U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. _______
[ ] Post-Effective Amendment No. _______
(Check appropriate box or boxes)
Voyageur Mutual Funds III
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(Exact Name of Registrant as Specified in Charter)
(800) 523-1918
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(Area Code and Telephone Number)
2005 Market Street, Philadelphia, PA 19103-7094
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(Address of Principal Executive Offices Number, Street, City, State, Zip Code)
Richelle S. Maestro, Esquire, 2005 Market Street, Philadelphia, PA 19103-7094
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(Name and Address of Agent for Service, Number, Street, City, State, Zip Code)
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
Title of the securities being registered:
Shares of beneficial interest, no par value, of Delaware Select Growth Fund.
No filing fee is due because Registrant is relying on Section 24(f) of the
Investment Company Act of 1940, as amended.
It is proposed that this filing will become effective on November 15, 2003,
pursuant to Rule 488 under the Securities Act of 1933, as amended.
Delaware Technology and Innovation Fund
Dear Shareholder:
Enclosed is a Notice of a Special Meeting of Shareholders (the
"Meeting") of Delaware Technology and Innovation Fund (the "Technology and
Innovation Fund"). The Meeting has been called for February 19, 2004 at 11:00
a.m. Eastern Time at the offices of Delaware Investments located at 2001 Market
Street, 2nd Floor Auditorium, Philadelphia, PA 19103-7055. The accompanying
Proxy Statement/Prospectus describes a proposal being presented for your
consideration and requests your prompt attention and vote by mail using the
enclosed proxy card or by telephone or by the Internet.
Please take a moment to vote!
This Meeting is critically important. You are being asked to consider
and approve an Agreement and Plan of Reorganization that would result in your
shares of the Technology and Innovation Fund being exchanged for those of
another fund in the Delaware Investments Family of Funds called Delaware Select
Growth Fund (the "Select Growth Fund"), a series of Voyageur Mutual Funds III.
If the shareholders of the Technology and Innovation Fund approve the proposal,
the Select Growth Fund will acquire substantially all of the assets, and assume
all of the liabilities, of the Technology and Innovation Fund. You will receive
shares of the Select Growth Fund equal in value to your investment in shares of
the Technology and Innovation Fund. You will no longer be a shareholder of the
Technology and Innovation Fund and, instead, you will be a shareholder of the
Select Growth Fund.
The transaction is being proposed because we believe the Select Growth
Fund's investment strategy has a better opportunity for sustainable results than
that of the Technology and Innovation Fund. In addition, the demand for shares
and, thus asset growth, for the Technology and Innovation Fund has been low. The
projected growth in assets of the Technology and Innovation Fund is also not
sufficient to continue to offer competitive performance and high quality service
to shareholders over the long term. The Select Growth Fund has an investment
objective and investment policies that are similar to those of the Technology
and Innovation Fund, as outlined in the Proxy Statement/Prospectus. The Select
Growth Fund is managed by Delaware Management Company, which is also the
investment adviser of your Fund.
Please take the time to review this entire document and vote now!
Whether or not you plan to attend the Meeting, please vote your shares by mail
or by telephone or by the Internet. If you determine at a later date that you
wish to attend this Meeting, you may revoke your proxy and vote in person.
Thank you for your prompt attention and participation.
Sincerely,
Jude T. Driscoll
Chairman
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DELAWARE TECHNOLOGY AND INNOVATION FUND
(a series of Delaware Group Equity Funds III)
2005 Market Street
Philadelphia, PA 19103-7094
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on February 19, 2004
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
Shareholders of Delaware Technology and Innovation Fund (the "Technology and
Innovation Fund"), a series of Delaware Group Equity Funds III (the "Trust"),
will be held at the offices of Delaware Investments located at 2001 Market
Street, 2nd Floor Auditorium, Philadelphia, PA 19103, on February 19, 2004 at
11:00 a.m. Eastern Time. The Meeting is being called for the following reasons:
1. For shareholders of the Technology and Innovation Fund to vote on an
Agreement and Plan of Reorganization between the Trust, on behalf of the
Technology and Innovation Fund, and Voyageur Mutual Funds III, on behalf of
Delaware Select Growth Fund (the "Select Growth Fund"), that provides for: (i)
the acquisition by the Select Growth Fund of substantially all of the assets of
the Technology and Innovation Fund in exchange for shares of the Select Growth
Fund and the assumption by the Select Growth Fund of the liabilities of
Technology and Innovation Fund; (ii) the pro rata distribution of shares of the
Select Growth Fund to the shareholders of the Technology and Innovation Fund;
and (iii) the liquidation and dissolution of the Technology and Innovation Fund.
2. To vote upon any other business as may properly come before the
Meeting or any adjournment thereof.
The transaction contemplated by the Agreement and Plan of
Reorganization is described in the attached Proxy Statement/Prospectus. A copy
of the form of the Agreement and Plan of Reorganization is attached as Exhibit A
to the Proxy Statement/Prospectus.
Shareholders of record of the Technology and Innovation Fund as of the
close of business on October 31, 2003 are entitled to notice of, and to vote at,
the Meeting or any adjournment thereof. Whether or not you plan to attend the
Meeting, please vote your shares by returning the Proxy Card by mail in the
enclosed postage-paid envelope, or by voting by telephone or the Internet. Your
vote is important.
By Order of the Boards of Trustees,
Richelle S. Maestro
Secretary
November __, 2003
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To secure the largest possible representation and to save the expense of further
mailings, please mark your Proxy Card, sign it, and return it in the enclosed
envelope, which requires no postage if mailed in the United States. If you
prefer, you may instead vote by telephone or the Internet. You may revoke your
Proxy at any time at or before the Meeting or vote in person if you attend the
Meeting.
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Proxy Statement/Prospectus
TABLE OF CONTENTS
Page
----
Cover Pages
Summary
What is the purpose of the proposal?
How will the shareholder voting be handled?
What are the general tax consequences of the Transaction?
Comparisons of Some Important Features
How do the investment objectives and policies
of the Technology and Innovation Fund and the Select Growth Fund compare?
What are the risks of an investment in the Funds?
What are the fees and expenses of each Fund and what might they be
after the Transaction?
What are other key features of the Funds?
Transfer Agency, Custody and Administrative Services
Management and Administration Fees
Distribution Services
Rule 12b-1 Plans
Purchases and Redemptions
Dividends and Distributions
Reasons for the Transaction
Information about the Transaction
How will the Transaction be carried out?
Who will pay the expenses of the Transaction?
What are the tax consequences of the Transaction?
What should I know about Select Growth Fund Shares?
What are the capitalizations of the Funds
and what might the capitalization be after the Transaction?
Comparison of Investment Objectives and Policies
Are there any significant differences between
the investment objectives, strategies and investment policies of
the Technology and Innovation Fund and the Select Growth Fund?
How do the investment restrictions of the Funds differ?
What are the risk factors associated with investments in the Funds?
Voting Information
How many votes are necessary to approve the Plan?
How do I ensure my vote is accurately recorded?
Can I revoke my proxy?
What other matters will be voted upon at the Meeting?
Who is entitled to vote?
What other solicitations will be made?
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Information about the Select Growth Fund
Information about the Technology and Innovation Fund
Information About Each Fund
Principal Holders of Shares
Exhibit A - Form of Agreement and Plan of Reorganization
Other Documents Included with the Proxy Statement/Prospectus
Prospectus of Delaware Select Growth Fund, dated June 30, 2003 Enclosure
Annual Report to Shareholders of Delaware Select Growth Fund Enclosure
for the fiscal year ended April 30, 2003
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PROXY STATEMENT/PROSPECTUS
Dated November 15, 2003
Acquisition of the Assets of
DELAWARE TECHNOLOGY AND INNOVATION FUND
(a series of Delaware Group Equity Funds III)
By and in exchange for shares of
DELAWARE SELECT GROWTH FUND
(a series of Voyageur Mutual Funds III)
This Proxy Statement/Prospectus solicits proxies to be voted at a
Special Meeting of Shareholders (the "Meeting") of Delaware Technology and
Innovation Fund (the "Technology and Innovation Fund"), a series of Delaware
Group Equity Funds III (the "Trust"), to vote on an Agreement and Plan of
Reorganization (the "Plan"). If the shareholders of the Technology and
Innovation Fund vote to approve the Plan, substantially all of assets of the
Technology and Innovation Fund will be acquired by Delaware Select Growth Fund
(the "Select Growth Fund," and, together with the Technology and Innovation
Fund, each a "Fund" and collectively, the "Funds"), a series of Voyageur Mutual
Funds III (the "Acquiring Trust"), in exchange for shares of Select Growth Fund
(the "Select Growth Fund Shares") and the assumption by the Select Growth Fund
of all of the liabilities of the Technology and Innovation Fund. The principal
offices of the Trust and the Acquiring Trust are located at 2005 Market Street,
Philadelphia, PA 19103-7094. You can reach the offices of both the Trust and the
Acquiring Trust by telephone by calling 1-800-523-1918.
The Meeting will be held at the offices of Delaware Investments located
at 2001 Market Street, 2nd Floor Auditorium, Philadelphia, PA 19103, on February
19, 2004 at 11:00 a.m. Eastern Time. The Board of Trustees of the Trust, on
behalf of the Technology and Innovation Fund, is soliciting these proxies. This
Proxy Statement/Prospectus will first be sent to shareholders on or about
December 1, 2003.
If the shareholders of the Technology and Innovation Fund vote to
approve the Plan, you will receive Select Growth Fund Shares equal in value to
your investment in the Technology and Innovation Fund. The Technology and
Innovation Fund will then be liquidated.
The Select Growth Fund's investment objective is to seek long-term
capital appreciation, which the Fund attempts to achieve by investing primarily
in equity securities of companies management believes have the potential for
high earnings growth. The investment objective of the Technology and Innovation
Fund is substantially similar to the investment objective of the Select Growth
Fund. The Technology and Innovation Fund's investment objective is to seek
long-term capital growth.
This Proxy Statement/Prospectus gives the information about Select
Growth Fund Shares that you should know before investing. You should retain it
for future reference. A Statement of Additional Information dated November 15,
2003 (the "Statement of Additional Information"), relating to this Proxy
Statement/Prospectus containing more information about the Select Growth Fund,
the Technology and Innovation Fund and the proposed transaction has been filed
with the U.S. Securities and Exchange Commission ("SEC") and is incorporated
herein by reference.
6
The following documents are included with and considered a part of this
Proxy Statement/Prospectus, and are intended to provide you with information
about the Select Growth Fund.
o The Class A, Class B, Class C and Class R and the Institutional
prospectuses of the Select Growth Fund, dated June 30, 2003 (the
"Select Growth Fund Prospectus").
o The Annual Report to Shareholders of the Select Growth Fund for the
fiscal year ended April 30, 2003 (the "Select Growth Fund Annual
Report").
The Prospectus of the Technology and Innovation Fund dated August 29,
2003 is incorporated by reference into this Proxy Statement/Prospectus. You can
request a free copy of the Statement of Additional Information or any of the
documents described above by calling 1-800-523-1918, or by writing to the
Acquiring Trust or the Trusts at Attention: Account Services, 2005 Market
Street, Philadelphia, PA 19103.
Like all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
Proxy Statement/Prospectus. Any representation to the contrary is a criminal
offense.
Mutual fund shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other U.S. government agency.
Mutual fund shares involve investment risks including the possible loss of
principal.
7
SUMMARY
This is only a summary of certain information contained in this Proxy
Statement/Prospectus. You should read the more complete information in the rest
of this Proxy Statement/Prospectus, including the Plan (attached as Exhibit A to
the Proxy Statement/Prospectus), and the Select Growth Fund Prospectus and the
Select Growth Fund Annual Report included with this Proxy/Statement Prospectus.
What is the purpose of the proposal?
The Board of Trustees of the Trust has approved the Plan for the
Technology and Innovation Fund and recommends that shareholders of the
Technology and Innovation Fund approve the Plan. If shareholders of the
Technology and Innovation Fund approve the Plan, the Fund's net assets will be
transferred to the Select Growth Fund in exchange for an equal value of Select
Growth Fund Shares. These Select Growth Fund Shares will then be distributed pro
rata to the Technology and Innovation Fund's shareholders and the Technology and
Innovation Fund will be liquidated and dissolved. The proposed transaction for
the Technology and Innovation Fund is referred to in this Proxy
Statement/Prospectus as the "Transaction."
This means that your shares of the Technology and Innovation Fund will
be exchanged for an equal value of Select Growth Fund Shares. As a result, you
will cease to be a shareholder of the Technology and Innovation Fund and will
become a shareholder of the Select Growth Fund. This exchange will occur on a
date agreed to between the Trust and the Acquiring Trust (hereafter, the
"Closing Date").
Like the Technology and Innovation Fund, the Select Growth Fund is a
mutual fund within the Delaware Investments Family of Funds that is managed by
Delaware Management Company (the "Manager"). Its investment objective and
policies are substantially similar, but not identical, to the Technology and
Innovation Fund.
For the reasons set forth below under "Reasons for the Transaction,"
the Boards of Trustees of the Trust and the Acquiring Trust have concluded that
the Transaction is in the best interests of the respective shareholders of the
Technology and Innovation Fund and the Select Growth Fund. Each Board of
Trustees has also concluded that no dilution in value would result to the
shareholders of each respective Fund as a result of the Transaction.
The Board of Trustees of the Trust recommend that you vote
to approve the Plan.
How will the shareholder voting be handled?
Shareholders of the Technology and Innovation Fund who own shares at
the close of business on October 31, 2003 will be entitled to vote at the
Meeting, and will be entitled to one vote for each full share and a fractional
vote for each fractional share that they hold. To approve the Transaction, a
majority (as defined under federal law) of the outstanding voting shares of the
Technology and Innovation Fund must be voted in favor of the Plan.
8
Please vote by proxy as soon as you receive this Proxy
Statement/Prospectus. You may place your vote by completing and signing the
enclosed proxy card or by telephone or by the Internet. If you return your
signed proxy card or vote by telephone or by Internet, your votes will be
officially cast at the Meeting by the persons appointed as proxies. You can
revoke your proxy or change your voting instructions at any time until the vote
is taken at the Meeting. For more details about shareholder voting, see the
"Voting Information" section of this Proxy Statement/Prospectus.
What are the general tax consequences of the Transaction?
It is expected that shareholders of the Technology and Innovation Fund
will not recognize any gain or loss for federal income tax purposes as a result
of the exchange of their shares for Select Growth Fund Shares. You should,
however, consult your tax advisor regarding the effect, if any, of the
Transaction in light of your individual circumstances. You should also consult
your tax advisor about state and local tax consequences of the Transaction, if
any, because the information about tax consequences in this document relates to
the federal income tax consequences only. For further information about the tax
consequences of the Transaction, see "Information About the Transaction - What
are the tax consequences of the Transaction?"
COMPARISONS OF SOME IMPORTANT FEATURES
How do the investment objectives and policies of the Technology and Innovation
Fund and the Select Growth Fund compare?
The Technology and Innovation Fund and Select Growth Fund have
substantially similar investment objectives. The Technology and Innovation
Fund's investment objective is to seek to provide long-term capital growth. The
Select Growth Fund's investment objective is to seek long-term capital
appreciation, which the Fund attempts to achieve by investing primarily in
equity securities of companies management believes have the potential for high
earnings growth. Essentially, therefore, both Funds seek to provide long-term
capital appreciation to shareholders. The Funds have similar investment
strategies. Both Funds seek to achieve their investment objectives by investing
primarily in equity securities. The principal difference in their strategies is
that, unlike the Technology and Innovation Fund, the Select Growth Fund does not
focus its investments in particular sectors or industries. In addition, unlike
the Technology and Innovation Fund, the Select Growth Fund is a diversified
fund.
The Technology and Innovation Fund invests primarily in stocks
management believes will benefit from technological advances and improvements.
The stocks can be of any size or market capitalization, including the securities
of emerging or other growth-oriented companies.
The Select Growth Fund invests primarily in equity securities of
companies that management believes have the potential for high earnings growth
based on their analysis of historical or projected earnings growth rates, price
to earnings ratios and cash flows. Management will consider companies of any
size as long as they are larger than $300 million in market capitalization.
For further information about the investment objectives and policies of
the Funds, see "Comparison of Investment Objectives and Policies."
9
What are the risks of an investment in the Funds?
As with most investments, investments in the Funds involve risks. There
can be no guarantee against losses resulting from an investment in either Fund,
nor can there be any assurance that either Fund will achieve its investment
objective.
The risks associated with an investment in the Select Growth Fund are
similar to the risks associated with investments in the Technology and
Innovation Fund. Those risks include changes in market conditions, particularly
declines in the stock market, and poor performance in specific industries or
companies in which the Funds may invest.
Investments in the Technology and Innovation Fund may also be subject
to somewhat greater industry and security risk than the Select Growth Fund
because of the Technology and Innovation Fund's focus on the technology sector.
Therefore, the Technology and Innovation Fund may be particularly sensitive to
changes in the general market and economic conditions that affect those
industries. A fund focused primarily in these securities is likely to be much
more volatile than a fund with exposure to a greater variety of industries,
especially in the short-run.
For further information about the investment objectives and policies of
the Funds, see "Comparison of Investment Objectives and Policies."
What are the fees and expenses of each Fund?
The following tables describe the fees and expenses that you may pay if
you buy and hold shares of the Funds. The sales charge structure for each Fund
is identical, and except as noted, the operating expenses shown are based on
expenses incurred during each Fund's most recent fiscal year. The Manager has
contracted to waive its fees and/or pay expenses of the Select Growth Fund for
the period from January 1, 2004 through December 31, 2004 to the extent
necessary to limit the total operating expenses of the Fund to the levels shown
below
FEES AND EXPENSES FOR THE SELECT GROWTH FUND
AND THE TECHNOLOGY AND INNOVATION FUND
- ---------------------------------- ---------------------------- ------------------- -------------------------------- ---------------
Fund Names and Classes Maximum Sales Load Maximum Maximum Sales Load on Redemption
of Shares on Purchases CDSC Reinvested Dividends Fees
- ---------------------------------- ---------------------------- ------------------- -------------------------------- ---------------
Select Growth Fund
Class A 5.75% None(1) None None
Class B None 4.00%(2) None None
Class C None 1.00%(3) None None
Class R None None None None
Institutional Class None None None None
Technology and
Innovation Fund
Class A 5.75% None(1) None None
Class B None 4.00%(2) None None
Class C None 1.00%(3) None None
Class R None None None None
Institutional Class None None None None
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(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is paid a
commission, a contingent deferred sales charge will apply to certain redemptions
made within two years of purchase. Additional Class A purchase options that
involve a contingent deferred sales charge may be permitted from time to time
and will be disclosed in a Fund's prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 4%, which declines to 3.25%
during the second year, 2.75% during the third year, 2.25% during the fourth and
fifth years, 1.50% during the sixth year and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
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OPERATING EXPENSES
- ---------------------------------- ----------------- ------------------- ------------- ------------------- -------------- ----------
Total Annual
Distributions Fund Fee
Fund Names and Classes Management and Service Other Operating Waivers & Net
of Shares Fees (12b-1) Fees Expenses Expenses(1) Payments Expenses
- ---------------------------------- ----------------- ------------------- ------------- ------------------- -------------- ----------
Select Growth Fund after
Transaction
Class A 0.74% 0.25% 1.05% 2.04% (0.54%)(2) 1.50%
Class B 0.74% 1.00% 1.05% 2.79% (0.54%)(2) 2.25%
Class C 0.74% 1.00% 1.05% 2.79% (0.54%)(2) 2.25%
Class R 0.74% 0.60% 1.05% 2.39% (0.54%)(2) 1.85%
Institutional Class 0.74% none 1.05% 1.79% (0.54%)(2) 1.25%
Select Growth Fund
Class A 0.74% 0.25% 0.84% 1.83% (0.33%)(2) 1.50%
Class B 0.74% 1.00% 0.84% 2.58% (0.33%)(2) 2.25%
Class C 0.74% 1.00% 0.84% 2.58% (0.33%)(2) 2.25%
Class R 0.74% 0.60% 0.84% 2.18% (0.33%)(2) 1.85%
Institutional Class 0.74% none 0.84% 1.58% (0.33%)(2) 1.25%
Technology and
Innovation Fund
Class A 0.75% 0.30%(3) 3.23% 4.28% (2.83%)(3,4) 1.45%
Class B 0.75% 1.00% 3.23% 4.98% (2.78%)(4) 2.20%
Class C 0.75% 1.00% 3.23% 4.98% (2.78%)(4) 2.20%
Class R 0.75% 0.60% 3.23% 4.58% (2.78%)(4) 1.80%
Institutional Class 0.75% none 3.23% 3.98% (2.78%)(4) 1.20%
(1) Certain qualified retirement plans are expected to exchange shares of the
Technology and Innovation Fund for shares of Select Growth Fund prior to the
consummation of the Transaction. This may have the effect of increasing "Total
Annual Fund Operating Expenses" for the Technology and Innovation Fund, and
decreasing "Total Annual Fund Operating Expenses" for the Select Growth Fund
before the Transaction.
(2) The Manager has contracted to waive fees and pay expenses for the Select
Growth Fund through December 31, 2003 in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees, extraordinary fees and
12b-1 fees) from exceeding 1.25% of average daily net assets. The Manager has
agreed to continue this contractual waiver through December 31, 2004 in order to
prevent total operating expenses (excluding any taxes, interest, brokerage fees,
extraordinary fees and 12b-1 fees) from exceeding 1.25% of average daily net
assets.
(3) Class A shares of the Technology and Innovation Fund are subject to a
maximum annual 12b-1 fee of 0.30% of average daily net assets and Class B and
Class C shares are each subject to an annual 12b-1 fee of 1.00% of average daily
net assets. Class R shares are subject to an annual 12b-1 fee of 0.60%. The
Fund's Distributor has contracted to waive a portion of Class A's 12b-1 fee
through August 31, 2004 in order to prevent those 12b-1 plan expenses from
exceeding 0.25% of average daily net assets.
(4) The Manager has contracted to waive fees and pay expenses for the Technology
and Innovation Fund through August 31, 2004 in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees, extraordinary fees and
12b-1 fees) from exceeding 1.20% of average daily net assets.
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Examples:
The following Examples are intended to help you compare the cost of
investing in the Technology and Innovation Fund with the cost of investing in
the Select Growth Fund. Each Example assumes that you invest $10,000 in each
Fund for the time period indicated and then redeem all of your shares at the end
of those periods. Each Example also assumes that your investment has a 5% return
each year. These are examples only, and do not represent future expenses, which
may be greater or less than those shown below.
1 Year 3 Years 5 Years 10 Years(2)
------ ------- ------- --------
Select Growth Fund
after transaction(1)
Class A $719 $1,129 $1,563 $2,767
Class B $228 $814 $1,426 $2,900
Class B (if redeemed) $628 $1,089 $1,651 $2,900
Class C $228 $814 $1,426 $3,080
Class C (if redeemed) $328 $814 $1,426 $3,080
Class R $188 $694 $1,227 $2,685
Institutional Class $127 $511 $919 $2,061
Technology and Innovation Fund(1)
Class A $714 $1,556 $2,409 $4,598
Class B $223 $1,247 $2,272 $4,697
Class B (if redeemed) $623 $1,522 $2,497 $4,697
Class C $223 $1,247 $2,272 $4,835
Class C (if redeemed) $323 $1,247 $2,272 $4,835
Class R $183 $1,132 $2,089 $4,518
Institutional Class $122 $957 $1,809 $4,016
(1) Each Fund's actual returns may be greater or less than the hypothetical 5%
return used. Each Fund's example reflects net operating expenses with expense
waivers for the one-year contractual period and the total operating expenses
without expense waivers for years two through 10.
(2) The Class B Examples reflect the conversion of Class B Shares to Class A at
the end of the eighth year. Information on the ninth and tenth years reflect
expenses of the Class A Shares.
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What are other key features of the Funds?
Transfer Agency, Accounting, Custody and Administrative Services.
Delaware Service Company, Inc. ("DSC"), an affiliate of the Manager, acts as
shareholder servicing, dividend disbursing and transfer agent for each Fund, and
for other mutual funds in the Delaware Investments Family of Funds. DSC also
provides accounting services to each Fund. Those services include performing all
functions related to calculating each Fund's net asset value and providing all
financial reporting services, regulatory compliance testing and other related
accounting services. For its services, DSC is paid fees by each Fund according
to fee schedules that are the same for each retail Fund in the Delaware
Investments Family of Funds. These fees are charged to each Fund, including the
Select Growth Fund and the Technology and Innovation Fund, on a pro rata basis.
JP Morgan Chase Bank is the custodian of the securities and other
assets of all of the Funds. The main office of The JP Morgan Chase Bank is 4
Chase Metrotech Center, Brooklyn, New York 11245.
Management and Administration Fees. The Manager is the investment
manager of all of the Funds. The Manager has entered into separate management
agreements relating to each of the Funds that provide for reductions in fee
rates as the assets of the Funds increase. Under the Select Growth Fund's and
the Technology and Innovation Fund's management agreements, the Funds pay the
Manager a management fee as a percentage of average daily net assets equal to:
0.75% on the first $500 million; 0.70% on the next $500 million; 0.65% on the
next $1,500 million, and 0.60% on assets in excess of $2,500 million.
The Manager has contracted to waive that portion, if any, of the annual
management fees payable by the Technology and Innovation Fund and to pay certain
expenses of the Fund to the extent necessary to ensure that the total operating
expenses of the Fund do not exceed 1.20% (exclusive of taxes, interest,
brokerage commissions, extraordinary expenses, and applicable 12b-1 expenses)
through August 31, 2004. The Manager has also contracted to waive fees and pay
expenses of the Select Growth Fund through December 31, 2003 in order to prevent
total operating expenses (excluding any 12b-1 expenses, taxes, interest,
brokerage fees and extraordinary expenses) from exceeding 1.25% of average daily
net assets.
Distribution Services. Pursuant to underwriting agreements relating to
each of the Funds, Delaware Distributors, L.P. (the "Distributor") serves as the
national distributor for the Funds. The Distributor pays the expenses of the
promotion and distribution of the Funds' shares, except for payments by the
Funds on behalf of Class A Shares, Class B Shares, Class C Shares and Class R
Shares under their respective 12b-1 Plans. The Distributor is an indirect,
wholly owned subsidiary of Delaware Management Holdings, Inc. and an affiliate
of the Manager.
Pursuant to a contractual arrangement with Delaware Distributors, L.P.,
Lincoln Financial Distributors, Inc. ("LFD") is primarily responsible for
promoting the sale of Fund shares through broker/dealers, financial advisors and
other financial intermediaries. LFD is also an affiliate of the Distributor and
the Manager.
Rule 12b-1 Plans. Each Fund has adopted a separate distribution plan or
"Rule 12b-1 Plan" for each of its Class A Shares, Class B Shares, Class C Shares
and Class R Shares (collectively, the "Rule 12b-1 Plans" and, each individually,
a "Rule 12b-1 Plan"). The Rule 12b-1 Plans do not apply to Institutional Classes
of Shares. Such Shares are not included in calculating the Rule 12b-1 Plans' fee
and the Rule 12b-1 Plans are not used to assist in the distribution or marketing
of Shares of the Institutional Classes.
14
Each Rule 12b-1 Plan permits the relevant Fund to pay out of the assets
of the Class A Shares, Class B Shares, Class C Shares and Class R Shares monthly
fees to the Distributor for its services and expenses in distributing and
promoting shares of such classes. These expenses may include, among others,
preparing and distributing advertisements, sales literature and prospectuses and
reports used for sales purposes, compensating sales and marketing personnel, and
paying distribution and maintenance fees to securities brokers and dealers who
enter into dealer's agreements with the Distributor. The Rule 12b-1 Plan
expenses relating to Class B Shares and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares. In addition, absent any applicable fee waiver, each
Fund may make payments out of the assets of the Class A Shares, Class B Shares,
Class C Shares and Class R Shares directly to other unaffiliated parties, such
as banks, who either aid in the distribution of shares of, or provide services
to, such Classes.
The maximum aggregate annual fee payable by a Fund under its Rule 12b-1
Plans and a Fund's Distribution Agreement is, on an annual basis: up to 0.25% of
the Select Growth Fund's average daily net assets of Class A Shares and up to
0.30% of the Technology and Innovation Fund's average daily net assets of Class
A Shares; up to 1.00% (0.25% of which are service fees to be paid to the
Distributor, dealers and others for providing personal service and/or
maintaining shareholder accounts) of Class B Shares' and Class C Shares' average
daily net assets; and up to 0.60% of the average daily net assets of Class R
Shares. The Boards of Trustees for the Trust and the Acquiring Trust may reduce
these amounts at any time. All of the distribution expenses incurred by the
Distributor and others, such as broker/dealers, in excess of the amount paid on
behalf of Class A Shares, Class B Shares Class C Shares and Class R Shares is
borne by such persons without any reimbursement from such Classes. Subject to
seeking best execution, each Fund may, from time to time, buy or sell portfolio
securities from or to firms that receive payments under the Rule 12b-1 Plans.
Purchase, Exchange and Redemption Procedures. Procedures for the
purchase, exchange and redemption of each Fund's shares are identical. You may
refer to the Prospectus of each Fund for the purchase, exchange, and redemption
procedures applicable to the purchases, exchanges and redemptions of that Fund's
shares. Set forth below is a brief description of the basic purchase, exchange,
and redemption procedures applicable to the shares of the Funds.
Shares of a Fund may be purchased at the net asset value next
determined after the Fund receives a purchase order in good order, subject to
any applicable sales charge. Purchases of shares of any of the Funds may be made
through authorized investment dealers or directly by contacting the Funds or the
Distributor, although the Institutional Class Shares of each Fund are available
for purchase only by certain groups of investors. The minimum initial investment
is $1,000 for Class A, B and C Shares of each Fund. Subsequent purchases must be
at least $100. The initial and subsequent investment minimums for Class A Shares
will be waived for purchases by officers, trustees and employees of any fund in
the Delaware Investments Family of Funds, the manager or the sub-adviser or any
of their affiliates if the purchases are made pursuant to a payroll deduction
account. Shares purchased pursuant to the Uniform Gifts to Minors Act or the
Uniform Transfers to Minors Act and shares purchased in connection with an
Automatic Investing Plan are subject to a minimum initial purchase of $250 and a
minimum subsequent purchase of $25. Accounts opened under the Asset Planner
services are subject to a minimum initial investment of $2,000 per Asset Planner
strategy selected. There are no minimum purchase requirements for the Class R
Shares or the Institutional Classes, but certain eligibility requirements must
be satisfied.
15
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $100,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. Purchase orders for more than the maximum amounts
will be rejected, although an investor may exceed these limitations by making
cumulative purchases over a period of time.
Each Fund reserves the right to reject any order for the purchase of
its shares if, in the opinion of management, such rejection is in such Fund's
best interest. Each Fund also reserves the right, following shareholder
notification, to charge a service fee on non-retirement accounts that, as a
result of redemption, have remained below the minimum stated account balance for
a period of three or more consecutive months. Each Fund also reserves the right,
upon 60 days' written notice, to redeem accounts involuntarily that remain under
the minimum initial purchase amount as a result of redemptions.
Class A Shares of each Fund are purchased at the offering price, which
reflects a maximum front-end sales charge of 5.75%; however, lower front-end
sales charges apply for larger purchases. Absent a fee waiver, Class A Shares
are also subject to annual Rule 12b-1 Plan expenses for the life of the
investment.
Class B Shares of each Fund are purchased at net asset value and are
subject to a CDSC of: (i) 4% if shares are redeemed within one year of purchase;
(ii) 3.25% if shares are redeemed during the second year of purchase; (iii)
2.75% if shares are redeemed during the third year; (iv) 2.25% during the fourth
and fifth years; (v) 1.50% if shares are redeemed during the sixth year
following purchase; and (vi) 0% thereafter, although the CDSC may be waived
under certain circumstances. Absent any fee waivers, Class B Shares are subject
to annual 12b-1 Plan expenses for approximately eight years after purchase, at
which time Class B shares are subject to automatic conversion to Class A Shares.
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase, although
the CDSC may be waived under certain circumstances. Absent any fee waivers,
Class C Shares are also subject to annual Rule 12b-1 Plan expenses for the life
of the investment.
Class R Shares are purchased at net asset value per share and are not
subject to a contingent deferred sales charge.
Institutional Class shares are purchased at the net asset value per
share without the imposition of a front end or contingent deferred sales charge,
or Rule 12b-1 Plan expenses.
Shares of any Fund will be redeemed at any time at the net asset value
next determined on the business day when a redemption request is received.
Requests for redemption of shares held in certificated form must be accompanied
by the certificates. Any applicable contingent deferred sales charge will be
deducted. Shares of a Fund may be exchanged for shares of the same class in
another fund in the Delaware Investments Family of Funds without paying a
front-end sales charge or a contingent deferred sales charge at the time of the
exchange. The sale of shares of a Fund, either through redemption or exchange,
is a taxable event and may result in a capital gain or loss to shareholders.
Shareholders of the Technology and Innovation Fund will not be charged sales
charges in connection with the Transaction and it is intended that the structure
of the Transaction will not create a taxable event for shareholders.
16
Dividends, Distributions and Taxes. The Select Growth Fund declares and
makes payment of dividends, if any, from its net investment income and payments
from net realized securities profits (capital gains), if any, annually. The
Technology and Innovation Fund declares and makes payment of dividends, if any,
from its net investment income on a semi-annual basis. Payments from net
realized securities profits (capital gains), if any, will also be distributed
semi-annually. The amount of these dividends will vary depending on changes in
the Funds' net investment income. Each Fund automatically reinvests
distributions in additional shares of that Fund unless you select a different
option, such as to receive distributions in cash or to reinvest distributions in
shares of another fund in the Delaware Investments Family of Funds.
Distributions, whether received in cash or in additional shares, are generally
subject to income tax. On May 28, 2003, President Bush signed into law the Jobs
and Growth Tax Relief Reconciliation Act of 2003, which changes the tax rates on
certain types of distributions. You should consult your tax advisor about your
particular tax situation and how it might be affected by the new tax law. The
tax status of your dividends from the Fund is the same whether you reinvest your
dividends or receive them in cash. Distributions from the Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. The new tax law reduces the tax rate on certain qualifying dividends and
long-term capital gains. Any capital gain may be taxable at different rates
depending on the shareholder's holding period for the shares. Each Fund notifies
its shareholders annually of the amount and nature of all dividends and
distributions received from the Fund in the prior year. For more information
about the tax implications of investments in the Funds, see the current
Prospectus of each Fund under the heading "Dividends, distributions and taxes,"
as well as the current Statement of Additional Information for the Select Growth
Fund under the heading "Taxes," the current Statement of Additional Information
for the Technology and Innovation Fund under the heading "Distributions and
Taxes."
REASONS FOR THE TRANSACTION
The Board of Trustees of the Trust, on behalf of the Technology and
Innovation Fund, have recommended the Transaction for purposes of combining the
Fund with a larger fund that has similar investment objectives and policies and
a better opportunity for sustainable results. There has also been relatively low
demand for and slow growth in assets of the Technology and Innovation Fund.
The Plan was presented to the Board of Trustees of the Trust at a
meeting of the Board on August 21, 2003. At the meeting, the Board questioned
management about the potential benefits and costs to shareholders of the
Technology and Innovation Fund. In deciding whether to recommend approval of the
Transaction to shareholders, the Board of Trustees considered, among other
things: the advantages and benefits, as well as the disadvantages and costs to
shareholders; the expense ratios of the Select Growth Fund and the Technology
and Innovation Fund and the impact of contractual fees waivers thereon; the
comparative investment performance of the Select Growth Fund and the Technology
and Innovation Fund; the compatibility of the investment objectives, policies,
restrictions and investments of the Technology and Innovation Fund with those of
the Select Growth Fund; the tax consequences of the Transaction; and the
significant experience of the Manager. Additionally, the Board of Trustees
believes that the investment strategy of Select Growth Fund affords a better
opportunity for sustainable positive results than the Technology and Innovation
Fund's investment strategy. During the course of deliberations, the Board of
Trustees also considered that the expenses of the Transaction will be shared
one-third by the Select Growth Fund, one-third by the Technology and Innovation
Fund and one-third by the Manager.
17
The Boards of Trustees of the Trust and the Acquiring Trust approved
the Plan, concluding that the Transaction is in the best interests of the
shareholders of each respective Fund and that no dilution of value would result
to the shareholders of each respective Fund from the Transaction. The Board of
the Trust then decided to recommend that shareholders of the Technology and
Innovation Fund vote to approve the Transaction. As required by law, the
Trustees approving the Plan and making the foregoing determinations included a
majority of the Trustees who are not interested persons of the Technology and
Innovation Fund or the Select Growth Fund.
For the reasons discussed above, the Board of Trustees of the Trust, on behalf
of the Technology and Innovation Fund, recommends that you vote FOR the Plan.
If the shareholders of the Technology and Innovation Fund do not
approve the Plan, the Board of Trustees may consider other possible courses of
action for the Fund, including liquidation and dissolution.
INFORMATION ABOUT THE TRANSACTION
This is only a summary of the Plan. You should read the actual plan. It
is attached as Exhibit A and incorporated herein by reference.
How will the Transaction be carried out?
If the shareholders of the Technology and Innovation Fund approve the
Plan, the Transaction will take place after various conditions are satisfied by
the Trust on behalf of the Technology and Innovation Fund, and by the Acquiring
Trust, on behalf of the Select Growth Fund, including the delivery of certain
documents. The Trust and the Acquiring Trust will agree on the Closing Date. If
the shareholders of the Technology and Innovation Fund do not approve the Plan,
the Transaction will not take place.
If the shareholders of the Technology and Innovation Fund approve the
Plan, the Fund will deliver to the Select Growth Fund substantially all of its
assets on the Closing Date. In exchange, the Trust, on behalf of the Technology
and Innovation Fund, will receive Select Growth Fund Shares to be distributed
pro rata by the Technology and Innovation Fund to its shareholders and the
Select Growth Fund will assume all of the liabilities of the Technology and
Innovation Fund. The value of the assets to be delivered to the Select Growth
Fund shall be the value of such assets computed as of the close of business of
the New York Stock Exchange, Inc. ("NYSE") (normally 4:00 p.m. Eastern Time) on
the last business day prior to the Closing Date.
The stock transfer books of the Technology and Innovation Fund will be
permanently closed as of the close of business of the NYSE on the day before the
Closing Date. The Technology and Innovation Fund will accept requests for
redemption only if received in proper form before that time. Requests received
after that time will be considered requests to redeem shares of the Select
Growth Fund.
To the extent permitted by law, the Trust and the Acquiring Trust may
agree to amend the Plan without shareholder approval. They may also agree to
terminate and abandon the Transaction at any time before or, to the extent
permitted by law, after the approval of shareholders of the Technology and
Innovation Fund.
18
Who will pay the expenses of the Transaction?
The expenses resulting from the Technology and Innovation Fund's participation
in a Transaction will be shared by the following parties in the percentages
indicated: 50% by the Select Growth Fund, and 50% by the Manager.
What are the tax consequences of the Transaction?
The Transaction is intended to qualify as a tax-free reorganization for
federal income tax purposes under Section 368(a)(1) of the Internal Revenue Code
of 1986, as amended. Based on certain assumptions made and representations to be
received from the Trust, on behalf of the Technology and Innovation Fund, and
for the Acquiring Trust, on behalf of the Select Growth Fund, it is expected
that Stradley, Ronon, Stevens & Young, LLP, will provide a legal opinion that,
for federal income tax purposes, (i) shareholders of the Technology and
Innovation Fund will not recognize any gain or loss as a result of the exchange
of their shares of the Technology and Innovation Fund for shares of the Select
Growth Fund, and (ii) the Select Growth Fund and its shareholders will not
recognize any gain or loss upon receipt of the Technology and Innovation Fund's
assets.
You should consult your tax advisor regarding the effect, if any, of
the Transaction in light of your individual circumstances. You should also
consult your tax adviser about the state and local tax consequences, if any, of
the Transaction because this discussion only relates to the federal income tax
consequences.
What should I know about the Select Growth Fund Shares?
If the Transaction is approved, full and fractional shares of the
Select Growth Fund will be distributed to shareholders of the Technology and
Innovation Fund in accordance with the procedures described above. When issued,
each share will be validly issued and fully paid and non-assessable, freely
transferable and will have full voting rights. The shares of the Select Growth
Fund will be recorded electronically in each shareholder's account. The Select
Growth Fund will then send a confirmation to each shareholder. As described in
the Select Growth Fund Prospectus, the Select Growth Fund does not issue share
certificates except for Class A Shares and Institutional Class Shares and then
only when requested. As of the Closing Date, any certificates representing
shares of the Technology and Innovation Fund will be cancelled.
The Select Growth Fund Shares to be issued in the Transaction have
substantially the same rights and privileges as the shares of your Fund. All
shares have noncumulative voting rights. This gives holders of more than 50% of
the shares voting the ability to elect all of the members of the Board of
Trustees. If this happens, holders of the remaining shares voting will not be
able to elect any trustees.
Like the Technology and Innovation Fund, the Select Growth Fund does
not routinely hold annual meetings of shareholders. The Select Growth Fund may
hold special meetings for matters requiring shareholder approval. A meeting of
that Fund's shareholders may also be called at any time by the Board of Trustees
or by the chairperson of the Board or by the president.
19
What are the capitalizations of the Funds and what might the capitalization be
after the Transaction?
The following table sets forth, as of [September 30,] 2003, the
separate capitalizations of the Select Growth Fund and the Technology and
Innovation Fund, and the estimated capitalization of the Select Growth Fund as
adjusted to give effect to the proposed Transaction. The capitalization of the
Select Growth Fund is likely to be different when the Transaction is
consummated.
Select Growth Fund--Technology and Innovation Fund
--------------------------------------------------
Select Technology Select Growth
Growth and Innovation Fund after
Fund Fund Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $645,314,492 $28,255,650 $673,540,142
Total shares outstanding 35,565,284 19,063,863 37,102,929
Technology Select Growth
Select Growth and Innovation Fund Class A
Fund Class A Fund Class A after Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $230,625,208 $14,756,544 $245,381,752
Total shares outstanding 12,169,834 9,852,034 12,948,543
Net asset value per share $18.95 $1.50 $18.95
Technology Select Growth
Select Growth and Innovation Fund Class B
Fund Class B Fund Class B after Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $277,547,837 $8,487,118 $286,034,955
Total shares outstanding 15,733,224 5,818,768 16,214,353
Net asset value per share $17.64 $1.46 $17.64
Technology Select Growth
Select Growth and Innovation Fund Class C
Fund Class C Fund Class C after Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $100,943,440 $3,281,566 $104,225,006
Total shares outstanding 5,784,424 2,249,027 5,972,479
Net asset value per share $17.45 $1.46 $17.45
20
Technology Select Growth
Select Growth and Innovation Fund Class R
Fund Class R Fund Class R after Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $18.93 $0 $18.93
Total shares outstanding 1 0 1
Net asset value per share $18.93 $0 $18.93
Technology Select Growth Fund
Select Growth and Innovation Institutional Class
Fund Institutional Fund Institutional after Transaction
Class Class (estimated)
(unaudited) (unaudited)
Net assets (millions) $36,197,988 $1,730,422 $37,928,410
Total shares outstanding 1,877,801 1,144,034 1,967,410
Net asset value per share $19.28 $1.51 $19.28
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
This section describes the key investment policies of the Funds, and
certain noteworthy differences between the investment objectives and strategies
of the Technology and Innovation Fund as compared to the Select Growth Fund. For
a complete description of the Select Growth Fund's investment policies and
risks, you should read the Select Growth Fund Prospectus, which is included with
this Proxy Statement/Prospectus.
The investment objectives and policies of the Technology and Innovation
Fund as compared to the Select Growth Fund, are described in separate sections
below. Policies or restrictions that are deemed fundamental may not be changed
without the approval of the lesser of (i) a majority of the outstanding shares
of the Fund, or (ii) 67% or more of the shares represented at a meeting of
shareholders at which the holders of more than 50% of the outstanding shares are
represented ("Majority Vote"). Policies or investment restrictions of a Fund
that are non-fundamental may be changed by the Board of Trustees without
shareholder approval. Although each Fund's objective is non-fundamental, should
the Board approve a change in a Fund's objective, the Board of Trustees would
notify shareholders before the change becomes effective.
Are there any significant differences between the investment objectives,
strategies and investment policies of the Technology and Innovation Fund and the
Select Growth Fund?
Investment Objectives. The Technology and Innovation Fund and the
Select Growth Fund both seek to provide long-term capital appreciation or growth
for shareholders. The investment objective for each Fund is non-fundamental.
Investment Strategy. Both the Technology and Innovation Fund and the
Select Growth Fund focus on and have significant investments in growth stocks.
The principal difference between the investment strategies of the two funds is
that the Technology and Innovation Fund is a non-diversified fund that focuses
its investments on the technology sector. As a non-fundamental policy, the
Technology and Innovation Fund invests at least 80% of its assets in common
stocks of companies that the Manager believes are poised to benefit from the
development, advancement, and use of technology or from innovations that may
indirectly benefit from technology. The Select Growth Fund is a diversified fund
that invests primarily in equity securities of companies the Manager believes to
have the potential for high earnings growth across many different sectors.
21
Principal Investments. Both Funds primarily invest in equity
securities, particularly common stock of companies. Each Fund may also invest in
securities that may be converted into common stock, provided they meet the
investment criteria of the Fund.
Common stock. Common stocks are securities that represent shares of
ownership of a corporation. Stockholders participate in the corporations profits
and losses, proportionate to the number of shares the own. The Technology and
Innovation Fund invests at least 80% of the Fund's total assets in equity
securities (including common stocks and convertible securities). Generally, 85%
to 100% of net assets of the Technology and Innovation Fund are invested in
common stock and the Fund may invest in common stocks of any market
capitalization. The Select Growth Fund invests at least 65% of the Fund's total
assets in equity securities (including common stocks, preferred stocks,
convertible securities and warrants or rights). Generally, 90% to 100% of net
assets of the Select Growth Fund are invested in common stock, and the Fund may
invest in companies of any size greater than $300 million in market
capitalization.
Additional Investments. Although the Funds normally invest in common
stocks, and to a lesser extent in convertible securities, both Funds may also
invest in other types of securities. Each Fund has different policies regarding
these types of investments.
American Depositary Agreements (ADRs) and Global Depositary Receipts
(GDRs). ADRs are securities issued by a U.S. bank (or non-U.S. bank for GDRs)
that represent the bank's holdings of foreign securities. The holder of an ADR
is entitled to the dividends and gains of the underlying foreign securities.
Both Funds may invest in ADRs, but have different limitations on such
investments. The The Technology and Innovation Fund may invest without limit in
ADRs, but currently intends to invest only a small portion of the portfolio in
ADRs. Technology and Innovation Fund may also invest up to 20% of its net assets
in foreign securities, but has no current intention of doing so. The Select
Growth Fund may invest no more than 10% of its assets in foreign securities,
including ADRs and GDRs, although, at the present time, the manager has no
intention of doing so.
Options and futures. An option represents the right to buy or sell a
security at an agreed upon price at a future date. A futures contract is an
agreement to purchase or sell a security at a specified price and on a specified
date. Both of the Funds may invest in options and futures without limitation.
Restricted securities. Restricted securities are privately placed
securities whose resale is restricted under securities law. Both Funds may
invest in restricted securities, including those that are eligible for resale
only among certain institutional buyers without registration (commonly known as
Rule 144A Securities) without limitation if certain liquidity criteria are
satisfied. Restricted securities that are determined to be illiquid may not
exceed either Fund's 15% limit on illiquid securities, which is described below.
Illiquid securities. Illiquid securities are securities that do not
have a ready market and cannot be easily sold within seven days at a price that
is approximately equal to their value as assessed by the Fund. Each Fund may
invest up to 15% of its net assets in illiquid securities.
22
Repurchase Agreements. A repurchase agreement is an agreement between a
buyer of securities, such as the Fund, and a seller of securities in which the
seller agrees to buy the securities back within a specified time at the same
price the buyer paid for them, plus an amount equal to an agreed upon interest
rate. Both Funds typically use repurchase agreements as a short-term investment
for the Fund's cash position. In order to enter into these repurchase
agreements, both Funds must have collateral of 102% of the repurchase price.
Both Funds will only enter into repurchase agreements in which the collateral is
comprised of U.S. government securities. Neither Fund may have more than 10% of
its assets in repurchase agreements with maturities of over seven days.
Repurchase agreements are often viewed as equivalent to cash.
Temporary Defensive Investments. Both Funds may invest in a temporary
defensive manner when the Manager believes that the Fund will be affected by
adverse market conditions. When investing in this manner, both Funds may hold
all or a substantial part of its assets in bonds, cash or cash equivalents. To
the extent that a Fund invests in a temporary defensive manner, the Fund may not
be able to achieve its investment objective.
How do the investment restrictions of the Funds differ?
Both of the Funds have adopted similar fundamental investment
restrictions, which may not be changed without the approval of a Majority Vote
of shareholders. There are, however, differences between the Funds'
non-fundamental policies, some of which have been described above.
What are the risks factors associated with investments in the Funds?
Like all investments, an investment in the Funds involves risk. There
is no assurance that a Fund will meet its investment objective. The achievement
of a Fund's objective depends upon market conditions generally and on the
investment manager's analytical and portfolio management skills. As with most
investments in mutual funds, the best results are generally achieved when an
investment in a Fund is held for a number of years. The investment risks for the
Funds are explained below.
Market Risk. Market risk is the risk that a majority of securities in a
certain market--such as stocks or bonds--will decline in value because of
economic conditions, future expectations, or investor confidence. This risk may
cause the price fluctuation of a security because of the changes in general
economic and interest rate conditions that affect the market as a whole. The
Funds seek to manage this risk by maintaining a long-term investment approach.
Company Size Risk. Company size risk is the risk that prices of small
and medium-sized companies may be more volatile than larger companies because of
limited financial resources or dependence on narrow product lines. The Funds
seek to balance this risk by investing in securities of larger companies.
Industry and Security Risk. Industry and security risk refers to the
risk that the value of securities in a particular industry, or in an individual
security, will decline because of changes in performance expectations. Each Fund
seeks to manage this risk by implementing policies that prohibit concentration.
Accordingly, each Fund limits the amount of its investments in any single issuer
or any single industry and follows a rigorous selection process before choosing
securities for investment.
23
Diversification. The Select Growth Fund is a diversified Fund which
mean that with respect to 25% of its assets, no single issuer may account for
more than 5% of the Fund's assets. By contrast, the Technology and Innovation
Fund is a non-diversified fund and has the flexibility to invest as much as 50%
of the its assets in as few as two issuers with no singer issuer accounting for
more than 25% of the portfolio. To manage this risk for the Technology and
Innovation Fund, the Manager performs extensive analysis on all securities,
particularly those that represent a larger percentage of portfolio assets. Since
a non-diversified fund may invest its assets in fewer issuers, the value of fund
shares may increase or decrease more rapidly than if the fund were fully
diversified because changes in the price of any one portfolio security may
affect a larger portion of the fund's overall assets.
Foreign Risk. Foreign risk is the risk associated with investments in
foreign securities, which may be adversely affected by political instability,
changes in currency rates, foreign economic conditions or inadequate regulatory
controls. Investments in ADRs, which represent an indirect ownership in foreign
securities, are subject to the same risks as direct investments in foreign
securities. Neither Fund normally, invests significantly in foreign securities
or ADRs.
Futures and Options Risk. A Fund may experience a significant loss if
the Fund employs an options or futures strategy and the value of the security or
index moves in a direction opposite to that anticipated by the Fund's manager.
Investments in futures and options also involve additional expenses, which may
offset a portion of any profit or increase any losses on the transaction. As a
practical matter, none of the Funds invest significantly in futures or options.
In addition, the Funds normally only use futures and options for defensive
purposes, such as protecting increases in the value of a security without
realizing taxable gain.
Liquidity Risk. Liquidity risk is the possibility that the Funds'
portfolio assets cannot be readily sold within seven days at the approximate
price that the Fund values the security. The Funds seek to mitigate liquidity
risk by limiting their investments in illiquid securities.
Interest Rate Risk. Because the Funds normally invest most of their
assets in equity securities, interest rate risk is not a significant type of
risk for these Funds. To the extent that a Fund invests in convertible debt
obligations, however, a Fund may be affected by adverse changes in interest
rates. Because small and medium-sized companies often borrow money to finance
their operations, they may be adversely affected by rising interest rates.
VOTING INFORMATION
How many votes are necessary to approve the Plan?
Provided that a quorum is present, the approval of the Plan for the
Technology and Innovation Fund requires the affirmative vote of the lesser 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 the Meeting, if the
holders of more than 50% of the Fund's outstanding voting securities are present
or represented by proxy. Each shareholder will be entitled to one vote for each
full share, and a fractional vote for each fractional share, of the Technology
and Innovation Fund held on the Record Date. If sufficient votes to approve the
proposal for the Technology and Innovation Fund are not received by the date of
the Meeting, the Meeting may be adjourned with respect to the Fund to permit
further solicitations of proxies. The holders of a majority of shares of the
Technology and Innovation Fund entitled to vote at the Meeting and present in
person or by proxy (whether or not sufficient to constitute quorum) may adjourn
the Meeting with respect to the Fund. The Meeting may also be adjourned by the
chairperson of the Meeting.
24
Abstentions and broker non-votes will be included for purposes of
determining whether a quorum is present at the Meeting, and will have the same
effect as a vote "against" the Plan. It is not anticipated that any broker
non-votes will be received.
How do I ensure my vote is accurately recorded?
You may attend the Meeting and vote in person. You may also vote by
completing and signing the attached proxy card and mailing it in the enclosed
postage paid envelope. A proxy card is, in essence, a ballot. If you simply sign
and date the proxy but give no voting instructions, your shares will be voted in
favor of the Plan and in accordance with the views of management upon any
unexpected matters that come before the Meeting or adjournment of the Meeting.
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.
Can I revoke my proxy?
You may revoke your proxy at any time before it is voted by sending a
written notice to the Trust for your Fund expressly revoking your proxy, by
signing and forwarding to the Trust a later-dated proxy, or by attending the
Meeting and voting in person. If your shares are held through a broker-dealer
and you wish to vote your shares in person at the Meeting, you must obtain a
"legal proxy" from your broker-dealer and present it to the Inspector of
Elections at the Meeting.
What other matters will be voted upon at the Meeting?
The Board of Trustees of the Trust does not intend to bring any matters
before the Meeting other than that described in this proxy. It is not aware of
any other matters to be brought before the Meeting by others. If any other
matter legally comes before the Meeting, proxies for which discretion has been
granted will be voted in accordance with the views of management.
Who is entitled to vote?
Only shareholders of record of the Technology and Innovation Fund at
the close of business on October 31, 2003 (the "Record Date") will be entitled
to vote at the Meeting. As of the Record Date, there were [______] outstanding
shares of the Technology and Innovation Fund.
What other solicitations will be made?
This proxy solicitation is being made by the Board of Trustees of the
Trust, on behalf of the Technology and Innovation Fund, for use at the Meeting.
The cost of this proxy solicitation will be shared as set forth above. In
addition to solicitation by mail, solicitations also may be made by
advertisement, telephone, telegram, facsimile transmission or other electronic
media, or personal contacts.
25
In addition to solicitation services to be provided by D.F. King & Co.,
Inc. ("D.F. King"), as described below, proxies may be solicited by the
Trustees, officers and employees of the Trust and Acquiring Trust (none of whom
will receive no compensation therefor in addition to their regular salaries)
and/or regular employees of the Manager or other service providers, or any of
their affiliates. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of the Technology and Innovation Fund's shares, and such
persons will be reimbursed for their expenses.
The Technology and Innovation Fund has retained D.F. King at a fee
estimated not to exceed $______, plus reimbursement of reasonable out-of-pocket
expenses, to assist in the solicitation of proxies (which amount is included in
the estimate of total expenses above). The Fund has also agreed to indemnify
D.F. King against certain liabilities and expenses, including liabilities under
the federal securities laws. D.F. King anticipates that approximately 50 of its
employees may solicit proxies. D.F. King is located at 77 Water Street, New
York, New York 10005
INFORMATION ABOUT THE SELECT GROWTH FUND
Information about the Select Growth Fund is included in the Select
Growth Fund Prospectus, dated June 30, 2003, which is attached to and considered
a part of this Proxy Statement/Prospectus. Additional information about the
Select Growth Fund is included in its Statement of Additional Information dated
June 30, 2003 and the Statement of Additional Information dated November 15,
2003 (relating to this Prospectus/Proxy Statement), each of which is
incorporated by reference herein. You may request free copies of the Statements
of Additional Information, which have been filed with the SEC, by calling
1-800-523-1918 or by writing to the Acquiring Trust at Attention: Account
Services, 1818 Market Street, Philadelphia, PA 19103-3682.
This Prospectus/Proxy Statement, which constitutes part of a
Registration Statement filed by the Select Growth Fund with the SEC under the
Securities Act of 1933, as amended, omits certain of the information contained
in the Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits and amendments thereto for further information
with respect to the Select Growth Fund and the shares it offers. Statements
contained herein concerning the provisions of documents are necessarily
summaries of such documents, and each such statement is qualified in its
entirety by reference to the copy of the applicable document filed with the SEC.
INFORMATION ABOUT THE TECHNOLOGY AND INNOVATION FUND
Information about the Technology and Innovation Fund is included in its
current Prospectus dated August 29, 2003, Annual Report to Shareholders dated as
of the fiscal year ended June 30, 2003, Statement of Additional Information
dated August 30, 2003, and the Statement of Additional Information dated
November 15, 2003 (relating to this Proxy Statement/Prospectus), each of which
is incorporated by reference herein. You may request free copies of these
documents, which have been filed with the SEC, by calling 1-800-523-1918 or by
writing to the Trust at Attention: Account Services, 2005 Market Street,
Philadelphia, PA 19103.
26
INFORMATION ABOUT EACH FUND
Each Fund files proxy materials, reports, and other information with
the SEC in accordance with the informational requirements of the Securities
Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as
amended. These materials can be inspected and copied at the public reference
facilities maintained by the SEC, Room 1200, 450 Fifth Street, N.W., Washington,
D.C. 20549. Also, copies of such material can be obtained from the Public
Reference Branch, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates or from the SEC's Internet site at http:\\www.sec.gov. To
request information regarding the Funds, you may also send an e-mail to the SEC
at publicinfo@sec.gov.
PRINCIPAL HOLDERS OF SHARES
On the Record Date, the officers and Trustees of the Trust, as a group,
owned less than 1% of the outstanding voting shares of the Technology and
Innovation Fund.
To the best knowledge of the Technology and Innovation Fund, as of the
Record Date, no person, except as set forth in the table below, owned of record
5% or more of the outstanding shares of any class of the Technology and
Innovation Fund. The Technology and Innovation Fund has no knowledge of
beneficial ownership. [Confirm: No control persons.]
[TECHNOLOGY AND INNOVATION 5% OWNERSHIP TABLE TO BE PROVIDED]
On the Record Date, the officers and trustees of the Acquiring Trust,
as a group, owned less than 1% of the outstanding shares of the Select Growth
Fund.
To the best knowledge of the Select Growth Fund, as of the Record Date,
no person, except as set forth in the table below, owned of record 5% or more of
the outstanding voting shares of each class of the Select Growth Fund. The
Select Growth Fund has no knowledge of beneficial ownership.
[SELECT GROWTH FUND 5% OWNERSHIP TABLE TO BE PROVIDED]
Confirm: No control persons.]
27
EXHIBIT TO
PROXY STATEMENT/PROSPECTUS
Exhibit
- -------
A Form of Agreement and Plan of Reorganization between the Trust (on
behalf of the Technology and Innovation Fund) and the Acquiring Trust
(on behalf of the Select Growth Fund).
OTHER DOCUMENTS INCLUDED WITH
THIS PROXY STATEMENT/PROSPECTUS
1. Prospectus of the Select Growth Fund, dated June 30, 2003 as previously filed
via EDGAR is incorporated into this filing by reference to
Post-Effective Amendment No. 44 filed June 30, 2003 and will be
included with the mailing to shareholders.
2. Annual Report to Shareholders of the Select Growth Fund for the fiscal year
ended April 30, 2003 as previously filed via EDGAR on July 10, 2003 is
incorporated herein by reference and will be included with the mailing
to shareholders.
28
[Exhibit A -- Form of Agreement and Plan of Reorganization between the Trust (on
behalf of the Technology and Innovation Fund) and the Acquiring Trust (on behalf
of the Select Growth Fund).]
29
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), made
as of this ___ day of ________ 2004, by and between Delaware Group Voyageur
Mutual Funds III (the "Acquiring Trust"), a statutory trust created under the
laws of the State of Delaware, with its principal place of business at One
Commerce Square, Philadelphia, Pennsylvania 19103, on behalf of its series,
Delaware Select Growth Fund ("Select Growth Fund"), and Delaware Group Equity
Funds III (the "Trust"), a statutory trust created under the laws of the State
of Delaware, with its principal place of business also at One Commerce Square,
Philadelphia, Pennsylvania 19103, on behalf of its series Delaware Technology
and Innovation Fund ("Acquired Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of: (i) the acquisition by the Acquiring Trust on
behalf of the Select Growth Fund of substantially all of the property, assets
and goodwill of the Acquired Fund in exchange solely for (a) shares of
beneficial interest, no par value, of the Select Growth Fund - Class A ("Select
Growth Fund Class A Shares"), (b) shares of beneficial interest, no par value,
of the Select Growth Fund - Class B ("Select Growth Fund Class B Shares"), (c)
shares of beneficial interest, no par value, of the Select Growth Fund - Class C
("Select Growth Fund Class C Shares"), (d) shares of beneficial interest, no par
value, of the Select Growth Fund - Class R ("Select Growth Fund Class R
Shares"), (e) shares of beneficial interest, no par value of the Select Growth
Fund - Institutional Class ("Select Growth Fund Institutional Class Shares"),
and (f) the assumption by the Acquiring Trust on behalf of the Select Growth
Fund of all of the liabilities of the Acquired Fund; (ii) the distribution of
(a) Select Growth Fund Class A shares to the shareholders of Acquired Fund -
Class A Shares ("Acquired Fund Class A Shares"), (b) Select Growth Fund Class B
Shares to the shareholders of Acquired Fund - Class B Shares ("Acquired Fund
Class B Shares"), (c) Select Growth Fund Class C Shares to the shareholders of
Acquired Fund - Class C Shares ("Acquired Fund Class C Shares"), (d) Select
Growth Fund Class R Shares to the shareholders of Acquired Fund - Class R Shares
("Acquired Fund Class R Shares"), and (e) Select Growth Fund Institutional Class
Shares to the shareholders of Acquired Fund - Institutional Class Shares
("Acquired Fund Institutional Class Shares"), according to their respective
interests in complete liquidation of the Acquired Fund; and (iii) the
dissolution of the Acquired Fund as soon as practicable after the closing (as
referenced in Section 3, hereof, hereinafter called the "Closing"), all upon and
subject to the terms and conditions of this Agreement hereinafter set forth.
AGREEMENT
In order to consummate the Plan of Reorganization and in
consideration of the premises and of the covenants and agreements hereinafter
set forth, and intending to be legally bound, the parties hereto covenant and
agree as follows:
1. Sale and Transfer of Assets and Liabilities, Liquidation and
Dissolution of the Acquired Fund
------------------------------------------------------------
(a) Subject to the terms and conditions of this Agreement, and
in reliance on the representations and warranties of the Acquiring Trust herein
contained, and in consideration of the delivery by the Acquiring Trust of the
number of its shares of beneficial interest of the Select Growth Fund
hereinafter provided, the Trust, on behalf of the Acquired Fund, agrees that it
-2-
will sell, convey, transfer and deliver to the Acquiring Trust, on behalf of the
Select Growth Fund, at the Closing provided for in Section 3, all of the
liabilities, debts, obligations and duties of any nature, whether accrued,
absolute, contingent or otherwise ("Liabilities") and the then existing assets
of the Acquired Fund as of the close of business (which hereinafter shall be,
unless otherwise noted, the regular close of business of the New York Stock
Exchange, Inc. ("NYSE")) ("Close of Business") on the valuation date (as defined
in Section 3 hereof, hereinafter called the "Valuation Date"), free and clear of
all liens, encumbrances, and claims whatsoever (other than shareholders' rights
of redemption and such restrictions as might arise under the Securities Act of
1933, as amended (the "1933 Act"), with respect to privately placed or otherwise
restricted securities that the Acquired Fund may have acquired in the ordinary
course of business), except for cash, bank deposits, or cash equivalent
securities in an estimated amount necessary (1) to pay the Acquired Fund's costs
and expenses of carrying out this Agreement (including, but not limited to, fees
of counsel and accountants, and expenses of its liquidation and dissolution
contemplated hereunder), which costs and expenses shall be established on the
books of the Acquired Fund as liability reserves, (2) to discharge all of the
Acquired Fund's Liabilities on its books at the Close of Business on the
Valuation Date including, but not limited to, its income dividends and capital
gains distributions, if any, payable for any period prior to, and through, the
Close of Business on the Valuation Date, and excluding those liabilities and
obligations that would otherwise be discharged at a later date in the ordinary
course of business, and (3) to pay such contingent liabilities as the trustees
of the Trust shall reasonably deem to exist against the Acquired Fund, if any,
at the Close of Business on the Valuation Date, for which contingent and other
appropriate liability reserves shall be established on the books of the Acquired
Fund (hereinafter "Net Assets"). The Trust, on behalf of the Acquired Fund,
-3-
shall also retain any and all rights that it may have over and against any
person that may have accrued up to and including the Close of Business on the
Valuation Date. The Trust agrees to use commercially reasonable efforts to
identify all of the Acquired Fund's Liabilities prior to the Valuation Date and
to discharge all such known Liabilities on or prior to the Valuation Date.
(b) Subject to the terms and conditions of this Agreement, and
in reliance on the representations and warranties of the Trust on behalf of the
Acquired Fund herein contained, and in consideration of such sale, conveyance,
transfer, and delivery, the Acquiring Trust agrees at the Closing to assume the
Liabilities, on behalf of the Select Growth Fund, and to deliver to the Trust on
behalf of the Acquired Fund: (i) the number of Select Growth Fund Class A
Shares, determined by dividing the net asset value per share of Acquired Fund
Class A Shares as of the Close of Business on the Valuation Date by the net
asset value per share of Select Growth Fund Class A Shares as of Close of
Business on the Valuation Date, and multiplying the result by the number of
outstanding shares of the Acquired Fund Class A Shares as of Close of Business
on the Valuation Date; (ii) the number of Select Growth Fund Class B Shares,
determined by dividing the net asset value per share of Acquired Fund Class B
Shares as of Close of Business on the Valuation Date by the net asset value per
share of Select Growth Fund Class B Shares as of Close of Business on the
Valuation Date, and multiplying the result by the number of outstanding shares
of Acquired Fund Class B Shares as of Close of Business on the Valuation Date;
(iii) the number of Select Growth Fund Class C Shares, determined by dividing
the net asset value per share of Acquired Fund Class C Shares as of Close of
Business on the Valuation Date by the net asset value per share of Select Growth
Fund Class C Shares as of Close of Business on the Valuation Date, and
multiplying the result by the number of outstanding shares of Acquired Fund
-4-
Class C Shares as of Close of Business on the Valuation Date; (iv) the number of
Select Growth Fund Class R Shares, determined by dividing the net asset value
per share of Acquired Fund Class R Shares as of Close of Business on the
Valuation Date by the net asset value per share of Select Growth Fund Class R
Shares as of Close of Business on the Valuation Date, and multiplying the result
by the number of outstanding shares of Acquired Fund Class R Shares as of Close
of Business on the Valuation Date; and (v) the number of Select Growth Fund
Institutional Class Shares, determined by dividing the net asset value per share
of Acquired Fund Institutional Class Shares as of Close of Business on the
Valuation Date by the net asset value per share of Select Growth Fund
Institutional Class Shares as of Close of Business on the Valuation Date, and
multiplying the result by the number of outstanding shares of Acquired Fund
Institutional Class Shares as of Close of Business on the Valuation Date. All
such values shall be determined in the manner and as of the time set forth in
Section 2 hereof.
(c) As soon as practicable following the Closing, the Trust
shall dissolve the Acquired Fund and distribute pro rata to the Acquired Fund's
shareholders of record as of the Close of Business on the Valuation Date, the
shares of beneficial interest of the Select Growth Fund received by the Acquired
Fund pursuant to this Section 1. Such dissolution and distribution shall be
accomplished by the establishment of accounts on the share records of the Select
Growth Fund of the type and in the amounts due such shareholders pursuant to
this Section 1 based on their respective holdings of shares of the Acquired Fund
as of the Close of Business on the Valuation Date. Fractional shares of
beneficial interest of the Select Growth Fund shall be carried to the third
decimal place. Unless requested, no certificates representing shares of
beneficial interest of the Select Growth Fund will be issued to shareholders of
the Acquired Fund Shares irrespective of whether such shareholders hold their
shares in certificated form.
-5-
(d) At the Closing, each shareholder of record of the Trust
shall be entitled to surrender the same to the transfer agent for the Acquiring
Trust and request in exchange therefor a certificate or certificates
representing the number of whole shares of beneficial interest of the class of
Select Growth Fund shares into which the corresponding shares of beneficial
interest of the Acquired Fund theretofore represented by the certificate or
certificates so surrendered shall have been converted. Certificates for
fractional shares of beneficial interest of the Acquiring Trust shall not be
issued, but such fractional shares shall continue to be carried by the Acquiring
Trust in book entry form for the account of such shareholder. Until so
surrendered, each outstanding certificate, which, prior to Closing, represented
shares of beneficial interest of the Acquired Fund, shall be deemed for all
Select Growth Fund purposes to evidence ownership of the number of shares of
beneficial interest of the Select Growth Fund into which the shares of
beneficial interest of the Acquired Fund (which prior to Closing were
represented thereby) have been converted.
(e) At the Closing, each shareholder of record of the Acquired
Fund as of the record date (the "Distribution Record Date") with respect to any
unpaid dividends and other distributions that were declared prior to the
Closing, including any dividend or distribution declared pursuant to Section
9(e) hereof, shall have the right to receive such unpaid dividends and
distributions with respect to the shares of the Acquired Fund that such person
had on such Distribution Record Date.
-6-
2. Valuation
---------
(a) The value of the Acquired Fund's Net Assets to be acquired
by the Select Growth Fund hereunder shall be computed as of Close of Business on
the Valuation Date using the valuation procedures set forth in the Acquired
Fund's currently effective prospectus and statement of additional information.
(b) The net asset value of a share of beneficial interest of
the Select Growth Fund Class A Shares, Select Growth Fund Class B Shares, Select
Growth Fund Class C Shares, Select Growth Fund Class R Shares and Select Growth
Fund Institutional Class Shares shall be determined to the nearest full cent as
of the Close of Business on the Valuation Date using the valuation procedures
set forth in the Select Growth Fund's currently effective prospectus and
statement of additional information.
(c) The net asset value of a share of beneficial interest of
the Acquired Fund Class A Shares, Acquired Fund Class B Shares, Acquired Fund
Class C Shares, Acquired Fund Class R Shares and Acquired Fund Institutional
Class Shares shall be determined to the nearest full cent as of the Close of
Business on the Valuation Date, using the valuation procedures as set forth in
the Acquired Fund's currently effective prospectus and statement of additional
information.
3. Closing and Valuation Date
--------------------------
The Valuation Date shall be [ ], 2004, or such later date as
the parties may mutually agree. The Closing shall take place at the principal
office of the Acquiring Trust, One Commerce Square, Philadelphia, Pennsylvania
19103 at approximately 9:00 a.m. Eastern time on the first business day
-7-
following the Valuation Date. Notwithstanding anything herein to the contrary,
in the event that on the Valuation Date (a) the NYSE 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 the Acquiring Trust or Trust, accurate appraisal of the value of the
net assets of the Acquired Fund or the Select Growth Fund 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,
reporting shall have been restored and accurate appraisal of the value of the
net assets of the Acquired Fund and the Select Growth Fund is practicable in the
judgment of the Acquiring Trust and Trust. The Trust shall have provided for
delivery as of the Closing of those Net Assets of the Acquired Fund to be
transferred to the Select Growth Fund's Custodian, Mellon Bank, N.A., One Mellon
Center, Pittsburgh, PA 15258. Also, the Trust shall deliver at the Closing a
list (which may be in electronic form) of names and addresses of the
shareholders of record of its Acquired Fund Shares, and the number of full and
fractional shares of beneficial interest of such classes owned by each such
shareholder, indicating thereon which such shares are represented by outstanding
certificates and which by book-entry accounts, all as of the Close of Business
on the Valuation Date, certified by its transfer agent, or by its President or
Vice-President to the best of their knowledge and belief. The Acquiring Trust
shall issue and deliver a certificate or certificates evidencing the shares of
the Select Growth Fund to be delivered at the Closing to said transfer agent
registered in such manner as the Trust may request, or provide evidence
satisfactory to the Trust in such manner as the Trust may request that such
shares of beneficial interest of the Select Growth Fund have been registered in
an open account on the books of the Select Growth Fund.
-8-
4. Representations and Warranties by the Trust
-------------------------------------------
The Trust represents and warrants to the Acquiring Trust that:
(a) The Trust is a statutory trust created under the laws of
the State of Delaware on [ ], and is validly existing and in good standing under
the laws of that State. The Trust, of which the Acquired Fund is a separate
series, is duly registered under the Investment Company Act of 1940, as amended
(the "1940 Act") as an open-end, management investment company. Such
registration is in full force and effect as of the date hereof and will be in
full force and effect as of the Closing and all of its shares sold have been
sold pursuant to an effective registration statement filed under the 1933 Act,
except for any shares sold pursuant to the private offering exemption for the
purpose of raising initial capital.
(b) The Trust is authorized to issue an unlimited number of
shares of beneficial interest of the Acquired Fund, with no par value. Each
outstanding share of the Acquired Fund is validly issued, fully paid,
non-assessable and has full voting rights and, except for any such shares sold
pursuant to the private offering exemption for purposes of raising initial
capital, is freely transferable.
(c) The financial statements appearing in the Acquired Fund
Annual Report to Shareholders for the fiscal year ended [ ], audited by Ernst &
Young LLP, copies of which have been delivered to the Acquiring Trust, and any
unaudited financial statements, copies of which may be furnished to the
Acquiring Trust, fairly present the financial position of the Acquired Fund as
of the date indicated, and the results of its operations for the period
indicated, in conformity with generally accepted accounting principles applied
on a consistent basis.
-9-
(d) The books and records of the Acquired Fund made available
to the Acquiring Trust and/or its counsel are true and correct in all material
respects and contain no material omissions with respect to the business and
operations of the Acquired Fund.
(e) The statement of assets and liabilities to be furnished by
the Trust as of the Close of Business on the Valuation Date for the purpose of
determining the number of shares of beneficial interest of the Select Growth
Fund to be issued pursuant to Section 1 hereof will accurately reflect the Net
Assets of the Acquired Fund and outstanding shares of beneficial interest, as of
such date, in conformity with generally accepted accounting principles applied
on a consistent basis.
(f) At the Closing, it will have good and marketable title to
all of the securities and other assets shown on the statement of assets and
liabilities referred to in subsection (e) above, free and clear of all liens or
encumbrances of any nature whatsoever except such restrictions as might arise
under the 1933 Act with respect to privately placed or otherwise restricted
securities that it may have acquired in the ordinary course of business and such
imperfections of title or encumbrances as do not materially detract from the
value or use of the assets subject thereto, or materially affect title thereto.
(g) The Trust has the necessary power and authority to conduct
its business and the business of the Acquired Fund as such businesses are now
being conducted.
(h) The Trust is not a party to or obligated under any
provision of its Agreement and Declaration of Trust, By-Laws, or any material
contract or any other material commitment or obligation, and is not subject to
any order or decree that would be violated by its execution of or performance
under this Agreement.
-10-
(i) The Trust has full power and authority to enter into and
perform its obligations under this Agreement, subject to approval of the Plan of
Reorganization by the Acquired Fund's shareholders. Except as provided in the
immediately preceding sentence, the execution, delivery and performance of this
Agreement have been validly authorized, executed and delivered by it, and this
Agreement constitutes its legal, valid and binding obligation enforceable
against it in accordance with its terms, subject as to enforcement to the effect
of bankruptcy, insolvency, reorganization, arrangement among creditors,
moratorium, fraudulent transfer or conveyance, and other similar laws of general
applicability relating to or affecting creditor's rights and to general equity
principles.
(j) Neither the Trust nor the Acquired Fund is under the
jurisdiction of a Court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
(k) The Trust does not have any unamortized or unpaid
organizational fees or expenses.
(l) The Trust has elected to treat the Acquired Fund as a
regulated investment company ("RIC") for federal income tax purposes under Part
I of Subchapter M of the Code, the Acquired Fund is a "fund" as defined in
Section 851(g)(2) of the Code, has qualified as a RIC for each taxable year
since its inception and will qualify as a RIC as of the Closing, and
consummation of the transactions contemplated by the Plan will not cause it to
fail to be qualified as a RIC as of the Closing.
-11-
5. Representations and Warranties by the Acquiring Trust
-----------------------------------------------------
The Acquiring Trust represents and warrants to the Trust that:
(a) The Acquiring Trust is a statutory trust created under the
laws of the State of Delaware on [ ], and is validly existing and in good
standing under the laws of that State. The Acquiring Trust, of which the Select
Growth Fund is a separate series of shares, is duly registered under the 1940
Act as an open-end, management investment company, such registration is in full
force and effect as of the date hereof or will be in full force and effect as of
the Closing and all of its shares sold have been sold pursuant to an effective
registration statement filed under the 1933 Act, except for any shares sold
pursuant to the private offering exemption for the purpose of raising initial
capital.
(b) The Acquiring Trust is authorized to issue an unlimited
number of shares of beneficial interest, without par value, of the Select Growth
Fund. Each outstanding share of the Select Growth Fund is fully paid,
non-assessable and has full voting rights and, except for any shares sold
pursuant to the private offering exemption for purposes of raising initial
capital, is freely transferable. The shares of beneficial interest of the Select
Growth Fund to be issued pursuant to Section 1 hereof will, upon their issuance,
be validly issued and fully paid and non-assessable, freely transferable and
have full voting rights.
(c) At the Closing, each class of shares of beneficial
interest of the Select Growth Fund to be issued pursuant to this Agreement will
be eligible for offering to the public in those states of the United States and
jurisdictions in which the corresponding class of shares of the Acquired Fund
are presently eligible for offering to the public, and there are an unlimited
number of shares registered under the 1933 Act such that there is a sufficient
number of such shares to permit the transfers contemplated by this Agreement to
be consummated.
-12-
(d) The statement of assets and liabilities of the Select
Growth Fund to be furnished by the Acquiring Trust as of the Close of Business
on the Valuation Date for the purpose of determining the number of shares of
beneficial interest of the Select Growth Fund to be issued pursuant to Section 1
hereof will accurately reflect the net assets of the Select Growth Fund and
outstanding shares of beneficial interest, as of such date, in conformity with
generally accepted accounting principles applied on a consistent basis.
(e) At the Closing, the Acquiring Trust will have good and
marketable title to all of the securities and other assets shown on the
statement of assets and liabilities referred to in subsection (d) above, free
and clear of all liens or encumbrances of any nature whatsoever except such
restrictions as might arise under the 1933 Act with respect to privately placed
or otherwise restricted securities that it may have acquired in the ordinary
course of business and such imperfections of title or encumbrances as do not
materially detract from the value or use of the assets subject thereto, or
materially affect title thereto.
(f) The Acquiring Trust has the necessary power and authority
to conduct its business and the business of the Select Growth Fund as such
businesses are now being conducted.
(g) The Acquiring Trust is not a party to or obligated under
any provision of its Agreement and Declaration of Trust, By-Laws, or any
material contract or any other material commitment or obligation, and is not
subject to any order or decree that would be violated by its execution of or
performance under this Agreement.
-13-
(h) The Acquiring Trust has full power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been validly authorized, executed and
delivered by it, and this Agreement constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, subject to
enforcement to the effect of bankruptcy, insolvency reorganization, arrangements
among creditors, moratorium, fraudulent transfer or conveyance, and other
similar laws of general applicability relating to or affecting creditors rights
and to general equity principles.
(i) Neither the Acquiring Trust nor the Select Growth Fund is
under the jurisdiction of a Court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
(j) The books and records of the Select Growth Fund made
available to the Trust and/or its counsel are true and correct in all material
respects and contain no material omissions with respect to the business and
operations of the Select Growth Fund.
(k) The Acquiring Trust has elected to treat the Select Growth
Fund as a regulated investment company ("RIC") for federal income tax purposes
under Part I of Subchapter M of the Code, the Select Growth Fund is a "fund" as
defined in Section 851(g)(2) of the Code, has qualified as a RIC for each
taxable year since its inception and will qualify as a RIC as of the Closing,
and consummation of the transactions contemplated by the Plan will not cause it
to fail to be qualified as a RIC as of the Closing.
-14-
6. Representations and Warranties by the Trust and the
Acquiring Trust
---------------------------------------------------
The Trust and the Acquiring Trust each represents and warrants
to the other that:
(a) Except as discussed in its currently effective prospectus,
there are no legal, administrative or other proceedings or investigations
against it, or, to its knowledge, threatened against it, that would materially
affect its financial condition or its ability to consummate the transactions
contemplated by this Agreement. It is not charged with or, to its knowledge,
threatened with, any violation or investigation of any possible violation of any
provisions of any federal, state or local law or regulation or administrative
ruling relating to any aspect of its business.
(b) There are no known actual or proposed deficiency
assessments with respect to any taxes payable by it.
(c) It has duly and timely filed, on behalf of the Acquired
Fund or the Select Growth Fund, as appropriate, all Tax (as defined below)
returns and reports (including information returns), which are required to be
filed by such Acquired Fund or Select Growth Fund, and all such returns and
reports accurately state the amount of Tax owed for the periods covered by the
returns, or, in the case of information returns, the amount and character of
income required to be reported by such Acquired Fund or Select Growth Fund. On
behalf of the Acquired Fund or the Select Growth Fund, as appropriate, it has
paid or made provision and properly accounted for all Taxes (as defined below)
due or properly shown to be due on such returns and reports. The amounts set up
as provisions for Taxes in the books and records of the Acquired Fund or Select
Growth Fund, as appropriate, as of the Close of Business on the Valuation Date
-15-
will, to the extent required by generally accepted accounting principles, be
sufficient for the payment of all Taxes of any kind, whether accrued, due,
absolute, contingent or otherwise, which were or which may be payable by the
Acquired Fund or Select Growth Fund, as appropriate, for any periods or fiscal
years prior to and including the Close of Business on the Valuation Date,
including all Taxes imposed before or after the Close of Business on the
Valuation Date that are attributable to any such period or fiscal year. No
return filed by it, on behalf of the Acquired Fund or Select Growth Fund, as
appropriate, is currently being audited by the Internal Revenue Service or by
any state or local taxing authority. As used in this Agreement, "Tax" or "Taxes"
means all federal, state, local and foreign (whether imposed by a country or
political subdivision or authority thereunder) income, gross receipts, excise,
sales, use, value added, employment, franchise, profits, property, ad valorem or
other taxes, stamp taxes and duties, fees, assessments or charges, whether
payable directly or by withholding, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority (foreign or domestic) with respect thereto. To its knowledge, there
are no levies, liens or encumbrances relating to Taxes existing, threatened or
pending with respect to the assets of the Acquired Fund or Select Growth Fund,
as appropriate.
(d) All information provided to the Trust by the Acquiring
Trust, and by the Trust to the Acquiring Trust, for inclusion in, or transmittal
with, the Combined Proxy Statement and Prospectus with respect to this Agreement
pursuant to which approval of the Acquired Fund's shareholders will be sought,
shall not contain any untrue statement of a material fact, or omit to state a
material fact required to be stated in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
-16-
(e) Except in the case of the Trust with respect to the
approval of the Acquired Fund's shareholders of the Agreement, no consent,
approval, authorization or order of any court or governmental authority, or of
any other person or entity, is required for the consummation of the transactions
contemplated by this Agreement, except as may be required by the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, or
state securities laws or Delaware statutory trust laws (including, in the case
of each of the foregoing, the rules and regulations thereunder).
7. Covenants of the Trust
----------------------
(a) The Trust covenants to operate business of the Acquired
Fund as presently conducted between the date hereof and the Closing.
(b) The Trust undertakes that the Acquired Fund will not
acquire the shares of beneficial interest of the Select Growth Fund for the
purpose of making distributions thereof other than to the Acquired Fund's
shareholders.
(c) The Trust covenants that by the Closing, all of the
Acquired Fund's federal and other Tax returns and reports required by law to be
filed on or before such date shall have been filed and all federal and other
Taxes shown as due on said returns shall have either been paid or adequate
liability reserves shall have been provided for the payment of such Taxes.
(d) The Trust will at the Closing provide the Acquiring Trust
with:
(1) A statement of the respective tax basis of all
investments to be transferred by the Acquired Fund to the
Select Growth Fund.
-17-
(2) A copy (which may be in electronic form) of the
shareholder ledger accounts including, without limitation, the
name, address and taxpayer identification number of each
shareholder of record, the number of shares of beneficial
interest held by each shareholder, the dividend reinvestment
elections applicable to each shareholder, and the backup
withholding and nonresident alien withholding certifications,
notices or records on file with the Acquired Fund with respect
to each shareholder, for all of the shareholders of record of
the Acquired Fund's shares as of the Close of Business on the
Valuation Date, who are to become holders of the Select Growth
Fund as a result of the transfer of assets that is the subject
of this Agreement, certified by its transfer agent or its
President or its Vice-President to the best of their knowledge
and belief.
(e) The Board of Trustees of the Trust shall call and the
Trust shall hold, a Special Meeting of the Acquired Fund's shareholders to
consider and vote upon this Agreement (the "Special Meeting") and the Trust
shall take all other actions reasonably necessary to obtain approval of the
transactions contemplated herein. The Trust agrees to mail to each shareholder
of record entitled to vote at the Special Meeting at which action on this
Agreement is to be considered, in sufficient time to comply with requirements as
to notice thereof, a Combined Proxy Statement and Prospectus that complies in
all material respects with the applicable provisions of Section 14(a) of the
1934 Act, and Section 20(a) of the 1940 Act, and the rules and regulations
promulgated thereunder.
(f) The Trust shall supply to the Acquiring Trust, at the
Closing, the statement of the assets and liabilities described in Section 4(e)
of this Agreement in conformity with the requirements described in such Section.
-18-
8. Covenants of the Acquiring Trust
--------------------------------
(a) The Acquiring Trust covenants that the shares of
beneficial interest of the Select Growth Fund to be issued and delivered to the
Acquired Fund pursuant to the terms of Section 1 hereof shall have been duly
authorized as of the Closing and, when so issued and delivered, shall be
registered under the 1933 Act, validly issued, and fully paid and
non-assessable, and no shareholder of the Select Growth Fund shall have any
statutory or contractual preemptive right of subscription or purchase in respect
thereof.
(b) The Acquiring Trust covenants to operate the business of
the Select Growth Fund as presently conducted between the date hereof and the
Closing.
(c) The Acquiring Trust covenants that by the Closing, all of
the Select Growth Fund's federal and other tax returns and reports required by
law to be filed on or before such date shall have been filed and all federal and
other taxes shown as due on said returns shall have either been paid or adequate
liability reserves shall have been provided for the payment of such taxes.
(d) The Acquiring Trust shall supply to the Trust, at the
Closing, the statement of assets and liabilities described in Section 5(d) of
this Agreement in conformity with the requirements described in such Section.
(e) The Acquiring Trust will file with the United States
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form N-14 under the 1933 Act ("Registration Statement"), relating to the
shares of beneficial interest of the Select Growth Fund issuable hereunder, and
will use its best efforts to provide that such Registration Statement becomes
-19-
effective as promptly as practicable. At the time such Registration Statement
becomes effective, it (i) will comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the 1940 Act, and the
rules and regulations promulgated thereunder; and (ii) will not contain an
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. At
the time the Registration Statement becomes effective, at the time of the
Acquired Fund's shareholders' meeting, and at the Closing, the prospectus and
statement of additional information included in the Registration Statement will
not contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
9. Conditions Precedent to be Fulfilled by the Trust and the
Acquiring Trust
---------------------------------------------------------
The obligations of the Trust and the Acquiring Trust to
effectuate this Agreement and the Plan of Reorganization hereunder shall be
subject to the following respective conditions:
(a) That (1) all the representations and warranties of the
other party contained herein shall be true and correct in all material respects
as of the Closing with the same effect as though made as of and at such date;
(2) the other party shall have performed all obligations required by this
Agreement to be performed by it at or prior to the Closing; and (3) the other
party shall have delivered to such party a certificate signed by the President
or Vice-President and by the Secretary or equivalent officer to the foregoing
effect.
-20-
(b) That the other party shall have delivered to such party a
copy of the resolutions approving this Agreement adopted by the other party's
Board of Trustees, certified by the Secretary or equivalent officer.
(c) That the Commission shall not have issued an unfavorable
advisory report under Section 25(b) of the 1940 Act, nor instituted nor
threatened to institute any proceeding seeking to enjoin the consummation of the
reorganization contemplated hereby under Section 25(c) of the 1940 Act, and no
other legal, administrative or other proceeding shall be instituted or
threatened that would materially and adversely affect the financial condition of
either party or would prohibit the transactions contemplated hereby.
(d) That this Agreement and the Plan of Reorganization and the
transactions contemplated hereby shall have been approved by the appropriate
action of the shareholders of the Acquired Fund at an annual or special meeting
or any adjournment thereof.
(e) That the Acquired Fund shall have declared a distribution
or distributions prior to the Valuation Date that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its ordinary income and all of its capital gain net income, if any, for the
period from the close of its last fiscal year to the Close of Business on the
Valuation Date, and (ii) any undistributed ordinary income and capital gain net
income from any prior period. Capital gain net income has the meaning given such
term by Section 1222(g) of the Code.
(f) That all required consents of other parties and all other
consents, orders and permits of federal, state and local authorities (including
those of the U.S. Securities and Exchange Commission and of state Blue Sky
securities authorities, including any necessary "no-action" positions or
exemptive orders from such federal and state authorities) to permit consummation
of the transaction contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve risk of
material adverse effect on the assets and properties of the Acquired Fund or the
Select Growth Fund.
-21-
(g) That prior to or at the Closing, the Trust and the
Acquiring Trust shall receive an opinion from Stradley Ronon Stevens & Young,
LLP ("SRSY") to the effect that, provided the acquisition contemplated hereby is
carried out in accordance with this Agreement and in accordance with customary
representations provided by the Trust and the Acquiring Trust in certificates
delivered to SRSY:
(1) The acquisition by the Select Growth Fund of
substantially all of the assets and the assumption of the
liabilities of the Acquired Fund in exchange solely for the
Select Growth Fund shares to be issued pursuant to Section 1
hereof, followed by the distribution by the Acquired Fund to
its shareholders of the Select Growth Fund shares in complete
liquidation of the Acquired Fund, will qualify as a
reorganization within the meaning of Section 368(a)(1) of the
Code, and the Select Growth Fund and the Acquired Fund will
each be a "party to the reorganization" within the meaning of
Section 368(b) of the Code;
(2) No gain or loss will be recognized by the
Acquired Fund upon the transfer of substantially all of its
assets to and the assumption of the liabilities by the
Acquired Fund in exchange solely for the voting shares of the
Select Growth Fund (to be issued in accordance with Section 1
hereof) under Section 361(a) and Section 357(a) of the Code;
-22-
(3) No gain or loss will be recognized by the Select
Growth Fund upon the receipt by it of substantially all of the
assets and the assumption of the liabilities of the Acquired
Fund in exchange solely for the voting shares of the Select
Growth Fund (to be issued in accordance with Section 1 hereof)
under Section 1032(a) of the Code;
(4) No gain or loss will be recognized by the
Acquired Fund upon the distribution of the Select Growth Fund
shares to the Acquired Fund shareholders in accordance with
Section 1 hereof in liquidation of the Acquired Fund under
Section 361(c)(1) of the Code.
(5) The basis of the assets of the Acquired Fund
received by the Select Growth Fund will be the same as the
basis of such assets to the Acquired Fund immediately prior to
the exchange under Section 362(b) of the Code;
(6) The holding period of the assets of the Acquired
Fund received by the Select Growth Fund will include the
period during which such assets were held by the Acquired Fund
under Section 1223(2) of the Code;
(7) No gain or loss will be recognized by the
shareholders of the Acquired Fund upon the exchange of their
shares in the Acquired Fund for the voting shares (including
fractional shares to which they may be entitled) of the Select
Growth Fund (to be issued in accordance with Section 1 hereof)
under Section 354(a) of the Code;
-23-
(8) The basis of the Select Growth Fund shares
received by the Acquired Fund shareholders in accordance with
Section 1 hereof (including fractional shares to which they
may be entitled) will be the same as the basis of the shares
of the Acquired Fund exchanged therefor under Section
358(a)(1) of the Code;
(9) The holding period of the Select Growth Fund's
shares received by the Acquired Fund's shareholders in
accordance with Section 1 hereof (including fractional shares
to which they may be entitled) will include the holding period
of the Acquired Fund's shares surrendered in exchange
therefor, provided that the Acquired Fund shares were held as
a capital asset on the date of the Reorganization under
Section 1223(l) of the Code; and
(10) The Select Growth Fund will succeed to and take
into account as of the date of the transfer (as defined in
Section 1.381(b)-1(b) of the regulations issued by the United
States Treasury (the "Treasury Regulations")) the items of the
Acquired Fund described in Section 381(c) of the Code, subject
to the conditions and limitations specified in Sections 381,
382, 383 and 384 of the Code, and the Treasury Regulations.
(h) That the Acquiring Trust shall have received an opinion
in form and substance reasonably satisfactory to it from SRSY, counsel to the
Trust, to the effect that, subject in all respects to the effects of bankruptcy,
insolvency, arrangement among creditors, moratorium, fraudulent transfer or
conveyance, and other similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles:
-24-
(1) The Trust was created as a statutory trust under
the laws of the State of Delaware on [ ], and is validly
existing and in good standing under the laws of the State of
Delaware;
(2) The Trust is authorized to issue an unlimited
number of shares of beneficial interest, without par value, of
the Trust and of the Acquired Fund. Assuming that the initial
shares of beneficial interest of the Acquired Fund were issued
in accordance with the 1940 Act, and the Agreement and
Declaration of Trust and By-Laws of the Trust, and that all
other such outstanding shares of the Acquired Fund were sold,
issued and paid for in accordance with the terms of the
Acquired Fund prospectus in effect at the time of such sales,
each such outstanding share is validly issued, fully paid,
non-assessable and has full voting rights and, except for any
shares sold pursuant to the private offering exemption for
purposes of raising initial capital, is freely transferable;
(3) The Trust is an open-end, investment company of
the management type registered as such under the 1940 Act;
(4) Except as disclosed in the Acquired Fund's
currently effective prospectus, such counsel does not know of
any material suit, action, or legal or administrative
proceeding pending or threatened against the Trust, the
unfavorable outcome of which would materially and adversely
affect the Trust or the Acquired Fund;
-25-
(5) To such counsel's knowledge, no consent,
approval, authorization or order of any court, governmental
authority or agency is required for the consummation by the
Trust of the transactions contemplated by this Agreement,
except such as have been obtained under the 1933 Act, the 1934
Act, the 1940 Act, and Delaware laws (including, in the case
of each of the foregoing, the rules and regulations
thereunder) and such as may be required under state securities
laws;
(6) Neither the execution, delivery nor performance
of this Agreement by the Trust violates any provision of its
Agreement and Declaration of Trust, its By-Laws, or the
provisions of any agreement or other instrument, known to such
counsel to which the Trust is a party or by which the Trust is
otherwise bound; and
(7) This Agreement has been validly authorized,
executed and delivered by the Trust and represents the legal,
valid and binding obligation of the Trust and is enforceable
against the Trust in accordance with its terms.
In giving the opinions set forth above, SRSY may state that it
is relying on certificates of the officers of the Trust with regard to matters
of fact and certain certifications and written statements of governmental
officials with respect to the good standing of the Trust.
(i) That the Trust shall have received an opinion in form and
substance reasonably satisfactory to it from SRSY, counsel to the Acquiring
Trust, to the effect that, subject in all respects to the effects of bankruptcy,
insolvency, arrangement among creditors, moratorium, fraudulent transfer or
conveyance, and other similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles:
-26-
(1) The Acquiring Trust was created as a statutory
trust under the laws of the State of Delaware on [ ], and is
validly existing and in good standing under the laws of the
State of Delaware;
(2) The Acquiring Trust is authorized to issue an
unlimited number of shares of beneficial interest, without par
value. Assuming that the initial shares of beneficial interest
of the Select Growth Fund were issued in accordance with the
1940 Act and the Acquiring Trust's Agreement and Declaration
of Trust and By-Laws, and that all other such outstanding
shares of the Select Growth Fund were sold, issued and paid
for in accordance with the terms of the Select Growth Fund's
prospectus in effect at the time of such sales, each such
outstanding share is validly issued, fully paid,
non-assessable and has full voting rights and, except for any
shares sold pursuant to the private offering exemption for
purposes of raising initial capital, is freely transferable;
(3) The Acquiring Trust is an open-end investment
company of the management type registered as such under the
1940 Act;
(4) Except as disclosed in the Select Growth Fund's
currently effective prospectus, such counsel does not know of
any material suit, action, or legal or administrative
proceeding pending or threatened against the Acquiring Trust,
the unfavorable outcome of which would materially and
adversely affect the Acquiring Trust or the Select Growth
Fund;
-27-
(5) The shares of beneficial interest of the Select
Growth Fund to be issued pursuant to the terms of Section 1
hereof have been duly authorized and, when issued and
delivered as provided in this Agreement, will have been
validly issued and fully paid and will be non-assessable by
the Acquiring Trust or the Select Growth Fund, and to such
counsel's knowledge, no shareholder has any preemptive right
to subscription or purchase in respect thereof;
(6) To such counsel's knowledge, no consent,
approval, authorization or order of any court, governmental
authority or agency is required for the consummation by the
Acquiring Trust of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933
Act, the 1934 Act, the 1940 Act, and Delaware laws (including,
in the case of each of the foregoing, the rules and
regulations thereunder and such as may be required under state
securities laws);
(7) Neither the execution, delivery nor performance
of this Agreement by the Acquiring Trust violates any
provision of its Agreement and Declaration of Trust, its
By-Laws, or the provisions of any agreement or other
instrument, known to such counsel to which the Acquiring Trust
is a party or by which the Acquiring Trust is otherwise bound;
and
(8) This Agreement has been validly authorized,
executed and delivered by the Acquiring Trust and represents
the legal, valid and binding obligation of the Acquiring Trust
and is enforceable against the Acquiring Trust in accordance
with its terms.
-28-
In giving the opinions set forth above, SRSY may state that it
is relying on certificates of the officers of the Acquiring Trust with regard to
matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of the Acquiring Trust.
(j) That the Acquiring Trust's Registration Statement with
respect to the shares of beneficial interest of the Select Growth Fund to be
delivered to the Acquired Fund's shareholders in accordance with Section 1
hereof shall have become effective, and no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto, shall have been issued prior to the Closing or shall be in effect at
the Closing, and no proceedings for the issuance of such an order shall be
pending or threatened on that date.
(k) That the shares of beneficial interest of the Select
Growth Fund to be delivered in accordance with Section 1 hereof shall be
eligible for sale by the Acquiring Trust with each state commission or agency
with which such eligibility is required in order to permit the shares lawfully
to be delivered to each Acquired Fund shareholder.
(l) That at the Closing, the Trust, on behalf of the Acquired
Fund, transfers to the Select Growth Fund aggregate Net Assets of the Acquired
Fund comprising at least 90% in fair market value of the total net assets and
70% in fair market value of the total gross assets recorded on the books of the
Acquired Fund at the Close of Business on the Valuation Date.
10. Fees and Expenses; Other Agreements
-----------------------------------
(a) The expenses of entering into and carrying out the
provisions of this Agreement, whether or not consummated, shall be borne
one-third by the Acquired Fund, one-third by the Select Growth Fund, and
one-third by Delaware Management Company, a series of Delaware Management
Business Trust and investment manager of the Select Growth Fund and the Acquired
Fund.
-29-
(b) Any other provision of this Agreement to the contrary
notwithstanding, any liability of the Trust under this Agreement with respect to
any series of the Trust, or in connection with the transactions contemplated
herein with respect to any series of the Trust, shall be discharged only out of
the assets of that series of the Trust, and no other series of the Trust shall
be liable with respect thereto.
(c) Any other provision of this Agreement to the contrary
notwithstanding, any liability of the Acquiring Trust under this Agreement with
respect to any series of the Acquiring Trust, or in connection with the
transactions contemplated herein with respect to any series of the Acquiring
Trust, shall be discharged only out of the assets of that series of the
Acquiring Trust, and no other series of the Acquiring Trust shall be liable with
respect thereto.
11. Termination; Waiver; Order
--------------------------
(a) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Plan of Reorganization
abandoned at any time (whether before or after adoption thereof by the
shareholders of the Acquired Fund) prior to the Closing as follows:
(1) by mutual consent of the Trust and the Acquiring
Trust;
(2) by the Acquiring Trust if any condition precedent
to its obligations set forth in Section 9 has not been
fulfilled or waived by the Acquiring Trust; or
-30-
(3) by the Trust if any condition precedent to its
obligations set forth in Section 9 has not been fulfilled or
waived by the Trust.
(b) If the transactions contemplated by this Agreement have
not been consummated by December 31, 2004, this Agreement shall automatically
terminate on that date, unless a later date is agreed to by both the Trust and
the Acquiring Trust.
(c) In the event of termination of this Agreement pursuant to
the provisions hereof, the same shall become void and have no further effect,
and there shall not be any liability on the part of either the Trust or the
Acquiring Trust or persons who are their trustees, officers, agents or
shareholders in respect of this Agreement.
(d) At any time prior to the Closing, any of the terms or
conditions of this Agreement may be waived by either the Trust or the Acquiring
Trust, respectively (whichever is entitled to the benefit thereof).
(e) The respective representations, warranties and covenants
contained in Sections 4-8 hereof shall expire with, and be terminated by, the
consummation of the Plan of Reorganization, and neither the Trust nor the
Acquiring Trust, nor any of their officers, directors, trustees, agents or
shareholders shall have any liability with respect to such representations or
warranties after the Closing. This provision shall not protect any officer,
director, trustee, agent or shareholder of the Trust or the Acquiring Trust
against any liability to the entity for which that officer, trustee, agent or
shareholder so acts or to its shareholders to which that officer, trustee, agent
or shareholder would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties in the conduct of
such office.
-31-
(f) If any order or orders of the Commission with respect to
this Agreement shall be issued prior to the Closing and shall impose any terms
or conditions that are determined by action of the Board of Trustees of the
Trust or the Board of Trustees of the Acquiring Trust to be acceptable, such
terms and conditions shall be binding as if a part of this Agreement without
further vote or approval of the shareholders of the Acquired Fund, unless such
further vote is required by applicable law or by mutual consent of the parties.
12. Liability of the Acquiring Trust and the Trust
----------------------------------------------
(a) Each party acknowledges and agrees that all obligations of
the Acquiring Trust under this Agreement are binding only with respect to the
Select Growth Fund; that any liability of the Acquiring Trust under this
Agreement with respect to the Select Growth Fund, or in connection with the
transactions contemplated herein with respect to Select Growth Fund, shall be
discharged only out of the assets of the Select Growth Fund; that no other
series of the Acquiring Trust shall be liable with respect to this Agreement or
in connection with the transactions contemplated herein; and that neither the
Trust nor the Acquired Fund shall seek satisfaction of any such obligation or
liability from the shareholders of the Acquiring Trust, the directors, officers,
employees or agents of the Acquiring Trust, or any of them.
(b) Each party acknowledges and agrees that all obligations of
the Trust under this Agreement are binding only with respect to the Acquired
Fund; that any liability of the Trust under this Agreement with respect to the
Acquired Fund, or in connection with the transactions contemplated herein with
respect to the Acquired Fund, shall be discharged only out of the assets of the
Acquired Fund; that no other series of the Trust shall be liable with respect to
-32-
this Agreement or in connection with the transactions contemplated herein; and
that neither the Acquiring Trust nor the Select Growth Fund shall seek
satisfaction of any such obligation or liability from the shareholders of the
Trust, the trustees, officers, employees or agents of the Trust, or any of them.
13. Final Tax Returns and Forms 1099 of the Acquired Fund
-----------------------------------------------------
(a) After the Closing, the Trust shall or shall cause its
agents to prepare any federal, state or local Tax returns, including any Forms
1099, required to be filed by the Trust with respect to the Acquired Fund's
final taxable year ending with its complete liquidation and for any prior
periods or taxable years and shall further cause such Tax returns and Forms 1099
to be duly filed with the appropriate taxing authorities.
(b) Notwithstanding the provisions of Section 1 hereof, any
expenses incurred by the Trust or the Acquired Fund (other than for payment of
Taxes) in connection with the preparation and filing of said Tax returns and
Forms 1099 after the Closing, shall be borne by the Acquired Fund to the extent
such expenses have been or should have been accrued by the Acquired Fund in the
ordinary course without regard to the Plan of Reorganization contemplated by
this Agreement; any excess expenses shall be borne by Delaware Management
Company, a series of Delaware Management Business Trust at the time such Tax
returns and Forms 1099 are prepared.
14. Cooperation and Exchange of Information
---------------------------------------
The Acquiring Trust and the Trust will provide each other and
their respective representatives with such cooperation and information as either
of them reasonably may request of the other in filing any Tax returns, amended
return or claim for refund, determining a liability for Taxes or a right to a
refund of Taxes or participating in or conducting any audit or other proceeding
in respect of Taxes. Each party or their respective agents will retain for a
period of six (6) years following the Closing all returns, schedules and work
papers and all material records or other documents relating to Tax matters of
the Acquired Fund and Select Growth Fund for its taxable period first ending
after the Closing and for all prior taxable periods.
-33-
15. Entire Agreement and Amendments
-------------------------------
This Agreement embodies the entire Agreement between the
parties and there are no agreements, understandings, restrictions, or warranties
between the parties other than those set forth herein or herein provided for.
This Agreement may be amended only by mutual consent of the parties in writing.
Neither this Agreement nor any interest herein may be assigned without the prior
written consent of the other party.
16. Counterparts
------------
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts
together shall constitute but one instrument.
17. Notices
-------
Any notice, report, or demand required or permitted by any
provision of this Agreement shall be in writing and shall be deemed to have been
given if delivered or mailed, first class postage prepaid, addressed to the
Trust or the Acquiring Trust at One Commerce Square, Philadelphia, PA 19103,
Attention: Secretary.
-34-
18. Governing Law
-------------
This Agreement shall be governed by and carried out in
accordance with the laws of the State of Delaware.
19. Effect of Facsimile Signature
-----------------------------
A facsimile signature of an authorized officer of a party
hereto on this Agreement and/or any transfer document shall have the same effect
as if executed in the original by such officer.
-35-
IN WITNESS WHEREOF, the Trust and the Acquiring Trust have
each caused this Agreement and Plan of Reorganization to be executed on its
behalf by its duly authorized officers, all as of the day and year first-above
written.
Voyageur Group Equity Funds III, on behalf of the
Delaware Technology and Innovation Fund
_________________________________________________
By:______________________________________________
Title:___________________________________________
Voyageur Mutual Funds III, on behalf of the
Delaware Select Growth Fund
_________________________________________________
By:______________________________________________
Title:___________________________________________
-36-
DELAWARE TECHNOLOGY AND INNOVATION FUND
SPECIAL SHAREHOLDER MEETING - FEBRUARY 19, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Richelle S. Maestro, Michael P. Bishof and David
P. O'Connor, or any of them, each with the right of substitution, proxies of the
undersigned at the Special Meeting of Shareholders of the fund named above (the
"Fund"), a series of the Trust (as defined in the proxy statement) to be held at
the offices of Delaware Investments located at Two Commerce Square, 2001 Market
Street, 2nd Floor Auditorium, Philadelphia, Pennsylvania 19103, on Thursday,
February 19, 2004 at 11:00 a.m. (E.S.T.), or at any postponement or adjournments
thereof, with all the powers which the undersigned would possess if personally
present, and instructs them to vote upon any matters which may properly be acted
upon at this meeting and specifically as indicated on the reverse side of this
form. Please refer to the proxy statement for a discussion of these matters.
BY SIGNING AND DATING THIS CARD, YOU AUTHORIZE THE PROXIES TO VOTE THE PROPOSAL
AS MARKED, OR IF NOT MARKED, TO VOTE "FOR" THE PROPOSAL, AND TO USE THEIR
DISCRETION TO VOTE ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING,
OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. PLEASE COMPLETE AND MAIL THIS
CARD AT ONCE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Please vote by checking |X| the appropriate box below.
THIS PROXY CARD IS ONLY VALID WHEN
SIGNED AND DATED. TO SECURE THE LARGEST
POSSIBLE REPRESENTATION AND AVOID THE
ADDITIONAL EXPENSE TO THE FUND OF
FURTHER SOLICITATION, PLEASE DATE AND
SIGN NAME OR NAMES BELOW AS PRINTED ON
THIS CARD TO AUTHORIZE THE VOTING OF
YOUR SHARES AS INDICATED. WHERE SHARES
ARE REGISTERED WITH JOINT OWNERS, ALL
JOINT OWNERS SHOULD SIGN. PERSONS
SIGNING AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR OTHER REPRESENTATIVE SHOULD
GIVE FULL TITLE AS SUCH.
Date _____________________, 200_
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature(s) (Joint Owners) (PLEASE SIGN WITHIN BOX)
1. To approve an Agreement and Plan of Reorganization between FOR AGAINST ABSTAIN
the Trust, on behalf of the Fund, and Delaware Group Adviser ----- ----- -----
Funds, on behalf of Delaware Diversified Income Fund (the
"Diversified Income Fund"), that provides for: (i) the ----- ----- -----
acquisition of substantially all of the assets, subject to the
liabilities, of the Fund in exchange for shares of the Diversified
Income Fund; and (ii) the dissolution of the Fund.
STATEMENT OF ADDITIONAL INFORMATION
FOR
VOYAGEUR MUTUAL FUNDS III
Dated November 15, 2004
Acquisition of the Assets of the
DELAWARE TECHNOLOGY AND INNOVATION FUND
(a series of Equity Funds III)
By and in exchange for shares of the
DELAWARE SELECT GROWTH FUND
(a series of Voyageur Mutual Funds III)
This Statement of Additional Information (SAI) relates specifically to
the proposed delivery of substantially all of the assets of Delaware Technology
and Innovation Fund (the "Acquired Fund") in exchange for shares of Delaware
Select Growth Fund (the "Select Growth Fund"), a series of Voyageur Mutual Funds
III, and the assumption by Select Growth Fund of the liabilities of the
Technology and Innovation Fund.
This SAI consists of this Cover Page and the following documents, each
of which is attached to and is legally considered to be a part of this SAI:
1. Statement of Additional Information of Delaware Select Growth
Fund, dated June 30, 2003, incorporated by reference from
Post-Effective Amendment No. 44 filed June 30, 2003.
2. Annual Report of Delaware Select Growth Fund for the fiscal
year ended April 30, 2003, incorporated by reference from
N-30D filed June 26, 2003.
This SAI is not a prospectus; you should read this SAI in conjunction
with the Proxy Statement/Prospectus dated November 15, 2004, relating to the
above-referenced transaction. You can request a copy of the Proxy
Statement/Prospectus by calling 800-523-1918 or by writing to the Delaware
Select Growth Fund at Attention: Account Services, 2005 Market Street,
Philadelphia, PA 19103-7094.
The Technology and Innovation Fund is not required to provide pro forma
financial statements because the net assets of the Technology and Innovation
Fund did not exceed 10% of the Select Growth's net assets (as of September 30,
2003).
32
PART C
OTHER INFORMATION
Item 15. Indemnification. Article VI of the By-Laws is incorporated
into this filing by reference to Post-Effective Amendment No. 37
filed December 14, 1999.
Item 16. Exhibits. The following exhibits are incorporated by reference
to the previously filed registration statement on Form N-1A
indicated below, except Exhibits 4(a), 7(b), 9(a)(i), 9(b)(i),
13(a)(ii), 14(a), 16(a) and 17(b):
(1) Copies of the charter of the Registrant as now in effect;
(a) Agreement and Declaration of Trust (December 17,
1998) incorporated into this filing by reference to
Post-Effective Amendment No. 37 filed December 14,
1999.
(b) Certificate of Trust (December 17, 1998)
incorporated into this filing by reference to
Post-Effective Amendment No. 37 filed December 14,
1999.
(2) Copies of the existing by-laws or corresponding instruments
of the Registrant;
(a) By-Laws (December 17, 1998) incorporated into this
filing by reference to Post-Effective Amendment No.
37 filed December 14, 1999.
(3) Copies of any voting trust agreement affecting more than
five percent of any class of equity securities of the
Registrant;
Not Applicable.
(4) Copies of the agreement of acquisition, reorganization,
merger, liquidation and any amendments to it;
(a) Form of Agreement and Plan of Reorganization is
filed herewith as Exhibit A to the Prospectus/Proxy
Statement.
(5) Copies of all instruments defining the rights of holders of
the securities being registered including, where
applicable, the relevant portion of the articles of
incorporation or by-laws of the Registrant;
(a) Agreement and Declaration of Trust. Articles III, V
and VI of Agreement and Declaration of Trust
incorporated into this filing by reference to
Post-Effective Amendment No. 37 filed December 14,
1999.
(b) By-Laws. Article II of By-Laws incorporated into
this filing by reference to Post-Effective Amendment
No. 37 filed December 14, 1999.
(6) Copies of all investment advisory contracts relating to the
management of the assets of the Registrant;
(a) Executed Investment Management Agreement (December
15, 1999) between Delaware Management Company (a
series of Delaware Management Business Trust) and
the Registrant on behalf of each Fund incorporated
into this filing by reference to Post-Effective
Amendment No. 39 filed May 25, 2001.
2
(b) Executed Sub-Advisory Agreement (July 26, 2001)
between Delaware Management Company (a series of
Delaware Management Business Trust) and Voyageur
Asset Management Inc. on behalf of the Delaware Core
Equity Fund incorporated into this filing by
reference to Post-Effective Amendment No. 44 filed
June 30, 2003.
(7) Copies of each underwriting or distribution contract
between the Registrant and a principal underwriter, and
specimens or copies of all agreements between principal
underwriters and dealers;
(a) Executed Distribution Agreement (May 15, 2003)
between Delaware Distributors, L.P. and the
Registrant on behalf of each Fund incorporated into
this filing by reference to Post-Effective Amendment
No. 44 filed June 30, 2003.
(b) Form of Second Amended and Restated Financial
Intermediary Distribution Agreement (August 21,
2003) between Delaware Distributors, L.P. and
Lincoln Financial Distributors, Inc. on behalf of
the Registrant is filed electronically herewith as
Exhibit No. EX-99.7(b).
(c) Dealer's Agreement (January 2001) incorporated into
this filing by reference to Post-Effective Amendment
No. 42 filed June 28, 2002.
(d) Vision Mutual Fund Gateway Agreement (November 2000)
incorporated into this filing by reference to
Post-Effective Amendment No. 42 filed June 28, 2002.
(e) Registered Investment Advisers Agreement (January
2001) incorporated into this filing by reference to
Post-Effective Amendment No. 42 filed June 28, 2002.
(f) Bank/Trust Agreement (January 2001) incorporated
into this filing by reference to Post-Effective
Amendment No. 42 filed June 28, 2002.
(8) Copies of all bonus, profit sharing, pension, or other
similar contracts or arrangements wholly or partly for the
benefit of trustees or officers of the Registrant in their
capacity as such. Furnish a reasonably detailed description
of any plan that is not set forth in a formal document;
Not Applicable.
(9) Copies of all custodian agreements and depository contracts
under Section 17(f) of the Investment Company Act of 1940,
as amended (the "1940 Act") for securities and similar
investments of the Registrant, including the schedule of
remuneration;
(a) Amended and Restated Custodian Agreement (May 2002)
between Mellon Bank, N.A. and the Registrant
incorporated into this filing by reference to
Post-Effective Amendment No. 42 filed June 28, 2002.
3
(b) Executed Securities Lending Authorization (March 12,
2002) between Mellon Bank, N.A. and the Registrant
incorporated into this filing by reference to
Post-Effective Amendment No. 42 filed June 28, 2002.
(10) Copies of any plan entered into by Registrant pursuant to
Rule 12b-1 under the 1940 Act and any agreements with any
person relating to implementation of the plan, and copies
of any plan entered into by Registrant pursuant to Rule
18f-3 under the 1940 Act, any agreement with any person
relating to implementation of the plan, any amendment to
the plan, and a copy of the portion of the minutes of the
meeting of the Registrant's trustees describing any action
taken to revoke the plan;
(a) Plan under Rule 12b-1 for Class A (April 19, 2001)
on behalf of each Fund incorporated into this filing
by reference to Post-Effective Amendment No. 39
filed May 25, 2001.
(b) Plan under Rule 12b-1 for Class B (April 19, 2001)
on behalf of each Fund incorporated into this filing
by reference to Post-Effective Amendment No. 39
filed May 25, 2001.
(c) Plan under Rule 12b-1 for Class C (April 19, 2001)
on behalf of each Fund incorporated into this filing
by reference to Post-Effective Amendment No. 39
filed May 25, 2001.
(d) Plan under Rule 12b-1 for Class R (May 15, 2003) on
behalf of each Fund incorporated into this filing by
reference to Post-Effective Amendment No. 43 filed
April 30, 2003.
(e) Plan under Rule 18f-3 (May 1, 2003) incorporated
into this filing by reference to Post-Effective
Amendment No. 43 filed April 30, 2003.
(11) An opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will,
when sold, be legally issued, fully paid and nonassessable;
To be filed by amendment.
(12) An opinion, and consent to their use, of counsel or, in
lieu of an opinion, a copy of the revenue ruling from the
Internal Revenue Service, supporting the tax matters and
consequences to shareholders discussed in the prospectus;
(a) Form of Opinion and Consent of Counsel of Tax
Matters is filed herewith as Exhibit No.
Ex-99.12(a).
(13) Copies of all material contracts of the Registrant not made
in the ordinary course of business which are to be
performed in whole or in part on or after the date of
filing the registration statement;
(a) Executed Shareholder Services Agreement (April 19,
2001) between Delaware Service Company, Inc. and the
Registrant on behalf of each Fund incorporated into
this filing by reference to Post-Effective Amendment
No. 42 filed June 28, 2002.
4
(i) Executed Schedule B (May 15, 2003) to the
Shareholder Services Agreement incorporated
into this filing by reference to
Post-Effective Amendment No. 44 filed June
30, 2003.
(ii) Executed Amendment Letter (August 23, 2002)
to the Shareholder Services Agreement is
filed electronically herewith as Exhibit No.
EX-99.13(a)(ii).
(b) Executed Fund Accounting Agreement (August 19, 1996)
between Delaware Service Company, Inc. and the
Registrant on behalf of each Fund incorporated into
this filing by reference to Post-Effective Amendment
No. 30 filed June 27, 1997, Post-Effective Amendment
No. 33 filed June 29, 1998 and Post-Effective
Amendment No. 34 filed May 11, 1999.
(i) Executed Amendment No. 26 (May 1, 2003) to
Schedule A of Delaware Investments Family of
Funds Fund Accounting Agreement incorporated
into this filing by reference to
Post-Effective Amendment No. 43 filed April
30, 2003.
(ii) Executed Schedule B (May 16, 2002) to
Delaware Group of Funds Fund Accounting
Agreement incorporated into this filing by
reference to Post-Effective Amendment No. 42
filed June 28, 2002.
(14) Copies of any other opinions, appraisals, or rulings, and
consents to their use, relied on in preparing the
registration statement and required by Section 7 of the
Securities Act of 1933, as amended (the "1933 Act" or
"Securities Act");
(a) Consent of Ernst & Young LLP, independent auditors,
is filed electronically herewith as Exhibit No.
EX-99.14(a).
(15) All financial statements omitted pursuant to Item 14(a)(1);
Not Applicable.
(16) Manually signed copies of any power of attorney pursuant to
which the name of any person has been signed to the
registration statement; and
(a) Power of Attorney is filed electronically herewith
as Exhibit No. EX-99.16(a).
(17) Any additional exhibits which the Registrant may wish to
file.
(a) Codes of Ethics for Delaware Investments Family of
Funds incorporated into this filing by reference to
Post-Effective Amendment No. 43 filed April 30,
2003.
(b) Codes of Ethics for Delaware Management Company, a
series of Delaware Management Business Trust, and
Delaware Distributors, L.P. are filed electronically
herewith as Exhibit No. EX-99.17(b).
(c) Code of Ethics for Lincoln Financial Distributors,
Inc. incorporated into this filing by reference to
Post-Effective Amendment No. 43 filed April 30,
2003.
5
(d) Code of Ethics for Voyageur Asset Management
Inc. incorporated into this filing by reference to
Post-Effective Amendment No. 41 filed July 27, 2001.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of
a prospectus which is part of this registration statement
by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act,
the reoffering prospectus will contain the information
called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items
of the applicable form.
(2) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as
part of an amendment to the registration statement and will
not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein,
and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by Post-Effective
Amendment the opinion of counsel regarding the tax
consequences of the proposed reorganization required by
Item 16 (12) of Form N-14 within a reasonable time after
receipt of such opinion.
6
SIGNATURES
As required by the Securities Act of 1933, as amended, (the "1933 Act")
the registration statement has been signed on behalf of the registrant in the
City of Philadelphia and the Commonwealth of Pennsylvania on the 15th day of
October, 2003.
VOYAGEUR MUTUAL FUNDS III
By: Jude T. Driscoll
-----------------------------
Jude T. Driscoll
Chairman
As required by the 1933 Act, this registration statement has been
signed by the following persons in the capacities and on the dates indicated:
Signature Title Date
- ------------------------------------ -------------------------------------------------- ---------------
Jude T. Driscoll Chairman (Principal Executive Officer) October 15, 2003
- -------------------------
Jude T. Driscoll
Walter P. Babich * Trustee October 15, 2003
- ------------------------------------
Walter P. Babich
John H. Durham * Trustee October 15, 2003
- ------------------------------------
John H. Durham
Anthony D. Knerr * Trustee October 15, 2003
- ------------------------------------
Anthony D. Knerr
Ann R. Leven * Trustee October 15, 2003
- ------------------------------------
Ann R. Leven
Thomas F. Madison * Trustee October 15, 2003
- ------------------------------------
Thomas F. Madison
Janet L. Yeomans * Trustee October 15, 2003
- ------------------------------------
Janet L. Yeomans
Joseph H. Hastings * Executive Vice President/Chief Financial Officer October 15, 2003
- ------------------------------------ (Principal Financial Officer)
Joseph H. Hastings
* By: Jude T. Driscoll
-------------------------------
Jude T. Driscoll
as Attorney-in-Fact for
each of the persons indicated
7
- ----------------------- --------------------------------------------------------
EXHIBIT NO. DESCRIPTION
- ----------------------- --------------------------------------------------------
EX-99.7(b) Form of Second Amended and Restated Financial
Intermediary Distribution Agreement (August 21, 2003)
between Delaware Distributors, L.P. and Lincoln
Financial Distributors, Inc. on behalf of the Registrant
- ----------------------- --------------------------------------------------------
EX-99.12(a) Form of Opinion and Consent of Tax Matters
- ----------------------- --------------------------------------------------------
EX-99.13(a)(ii) Executed Amendment Letter (August 23, 2002) to the
Shareholder Services Agreement
- ----------------------- --------------------------------------------------------
EX-99.14(a) Consent of Ernst & Young LLP, independent auditors
- ----------------------- --------------------------------------------------------
EX-99.16(a) Power of Attorney
- ----------------------- --------------------------------------------------------
EX-99.17(b) Codes of Ethics for Delaware Management Company, a
series of Delaware Management Business Trust, and
Delaware Distributors, L.P.
- ----------------------- --------------------------------------------------------
8