeder structure, shareholders would be notified
of such a change and the prospectus of the particular Fund would be amended to
disclose the ability to operate in a master-feeder structure.
Proposal Five: To Approve a New Investment Management Agreement for the Fund
This Proposal applies to all Funds.
Proposal Overview
Shareholders of the Funds are being asked to approve a new Investment Management
Agreement with Delaware Management Company (previously defined as "DMC"), the
current investment manager for each Fund. The New Investment Management
Agreements with VFM:
Arizona Fund Minnesota Insured Fund
Arizona Insured Fund Minnesota Limited Term Fund
California Fund Missouri Insured Fund
California Insured Fund New Mexico Fund
Colorado Fund North Dakota Fund
Idaho Fund Oregon Insured Fund
Kansas Fund Utah Tax Free Fund
Minnesota Fund Washington Insured Fund
Minnesota High Yield Fund
For each such Fund, the principal portfolio manager, either Andrew M.
McCullagh, Jr.will reflect one or Elizabeth H. Howell, will remain unchanged. Biographical
information on Mr. McCullagh and Ms. Howell can be found below under "Executive
Officers of Voyageur Funds."
Shareholdersmore of the following changes, all of which are
explained in further detail below.
o Management fee increase or management fee decrease, together with the addition
of fee "breakpoints," which reduce fee rates as Fund assets grow.
o Potential management fee decrease due to the addition of breakpoints which
would result in lower fees as Fund assets grow.
o Elimination of a provision concerning shareholder approval of amendments.
To determine which proposed changes apply to your Fund, please check the table
at the end of this Proposal.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the fund, which means the
vote: (i) more than 50% of the outstanding voting securities of the fund; or
(ii) 67% or more of the voting
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securities of the Fund present at a meeting, if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, whichever
is less.
If shareholders approve the new Agreements, any modified management fees will
take effect on [(Delaware to advise:) ____________], or at a later date if the
Meeting is postponed or adjourned. If a new Agreement is not approved for a
particular Fund, the current Agreement will continue in effect. The Board of
Directors for each Fund has unanimously approved the proposed Agreements and
recommends that you vote FOR the new Investment Management Agreement for your
Fund.
Proposed Changes in Management Fees
Purpose of Management Fees. Each Fund has hired DMC to serve as its investment
manager. Under the current Investment Management Agreements, the portfolio
management team for each Fund regularly decides which securities or instruments
to buy or sell for the Fund and the investment manager directly or indirectly
arranges for the placement and execution of orders for the purchase or sale of
such securities and instruments. The investment manager is also responsible for
each Fund's regulatory compliance and general administrative operations and
provides regular reports to the Fund's Board of Directors. The management fees
paid by a Fund are used by its investment manager to pay for the personnel,
equipment, office space and facilities that are needed to manage the assets of
the Fund and to administer its affairs.
Reasons for Proposed Changes in Management Fees. At the request of the Boards,
management recently undertook a complete review of the level and structure of
the management fees for each Fund within the Delaware Investments family. The
extensive review process was performed with the guidance of an outside
consultant to help ensure the accuracy of the results and conclusions. The
process involved the comparison of each Fund with its own universe of
"competing" funds, which were identified based on investment objective, asset
type and distribution channel. Once competing funds were identified, management
compared fee rates at various asset sizes to evaluate both fee rates and
breakpoint structures. Management's goal was to establish a consistent fee
structure for the various Delaware Investments Funds that would be competitive
with funds with a similar investment objective and size in the current
marketplace.
Management believes that a competitive management fee structure is needed to
ensure that Delaware Investments will continue to be able to deliver Funds with
competitive expense ratios and provide the increased investment opportunities
and service options that are now available to shareholders. Also, in recent
years, management has noticed increased competition for talented investment and
service professionals along with growing expenses in order to recruit and retain
such personnel. By establishing fee levels at competitive market rates,
management believes it can continue to attract talented professionals and
support high-quality, long-term investment management and shareholder services
to help maintain solid investment performance.
Description of Proposed Changes in Management Fees. As a result of its analysis,
Fund management has identified a number of different management fee pricing
levels to be established for the Funds in the Delaware Investments family, each
reflecting the dynamics and complexity of managing the assets of particular
categories of Funds based on asset type (such as equity or fixed-income),
sub-divisions within asset type (such as "insured" or "non-insured" fixed-income
securities) and geography (such as domestic or international). In addition, Fund
management identified a standardized schedule of breakpoints for Funds at each
of the management fee level categories, so that management fees will be reduced
if a Fund's assets grow to certain levels, in order to allow the Funds to
benefit from economies of scale. The meetings described in this Proxy Statement
are part of a series of shareholder meetings to be held at which the
standardized management fee pricing levels and schedules of breakpoints will be
put into place for many of the Delaware Investments Funds.
The chart included in Exhibit F shows the current and proposed management fee
rates for each Fund and the dollar amounts paid to the investment manager and
its affiliates during the last fiscal year. If a management fee increase is
proposed, the chart shows the dollar amount that the Fund would have paid to DMC
if the proposed management fees had been in effect. The chart also shows whether
DMC has waived any management fees and the effect that such waivers would have
had on the amounts paid under the proposed Agreement. In addition, in order to
demonstrate the effect that the proposed management fee changes are expected to
have on the overall expenses of the Funds, Exhibit G contains a Fee Table for
each Fund for which a management fee increase is proposed, showing the actual
expense levels under the current management fees and the projected expense
levels following implementation of the proposed management fees.
Board Consideration of Proposed Management Agreement Changes. In considering the
proposed management fee changes, the Directors reviewed extensive materials
concerning the methodology used by management to identify competitive peer
groups for comparison and to develop proposed management fee pricing and
breakpoint levels for the various categories of Funds. The Directors reviewed
separate reports for each Fund containing detailed comparative management fee
and expense information of each Fund and other funds in the relevant peer group,
as well as expense ratio comparisons with relevant mutual fund indices. The
Directors assessed how the management fee changes would position each Fund
within its peer group. The Directors also reviewed
-12-
and considered performance and ranking data for each Fund along with other
comparative funds within the investment objective category, as well as a
performance comparison to a relevant securities index for each Fund. In addition
to the expense and performance information, the Directors reviewed the
investment manager's historical profitability with respect to each Fund and the
anticipated effects of any management fee changes.
The Directors also considered the reasons presented by management with respect
to each proposed management fee change, including the anticipated impact of
management fee increases or decreases on shareholders of the Funds. In support
of fee increases for particular Funds, the Directors considered various factors
including the enhanced service options and investment opportunities that are
made available to shareholders, the growing expense associated with recruiting
and retaining qualified investment and service professionals in an increasingly
competitive industry and the importance of supporting quality, long-term service
by investment managers to help achieve solid investment performance.
Following consideration of all of the information and factors discussed above,
the Directors for each Fund, including all of the independent Directors,
unanimously approved the proposed management fee changes.
Other Proposed Changes to Investment Management Agreements
In addition to modifications to the management fee structure, certain other
changes to the Investment Management Agreements are proposed, one or more of
which may apply to a particular Fund. The proposed changes are designed to
eliminate provisions that appear in certain older Funds' Agreements and to
standardize the form of Agreement among all Funds within the Delaware
Investments family. Please refer to the table below to determine whether the
changes are proposed for your Fund's Agreement.
Shareholder Approval of Amendments to Investment Management Agreements. Under
the 1940 Act, shareholder approval is normally required before any fund
investment management agreement can be materially amended. The purpose of this
requirement is to allow shareholders to make decisions concerning provisions of
an investment management agreement that could affect their investment.
Funds are, being askedhowever, permitted to approve Newamend such agreements without shareholder
approval if the change involves a decrease in management fee rates or a
potential decrease due to the introduction or restructuring of breakpoints. In
such cases, the SEC staff believes that mutual funds should not be required to
experience the delay and costs of seeking shareholder approval, since
shareholders are generally assumed to be in favor of management fee decreases.
Each Fund's current Investment Management Agreements with DMC:
Aggressive Growthrequires shareholder
approval of any amendment to the Agreement, regardless of whether shareholder
approval would be required under federal law. Management proposes to change the
Agreements to permit amendments without shareholder approval in appropriate
circumstances like those described above.
Miscellaneous Changes. In addition to the changes discussed above, there are
certain miscellaneous changes designed to standardize the form of Agreement
among all Delaware Investments Funds. First, the Agreements for the Funds will
reflect non-material language and structural changes to conform the Agreements
to the standard Delaware Investments model Agreement. Second, each new Agreement
will contain a provision permitting the names "Delaware," "Delaware Investments"
or "Delaware Group" to be used by other Funds, series or classes, whether
already existing or to be created in the future, which are, or may be, sponsored
or advised by DMC. The first Delaware Investments Fund Iowato use the word
"Delaware" in its name was the Delaware Balanced Fund Florida(formerly Delaware Fund)
series of Delaware Group Equity Funds I, Inc., which was originally established
in 1938. DMC understands that the Delaware Balanced Fund National High Yield Fund
Florida Insured Fund New York Fund
Florida Limited Term may have a claim to the
use of the name "Delaware." Without reaching any conclusion as to such claim,
each Agreement will recognize the ability of multiple Funds to use the words
described above in their names.
Summary of Changes to Investment Management Agreements
The following table lists all of the Funds for which new Investment Management
Agreements are proposed, as well as the types of changes that are proposed for
each Agreement.
Elimination of Shareholder
Company/Fund Name Management Fee Change Approval for Amendments
----------------- --------------------- -----------------------
Voyageur Funds, Inc.
Delaware Voyageur US Government Securities Fund 0.05% increase/add breakpoints X
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund Potential decrease due to addition of breakpoints X
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Elimination of Shareholder
Company/Fund Name Management Fee Change Approval for Amendments
----------------- --------------------- -----------------------
Delaware-Voyageur Tax-Free Minnesota Insured Fund Potential decrease due to addition of breakpoints X
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Minnesota Intermediate Fund 0.10% increase/add breakpoints X
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free California Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free Idaho Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free Iowa Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Minnesota High Yield Municipal 0.10% decrease/add breakpoints X
Bond Fund
National High-Yield Municipal Bond Fund 0.10% decrease/add breakpoints X
Delaware-Voyageur Tax-Free New York Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free Wisconsin Fund 0.05% increase/add breakpoints X
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund 0.05% increase/add breakpoints X
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund 0.25% decrease/add breakpoints X
Growth Stock Fund 0.35% decrease/add breakpoints X
Tax-Efficient Equity Fund Potential decrease due to change in breakpoints X
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund 0.05% increase/add breakpoints X
Delaware-Voyageur Tax-Free North Dakota Fund 0.05% increase/add breakpoints X
Information About the Investment Manager
DMC serves as investment manager for each of the Funds. DMC is registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Advisers
Act") and, together with its predecessors, has been managing funds within the
Delaware Investments family since 1938. DMC is located at One Commerce Square,
Philadelphia, Pennsylvania 19103.
On November 1, 1998, DMC was managing approximately $15.8 billion in assets in
various open-end and closed-end mutual fund accounts. Other affiliates of DMC
were managing additional institutional and separate account assets in the amount
of $17.3 billion on that date.
DMC is an indirect, wholly owned subsidiary of LNC. Portfolio managersLincoln National Corporation,
also known as Lincoln Financial Group. Lincoln National Corporation, with
headquarters in Fort Wayne, Indiana, is a diversified organization involved in
many aspects of the financial services industry, including insurance and
investment management.
DMC also provides investment management or sub-advisory services to other Funds
within the Delaware Investments family which have investment objectives that are
similar to those of the Funds managed by DMC will be individuals currently employed by DMC. Thus,
these Funds will experience a change in portfolio management. However, it is
intended that Growth Stock Fund will continue to be managed by James C. King
pursuant to a sub-advisory agreement. See "Proposal Three--Proposal to Approve a
Sub-Advisory Agreement Pursuant to which Voyageur Asset Management LLC Would
Manage the Assets of Growth Stock Fund." Aggressive Growth Fund will be managed
by Edward N. Antoian and Gerald S. Frey. Florida Insured Fund, Florida Limited
Term Fund, Florida Fund, National High Yield Fund and New York Fund will be
managed by Patrick P. Coyne and Mitchell. L. Conery. Biographical information
for Messrs. Antoian, Frey, King, Coyne and Conery can be found below under
"Executive Officers of Voyageur Funds." Iowa Fund and Wisconsin Fund will be
managed by Ms. Howell.
BOARD OF DIRECTORS RECOMMENDATION
The Boards of Directors of each Company, including the disinterested
directors, voted to approve the New Agreements. For information about each
Board's deliberations and the reasons for its recommendation, please see
"Evaluation of the Merger by the Boards of Directors" near the end of this
Proposal Two.
The Boards of Directors recommend that shareholders of each Fund vote
FOR approval of such Fund's New Agreement.
COMPARISON OF NEW AGREEMENTS AND CURRENT AGREEMENTS
Except as described below, each Fund's New Agreement will contain the
same terms and conditions as are contained in such Fund's Current Agreement,
including the investment advisory fees payable by the Fund. A form of New
Agreement is attached to this Proxy Statement applies. For the
names of such other funds, together with the current (and proposed, in some
cases) management or sub-advisory fee rates for such funds, see Exhibit H.
DMC is a series of Delaware Management Business Trust. The Trustees who operate
the business and their principal occupations (which are positions with DMC) are
as follows: Wayne A. Stork, Chairman, President, Chief Executive Officer and
Chief Investment Officer; Richard G. Unruh, Jr., Executive Vice President; David
K. Downes, Executive Vice President, Chief Operating Officer and Chief Financial
Officer; and George M. Chamberlain, Jr., Senior Vice President and Secretary;
and John B. Fields, Vice President/Senior Portfolio Manager.
Other Information Relevant to Approval of
Investment Management Agreements
The form of proposed Investment Management Agreement for the Funds is attached
as Exhibit A. The following
discussionI. 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 qualified in its entiretyspecifically approved at least annually with
respect to each Fund by reference to the text(i) a vote of such New
Agreement. If approved by shareholders, the New Agreements will take effect upon
consummationa majority of the Merger.
ADVISORY SERVICES. Pursuant to both the Current Agreements and the New
Agreements, either VFMBoard of
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Directors, or DMC, as the case may be (sometimes referred to
hereinafter as the "Adviser"), has the sole and exclusive responsibility for the
management(ii) a vote of a majority of the respective Fund's portfolio and the making and execution of
all investment decisions for the Fund subject to the objectives and investment
policies and restrictionsoutstanding voting securities of
the Fund, and subject to the supervision(iii) in either case, separately by a majority of the Company's Board of Directors; provided that under the New Agreements the Adviser
may retain one or more sub-advisers. See "Ability to Retain a Sub-Adviser"
below. Under the Current Agreements and the New Agreements the Adviser is
required to furnish, at its own expense, office facilities, equipment and
personnel for servicing the investments of each Fund. In addition, the Adviser
is required, if a Company so requests, to arrange for its officers and employees
to serve without compensation from the Funds as directors, officers or employees
of the Companies if duly elected to such positions by the shareholders or
directors of the Companies.
COMPENSATION. Investment advisory fees payable by each Fund under its
Current AgreementDirectors
who are identical to fees which will be payable under its New
Agreement except that, as describednot "interested persons" (as defined in the following paragraph, under certain
Current Agreements, VFM is contractually obligated to waive its advisory fee if
total1940 Act). Each current and
proposed Agreement may be terminated without penalty by (i) the Fund, operating expenses exceedby a certain level. As compensation for the
Adviser's services, each Fund is obligated to pay to the Adviser a monthly
investment advisory fee in the amount set forth in the table on page 12, below.
The fee is based on the average daily value of each Fund's net assets at the
close of business of each business day.
FEE AND EXPENSE LIMITATIONS. Under each Fund's Current Agreement (other
than the Current Agreements of Growth Fund, Aggressive Growth Fund and Growth
and Income Fund), VFM is contractually obligated to waive its advisory fee if
and to the extent that aggregate Fund operating expenses exceed 1% of the Fund's
average daily net assets. Fund operating expenses are defined to include, among
other expenses, the advisory fee paid to VFM under the Current Agreement, the
administrative services fee paid to VFM under the Fund's Administrative Services
Agreement and deferred organizational costs, but to exclude interest, taxes,
brokerage fees and commissions, insurance premiums on portfolio securities (with
respect to those Funds that invest in insured municipal bonds) and Rule 12b-1
plan fees. The Current Agreements of Growth Fund, Aggressive Growth Fund and
Growth and Income Fund do not include contractual expense limitation provisions.
The New Agreements will not include any contractual expense limitation
provisions. However, DMC has committed, for a period of two years following the
date of Closing, to voluntarily waive fees and/or pay Fund expenses to the same
extent, if any, as would have been necessary to comply with such contractual
provisions.
Under both the Current Agreements and the New Agreements, all costs and
expenses incurred in the operation of the Funds, to the extent not specifically
assumed by the Adviser or the Funds' distributor, are the responsibility of the
Funds.
ABILITY TO RETAIN A SUB-ADVISER. The Current Agreements provide that
VFM shall have the sole and exclusive responsibility for the management of each
Fund's investment portfolio and for making and executing all investment
decisions for each Fund. Each New Agreement authorizes the Adviser, at its
expense, to retain a sub-adviser or sub-advisers to perform some or all of the
services for which the Adviser is responsible under the New Agreement. Any
retentionvote
of a sub-adviser is subject to approval bymajority of the Board of Directors, and
the shareholdersor (ii) by a vote of a majority of the
respective Fund.
STANDARD OF CARE. The Current Agreements do not contain an explicit
standardoutstanding voting securities of care. The New Agreements providea Fund, or (iii) by DMC or DIAL, as relevant,
at any time on 60 days' written notice. Each Agreement will also terminate
automatically upon its "assignment," as that term is defined in the absence1940 Act.
Under each of willful
misfeasance, bad faith, gross negligence or a reckless disregard of its duties,
the Adviser shall not be liablecurrent and proposed Agreements, best efforts are used to
the Funds or their shareholders for any
action or omission in the course of, or connected with, rendering services under
the New Agreements or for any losses that may be sustained in the purchase,
holding or sale of any security, or otherwise.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE. The New Agreements
each provide that, subject to the primary objective of obtainingobtain the best available pricesprice and most favorable execution the Adviserfor portfolio
transactions. Orders may place ordersbe placed with brokers or dealers who provide brokerage
and research services to the Adviserinvestment manager or itstheir advisory clients. The New Agreements also provide that, toTo
the extent consistent with the Rulesrequirements of the Securities and Exchange Commissionrules of the SEC and the
National Association of Securities Dealers, Inc., these orders may be placed
with brokers who sell shares of the Funds to which the Adviser provides advisory services.Funds. The services whichprovided may be provided to the Adviser 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 will beare used by the Adviserinvestment manager in connection with
itstheir investment decision-making process with respect to one or more Funds andor
accounts that it
manages,they manage, and need not be used, or used exclusively with respect to the
Fund or account generating the brokerage.
The NewAs provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, also provide that higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In some
instances, services provided constitute in some part brokerage and research
services used in connection with the investment decision-making process and
constitute in some part services used in connection with administrative or other
functions not related to the investment decision-making process. In such cases,
the investment manager will make a good faith allocation of brokerage and
research services and will pay out of their own resources for services used by
them in connection with administrative or other functions not related to the
investment decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the investment manager or sub-adviser shall
not be liable to the Fund or any shareholder of the Fund for any action or
omission in the course of, or in connection with, rendering services under a
current or proposed Agreement, or for any losses that may be sustained in the
purchase, holding or sale of any security or otherwise.
Other Agreements with the Funds
Each Company is currently party to a Distribution Agreement relating to the
Funds with Delaware Distributors, L.P. (the "Distributor"), an affiliate of DMC.
The Distributor's principal address is 1818 Market Street, Philadelphia, PA
19103. Pursuant to the Distribution Agreement, the Distributor provides
underwriting, distribution and marketing services to the Funds. The Agreement
includes references to distribution plans adopted pursuant to Rule 12b-1 under
the 1940 Act. The Companies are also parties to a Shareholders Services
Agreement and a Fund Accounting Agreement with Delaware Service Company, Inc.
("DSC"), an affiliate of DMC, pursuant to which DSC provides fund accounting,
shareholder servicing, dividend disbursing and transfer agency services. Exhibit
F to this Proxy Statement lists the amount of any payments made to the
Distributor pursuant to Rule 12b-1 Plans and to DSC pursuant to service
agreements, for each Fund's most recently completed fiscal year.
Proposal Six: To Approve a New Sub-Advisory Agreement for the Fund
This Proposal only applies to the following Funds:
Voyageur Funds, Inc. Voyageur Mutual Funds III, Inc.
Delaware-Voyageur US Government Securities Fund Growth Stock Fund
Shareholders of the two Funds listed above are being asked to approve a new
Sub-Advisory Agreement with their Fund's existing sub-adviser. Exhibit F to this
Proxy Statement lists the current sub-adviser for each Fund, along with the
sub-advisory fee rates and other information about the current sub-advisory
agreements. New Agreements are required at this time because the existing
Agreements will terminate if new Investment Management Agreements are approved
as described in Proposal Five.
The proposed Sub-Advisory Agreements do not contain any changes in sub-advisory
fee rates and are largely identical to the current Sub-Advisory Agreements.
There are no provisionsa number of minor changes in language in the Current
Agreements addressingform of the Agreement,
which are designed to result in a single, standardized Agreement among all
Delaware Investments Funds that utilize sub-advisers.
-15-
One new provision requires the sub-adviser for the two Funds listed above to
share in any fee waiver or expense limitation arrangement entered into by the
investment manager for those Funds. This provision does not affect the amounts
to be paid by the Fund, but the sub-adviser may receive less, depending on
management fee waivers or expense limitations.
Required Vote. Approval of this Proposal for a Fund requires the vote of a
"majority of the outstanding voting securities" of the Fund, which means the
vote of: (i) more than 50% of the outstanding voting securities of the Fund; or
(ii) 67% or more of the voting securities of the Fund present at a meeting, if
the holders of more than 50% of the outstanding voting securities are present or
represented by proxy, whichever is less.
The proposed Sub-Advisory Agreement for these issues. Disclosure inFunds will not take effect until
shareholders approve a new Investment Management Agreement for each Fund's current Prospectus
and StatementFund.
[(Delaware to confirm:)] If a proposed Sub-Advisory Agreement is not approved
for a Fund, the investment manager will take responsibility for all aspects of
Additional Information provides, however, that the Adviser may
engage ininvestment management until such practices.
TERM. Iftime as a new sub-advisory arrangement is
approved by shareholders, the NewBoard of Directors and by shareholders.
The Board of Directors for each Fund has unanimously approved the proposed
Sub-Advisory Agreements will become
effective upon consummationand recommends that you vote FOR the new Sub-Advisory
Agreement for your Fund.
Information About the Sub-Adviser
Voyageur Asset Management LLC ("VAM") is the sub-adviser for the
Delaware-Voyageur US Government Securities Fund of Voyageur Funds, Inc. and the
Growth Stock Fund of Voyageur Mutual Funds III, Inc. VAM is registered as an
investment adviser under the Advisers Act and has been providing advisory
services to the US Government Securities Fund since [_______________] and to the
Growth Stock Fund since [____________________]. VAM is located at 90 South
Seventh Street, Suite 4400, Minneapolis, MN 55402.
On [November 30, 1998], VAM was managing approximately [$___________] in assets
for _________________[SRSY is in the process of compiling more complete
information from VAM].
VAM is a [provide Parent info]. [Name and principal occupation of the Mergerprincipal
executive officer and will haveeach director of the firm to be described here; along with
information about any firm officers or directors who serve as officers or
directors of the Fund - SRSY is in the process of compiling this information
from VAM.]
Other Information Relevant to Approval of
Sub-Advisory Agreements
The form of proposed Sub-Advisory Agreement for the Funds is attached as Exhibit
J. Each Current and Proposed Agreement has an initial termsterm of two years. Thereafter, as is also the case with the Current Agreements, each Fund's
New Agreementyears and
provides that it will thereafter continue in effect from year to year only if
such continuation is specifically approved at least annually (a)with respect to
each Fund by (i) a vote of a majority of the Fund's Board of Directors, or by the(ii) a vote
of a majority of the outstanding voting securities of the Fund, and (b)(iii) in
either case, separately by the vote of a majority of the directors
of the FundDirectors who are not parties to the Agreement or interested persons"interested
persons" (as defined in the 1940 Act) of any such party, cast in person at a meeting of the
Board of Directors of the Fund called for the purpose of voting on such
approval. In the case of both the New Agreements. Each current and the Current Agreements,
eachproposed Agreement may
be terminated by the Fund or by the Adviser on 60 days'
notice to the other party, and terminates automatically upon its assignment.
OTHER INFORMATION RELATED TO ADVISORY AGREEMENTS
The first table below sets forth for each Fund the date of such Fund's
Current Agreement, the date on which such Agreement was last submitted to a vote
of the shareholders of the Fund, the purpose of such submission, the rate of
compensation payable under such Agreement, advisory fees paid to and waived by
VFM for the Fund's last fiscal year and the Fund's net assets at December 31,
1996. The second table sets forth for each Fund's last fiscal year
administrative services fees paid to VFM under the Fund's Administrative
Services Agreement, commissions paid to VFD under the Fund's Distribution
Agreement, and Rule 12b-1 fees paid to VFD under the Fund's Plan of
Distribution.
Date Last Net Assets
Date of Submitted to Purpose of Rate of Advisory Advisory of Fund
Agmt Shareholders Submission Compensation* Fees Paid Fees Waived at 12/31/96
---- ------------ ---------- ------------- --------- ----------- ------------
AZ Insured 11/1/93 10/13/93 (3) 0.50% $1,119,609 $ 0 $212,922,363
AZ Tax Free 3/1/95 (4) (4) 0.50% $ 0 $ 0 $ 0
CA Insured 11/1/93 10/13/93 (3) 0.50% $ 192,101 $ 75,000 $ 37,323,194
CA Tax Free 3/1/95 (4) (4) 0.50% $ 7,369 $ 7,369 $ 1,972,477
CO Tax Free 11/1/93 9/28/94 (2) 0.50% $1,865,515 $ 0 $364,022,636
FL Ltd Term 5/2/94 (4) (4) 0.40% $ 11,429 $ 11,429 $ 4,255,243
FL Insured 11/1/93 10/13/93 (3) 0.50% $1,074,026 $ 25,000 $195,392,923
FL Tax Free 3/1/95 (4) (4) 0.50% $ 29,915 $ 29,915 $ 7,411,424
MN Ltd Term 11/1/93 10/13/93 (3) 0.40% $ 281,038 $ 0 $ 67,569,891
MN Insured 11/1/93 10/13/93 (3) 0.50% $1,518,301 $ 0 $314,820,291
MN Tax Free 11/1/93 10/13/93 (3) 0.50% $2,222,690 $ 0 $437,696,176
MN High Yield 6/3/96 (4) (4) 0.65% $ 17,203 $ 17,203 $ 9,705,551
ID Tax Free 12/1/94 (4) (4) 0.50% $ 131,410 $130,000 $ 33,451,212
IA Tax Free 11/1/93 (4) (4) 0.50% $ 217,160 $ 5,000 $ 42,352,589
KS Tax Free 11/1/93 10/13/93 (3) 0.50% $ 60,154 $ 30,000 $ 12,668,250
MO Insured 11/1/93 10/13/93 (3) 0.50% $ 290,247 $ 95,000 $ 59,885,472
NTL High Yield 11/13/96 (4) (4) 0.65% $ 140,548 $ 35,572 $ 59,192,976
NY Tax Free 11/20/96 (4) (4) 0.50% $ 17,615 $ 17,615 $ 10,351,401
NM Tax Free 11/1/93 10/13/93 (3) 0.50% $ 107,784 $ 0 $ 21,268,754
ND Tax Free 11/1/93 10/13/93 (3) 0.50% $ 175,239 $ 0 $ 34,454,124
OR Insured 11/1/93 10/13/93 (3) 0.50% $ 124,769 $ 65,000 $ 26,031,139
UT Tax Free 11/1/93 10/13/93 (3) 0.50% $ 21,935 $ 21,935 $ 4,258,007
WA Insured 11/1/93 10/13/93 (3) 0.50% $ 12,662 $ 12,662 $ 2,917,416
WI Tax Free 11/1/93 (4) (4) 0.50% $ 141,262 $ 10,000 $ 30,186,630
Agg Growth 5/16/94 (4) (4) 1.00% $ 34,256 $ 25,000 $ 5,442,223
Growth 9/1/95 8/21/95 (1) 1.00% $ 222,957 $ 25,000 $ 32,079,713
- ------------------------
* As a percentage of average daily net assets.
(1) To approve an increase in advisory fees.
(2) To ratify the Advisory Agreement.
(3) To approve a new Advisory Agreement (same terms and fees) with VFM as a
result of a change in control in the Adviser.
(4) Not submitted to public shareholders.
Commissions
Retained by
Administrative VFD under Rule 12b-1
Fees Paid Administrative Distribution Fees Paid Rule 12b-1
to VFM Fees Waived Agreement to VFD Fees Waived
------ ----------- --------- ------ -----------
AZ Insured $307,939 $ 0 $ 40,338 $ 140,267 $ 293,789
AZ Tax Free $ 35,594 $ 34,536 $ 13,217 $ 21,757 $ 2,854
CA Insured $ 85,853 $ 0 $ 14,226 $ 38,694 $ 22,641
CA Tax Free $ 20,859 $ 21,559 $ 1,641 $ 1,892 $ 811
CO Tax Free $438,237 $ 0 $ 68,666 $ 320,190 $ 500,871
FL Ltd Term $ 23,812 $ 21,512 $ 1,233 $ 4,623 $ 5,417
FL Insured $324,664 $ 0 $ 20,261 $ 14,422 $ 483,322
FL Tax Free $ 28,312 $ 30,812 $ 5,271 $ 6,210 $ 3,755
MN Ltd Term $115,484 $ 0 $ 5,306 $ 80,724 $ 124
MN Insured $353,378 $ 0 $ 33,673 $ 55,021 $ 6,996
MN Tax Free $504,689 $ 0 $ 69,682 $ 264,477 $ 8,024
MN High Yield $ 12,121 $ 13,721 $ 20 $ 7,608 $ 0
ID Tax Free $ 64,457 $ 0 $ 32,689 $ 28,358 $ 9,559
IA Tax Free $103,079 $ 0 $ 26,641 $ 9,593 $ 58,179
KS Tax Free $ 42,148 $ 0 $ 7,686 $ 11,977 $ 16,119
MO Insured $130,186 $ 0 $ 29,607 $ 50,306 $ 103,956
NTL High Yield $ 8,025 $ 0 $ 0 $ 27 $ 17,451
NY Tax Free $ 3,400 $ 5,447 $ 1 $ 288 $ 0
NM Tax Free $ 57,384 $ 0 $ 6,724 $ 4,600 $ 41,408
ND Tax Free $ 88,034 $ 0 $ 5,425 $ 2,849 $ 72,351
OR Insured $ 66,238 $ 0 $ 20,166 $ 24,373 $ 33,580
UT Tax Free $ 26,694 $ 8,065 $ 800 $ 2,499 $ 9,557
WA Insured $ 23,166 $ 21,966 $ 2,196 $ 1,938 $ 4,501
WI Tax Free $ 71,833 $ 0 $ 11,170 $ 7,264 $ 21,850
Agg Growth $ 26,121 $ 0 $ 608 $ 227 $ 0
Growth $ 80,534 $ 0 $ 6,662 $ 47,797 $ 0
Growth & Income $ 14,750 $ 10,744 $ 0 $ 30 $ 0
FEES AND EXPENSES
As discussed above, certain Current Agreements contain contractual
expense limitations. The New Agreements will not contain any such limitations.
However, DMC has committed for a period of two years following the date of the
Closing of the Merger to waive fees and/or pay Fund expenses to the same extent,
if any, as would have been necessary had such contractual expense limitations
remained in place. VFM has also undertaken in the current Prospectuses of
certain Funds to voluntarily waive fees or reimburse expenses in addition to
those that it is contractually required to waive or reimburse under the Current
Agreements. DMC has agreed that it will waive fees and/or pay Fund expenses
consistent with such Prospectus disclosed expense limitations at least through
December 31, 1997.
In addition to the contractual and prospectus imposed expense
limitations described above, VFM and VFD have, on a voluntary basis, waived
additional fees and reimbursed additional Fund expenses for certain Funds. The
amount of such voluntary fee waivers and expense reimbursements has varied from
year to year depending on VFM's and VFD's assessment of market conditions.
Senior management of VFM and VFD have reviewed with senior management of DMC,
Delaware Distributors and Delaware Service the amount of fees and expenses that
VFM and VFD expected to waive or reimburse during 1997 and the expected total
expense ratios for each Fund for 1997, and the expected total expense ratios for
each Fund for 1997, after taking into account such fee waivers and expense
reimbursements. DMC currently expects to voluntarily waive fees and/or pay Fund
expenses following the Closing and through December 31, 1997 to the extent
necessary to cause the total expense ratio for Class A of each Fund to be the
same as the total expense ratio that senior management of VFM and VFD projected
for such class of each such Fund during 1997. Expense ratios for Class B and
Class C of each Fund are expected to vary from the expense ratio for Class A by
the amount of the difference in the Rule 12b-1 plan fees payable for each class.
In accordance with DMC's standard process, it is expected that, commencing in
1998, the voluntary fee waivers and expense limitations described in this
paragraph will be reviewed on a semi-annual basis and may be adjusted or
eliminated from time to time based on factors determined by DMC, Delaware
Distributors and Delaware Service to be relevant. Notwithstanding any possible
adjustment or elimination of voluntary fee waivers or expense limitations, fees
paid to VFM or DMC for investment management services after the Closing will not
exceed those set forth in the New Agreements being considered for approval at
the Meeting unless shareholder approval is obtained. Nor will Rule 12b-1 Plan
payments for each class of the Fund exceed the levels set forth in the Funds'
existing Rule 12b-1 Plans, without shareholder approval.
EVALUATION OF THE MERGER BY THE BOARDS OF DIRECTORS
On January 15, 1997, the Boards of Directors of the Companies were
informed by VFM that DFG had entered into the Merger Agreement. After such
notification, the Boards were advised by counsel to the Funds regarding their
fiduciary obligations and the nature and extent of the information that they
should consider requesting in order to evaluate the New Agreements and the
potential impact of the Merger on the Funds and their shareholders. A special
meeting of the Boards was held on January 28, 1997, at which meeting the Boards
met with various executive officers of LNC, DMC, Delaware Distributors and
Delaware Services ("DMH representatives"). These individuals presented to Board
members background information on LNC, information on DMC, including its
experience in municipal bond fund, fixed income fund and equity fund management,
and the structure of and rationale behind the proposed Merger. They also
discussed with Board members the organizational continuity that would follow the
Merger, noting in particular that the majority of the Funds would continue to be
managed by their current portfolio managers. They also discussed the
capabilities of Delaware Distributors and Delaware Service and described the
Transition Services Agreement referred to above that was designed to help
provide continuity with respect to shareholder servicing, fund accounting and
dividend disbursing and transfer agency services. DMH representatives summarized
other benefits that the Merger, in their opinion, could bring to Fund
shareholders, including benefits in the areas of customer service and fund
accounting, improved distribution as a result of the strength of Delaware
Distributors, and access through a net asset value exchange privilege to all
open-end mutual funds in the Delaware Group.
At the meeting, the Boards appointed a special committee made up of
disinterested directors (the "Special Committee") to further consider and make
recommendations to the Boards as to the appropriateness of the proposed
transactions. Those directors who are members of the Special Committee are James
W. Nelson and Thomas F. Madison. On February 5, 1997, the Special Committee
travelled to DMH's headquarters and met with senior management representatives
of DMC, Delaware Distributors and Delaware Service to review various aspects of
the proposed Merger, the background of DMC and its affiliates, DMC's operational
capabilities and compliance functions and future plans for the Funds. The
Special Committee also met with outside counsel to the funds in the Delaware
Group, a representative of Ernst & Young LLP, the independent public accountants
to the funds in the Delaware Group, proposed portfolio managers for some of the
Funds and with certain nominees to the Funds' Boards.
At a meeting on February 7, 1997, the Boards of Directors of the Funds
met to review with the Special Committee the findings of such committee. The
Boards also met with senior management representatives of DMC, Delaware
Distributors and Delaware Service and reviewed substantial additional
information, including information regarding the following points: (a) the
structure of the Merger; (b) the performance and abilities of DMC, including
performance information for funds in the Delaware Group; (c) benefits of the
Merger to Fund shareholders; (d) Fund expenses following the transaction; (e)
proposed staffing and personnel relative to the Funds; (f) organizational style;
(g) the financial condition of LNC and its affiliates; (h) the fact that
consolidations of the Funds currently are not being considered; (i) anticipated
changes in Fund officers and counsel; (j) the compliance philosophy and record
of DMC and its affiliates; (k) distribution, shareholder servicing and fund
accounting; and (l) pro forma profitability information (in connection with
providing advisory, distribution and other services to the Funds) for DMC,
Delaware Distributors and Delaware Service, assuming consummation of the Merger.
A final meeting of the Boards was held on February 14, 1997 for the
purpose of approving the Funds' New Agreements. At such meeting, each Company's
Board recommended that the shareholders of each Fund that is a series of such
Company approve the Fund's New Agreement, to become effective as of the closing
of the Merger. During its deliberations the Board noted, in particular, the
following:
* Each Fund's New Agreement contains substantially the same
material terms and conditions as are contained in the Fund's
Current Agreement except that, as discussed above, the New
Agreements do not contain contractual expense limitation
provisions and they allow the Adviser to retain one or more
sub-advisers.
* DMC has committed, for a period of two years following the
date of Closing, to voluntarily waive fees and/or pay Fund
expenses to the same extent, if any, as would have been
necessary to comply with the contractual expense limitations
in the Current Agreements.
* The Funds will not bear any costs or expenses in connection
with the Merger, including the costs of this proxy
solicitation.
* No change in any Fund's investment objectives or fundamental
policies are contemplated in connection with the Merger.
* The Merger is expected to result in a number of benefits to
shareholders, including access through a net asset value
exchange privilege to all of the open-end mutual funds in the
Delaware Group.
* The Merger is not expected to cause any change in the
investment personnel managing the majority of the Funds.
The Board also considered Section 15(f) of the 1940 Act during its
deliberations. Section 15(f) provides a "safe harbor" from the 1971 case of
ROSENFELD V. BLACK, in which the U.S. Court of Appeals for the Second Circuit
held that an investment adviser is prohibited from benefitting financially in
connection with the sale or assignment of its advisory office to another
investment adviser. Under the ROSENFELD analysis, any compensation received by
an investment adviser or an affiliate thereof in connection with the transfer or
assignment of an investment advisory agreement arguably would be prohibited if
all or any portion of such compensation constitutes consideration for the
assistance by such investment adviser or affiliate thereof in facilitating the
transfer of the investment advisory office to the successor adviser. The Section
15(f) safe harbor is available if two conditions are met. First, for a period of
three years after the transaction at least 75% of the board members of the
investment company must not be "interested persons" (within the meaning of the
1940 Act) of the new or predecessor investment adviser. The Board of Directors
which shareholders are being asked to elect in Proposal One, above, consists of
eight directors, two of whom, Jeffrey J. Nick and Wayne A. Stork, are interested
persons of LNC, and none of whom are interested persons of VFM. Accordingly, the
composition of the proposed Board of Directors would be in compliance with this
provision of Section 15(f). Second, an "unfair burden" must not be imposed upon
the investment company as a result of such transaction or any express or implied
terms, conditions or understandings applicable thereto. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during a two-year period
after the transaction whereby the investment adviser, or any interested person
of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its shareholders (other
than fees for bona fide investment advisory or other services) or from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter for such investment company). In
connection therewith, LNC represented to the Board that it will use its best
efforts to assure that the Funds do not execute any portfolio transactions
through an affiliate of LNC for a period of at least two years following
consummation of the Merger.
LNC has represented in the Merger Agreement that neither LNC nor any of
its affiliates has any express or implied understanding or arrangement which
would impose an unfair burden on any of the Funds or would in any way violate
Section 15(f) of the 1940 Act as a result of the transactions contemplated by
the Merger Agreement.
VOTE REQUIRED
THE BOARDS OF DIRECTORS RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE
IN FAVOR OF APPROVAL OF SUCH FUND'S NEW AGREEMENT. Approval of the proposal for
a Fund requires the favorable vote of a majority of the outstanding shares of
such Fund, as defined in the 1940 Act, which means the lesser of the vote of (a)
67% of the shares of the Fund present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund. Unless otherwise instructed, the proxies
will vote to approve the New Agreements.
PROPOSAL THREE
PROPOSAL TO APPROVE A SUB-ADVISORY AGREEMENT
PURSUANT TO WHICH VOYAGEUR ASSET MANAGEMENT LLC
WOULD MANAGE THE ASSETS OF GROWTH STOCK FUND
THE PROPOSED SUB-ADVISORY AGREEMENT
As set forth in Proposal Two, shareholders of Growth Stock Fund are
being asked to approve a new investment advisory agreement with DMC. DMC
believes that Growth Stock Fund is an appropriate addition to the Delaware
Group, since it is not duplicative of any of the Delaware Group's current funds.
However, DMC does not believe that it currently has adequate resources to manage
this type of Fund. Therefore, DMC proposed that the Board of Directors approve a
sub-advisory agreement (the "Sub-Advisory Agreement") between DMC and Voyageur
Asset Management LLC ("VAM LLC"). It is expected that VAM LLC will be a wholly
owned subsidiary of DFG LLC formed as a part of the Reorganization. See
"Background." After the Merger, VAM LLC is expected to conduct the private
account investment advisory business formerly conducted by VFM. The current
portfolio manager for Growth Stock Fund, James C. King, will be an employee of
VAM LLC following the Merger and, if the proposed Sub-Advisory Agreement is
approved, will continue to act as Growth Stock Fund's portfolio manager after
the Merger. Mr. King was a director of VFM and VFD from 1993 through 1995 and
has been a Senior Equity Portfolio Manager of VFD since 1990. He has over 30
years of investment experience. The Board of Directors of Growth Stock Fund has
approved, and recommends that Growth Stock Fund shareholders approve, the
Sub-Advisory Agreement. If approved by shareholders, the Sub-Advisory Agreement
would be effective upon closing of the Merger. The form of Sub-Advisory
Agreement is attached as Exhibit B to this Proxy Statement. The following
discussion is qualified in its entirety by reference to the text of the
Sub-Advisory Agreement.
Under the terms of the Sub-Advisory Agreement, and subject to the
supervision of DMC, VAM LLC will direct the investment of Growth Stock Fund's
assets and will be responsible for the formulation and implementation of a
continuing program for the management of the Fund's assets and resources. VAM
LLC will make all determinations with respect to the investment of the assets of
Growth Stock Fund and will take such steps as may be necessary to implement the
determinations, including the placement of purchase and sale orders on behalf of
the Fund.
The Sub-Advisory Agreement provides that DMC shall pay VAM LLC a
monthly management fee at an annual rate of [0.__%] of Growth Stock Fund's
average daily net assets during each month. VAM LLC's sub-advisory fee will be
paid by DMC, not by Growth Stock Fund.
The Sub-Advisory Agreement will terminate automatically in the event of
its assignment. In addition, the Sub-Advisory Agreement is terminable at any
time, without penalty by (i) the Board of Directors of Growth Stock Fund, or by a vote of a majority of the
Fund's outstanding voting securities on 60 days'
written notice to DMC and VAM LLC, by DMC on 60 days' written notice to VAM LLC,
or by VAM LLC on 60 days' written notice to the DMC. The Sub-Advisory Agreement
shall have an initial term of two years and thereafter shall continue in effect
only so long as such continuance is specifically approved at least annually by
either the Board of Directors, of Growth Stock Fund, or by a vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the Fund,
provided that, in either event, such continuance is also approved(ii) by a vote of a majority of the outstanding voting
securities of a Fund, or (iii) by the sub-adviser at any time on 60 days'
written notice. Each Agreement will also terminate automatically upon its
"assignment," as that term is defined in the 1940 Act.
Under each of the current and proposed sub-advisory agreements, best efforts are
used to obtain the best available price and most favorable execution for
portfolio transactions. Orders may be placed with brokers or dealers who provide
brokerage and research services to the investment manager, sub-adviser or their
advisory clients. To the extent consistent with the requirements of the rules of
the SEC and the National Association of Securities Dealers, Inc., these orders
may be placed with brokers who sell shares of the Funds. The services provided
may include advice, either directly or through publications or writings, as to
the value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software and hardware used in
security analyses; and providing portfolio performance evaluation and technical
market analyses. Such services are used by the investment manager or sub-adviser
in connection with their investment decision-making process with respect to one
or more Funds or accounts that they manage, and need not be used exclusively
with respect to the Fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the current and proposed
Agreements, higher commissions are permitted to be paid to broker/dealers who
provide brokerage and research services than to broker/dealers who do not
provide such services, if such higher commissions are deemed reasonable in
relation to the value of the brokerage and research services provided. In
-16-
some instances, services provided constitute in some part brokerage and research
services used in connection with the investment decision-making process and
constitute in some part services used in connection with administrative or other
functions not related to the investment decision-making process. In such cases,
the sub-adviser will make a good faith allocation of brokerage and research
services and will pay out of their own resources for services used by them in
connection with administrative or other functions not related to the investment
decision-making process.
The current and proposed Agreements provide that, in the absence of willful
misfeasance, bad faith, gross negligence or a reckless disregard to the
performance of its duties to a Fund, the sub-adviser shall not be liable to the
Fund or any shareholder of the Fund for any action or omission in the course of,
or in connection with, rendering services under a current or proposed Agreement,
or for any losses that may be sustained in the purchase, holding or sale of any
security or otherwise.
Proposal Seven: To Ratify the Selection of Ernst & Young LLP as Independent
Auditors for the Company
This Proposal applies to all Companies.
The Boards of Directors have selected Ernst & Young LLP as independent auditors
of each Company for the current fiscal year and shareholders are asked to ratify
this selection. Ernst & Young LLP's principal address is Two Commerce Square,
Philadelphia, PA 19103. A representative from Ernst & Young LLP is expected to
be present at the meeting. The representative of Ernst & Young LLP will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions. Each Companies' Audit Committee
meets periodically with the representatives of Ernst & Young LLP to receive
reports from Ernst & Young LLP and plan for the Companies' audits.
Required Vote. A simple majority (more than 50%) of the outstanding voting
securities of each Company, regardless of individual Funds within a Company, is
required to ratify the selection of Ernst & Young LLP as independent auditor for
each such Company.
The Board of Directors of each Company unanimously recommends that you ratify
the selection of Ernst & Young LLP as independent auditors for such Company for
the current fiscal year.
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Proposal Eight: To Approve the Reorganization of the Company from a Minnesota
Corporation into a Delaware Business Trust and the Dissolution of the Minnesota
Corporation
This Proposal applies to all Companies.
The Board of Directors of each Company (the "Current Boards") has approved
separate Agreements and Plans of Reorganization (a "Plan" or the "Plans")
substantially in the form attached to this Proxy Statement as Exhibit K. Each
Plan provides for a reorganization (a "Reorganization") pursuant to which each
Company will change its state and form of organization from a Minnesota
corporation into a Delaware business trust. Each Company may be referred to in
this Proposal as a "Current Fund" or the "Current Funds" and each Series of a
Company is referred to in this Proposal as the "Current Series."
For each Current Fund, the Reorganization involves the continuation of the
Current Fund in the form of a newly created Delaware business trust. The newly
created Delaware business trusts are referred to in this Proposal as the "New
Funds." Separate classes and series of shares of each Delaware business trust
that correspond to the classes and series of each Current Fund will carry on the
business of the Current Fund. The series of shares of the New Funds that
correspond to the Current Series are referred to in this Proposal as the "New
Series." Each New Fund and New Series will have substantially the same name as
its corresponding Current Fund and Current Series.
Under the Reorganization, the investment objectives of each New Series will be
the same as those of its corresponding Current Series; the portfolio securities
of each Current Series will be transferred to its corresponding New Series; and
shareholders will own interests in each New Fund that are equivalent to their
interests in the Current Fund on the closing date of the Reorganization. The
directors, whoand the officers and employees of each Current Fund on the effective
date of the Reorganization will become the trustees, officers and employees,
respectively, of the corresponding New Fund and will operate the New Fund in the
same manner as they previously operated the Current Fund. The investment manager
responsible for the investment management of each New Series will be the same as
the investment manager to the Current Series. For those Current Series with
sub-advisory arrangements, the sub-adviser for each New Series will be the same
as the sub-adviser to the Current Series. In essence, a shareholder's investment
in a Current Fund will not change for all practical purposes. The investment
manager of each Current Series is referred to as the "Current Adviser" and, for
those Current Series with sub-advisory arrangements, the sub-adviser to each
Current Series is referred to as the "Current Sub-Adviser."
Background and Reasons for the Reorganizations. The Current Boards unanimously
recommend conversion of the Current Funds into Delaware business trusts because
they have determined that the Delaware business trust form of organization is an
inherently flexible form of organization and provides certain administrative
advantages to the Companies. Delaware trust law contains provisions specifically
designed for mutual funds. Those provisions take into account the unique
structure and operation of mutual funds, and allow mutual funds to simplify
their operations by reducing administrative burdens so that, in general, they
may operate more efficiently. For example, mutual funds organized as Delaware
business trusts are not partiesrequired to such Agreement,hold annual shareholders' meetings and may
create new series or interested
personsclasses of such parties, cast in personshares without obtaining the approval of
shareholders at a meeting calledmeeting.
Under Delaware business trust law, the New Funds will have the flexibility to
respond to future business contingencies. For example, a New Fund will have the
power to consolidate with another entity, to cause each New Series to become a
separate trust and to change the New Fund's domicile all without a shareholder
vote, unless such vote is required under the1940 Act or other applicable law.
This flexibility could help to assure that the New Fund operates under the most
advanced form of organization and could help reduce the expense and frequency of
future shareholders' meetings for non-investment related issues.
The Reorganizations also will increase uniformity among the mutual funds within
the Delaware Investments family. Increased uniformity among the mutual funds,
many of which share common directors, trustees, officers and service providers,
is expected to reduce the costs and resources devoted to compliance with varying
state corporate or trust laws and also reduce administrative burdens.
Another advantage that is afforded to a mutual fund organized as a Delaware
business trust is that there is a well established body of corporate precedent
that may be relevant in deciding issues pertaining to the trust.
For these reasons, the Current Boards believe it is in the interests of the
shareholders of the Current Funds to reorganize the Current Funds into Delaware
business trusts. At present, it appears that the most advantageous time to
consummate the Reorganizations is on or before ________________, 1999. This
date, however, may be modified by the Current Fund and the New Fund. The Current
Boards reserve the right to abandon the Reorganizations if they determine that
such action is in the best interests of the Current Funds.
The following discussion applies to the Reorganization of each Current Fund,
except where otherwise specifically noted.
Consequences and Procedures of the Reorganization. Upon consummation of the
Reorganization, the New Fund will continue the Current Fund's business with the
same investment objectives, policies and restrictions that are in effect for the
Current Series at the time of the consummation of the Reorganization (see the
discussion under "Investment Policies and Restrictions" below). The net asset
value of the shares of each class of each Current Series will not be affected by
the Reorganization. The New Fund has been organized specifically for the purpose
of voting on such approval.
THE BOARD'S CONSIDERATIONS
The Sub-Advisory Agreement was approved byeffecting the Growth Stock Fund's
Board of Directors, subjectReorganization. Immediately prior to shareholder approval, at a meeting called for the purpose of voting on the Sub-Advisory Agreement held February 14, 1997. Prior to
approving the Sub-Advisory Agreement, the Board considered a variety of factors,
including: (a) the historical performance of Growth Stock Fund under current
management; (b) the nature, quality and extenteffective date of the
services proposed to be
provided by VAM LLC pursuant to the Sub-Advisory Agreement; (c) DMC's role in
supervising VAM LLC in its capacity as sub-adviser to DMC; and (d) the
reasonableness of the proposed fee allocation between DMC and VAM LLC in light
of the reduced investment role but continued overall responsibility of DMC.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF GROWTH STOCK FUND RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT.
Adoption of the proposal requires the favorable vote of a majority of the
outstanding shares of the Fund, asReorganization (as defined in the 1940 Act, which meansPlan), each New Fund will have outstanding
only one share of each class of beneficial interest of each New Series
corresponding to the lessershares of each class of each Current Series. The Current
Fund will be the vote of (a) 67%sole holder of the shares of beneficial interest. The Plan
contemplates that the Fund present at a meeting
where more than 50% of the outstanding shares are present in person or by proxy,
or (b) more than 50% of the outstanding shares of the Fund. Unless otherwise
instructed, the proxies will vote for the approval of the proposed Sub-Advisory
Agreement.
PROPOSAL FOUR
PROPOSAL TO APPROVE THE LIQUIDATION OF
INTERNATIONAL EQUITY FUND, NATIONAL INSURED TAX FREE FUND,
NATIONAL LIMITED TERM TAX FREE FUND
AND NATIONAL TAX FREE FUND
INTRODUCTION
On February 7, 1997, the Boards of Directors of International Equity
Fund, National Insured Tax Free Fund, National Limited Term Tax Free Fund and
National Tax Free Fund (individually a "Liquidating Fund" and collectively the
"Liquidating Funds") considered the recommendation of VFM that such Funds be
liquidated and terminated. A Plan of Liquidation and Termination for each such
Fund (individually a "Plan" and collectively the "Plans") was subsequently
adopted by the Boards on February 14, 1997, subject to shareholder approval. A
copy of the form of Plan is attached as Exhibit C to this Proxy Statement. If
the Plan is approved by a Liquidating Fund's shareholders, the portfolio
securities and other assets of such Fund will be sold, creditors will be paid or
reserves for such payments established, and the net proceeds of such sales will
be distributed to shareholders in cash, pro rata in accordance with their
shareholdings. With respect to each Fund, approval of the Plan will be
considered approval of an amendment to the articles of incorporation of such
Fund's Company required to effect the Plan.
BACKGROUND
In connection with the Merger described at the beginning of this Proxy
Statement under "Background," LNC and VFM determined that neither VFM nor DMC
would act as investment adviser to the Liquidating Funds after consummation of
the Merger. LNC's and VFM's determination was based primarily upon the small
size of each of the Liquidating Funds, the fact that each of the Liquidating
Funds is duplicative of a fund offered within the Delaware Group, and the cost
of and amount of time available to complete a merger of each Liquidating Fund
into its corresponding Delaware Group fund prior to ordirectors serving at the time of Closing.
The Liquidating Funds had the following net asset valuesReorganization will
serve as of December 31,
1996:
Fund Net Assets
---- ----------
International Equity Fund $ 2,560,777
National Insured Tax Free Fund $ 32,030,258
National Limited Term Tax Free Fund $ 1,184,425
National Tax Free Fund $ 3,737,821
Shareholdersthe trustees of the Liquidating FundsNew Fund, with comparable responsibilities. The
officers of the Current Fund will be givenbecome officers of the opportunityNew Fund with
comparable responsibilities. The Reorganization will not result in the
recognition of income, gain or loss for Federal income tax purposes to invest their redemptionthe
Current Fund, the New Fund or liquidation proceeds in Class Athe holders of shares of any
open-end mutual fundthe Current Fund. (See
"Certain Tax Consequences of the Plan.")
To accomplish the Reorganization, the Plan provides that the Current Fund will
transfer all of the assets of the Current Series, subject to its related
liabilities, to the corresponding New Fund and to each of its corresponding New
Series. The New Fund will establish an account for each shareholder and will
credit to that account the exact number of full and fractional shares of the
class of the New Series that such shareholder previously held in the Delaware Group (including the Voyageur Funds that
become memberssame class
of the Delaware Group as a resultcorresponding Current Series on the effective date of the Merger) atReorganization.
Each shareholder will retain the right to any declared but undistributed
dividends or other distributions payable on the shares of the Current Series
that he or she owned. On the date of the Reorganization, the net asset value without the impositionper
share of any front-end sales charge, for a periodeach class of one
year following the liquidationshares of the shareholder's Fund.
THE BOARDS' CONSIDERATIONS
At the meeting of the Boards of Directors held on February 7, 1997, VFM
reviewed LNC's conclusion with the Boards. VFM noted that VAM LLC also would not
be in a position to manage the Liquidating Funds after the Merger, since VAM LLCeach Current Series will be retaining generally only those assets related to the management of
private accounts and certain non-retail mutual funds. VFM also expressed its
opinion that, givensame as the small size of each of the Liquidating Funds, it would be
difficult to find an investment adviser interested in managing such Funds. VFM
then reviewed the tax consequences of a liquidation with the Boards, explaining
that the payment of liquidation distributions will be a taxable event to
shareholders. Finally, VFM informed the Boards that shareholders of the
Liquidating Funds would be given the opportunity to invest their redemption or
liquidation proceeds in Class A shares of any open-end mutual fund in the
Delaware Group (including the Voyageur Funds that become members of the Delaware
Group) at net
asset value without the imposition of any front-end sales charge.
On February 14, 1997, the Boards of Directors, including allper share of the independent directors, unanimously approved for each Liquidating Fund the Plan
and determined to recommend that shareholderscorresponding class of each Liquidating Fund approve
its respective Plan.
If shareholders of a Fund do not approve liquidation, the Board of
Directors will meet to determine an alternative course of action. Liquidationshares of the Funds is contingent upon consummationNew Series.
The New Fund will assume all liabilities and obligations of the Merger.
SUMMARY OF THE PLANS AND RELATED TRANSACTIONS
For each Liquidating Fund, such Fund's Plan will become effective upon
consummation of the Merger (the "Effective Date"). From the Effective Date
through the completion of liquidation, VAM LLC will act as the investment
adviser for each Liquidatingits corresponding
Current Fund. As soon as practicable after the Effective
Dateeffective date of the
Reorganization, the Current Fund will be dissolved and its existence terminated.
On the effective date of the Reorganization, each certificate representing
shares of a Liquidating Fund'sclass of a Current Series will represent an identical number of
shares of the same class of the corresponding New Series. Shareholders will have
the right to exchange their certificates of the Current Fund for certificates of
the New Fund. A shareholder, however, is not required to make this exchange of
certificates.
The Plan provides that the effective date of the Reorganization will be (i) the
next business day after the later of the receipt of all necessary regulatory
approvals and the final adjournment of the meeting of shareholders of the
Current Fund at which the Plan will be considered, or (ii) such later date as
the Current Fund and the New Fund may mutually agree. It is expected that this
will be on ________________, 1999, or such earlier time as the Current Board
deems advisable and in the best interests of the Current Fund and its
shareholders. The Plan may be terminated and the Reorganization abandoned at any
time prior to the effective date of the Reorganization by the Current Board. If
the Reorganization is not so approved or if the Current Board determines to
terminate or abandon the Reorganization, the Current Fund will completecontinue to
operate as a Minnesota corporation.
Capitalization and Structure. Each New Fund was established pursuant to a
substantially identical Agreement and Declaration of Trust ("Trust Document")
under the salelaws of the State of Delaware. Each New Fund is organized as a series
company. The Trust Document permits the Trustees to issue an unlimited number of
shares of beneficial interest, with no par value. The Board of Trustees of the
New Fund has the power to divide such shares into an unlimited number of series
or classes of beneficial interest without shareholder approval. Each of the
other New Funds has designated the same number of series and classes as its
portfolio securitiescorresponding Current Fund. Each share of a New Series represents an equal
proportionate interest in orderthe assets and liabilities belonging to convert its assetsthat series
(or class) as declared by the Board of Trustees.
Shares of the respective classes of the New Series have substantially the same
dividend, redemption, voting, exchange and liquidation rights, and terms of
conversion as the shares of the corresponding Current Series. Please see Exhibit
L, "Comparison And Significant Differences For Delaware Business Trusts And
Minnesota Corporations." Shares of the respective classes of the Current Series
and the corresponding New Series are fully paid, non-assessable, and freely
transferable and have no preemptive or subscription rights.
Prior to cash. After the Effective
Date, suchReorganization, the New Fund will have nominal assets and no
liabilities. The sole shareholder of the New Fund will be the corresponding
Current Fund. Each New Series will have the same investment objectives and
policies as its corresponding Current Series at the time of the Reorganization.
(See the discussion under "Investment Policies and Restrictions" below.) The
Current Adviser will provide investment management services to the New Series as
it does to the Current Series. For the Current Series that have sub-advisory
arrangements, the Current Sub-Adviser will provide sub-advisory services to the
corresponding New Series as it does to the Current Series. The New Fund will
have the same fiscal year as the Current Fund.
Subsequent to the closing of the Reorganization, shares of the respective
classes of the Current Series will be exchanged for an identical number of
shares of the same class of the corresponding New Series. Thereafter, shares of
each class of the New Series will be available for issuance at their net asset
value applicable at the time of sale. The New Fund will adopt the Current Fund's
existing registration statement under the Securities Act of 1933 and the 1940
Act.
Effects of Shareholder Approval of the Reorganization. An investment company
registered under the 1940 Act is required to: (1) submit the selection of the
company's independent auditors to all shareholders for their ratification; (2)
call a special meeting to elect directors (trustees) within 60 days if, at any
time, less than one half of the directors (trustees) holding office have been
elected by all shareholders; and (3) submit any proposed investment management
agreement and sub-advisory agreement relating to a particular series of the
investment company to the shareholders of that series for approval.
The Current Board believes that it is in the best interest of the shareholders
of the Current Fund (who will become the shareholders of the corresponding New
Fund if the Reorganization is approved) to avoid the considerable expense of
another shareholders' meeting to obtain the shareholder approvals described
above shortly after the closing of the Reorganization. The Current Board also
believes that it is not engage in any business activity exceptthe best interest of the shareholders to carry out
the Reorganization if the surviving New Fund would not have a Board of Trustees,
independent auditors, and investment management agreements or sub-advisory
agreements complying with the 1940 Act.
The Current Board will, therefore, consider approval of the Reorganization by
the requisite vote of the shareholders of the Current Fund to constitute the
approval of the Plan contained in Exhibit K, and also to constitute, for the
purposepurposes of winding up its business and affairs, preserving the value1940 Act: (1) ratification of its assets and
distributing such assets to shareholdersthe independent auditors for each
Current Fund at the time of the Reorganization as the New Fund's independent
auditors (please see Proposal Seven); (2) election of the Directors of the
Current Fund who are in office at the time of the Reorganization as the trustees
of the New Fund after the payment to (or reservation of
assets for payment to) all creditorsclosing of the Fund. All contracts entered intoReorganization (please see Proposal
One); (3) approval by orthe shareholders of each Current Series of the investment
management agreement between the New Fund on behalf of the New Series and the
Current Adviser, which will be substantially identical to the agreement that is
in place between the Current Fund and the Current Adviser for the corresponding
Current Series on the effective date of the Reorganization (please see Proposal
Five); and (4) for those Current Series subject to a Liquidatingsub-advisory agreement,
approval by the shareholders of the Current Series of the sub-advisory agreement
between the Current Adviser and the Current Sub-Adviser, which will be
substantially identical to the agreement that is in place between the Current
Adviser and the Current Sub-Adviser on the effective date of the Reorganization
(please see Proposal Six).
The New Fund will terminate upon consummationissue a single share of each class of each New Series to the
Current Fund, and, assuming approval of the Reorganization by shareholders of
the Current Fund, the officers of the Current Fund, prior to the Reorganization,
will cause the Current Fund, as the sole shareholder of the New Fund, to vote
such shares "FOR" the matters specified in the above paragraph. The Current Fund
will then consider the requirements of the 1940 Act referred to above to have
been satisfied.
The mailing address and telephone number of the principal executive offices of
both the Current Fund and the New Fund are 1818 Market Street, Philadelphia, PA
19103, and 1-800-523-1918, respectively.
Investment Policies and Restrictions. If the investment policies and
restrictions for the Current Series as proposed and set forth in Proposals Two,
Three and Four are approved by the shareholders, the investment policies and
restrictions of the corresponding New Series will be the policies and
restrictions of the Current Series as amended by the provisions set forth in
such Proposals. For each Current Series for which the investment policies and
restrictions set forth in Proposals Two, Three and Four are not approved, the
investment policies and restrictions of the corresponding New Series after the
Reorganization will be the investment policies and restrictions of that Current
Series immediately prior to the Reorganization.
Investment Management Agreements. If the proposed new investment management
agreement relating to the Current Series, and as proposed and described in
Proposal Five (a "New Agreement"), is approved by the shareholders of the
Current Series, the terms of the investment management agreement for the
corresponding New Series will be substantially identical to the New Agreement
for the Current Series. For each Current Series for which the New Agreement
described in Proposal Five is not approved, if any, the investment management
agreement for the corresponding New Series will be substantially identical to
the existing investment management agreement currently in place for that Current
Series.
Sub-Advisory Agreements. For the Current Series with sub-advisory arrangements,
if the proposed new sub-advisory agreement relating to the Current Series, as
proposed and described in Proposal Six (a "New Sub-Advisory Agreement"), is
approved by the shareholders of the Current Series, the terms of the
sub-advisory agreement for the corresponding New Series will be substantially
identical to the New Sub-Advisory Agreement for the Current Series. For each
Current Series for which the New Sub-Advisory Agreement described in Proposal
Six is not approved, if any, the sub-advisory agreement for the corresponding
New Series will be substantially identical to the existing sub-advisory
agreement currently in place for that Current Series.
Certain Tax Consequences of the Plan. It is anticipated that the transactions
contemplated by such Fund's Plan. After the Effective DatePlan will be tax-free for federal income tax purposes.
Consummation of the Reorganization is subject to receipt of a Liquidating Fund's Plan, and in any event within 60 days thereafter, such Fund
will mail to each shareholderlegal opinion from
the law firm of record who has not redeemed such shareholder's
shares a liquidating distribution equalStradley, Ronon, Stevens & Young, LLP, counsel to the shareholder's proportionate
interest in the remaining assets of theCurrent
Fund and information concerning the sources of the liquidating distribution. Shareholders of the Liquidating Funds
may reinvest their redemption proceeds or the proceeds of their liquidating
distributions in Class A shares of any of the mutual funds in the Delaware Group
at net asset value without the imposition of any front-end sales charge.
After the distribution of assets to shareholders, each LiquidatingNew Fund, will be terminated in accordance with its Plan and applicable provisions under
Minnesota law. The Plans provide that, the Boards of Directors may authorize such
variations from, or amendments to, the provisions of the Plans as may be
necessary or appropriate to effect the complete liquidation and termination of
the Liquidating Funds in accordance with the purposes to be accomplished by the
Plans.
The adoption of the Plan by a Liquidating Fund will not affect the
right of shareholders of such Fund to redeem shares of such Fund at their then
current net asset value per share any day prior to the day the liquidating
distribution is made.
FEDERAL INCOME TAX CONSEQUENCES
PAYMENT BY A LIQUIDATING FUND OF LIQUIDATION DISTRIBUTIONS TO
SHAREHOLDERS WILL BE A TAXABLE EVENT. BECAUSE THE INCOME TAX CONSEQUENCES FOR A
PARTICULAR SHAREHOLDER MAY VARY DEPENDING ON INDIVIDUAL CIRCUMSTANCES, EACH
SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF RECEIPT OF A LIQUIDATING
DISTRIBUTION.
Each Liquidating Fund currently qualifies, and intends to continue to
qualify through the end of the liquidation period, for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended
so that
it will be relieved(the "Internal Revenue Code"), the exchange of federal income tax on any investment company taxable
income or net capital gain (the excess of net long-term capital gain over net
short-term capital loss) from the sale of its assets. The payment of liquidation
distributions will be a taxable event to shareholders. Each shareholder will be
viewed as having sold his or her Fund shares for an amount equal to the
liquidation distribution(s) he or she receives. Each shareholder will recognize
gain or loss in an amount equal to the difference between (a) the shareholder's
adjusted basis in the Fund shares, and (b) such liquidation distribution(s). The
gain or loss will be capital gain or loss to the shareholder if the Fund shares
were capital assets in the shareholder's hands and generally will be long-term
if the Fund shares were held for more than one year before the liquidation
distribution is received.
Immediately prior to declaring the liquidating distribution, National
Insured Tax Free Fund, National Limited Term Tax Free Fund and National Tax Free
Fund will declare a dividend of all current but undistributed tax-exempt
interest income. Shareholders will be entitled to treat this amount as an
exempt-interest dividend, I.E., as tax-exempt interest income in their hands.
This tax-exempt dividend will be paid at the same time as the liquidating
distribution, and shareholders will be notified of the portion ofCurrent Fund for
the total
distribution that constitutes the tax-exempt interest dividend. The balance of
the liquidating distribution will be treated as an amount realized from the sale
of Fund shares, as discussed above.
Each Liquidating Fund generally will be required to withhold tax at the
rate of 31% with respect to any liquidation distribution paid to individuals and
certain other non-corporate shareholders who fail to certify to the Fund that
their social security number or taxpayer identification number provided to the
Fund is correct and that the shareholder is not subject to backup withholding.
The foregoing summary is generally limited to the material federal
income tax consequences to shareholders who are individual United States
citizens and who hold shares as capital assets. It does not address the federal
income tax consequences to shareholders who are corporations, trusts, estates,
tax-exempt organizations, pension plans, Individual Retirement Accounts or
non-resident aliens. This summary does not address state or local tax
consequences. Shareholders are urged to consult their own tax advisers to
determine the extent of the federal income tax liability they would incur as a
result of receiving a liquidation distribution, as well as any tax consequences
under any applicable state, local or foreign laws.
VOTE REQUIRED
EACH LIQUIDATING FUND'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF SUCH FUND'S PLAN. For each Liquidating
Fund, the affirmative vote of a majority of the outstanding shares of the corresponding New Fund, is requiredthe transfer of such shares to approve the
Plan.
PROPOSAL FIVE
PROPOSAL FOR GROWTH AND INCOME FUND
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION
INTRODUCTION
Shareholdersholders of Growth and Income Fund (the "Fund") are being asked to
consider and vote upon an Agreement and Plan of Reorganization, dated as of
________, 1997 (the "Plan"), by and between Voyageur Mutual Funds III, Inc.
("Voyageur III"), on behalfshares of the Current Fund, and VAM Institutional Funds, Inc. ("VAM
Funds"), on behalf of a newly formed series of VAM which is also called Growththe liquidation and Income Fund (the "New Fund"). Pursuant to the Plan, alldissolution of
the assets of the
Fund would be acquired by New Fund (which, prior to such time, would have no
assets) and shareholders of the Fund would become shareholders of New Fund and
would receive shares in New Fund equal to the value of their holdings in the
Fund on the date of such transaction (the transactions described above are
referred to as the "Fund Reorganization"). The shares to be issued by NewCurrent Fund pursuant to the Fund Reorganization ("New Fund Shares") will be issued at net
asset value without a sales charge. A vote in favor of the Plan will be
considered a vote in favor of an amendment to the articles of incorporation of
Voyageur III required to effect the Fund Reorganization as contemplated by the
Plan. The Fund Reorganization is not contingent upon consummation of the Merger.
BACKGROUND
The Fund is currently a series of Voyageur III. Aggressive Growth Fund,
Growth Stock Fund and International Equity Fund are also series of Voyageur III.
As described above, in connection with the Merger, shareholders of Aggressive
Growth Fund and Growth Stock Fund are being asked to approve new investment
advisory agreements with DMC, and shareholders of International Equity Fund are
being asked to approve such Fund's liquidation. In addition, shareholders of
each series of Voyageur III (including the Fund) are being asked to approve a
new Board of Directors for Voyageur III that will consist principally of
individuals who currently serve on the Board of Directors of the investment
companies in the Delaware Group.
Shareholders of the Fund are not being asked to approve a new
investment advisory agreement with DMC. After the Merger, the management of the
Fund will remain essentially unchanged with the Fund continuing to be
sub-advised by Segall Bryant & Hamill ("Segall Bryant"). See "Comparison of Fund
and New Fund" below. Unlike Aggressive Growth Fund and Growth Stock Fund, the
Fund will not become a part of the Delaware Group. For this reason, shareholders
are being asked to approve the Plan. The Plan will in essence cause the Fund to
become, as the New Fund, a series of a different corporate entity, VAM Funds.
VAM Funds will have the same Board of Director as Voyageur III currently has and
will not be affiliated with LNC. The Plan will not result in any other material
changes to shareholders.
THE PLAN
The terms and conditions under which the Fund Reorganization would be
consummated are set forth in the Plan and are summarized below. This summary is
qualified in its entirety by referencegive rise to the Plan, a copy of which is attached
as Exhibit D to this Proxy Statement.
The Plan provides that (a) the Fund will transfer all of its assets,
including portfolio securities, cash, cash equivalents, securities, commodities,
futures and interest receivables, to New Fund on the Closing Date in exchange
for the assumption by New Fund of all of the Fund's liabilities, including all
expenses, costs, charges and reserves, as reflected on an unaudited statement of
assets and liabilities of the Fund prepared by the Treasurer of Voyageur III as
of the Valuation Date in accordance with generally accepted accounting
principles consistently applied from the prior audited period, and the delivery
of New Fund Shares; and (b) such New Fund Shares will be distributed to the
shareholders of the Fund on the Closing Date or as soon as practicable
thereafter and outstanding Fund shares will be canceled and retired. The
distribution of New Fund Shares and the cancellation and retirement of
outstanding Fund shares is to be accomplished under the Plan by amending the
articles of incorporation of Voyageur III in the manner provided in the
amendment set forth in Exhibit 1 to the Plan.
For technical reasons, certain of the Fund's existing investment
limitations may be deemed to preclude the Fund from consummating the Fund
Reorganization to the extent that the Fund Reorganization would involve the Fund
holding all of its assets as shares of New Fund until such shares are
distributed to the Fund's shareholders. By approving the Plan, the Fund's
shareholders will be deemed to have agreed to waive each of these limitations.
The number of New Fund Shares to be delivered to the Fund will have an
aggregate net asset value equal to the value of the Fund assets acquired by New
Fund (net of the liabilities assumed by New Fund); these values will be
calculated as of the close of business of the New York Stock Exchange on a
business day not later than the fifth business day following the receipt of the
requisite approval of the Plan by the shareholders of the Fund or at such other
time as the Fund and New Fund may agree (the "Valuation Date"). These New Fund
Shares will be distributed to the former Fund shareholders, with each such
shareholder receiving New Fund Shares with a value equal to the value of their
holdings in the Fund.
New Fund will cause its transfer agent to credit and confirm an
appropriate number of New Fund Shares to each Fund shareholder. Neither the Fund
nor New Fund issues stock certificates.
The Closing Date will be 5:00 p.m., Eastern Time, on the Valuation
Date, or at such other time as the Fund and New Fund may agree. The consummation
of the Fund Reorganization is contingent upon the approval of the Plan by the
shareholders of the Fund and the receipt of the other opinions and certificates
set forth in Sections 6, 7 and 8 of the Plan and the occurrence of the events
described in those Sections, certain of which may be waived by the Fund or New
Fund. The Plan may be amended in any mutually agreeable manner, except that no
amendment may be made subsequent to the Meeting which would detrimentally affect
the value of the New Fund Shares to be distributed. LNC will bear all direct
costs associated with preparation, printing, filing and proxy solicitation
expenses incurred in connection with obtaining requisite shareholder approval of
the Fund Reorganization. In addition, VFM will pay any unamortized
organizational expenses on the books of the Fund immediately prior to the Fund
Reorganization.
The Plan may be terminated and the Fund Reorganization abandoned at any
time, before or after approval by the Fund's shareholders, by mutual consent of
the Fund and New Fund. In addition, either party may terminate the Plan upon the
occurrencerecognition of a
material breach of the Plan by the other partygain or if, by
December 31, 1997, any condition set forth in the Plan has not been fulfilled or
waived by the party entitled to its benefits.
Shareholders of the Fund will continue to be able to redeem their
shares at net asset value next determined after receipt of the redemption
request until the close of business on the business day next preceding the
Closing Date. Redemption requests received by the Fund thereafter will be
treated as requests for redemption of shares of New Fund.
TAX ASPECTS OF THE REORGANIZATION
It is intended that the Reorganization will qualifyloss for federal income tax purposes as a tax-free reorganization under Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that, for federal
income tax purposes, no income, gain or loss will be recognized by the Fund's
shareholders. The Fund has not asked, nor does it plan to ask, the Internal
Revenue Service to rule on the tax consequences of the Reorganization.
As a condition to the closing ofCurrent Fund, the Fund Reorganization, the two funds
will receive an opinion from Dorsey & Whitney LLP, counsel to the funds, based
in part on certain representations to be furnished by each fund, substantially
to the effect that the federal income tax consequences of the Fund
Reorganization will be as follows:
(i) the Fund Reorganization will constitute a reorganization
within the meaning of Section 368(a)(1)(F) of the Code, and New Fund,
and the Fund each will qualify as a party to the Fund Reorganization
under Section 368(b) of the Code;
(ii) Fund shareholders will recognize no income, gain or loss
upon receipt, pursuant to the Fund Reorganization, of New Fund shares.
Fund shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of the Fund
which are distributed by the Fund prior to the Fund Reorganization;
(iii) the tax basis of New Fund shares received by each Fund
shareholder pursuant to the Reorganization will be equal to the tax
basis of the Fund shares exchanged therefor;
(iv) the holding period of New Fund shares received by each
Fund shareholder pursuant to the Reorganization will include the period
during which the Fund shareholder held the Fund shares exchanged
therefor, provided that the Fund shares were held as a capital asset on
the date of the Fund Reorganization;
(v) the Fund will recognize no income, gain or loss by reason
of the Fund Reorganization;
(vi) New Fund will recognize no income, gain or loss by reason
of the Fund Reorganization;
(vii) the tax basis of the assets received by the Fund
pursuant to the Fund Reorganization will be the same as the basis of
those assets in the hands of the Fund immediately prior to the Fund
Reorganization;
(viii) the holding period of the assets received by New Fund
pursuant to the Fund Reorganization will include the period during
which such assets were held by the Fund; and
(ix) New Fund will succeed to and take into account the
earnings and profits, or deficit in earnings and profits, of the Fund
immediately prior to the Fund Reorganization.
The foregoing advice is based in part upon certain representations
furnished by the Fund, VFM and certain 5% shareholders of the Current Fund of which two
principal ones are: (a) immediately following consummation of the Fund
Reorganization, the shareholders of the Fund will own all of the outstanding
stock ofor the New Fund and will own such stock solely by reason of their
ownership of stock of the Fund immediately prior to the Fund Reorganization; and
(b) there is no plan or intention on the part of shareholders of the Fund who
own 5% or more of the shares of the Fund and, to the best knowledge of
management of the Fund, there is no plan or intention on the part of the
remaining shareholders of the Fund to sell, exchange or otherwise dispose of any
ofFund. A shareholder's adjusted
basis for tax purposes in the shares of the New Fund stock receivedafter the exchange and
transfer will be the same as his adjusted basis for tax purposes in the shares
of the corresponding Current Fund immediately before the exchange.
As a business trust, the New Fund (or, in certain circumstances, its
shareholders who are Pennsylvania residents) would be subject to the
Pennsylvania county personal property tax. However, at present, Pennsylvania
counties generally have stopped assessing personal property taxes. This is due,
in part, to ongoing litigation challenging the validity of the tax. However, if
the personal property tax were reinstituted, or any similar state or local tax
were imposed, the New Fund's options would be reevaluated at that time.
Each shareholder should consult his or her own tax adviser with respect to the
details of these tax consequences and with respect to state and local tax
consequences of the proposed transaction.
Distribution Plans and Shareholder Servicing Arrangements. The New Fund will
enter into agreements with DSC for transfer agency, dividend disbursing and
shareholder servicing and fund accounting services that are substantially
identical to the agreements currently in effect for each corresponding Current
Fund for such services. Delaware Distributors, L.P. ("DDLP") will serve as the
national distributor for the shares of the New Series under a separate
distribution agreement between DDLP and the New Fund that is substantially
identical to the distribution agreement currently in effect for the Current
Series.
The Current Fund has adopted distribution plans under Rule 12b-1 of the 1940 Act
(each a "Distribution Plan") relating to certain classes of shares of the
Current Series. For each class of shares of the Current Series that is subject
to a Distribution Plan, the corresponding New Fund also has adopted a
distribution plan that is substantially identical to the Distribution Plan
currently in place for the same class of shares of the corresponding Current
Series.
Requests for Redemption of the Current Fund. Any request to redeem shares of the
Current Fund that is received and processed prior to the Reorganization will be
treated as a redemption of shares of the Current Fund. Any request to redeem
shares of the Current Fund received or processed after the Reorganization will
be treated as a request for the redemption of shares of the corresponding New
Fund.
Expenses of the Reorganization. SHAREHOLDERS OF THE FUND SHOULD CONSULT THEIR TAX ADVISORS REGARDING
THE EFFECT, IF ANY, OF THE PROPOSED FUND REORGANIZATION IN LIGHT OF THEIR
INDIVIDUAL CIRCUMSTANCES. SINCE THE FOREGOING DISCUSSION RELATES ONLY TO THE
FEDERAL INCOME TAX CONSEQUENCES OF THE FUND REORGANIZATION, SHAREHOLDERS OF THE
FUND SHOULD CONSULT THEIR TAX ADVISORS AS TO STATE AND LOCAL TAX CONSEQUENCES,
IF ANY, OF THE FUND REORGANIZATION.
DISSENTERS' RIGHTS
Pursuant to Sections 302A.471Because the Reorganization will benefit solely
the Current Fund and 302A.473its shareholders, the Current Board has authorized that the
expenses incurred by the Current Fund in the Reorganization or arising out of
the Reorganization shall be paid by the Current Fund, whether or not the
Reorganization is approved by the shareholders.
Comparison of Legal Structures. A comparison of the Delaware Business Trust Act
with the Minnesota Business Corporation Act, (the "MBCA Sections"), record holdersincluding a comparison of Fund shares are
entitled to assert dissenters' rights in connection with the Fund Reorganization
and obtain paymentrelevant
provisions of the "fair value" of their shares, provided such
shareholders comply with the requirementsgoverning documents of the MBCA Sections. NOTWITHSTANDING
THE PROVISIONS OF THE MBCA SECTIONS, THE DIVISION OF INVESTMENT MANAGEMENT OF
THE COMMISSION HAS TAKEN THE POSITION THAT ADHERENCE TO STATE APPRAISAL
PROCEDURES BY A REGISTERED INVESTMENT COMPANY ISSUING REDEEMABLE SECURITIES
WOULD CONSTITUTE A VIOLATION OF RULE 22c-1 UNDER THE 1940 ACT. THIS RULE
PROVIDES THAT NO OPEN-END INVESTMENT COMPANY MAY REDEEM ITS SHARES OTHER THAN AT
NET ASSET VALUE NEXT COMPUTED AFTER RECEIPT OF A TENDER OF SUCH SECURITY FOR
REDEMPTION. IT IS THE VIEW OF THE DIVISION OF INVESTMENT MANAGEMENT THAT RULE
22c-1 PREEMPTS APPRAISAL PROVISIONS IN STATE STATUTES.
DESCRIPTION OF SHARES
Shares ofCurrent Funds and the New Fund to be issued pursuant toFunds, is
included in Exhibit L, which is entitled "Comparison And Significant Differences
For Delaware Business Trusts And Minnesota Corporations."
Required Vote. The Plans and the Plan will, when issued,
be fully paidtransactions contemplated thereby, including
the liquidation and nonassessable by New Fund and transferable without
restrictions and will have no preemptive or conversion rights.
COMPARISON OF FUND AND NEW FUND
INVESTMENT ADVISER AND SUB-ADVISER. VAM, on behalf of New Fund, will
enter into an investment advisory agreement with VAM LLC. The terms of such
advisory agreement will be identical to the termsdissolution of the Fund's current
investment advisory agreement with VFM. As described above, prior toCurrent Funds, requires the Merger
DFG will complete a reorganization whereby certain assets of DFG and its
subsidiaries, including certain assets of VFM, will be sold by DFG to certain
newly organized limited liability companies, including VAM LLC. These limited
liability companies will not be acquired by LNC in the Merger. VAM LLC will be
ultimately controlled by the same individuals who currently control VFM, Michael
E. Dougherty, James O. Pohlad, Robert C. Pohlad and William M. Pohlad. It is
expected that those individuals who currently serve as the principal executive
officer and the directors of VFM will, with the exception of Frank Tonnemaker,
serve in such capacities with VAM LLC after the merger. See "Supplemental
Information about Voyageur Fund Managers, Inc." VAM LLC in turn will enter into
a sub-advisory agreement with Segall Bryant &Hamill ("Segall Bryant"), the
Fund's current sub-adviser, containing identical terms to the current
sub-advisory agreement between VFM and Segall Bryant. Ralph Segall, Managing
Director of Segall Bryant, who is primarily responsible for the day-to-day
management of the Fund's portfolio, will continue to act in such capacity for
New Fund.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The investment
objectives, policies and restrictions of New Fund will be identical to those of
the Fund.
DIRECTORS AND EXECUTIVE OFFICERS. As mentioned above, the Directors of
VAM Funds are the same as the current Directors of Voyageur III. The officers of
VAM Funds are the same individuals as listed below under "Executive Officers of
Voyageur Funds." However, Mr. McCullagh and Ms. Howell will resign as officers
of VAM Funds immediately prior to the Merger.
PLAN OF DISTRIBUTION; PRINCIPAL UNDERWRITER. The Plan of Distribution
for New Fund will be identical to the Fund's current Plan of Distribution. VFD
acts as the principal underwriter of the Fund's shares. _____________, one of
the limited liability companies to be formed in the reorganization of DFG, will
act as the principal underwriter of New Fund's shares.
DIVIDEND DISBURSING, TRANSFER, ADMINISTRATIVE AND ACCOUNT SERVICES
AGENT. VFM acts as the Fund's dividend disbursing, transfer, administrative and
account services agent pursuant to an administrative services agreement. VAM LLC
will act in such capacities for New Fund pursuant to an administrative services
agreement that will have identical terms to the current agreement between VFM
and the Fund.
THE BOARD'S CONSIDERATIONS
At a meeting of the Board of Directors of Voyageur III held on February
7, 1997, VFM reviewed the proposed Plan with the Board. In reviewing the Plan
the Board considered the various factors discussed above, including the
following:
(a) The Fund is currently a series of a corporate entity that
will become a part of the Delaware Group, whereas the Fund will not be
advised by DMC or its affiliates;
(b) The Plan will result in no material changes to
shareholders other than a change in the corporate entity of which their
fund is a series, and will allow their fund to be a series of a
corporate entity that will be advised by VAM LLC;
(c) The Board of Directors of VAM Funds will not change as a
result of the Merger and will continue to consist of the same
individuals who currently serve on the Board of Directors of Voyageur
III;
(d) It is anticipated that the Fund Reorganization will
constitute a tax-free reorganization for federal income tax purposes,
and no gain or loss will be recognized by the Fund or its shareholders
for federal income tax purposes as a result of the Fund Reorganization.
Based on the foregoing, at a meeting held on February 14, 1997, the
Board determined that the Fund Reorganization is in the best interestsapproval of
the shareholders ofas set forth below: [To be inserted.]
The Current Board unanimously recommends that you vote FOR the Reorganization.
EXHIBIT A
OUTSTANDING SHARES AS OF RECORD DATE (January 18, 1999)
Shares Outstanding Shares Owned by Fund Directors
on and Executive Officers as a Group
Company/Fund Record Date* as of October 31, 1998
------------ ------------ ----------------------
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund
Voyageur Insured Funds, Inc
Delaware-Voyageur Tax-Free Arizona Insured Fund
Delaware-Voyageur Minnesota Insured Fund
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund
National High-Yield Municipal Bond Fund
Delaware-Voyageur Tax-Free New York Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Tax-Free North Dakota Fund
and
* The Shares outstanding on the record date included all shares purchased in
transactions that the interests of Fund shareholders will not be
diluted as a result thereof, and therefore approved the Plan.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF VOYAGEUR III UNANIMOUSLY RECOMMENDS THAT FUND
SHAREHOLDERS VOTE IN FAVOR OF APPROVAL OF THE PLAN. The affirmative vote of a
majority of the Fund shares entitled to vote is required to approve the Plan.
PROPOSAL SIX
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or its investment adviser. The 1940 Act
requires that the selection be submitted for ratification or rejectionhave settled by the shareholders at their next annual meeting following the selection.
KPMG Peat Marwick LLP ("KPMG") has acted as independent public
accountants for each Company since its inception. However, _____________________
______________________________ acts as independent public accountants for the
Delaware Group of investment companies. At the request of LNC, in connection
with certain Funds becoming a part of the Delaware Group, as described elsewhere
herein, the Boards of Directors of the Funds, including a majority who are not
interested persons of VFM or DMC, have appointed __________ to become the
independent public accountants for the Companies for their current fiscal year.
This appointment is contingent upon consummation of the Merger.
KPMG has not rendered any adverse or qualified opinions, or any
disclaimers of opinions, with respect to the Funds, and the Funds have not had
any disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of KPMG, would have caused it
to make a reference to the subject matter of the disagreement in connection with
its reports.
Representatives of __________ are expected to be present at the
meeting. Such representatives will be given the opportunity to make a statement
to the shareholders if they desire to do so and are expected to be available to
respond to any questions that may be raised at the meeting.
VOTE REQUIRED
THE BOARDSrecord date.
A-1
EXHIBIT B
SHAREHOLDERS OWNING 5% OR MORE OF DIRECTORS RECOMMEND THAT SHAREHOLDERSA FUND AS OF EACH COMPANY
VOTE IN FAVOR OF THE RATIFICATION OF THE SELECTION OF ______________________ AS
THE INDEPENDENT PUBLIC ACCOUNTANTS FOR SUCH COMPANY. For each Company, the vote
of a majority of the shares of the Company represented at the meeting and
entitled to vote, provided at least a quorum (10% of the outstanding shares) is
represented in person or by proxy, is sufficient for the ratification of the
selection of the independent public accountants.
SUPPLEMENTAL INFORMATION ABOUT
VOYAGEUR FUND MANAGERS, INC.
VFM, a Minnesota corporation, is an indirect wholly owned subsidiary of
DFG, which is owned 49.83% by Michael E. Dougherty and 49.83% equally by James
O. Pohlad, Robert C. Pohlad and William M. Pohlad. Mr. Dougherty co-founded the
predecessor of DFG in 1977 and has served as DFG's Chairman of the Board and
Chief Executive Officer since inception. As of JanuaryOCTOBER 31, 1997, VFM and its
affiliates served as the investment manager to six closed-end and ten open-end
investment companies (comprising 33 separate investment portfolios),
administered numerous private accounts and managed approximately $11 billion in
assets.
The names and principal occupations of the principal executive officer
and each director of VFM are set forth below. The address of all individuals is
that of the VFM and the Funds.
Name Principal Occupation
- ---- --------------------
Michael E. Dougherty Chairman of VFM; Chairman of VFD and Dougherty
Dawkins, Inc.; Director, Chairman of the Board,
President and Chief Executive Officer of DFG.
John G. Taft Director and President of VFM; Director and Executive
Vice President of VFD.
Jane M. Wyatt Director and Chief Investment Officer of VFM;
Director and Executive Vice President of VFD.
Edward J. Kohler Director and Executive Vice President of VFM;
Director of VFD.
Frank C. Tonnemaker Director and Executive Vice President of VFM; and
Director and President of VFD.
All of such individuals will resign their positions immediately prior
to Closing. It is expected that, after consummation of the Merger, the
individuals who currently serve as the principal executive officer and directors
of DMC will also serve as the principal executive officer and directors of VFM.
See "Supplemental Information about Delaware Management Company, Inc." below.
Information regarding compensation received by VFM pursuant to certain
advisory agreements is set forth above under "Proposal Two--Proposal to Approve
New Investment Advisory Agreements." Set forth below is information regarding
advisory agreements between VFM and certain other open-end and closed-end funds
which have investment objectives similar to those of one or more of the Funds
being asked to approve new investment advisory agreements under Proposal Two:1998
RateNumber of Advisory Net AssetsPercent of Percent of
Company/Fund VFM's Compensation Fees WaivedName and Address Shares Fund at 12/31/96
-Company
------------ ---------------- ------ ---- ------------------ ----------- -----------------------
Voyageur Funds, Inc.
Delaware-Voyageur US Government Securities Fund
Voyageur Insured Funds, Inc
Delaware-Voyageur Tax-Free Arizona Insured Fund
Delaware-Voyageur Tax-Free Colorado Insured Fund
Delaware-Voyageur Minnesota Insured Fund
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Minnesota High Yield Municipal IncomeBond
Fund
Inc. Annual rate of .40% of $ 0 $ 58,315,692
average weekly net assets
MinnesotaNational High-Yield Municipal IncomeBond Fund
Delaware-Voyageur Tax-Free New York Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
Voyageur Mutual Funds II, Inc.
Annual rate of .40% of $ 0 $161,051,362
average weekly net assets
Minnesota Municipal IncomeDelaware-Voyageur Tax-Free Colorado Fund
Voyageur Mutual Funds III, Inc.
Annual rate of .40% of $ 0 $ 38,910,971
average weekly net assets
Arizona Municipal IncomeAggressive Growth Fund
Inc. Annual rate of .40% of $ 0 $ 67,367,446
average weekly net assets
Florida Insured Municipal IncomeGrowth Stock Fund
Annual rate of .40% of $ 0 $ 54,439,214
average weekly net assets
Colorado Insured Municipal IncomeTax-Efficient Equity Fund
Inc. Annual rate of .40% of $ 0 $107,788,794
average weekly net assets
National InsuredVoyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund
Annual rate of .50% of $145,000 $ 32,030,258
average daily net assets
National Limited Term Tax FreeDelaware-Voyageur Tax-Free North Dakota Fund Annual rate of .40% of $ 4,731 $ 1,184,425
average daily net assets
National Tax Free Fund Annual rate of .50% of $ 12,665 $ 3,737,821
average daily net assets
SUPPLEMENTAL INFORMATION ABOUT
DELAWARE MANAGEMENT COMPANY, INC.
DMC is an indirect, wholly owned subsidiaryB-1
EXHIBIT C
EXECUTIVE OFFICERS OF THE COMPANIES
David K. Downes (58) Executive Vice President, Chief Operating Officer, Chief
Financial Officer of DMH. In turn, DMH is an
indirect, wholly-owned subsidiary, and subject to the ultimate control, of LNC.
LNC, an Indiana corporation with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspectseach of the financial
services industry, including insurance and investment management. DMC and its
predecessors have been managing the funds in the Delaware Group since 1938. On
December 31, 1996, DMC and its affiliates within the Delaware Group, including
Delaware International Advisers Ltd., were supervising in the aggregate
approximately $32 billion in assets in the various institutional or separately
managed and investment company accounts. DMC is located at One Commerce Square,
Philadelphia, Pennsylvania 19103.
The names and principal occupations of the principal executive officer
and each director of DMC are set forth below. The address of all individuals is
that of DMC.
Name Principal Occupation
- ---- --------------------
Wayne A. Stork Chairman, President, Chief Executive Officer,
Chief Investment Officer and Director of
Delaware Management Company, Inc.; Chairman,
President, Chief Executive Officer, Director
and/or Trustee of 1734 investment companies in the Delaware
Group (which excludes Delaware Pooled
Trust, Inc.),Investments family, Delaware Management Holdings, Inc., DMH Corp., Delaware International Holdings
Ltd. andInc, Founders Holdings, Inc.; Chairman and
Director of Delaware Pooled Trust, Inc.,
Delaware Distributors, Inc. andCBO Corporation,
Delaware Capital Management, Inc.; Chairman, Chief Executive
Officer and Director of, Delaware International
Advisers Ltd.; Director of Delaware ServiceManagement Company Inc. and Delaware Investment &
Retirement Services, Inc.
Winthrop S. Jessup Executive Vice President and Director(a series of
Delaware Management Company, Inc.Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware Distributors, L.P.; Executive
Vice President, Chief Operating Officer, Chief Financial Officer and Trustee of 17 investment companies in the
Delaware Group (which excludes Delaware Pooled
Trust, Inc.) and
Delaware Management Holdings,
Inc.; President and Chief Executive Officer of
Delaware Pooled Trust, Inc.; President and
Director of Delaware Capital Management, Inc.;Business Trust; Executive Vice President, and Director of DMH
Corp., Delaware International Holdings Ltd. and
Founders Holdings, Inc.; Vice Chairman and
Director of Delaware Distributors, Inc.; Vice
Chairman of Delaware Distributors, L.P.;
Director of Delaware Service Company, Inc.,
Delaware International Adviser Ltd., Delaware
Management Trust Company and Delaware Investment
& Retirement Services, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of
Delaware Management Company, Inc.; Executive
Vice President of the 18 investment companies in
the Delaware Group; Senior Vice President of
Delaware Management Holdings, Inc.; Director of
Delaware International Advisers Ltd.
David K. Downes Executive Vice President/Chief Operating
Officer/Officer, Chief Financial Officer and Director of Delaware Management Company,
Inc.; Senior Vice
President/Chief Administrative Officer/Chief
Financial Officer of the 18 investment companies
in the, DMH Corp., Delaware Group; ChairmanDistributors, Inc., Founders Holdings, Inc. and
Director of
Delaware Management Trust Company and Delaware
Investment & Retirement Services,Delvoy, Inc.; President/President, Chief Executive Officer/Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.; Executive Vice
President/President, Chief Operating Officer/Officer,
Chief Financial Officer and Director of DMH Corp.,
Delaware Distributors, Inc., Founders Holdings,
Inc. and Delaware International Holdings Ltd.;
Executive Vice President/Chief Operating
Officer/Chief Financial Officer of Delaware
Management Holdings, Inc. and Delaware Capital
Management, Inc.; Senior Vice President/Chief
Administrative Officer/Chief Financial Officer
of Delaware Distributors, L.P., Director of
Delaware International Advisers Ltd.
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of
Delaware Management Company, Inc.; Senior Vice
President and Secretary of the 18 investment
companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware
Distributors, L.P.; Executive Vice President,
SecretaryChairman and Director of Delaware Management Trust Company; Senior Vice President, SecretaryChairman, Chief
Executive Officer and Director of DMH Corp.,Retirement Financial Services, Inc. During the
past five years, Mr. Downes has served in various executive capacities at
different times in the Delaware Distributors,Investments organization.
Richard G. Unruh (59) Executive Vice President of each of the 34 investment
companies in the Delaware Investments family, Delaware Management Holdings,
Inc., Delaware ServiceManagement Company Inc.,(a series of Delaware Investment & Retirement Services,
Inc., Founders Holdings, Inc.Management Business
Trust) and Delaware Capital Management, Inc.; Secretary and DirectorPresident of Delaware International Holdings Ltd.,Investment
Advisers (a series of Delaware Management Business Trust); Executive Vice
President and Director/Trustee of Delaware Management Company, Inc. and Delaware
Management Business Trust; Director of Delaware International Advisers Ltd., Attorney.
DMC currently serves as investment adviser for the following funds that
have investment objectives similar to those of one or more of the Funds being
asked to approve new investment advisory agreements under Proposal Two:
[NAME OF FUND, RATE OF COMPENSATION, FEES WAIVED PURSUANT TO ADVISORY AGREEMENT,
NET ASSETS OF FUND AS OF DECEMBER 31, 1996.]
EXECUTIVE OFFICERS OF VOYAGEUR FUNDS
Certain information about the executive officers of the Funds is set
forth below. Unless otherwise indicated, all positions have been held more than
five years.
Position and Term of Office with the Funds and
Name (Age) Business Experience
During the Past Five Years
- ---------- ----------------------------------------------
John G. Taft (42) President ofpast five years, Mr. Unruh has served in various executive capacities
at different times within the Funds (Executive Vice President
of Colorado Tax Free Fund); President of VFM;
Director of VFM and of VFD since 1993; Executive
Vice President of VFD (since 1995); Management
Committee member of VFM from 1991 to 1993.
Andrew M. McCullagh, Jr. (48) Executive Vice President of the Funds (President
of Colorado Tax Free Fund); Senior Tax Exempt
Portfolio Manager of VFM; previously, Director
of VFM and VFD from 1993 to 1995.
Jane M. Wyatt (42) Executive Vice President of the Funds; Director
and Chief Investment Officer of VFM since 1993;
Director and Executive Vice President of VFD
since 1993; previously, Executive Vice President
and Portfolio Manager of VFM from 1992 to 1993.
Steve Eldredge (40) Vice President of the Funds since 1995; Senior
Tax Exempt Portfolio Manager of VFM since 1995;
previously, portfolio manager for ABT Mutual
Funds, Palm Beach, Florida, from 1989 to 1995.
Elizabeth H. Howell (35) Vice President of the Funds; Senior Tax Exempt
Portfolio Manager of VFM.
James C. King (56) Vice President of the Funds; Senior Equity
Portfolio Manager of VFM since 1993; previously,
Director of VFM and VFD from 1993 to 1995.
Kenneth R. Larsen (33) Treasurer of the Funds; Treasurer of VFM and
VFD; previously, Director, Secretary and
Treasurer of VFM and VFD from 1993 to 1995.
Thomas J. Abood (33) Secretary of the Funds since 1995; Senior Vice
President and General Counsel since 1994 of DFG;
Senior Vice President of VFM, VFD and Voyageur
Companies, Inc. since 1995; previously, Vice
President of VFM and Voyageur Companies, Inc.
from 1994 to 1995; previously, associated with
the law firm of Skadden, Arps, Slate, Meagher &
Flom, Chicago, Illinois from 1988 to 1994.
All of such individuals [EXCEPT MS. HOWELL AND MR. MCCULLAGH] will
resign their positions with the Funds immediately prior to Closing. It is
expected that, after consummation of the Merger, the newly elected Boards of
Directors will elect the following individuals to serve as officers of the
Funds:
Expected Position with Funds and Business
Name (Age) Experience During the Past Five Years
- ---------- -----------------------------------------
Wayne A. Stork (59) Chairman, President, Chief Executive Officer,
Director and/or Trustee of the Funds. See
"Supplemental Information About Delaware Management Company, Inc." for a description of
Mr. Stork's business experience.
Winthrop S. Jessup (51) Executive Vice President of the Funds. See
"Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Jessup's business experience.
Richard G. Unruh, Jr. (57) Executive Vice President of the Funds. See
"Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Unruh's business experience.Investments organization.
Paul E. Suckow (49)(51) Executive Vice President/Chief Investment Officer, Fixed
Income of the Funds andeach of the 1834 investment companies in the Delaware GroupInvestments
family, Delaware Management Company, Inc., Delaware Management Business Trust,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Company,Holdings, Inc.; Executive Vice President and Director of
Founders Holdings, Inc.; Senior Vice President/Chief
Investment Officer, Fixed Income of Delaware
Management Holdings, Inc.; SeniorExecutive Vice President of Delaware Capital
Management, Inc.; Director of Founders CBO Corporation; Director of HYPPCO
Finance Company Ltd.; before returning to During the past five years, Mr. Suckow has served in
various executive capacities at different times within the Delaware GroupInvestments
organization.
Michael P. Bishof (36) Senior Vice President/Treasurer of each of the 34
investment companies in 1993, Mr. Suckow was Executivethe Delaware Investments family and Founders Holdings,
Inc.; Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust) and Delaware Service Company,
Inc.; Senior Vice President and DirectorTreasurer/Manager of Fixed IncomeInvestment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series of
Delaware Management Business Trust); Senior Vice President and Manager of
Investment Accounting of Delaware International Holdings Ltd.; Senior Vice
President and Assistant Treasurer of Founders CBO Corporation. Before joining
Delaware Investments in 1995, Mr. Bishof was a Vice President for OppenheimerBankers 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, New YorkNY, from 19851987 to 1992; prior to 1985, he
was a fixed-income portfolio manager for the
Delaware Group.
David K. Downes (57) Senior Vice President/Chief Administrative
Officer/ Chief Financial Officer of the Funds.
See "Supplemental Information About Delaware
Management Company, Inc." for a description of
Mr. Downes' business experience.1993.
George M. Chamberlain, Jr. (50)(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 the
Funds. See "Supplemental Information AboutDelaware Distributors, L.P.,
Delaware Management Company Inc." for a
description(a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust)
and Delaware Management Holdings, Inc.; Senior Vice President, Secretary and
Director/Trustee of DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Retirement Financial Services Inc., Delaware Capital Management, Inc., Delvoy,
Inc. and Delaware Management Business Trust; Executive Vice President, Secretary
and Director of Delaware Management Trust Company.
Joseph H. Hastings (48) Senior Vice President/Corporate Controller of each of
the 34 investment companies in the Delaware Investments family and Founders
Holdings, Inc.; Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Management Business Trust, Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital Management,
Inc., Delaware International Holdings Ltd. and Delvoy, Inc.; Chief Financial
Officer/Treasurer of Retirement Financial Services, Inc.; Executive Vice
President/Chief Financial Officer/Treasurer of Delaware Management Trust
Company; Senior Vice President/Assistant Treasurer of Founders CBO Corporation.
During the past five years, Mr. Chamberlain's business
experience.Hastings has served in various executive
capacities at different times within the Delaware Investments organization.
C-1
Patrick P. Coyne (33)(35) Vice President/Senior Portfolio Manager of the
tax-free FundsDelaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), Delaware
Capital Management, Inc., and of the tax-free and
fixed-income investment companiesfunds in the Delaware
Group, Delaware Management Company,
Inc. and Delaware Capital Management, Inc.;
duringInvestments family. During the past five years, Mr. Coyne has served in various
capacities at different times within the Delaware Investments organization.
Mitchell L. Conery (38)(39) Vice President/Senior Portfolio Manager of the
tax-free FundsDelaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and of the
tax-free and
fixed-income investment companiesfunds in the Delaware Group andInvestments family. Before joining Delaware
Management Company,
Inc.; from 1995 to 1996,Investments in 1997, Mr. Conery was an investment officer with Travelers
Insurance and
from 1992 to 1995 he wasthrough 1996, and a research analyst with CS First Boston. Mr. Conery joined the
Delaware Group in 1997.
Edward N. Antoian (41)Boston
from 1992 to 1995.
Elizabeth H. Howell (36) Vice President/Senior Portfolio Manager of the
equity FundsDelaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and of the
equity investment
companiesfixed-income funds in the Delaware Group,Investments family. Before joining Delaware
Management Company,Investments in 1997, Ms. Howell was a senior portfolio manager with Voyageur
Fund Managers, Inc.
and Delaware Capital
Management, Inc.; during the past five years,
Mr. Antoian has served in various capacities
within the Delaware organization.
Gerald S. FreyAndrew M. McCullagh (50) Vice President/Senior Portfolio Manager of the
equity FundsDelaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and of the
fixed-income funds in the Delaware Investments family. Before joining Delaware
Investments in 1997, Mr. McCullagh was a senior portfolio manager with Voyageur
Fund Managers, Inc.
Gary A. Reed (43) Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., Delaware Management Business Trust, Delaware Management Company
(a series of Delaware Management Business Trust), Delaware Investment Advisers
(a series of Delaware Management Business Trust), and Delaware Capital
Management, Inc.; and an officer of the fixed-income funds in the Delaware
Investments family. During the past five years, Mr. Reed has served in various
capacities at different times within the Delaware Investments organization.
Babak Zenouzi (35) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and of the
equity funds in the Delaware Investments family. During the past five years, Mr.
Zenouzi has served in various capacities at different times within the Delaware
Investments organization.
George H. Burwell (36) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 8
investment companies in Delaware Investments and of Delaware Management Company.
Before joining Delaware Investments in 1992, Mr. Burwell was a portfolio manager
for Midlantic Bank, New Jersey. In addition, he was a security analyst for Balis
& Zorn, New York and for First Fidelity Bank, New Jersey.
Gerald S. Frey (52) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), and 8
investment companies in the Delaware Group and of Delaware Management Company,
Inc.; before Before joining the Delaware Group in 1996, Mr. Frey was a Senior Director
with Morgan Grenfell Capital Management, New York, New YorkNY from 1986 to 1995.
Michael P. Bishof (34) Vice President/TreasurerC-2
EXHIBIT D
SHAREHOLDINGS BY DIRECTORS AND NOMINEES IN THE
DELAWARE INVESTMENTS FUNDS AS OF OCTOBER 31, 1998
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
JEFFREY J. NICK
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund................................... 1,270.806 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 31,403.410 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund................................... 19,012.257 - / -
WALTER P. BABICH
Delaware Group Cash Reserve, Inc............................ 7,869.800 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund.................................. 9,651.044 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund....................................... 4,314.040 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund..................................... 6,938.292 Less than 1%/Less than 1%
ANTHONY D. KNERR
None
D-1
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
ANN R. LEVEN
Delaware Group Equity Funds I, Inc.
Delaware Fund........................................... 750.665 Less than 1%/Less than 1%
Delaware Group Equity Funds I, Inc.
Devon Fund.............................................. 254.789 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund..................................... 2,025.428 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 2,036.432 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund............................................... 2,527.037 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 994.566 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund............................... 1,174.926 Less than 1%/Less than 1%
W. THACHER LONGSTRETH
Delaware Group Equity Funds I, Inc.
Delaware Fund .......................................... 40,815.95 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund..................................... 67,652.453 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund............................... 4,161.893 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund.............................................. 5,296.988 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund............................................. 1,942.898 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund.................................... 934.814 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund......................................... 60,197.084 Less than 1%/Less than 1%
Delaware Group Government Fund, Inc.
U.S. Government Fund.................................... 96.057 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
U.S. Government Money Fund.............................. 90.100 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................ 25,648.646 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc............................ 40,105.860 Less than 1%/Less than 1%
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund....................................... 40,050.721 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund.............................. 221.163 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc..................... 470.830 Less than 1%/Less than 1%
Delaware Group Dividend and Income Fund, Inc................ 1,000.000 Less than 1%/Less than 1%
Delaware Group Global Dividend and Income Fund, Inc......... 1,274.000 Less than 1%/Less than 1%
WAYNE A. STORK
Delaware Group Equity Funds I, Inc.
Devon Fund ................................................ 65,720.574 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Income Fund........................................ 1,118.749 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund....................................... 2,862.459 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund............................................ 601,720.448 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
High-Yield Opportunities Fund.............................. 1,066,253.089 40.28%/Less than 1%
Delaware Group Government Fund, Inc.
Government Income Series................................... 5,322.055 Less than 1%/Less than 1%
Delaware Group Cash Reserve, Inc. .......................... 4,783,208.930 Less than 1%/Less than 1%
Delaware Group Tax-Free Money Fund, Inc..................... 1,075.010 Less than 1%/Less than 1%
Delaware Group State Tax-Free Income Trust
Tax-Free Pennsylvania Fund................................. 1,231,454.464 1.11%/1.10%
Delaware Group Global & International Funds, Inc.
International Equity Series................................ 11,838.599 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund..................................... 1,225.190 Less than 1%/Less than 1%
D-2
Percentage of
Company Shares Owned Fund/Company Owned
------- ------------ ------------------
THOMAS F. MADISON
Delaware Group Equity Funds I, Inc.
Devon Fund............................................... 246.327 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund................................ 159.373 Less than 1%/Less than 1%
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund................................... 132.162 Less than 1%/Less than 1%
CHARLES E. PECK
Delaware Group Equity Funds I, Inc.
Delaware Fund............................................ 16,151.178 Less than 1%/Less than 1%
Delaware Group Equity Funds I, Inc.
Devon Fund............................................... 12,876.107 Less than 1%/Less than 1%
Delaware Group Equity Funds II, Inc.
Decatur Total Return Fund................................ 9,633.481 Less than 1%/Less than 1%
Delaware Group Equity Funds III, Inc.
Trend Fund............................................... 21,771.736 Less than 1%/Less than 1%
Delaware Group Equity Funds IV, Inc.
DelCap Fund.............................................. 7,583.990 Less than 1%/Less than 1%
Delaware Group Equity Funds V, Inc.
Small Cap Value Fund..................................... 7,248.518 Less than 1%/Less than 1%
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund......................................... 14,417.178 Less than 1%/Less than 1%
Delaware Group Income Funds, Inc.
Delchester Fund.......................................... 67,477.705 Less than 1%/Less than 1%
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund............................. 16,939/372 Less than 1%/Less than 1%
Delaware Group Global & International Funds, Inc.
International Equity Fund................................ 8,691.150 Less than 1%/Less than 1%
D-3
EXHIBIT E
LISTS OF CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
Table of Contents
Voyageur Funds, Inc.
Delaware-Voyageur U.S. Government Securities Fund...........................E2
Voyageur Insured Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Insured Fund.............................E4
Delaware-Voyageur Minnesota Insured Fund....................................E4
Voyageur Intermediate Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund......................E4
Voyageur Mutual Funds, Inc.
Delaware-Voyageur Tax-Free Arizona Fund.....................................E6
Delaware-Voyageur Tax-Free California Fund..................................E6
Delaware-Voyageur Tax-Free Idaho Fund.......................................E6
Delaware-Voyageur Tax-Free Iowa Fund........................................E8
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund.................E10
National High-Yield Municipal Bond Fund....................................E12
Delaware-Voyageur Tax-Free New York Fund....................................E6
Delaware-Voyageur Tax-Free Wisconsin Fund...................................E8
Voyageur Mutual Funds II, Inc.
Delaware-Voyageur Tax-Free Colorado Fund...................................E14
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund.....................................................E16
Growth Stock Fund..........................................................E18
Tax-Efficient Equity Fund..................................................E20
Voyageur Tax Free Funds, Inc.
Delaware-Voyageur Tax-Free Minnesota Fund...................................E4
Delaware-Voyageur Tax-Free North Dakota Fund................................E4
E-1
Delaware-Voyageur US Government Securities Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest more than 25% of
its assets in the securities of issuers in
any single industry; provided that there
shall be no limitation on the purchase of
securities issued by banks and obligations
issued or guaranteed by the U.S.
government, its agencies or
instrumentalities.
Borrowing* The Fund shall not borrow money, except
from banks for temporary or emergency
purposes in an amount not exceeding 5% of
the Funds andvalue of the 18 investment companiesFund's total assets. The
Fund will not borrow for leverage
purposes, and securities will not be
purchased while borrowings are
outstanding. Interest paid on any money
borrowed will reduce the Fund's net
income. The Fund shall not pledge,
hypothecate, mortgage or otherwise
encumber its assets in excess of 5% of its
total assets (taken at the Delaware Group,
Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Distributors, L.P.,
Delaware Service Company, Inc.,lower of cost
or current value) and Founders
Holdings, Inc.; Vice President/Managerthen only to secure
borrowings permitted under "Borrowing".
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not purchase securities on
margin, except such short-term credits as
may be necessary for the clearance of
Investment Accountingpurchases and sales of Delaware International
Holdings Ltd.; Assistant Treasurersecurities.
The Fund shall not make short sales of
Founders
CBO Corporation; before joiningsecurities or maintain a short position
for the Delaware
Group in 1995, Mr. Bishof was a Vice President
for Bankers Trust, New York, New York from 1994
to 1995, a Vice President for CS First Boston
Investment Management, New York, New York from
1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New
York, New York from 1987 to 1993.
SHAREHOLDER PROPOSALS
As series of Minnesota corporations (or, in some instances,
Massachusetts business trusts), the Funds are not required to hold annual
shareholder meetings. Since the Funds do not hold regular meetings of
shareholders, the anticipated date of the next shareholder meeting cannot be
provided. Any shareholder proposal which may properly be included in the proxy
solicitation material for a special shareholder meeting must be received by the
Fund no later than four months prior to the date proxy materials are mailed to
shareholders.
Dated: February 21, 1997 Thomas J. Abood, Secretary
EXHIBIT A
(Changes from Current Agreement are in ITALICS)
INVESTMENT ADVISORY AGREEMENT
This Agreement, made this ___ day of ________, 1997, by and
between ___________ Funds, Inc., a Minnesota corporation (the "Company"), on
behalf of each Fund represented by a series of shares of common stockaccount of the Fund that adopts this Agreement (each a "Fund" and, collectively, the "Funds")
(the Funds, together with the date each Fund adopts this Agreement, are set
forth in Exhibit A hereto, which shall be updated from time to time to reflect
additions, deletions or other changes thereto), and [Voyageur Fund Managers,
Inc.] [Delaware Management Company, Inc.], a _________ corporation ("Adviser"),
WITNESSETH:
1. INVESTMENT ADVISORY SERVICES.
(a) The Company hereby engages Adviser on behalf of the Funds,
and Adviser hereby agrees to act, as investment adviser for, and to manage the
investment of the assets of, the Funds.
(b) The investment of the assets of each Fund shallunless at all
times be subjectwhen a short position is open it
owns an equal amount of such securities or
owns securities which, without payment of
any further consideration, are convertible
into or exchangeable for securities of the
same issue as, and equal in amount to, the
applicable provisionssecurities sold short.
Underwriting The Fund shall not underwrite securities
issued by other persons except to the
extent that, in connection with the
disposition of its portfolio investments,
it may be deemed to be an underwriter
under federal securities laws.
Real Estate The Fund shall not purchase or sell
real estate, although it may purchase
securities which are secured by or
represent interests in real estate.
Commodities The Fund shall not purchase or sell
commodities or commodity contracts.
Lending The Fund shall not make loans, except by
purchase of debt obligations in which the
Fund may invest consistent with its
investment policies and through repurchase
agreements.
Illiquid Securities The Fund shall not purchase securities
restricted as to resale. The Fund shall
not invest in (a) securities which in the
opinion of the ArticlesFund's investment adviser
at the time of Incorporation,such investment are not
readily marketable, and (b) securities the
Bylaws,disposition of which is restricted under
federal securities laws as described in
the Registration Statement,preceding paragraph.
Investment Companies The Fund shall not invest in securities of
other investment companies, except as part
of a merger, consolidation or acquisition
of assets.
Control or Management None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-2
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Options The Fund shall not purchase options or
puts, calls, straddles, spreads or
combinations thereof; in connection with
the current Prospectus andpurchase of fixed-income securities,
however, the StatementFund may acquire attached
warrants or other rights to subscribe for
securities of Additional Information,companies issuing such
fixed-income securities or securities of
parents or subsidiaries of such companies.
(The Fund's investment policies do not
currently permit it to exercise warrants
or rights with respect to equity
securities.)
Futures None.
Unseasoned Issuers None.
Warrants See "Options."
Holdings by Affiliates The Fund shall not invest in securities of
any issuer if, any,to the knowledge of the
CompanyFund, officers and eachdirectors of the Fund
or officers and directors of the Fund's
investment adviser who beneficially own
more than 1/2 of 1% of the securities of
that issuer together own more than 5%.
Oil or Gas The Fund shall conformnot buy or sell oil, gas or
other mineral leases, rights or royalty
contracts.
Miscellaneous None.
E-3
Delaware-Voyageur Tax-Free Arizona Insured Fund
Delaware-Voyageur Tax-Free Minnesota Fund
Delaware-Voyageur Minnesota Insured Fund
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund
Delaware-Voyageur Tax-Free North Dakota Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest 25% or more of its
assets in the securities of issuers in any single
industry, except that the Fund may invest without
limitation, in circumstances in which other
appropriate available investments may be in
limited supply, in housing, health care and
utility obligations; provided that there shall be
no limitation on the purchase of Tax Exempt
Obligations and, for defensive purposes,
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
(Note: For purposes of this investment
restriction, the Fund's investment adviser (the
"Manager") interprets "Tax Exempt Obligations" to
exclude limited obligation bonds payable only from
revenues derived from facilities or projects
within a single industry.)
Borrowing* The Fund shall not borrow money, except from banks
for temporary or emergency purposes in an amount
not exceeding 20% of the value of the Fund's total
assets, including the amount borrowed. The Fund
may not borrow for leverage purposes, and
securities will not be purchased while borrowings
are outstanding. Interest paid on any money
borrowed will reduce the Fund's net income.
The Fund shall not pledge, hypothecate, mortgage
or otherwise encumber its assets in excess of 10%
of its total assets (taken at the lower of cost or
current value) and then only to secure borrowings
permitted by the restriction described in the
preceding paragraph).
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not purchase securities on margin,
except such short-term credits as may be necessary
for the clearance of purchases and sales of
securities.
The Fund shall not make short sales of securities
or maintain a short position for the account of
such Fund unless at all times when a short
position is open it owns an equal amount of such
securities or owns securities which, without
payment of any further consideration, are
convertible into or exchangeable for securities of
the same issue as, and equal in amount to, the
securities sold short.
Underwriting The Fund shall not underwrite securities issued by
other persons except to the extent that, in
connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter
under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate,
although it may purchase securities which are
secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts (including futures contracts).
Lending The Fund shall not make loans, except by purchase
of debt obligations in which the Fund may invest
consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities The Fund shall not invest more than 15% of its net
assets in illiquid investments.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-4
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies None.
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates The Fund shall not invest in securities of any
issuer if, to the knowledge of the Fund, officers
and directors or trustees [as applicable] of the
Fund or officers and directors of the Fund's
investment adviser who beneficially own more than
1/2 of 1% of the securities of that issuer
together own more than 5% of such securities.
Oil or Gas None.
Miscellaneous None.
E-5
Delaware-Voyageur Tax-Free Arizona Fund
Delaware-Voyageur Tax-Free California Fund
Delaware-Voyageur Tax-Free Idaho Fund
Delaware-Voyageur Tax-Free New York Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest 25% or more of its
assets in the securities of issuers in any single
industry (except that it may invest without
limitation, in circumstances in which other
appropriate available investments may be in
limited supply, in housing, health care, utility,
transportation, education and/or industrial
obligations); provided that there shall be no
limitation on the purchase of Tax Exempt
Obligations and, for defensive purposes,
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
(Note: For purposes of eachthis investment
restriction, the Manager interprets "Tax Exempt
Obligations" to exclude limited obligations bonds
payable only from revenues derived from facilities
or projects within a single industry.)
Borrowing* The Fund as set forthshall not borrow money (provided that the
Fund may enter into reverse repurchase
agreements), except from banks for temporary or
emergency purposes in such
documents and as interpreted from time to time by the Board of Directorsan amount not exceeding 20%
of the Company. Within the frameworkvalue of the investment policiesFund's total assets, including
the amount borrowed. The Fund may not borrow for
leverage purposes, provided that the Fund may
enter into reverse repurchase agreements for such
purposes, and securities will not be purchased
while outstanding borrowings exceed 5% of eachthe
value of the Fund's total assets.
Issuing Senior Securities* The Fund and
subject to such other limitations and directions asshall not issue any senior securities (as
defined in the BoardInvestment Company Act of Directors may
from time to time prescribe, Adviser shall have the sole and exclusive
responsibility for the management of each Fund's assets and the making and
execution of all investment decisions for each Fund,1940),
except as set forth in the following paragraph. Adviser shall reportinvestment restriction
pertaining to "Borrowing, and except to the Board of Directors regularly at
such timesextent
that using options, futures contracts and in such detail as the Boardoptions
on futures contracts, purchasing or selling on a
when-issued or forward commitment basis or using
similar investment strategies may from timebe deemed to
time determine
appropriate, in order to permit the Board to determine the adherence of Adviserconstitute issuing a senior security.
Short Sales/Margin* None.
Underwriting The Fund shall not underwrite securities issued by
other persons except to the investment policiesextent that, in
connection with the disposition of portfolio
investments, the Funds.
(c) ADVISER MAY, AT ITS EXPENSE, SELECT AND CONTRACT WITH ONE
OR MORE REGISTERED INVESTMENT ADVISERS ("SUB-ADVISER") FOR ANY OF THE FUNDS TO
PERFORM SOME OR ALL OF THE SERVICES FOR SUCH FUNDS. SUCH SUB-ADVISER SHALL BE
RESPONSIBLE FOR EXECUTING ORDERS FOR THE PURCHASE AND SALE OF PORTFOLIO
SECURITIES. ADVISER WILL COMPENSATE ANY SUB-ADVISER FOR ITS SERVICES TO THE
FUNDS. ADVISER 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.
(d) Adviser shall, at its own expense, furnish all office
facilities, equipment and personnel necessary to discharge its responsibilities
and duties hereunder. Adviser shall arrange, if requested by the Company, for
officers or employees of Adviser to serve without compensation from any Fund as
directors, officers, or employees of the Company if duly elected to such
positions by the shareholders or directors of the Company (as required by law).
(e) Adviser hereby acknowledges that all records pertaining to
each Fund's investments are the property of the Company, and in the event that a
transfer of investment advisory services to someone other than Adviser should
ever occur, Adviser will promptly, and at its own cost, take all steps necessary
to segregate such records and deliver them to the Company.
(f) SUBJECT TO THE PRIMARY OBJECTIVE OF OBTAINING THE BEST
AVAILABLE PRICES AND EXECUTION, ADVISER WILL PLACE ORDERS FOR THE PURCHASE AND
SALE OF PORTFOLIO SECURITIES WITH SUCH BROKER/DEALERS WHO PROVIDE STATISTICAL,
FACTUAL AND FINANCIAL INFORMATION AND SERVICES TO THE FUNDS, ADVISER OR TO ANY
OTHER FUND FOR WHICH ADVISER PROVIDES INVESTMENT ADVISORY SERVICES AND/OR WITH
BROKER/DEALERS WHO SELL SHARES OF THE FUNDS OR WHO SELL SHARES OF ANY OTHER FUND
FOR WHICH ADVISER PROVIDES INVESTMENT ADVISORY SERVICES. BROKER/DEALERS WHO SELL
SHARES OF THE FUNDS OF WHICH ADVISER IS INVESTMENT MANAGER, SHALL ONLY RECEIVE
ORDERS FOR THE PURCHASE OR SALE OF PORTFOLIO SECURITIES TO THE EXTENT THAT THE
PLACING OF SUCH ORDERS IS IN COMPLIANCE WITH THE RULES OF THE SECURITIES AND
EXCHANGE COMMISSION AND THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
(g) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (f) ABOVE,
AND SUBJECT TO SUCH POLICIES AND PROCEDURES AS MAY BE ADOPTED BY THE BOARD OF
DIRECTORS AND OFFICERS OF THE COMPANY, ADVISER MAY ASK THE FUNDS AND THE FUNDS
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 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 ADVISER'S OVERALL RESPONSIBILITIES WITH RESPECT TO THE FUNDS AND TO OTHER
FUNDS AND OTHER ADVISORY ACCOUNTS FOR WHICH ADVISER EXERCISES INVESTMENT
DISCRETION.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and management servicesmay be deemed to be rendered by Adviser hereunder, eachan
underwriter under federal securities laws.
Real Estate The Fund shall pay to Adviser a monthly
fee,not purchase or sell real
estate, although it may purchase securities which
fee shall be paid to Adviser not later than the fifth business day of
the month following the monthare secured by or represent interests in which said services were rendered.real
estate.
Commodities The monthly
fee payable by each Fund shall be as set forthnot purchase or sell commodities or
futures or options contracts with respect to
physical commodities. This restriction shall not
restrict the Fund from purchasing or selling, on a
basis consistent with any restrictions contained
in Exhibit A hereto,its then-current prospectus, any financial
contracts or instruments which may be updated from time to time to reflect amendments, if any, to Exhibit A. The
monthly fee payable by each Fund shall be based on the average of the net asset
values of all of the issued and outstanding shares of the Fund as determined as
of the close of each business day of the month pursuant to the Articles of
Incorporation, Bylaws, and currently effective Prospectus and Statement of
Additional Information of the Company and the Fund. For purposes of calculating
each Fund's average daily net assets, as such term is used in this Agreement,
each Fund's net assets shall equal its total assets minus (a) its total
liabilities and (b) its net orders receivable from dealers.
3. ALLOCATION OF EXPENSES.
(a) In addition to the fee described in Section 2 hereof, each
Fund shall pay all its costs and expenses which are not assumed by Adviser.
These Fund expenses include,deemed
commodities (including, by way of example butand not
by way of limitation, all expenses incurredoptions, futures, and
options on futures with respect, in each case, to
interest rates, currencies, stock indices, bond
indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase
of debt obligations in which the Fund may invest
consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-6
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Investment Companies None.
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-7
Delaware-Voyageur Tax-Free Iowa Fund
Delaware-Voyageur Tax-Free Wisconsin Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest 25% or more of its
assets in the operationsecurities of issuers in any single
industry, except that it may invest without
limitation, in circumstances in which other
appropriate available investments may be in
limited supply, in housing, health care and/or
utility obligations; provided that there shall be
no limitation on the purchase of Tax Exempt
Obligations and, for defensive purposes,
obligations issued or guaranteed by U.S.
government, its agencies or instrumentalities.
(Note: For purposes of this investment
restriction, the Manager interprets "Tax Exempt
Obligations" to exclude limited obligations bonds
payable only from revenues derived from facilities
or projects within a single industry.)
Borrowing* The Fund shall not borrow money, except from banks
for temporary or emergency purposes in an amount
not exceeding 20% of the value of the Fund's total
assets, including the amount borrowed. The Fund
may not borrow for leverage purposes, and
securities will not be purchased while borrowings
are outstanding. Interest paid on any money
borrowed will reduce the Fund's net income.
Issuing Senior Securities* The Fund shall not issue any senior securities (as
defined in the Investment Company Act of 1940),
except as set forth in the investment restriction
pertaining to "Borrowing," and except to the
extent that purchasing or selling on a when-issued
or forward commitment basis may be deemed to
constitute issuing a senior security.
Short Sales/Margin* The Fund shall not make short sales of securities
or maintain a short position for the account of
the Fund andunless at all times when a short position
is open it owns an equal amount of such securities
or owns securities which, without payment of any
public offering of
its shares, including, among others, Rule 12b-1 plan of distribution fees (if
any), interest, taxes, brokerage fees and commissions, feesfurther consideration, are convertible into or
exchangeable for securities of the directors who
aresame issue as,
and equal in amount to, the securities sold short.
Underwriting The Fund shall not employees of Adviser or the principal underwriter of the Fund's shares
(the "Underwriter"), or any of their affiliates, expenses of directors' and
shareholders' meetings, including the cost of printing and mailing proxies,
expenses of insurance premiums for fidelity andunderwrite securities issued by
other coverage, expenses of
redemption of shares, expenses of issue and sale of shares (topersons except to the extent not
borne by the Underwriter under its agreement with the Fund), expenses of
printing and mailing stock certificates representing shares of the Fund,
association membership dues, charges of custodians, transfer agents, dividend
disbursing agents, accounting services agents, investor servicing agents, and
bookkeeping, auditing, and legal expenses. Each Fund will also pay the fees and
bear the expense of registering and maintaining the registration of the Fund and
its shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
(b) The Underwriter shall bear all advertising and promotional
expensesthat, in
connection with the distributiondisposition of its portfolio
investments, it may be deemed to be an underwriter
under federal securities laws.
Real Estate The Fund shall not purchase or sell real
estate, although it may purchase securities which
are secured by or represent interests in real
estate.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts (including futures contracts).
This restriction shall not restrict the Fund from
purchasing or selling, on a basis consistent with
any restrictions contained in its then-current
prospectus, any financial contract or instruments
which may be deemed commodities (including by way
of example, and not by way of limitation, options,
futures and options on futures with respect, in
each case, to interest rates, currencies, stock
indices, bond indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase
of debt obligations in which the Fund may invest
consistent with its investment policies and
through repurchase agreements.
Illiquid Securities None.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-8
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-9
Delaware-Voyageur Minnesota High-Yield Municipal Bond Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest 25% or more of its total
assets in the securities of any industry,
although, for purposes of this limitation,
tax-exempt securities and U.S. Government
obligations are not considered to be part of any
industry.
Borrowing* The Fund shall not borrow money (provided that the
Fund may enter into reverse repurchase agreements
with respect to not more than 10% of its total
assets), except from banks for temporary or
emergency purposes in an amount not exceeding 20%
of the value of the Fund's shares,total assets, including
payingthe amount borrowed. The Fund may not borrow for
prospectusesleverage purposes, provided that the Fund may
enter into reverse repurchase agreements for new shareholders,such
purposes, and securities will not be purchased
while outstanding borrowings exceed 5% of the
value of the Fund's total assets.
Issuing Senior Securities* The Fund shall not issue any senior securities (as
defined in the Investment Company Act of 1940),
except as providedset forth in investment restriction
pertaining to "Borrowing," and except to the
following sentence. Noextent that using options, futures contracts and
options on futures contracts, purchasing or
selling on a when-issued or forward commitment
basis or using similar investment strategies may
be deemed to constitute issuing a senior security.
Short Sales/Margin* None.
Underwriting The Fund shall use any of its assetsnot underwrite securities issued by
other persons except to finance costs
incurredthe extent that, in
connection with the distributiondisposition of portfolio
investments, the Fund may be deemed to be an
underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate,
although it may purchase securities which are
secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or
futures or options contracts with respect to
physical commodities. This restriction shall not
restrict the Fund from purchasing or selling, on a
basis consistent with any restrictions contained
in its then-current Prospectus, any financial
contracts or instruments which may be deemed
commodities (including, by way of example and not
by way of limitation, options, futures, and
options on futures with respect, in each case, to
interest rates, currencies, stock indices, bond
indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase
of debt obligations in which the Fund may invest
consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities None.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-10
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management None.
Options See "Issuing Senior" and "Commodities."
Futures See "Issuing Senior" and "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-11
National High-Yield Municipal Bond Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest 25% or more of its sharestotal
assets in the securities of any industry,
although, for purposes of this limitation,
tax-exempt securities and U.S. Government
obligations are not considered to be part of any
industry.
Borrowing* The Fund shall not borrow money (provided that the
Fund may enter into reverse repurchase agreements
with respect to not more than 10% of its total
assets), except pursuantfrom banks for temporary or
emergency purposes in an amount not exceeding 20%
of the value of the Fund's total assets, including
the amount borrowed. The Fund may not borrow for
leverage purposes, provided that the Fund may
enter into reverse repurchase agreements for such
purposes, and securities will not be purchased
while outstanding borrowings exceed 5% of the
value of the Fund's total assets.
Issuing Senior Securities* The Fund shall not issue any senior securities (as
defined in the Investment Company Act of 1940),
except as set forth under "Borrowing," and except
to the extent that using options, futures
contracts and options on futures contracts,
purchasing or selling on a Planwhen-issued or forward
commitment basis or using similar investment
strategies may be deemed to constitute issuing a
senior security.
Short Sales/Margin* None.
Underwriting The Fund shall not underwrite securities issued by
other persons except to the extent that, in
connection with the disposition of Distribution,portfolio
investments, the Fund may be deemed to be an
underwriter under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate,
although it may purchase securities which are
secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or
futures or options contracts with respect to
physical commodities. This restriction shall not
restrict the Fund from purchasing or selling, on a
basis consistent with any restrictions contained
in its then-current prospectus, any financial
contracts or instruments which may be deemed
commodities (including, by way of example and not
by way of limitation, options, futures, and
options on futures with respect, in each case, to
interest rates, currencies, stock indices, bond
indices or interest rate indices).
Lending The Fund shall not make loans, except by purchase
of debt obligations in which the Fund may invest
consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities None.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-12
Control or Management None.
Options See "Commodities."
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-13
Delaware-Voyageur Tax-Free Colorado Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest 25% or more of its
assets in the securities of issuers in any single
industry, except that the Fund may invest without
limitation, in circumstances in which other
appropriate available investments may be in
limited supply, in housing, health care and
utility obligations; provided that there shall be
no limitation on the purchase of Tax Exempt
Obligations and, for defensive purposes,
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
(Note: For purposes of this investment
restriction, the Fund's investment adviser (the
"Manager") interprets "Tax Exempt Obligations" to
exclude limited obligation bonds payable only from
revenues derived from facilities or projects
within a single industry.)
Borrowing* The Fund shall not borrow money, except from banks
for temporary or emergency purposes in an amount
not exceeding 10% of the value of the Fund's total
assets, including the amount borrowed. The Funds
may not borrow for leverage purposes, and
securities will not be purchased while borrowings
are outstanding. Interest paid on any money
borrowed will reduce the Fund's net income.
The Fund shall not pledge, hypothecate, mortgage
or otherwise encumber its assets in excess of 10%
of its total assets (taken at the lower of cost or
current value) and then only to secure borrowings
permitted by the restriction described in the
preceding paragraph).
Issuing Senior Securities* None.
Short Sales/Margin* The Fund shall not purchase securities on margin,
except such short-term credits as may be necessary
for the clearance of purchases and sales of
securities.
The Fund shall not make short sales of securities
or maintain a short position for the account of
the Fund unless at all times when a short position
is open it owns an equal amount of such securities
or owns securities which, without payment of any
further consideration, are convertible into or
exchangeable for securities of the same issue as,
and equal in amount to, the securities sold short.
Underwriting The Fund shall not underwrite securities issued by
other persons except to the extent that, in
connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter
under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate,
although it may purchase securities which are
secured by or represent interests in real estate.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts (including futures contracts).
Lending The Fund shall not make loans, except by purchase
of debt obligations in which the Fund may invest
consistent with its investment policies, and
through repurchase agreements.
Illiquid Securities The Fund shall not invest more than 15% of its net
assets in illiquid investments.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-14
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates The Fund shall not invest in securities of any
issuer if, to the knowledge of the Fund, officers
and directors (or trustees) of the Fund or
officers and directors of the Fund's investment
adviser who beneficially own more than 1/2 of 1%
of the securities of that issuer together own more
than 5% of such securities.
Oil or Gas None.
Miscellaneous None.
E-15
Aggressive Growth Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest more than 25% of the
value of its total assets in securities of issuers
in any adopted pursuantone industry. For purposes of this
restriction, the term industry will be deemed to
Ruleinclude the government of any country other than
the United States, but not the U.S. government.
Borrowing* The Fund shall not borrow money, except that the
Fund may borrow from banks for temporary or
emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments
of dividends and distributions that might
otherwise require the untimely disposition of
securities, in an amount not to exceed 20% of the
value of the Fund's total assets (including the
amount borrowed) valued at market less liabilities
(not including the amount borrowed) at the time
the borrowing is made. Whenever borrowings exceed
5% of the value of the total assets of the Fund,
the Fund will not make any additional investments.
Issuing Senior Securities* None.
Short Sales/Margin* None.
Underwriting The Fund shall not act as an underwriter of
securities, except that the Fund may acquire
securities under circumstances in which, if the
securities were sold, the Fund might be deemed to
be an underwriter for purposes of the Securities
Act of 1933, as amended.
Real Estate The Fund shall not purchase or sell real estate
or real estate limited partnership interests,
except that the Fund may purchase and sell
securities of companies that deal in real estate
or interests in real estate.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts, except futures contracts and
related options and other similar contracts.
Lending The Fund shall not lend money to other persons,
except through purchasing debt obligations,
lending portfolio securities and entering into
repurchase agreements.
Illiquid Securities None.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-16
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management None.
Options None.
Futures See "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-16
Growth Stock Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification The Fund shall not invest more than 5% of the
value of its total assets in the securities of any
one issuer (other than securities of the U.S.
Government or its agencies or instrumentalities).
Concentration The Fund shall not concentrate its investments in
any particular industry; however, it may invest up
to 25% of the value of its total assets in the
securities of issuers conducting their principal
business activities in any one industry.
Borrowing* The Fund shall not borrow money, except from banks
for temporary or emergency purposes in an amount
not exceeding 5% of the value of the Fund's total
assets.
The Fund shall not mortgage, pledge or hypothecate
its assets except in an amount not exceeding 10%
of the value of its total assets, to secure
temporary or emergency borrowing. For purposes of
this policy, collateral arrangements for margin
deposits on futures contracts or with respect to
the writing of options are not deemed to be a
pledge of assets.
Issuing Senior Securities* The Fund shall not issue any senior securities as
defined in the Investment Company Act of 1940 (the
"1940 Act"), except to the extent that using
options and futures contracts may be deemed to
constitute issuing a senior security.
Short Sales/Margin* The Fund shall not purchase securities on margin,
except that it may obtain such short-term credits
as may be necessary for the clearance of purchases
or sales of securities and except that it may make
margin deposits in connection with futures
contracts.
The Fund shall not make short sales except where,
by virtue of ownership of other securities, it has
the right to obtain without payment of further
consideration, securities equivalent in kind and
amount to those sold.
Underwriting The Fund shall not underwrite securities issued by
other persons except to the extent that, in
connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter
under federal securities laws.
Real Estate The Fund shall not purchase or sell real estate or
real estate mortgage loans, except the Fund may
purchase or sell securities issued by companies
owning real estate or interests therein.
Commodities The Fund shall not purchase or sell commodities or
commodities futures contracts, except that it may
enter into financial futures contracts and engage
in related options transactions.
Lending The Fund shall not make loans to other persons,
except to the extent that repurchase agreements
are deemed to be loans under the 1940 Act, and
except that it may purchase debt securities as
described in the Prospectus under "Investment
Objectives and Policies." The purchase of a
portion of an issue of bonds, debentures or other
debt securities distributed to the public or to
financial institutions will not be considered the
making of a loan.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-18
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Illiquid Securities The Fund shall not invest more than 15% of its net
assets in illiquid investments.
Investment Companies The Fund shall not invest more than 5% of the
value of its total assets in the securities of any
single investment company or more than 10% of the
value of its total assets in the securities of two
or more investment companies except as part of a
merger, consolidation or acquisition of assets.
Control or Management The Fund shall not invest for the purpose of
exercising control or management.
The Fund shall not purchase more than 10% of any
class of securities of any one issuer (taking all
preferred stock issues of an issuer as a single
class and all debt issues of an issuer as a single
class) or acquire more than 10% of the outstanding
voting securities of an issuer.
Options The Fund shall not write, purchase or sell puts,
calls or combinations thereof, except that it may
(a) purchase or write put and call options on
stock indexes listed on national securities
exchanges, (b) write and purchase put and call
options with respect to the securities in which it
may invest and (c) engage in financial futures
contracts and related options transactions.
See "Borrowing."
Futures See "Borrowing," "Short Sales/Margin" and
"Commodities."
Unseasoned Issuers The Fund shall not invest more than 5% of the
value of its total assets in the securities of any
issuers which, with their predecessors, have a
record of less than three years' continuous
operation. (Securities of such issuers will not be
deemed to fall within this limitation if they are
guaranteed by an entity in continuous operation
for more than three years.)
Warrants None.
Holdings by Affiliates The Fund shall not purchase or retain the
securities of any issuer, if, to the Fund's
knowledge, those officers or directors of Delaware
Voyageur Mutual Funds III, Inc. or its affiliates
or of its investment adviser or sub-adviser who
individually own beneficially more than 0.5% of
the outstanding securities of such issuer,
together own beneficially more than 5% of such
outstanding securities.
Oil or Gas The Fund shall not purchase or sell oil, gas or
other mineral leases, rights or royalty contracts,
except the Fund may purchase or sell securities of
companies investing in the foregoing.
Miscellaneous The Fund shall not participate on a joint or a
joint and several basis in any securities trading
account.
E-19
Tax-Efficient Equity Fund
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Diversification None.
Concentration The Fund shall not invest more than 25% of the
value of its total assets in securities of issuers
in any one industry. For purposes of this
restriction, the term industry will be deemed to
include the government of any country other than
the United States, but not the U.S. government.
Borrowing* The Fund shall not borrow money, except that the
Fund may borrow from banks for temporary or
emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments
of dividends and distributions that might
otherwise require the untimely disposition of
securities, in an amount not to exceed 20% of the
value of the Fund's total assets (including the
amount borrowed) valued at market less liabilities
(not including the amount borrowed) at the time
the borrowing is made. Whenever borrowings exceed
5% of the value of the total assets of the Fund,
the Fund will not make any additional investments.
Issuing Senior Securities* The Fund shall not issue any senior securities, as
defined in the Investment Company Act of 1940,
other than as set forth under "Borrowing" above
and except to the extent that using options and
futures contracts or purchasing or selling
securities on a when-issued or delayed delivery
basis may be deemed to constitute issuing a senior
security.
Short Sales/Margin* None.
Underwriting The Fund shall not act as an underwriter of
securities, except that the Fund may acquire
securities under circumstances in which, if the
securities were sold, the Fund might be deemed to
be an underwriter for purposes of the Securities
Act of 1933, as amended.
Real Estate The Fund shall not purchase or sell real estate
or real estate limited partnership interests,
except that the Fund may purchase and sell
securities of companies that deal in real estate
or interests in real estate.
Commodities The Fund shall not purchase or sell commodities or
commodity contracts, except futures contracts and
related options and other similar contracts.
Lending The Fund shall not lend money to other persons,
except through purchasing debt obligations,
lending portfolio securities and entering into
repurchase agreements.
Illiquid Securities None.
Investment Companies None.
- ----------
* These activities will be covered by the proposed standard restriction
concerning Senior Securities and Borrowing.
E-20
Category Current Fundamental Investment Restriction
- -------- ------------------------------------------
Control or Management None.
Options See "Issuing Senior Securities."
Futures See "Issuing Senior Securities" and "Commodities."
Unseasoned Issuers None.
Warrants None.
Holdings by Affiliates None.
Oil or Gas None.
Miscellaneous None.
E-21
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Insured Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Arizona Delaware 4/30/97(1) 0.50% per year 0.50% on first $500 million
Insured Fund Management 0.475% on next $500 million
Company, 0.45% on next $1,500 million
Inc. 0.425% on assets in excess of
("DMC") $2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota Insured DMC 4/30/97(1) 0.50% per year 0.50% on first $500 million
Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Intermediate Tax Free Funds,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota DMC 4/30/97(1) 0.40% per year 0.50% on first $500 million
Intermediate Fund 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Arizona Fund DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free California DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
[RESTUBBED FROM PREVIOUS PAGE]
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
Voyageur Insured Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Arizona N/A N/A
Insured Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota Insured N/A N/A
Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Intermediate Tax Free Funds,
Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota
Intermediate Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Arizona Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free California
Fund
- -------------------------------------------------------------------------------------------------------
- ------------------------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
F-1
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Idaho Fund DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Iowa Fund DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota High Yield DMC 4/30/97(1) 0.65% per year 0.55% on first $500 million
Municipal Bond Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --National High-Yield Municipal Bond DMC 4/30/97(1) 0.65% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free New York DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Wisconsin DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds II, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Colorado DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
[RESTUBBED FROM PREVIOUS PAGE]
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Idaho Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Iowa Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Minnesota High Yield
Municipal Bond Fund
- -------------------------------------------------------------------------------------------------------
- --National High-Yield Municipal Bond
Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free New York
Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Wisconsin
Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds II, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Colorado
Fund
- -------------------------------------------------------------------------------------------------------
F-2
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free North DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Dakota Fund 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds III, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Aggressive Growth Fund DMC 4/30/97(1) 1.00% per year 0.75% on first $500 million
0.70% on next $500 million
0.65% on next $1,500 million
0.60% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Growth Stock Fund DMC 4/30/97(1) 1.00% per year 0.65% on first $500 million
0.60% on next $500 million
(Investment Management) 0.55% on next $1,500 million
0.50% on assets in excess of
$2,500 million; all per year
- -----------------------------------------------------------------------------------------------------------------------------------
- --Growth Stock Fund Voyageur 4/30/97(1) 0.50% per year 0.325 % per year
Asset
(Sub-Advisory) Management [Does DMC want
LLC ("VAM") breakpoints; BD
materials don't say]
- -----------------------------------------------------------------------------------------------------------------------------------
- --Tax-Efficient Equity Fund DMC 4/30/97(1) 0.75% on first 0.75% on first $500 million
$500 million 0.70% on next $500 million
0.725% on next 0.65% on next $1,500 million
$500 million 0.60% on assets in excess of
0.70% on assets $2,500 million; all per year
in excess of
$1,000 million;
all per year
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
[RESTUBBED FROM PREVIOUS PAGE]
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free Minnesota
Fund
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur Tax-Free North
Dakota Fund
- -------------------------------------------------------------------------------------------------------
Voyageur Mutual Funds III, Inc.
- -------------------------------------------------------------------------------------------------------
- --Aggressive Growth Fund
- -------------------------------------------------------------------------------------------------------
- --Growth Stock Fund
(Investment Management)
- -------------------------------------------------------------------------------------------------------
- --Growth Stock Fund
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------
- --Tax-Efficient Equity Fund N/A N/A
- -------------------------------------------------------------------------------------------------------
F-3
EXHIBIT F
INFORMATION RELATING TO INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Management
(or
Sub-Advisory)
Fee Rate Proposed Management (or
Investment Asset Size Based On Sub-Advisory) Fee Rate
Manager or Date of as of Average Daily Based on Average Daily
Fund/Series Sub-Adviser Agreement 10/31/98 Net Assets Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government DMC 4/30/97(1) 0.50% per year 0.55% on first $500 million
Securities Fund 0.50% on next $500 million
(Investment Management) 0.45% on next $1,500 million
0.425% on assets in excess of
$2,500 million; all per year
- ------------------------------------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government VAM 4/30/97(1) 0.25% per year No Change
Securities Fund
(Sub-Advisory)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------
(1) Last submitted to shareholders for approval on April 11, 1997 in connection
with Lincoln National Corporation's acquisition of the previous investment
manager, Voyageur Fund Managers, Inc.
[RESTUBBED FROM PREVIOUS PAGE]
- -------------------------------------------------------------------------------------------------------
Management
Fees that
Would Have
Been Due Servicing
During The /Distribution
Management Last Fiscal Fees Paid
Fees Due Year Under Percentage Last Fiscal
and/or Proposed Difference Year to
Waived Last Management Between Affiliates
Fund/Series Fiscal Year A Fee Rate B Rate A & B of Manager
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Voyageur Tax Free Funds, Inc.
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government
Securities Fund
(Investment Management)
- -------------------------------------------------------------------------------------------------------
- --Delaware-Voyageur US Government
Securities Fund
(Sub-Advisory)
- -------------------------------------------------------------------------------------------------------
F-4
EXHIBIT G
ACTUAL AND HYPOTHETICAL EXPENSE TABLES
Class A Shares Class B & C Shares Institutional Shares
Names of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------- ------ -------- ------ -------- ------ --------
Delaware-Voyageur US Government Securities Fund
(Voyageur Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% 0.50% 0.55%
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% None None
Other Expenses................................. 0.27% 0.27% 0.27% 0.27% 0.27% 0.27%
---- ---- ---- ---- ---- ----
Total Operating Expenses.............. 1.02% 1.07% 1.77% 1.82%
==== ==== ==== ==== ==== ====
Total Operating Expenses
After Waiver*................ 1.02% **% 1.77% **%
==== == ==== == ==== ====
Delaware-Voyageur Tax-Free Minnesota
Intermediate Fund
(Voyageur Intermediate Tax Free Funds, Inc.)
Management Fees................................ 0.40% 0.50% 0.40%` 0.50% N/A N/A
12b-1 Fees..................................... 0.15% 0.15% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.31% 0.31% 0.31% 0.31% N/A N/A
----- ----- ----- ----- --- ---
Total Operating Expenses.............. 0.86% 0.96% 1.71% 1.81% N/A N/A
==== ==== ===== ===== === ===
Total Operating Expenses
After Waiver*................ 0.86% **% 1.71% **% N/A N/A
==== == ===== == === ===
Delaware Voyageur Tax-Free Arizona Fund
(Voyageur Mutual Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50%` 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.28% 0.28% 0.28% 0.28% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses....... 1.03% 1.08% 1.78% 1.83%
==== ==== ==== ====
Total Operating Expenses
After Waiver*................ 0.50% **% 1.25% **% N/A N/A
==== == ==== == === ===
Delaware-Voyageur Tax-Free California Fund
(Voyageur Mutual Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.54% 0.54% 0.54% 0.54% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 1.29% 1.34% 2.04% 2.09% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.25% **% 1.00% **% N/A N/A
==== == ==== == === ===
Delaware-Voyageur Tax-Free Idaho Fund
(Voyageur Mutual Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.24% 0.24% 0.24% 0.24% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 0.99% 1.04% 1.74% 1.79% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.99% **% 1.74% **% N/A N/A
==== == ==== == === ===
Delaware-Voyageur Tax-Free Iowa Fund
(Voyageur Mutual Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.32% 0.32% 0.32% 0.32% N/A N/A
---- ---- ---- ---- --- ---
* DMC or DIAL voluntarily waived all or a portion of its management fee and,
in some cases, made expense payments on behalf of the Funds, all in order to
limit total operating expenses to certain amounts during the past fiscal
year. These voluntary waivers and payments can be ended at any time.
** Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-1
Class A Shares Class B & C Shares Institutional Shares
Names of Fund/Company Actual Proposed Actual Proposed Actual Proposed
- --------------------- ------ -------- ------ -------- ------ --------
Total Operating Expenses.............. 1.07% 1.12% 1.82% 1.87% N/A N/A
==== ==== ==== ==== === ===
After Waiver*................ 1.00% **% 1.75% **% N/A N/A
===== == ==== == === ===
Delaware-Voyageur Tax-Free New York Fund
(Voyageur Mutual Funds, Inc.)
0.75% 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.33% 0.33% 0.33% 0.33% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 1.08% 1.13% 1.83% 1.88% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 1.00% **% 21.75% **% N/A N/A
==== == ===== == === ===
Delaware-Voyageur Tax-Free Wisconsin Fund
(Voyageur Mutual Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.29% 0.29% 0.29% 0.29% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 1.04% 1.09% 1.79% 1.84% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 1.00% ** % 1.75% **% N/A N/A
==== === ==== == === ===
Delaware-Voyageur Tax-Free Colorado Fund
(Voyageur Mutual Funds II, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.24% 0.24% 0.24% 0.24% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 0.99% 1.04% 1.74% 1.79% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.87% **% 1.62% **% N/A N/A
==== == ==== == === ===
Delaware-Voyageur Tax-Free Minnesota Fund
(Voyageur Tax Free Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.22% 0.22% 0.22% 0.22% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 0.97% 1.02% 1.72% 1.77% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 0.94% **% 1.69% **% N/A N/A
==== == ==== == === ===
Declaware-Voyageur Tax-Free North Dakota Fund
(Voyageur Tax Free Funds, Inc.)
Management Fees................................ 0.50% 0.55% 0.50% 0.55% N/A N/A
12b-1 Fees..................................... 0.25% 0.25% 1.00% 1.00% N/A N/A
Other Expenses................................. 0.40% 0.40% 0.40% 0.40% N/A N/A
---- ---- ---- ---- --- ---
Total Operating Expenses.............. 1.15% 1.20% 1.90% 1.95% N/A N/A
==== ==== ==== ==== === ===
Total Operating Expenses
After Waiver*................ 1.00% **% 1.75% **% N/A N/A
==== === ==== == === ===
*DMC or DIAL voluntarily waived all or a portion of its management fee and, in
some cases, made expense payments on behalf of the Funds, all in order to
limit total operating expenses to certain amounts during the past fiscal year.
These voluntary waivers and payments can be ended at any time.
**Hypothetical expense figures after waivers are not shown along with the
proposed fee rates, because fee waivers have not been determined for future
fiscal years.
G-2
EXHIBIT H
FUNDS SIMILARLY MANAGED BY THE INVESTMENT MANAGER
AND SUB-ADVISER
Domestic Equity Funds
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
Blue Chip Fund DMC $_________ .65% on first $500 million .65% on first $500 million
(Investment Management) .625% on next $500 million .60% on next $500 million
.60% on assets in excess of .55% on next $1,500 million
$1,000 million; all per year .50% on assets in excess of $2,500
million; all per year
Blue Chip Fund VGA $_________ .15% on average daily net N/A
(Sub-Advisory) assets averaging one year
old or less
.20% on average daily net
assets averaging two years
old or less, but greater
than one year old
.35% on average daily net
assets averaging over two
years old; all per year
Capital Appreciation Fund DMC $_________ .75% on first $500 million .75% on first $500 million
.725% on next $500 million .70% on next $500 million
.70% on assets in excess of .65% on next $1,500 million
$1,000 million; all per year .60% on assets in excess of $2,500
million; all per year
Convertible Securities Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of $2,500
million, all per year
Decatur Income Fund DMC $_________ .60% on first $100 million .65% on first $500 million
.525% on next $150 million .60% on next $500 million
.50% on next $250 million .55% on next $1,500 million
.475% on assets in excess of .50% on assets in excess of
$500 million; all per year $2,500 million; all per year
less directors' fees
Decatur Total Return Fund DMC $_________ .60% on first $500 million .65% on first $500 million
.575% on next $250 million .60% on next $500 million
.55% on assets in excess of .55% on next $1,500 million
$750 million; all per year .50% on assets in excess of
less directors' fees $2,500 million; all per year
Decatur Total Return Series DMC $_________ .60% per year less .65% on first $500 million
(Variable Annuity) directors' fees .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million, all per year
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-1
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
Delaware Fund DMC $_________ .60% on first $100 million .65% on first $500 million
.525% on next $150 million .60% on next $500 million
.50% on next $250 million .55% on next $1,500 million
.475% on assets in excess of .50% on assets in excess of
$500 million; all per year, $2,500 million; all per year
less directors' fees
Delaware Series DMC $_________ .60% per year less .65% on first $500 million
(Variable Annuity) directors' fees .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
DelCap Fund DMC $_________ .75% per year less .75% on first $500 million
directors' fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
DelCap Series DMC $_________ .75% per year less .75% on first $500 million
(Variable Annuity) directors' fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Devon Fund DMC $_________ .60% on first $500 million .65% on first $500 million
.50% on assets in excess of .60% on next $500 million
$500 million; all per year .55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
Devon Series DMC $_________ .60% per year .65% on first $500 million
(Variable Annuity) .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
Diversified Value Fund DMC $_________ .65% on first $500 million N/A
.60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
The Growth & Income DMC $_________ .55% per year N/A
Portfolio**
The Large Cap Value Equity DMC $_________ .55% per year less .55% per year
Portfolio** directors' fees
Mid Cap Value Fund DMC $_________ .75% on first $500 million N/A
.70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
The Mid Cap Growth Equity DMC $_________ .80% per year less .75% per year
Portfolio** directors' fees
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-2
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
The Real Estate Investment DMC $_________ .75% per year .75% on first $500 million
Trust Portfolio** .70% on next $500 million
(Investment Management) .65% on next $1,500 million
.60% on assets in excess of
$2,500 million per year
The Real Estate Investment LIM $_________ 30% on management fee paid N/A
Trust Portfolio** to DMC
(Sub-Advisory)
The Real Estate Investment DMC $_________ .75% per year N/A
Trust Portfolio II**
(Investment Management)
The Real Estate Investment LIM $_________ 30% of management fee paid N/A
Trust Portfolio II** to DMC
(Sub-Advisory)
REIT Series DMC $_________ .75% on first $500 million N/A
(Variable Annuity) .70% on next $500 million
(Investment Management) .65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
REIT Series LIM $_________ 30% of management fee paid N/A
(Variable Annuity) to DMC
(Sub-Advisory)
Retirement Income Fund DMC $_________ .65% on first $500 million .65% on first $500 million
.625% on next $500 million .60% on next $500 million
.60% on assets in excess of .55% on next $1,500 million
$1,000; all per year .50% on assets in excess of
$2,500; all per year
Small Cap Contrarian Fund DMC $_________ .75% on first $500 million N/A
.70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
The Small Cap Growth Equity DMC $_________ .75% per year N/A
Portfolio**
The Small/Mid Cap Value DMC $_________ .65% per year N/A
Equity Portfolio**
Small Cap Value Fund DMC $_________ .75% per year less .75% on first $500 million
directors' fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Small Cap Value Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-3
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
Social Awareness Fund DMC $_________ .75% on first $500 million .75% on first $500 million
(Investment Management) .725% on next $500 million .70% on next $500 million
.70% on assets in excess of .65% on next $1,500 million
$1,000; all per year .60% on assets in excess of
$2,500 million; all per year
Social Awareness Fund VGA $_________ .20% on average daily net N/A
(Sub-Advisory) assets averaging one year
old or less
.25% of average daily net
assets averaging two years
old or less, but greater
than one year old
.40% of average daily net
assets averaging over two
years old; all per year
Social Awareness Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
(Investment Management) .65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Social Awareness Series VGA $_________ .25% on first $20 million N/A
(Variable Annuity) .35% on next $30 million
(Sub-Advisory) .40% on assets in excess of
$50 million; all per year
Trend Fund DMC $_________ .75% per year less .75% on first $500 million
director's fees .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
Trend Series DMC $_________ .75% per year .75% on first $500 million
(Variable Annuity) .70% on next $500 million
.65% on next $1,500 million
.60% on assets in excess of
$2,500 million; all per year
U.S. Growth Fund DMC $_________ .70% per year .65% on first $500 million
(Investment Management) .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
U.S. Growth Fund L&M $_________ .40% per year N/A
(Sub-Advisory)
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-4
Domestic Fixed-Income Funds
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
The Aggregate Fixed Income DMC $_________ .40% per year N/A
Portfolio**
Corporate Bond Fund DMC $_________ .50% on first $500 million N/A
.475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware Group Dividend and DMC $_________ .55% per year N/A
Income Fund, Inc.***
Delchester Fund DMC $_________ .60% on first $500 million .65% on first $500 million
.575% on next $250 million .60% on next $500 million
.55% on assets in excess of .55% on next $1,500 million
$750 million; all per year .50% on assets in excess of
less directors' fees $2,500 million; all per year
Delchester Series DMC $_________ .60% per year less .65% on first $500 million
(Variable Annuity) directors' fees .60% on next $500 million
.55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
The Diversified Core Fixed DMC $_________ .43% per year N/A
Income Portfolio**
(Investment Management)
The Diversified Core Fixed DIAL $_________ Fee equal to portion of N/A
Income Portfolio** management fee attributable
(Sub-Advisory) to foreign investments
Extended Duration Bond Fund DMC $_________ .55% on first $500 million N/A
.50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
U.S. Government Fund DMC $_________ .60% per year less .55% on first $500 million
directors' fees .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
The High-Yield Bond DMC $_________ .45% per year N/A
Portfolio**
High-Yield Opportunities Fund DMC $_________ .65% on first $500 million .65% on first $500 million
.625% on next $500 million .60% on next $500 million
.60% on assets in excess of .55% on next $1,500 million
$1,000 million; all per year .50% on assets in excess of
$2,500 million; all per year
The Intermediate DMC $_________ .40% per year less .40% per year
Fixed-Income Portfolio** directors' fees
Limited Term Government Fund DMC $_________ .50% per year less .50% on first $500 million
directors' fees .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$1,500 million; all per year
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-5
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
The Limited-Term Maturity DMC $_________ .30% per year N/A
Portfolio**
Strategic Income Fund DMC $_________ .65% on first $500 million .65% on first $500 million
(Investment Management) .625% on next $500 million .60% on next $500 million
.60% on assets in excess of .55% on next $1,500 million
$1,000 million; all per year .50% on assets in excess of
$2,500 million; all per year
Strategic Income Fund DIAL $_________ 1/3 of management fees paid N/A
(Sub-Advisory) to DMC
Strategic Income Series DMC $_________ .65% per year .65% on first $500 million
(Variable Annuity) .60% on next $500 million
(Investment Management) .55% on next $1,500 million
.50% on assets in excess of
$2,500 million; all per year
Strategic Income Series DIAL $_________ 1/3 of management fee paid N/A
(Variable Annuity) to DMC
(Sub-Advisory)
National Tax Free Funds
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ----------- -------------- ------------------------ ------------------------
Tax Free Insured Fund DMC $_________ .60% per year less .50% on first $500 million
directors' fees .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$1,500 million; all per year
Tax Free USA Fund DMC $_________ .60% on first $500 million .55% on first $500 million
.575% on next $250 million .50% on next $500 million
.55% on assets in excess of .45% on next $1,500 million
$750 million; all per year .425% on assets in excess of
less directors' fees $2,500 million per year
Tax Free USA Intermediate DMC $_________ .50% per year .50% on first $500 million
Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million per year less
directors' fees
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-6
State Tax Free Funds
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ------------------------ ------------------------
Voyageur Arizona Municipal DMC $_________ .40% per year N/A
Income Fund, Inc.***
Delaware-Voyageur Tax-Free DMC $_________ .50% on first $500 million N/A
California Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Voyageur Colorado Insured DMC $_________ .40% per year N/A
Municipal Income Fund,
Inc.***
Delaware-Voyageur Tax Free DMC $_________ .55% on first $500 million N/A
Florida Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax Free DMC $_________ .50% on first $500 million N/A
Florida Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Voyageur Florida Insured DMC $_________ .40% per year N/A
Municipal Income Fund***
Delaware-Voyageur Tax Free DMC $_________ .55% on first $500 million N/A
Kansas Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax-Free DMC $_________ .50% on first $500 million N/A
Missouri Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Voyageur Minnesota Municipal DMC $_________ .40% per year N/A
Income Fund, Inc.***
Voyageur Minnesota Municipal DMC $_________ .40% per year N/A
Income Fund II, Inc.***
Voyageur Minnesota Municipal DMC $_________ .40% per year N/A
Income Fund III, Inc.***
Tax Free New Jersey Fund DMC $_________ .55% on the first $500 .55% on first $500 million
million .50% on next $500 million
.525% on next $500 million .45% on next $1,500 million
.50% on assets in excess of .425% on assets in excess of
$1,000 million; all per year $2,500 million per year
Delaware-Voyageur Tax Free DMC $_________ .55% on first $500 million N/A
New Mexico Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-7
Investment Current Management (or Proposed Management (or
Manager or Asset Size Sub-Advisory) Fee Rate Based Sub-Advisory) Fee Rate Based
Fund Sub-Adviser* as of 10/31/98 On Average Daily Net Assets on Average Daily Net Assets
---- ------------ -------------- ---------------------------- ----------------------------
Tax Free Ohio Fund DMC $_________ .55% on first $500 million .55% on first $500 million
.525% on next $500 million .50% on next $500 million
.50% on assets in excess of .45% on next $1,500 million
$1,000 million all per year .425% on assets in excess of
$2,500 million per year
Delaware-Voyageur Tax Free DMC $_________ .50% on first $500 million N/A
Oregon Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Tax Free Pennsylvania Fund DMC $_________ .60% on first $500 million .55% on first $500 million
.575% on next $250 million .50% on next $500 million
.55% on assets in excess of .45% on next $1,500 million
$750 million; all per year .425% on assets in excess of
$2,500 million per year
Delaware-Voyageur Tax Free DMC $_________ .55% on first $500 million N/A
Utah Fund .50% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
Delaware-Voyageur Tax Free DMC $_________ .50% on first $500 million N/A
Washington Insured Fund .475% on next $500 million
.45% on next $1,500 million
.425% on assets in excess of
$2,500 million; all per year
- ----------
* Investment Managers/Sub-Advisers:
Delaware Management Company ("DMC")
Delaware International Advisers Ltd. ("DIAL")
Lincoln Investment Management, Inc. ("LIM")
Voyageur Asset Management LLC ("VAM")
Vantage Global Advisors, Inc. ("VGA")
Lynch & Mayer, Inc. ("L&M")
AIB Govett, Inc. ("AIBG")
** These funds are institutional funds and are only sold to investors who
invest a minimum of $1,000,000.
*** Closed-end fund that does not accept new investments; therefore, there are
no breakpoints in the management fees.
H-8
EXHIBIT I
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [REGISTRANT], a[____________] ("Fund") on behalf
of the [SERIES] ("Series"), and [MANAGER NAME] , a ________________]
("Investment Manager").
WITNESSETH:
WHEREAS, the Fund has been organized and operates as an investment company
registered under the Investment Company Act of 1940 (as amended,and is currently comprised
of [_] series, including the "1940 Act")Series; as a separate series of the Fund, each
series engages in the business of investing and reinvesting its assets in
securities, and
WHEREAS, the Investment Manager is a registered investment adviser under the
Investment Advisers Act of 1940 and engages in the business of providing
investment management services; and
WHEREAS, the Fund on behalf of the Series and the Investment Manager desire to
enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Fund hereby employs the Investment Manager to manage the investment
and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Fund's Board of Directors and officers of
the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth
for the compensation herein provided. The Investment Manager shall for all
purposes herein be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent
of the Fund. The Investment Manager shall regularly make decisions as to
what securities and other instruments to purchase and sell on behalf of the
Series and shall effect the purchase and sale of such investments in
furtherance of the Series' objectives and policies and shall furnish the
Board of Directors of the Fund with such information and reports regarding
the Series' investments as the Investment Manager deems appropriate or as
the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear the
expenses and salaries necessary and incidental thereto including, but not
in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders;
calling and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and accounting fees;
taxes; and federal and state registration fees. Directors, officers and
employees of the Investment Manager may be directors, officers and
employees of any of the investment companies within the Delaware
Investments family (including the Fund). Directors, officers and employees
of the Investment Manager who are directors, officers and/or employees of
these investment companies shall not receive any compensation from such
companies for acting in such dual capacity.
In the conduct of the respective businesses of the parties hereto and in
the performance of this Agreement, the Fund and Investment Manager may
share facilities common to each, which may include legal and accounting
personnel, with appropriate proration of expenses between them.
3. (a) Subject to the primary objective of obtaining the best available
prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for
which the Investment Manager or any such Sub-Adviser provides investment
advisory services and/or with broker/dealers who sell shares of the Fund or
who sell shares of any other fund for which the Investment Manager or any
such Sub-Adviser provides investment advisory services. Broker/dealers who
sell shares of the funds of which Delaware Management Company is investment
manager, shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance
with the Rules of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
I-1
(b) Notwithstanding the provisions of subparagraph (a) above and subject to
such policies and procedures as may be adopted by the Board of Directors
and officers of the Fund, the Investment Manager may ask the Fund and the
Fund may agree to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would
have charged for effecting that transaction, in such instances where the
Fund and the Investment Manager have determined in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Manager's overall responsibilities with respect to the Fund and to other
funds and other advisory accounts for which the Investment Manager or any
Sub-Adviser, as defined in Paragraph 5 hereof, exercises investment
discretion.
4. FREEDOM TO DEAL WITH THIRD PARTIES.
AdviserAs compensation for the services to be rendered to the Fund by the
Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets, a fee based
on the average daily net assets of the Series during the month. Such fee
shall be calculated in accordance with the following schedule:
Monthly Annual Rate Average Daily Net Assets
------- ----------- ------------------------
If this Agreement is terminated prior to the end of any calendar month, the
management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of
calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The Investment Manager may, at its expense, select and contract with one
or more investment advisers registered under the Investment Advisers Act of
1940 ("Sub-Advisers") to perform some or all of the services for the Series
for which it is responsible under this Agreement. The Investment Manager
will compensate any Sub-Adviser for its services to the Series. The
Investment Manager may terminate the services of any Sub-Adviser at any
time in its sole discretion, and shall at such time assume the
responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected and the requisite approval of the Series'
shareholders is obtained. The Investment Manager will continue to have
responsibility for all advisory services furnished by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to the Fund under
the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different
services to others similarso long as its ability to those rendered underrender the services provided
for in this Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to
the Fund or to any other investment company, corporation, association, firm
or individual.
8. It is understood and agreed that so long as the Investment Manager
and/or its advisory affiliates shall continue to serve as the Fund's
investment adviser, other mutual funds as may be sponsored or advised by
the Investment Manager or its affiliates shall have the right permanently
to adopt and to use the words "Delaware," "Delaware Investments" or
"Delaware Group" in their names and in the names of any series or class of
shares of such funds.
9. In the absence of willful misfeasance, bad faith, gross negligence, or a
reckless disregard of the performance of its duties as the Investment
Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of
any security, or otherwise.
10. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a different nature except as such
services may conflict with the services to be rendered or the duties to be
assumed hereunder.
5. REPORTS TO DIRECTORS OF THE FUND.
Appropriate officers of Adviser shall provide the directorsmajority of the Company with such information as is required by any planoutstanding
voting securities of distribution
adopted by the Company on behalf of any Fund pursuant to Rule 12b-1 under the
1940 Act.
6. STANDARD OF CARE.
IN THE ABSENCE OF WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE OR A RECKLESS DISREGARD OF THE PERFORMANCE OF DUTIES OF THE ADVISER
TO THE FUNDS, THE INVESTMENT MANAGER SHALL NOT BE SUBJECT TO LIABILITIES OF THE
FUNDS OR TO ANY SHAREHOLDERS OF THE FUNDS 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.
7. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
(a) The effective date of this Agreement with respect to each
Fund shall be the date set forth on Exhibit A hereto.
(b) Unless sooner terminated as hereinafter provided, this
AgreementSeries. It shall continue in effect with respect to each Fund for a period
of two years from the date of its execution, and may be renewed thereafter shall continue in effect only so long as such renewal and
continuance is specifically approved at least annually by (i) the Board of
Directors of the Company or by the vote of a majority of the outstanding voting securities
of the applicable Fund,Series and (ii)only if the terms and the renewal hereof have been
approved by the vote of a majority of the directorsDirectors of the CompanyFund who are not
parties to this Agreementhereto or "interested persons", as defined in the 1940 Act,interested persons of Adviser or of the
Companyany such party, cast in person at a
meeting called for the purpose of voting on such approval. (c) ThisNotwithstanding
the foregoing, this Agreement may be terminated with respect to anyby the Fund at any time,
without the payment of anya penalty, on sixty days' written notice to the
Investment Manager of the Fund's intention to do so, pursuant to action by
the Board of Directors of the CompanyFund or bypursuant to the vote of a majority of
the outstanding voting securities of such Fund, or by Adviser, upon 60the Series. The Investment Manager may
I-2
terminate this Agreement at any time, without the payment of a penalty, on
sixty days' written notice to the other party.
(d)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 agreementAgreement shall automatically terminate automatically in the
event of its "assignment" (as defined in the 1940 Act).
(e) No amendment to thisassignment.
11. This Agreement shall be effective with
respectextend to any Fund until approved byand bind the vote of: (i) a majorityheirs, executors,
administrators and successors of the directorsparties hereto.
12. For the purposes of the Company who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of Adviser or of the Company cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
a majority of the outstanding voting securities of the applicable Fund.
(f) Wherever referred to in this Agreement, the vote or
approval of the holdersterms "vote of a majority of
the outstanding voting securities or
sharessecurities"; "interested persons"; and "assignment"
shall have the meaning defined in the Investment Company Act of a Fund shall mean the lesser of (i) the vote of 67% or more of the
voting securities of such Fund present at a regular or special meeting of
shareholders duly called, if more than 50% of the Fund's outstanding voting
securities are present or represented by proxy, or (ii) the vote of more than
50% of the outstanding voting securities of such Fund.
8. NOTICES.
Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of such notice.1940.
IN WITNESS WHEREOF, the Company and Adviserparties hereto have caused this
Agreementtheir corporate seals to be
executedaffixed and duly attested and their presents to be signed by their duly
authorized officers as of the day and
year first above written.
VOYAGEUR ______________________ FUNDS, INC.
By __________________________________
Its of , 19 .
[MANAGER NAME] [REGISTRANT NAME]
for the [SERIES NAME]
By:_________________________________
Name:_______________________________
Title:______________________________
By:________________________________
Name:______________________________
Title:_____________________________
Attest:_____________________________
Name:_______________________________
Title:______________________________
Attest:____________________________
[VOYAGEUR FUND MANAGERS, INC.]
[DELAWARE MANAGEMENT COMPANY, INC.]
By __________________________________
Its ___________________________
Exhibit A
to
Investment Advisory Agreement
between
[Voyageur Fund Managers, Inc.]
[Delaware Management Company, Inc.]
and
Voyageur _____________ Funds, Inc.
MONTHLY
ADVISORY FEE
(as % of average
FUND EFFECTIVE DATE daily net assets)
---- -------------- -----------------Name:______________________________
Title:_____________________________
I-3
EXHIBIT B
(Changes from Current Agreement are in ITALICS)J
FORM OF SUB-ADVISORY AGREEMENT
Agreement, dated __________, 1997,AGREEMENT, made by and between Delaware
Management Company, Inc. (the "Adviser"[MANAGER NAME] ("Investment Manager"), a corporation, and
Voyageur Asset
Management LLC, a Minnesota limited liability company[SUB-ADVISER NAME] ("Sub-Adviser").
WITNESSETH:
WHEREAS, Voyageur Mutual Funds III, Inc.[REGISTRANT NAME], a Minnesota
corporation (the"Company"[______________] ("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 its Growth Stockthe [Series]
("Series") have entered into an agreement of even date herewith ("Investment
Management Agreement") whereby the Investment Manager will provide investment
advisory services to the Fund a separately
managed serieson behalf of the Company (the "Fund"), has appointed Adviser as the Fund's
investment adviser pursuant to an Investment Advisory Agreement dated ________,
1997 (the "Advisory Agreement");Series; and
WHEREAS, pursuantthe 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 termsFund on behalf of the Advisory Agreement,
Adviser desires to appoint Sub-Adviser as its sub-adviser for the Fund, and
Sub-Adviser is willing to act in such capacity upon the terms set forth herein;Series; and
WHEREAS, pursuant to the termsInvestment Manager and the Sub-Adviser are registered Investment
Advisers under the Investment Advisers Act of 1940 and engage in the Advisory Agreement, the
Company has approved the appointmentbusiness of
Sub-Adviser as Sub-Adviser for the Fund.providing investment management services.
NOW, THEREFORE, in consideration of the mutual agreementscovenants herein made, Advisercontained, and
Sub-Adviser agreeeach of the parties hereto intending to be legally bound, it is agreed as
follows:
1. AdviserThe Investment Manager hereby employs the Sub-Adviser, subject always to
serve as sub-adviser
for,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 asfor the period and on the terms hereinafter set forth
herein.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, to assume all obligations herein set forth and to
bear all expenses of its performance of such obligations (but no other
expenses). Sub-Adviser shall not be required to pay expenses of the Fund,
including, but not limited to (a) brokerage and commission expenses; (b)
federal, state, local and foreign taxes, including issue and transfer taxes
incurred by or levied on the Fund; (c) interest charges on borrowings; (d) the
Fund's organizational and offering expenses, whether or not advanced by Adviser;
(e) the cost of other personnel providing services to the Fund; (f) fees and
expenses of registering or otherwise qualifying the shares of International Fund
under applicable state securities laws; (g) expenses of printing and
distributing reports to shareholders; (h) costs of shareholders' meetings and
proxy solicitation; (i) charges and expenses of the Fund's custodian and
registrar, transfer agent and dividend disbursing agent; (j) compensation of the
Company's officers, directors and employees that are not Affiliated Persons or
Interested Persons (as defined in Section 2(a)(19) of the Investment Company Act
of 1940, as amended (the "1940 Act") and the rules, regulations and releases
relating thereto) of Adviser; (k) legal and auditing expenses; (l) costs of
certificates representing common shares of the Fund; (m) costs of stationery and
supplies; (n) insurance expenses; (o) association membership dues; (p) the fees
and expenses of registering the Fund and its shares with the Securities and
Exchange Commission; (q) travel expenses of officers and employees of
Sub-Adviser to the extent such expenses relate to the attendance of such persons
at meetings at the request of the Board of Directors of the Company; and (r) all
other charges and costs of the Fund's operation unless otherwise explicitly
provided herein.provided. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor, and shall,
except asunless otherwise expressly provided orand authorized,
(whether herein or otherwise) have no authority to
act for or on behalf ofrepresent the Fund in any way, or otherwisein any way be deemed an agent
of the Fund. 2.The Sub-Adviser shall directregularly make decisions as to what
securities to purchase and sell on behalf of the Fund'sSeries with respect to
that portion of the Series' assets designated by the Investment Manager,
shall effect the purchase and sale of such investments in accordance with applicable lawfurtherance of
the Series' objectives and the investment objective, policies and restrictions set forth in the Fund's then-effective Registration Statement under
the Securities Act of 1933, as amended, including the Prospectus and Statement
of Additional Information of the Fund contained therein, subject to the
supervision of the Company, its officers and directors, and Adviser and in
accordance with the investment objectives, policies and restrictions from time
to time prescribed byshall furnish the Board of
Directors of the CompanyFund with such information and communicated by
Adviser to Sub-Adviser and subject to such further limitationsreports regarding its
activities as Adviser may
from time to time impose by written notice to Sub-Adviser.
3. Sub-Adviser shall formulate and implement a continuing
program for managing the investmentInvestment Manager deems appropriate or as the Directors
of the Fund's assets, and shall amend and
update such program from time to time as financial and other economic conditions
warrant. Sub-Adviser shall make all determinations with respect to managing the
investment of the Fund's assets and shall take such steps as may be necessary to
implement the same, including the placement of purchase and sale orders on
behalf of the Fund.
4. Sub-Adviser shall furnish such reports to Adviser as
AdviserFund may reasonably request for Adviser's use in dischargingthe performance of its duties and
obligations under this Agreement, the Advisory Agreement, which reports may be distributed by Adviser toSub-Adviser shall act in conformity
with the Company's BoardArticles of Directors at periodic meetingsIncorporation, By-Laws and Prospectus of the Fund and
with the instructions and directions of the Investment Manager and of the
Board of Directors and
at such other times as may be reasonably requested by the Board of Directors.
Copies of all such reports shall be furnished to Adviser for examination and
review within a reasonable time prior to the presentation of such reports to
Company's Board of Directors.
5. Sub-Adviser shall select the brokers and dealers that will
execute the purchases and sales of securities for the Fund and markets on or in
which such transactions will be executedconform 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 place,bear the expenses and
salaries necessary and incidental thereto including, but not in limitation
of the foregoing, the costs incurred in: the maintenance of its corporate
existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of
stock, including issuance and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and federal
and state registration fees. Without limiting the foregoing, except as the
Investment Manager and the Sub-Adviser may agree in writing from time to
time, the Sub-Adviser shall have no responsibility for record maintenance
and preservation obligations under Section 31 of the Investment Company Act
of 1940.
Directors, officers and employees of the Sub-Adviser may be directors,
officers and employees of other funds which have employed the Sub-Adviser
as sub-adviser or investment manager. Directors, officers and employees of
the Sub-Adviser who
J-1
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
nameperformance 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 its nominee, all such orders.
(a) SUBJECT TO THE PRIMARY OBJECTIVE OF OBTAINING THE BEST
AVAILABLE PRICES AND EXECUTION, SUB-ADVISER WILL PLACE ORDERS FOR THE
PURCHASE AND SALE OF PORTFOLIO SECURITIES WITH SUCH BROKER/DEALERS WHO
PROVIDE STATISTICAL, FACTUAL AND FINANCIAL INFORMATION AND SERVICES TO
THE FUND, SUB-ADVISER OR TO ANY OTHER FUND FOR WHICH 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
SUB-ADVISER PROVIDES INVESTMENT ADVISORY SERVICES. BROKER/DEALERS WHO
SELL SHARES OF THE FUNDS OF WHICH SUB-ADVISER OR ADVISER IS INVESTMENT
MANAGER, SHALL ONLY RECEIVE ORDERS FOR THE PURCHASE OR SALE OF
PORTFOLIO SECURITIES TO THE EXTENT THAT THE PLACING OF SUCH ORDERS IS
IN COMPLIANCE WITH THE RULES OF THE SECURITIES AND EXCHANGE COMMISSION
AND THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
(b) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (a) ABOVE,
AND SUBJECT TO SUCH POLICIES AND PROCEDURES AS MAY BE ADOPTED BY THE
BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY OR 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 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 SUB-ADVISER'S OVERALL RESPONSIBILITIES WITH RESPECT TO
THE FUND AND TO OTHER FUNDS AND OTHER ADVISORY ACCOUNTS FOR WHICH
SUB-ADVISER EXERCISES INVESTMENT DISCRETION.
(c) It is understood that certainwho sell shares of any other clients ofFund for which the Investment
Manager or Sub-Adviser may haveprovides investment objectives and policies similar to thoseadvisory services.
Broker/dealers who sell shares of the Fund, and thatFunds for which the Investment
Manager or Sub-Adviser may, from time to time, make recommendations
that result inprovides advisory services shall only receive orders
for the purchase or sale of a particular security by its
other clients simultaneously withportfolio securities to the Fund. If transactions on behalf
of more than one client during the same period increase the demand for
securities being purchased or the supply of securities being sold,
there may be an adverse effect on price or quantity. In such event,
Sub-Adviser shall allocate advisory recommendations andextent that the
placing of such orders in a manner that is deemed equitable by Sub-Adviser to the
accounts involved, including the Fund. When two or more of the clients
of Sub-Adviser (including the Fund) are purchasing or selling the same
security on a given day from the same broker or dealer, such
transactions may be averaged as to price.
(d) Sub-Adviser agrees that it will not purchase or sell
securities for the Fund in any transaction in which it, Adviser or any
"affiliated person" of the Company, Adviser or Sub-Adviser or any
affiliated person of such "affiliated person" is acting as principal;
provided, however, that Sub-Adviser may effect transactions pursuant to
Rule 17a-7 under the 1940 Act in compliance with the Fund's
then-effectiverules 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 concerning such transactions.
(e) Sub-Adviser agrees that it will not execute any portfolio
transactions forand procedures as may be adopted by the Board of Directors
and officers of the Fund, withthe Sub-Adviser may ask the Fund and the Fund may
agree to pay a member of an exchange, broker or dealer or futures
commission-merchant which is an "affiliated person"amount of
commission for effecting a securities transaction in excess of the Company,
Adviseramount
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 or an "affiliated person"have determined in good faith that such amount of such an "affiliated
person" withoutcommission
was reasonable in relation to the prior written consent of Adviser. In effecting any
such transactions with the prior written consent of Adviser,
Sub-Adviser shall comply with Section 17(e)(1)value of the 1940 Act, other
applicable provisionsbrokerage and research
services provided by such member, broker or dealer, viewed in terms of
the 1940 Act, if any, the then-effective
Registration Statement of the Fund under the Securities Act of 1933, as
amended and the Fund's then-effective policies concerning such
transactions.
(f) Sub-Adviser shall promptly communicate to Adviser and, if
requested by Adviser, to the Company's Board of Directors, such
information relating to portfolio transactions as Adviser may
reasonably request. The parties understandeither that the Fund shall bear all
brokerage commissions in connection with the purchases and sales of
portfolio securities for the Fund and all ordinary and reasonableparticular transaction costs in connection with purchases of such securities in
private placements and subsequent sales thereof.
6. Sub-Adviser may (at its cost except as contemplated by
paragraph 5 of this Agreement) employ, retain or otherwise avail itself of the
services and facilities of persons and entities within its own organization or
any other organization for the purpose of providing Sub-Adviser, Adviser or the
Fund with such information, advice or assistance, including but not limited to
advice regarding economic factors and trends and advice as to transactions in
specific securities, as Sub-Adviser may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or otherwise helpful
to Adviser or the Fund, or in the discharge of Sub-Adviser's overall
responsibilities with respect to the Fund and to other funds and other
advisory accounts for which it serves asthe Investment Manager or the Sub-Adviser
exercises investment manager or investment adviser.
7. Sub-Adviser shall cooperate with and make available to
Adviser, the Fund and any agents engaged by the Fund, Sub-Adviser's expertise
relating to matters affecting the Fund.
8. Fordiscretion.
4. As compensation for the services to be rendered to the Fund for the
benefit of the Series by the Sub-Adviser under the provisions of this
Agreement, the Investment Manager shall pay to the Sub-Adviser:
[(The following language is used for funds that do not have an asset-based
sub-advisory fee rate:) a monthly fee equal to [%] of the fees paid to the
Investment Manager under the Investment Management Agreement.]
[(The following language is used for funds that have an asset-based
sub-advisory fee rate:) a monthly fee equal to [insert asset-based fee
rate]; provided however, that the Sub-Adviser shall waive all or a portion
of the fees payable under this Agreement andto the facilitiesextent necessary to bear
its proportionate share of any management fee waiver undertaken by the
Investment Manager. The amount of such waiver by the Sub-Adviser shall be
furnished for each fiscal yearcalculated by multiplying the dollar amount of the Fund, Adviser shall
pay to Sub-Adviser a monthlymanagement fees waived
by the investment manager by the percentage that the then-current
sub-advisory fee rate represents of the then-current investment management
fee atrate.]
If this Agreement is terminated prior to the annual rateend of . of 1% ofany calendar month, the
Fund's average daily net assets. This fee will be computed based on net assets
at the beginning of each day and will be paid to Sub-Adviser monthly on or
before the fifteenth day of the month next succeeding the month for which the
fee is paid. TheSub-Advisory fee shall be prorated for the portion of any fractionmonth in which
this Agreement is in effect according to the proportion which the number of
a fiscal year atcalendar days, during which the commencementAgreement is in effect, bears to the number
of calendar days in the month, and terminationshall 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.
PursuantAgreement 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 Advisorydate of this Agreement, Adviser receives monthly
fromduring the term of this Agreement, the
Sub-Adviser, will not, without the written consent of the Investment
Manager, which consent will not be unreasonably withheld, render investment
company (or portfolio thereof) which the Investment manger reasonably
determines would be in competition with and which has investment policies
similar to those of the Portfolio.
6. Subject to the limitation set forth in Paragraph 5, the Sub-Adviser, its
directors, officers, employees, agents and shareholders may engage in other
businesses, may render investment advisory services to other investment
companies, or to any other corporation, association, firm or individual,
and may render underwriting services to the Fund compensation ator to any other investment
company, corporation, association, firm or individual.
The Investment Manager agrees that it shall not use the annual rate of . %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 Fund's average daily
net assets. If Adviser has undertakenSub-Adviser.
J-2
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 Fund's Registration Statementcourse 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
filed under the 1940 Act or elsewhere to waive all or part of its fee under the
Advisory Agreement or to reduce such fee upon order of the Board of Directors ordate
written below if approved by the vote of a majority of the outstanding
voting securities of the Fund,
Sub-Adviser's fee payable under this Agreement will be proportionately waived.
9. Sub-Adviser represents, warrants and agrees that:
(a) Sub-Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act") and is currently
in compliance and shall at all times continue to comply with the
requirements imposed upon it by Advisers Act and other applicable laws
and regulations. Sub-Adviser agrees to (i) supply Adviser with such
documents as Adviser may reasonably request to document compliance with
such laws and regulations and (ii) immediately notify Adviser of the
occurrence of any event which would disqualify Sub-Adviser from serving
as an investment adviser of an investment company pursuant to any
applicable law or regulation.
(b) Sub-Adviser will maintain, keep current and preserve on
behalf of the Company all records required or permitted by the 1940 Act
in the manner provided by such Act. Sub-Adviser agrees that such
records are the property of the Company, and will be surrendered to the
Company promptly upon request.
(c) Sub-Adviser will complete such reports concerning
purchases or sales of securities on behalf of Sub-Adviser as Adviser
may from time to time require to document compliance with the 1940 Act,
Advisers Act, the Internal Revenue Code, applicable state securities
laws and other applicable laws and regulations or regulatory and taxing
authorities in countries other than the United States.
(d) After filing with the Securities and Exchange Commission
any amendment to its Form ADV, Sub-Adviser will promptly furnish a copy
of such amendment to Adviser.
(e) Sub-Adviser will immediately notify Adviser of the
occurrence of any event which would disqualify Sub-Adviser from serving
as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable statute or regulation.
10. Adviser represents, warrants and agrees that:
(a)Series. It has been duly authorized by the Board of Directors of
the Company to delegate to Sub-Adviser the provision of the services
contemplated hereby.
(b) Adviser and the Company are currently in compliance and
shall at all times continue to comply with the requirements imposed
upon Adviser and the Company by applicable law and regulations.
11. Sub-Adviser will not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or its shareholders in
connection with the performance of its duties under this Agreement, except a
loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
duties under this Agreement.
12. This Agreement shall become effective as of the date first
set forth above. Wherever referred to in this Agreement, the vote or approval of
the holders of a majority of the outstanding voting securities or shares of the
Fund shall mean the vote of 67% or more of such shares if the holders of more
than 50% of such shares are present in person or by proxy or the vote of more
than 50% of such shares, whichever is less.
Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect for a period
of two years from the date of
its execution, and may be renewed thereafter shall continue in effect only so long as such renewal and
continuance is specifically approved at least annually (a) by the Board of
Directors of the Company or by the vote of a majority of the outstanding voting securities
of the Fund,Series and (b)only if the terms and the renewal hereof have been
approved by the vote of a majority of the directorsDirectors of the Fund who are not
parties to this Agreementhereto or Interested Personsinterested persons of Adviser, Sub-Adviser
or the Company,any such party, cast in person at a
meeting called for the purpose of voting on such approval. ThisNotwithstanding
the foregoing, this Agreement may be terminated by the Investment Manager
or the Fund at any time, without the payment of anya penalty, (a)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 vote of
the Board of Directors of the CompanyFund or bypursuant to the vote of the holders of a majority of
the outstanding voting securities of the Fund, upon 60 days' written notice to Adviser andSeries. The Sub-Adviser may
terminate this Agreement at any time, without the Sub-Adviser, or (b)
by Adviser, upon 60payment of a penalty on
sixty days' written notice to the Sub-Adviser; or (c) byInvestment 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 upon 60 days' written noticethe fee
provided in Paragraph 4 hereof, prorated to Adviser.the date of termination. This
Agreement shall automatically terminate in the event of its assignment asassignment.
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 1940Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers as of the day of [_____________], [______].
[MANAGER NAME]
By:_______________________________________
Name:
Title:
Attest:___________________________________
[SUB-ADVISER NAME]
By:_______________________________________
Name:
Title:
Attest:___________________________________
J-3
Agreed to and accepted as of the day and year first above written:
[REGISTRANT NAME]
on behalf of the [SERIES NAME]
By:______________________________________
Chairman
Attest:___________________________________
J-4
EXHIBIT K
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is
made as of this ___ day of ______________, 1998 by and between [name of Delaware
business trust], a Delaware business trust ("Fund"), and [name of Minnesota
corporation], a Minnesota corporation ("Corporation") (the Fund and the
rules thereunder,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 however,for in Section 2 (hereinafter referred to as the
"Closing") all of the Corporation's then-existing assets, the assets belonging
to each series of the Corporation to be conveyed, transferred and delivered to
the corresponding series of the Fund. In consideration thereof, the Fund agrees
at the Closing (1) to assume and pay, to the extent that they exist on or after
the Effective Date of the Reorganization (as defined in Section 2 hereof), all
of the Corporation's obligations and liabilities, whether absolute, accrued,
contingent or otherwise, including all fees and expenses in connection with the
Agreement, which fees and expenses shall in turn include, without limitation,
costs of legal advice, accounting, printing, mailing, proxy solicitation and
transfer taxes, if any, the obligations and liabilities allocated to each series
of the Corporation to become the obligations and liabilities of the
corresponding series of the Fund, and (2) to deliver, in accordance with
paragraph (b) of this Section 1, full and fractional shares of beneficial
interest, $.01 par value, of each of the Fund's separate series and the
respective classes of those series, all as set forth in the Appendix attached
hereto (hereinafter, the series are individually and collectively referred to as
"Series of the Fund" and the classes are individually referred to as a "Class of
the Fund" and collectively as "Classes of the Fund"), equal in number to the
number of full and fractional shares of common stock, ______ par value, of,
respectively, each of the Corporation's separate series and the respective
classes of those series, all as set forth in the Appendix attached hereto
(hereinafter, the series are referred to individually and collectively as
"Series of the Corporation" and the classes are referred to individually as a
"Class of the Corporation" and collectively as "Classes of the Corporation")
outstanding immediately prior to the Effective Date of the Reorganization. The
transactions contemplated hereby are intended to qualify as a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended ("Code").
K-1
(b) In order to effect such automatic terminationdelivery, 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
preventeddeemed to be the same as the net asset value per share of the corresponding
Class of the Corporation at the close of regular trading on the New York Stock
Exchange on the business day immediately preceding the Effective Date of the
Reorganization. On the Effective Date of the Reorganization, each certificate
representing shares of a Series and Class of the Corporation will represent the
same number of shares of the corresponding Series and Class of the Fund. Each
shareholder of the Corporation will have the right to exchange his (her) share
certificates for share certificates of the Fund. However, a shareholder need not
make this exchange of certificates unless he (she) so desires. Simultaneously
with the crediting of the shares of the Series and Classes of the Fund to the
shareholders of record of the Corporation, the shares of the Series and Classes
of the Corporation held by such shareholder shall be cancelled.
(c) As soon as practicable after the Effective Date of the
Reorganization, the Corporation shall take all necessary steps under Minnesota
law to effect a complete dissolution of the Corporation.
2. Closing and Effective Date of the Reorganization.
The Closing shall consist of (i) the conveyance, transfer and
delivery of the Corporation's assets to the Fund, in a particular caseexchange for the assumption
and payment by an orderthe Fund of exemptionthe 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 a no-action lettermore post-effective amendments to the
Corporation's Registration Statement on Form N-1A ("Registration Statement")
under the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended
K-2
("1940 Act"), containing such amendments to the Registration Statement as are
determined by the Trustees of the staffFund 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 such assignment does not require terminationthe
reorganization contemplated by this Agreement qualifies as a statutory or regulatory matter. This Agreement shall automatically terminate
upon completion"reorganization"
under Section 368 of the dissolution, liquidationCode, and thus will not give rise to the recognition of
income, gain or winding uploss for federal income tax purposes to the Corporation, the
Fund, or the shareholders of the Fund.
13. No amendmentCorporation 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 or modificationand 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 shall be
effective unlesshave been duly authorized and until approved by the vote of a majorityall requisite action of the
outstandingFund 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.
14. ThisFund 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 be binding upon,have received the opinion of Stradley,
Ronon, Stevens & Young, LLP, dated the Effective Date of the Reorganization,
addressed to and inurein form and substance satisfactory to the benefitFund, to the effect
that: (i) the Corporation is a corporation, duly organized and validly existing
under the laws of Adviserthe State of Minnesota; (ii) the Corporation is an open-end
investment company of the management type registered under the 1940 Act; and
Sub-Adviser,(iii) this Agreement and their respective successors.
15. If any provisionthe reorganization provided for herein and the
execution of this Agreement shall be held or made
invalidhave been duly authorized and approved by a court decision, statute, rule or otherwise,all
requisite corporate action of the remainder ofCorporation and this Agreement shall not be affected thereby.
16. To the extent that state law is not preemptedhas been duly
executed and delivered by the provisionsCorporation and is a legal, valid and binding
agreement of any lawthe Corporation in accordance with its terms;
K-3
(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 heretoforeand
jurisdictions in which the shares of their corresponding Series and Class of the
Corporation are presently eligible for offering to the public so as to permit
the issuance and delivery of shares contemplated by this Agreement to be
consummated;
(g) This Agreement and the reorganization contemplated hereby
shall have been adopted and approved by the appropriate action of shareholders
at an annual or hereafter enacted,special meeting or any adjournment thereof;
(h) The shareholders of the Corporation shall have voted to
direct the Corporation to vote, and the Corporation shall have voted, as sole
shareholder of the Fund, to:
(i) Elect as Trustees of the Fund the following
individuals: Messrs. Walter P. Babich, W. Thacher Longstreth, Charles E. Peck,
Wayne A. Stork, Thomas F. Madison, and Jeffrey J. Nick, and Ms. Ann R. Leven;
(ii) Select Ernst & Young LLP as the sameindependent
auditors for the Fund for the fiscal year ending [month and day], 2000;
(iii) (A) With respect to each Series, if at the annual
or special meeting specified in paragraph (g) of this Section 3 (or any
adjournment thereof) the shareholders of a Series of the Corporation (x) approve
a proposal for a new investment management agreement ("New Investment Management
Agreement") between the current investment advisor to the Series (the "Advisor")
and the Corporation on behalf of such Series, approve an investment management
agreement between the Advisor and the Fund on behalf of such Series that is
substantially identical to the New Investment Management Agreement, or (y) do
not approve a proposal for a New Investment Management Agreement between the
Advisor and the Corporation on behalf of such Series, approve an investment
management agreement between the Advisor and the Fund on behalf of such Series
that is substantially identical to the then-current investment management
agreement between the Advisor and the Corporation on behalf of such Series;
(B) With respect to each Series that is subject to
a sub-advisory agreement, if any, if at the annual or special meeting specified
in paragraph (g) of this Section 3 (or any adjournment thereof) the shareholders
of such Series of the Corporation (x) approve a proposal for a new sub-advisory
agreement ("New Sub-Advisory Agreement") between the Advisor and the current
sub-advisor (the "Sub-Advisor") with respect to the assets of such Series,
approve a New Sub-Advisory Agreement between the Advisor and the Sub-Advisor
with respect to the assets of such Series that is substantially identical to the
New Sub-Advisory Agreement, or (y) do not approve a proposal for a New
Sub-Advisory Agreement between the Advisor and the Sub-Advisor, approve a
sub-advisory agreement between the Advisor and the Sub-Advisor with respect to
the assets of such Series that is substantially identical to the then-current
sub-advisory agreement between the Advisor and the Sub-Advisor with respect to
the assets of such Series;
K-4
(i) The Trustees of the Fund shall have taken the following
actions at a meeting duly called for such purposes:
(i) Approval of the investment management agreements and
the sub-advisory agreements, if any, described in paragraph (h) of this Section
3 hereof, for each Series of the Fund;
(ii) Approval of a distribution plan, if any, for each
Class of each Series of the Fund, as adopted pursuant to Rule 12b-1 under the
1940 Act, that is substantially identical to the then-current distribution plan,
if any, as adopted pursuant to Rule 12b-1 under the 1940 Act for each Class of
each corresponding Series of the Corporation;
(iii) Approval of the assignment of the Corporation's
Custodian Agreement with Norwest Bank Minnesota, N.A. to the Fund;
(iv) Selection of Ernst & Young LLP as the Fund's
independent auditors for the fiscal year ending [month and day], 2000;
(v) Approval of the Fund's Shareholders Services
Agreement with Delaware Service Company, Inc.;
(vi) Approval of the Fund Accounting Agreement with
Delaware Service Company, Inc. that covers the funds comprising the Delaware
Investments Family of Funds;
(vii) Approval of the Distribution Agreement between the
Fund and Delaware Distributors, L.P. on behalf of the Series and Classes;
(viii) Authorization of the issuance by the Fund, prior
to the Effective Date of the Reorganization, of one share of each Series and
Class of the Fund to the Corporation in consideration for the payment of $10.00
per share for the purpose of enabling the Corporation to vote on the matters
referred in paragraph (h) of this Section 3 hereof;
(ix) Submission of the matters referred to in paragraph
(h) of this Section 3 to the Corporation as sole shareholder of each Series of
the Fund; and
(x) Authorization of the issuance and delivery by the
Fund of shares of each Series and Class of the Fund on the Effective Date of the
Reorganization in exchange for the assets of the corresponding Series of the
Corporation pursuant to the terms and provisions of this Agreement.
At any time prior to the Closing, any of the foregoing
conditions may be amended from timewaived by the Board of Directors of the Corporation if, in the
judgment of such Board, such waiver will not effect in a materially adverse way
the benefits intended to time,be accorded the shareholders of the Corporation under
this Agreement.
K-5
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 administered,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 according toin accordance with the laws of the
State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers thereunto duly authorized in
multiple counterparts, each of which shall be an original but all of which shall
constitute one of the same instrument.
DELAWARE MANAGEMENT COMPANY, INC.
By
-------------------------------------
Name:
Title:
VOYAGEUR ASSET MANAGEMENT LLC
By
-------------------------------------
Name:
Title:
EXHIBIT C
_________________ FUND, A SERIES OF __________ FUNDS, INC.
PLAN OF LIQUIDATION AND TERMINATION
The following Plan of Liquidation and Termination (the "Plan") of
________________ Fund (the "Fund"), one of ___ series of ________ Funds, Inc.
(the "Company"), a corporation organized and existing under the laws of the
state of Minnesota, which has operated as an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), is intended to accomplish the complete liquidation
and termination of the Fund in conformity with the provisions of the Company's
Articles of Incorporation and ByLaws, and Minnesota law.
WHEREAS, the Company's Board of Directors (the "Board") has deemed that
it is advisable and in the best interest of the Fund and its shareholders to
liquidate and terminate the Fund and the Board, on February 7, and February 14,
1997, considered the matter and determined to recommend the liquidation and
termination of the Fund pursuant toCorporation have each
caused this Plan;
NOW, THEREFORE, the liquidation and termination of the Fund shall be
carried out in the manner hereinafter set forth:
1. EFFECTIVE DATE OF PLAN. This Plan shall be effective upon
consummation of the merger of a wholly owned subsidiary of Lincoln National
Corporation ("LNC") with and into Dougherty Financial Group Inc. ("DFG")
pursuant to an Agreement and Plan of Merger by and among LNC, DFG, Michael E.
Dougherty, James O. Pohlad, Robert C. Pohlad and William M. Pohlad, provided
that the Plan has previously been adopted and approved at a meeting of
shareholders of the Fund called for the purpose of voting upon the Plan, by a
vote of holders of more than 50 percent of the outstanding shares of the Fund.
The date of effectiveness of the Plan is hereinafter called the "Effective
Date."
2. CESSATION OF BUSINESS. After the Effective Date, the Company shall
not engage in any business activities on behalf of the Fund except for the
purpose of winding up the Fund's business and affairs, preserving the value of
its assets and distributing its assets to shareholders in accordance with the
provisions of this Plan after the payment to (or reservation of assets for
payment to) all creditors of the Fund. After the Effective Date, the Fund shall
not issue any new shares except in connection with the reinvestment of dividends
or distributions by existing shareholders. Notwithstanding the provisions of
this Plan, the Company shall, prior to making the final liquidating distribution
to Fund shareholders, continue to honor requests for the redemption of Fund
shares received up to and including 4:00 p.m. on the day before the Liquidation
Record Date (as defined in Section 5 below).
3. LIQUIDATION OF ASSETS. As soon as practicable after the Effective
Date and consistent with the terms of the Plan, the Company shall cause the
liquidation of the Fund's assets to cash form.
4. PAYMENT OF DEBTS. As soon as practicable after the Effective Date,
the Company shall determine and pay (or reserve sufficient amounts to pay) the
amount of all known or reasonably ascertainable liabilities of the Fund incurred
or expectedReorganization to be incurred prior to the date of the liquidating distribution
provided in Section 5 below.
5. LIQUIDATING DISTRIBUTION. As soon as practicable after the Effective
Date,executed on its behalf by
its Chairman, President or a Vice President and in any event within sixty (60) days thereafter, the Company will mail
the following to each Fund shareholder of record who has not redeemedattested by its shares: (i) a liquidating distribution equal to the shareholder's proportionate
interest in the remaining assets of the Fund (after the payment and creation of
the reserves contemplated by Section 4 above); and (ii) information concerning
the sources of the liquidating distribution. OnSecretary or before such mailing date the
Company will compile the list of remaining shareholders of record entitled to
receive a liquidation distribution. The day on which such list is determined
shall be the "Liquidation Record Date." The payment of the liquidating
distribution and the retirement and cancellation of Fund shares will be effected
pursuant to an
amendment to the Articles of Incorporation of the Company in the
form attached hereto as Exhibit 1 (the "Amendment").
6. TERMINATION AND DISSOLUTION. As promptly as practicable after the
completion of the liquidating distribution described in the preceding paragraph,
the Fund shall be terminated pursuant to the terms of this Plan and applicable
provisions of Minnesota law.
7. EXPENSES OF LIQUIDATION AND TERMINATION. All expenses incurred by
the Company in relation to the carrying out of this Plan, other than brokerage
commissions and taxes, if any, shall be borne by Lincoln National Corporation.
8. POWER OF THE BOARD. The Board and, subject to the general direction
of the Board, the officers of the Company, shall have authority to do or to
authorize any orAssistant Secretary, all acts and things as provided for in this Plan and any and
all such further acts and things as they may consider necessary or desirable to
carry out the purposes of this Plan, including without limitation, the execution
and filing of all articles, documents, information returns, tax returns, forms
and other papers which may be necessary or appropriate to implement this Plan or
which may be required by the provisions of the Investment Company Act of 1940,
as amended, the Securities Act of 1933, as amended, and applicable Minnesota
law.
9. AMENDMENTS TO THE PLAN. The Board shall have the authority to
authorize such variations from or amendments to the provisions of this Plan
(other than the terms of the liquidating distribution) as may be necessary or
appropriate to effect the complete liquidation and termination of the Fund and
the distribution of the Fund's assets to Fund shareholders in accordance with
the purposes intended to be accomplished by this Plan.
EXHIBIT 1 TO PLAN OF LIQUIDATION AND TERMINATION
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
____________________ FUNDS, INC.
The undersigned officer of _______________ Funds, Inc. (the
"Corporation"), a corporation subject to the provisions of Chapter 302A of the
Minnesota Statutes, hereby certifies that the Corporation's (a) Board of
Directors, at a meeting held February 14, 1997, and (b) shareholders, at a
meeting held ___________, 1997 adopted the resolutions hereinafter set forth;
and such officer further certifies that the amendments to the Corporation's
Articles of Incorporation set forth in such resolution were adopted pursuant to
Chapter 302A.
WHEREAS, the Corporation is registered as an open-end management
investment company (I.E., a mutual fund) under the Investment Company Act of
1940 and offers its shares to the public in several series, each of which
represents a separate and distinct portfolio of assets; and
WHEREAS, it is desirable and in the best interest of the holders of the
___________________ Fund (the "Fund"), a series of the Corporation, to liquidate
and terminate the Fund pursuant to the Plan of Liquidation and Termination (the
"Plan") approved by Fund shareholders on __________________, 1997;
WHEREAS, the Corporation wishes to provide for the distribution of the
assets of the Fund to its shareholders and the simultaneous cancellation and
retirement of the outstanding shares of the Fund; and
WHEREAS, the Plan requires that, in order to bind all shareholders of
the Fund to the foregoing and, in particular, to bind such shareholders to the
cancellation and retirement of the outstanding shares of the Fund, it is
necessary to adopt an amendment to the Corporation's Articles of Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the Corporation's Articles of
Incorporation be, and the same hereby are, amended to add the following Article
5E immediately following Article 5 thereof:
5E. (a) For purposes of this Article 5E, the following terms shall have
the following meanings:
"EFFECTIVE DATE" means the date on which the Fund shareholders
adopt and approve the Plan of Liquidation and Termination (the "Plan")
approved by the Fund shareholders on ___________________, 1997.
THE "FUND" means the Series __ Common Shares of the
Corporation, which have been designated _________________________ Fund
in the bylaws of the Corporation.
"LIQUIDATING DISTRIBUTION DATE" means the date, as soon as
practicable after the Effective Date, for the consummation of the
liquidation.
(b) At the Liquidating Distribution Date, the assets belonging to the
Fund shall be distributed, as described in the Plan, among the Fund's
shareholders in proportion to each shareholder's interest in the remaining
assets of the Fund. For purposes of the foregoing, the term "assets belonging
to" has the meaning assigned to it in Article 7(b) of the Corporation's Articles
of Incorporation.
(c) All issued and outstanding shares of the Fund shall simultaneously
be canceled on the Books of the Fund and retired.
(d) From and after the Liquidating Distribution Date, the Fund Shares
canceled and retired pursuant to paragraph (c) above shall have the status of
authorized and unissued Shares of the Corporation without designation as to
series.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment on behalf of the Corporation on
_______________, 1997.
__________________________ FUNDS, INC.
By ____________________________________
Its ______________________________
EXHIBIT D
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of the __ day and year first-above written.
[Name of Minnesota corporation]
(a Minnesota Corporation)
Attest:
By: /s/ George M. Chamberlain, Jr. By: /s/ Jeffrey J. Nick
---------------------------------------- ------------------------------------------
George M. Chamberlain, Jr. Jeffrey J. Nick
Secretary President and Chief Executive Officer
K-6
[Name of Delaware business trust]
(a Delaware business trust)
Attest:
By: /s/ Eric E. Miller By: /s/ Jeffrey J. Nick
---------------------------------------- ------------------------------------------
Eric E. Miller Jeffrey J. Nick
Assistant Secretary President and Chief Executive Officer
K-7
Appendix
Series and Classes of ______, 1997, byCorresponding Series and between Voyageur Mutual Funds III, Inc.
("Voyageur III"), on behalfClasses of
its series Growth and Income Fund, and VAM
Institutional Funds, Inc. ("VAM Funds"), on behalf of its newly formed series
Growth and Income Fund ("New Growth and Income Fund"). Voyageur III and VAM
Funds are Minnesota corporations. As used in this Agreement, the terms "New
Growth and Income Fund" and "Growth and Income Fund" shall be construed to mean,
respectively, "VAM Funds on behalf of New Growth and Income Fund" and "Voyageur
III on behalf of Growth and Income Fund," where necessary to reflect the fact
that a corporate series is generally considered the beneficiary of corporate
level actions taken with respect to the series and is not itself recognized as a
person under law.
This Agreement is intended to be and is adopted as a "plan of
reorganization," within the meaning of Treas. Reg. 1.368-2(g), for a
reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended (the "Code"). The reorganization (the "Reorganization") will consist
of the transfer to New Growth and Income Fund of all of the assets of Growth and
Income Fund in exchange for the assumption by New Growth and Income Fund of all
liabilities of Growth and Income Fund and the issuance by New Growth and Income
Fund of shares of common stock, par value $0.01 per share ("New Growth and
Income Fund Shares"), to be distributed, after the Closing Date hereinafter
determined, to the shareholders of Growth and Income Fund in liquidation of
Growth and Income Fund as provided herein, all upon the terms and conditions
hereinafter set forth in this Agreement. The distribution of New Growth and
Income Fund Shares to Growth and Income Fund shareholders and the retirement and
cancellation of Growth and Income Fund shares will be effected pursuant to an
amendment to the Articles of Incorporation of Voyageur III in the form attached
hereto as Exhibit 1 (the "Amendment"), to be adopted by Voyageur III in
accordance with the Minnesota Business Corporation Act.
In consideration of the premises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. REORGANIZATION AND LIQUIDATION OF GROWTH AND INCOME FUND
1.1. Subject to the terms and conditions set forth herein and in the
Amendment and on the basis of the representations and warranties contained
herein, Growth and Income Fund agrees to assign, deliver and otherwise transfer
the Growth and Income Fund Assets (as defined in paragraph 1.2) to New Growth
and Income Fund and New Growth and Income Fund agrees in exchange therefor to
assume all liabilities of Growth and Income Fund on the Closing Date (as defined
in paragraph 3.1) as set forth in paragraph 1.3 and to deliver to Growth and
Income Fund Shareholders (as defined in paragraph 1.5) the number of New Growth
and Income Fund Shares, including fractional New Growth and Income Fund Shares,
determined in accordance with paragraph 2.2. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2. The "Growth and Income Fund Assets" shall consist of all property,
including, without limitation, all cash, cash equivalents, securities, futures
and interest receivables owned by Growth and Income Fund, and any deferred or
prepaid expenses shown as an asset on Growth and Income Fund's books, on the
Valuation Date (as defined in paragraph 2.1).
1.3. New Growth and Income Fund will assume all liabilities of Growth
and Income Fund, which include, without limitation, all expenses, costs, charges
and reserves reflected on an unaudited Statement of Assets and Liabilities of
Growth and Income Fund prepared by the Treasurer of Growth and Income Fund as of
the Valuation Date in accordance with generally accepted accounting principles
consistently applied from the prior audited period ("Valuation Date Statement").
1.4. On the Closing Date or as soon as practicable thereafter, pursuant
to paragraph 1.1 hereof and the Amendment, Growth and Income Fund will
distribute New Growth and Income Fund Shares received by Growth and Income Fund
pro rata to its shareholders of record determined as of the close of business on
the Valuation Date ("Growth and Income Fund Shareholders"). Thereafter, no
additional shares representing interests in Growth and Income Fund shall be
issued. Such distribution will be accomplished by an instruction, signed by
Growth and Income Fund's Secretary, to transfer New Growth and Income Fund
Shares then credited to Growth and Income Fund's account on the books of New
Growth and Income Fund to open accounts on the books of VAM Funds in the names
of the Growth and Income Fund Shareholders and representing the respective pro
rata number of New Growth and Income Fund Shares due each such Growth and Income
Fund Shareholder. All issued and outstanding shares of Growth and Income Fund
simultaneously will be canceled on Growth and Income Fund's books.
1.5. Ownership of New Growth and Income Fund Shares will be shown on
the books of VAM Fund's transfer agent. New Growth and Income Fund Shares will
be issued in the manner described in New Growth and Income Fund's then-current
Prospectus and Statement of Additional Information, except no front-end sales
charges will be incurred by Growth and Income Fund Shareholders in connection
with New Growth and Income Fund Shares received in the Reorganization.
1.6. Any transfer taxes payable upon issuance of New Growth and Income
Fund Shares in a name other than the registered holder of Growth and Income Fund
Shares on Growth and Income Fund's books as of the close of business on the
Valuation Date shall, as a condition of such issuance and transfer, be paid by
the person to whom New Growth and Income Fund Shares are to be issued and
transferred.
1.7. Any reporting responsibility of Growth and Income Fund is and
shall remain the responsibility of Growth and Income Fund.
1.8. All books and records maintained on behalf of Growth and Income
Fund will be delivered to New Growth and Income Fund and, after the Closing,
will be maintained by New Growth and Income Fund or its designee in compliance
with applicable record retention requirements under the Investment Company Act
of 1940, as amended (the "1940 Act").
2. VALUATION
2.1. The "Valuation Date" shall be a business day not later than the
5th business day following the receipt of the requisite approval of this
Agreement by shareholders of Growth and Income Fund or such other date after
such shareholder approval as may be mutually agreed upon. The value of the
Growth and Income Fund Assets shall be the value of such assets computed as of
4:00 p.m., Eastern time, on the Valuation Date, using the valuation procedures
set forth in New Growth and Income Fund's then current Prospectus and Statement
of Additional Information.
2.2. The New Growth and Income Fund Shares to be issued hereunder will
have an aggregate net asset value equal to the value of the Growth and Income
Fund Assets, net of the liabilities of Growth and Income Fund, determined in
accordance with paragraph 2.1.
2.3. All computations of value shall be made by Voyageur Fund Managers,
Inc. ("VFM") in accordance with its regular practice in pricing Growth and
Income Fund. New Growth and Income Fund shall cause VFM to deliver a copy of its
valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1. The Closing shall take place on the Valuation Date as of 5:00
p.m., Eastern time, or at such other day or time as the parties may agree (the
"Closing Date"). The Closing shall be held in a location mutually agreeable to
the parties hereto. All acts taking place at the Closing shall be deemed to take
place simultaneously as of 5:00 p.m., Eastern time, on the Closing Date unless
otherwise provided.
3.2. Portfolio securities held by Growth and Income Fund (together with
any cash or other assets) shall be delivered by Growth and Income Fund to
Norwest Bank Minnesota, N.A. (the "Custodian"), as custodian for New Growth and
Income Fund, for the account of New Growth and Income Fund on or before the
Closing Date in conformity with applicable custody provisions under the 1940 Act
and duly endorsed in proper form for transfer in such condition as to constitute
good delivery thereof in accordance with the custom of brokers. The portfolio
securities shall be accompanied by all necessary federal and state stock
transfer stamps or a check for the appropriate purchase price of such stamps.
Portfolio securities and instruments deposited with a securities depository (as
defined in Rule 17f-4 under the 1940 Act) shall be delivered on or before the
Closing Date by book-entry in accordance with customary practices of such
depository and the Custodian. The cash delivered shall be in the form of a
Federal Funds wire, payable to the order of "Norwest Bank Minnesota, N.A.,
Custodian for Growth and Income Fund, a series of VAM Institutional Funds, Inc."
3.3. In the event that on the Valuation Date, (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on such Exchange or elsewhere shall be
disrupted so that, in the judgment of both New Growth and Income Fund and Growth
and Income Fund, accurate appraisal of the value of the Growth and Income Fund
Assets is impracticable, the Valuation Date shall be postponed until the first
business day after the day when trading shall have been fully resumed without
restriction or disruption and reporting shall have been restored.
3.4. At the Closing, each party shall deliver to the other such bills
of sale, checks, assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably request.
4. COVENANTS OF NEW GROWTH AND INCOME FUND AND GROWTH AND INCOME FUND
4.1. Except as otherwise expressly provided herein, Growth and Income
Fund will operate its business in the ordinary course between the date hereof
and the Closing Date, it being understood that such ordinary course will include
customary dividends and other distributions.
4.2. VAM Funds will prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), relating to New Growth and
Income Fund Shares (the "Registration Statement").
4.3. Growth and Income Fund will call a meeting of its shareholders to
consider and act upon this Agreement and the Amendment and to take all other
action necessary to obtain approval of the transactions contemplated herein,
including, if necessary, the waiver of any existing investment limitations that
might otherwise preclude Growth and Income Fund from holding all of its assets
as New Growth and Income Fund Shares until such shares are distributed to Growth
and Income Fund shareholders. Voyageur III will prepare the notice of meeting,
form of proxy and proxy statement (collectively, "Proxy Materials") to be used
in connection with such meeting. VAM Funds will furnish Voyageur III with such
information relating to New Growth and Income Fund as is reasonably necessary
for the preparation of the Proxy Materials.
4.4. Subject to the provisions of this Agreement, New Growth and Income
Fund and Growth and Income Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
4.5. As soon after the Closing Date as is reasonably practicable,
Voyageur III (a) shall prepare and file all federal and other tax returns and
reports of Growth and Income Fund required by law to be filed with respect to
all periods ending on or before the Closing Date but not theretofore filed, and
(b) shall pay all federal and other taxes shown as due thereon and/or all
federal and other taxes that were unpaid as of the Closing Date, including
without limitation, all taxes for which the provision for payment was made as of
the Closing Date (as represented in paragraph 5.2(l)).
4.6. New Growth and Income Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act and the 1940
Act as it may deem appropriate in order to continue its operations after the
Closing Date.
5. REPRESENTATIONS AND WARRANTIES
5.1. VAM Funds represents and warrants to Voyageur III as follows:
(a) New Growth and Income Fund is a series of VAM Funds. VAM
Funds is a corporation validly existing and in good standing under the
laws[name of Minnesota with corporate power to carry on itscorporation] [name of Delaware business as
presently conducted.
(b) VAM Funds is a duly registered management investment
company,trust]
K-8
EXHIBIT L
COMPARISON and its registration with the Commission as an investment
company under the 1940 Act is in full forceSIGNIFICANT DIFFERENCES
for DELAWARE BUSINESS TRUSTS and
effect.
(c) The Prospectus and Statement of Additional Information of
New Growth and Income Fund will, on the Closing Date, conform in all
materials respects to the applicable requirements of the 1933 Act and
the 1940 Act and the regulations thereunder and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) New Growth and Income Fund is not in, and the execution,
delivery and performance of this Agreement will not result in, a
material violation of any provision of VAM Funds's Articles of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which New Growth and Income
Fund is a party or by which it is bound.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against VAM Funds or New
Growth and Income Fund or any of its properties or assets which, if
adversely determined, would materially and adversely affect its
financial condition or the conduct of its business; and New Growth and
Income Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects, or is reasonably likely to materially
and adversely affect, its business or its ability to consummate the
transactions herein contemplated.
(f) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of VAM
Funds, and this Agreement constitutes a valid and binding obligation of
New Growth and Income Fund enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws relating to or
affecting creditors rights and to general equity principles. No other
consents, authorizations or approvals are necessary in connection with
VAM Funds' performance of this Agreement, except such as have been
obtained under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the 1940 Act and such as may be required
under state securities laws;
(g) New Growth and Income Fund Shares to be issued and
delivered to Growth and Income Fund, for the account of the Growth and
Income Fund Shareholders, pursuant to the terms of this Agreement will
at the Closing Date have been duly authorized and, when so issued and
delivered, will be duly and validly issued New Growth and Income Fund
Shares, and will be fully paid and nonassessable with no personal
liability attaching to the ownership thereof;
(h) The information furnished or to be furnished by New Growth
and Income Fund for use in registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
federal securities and other laws and regulations applicable thereto.
(i) The Proxy Materials, insofar as they relate to New Growth
and Income Fund, will, at the time of the meeting of Growth and Income
Fund's shareholders and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
materially misleading.
5.2 Voyageur III represents and warrants to VAM Funds as follows:
(a) Growth and Income Fund is a series of Voyageur III.
Voyageur III is a corporation validly existing and in good standing
under the laws of Minnesota.
(b) Voyageur III is a duly registered management investment
company, and its registration with the Commission as an investment
company under the 1940 Act and the registration of its shares under the
1933 Act are in full force and effect.
(c) All of the issued and outstanding shares of common stock
of Growth and Income Fund have been offered and sold in compliance in
all material respects with applicable registration requirements of the
1933 Act and state securities laws. Shares of Growth and Income Fund
are registered in all jurisdictions in which they are required to be
registered under state securities laws and other laws, and Voyageur III
is not subject to any stop order and is fully qualified to sell Growth
and Income Fund shares in each state in which such shares have been
registered.
(d) The current Prospectus and Statement of Additional
Information of Growth and Income Fund conform in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) Growth and Income Fund is not in, and the execution,
delivery and performance of this Agreement will not result in, a
material violation of any provision of Voyageur III's Articles of
Incorporation or Bylaws or of any agreement, indenture, instrument,
contract, lease or other undertaking to which Growth and Income Fund is
a party or by which it is bound.
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against Growth and Income Fund
or any of its properties or assets which, if adversely determined,
would materially and adversely affect its financial condition or the
conduct of its business; and Growth and Income Fund knows of no facts
that might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the transactions
herein contemplated.
(g) The Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets and Financial Highlights
of Growth and Income Fund as of April 30, 1996 and for the year then
ended, certified by KPMG Peat Marwick LLP, and the unaudited Statement
of Assets and Liabilities, Statement of Operations, Statement of
Changes in Net Assets and Financial Highlights of Growth and Income
Fund as of October 30, 1996 and for the six months then ended, fairly
present, in all material respects, Growth and Income Fund's financial
condition as of such date, and its results of operations, changes in
its net assets and financial highlights for such period in accordance
with generally accepted accounting principles, and as of such date
there were no known liabilities of Growth and Income Fund (contingent
or otherwise) not disclosed therein that would be required in
accordance with generally accepted accounting principles to be
disclosed therein.
(h) Since the date of the most recent unaudited financial
statements, there has not been any material adverse change in Growth
and Income Fund's financial condition, assets, liabilities or business,
other than changes occurring in the ordinary course of business, or any
incurrence by Growth and Income Fund of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and acknowledged by New Growth and
Income Fund prior to the date of this Agreement and prior to the
Closing Date. All liabilities of Growth and Income Fund (contingent and
otherwise) are reflected in the Valuation Date Statement. For the
purpose of this subparagraph (h), neither a decline in Growth and
Income Fund's net asset value per share nor a decrease in Growth and
Income Fund's size due to redemptions by Growth and Income Fund
shareholders shall constitute a material adverse change.
(i) Growth and Income Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to the Closing Date.
(j) All issued and outstanding shares of Growth and Income
Fund are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof. Growth and Income Fund does not
have outstanding any options, warrants or other rights to subscribe for
or purchase any of its shares, nor is there outstanding any security
convertible into any of its shares. All such shares will, at the time
of Closing, be held by the persons and in the amounts recorded by
Growth and Income Fund's transfer agent.
(k) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all
necessary action on the part of Voyageur III and, subject to the
approval of Growth and Income Fund's shareholders, this Agreement
constitutes a valid and binding obligation of Growth and Income Fund
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws relating to or affecting creditors' rights
and to general equity principles. No other consents, authorizations or
approvals are necessary in connection with Growth and Income Fund's
performance of this Agreement, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required
under state securities laws.
(l) All material federal and other tax returns and reports of
Growth and Income Fund required by law to be filed on or before the
Closing Date shall have been filed and are correct and all federal and
other taxes shown as due or required to be shown as due on said returns
and reports have been paid or provision has been made for the payment
thereof and, to the best of Growth and Income Fund's knowledge, no such
return is currently under audit and no assessment has been asserted
with respect to any such return and there are no facts that might form
the basis for such proceedings.
(m) For each taxable year since its inception, Growth and
Income Fund has met all the requirements of Subchapter M of the Code
for qualification and treatment as a "regulated investment company" and
neither the execution or delivery of, nor the performance of its
obligations under, this Agreement will adversely affect, and no other
events, to the best of Growth and Income Fund's knowledge, are
reasonably likely to occur which will adversely affect the ability of
Growth and Income Fund to continue to meet the requirements of
Subchapter M of the Code.
(n) At the Closing Date, Growth and Income Fund will have good
and valid title to the Growth and Income Fund Assets, subject to no
liens (other than the obligation, if any, to pay the purchase price of
portfolio securities purchased by Growth and Income Fund which have not
settled prior to the Closing Date), security interests or other
encumbrances, and full right, power and authority to assign, deliver
and otherwise transfer such assets hereunder, and upon delivery and
payment for such assets, New Growth and Income Fund will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including any restrictions as might arise under the
1933 Act.
(o) At the time of the meeting of Growth and Income Fund's
shareholders and on the Closing Date, the Proxy Materials will (i)
comply in all material respects with the provisions of the 1934 Act and
the 1940 Act and the regulations thereunder and (ii) not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither Growth and Income Fund nor Voyageur III
shall be construed to have made the foregoing representation with
respect to portions of the Proxy Materials furnished by New Growth and
Income Fund. Any other information furnished by Growth and Income Fund
for use in any other manner that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with the applicable federal
securities and other laws and regulations thereunder.
(p) Growth and Income Fund has maintained or has caused to be
maintained on its behalf all books and accounts as required of a
registered investment company in compliance with the requirements of
Section 31 of the 1940 Act and the Rules thereunder.
(q) Growth and Income Fund is not acquiring New Growth and
Income Fund Shares to be issued hereunder for the purpose of making any
distribution thereof other than in accordance with the terms of this
Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF GROWTH AND INCOME FUND
The obligations of Growth and Income Fund to consummate the
transactions provided for herein shall be subject, at its election, to the
performance by New Growth and Income Fund of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
6.1. All representations and warranties of New Growth and Income Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2. New Growth and Income Fund shall have delivered to Growth and
Income Fund a certificate of its President and Treasurer, in a form reasonably
satisfactory to Growth and Income Fund and dated as of the Closing Date, to the
effect that the representations and warranties of VAM Funds made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as Voyageur III shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW GROWTH AND INCOME FUND
The obligations of New Growth and Income Fund to complete the
transactions provided for herein shall be subject, at its election, to the
performance by Growth and Income Fund of all the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following conditions:
7.1. All representations and warranties of Voyageur III contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
7.2. Growth and Income Fund shall have delivered to New Growth and
Income Fund at the Closing a certificate of its President and its Treasurer, in
form and substance satisfactory to New Growth and Income Fund and dated as of
the Closing Date, to the effect that the representations and warranties of
Growth and Income Fund made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as New Growth and
Income Fund shall reasonably request.
7.3. Growth and Income Fund shall have delivered to New Growth and
Income Fund a statement, certified by the Treasurer of Voyageur III, of the
Growth and Income Fund Assets and its liabilities, together with a list of
Growth and Income Fund's portfolio securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax purposes,
such statement to be prepared as of the Closing Date and in accordance with
generally accepted accounting principles consistently applied.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW GROWTH AND INCOME
FUND AND GROWTH AND INCOME FUND.
The obligations of Growth and Income Fund and New Growth and Income
Fund hereunder are each subject to the further conditions that on or before the
Closing Date:
8.1. This Agreement and the Amendment and the transactions contemplated
herein and therein shall have been approved by the requisite vote of the holders
of the outstanding shares of Growth and Income Fund in accordance with the
provisions of Voyageur III's Articles of Incorporation, and certified copies of
the resolutions evidencing such approval shall have been delivered to New Growth
and Income Fund.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by New Growth and Income Fund or Growth and Income
Fund to permit consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve risk of a material adverse
effect on the assets or properties of New Growth and Income Fund or Growth and
Income Fund.
8.4. On or prior to the Valuation Date, Growth and Income Fund shall
have declared and paid a dividend or dividends and/or other distribution or
distributions that, together with all previous such dividends or distributions,
shall have the effect of distributing to its shareholders all of Growth and
Income Fund's investment company taxable income (computed without regard to any
deduction for dividends paid) and all of its net capital gain (after reduction
for any capital loss carry-forward and computed without regard to any deduction
for dividends paid) for the taxable year during which the Reorganization occurs.
8.5. The parties shall have received an opinion of the law firm of
Dorsey & Whitney LLP (based on such representations as such law firm shall
reasonably request), addressed to VAM Funds and Voyageur III, which opinion may
be relied upon by the shareholders of Growth and Income Fund, substantially to
the effect that the federal income tax consequences of the Reorganization will
be as follows:
(i) the Reorganization will constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and New Growth
and Income Fund and Growth and Income Fund each will qualify
as a party to the Reorganization under Section 368(b) of the
Code;
(ii) Growth and Income Fund shareholders will recognize no income,
gain or loss upon receipt, pursuant to the Reorganization, of
New Growth and Income Fund shares. Growth and Income Fund
shareholders subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of
Growth and Income Fund which are distributed by Growth and
Income Fund prior to the Reorganization;
(iii) the tax basis of New Growth and Income Fund shares received by
each Growth and Income Fund shareholder pursuant to the
Reorganization will be equal to the tax basis of Growth and
Income Fund shares exchanged therefor;
(iv) the holding period of New Growth and Income Fund shares
received by each Growth and Income Fund shareholder pursuant
to the Reorganization will include the period during which the
Growth and Income Fund shareholder held the Growth and Income
Fund shares exchanged therefor, provided that the Growth and
Income Fund shares were held as a capital asset on the date of
the Reorganization;
(v) Growth and Income Fund will recognize no income, gain or loss
by reason of the Reorganization;
(vi) New Growth and Income Fund will recognize no income, gain or
loss by reason of the Reorganization;
(vii) the tax basis of the assets received by New Growth and Income
Fund pursuant to the Reorganization will be the same as the
basis of those assets in the hands of Growth and Income Fund
immediately prior to the Reorganization;
(viii) the holding period of the assets received by New Growth and
Income Fund pursuant to the Reorganization will include the
period during which such assets were held by Growth and Income
Fund; and
(ix) New Growth and Income Fund will succeed to and take into
account the earnings and profits, or deficit in earnings and
profits, of Growth and Income Fund immediately prior to the
Reorganization.
Notwithstanding anything herein to the contrary, neither New Growth and
Income Fund nor Growth and Income Fund may waive the condition set forth in this
paragraph 8.5.
8.6. The Amendment shall have been filed in accordance with applicable
provisions of Minnesota law.
9. FEES AND EXPENSES
9.1. (a) Lincoln National Corporation shall bear all direct expenses
incurred in connection with entering into and carrying out the
provisions of this Agreement, including expenses incurred in connection
with the preparation, printing, filing and solicitation of proxies to
obtain requisite shareholder approvals.
(b) VFM shall pay any unamortized organizational expenses on the
books of Growth and Income Fund immediately prior to the
Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the
parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated herein.
11. TERMINATION
11.1. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Voyageur III and VAM
Funds;
(b) by either VAM Funds or Voyageur III by notice to the
other, without liability to the terminating party on account of such
termination (providing the terminating party is not otherwise in
material default or breach of this Agreement) if the Closing shall not
have occurred on or before December 31, 1997; or
(c) by either New Growth and Income Fund or Growth and Income
Fund, in writing without liability to the terminating party on account
of such termination (provided the terminating party is not otherwise in
material default or breach of this Agreement), if (i) the other party
shall fail to perform in any material respect its agreements contained
herein required to be performed on or prior to the Closing Date, (ii)
the other party materially breaches any of its representations,
warranties or covenants contained herein, (iii) the Growth and Income
Fund shareholders fail to approve this Agreement at any meeting called
for such purpose at which a quorum was present, or (iv) any other
condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it
will not or cannot be met.
11.2. (a) Termination of this Agreement pursuant to paragraphs 11.1(a)
or (b) shall terminate all obligations of the parties hereunder and
there shall be no liability for damages on the part of New Growth and
Income Fund or Growth and Income Fund or the directors or officers of
New Growth and Income Fund or Growth and Income Fund, to any other
party or its directors or officers.
(b) Termination of this Agreement pursuant to paragraph 11.1(c)
shall terminate all obligations of the parties hereunder and there
shall be no liability for damages on the part of New Growth and Income
Fund or Growth and Income Fund or the directors or officers of New
Growth and Income Fund or Growth and Income Fund, except that any party
in breach of this Agreement shall, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this
Agreement, including legal, accounting and filing fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the parties; PROVIDED, HOWEVER,
that following the meeting of Growth and Income Fund's shareholders called by
Growth and Income Fund pursuant to paragraph 4.3, no such amendment may have the
effect of changing the provisions for determining the number of New Growth and
Income Fund shares to be issued to the Growth and Income Fund Shareholders under
this Agreement to the detriment of such Growth and Income Fund Shareholders
without their further approval.
13 MISCELLANEOUS
13.1. The article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
13.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.
13.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.5. The obligations and liabilities of VAM Funds hereunder are solely
those of New Growth and Income Fund. It is expressly agreed that no shareholder,
nominee, director, officer, agent or employee of VAM Funds on behalf of New
Growth and Income Fund shall be personally liable hereunder. The execution and
delivery of this Agreement have been authorized by the directors of VAM Funds
and signed by authorized officers of VAM Funds acting as such, and neither such
authorization by such directors nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally.
13.6. The obligations and liabilities of Voyageur III hereunder are
solely those of Growth and Income Fund. It is expressly agreed that no
shareholder, nominee, director, officer, agent or employee of Growth and Income
Fund shall be personally liable hereunder. The execution and delivery of this
Agreement have been authorized by the directors of Voyageur III and signed by
authorized officers of Voyageur III acting as such, and neither such
authorization by such directors nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer.
VOYAGEUR MUTUAL FUNDS III, INC., on
behalf of Growth and Income Fund
By _________________________________
Its ________________________________
VAM INSTITUTIONAL FUNDS, INC., on
behalf of Growth and Income Fund
By _________________________________
Its ________________________________
FOR VOYAGEUR FUNDS VOTING ON PROPOSALS 1, 2 AND 6:
[AGGRESSIVE GROWTH FUND
ARIZONA INSURED TAX FREE FUND
ARIZONA TAX FREE FUND
CALIFORNIA INSURED TAX FREE FUND
CALIFORNIA TAX FREE FUND
COLORADO TAX FREE FUND
FLORIDA INSURED TAX FREE FUND
FLORIDA LIMITED TERM TAX FREE FUND
FLORIDA TAX FREE FUND
IDAHO TAX FREE FUND
IOWA TAX FREE FUND
KANSAS TAX FREE FUND
MINNESOTA HIGH YIELD MUNICIPAL BOND FUND
MINNESOTA INSURED FUND
MINNESOTA LIMITED TERM MUNICIPAL BOND FUND
MINNESOTA TAX FREE FUND
MISSOURI INSURED TAX FREE FUND
NATIONAL HIGH YIELD MUNICIPAL BOND FUND
NEW MEXICO TAX FREE FUND
NEW YORK TAX FREE FUND
NORTH DAKOTA TAX FREE FUND
OREGON INSURED TAX FREE FUND
UTAH TAX FREE FUND
WASHINGTON INSURED TAX FREE FUND
WISCONSIN TAX FREE FUND]CORPORATIONS
L-1
DELAWARE INVESTMENTS
1818 MARKET STREET
PHILADELPHIA, PA 19103
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENTTHE BOARD OF DIRECTORS, The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
eachUndersigned
hereby Appoints {________________}, or any of them, with power to act without the other and with the right of
substitution, in each, the proxies of the undersigned to vote all shares of
________________________ [name of Voyageur Fund] Tax Free Fund (the "Fund"),
held byat the undersigned at a special meeting of shareholdersSpecial Meeting Of Shareholders
of the Fundabove fund to be held AT The Union League, 140 South Broad Street,
Philadelphia, Pennsylvania, on April 11, 1997, andMarch 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, in person. All previous proxies given with
respect to the meeting are revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
2. To vote: FOR __________ AGAINST __________ approval of a new Investment
Advisory Agreement.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of _______________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorizedinstructs them to vote upon such other
business asany
matters which may properly come beforebe acted upon at this meeting and specifically as
indicated on the annual meeting or any adjournments or
postponements thereof.lower portion of this form. Please refer to the proxy statement
for a discussion of each of these matters.
BY SIGNING AND DATING THIS CARE, YOU AUTHORIZE THE PROXIES TO VOTE EACH PROPOSAL
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" EACH PROPOSAL, AND TO USE THEIR
DISCREITION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING,
PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. ITCARD IS UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETINGVALID ONLY SIGNED AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
VOYAGEUR GROWTH AND INCOME FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
Voyageur Growth and Income Fund (the "Fund"), held by the undersigned at a
special meeting of shareholders of the Fund to be held on April 11, 1997, and at
any adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
5. To vote: FOR __________ AGAINST __________ approval of an Agreement and
Plan of Reorganization pursuant to which all of the assets of the Fund would be
acquired by a newly formed series of VAM Institutional Funds, Inc., also called
Growth and Income Fund, and shareholders would become shareholders of the newly
formed series.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of ________________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
VOYAGEUR GROWTH STOCK FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
Voyageur Growth Stock Fund (the "Fund"), held by the undersigned at a special
meeting of shareholders of the Fund to be held on April 11, 1997, and at any
adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
2. To vote: FOR __________ AGAINST __________ approval of a new Investment
Advisory Agreement.
3. To vote: FOR __________ AGAINST __________ approval of a Sub-Advisory
Agreement.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of _______________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
FOR VOYAGEUR FUNDS VOTING ON PROPOSALS 1, 4 AND 6:
[INTERNATIONAL EQUITY FUND, NATIONAL INSURED TAX FREE FUND, NATIONAL LIMITED
TERM TAX FREE FUND AND NATIONAL TAX FREE FUND]
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints _______________________________,
____________________________, and _______________________________________, and
each of them, with power to act without the other and with the right of
substitution in each, the proxies of the undersigned to vote all shares of
________________ [name of Voyageur Fund] (the "Fund"), held by the undersigned
at a special meeting of shareholders of the Fund to be held on April 11, 1997,
and at any adjournments thereof, with all the powers the undersigned would
possess if present in person. All previous proxies given with respect to the
meeting are revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote:
______FOR all nominees listed below (except as marked to the contrary
below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Walter P. Babich, Anthony D. Knerr, Ann R. Leven,
W. Thacher Longstreth, Thomas F. Madison,
Jeffrey J. Nick, Charles E. Peck and Wayne A. Stork
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
4. To vote: FOR __________ AGAINST __________ approval of the liquidation
of the Fund and the distribution of the Fund's net assets to shareholders.
6. To vote: FOR __________ AGAINST __________ ABSTAIN __________
ratification of the selection of _______________________ as independent public
accountants for the Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated: ______________________________, 1997
___________________________________________
___________________________________________
IMPORTANT: Please date and sign this Proxy.
If the stock is held jointly, signature
should include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.DATED.
Vote On Directors For Withhold For All
1. To elect the following nominees as Directors or Trustees of the Company All All Except
01) JEFFREY J. NICK 06) ANN R. LEVEN
02 WAYNE A. STORK 07) JAN R. YOEMANS _______________________________________________
03) WALTER P. BABICH 08) THOMAS F. MADISON To withhold authority to vote, "For All Except"
04) ANTHONY D. KNERR 09) CHARLES E. PECK and write the nominee's number on the line
above.
Vote On Proposals For Against Abstain
2. To approve the redesignation of the Fund's 4G. To redesignate all current fundamental
investment objective from fundamental to non- investment
restrictions as non-fundamental
fundamental
3. To approve a change in the Fund's fundamental policy concerning
diversification of investments.
4. To approve standardized fundamental investment 5. To approve a new investment management
restrictions for the Fund (proposal involves agreement for the Fund
separate votes on sub-proposals 3A-3G)
4A. To adopt a new fundamental investment 6. To approve a new sub-advisory agreement
restriction concerning concentration of the for the Fund
Fund's investments in the same industry
4B. To adopt a new fundamental investment 7. To ratify the selection of Ernst & Young LLP, as
restriction concerning borrowing money and independent auditors for the Company
issuing senior securities
4C. To adopt a new fundamental investment 8. To approve the restructuring of the Company
restriction concerning underwriting from a Minnesota Corporation into a Delaware
4D. To adopt a new fundamental investment Business Trust
restriction concerning investments in real
estate PLEASE DATE AND SIGN NAME OR NAMES BELOW AS
4E. To adopt a new fundamental investment PRINTED ABOVE TO AUTHORIZE THE VOTING OF YOUR
restriction concerning investments in SHARES AS INDICATED ABOVE, WHER SHARES ARE
commodities REGISTERED WITH JOINT OWNERS SHOULD SIGN.
4F. To adopt a new fundamental investment PERSONS SIGNING AS EXECUTOR, ADMINISTRATOR,
restriction concerning lending by the Fund TRUSTEE OR OTHER REPRESENTATIVE SHOULD
GIVE FULL TITLE AS SUCH.
----------------------------------------------- -------------------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date