UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _________________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
DELAWARE GROUP INCOME FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________
2) Form, Schedule or Registration Statement No.:
____________________________________________________________
3) Filing Party:
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4) Date Filed:
LND Transaction Q & A
Table of Questions
Who will bear the cost of the Transaction?...................................3
Do I need to vote on the proposed Transaction?...............................3
What are my options if the Transaction is approved, but I do not wish to
become a shareholder of Corporate Bond Fund? ................................3
I understand that I will be assessed a 2% redemption fee if I redeem my
Corporate Bond Fund shares within three (3) months after the closing of the
Transaction. Why is this?....................................................3
I understand that one of the reasons that the Company is being reorganized
into Corporate Bond Fund is that it has been trading at a significant
discount in the secondary market. Why is this a disadvantage?...............4
Will there be any tax consequences to this Transaction?......................4
How will I track my basis in the new shares?.................................4
Where can I find more information on Corporate Bond Fund?....................4
Will I need to complete a new application if the Transaction
is approved and closed?......................................................5
Where will I call for account information if the Transaction
is approved and closed?......................................................5
What class of shares will I go into if the Transaction
is approved and closed?......................................................5
What fees will I be subject to after the Transaction?........................5
The Company's shareholders will receive Class A shares of Corporate Bond
Fund at the closing of the Transaction. Are there any exceptions to this
rule?........................................................................6
I am a broker whose client is a Company shareholder. Why is my client being
contacted by a third party regarding this proxy?.............................6
Will the proxy solicitation involve telephone calls to Company
shareholders?................................................................6
I have realized that I do not have a broker/dealer associated
with my new Corporate Bond Fund shares. How do I add my
broker information to my account?.........................................6
I have questions regarding some old tax forms/dividend checks/etc.
from prior to the Transaction. Whom should I contact regarding this?.........6
I have some Company share certificates that I have not surrendered.
What should I do with them?..................................................6
I currently participate in the Company's Dividend Reinvestment Plan. What
will my dividend options be after the Transaction closes?....................7
When will the Transaction occur?.............................................7
How do I vote on the proxy?..................................................7
What are the principal differences between open-end and
closed-end funds?............................................................8
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2
How will the Transaction benefit shareholders of the Company?
|X| The Board recommended the Transaction primarily because shareholders
of Lincoln National Income Fund, Inc. (the "Company") would benefit
from significantly lower operating expenses as shareholders of
Delaware Corporate Bond Fund ("Corporate Bond Fund"). As shareholders
of an open-end fund, the Company's shareholders would also have more
liquidity. In addition, the discount at which the Company's shares are
currently trading would be eliminated by reorganizing the Company into
an open-end fund. Despite the fact that LND has better performance
record, the Corporate Bond Fund has a strong performance track record
(it is a leader within its Lipper peer group and has a 5-star rating
from Morningstar). Moreover, given that the two funds are currently
managed by the same individual, Ryan K. Brist, and given that the two
have similar investment goals and extensive overlap, the Transaction
would not have a detrimental impact on LND shareholders vis-a-vis the
fund's investment goals and management philosophy. In addition, the
merger of LND into Corporate Bond will eliminate the risk of potential
proxy fights initiated by closed-end fund arbitrageurs.
Who will bear the cost of the Transaction?
|X| The Company will bear one-third of the expenses associated with the
Transaction. DMC, the investment adviser to the Company, and Corporate
Bond Fund will bear the remaining expenses associated with the
Transaction.
Do I need to vote on the proposed Transaction?
|X| While you are not required to vote, the Company requests that you vote
your shares in order to help minimize the solicitation costs that are
being borne by the Company.
What are my options if the Transaction is approved, but I do not wish to become
a shareholder of Corporate Bond Fund?
|X| If approved by Company's shareholders, the Transaction is expected to
take place on or about June 16, 2006. Prior to the Transaction, you
have the option of selling your Company shares on the secondary
market. You also have the option of redeeming your shares of the
Corporate Bond Fund after the closing of the Transaction. However,
Corporate Bond Fund shares acquired as a result of the Transaction are
subject to a 2% redemption fee if redeemed within 3 months after the
closing.
I understand that I will be assessed a 2% redemption fee if I redeem my
Corporate Bond Fund shares within three (3) months after the closing of the
Transaction. Why is this?
|X| The reorganization of the Company into Corporate Bond Fund may present
the opportunity for short-term traders to profit from the difference
between the market price at which the Company's shares trade in the
secondary market and the Company's net asset value. This difference is
often referred to as "the discount". The concern is that arbitrageurs
may purchase shares of the Company at a discount prior to the closing
of the Transaction only to reap a quick profit by selling the shares
of Corporate Bond Fund they receive in the Transaction at NAV
immediately after the Transaction closes. Such arbitrage activity can
disrupt portfolio management strategies for Corporate Bond Fund and
cause Corporate Bond Fund to incur significant transaction costs. In
order to protect long-term shareholders of Corporate Bond Fund from
the negative consequences of such arbitrage activity, a 2% redemption
fee will be imposed on redemptions made within three (3) months after
the Transaction closes, the proceeds of which will be paid to
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Corporate Bond Fund. This redemption fee only relates to Corporate
Bond Fund shares issued in the Transaction.
I understand that one of the reasons that the Company is being reorganized into
Corporate Bond Fund is that the Company has been trading at a significant
discount in the secondary market. Why is this a disadvantage?
|X| Closed-end fund shares trade on secondary markets at share prices that
may be higher or lower than the closed-end fund's net asset value per
share. The Company's shares have historically traded at a discount to
their net asset value. Because open-end funds are always purchased and
sold at net asset value (less any commission or redemption fee),
open-end funds do not trade at a discount. This means that the share
price of an open-end fund fully reflects the per share value of the
open-end fund's investment portfolio.
Will there be any tax consequences to this Transaction?
|X| The Transaction is intended to qualify as a tax-free reorganization
for federal income tax purposes. It is expected that the law firm of
Stradley Ronon Stevens & Young, LLP will provide a legal opinion that,
for federal income tax purposes, (i) shareholders of the Company will
not recognize any gain or loss as a result of the exchange of their
Company shares for Corporate Bond Fund Class A shares, and (ii)
Corporate Bond Fund and its shareholders will not recognize any gain
or loss upon receipt of the Company's assets.
How will I track my basis in the new shares?
|X| If shareholders of the Company vote to approve the Transaction, it
will result in the transfer of substantially all of the Company's net
assets to Corporate Bond Fund in exchange for Corporate Bond Fund
Class A shares of equivalent aggregate NAV. These Corporate Bond Fund
Class A shares will then be distributed pro rata to the Company's
shareholders. This means that the total net asset value of your
investment will be the same immediately before and after the
Transaction, although the number of Corporate Bond Fund Class A shares
that you receive will likely be different than the number of Company
shares that you surrender. Thus, your tax basis will not change.
|X| After the Transaction, you will continue to be responsible for
tracking the adjusted tax basis and holding period for your shares for
federal income tax purposes. You should consult your tax adviser
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.
Where can I find more information on Corporate Bond Fund?
|X| Corporate Bond Fund's prospectus, fact sheet and most recent annual
and semi-annual reports can all be found on-line, at:
www.DelawareInvestments.com > Individual Investors > Shareholder
Information > Fund Literature > Shareholder Reports
Will I need to complete a new application if the Transaction is approved and
closed?
|X| No. However, if you wish to change your dividend options or your other
account designations following the Transaction, please call Delaware
Investments Service Center at 800 523-1918 Monday through Friday, 8am
through 7pm, EST.
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Where will I call for account information if the Transaction is approved and
closed?
|X| You may call Delaware Investments' Shareholder Service Center at
800-523-1918 or e-mail service@delinvest.com (You should receive a
response within one (1) business day). Representatives are available
to answer your questions Monday through Friday from 8:00 a.m. to 7:00
p.m., Eastern Time. You may also contact the Shareholder Service
Center by writing to:
Delaware Investments
Attn: Shareholder Service Center
2005 Market Street
Philadelphia, PA 19103-7094
What class of shares will I go into if the Transaction is approved and closed?
|X| Each shareholder of the Company will receive a number of Corporate
Bond Fund Class A shares with an aggregate NAV equal to the aggregate
NAV of his or her Company shares. If you qualify for Institutional
Class shares of Corporate Bond Fund, you may exchange your Corporate
Bond Fund Class A shares for Corporate Bond Fund Institutional Class
shares after the Transaction is completed.
What fees will I be subject to after the Transaction?
Projected
Corporate Bond Fund Class A
shares After Transaction
Annual Fund Operating Expenses
(as percentage of average net
assets)
Management Fees 0.50%
Distribution and service
(12b-1) Fees 0.30%
Other Expenses 0.24%
- -------------------------------------------------------------
Total Annual Fund Operating
Expenses 1.04%
- -------------------------------------------------------------
Management Fee Reduction (0.23)%
- -------------------------------------------------------------
Net Annual Operating Expenses 0.81%
Note: DMC is currently waiving fees and paying expenses in order to prevent
total operating expenses of the Corporate Bond Fund (excluding any 12b-1 fees,
taxes, interest, brokerage fees, extraordinary expenses, merger costs and
certain insurance costs) from exceeding 0.55% of the Fund's average daily net
assets. The Corporate Bond Fund's distributor has contracted to limit the Class
A Rule 12b-1 fees to no more than 0.25%. Management will maintain this expense
cap and Class A 12b-1 fee waiver for the Corporate Bond Fund at least until one
year following the consummation of the merger (i.e., through June 2007). In
keeping with its previous undertaking to the Board, management would waive
additional fees
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or reimburse additional expenses as necessary to ensure that the total operating
expenses of the Corporate Bond Fund are at least within the third quartile of
its Lipper expense peer group.
The Company's shareholders will receive Class A shares of Corporate Bond Fund at
the closing of the Transaction. Are there any exceptions to this rule?
|X| If, after the Transaction has been completed, a new Corporate Bond
Fund shareholder qualifies for Institutional shares, the shareholder
may exchange from Class A to Institutional shares of Corporate Bond
Fund after the Transaction. If you think you may qualify for
Institutional shares, contact Delaware Service Center at 800-523-1918.
|X| Investors who qualify and exchange for Institutional shares will not
be subject to the temporary 2% redemption fee that will ordinarily
apply to redemptions of Corporate Bond Fund shares received in the
Transaction. However, any subsequent redemption or exchange of such
Institutional shares with shares of another fund within the three (3)
month period will be subject to the temporary 2% redemption fee.
I am a broker whose client is a Company shareholder. Why is my client being
contacted by a third party regarding this proxy?
|X| Your client has most likely been contacted by D.F. King & Co., who has
been retained by the Company to solicit shareholder votes on the
proposed Transaction.
Will the proxy solicitation involve telephone calls to Company shareholders?
|X| The Company's shareholders may receive a phone call from D.F. King &
Co. as part of the proxy solicitation process. D.F. King & Co. may
call as late as 9 p.m. in order to solicit as many votes as possible
prior to the June 1, 2006 shareholder meeting.
I have realized that I do not have a broker/dealer associated with my new
Corporate Bond Fund shares. How do I add my broker information to my account?
|X| This must be accomplished by written request to Delaware Investments.
I have questions regarding some old tax forms/dividend checks/etc. from prior to
the Transaction (expected to close on or about June 16, 2006). Whom should I
contact regarding this?
|X| All questions regarding account information up to and including June
16, 2006, should be directed to the Mellon Service Center. Mellon's
Service Center can be reached at 800-851-9677. After June 16, 2006,
please call Delaware Investments Service Center by calling
800-523-1918 Monday through Friday, 8am-7pm, EST.
I have some Company share certificates that I have not surrendered. What should
I do with them?
|X| Prior to the closing of the Transaction (which is expected to be June
16, 2006), you can return them to Mellon. After the Transaction, you
can return them to Delaware Investments.
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I currently participate in the Company's Dividend Reinvestment Plan. What will
my dividend options be after the Transaction closes?
|X| Following the Transaction, you will retain your current dividend
options. Accordingly, your dividends or capital gains distributions
will continue to be either reinvested into Corporate Bond Fund or sent
to you via check. You will also have the additional option of
reinvesting your dividends and/or capital gains distributions into
another Delaware fund. To change your dividend options following the
Transaction, call Delaware Investments Service Center at 800-523-1918
Monday through Friday, 8am - 7pm, EST.
When will the Transaction occur?
|X| If the Transaction is approved by the Company's shareholders, it is
expected to close after the close of business on June 16, 2006. At
that time, all assets of the Company will be transferred to Delaware
Corporate Bond Fund and all Company shareholders will become
shareholders of Corporate Bond Fund.
How do I vote on the proxy?
o Instructions for shareholders whose funds are held by Mellon .
Vote by Mail
- the client can mail the proxy card back to the proxy processor,
MIS at Proxy Tabulator, PO Box 9129, Hingham, MA 02043
Vote by Internet
o go to the website www.proxyweb.com
o enter the Control Number found on the proxy card.
o follow the instructions
Vote by Telephone
o call 1.888.221.0697
o enter the Control Number found on the proxy card
o follow the instructions
Instructions for Beneficial Shareholders, those clients whose funds are held in
street name (i.e., in the name of their broker).
Vote by Mail
- clients can mail the proxy card back to ADP at Proxy Services, PO
BOX 9138, Farmingdale, NY 11735-9585
Vote by Internet
o go to www.proxyvote.com
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o enter the control number located on the voting instruction form
o follow the instructions
Vote by Telephone
o call the telephone number located on the card. (Phone number
changes depending on the broker-dealer.)
o enter the control number located on the voting instruction form
o follow the instructions
Or, you can vote in person at the shareholder meeting being held at the offices
of Delaware Investments, 2001 Market Street, 2nd Floor Auditorium, Philadelphia,
PA 19103, on June 1, 2006, at 10:00 a.m. Eastern time. If your shares are held
"of record" through a broker-dealer (i.e., you are not the registered owner),
you should obtain a "legal proxy" from your broker-dealer and give it to the
Inspector of Elections at the meeting.
What are the principal differences between open-end and closed-end funds?
|X| Corporate Bond Fund is an open-end fund that engages in a continuous
public offering of its shares and that must stand ready to redeem its
shares upon the instruction of the Fund's shareholders received in
good order within seven days. Corporate Bond Fund's size fluctuates
both because of sales and redemptions of its shares as well as by the
market appreciation and depreciation in fund assets.
By contrast, the Company is a closed-end fund that lists its shares on
the New York Stock Exchange ("NYSE"), and does not sell its shares on
a continuous basis and generally may not redeem its shares upon
shareholder request. As a consequence, the number of outstanding
shares of the Company (absent an issuer tender offer, an open-market
repurchase program or shares issued pursuant to a dividend
reinvestment plan) will remain constant, and the size of the Company
is generally affected only by the market appreciation and depreciation
of its assets.
For further details on the differences between the two types of funds,
please review the Proxy Statement/Prospectus. The distinction between
open-and closed-end funds has a direct bearing on the management of
the funds and on expenses to which the funds are subject.
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Delaware Group Income Funds
Filed: 5 May 06, 12:00am