File No. 33-_____
As filed October 22, 2004
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. _____
[ ] Post-Effective Amendment No. ____
(Check appropriate box or boxes)
Voyageur Mutual Funds
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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:
Class A, Class B and Class C shares of beneficial interest, no par value, of
Delaware Tax-Free California Fund. No filing fee is due because Registrant is
relying on Section 24(f) of the Investment Company Act of 1940, as amended.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to such Section
8(a), shall determine.
This Registration Statement contains one Proxy Statement/Prospectus and one
Statement of Additional Information for three registrants (each of which offers
shares in one or more series). This Registration Statement contains one Part C
for the Registrant. Separate Registration Statements, each of which includes the
common Proxy Statement/Prospectus and common Statement of Additional Information
and includes its own Part C, also are being filed for each of the two other
registrants.
Delaware
Investments (SM)
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A member of Lincoln Financial Group (R)
DELAWARE TAX-FREE ARIZONA FUND
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
DELAWARE TAX-FREE FLORIDA FUND
Dear Shareholder:
Enclosed is a Notice of a Joint Meeting (the "Meeting") of Shareholders
of certain registered investment companies within the Delaware Investments
family, including Delaware Tax-Free Arizona Fund (the "Arizona Fund"), Delaware
Tax-Free California Insured Fund (the "California Insured Fund"), and Delaware
Tax-Free Florida Fund (the "Florida Fund") (each, individually an "Acquired
Fund" and, collectively, the "Acquired Funds"). The Meeting has been called for
March 15, 2005 at 4:00 p.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 the
proposals being presented for your consideration and requests your prompt
attention and vote by mail using the enclosed proxy card or by telephone or
through the Internet.
PLEASE TAKE A MOMENT TO VOTE!
The Meeting is critically important. You are being asked to approve a
Plan of Reorganization that would result in your shares of an Acquired Fund
being exchanged for those of another fund in the Delaware Investments Family of
Funds (each, individually, an "Acquiring Fund" and, collectively, the "Acquiring
Funds"), as indicated in the table below:
ACQUIRED FUND CORRESPONDS TO: ACQUIRING FUND
- ------------------------------------------------------------------------------------------------
The Arizona Fund, a series of Delaware Tax-Free Arizona Insured Fund
Voyageur Mutual Funds ------------> (the "Arizona Insured Fund"), a series
of Voyageur Insured Funds
The California Insured Fund, a Delaware Tax-Free California Fund (the
series of Voyageur Investment Trust ------------> "California Fund"), a series of Voyageur
Mutual Funds
The Florida Fund, a series of Delaware Tax-Free Florida Insured Fund
Voyageur Investment Trust ------------> (the "Florida Insured Fund"), a series
of Voyageur Investment Trust
Each Acquired Fund's investment goal is identical to the investment
goal of the corresponding Acquiring Fund, and the investment policies of each
Acquired Fund are substantially similar to those of the corresponding Acquiring
Fund, as outlined in the attached Proxy Statement/Prospectus. The Acquiring
Funds and the Acquired Funds are all managed by Delaware Management Company, a
series of Delaware Management Business Trust.
If the shareholders of an Acquired Fund approve the proposal, the
corresponding Acquiring Fund will acquire substantially all of the assets, and
assume all of the liabilities, of such Acquired Fund. As a shareholder of the
Acquired Fund, you will receive shares of an Acquiring Fund equal in value to
your investment in such Acquired Fund. You will no longer be a shareholder of
the Acquired Fund and, instead, you will be a shareholder of the corresponding
Acquiring Fund.
The transactions above are being proposed because we believe that, as a
result of combining each of the Acquired Funds with the corresponding Acquiring
Funds, the shareholders of the Funds could potentially benefit from the growth
in assets and cost savings due to economies of scale. In addition, the demand
for shares and, thus, asset growth for the Acquired Funds has been low and the
projected growth in assets of the Acquired Funds is also not sufficient to
continue to offer competitive performance to shareholders over the long term.
In addition, you are being asked (i) along with the other shareholders
in either Voyageur Mutual Funds or Voyageur Investment Trust, as applicable, to
elect a Board of Trustees; (ii) if you are a shareholder of the California
Insured Fund or the Florida Fund, to approve the redomestication of Voyageur
Investment Trust from a Massachusetts business trust to a newly created Delaware
statutory trust; and (iii) to approve the use of a "manager of managers
structure," which will permit, subject to certain conditions, Delaware
Management Company, as the investment manager, to hire and replace subadvisers
for a Fund without seeking shareholder approval. Your vote on these three
proposals is important even if the reorganizations into the Acquiring Funds, as
described above, are approved.
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 through 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,
as provided in the attached Proxy Statement/Prospectus.
Thank you for your prompt attention and participation.
Sincerely,
Jude T. Driscoll
Chairman
DELAWARE TAX-FREE ARIZONA FUND
(A SERIES OF VOYAGEUR MUTUAL FUNDS)
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
DELAWARE TAX-FREE FLORIDA FUND
(EACH A SERIES OF VOYAGEUR INVESTMENT TRUST)
2005 Market Street
Philadelphia, PA 19103-7094
NOTICE OF JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 15, 2005
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Joint Meeting (the "Meeting") of Shareholders
of Delaware Tax-Free Arizona Fund, one series of Voyageur Mutual Funds (the
"Arizona Fund"), and Delaware Tax-Free California Insured Fund (the "California
Insured Fund") and Delaware Tax-Free Florida Fund (the "Florida Fund"), two
series of Voyageur Investment Trust (each, an "Acquired Fund" and collectively,
the "Acquired Funds"), has been called by the Boards of Trustees of Voyageur
Mutual Funds and Voyageur Investment Trust, respectively, and will be held at
the offices of Delaware Investments located at 2001 Market Street, 2nd Floor
Auditorium, Philadelphia, PA 19103, on March 15, 2005 at 4:00 p.m., Eastern
time. The Meeting is being called for the following reasons:
1. To approve the following Plans of Reorganization (includes 3
sub-proposals):
(a) For shareholders of the Arizona Fund, a Plan of Reorganization
between Voyageur Mutual Funds, on behalf of the Arizona Fund, and
Voyageur Insured Funds, on behalf of the Delaware Tax-Free
Arizona Insured Fund (the "Arizona Insured Fund");
(b) For shareholders of the California Insured Fund, a Plan of
Reorganization between Voyageur Investment Trust, on behalf of
the California Insured Fund, and Voyageur Mutual Funds, on behalf
of Delaware Tax-Free California Fund (the "California Fund"); and
(c) For shareholders of Florida Fund, a Plan of Reorganization by
Voyageur Investment Trust, on behalf of the Florida Fund and
Delaware Tax-Free Florida Insured Fund (the "Florida Insured
Fund"),
which provide for: (i) the acquisition by the Arizona Insured Fund,
the California Fund and the Florida Insured Fund (each an "Acquiring
Fund") of substantially all of the assets of the corresponding
Acquired Fund, in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the liabilities of the
corresponding Acquired Fund; (ii) the pro rata distribution of shares
of the corresponding Acquiring Fund to the shareholders of the
corresponding Acquired Fund; and (iii) the liquidation and dissolution
of the Acquired Funds.
2. To elect a Board of Trustees for each of Voyageur Mutual Funds and
Voyageur Investment Trust. The nominees for election to the Boards of
Trustees are:
Jude T. Driscoll Thomas F. Madison
John A. Fry Janet L. Yeomans
Anthony D. Knerr [Nominee]
Ann R. Leven [Nominee]
3. For shareholders of the California Insured Fund and the Florida Fund,
to approve the redomestication of Voyageur Investment Trust from a
Massachusetts business trust to a Delaware statutory trust.
4. To approve the use of a "manager of managers" structure whereby the
investment manager of the Funds will be able to hire and replace
subadvisers without shareholder approval.
5. To vote upon any other business as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record of the Acquired Funds as of the close of business on
December 1, 2004 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 PROVIDED, OR BY VOTING BY TELEPHONE OR OVER THE INTERNET. YOUR VOTE IS
IMPORTANT.
By Order of the Boards of Trustees,
Richelle S. Maestro
Secretary
December __, 2004
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, AS PROVIDED IN THE ATTACHED PROXY STATEMENT/PROSPECTUS.
2
PROXY STATEMENT/PROSPECTUS
TABLE OF CONTENTS
[TO BE ADDED]
EXHIBIT A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION
EXHIBIT B - FORM OF PLAN OF REORGANIZATION BY VOYAGEUR INVESTMENT TRUST (ON
BEHALF OF THE FLORIDA AND FLORIDA INSURED FUNDS)
EXHIBIT C - EXECUTIVE OFFICERS OF THE TRUSTS
EXHIBIT D - FORM OF AGREEMENT AND PLAN OF REDOMESTICATION BETWEEN VOYAGEUR
INVESTMENT TRUST AND DELAWARE INVESTMENTS MUNICIPAL TRUST
EXHIBIT E - A COMPARISON OF GOVERNING DOCUMENTS AND STATE LAW
EXHIBIT F - PRINCIPAL HOLDER OF SHARES
-i-
PROXY STATEMENT/PROSPECTUS
DATED DECEMBER __, 2004
ACQUISITION OF THE ASSETS AND ASSUMPTION OF LIABILITIES OF:
DELAWARE TAX-FREE ARIZONA FUND DELAWARE TAX-FREE CALIFORNIA INSURED FUND
(A SERIES OF VOYAGEUR MUTUAL FUNDS) (A SERIES OF VOYAGEUR INVESTMENT TRUST)
BY AND IN EXCHANGE FOR SHARES OF BY AND IN EXCHANGE FOR SHARES OF
DELAWARE TAX-FREE ARIZONA INSURED FUND DELAWARE TAX-FREE CALIFORNIA FUND
(A SERIES OF VOYAGEUR INSURED FUNDS) (A SERIES OF VOYAGEUR MUTUAL FUNDS)
DELAWARE TAX-FREE FLORIDA FUND
(A SERIES OF VOYAGEUR INVESTMENT TRUST)
BY AND IN EXCHANGE FOR SHARES OF
DELAWARE TAX-FREE FLORIDA INSURED FUND
(A SERIES OF VOYAGEUR INVESTMENT TRUST)
This Proxy Statement/Prospectus solicits proxies to be voted at a
Meeting (the "Meeting") of Shareholders of certain registered open-end
management investment companies within the Delaware Investments Family of Funds
(the "Delaware Companies"), including Delaware Tax-Free Arizona Fund, one series
of Voyageur Mutual Funds (the "Arizona Fund"), Delaware Tax-Free California
Insured Fund (the "California Insured Fund") and Delaware Tax-Free Florida Fund
(the "Florida Fund"), two series of Voyageur Investment Trust (the Arizona Fund,
the California Insured Fund and the Florida Fund are hereinafter each referred
to as an "Acquired Fund" and, collectively, as the "Acquired Funds"). The
Meeting has been called by the Board of Trustees of the Voyageur Mutual Funds
and Voyageur Investment Trust, respectively, to vote on the following proposals
(each of which is described more fully below):
(1) To approve Plans of Reorganization;
(2) To elect a Board of Trustees;
(3) To approve an Agreement and Plan of Redomestication (applies to
California Insured Fund and Florida Fund only); and
(4) To approve the use of a "manager of managers" structure.
The principal offices of the Delaware Companies are located at 2005
Market Street, Philadelphia, PA 19103. You can reach the offices of Voyageur
Mutual Funds and Voyageur Investment 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 March
15, 2005 at 4:00 p.m., Eastern time. The Boards of Trustees of Voyageur Mutual
Funds, on behalf of the Arizona Fund, and Voyageur Investment Trust, on behalf
of the California Insured Fund and the Florida Fund, are soliciting these
proxies. This Proxy Statement/Prospectus will first be sent to shareholders on
or about December [ ], 2004.
This Proxy Statement/Prospectus gives you the information about an
investment in the Delaware Tax-Free Arizona Insured Fund, the Delaware Tax-Free
California Fund and the Delaware Tax-Free Florida Insured Fund (collectively,
the "Acquiring Funds") and about other matters that you should know before
voting and investing. You should retain it for future reference. A Statement of
Additional Information dated December [ ], 2004 (the "Statement of Additional
Information"), relating to this Proxy Statement/Prospectus containing more
information about the Acquiring Funds, the Acquired Funds (together, the
"Funds") and the proposed transactions, has been filed with the U.S. Securities
and Exchange Commission (the "SEC") and is incorporated herein by reference.
The Prospectus of the Funds, dated November 30, 2004 (the "Fund
Prospectus") is included with and is considered a part of this Proxy
Statement/Prospectus, and is intended to provide you with information about the
Acquiring Funds.
You can request a free copy of the Statement of Additional Information,
the Fund Prospectus or the Annual Report to Shareholders of the Funds for the
fiscal year ended August 31, 2004 by calling 1-800-523-1918, or by writing to
the Delaware Companies at Attention: Account Services, 2005 Market Street,
Philadelphia, PA 19103.
LIKE ALL MUTUAL FUNDS, THE SEC 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.
WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON?
Not all of the four proposals contained in this Proxy
Statement/Prospectus affect all Acquired Funds. Specifically, not all
shareholders will be voting on Proposal 3. The table below indicates which
Acquired Fund's shareholders will be voting on the proposals described in this
Proxy Statement/Prospectus.
2
PROPOSAL SUMMARY FUND WHOSE SHAREHOLDERS ARE ENTITLED TO VOTE
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1. To approve a Plan of Reorganization that provides for: (a) Arizona Fund - Plan between Voyageur Mutual Funds,
(i) the acquisition by the Acquiring Fund of substantially on behalf of Arizona Fund, and Voyageur Insured Funds,
all of the assets of the corresponding Acquired Fund, in on behalf of Delaware Tax-Free Arizona Insured Fund
exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the liabilities of the (b) California Insured Fund - Plan between Voyageur
corresponding Acquired Fund; (ii) the pro rata Investment Trust, on behalf of California Insured Fund,
distribution of shares of the Acquiring Fund to the and Voyageur Mutual Funds, on behalf of Delaware
shareholders of the corresponding Acquired Fund; and (iii) Tax-Free California Fund
the liquidation and dissolution of the Acquired Funds.
(c) Florida Fund - Plan by Voyageur Investment Trust,
on behalf of Florida Fund and Delaware Tax-Free Florida
Insured Fund
2. To Elect Trustees Arizona Fund (voting with all of the other series of
Voyageur Mutual Funds)
California Insured and Florida Funds (voting with all
of the other series of Voyageur Investment Trust)
3. To approve the redomestication of Voyageur Investment California Insured Fund and Florida Fund (voting with
Trust from a Massachusetts business trust to a newly all of the other series of Voyageur Investment Trust)
formed Delaware statutory trust.
4. To approve the use of a manager of managers structure Arizona Fund, California Insured Fund and Florida Fund
whereby the investment manager will be able to hire and (voting separately by Fund)
replace subadvisers without shareholder approval.
PROPOSAL ONE: TO APPROVE A PLAN OF REORGANIZATION (INCLUDES THREE (3)
SUB-PROPOSALS):
Shareholders of each of the Acquired Funds are being asked to consider
and approve a Plan of Reorganization (a "Plan") that will have the effect of
reorganizing that Acquired Fund with and into a corresponding Acquiring Fund as
follows:
SUB-PROPOSAL NO. ACQUIRED FUND CORRESPONDS TO: ACQUIRING FUND
- ---------------------------------------------------------------------------------------------------------------
1(a) The Arizona Fund, a series of The Arizona Insured Fund, a series
Voyageur Mutual Funds --------------> of Voyageur Insured Funds
1(b) The California Insured Fund, a The California Fund, a series of
series of Voyageur Investment --------------> Voyageur Mutual Funds
Trust
1(c) The Florida Fund, a series of The Florida Insured Fund, a series
Voyageur Investment Trust --------------> of Voyageur Investment Trust
3
Each Plan provides for: (i) the acquisition by the Acquiring Fund of
substantially all of the assets of the corresponding Acquired Fund in exchange
for shares of the Acquiring Fund and assumption by the Acquiring Fund of the
liabilities of the corresponding Acquired Fund; (ii) the pro rata distribution
of shares of the Acquiring Fund to the shareholders of the corresponding
Acquired Fund; and (iii) the liquidation and dissolution of the Acquired Fund.
If the shareholders of an Acquired Fund vote to approve the Plan, as a
shareholder of the Acquired Fund you will receive Acquiring Fund shares equal in
value to, and of the same class as, your investment in the Acquired Fund. The
Acquired Fund will then be liquidated.
SUMMARY
This is only a summary of certain information contained in this
Proposal 1. You should read the more complete information in the rest of this
Proxy Statement/Prospectus, including the Plans (attached as Exhibits A and B)
and the Fund Prospectus included with this Proxy Statement/Prospectus.
WHAT IS THE PURPOSE OF PROPOSAL 1?
The Board of Trustees of each of Voyageur Mutual Funds and Voyageur
Investment Trust (individually a "Trust" and, together, the "Trusts") approved
the Plans for the respective Acquired Funds and recommends that shareholders of
each Acquired Fund approve the Plan for that Acquired Fund. If shareholders of
an Acquired Fund approve the Plan, substantially all of the Acquired Fund's
assets will be transferred to the corresponding Acquiring Fund in exchange for
the Acquiring Fund's shares equal in value to the assets of the Acquired Fund
and assumed liabilities that are transferred to the Acquiring Fund. The
Acquiring Fund shares will then be distributed pro rata to the Acquired Fund's
shareholders and the Acquired Fund will be liquidated and dissolved. The
proposed transaction for each Acquired Fund is referred to in this Proxy
Statement/Prospectus individually as a "Transaction," and, collectively for all
the Acquired Funds, as the "Transactions." In addition, the terms "Fund" or
"Funds" means both the Acquired and the Acquiring Funds.
The Transaction, if approved, will result in your shares of an Acquired
Fund being exchanged for an equal value of Acquiring Fund shares of the same
class. This means that you will cease to be a shareholder of the Acquired Fund
and will become a shareholder of the corresponding Acquiring Fund. This exchange
will occur on a date agreed to by the parties to the Plan (hereafter, the
"Closing Date"), which is currently expected to be in the first half of 2005.
For the reasons set forth below under "Reasons for the Transaction,"
the Boards of Trustees of the Trusts have concluded that the Transactions are in
the best interests of the respective shareholders of the Acquired Funds. The
Boards of Trustees have also concluded that no dilution in value would result to
the shareholders of the Acquired Funds as a result of the Transactions.
4
HOW DO THE INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES OF THE ACQUIRED FUNDS
AND THE ACQUIRING FUNDS COMPARE?
Like the Acquired Funds, the Acquiring Funds are mutual funds within
the Delaware Investments Family of Funds that are managed by Delaware Management
Company ("DMC"), a series of Delaware Management Business Trust. The investment
objective of each Acquired Fund is identical to the investment objective of its
respective Acquiring Fund. Each Fund's investment objective is to seek to
provide its investors with as high a level of current income exempt from federal
income tax and from the personal income tax in its respective state, as is
consistent with preservation of capital. Each Fund's investment objective is
fundamental and may not be changed without prior shareholder approval, as
described below.
In addition, the investment strategies and policies of each Acquired
Fund are substantially similar, but not identical, to the investment strategies
and policies of the corresponding Acquiring Fund. Each Fund seeks to achieve its
objective by investing its assets primarily in municipal securities the income
from which is exempt from federal income taxes, including the federal
alternative minimum tax, and its respective state personal income tax. The
principal difference between the investment strategies of each Acquired Fund and
its corresponding Acquiring Fund relates to whether a Fund has adopted an
investment policy regarding "insured municipal securities." Insured municipal
securities are debt securities issued by or on behalf of a state or territory,
its agencies, instrumentalities, municipalities or other political
sub-divisions, for which such issuers have obtained insurance for the payment of
interest and principal (when due) to the bondholders. This insurance is designed
to protect against certain risks (as described below)--it does not guarantee the
market value of the insured municipal securities held in a Fund's portfolio and
it does not guarantee the value of an investment in a Fund.
Two of the Acquiring Funds - the Arizona Insured Fund and the Florida
Insured Fund - and one of the Acquired Funds - the California Insured Fund -
have each adopted a non- fundamental investment policy, which may be changed
with prior notice to shareholders (no shareholder approval is required), to
invest at least 80% of its net assets in insured municipal securities. Neither
the Arizona Fund, the Florida Fund (each of which is an Acquired Fund) nor the
California Fund (which is an Acquiring Fund) has adopted such an investment
policy. The Arizona Insured Fund, the Florida Insured Fund, and the California
Insured Fund are collectively referred hereinafter to as "Insured Funds" and the
Arizona Fund, the Florida Fund and the California Fund are collectively referred
to hereinafter as "Non-Insured Funds." The Non-Insured Funds, however, may
invest without limitation in insured municipal securities. Notwithstanding the
difference between the Acquired Funds and the Acquiring Funds due to the
non-fundamental policies described above, DMC historically has managed the
portfolios of the Insured Funds and the Non-Insured Funds in a substantially
similar manner with respect to investments in insured municipal securities.
5
For further information about the investment objectives and policies of
the Funds, see "Comparison of Investment Objectives, Policies and Risks."
WHAT ARE THE PRINCIPAL RISKS ASSOCIATED WITH INVESTMENTS IN THE FUNDS?
As with most investments, investments in the Funds involve certain
risks. There can be no guarantee against losses resulting from an investment in
any Fund, nor can there be any assurance that any Fund will achieve its
investment objective. Investments in the Funds involve risks associated with
changes in interest rates, market conditions, industry conditions and the
financial strengths of issuers of the portfolio securities held by a Fund. The
risks associated with an investment in an Acquired Fund are identical to the
risks associated with an investment in the corresponding Acquiring Fund.
However, to the extent that an Insured Fund invests more of its assets in
insured municipal securities as compared to its corresponding Non-Insured Fund,
the Insured Fund may be subject to less credit risk because the payment of
interest and principal with respect to such insured municipal securities are
insured by an insurance company. There is no assurance, however, that an
insurance company will meet its obligations with respect to the insured
municipal securities.
Also, all of the Funds are considered to be "non-diversified," meaning
that they invest more of their assets in a fewer number of issuers than
diversified funds. Accordingly, to the extent that a Fund invests its assets in
fewer issuers as compared to a diversified fund, the value of the Fund's shares
may experience greater increases or decreases in value than if the Fund were
diversified.
For further information about the risks of investing in the Funds, see
"Comparison of Investment Objectives, Policies and Risks."
WHAT ARE THE GENERAL TAX CONSEQUENCES OF A TRANSACTION?
It is expected that shareholders of an Acquired Fund will not recognize
any gain or loss for federal income tax purposes as a result of the exchange of
their shares for shares of the corresponding Acquiring Fund. 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 Transactions - What
are the tax consequences of the Transactions?"
WHO MANAGES THE FUNDS?
The management of the business and affairs of each Fund is the
responsibility of the Board of Trustees of the applicable Trust. The Boards and
senior management select officers who are responsible for the day-to-day
operations of the Funds.
DMC manages the assets of each of the Funds and makes each Fund's
investment decisions. DMC is a series of Delaware Management Business Trust,
which is an indirect, wholly owned subsidiary of Delaware Management Holdings,
Inc., and is located at 2005 Market Street, Philadelphia, Pennsylvania
19103-7094. DMC and its predecessors have been managing the assets of the
Delaware Companies since 1938. As of September 30, 2004, DMC and its affiliates
within Delaware Investments were managing in the aggregate more than $[ ]
billion in assets in various institutional or separately managed, investment
company, and insurance accounts.
6
THE FLORIDA FUNDS. Patrick P. Coyne, M. L. Conery and Joseph R. Baxter
have primary responsibility for making the day-to-day investment decisions for
the Florida Fund and the Florida Insured Fund.
Mr. Coyne and M. L. Conery assumed joint responsibility for the Florida
Fund and the Florida Insured Fund on May 1, 1997. Mr. Baxter became a
co-portfolio manager for the Florida Fund and the Florida Insured Fund on May
22, 2003.
Patrick P. Coyne, Senior Vice President/Deputy Chief Investment Officer
- - Fixed Income, is a graduate of Harvard University with an MBA from the
University of Pennsylvania's Wharton School. Mr. Coyne joined Delaware
Investments' fixed-income department in 1990. Prior to joining Delaware
Investments, he was a manager of Kidder, Peabody & Co. Inc.'s trading desk, and
specialized in trading high-grade municipal bonds and municipal futures
contracts.
M. L. Conery, Vice President/Senior Portfolio Manager, holds a
bachelor's degree from Boston University and an MBA in finance from the State
University of New York at Albany. Before joining Delaware Investments in January
1997, M. L. Conery served as an investment officer with Travelers Insurance and
as a research analyst with CS First Boston and MBIA Corporation.
Joseph R. Baxter, Vice President/Portfolio Manager, is a graduate of
LaSalle University where he earned his undergraduate degree in finance and
marketing. Prior to joining Delaware Investments in 1999, he held investment
positions with First Union. Most recently, he served as a municipal portfolio
manager for the Evergreen Funds.
THE ARIZONA AND CALIFORNIA FUNDS. Andrew M. McCullagh, Jr., Vice
President/Senior Portfolio Manager, has primary responsibility for making
day-to-day investment decisions for the Arizona Fund, the Arizona Insured Fund,
the California Fund and the California Insured Fund. He has been managing these
Funds since their inception. Mr. McCullagh is a graduate of Washington College
and has a Graduate Certificate in Public Finance from the University of
Michigan. Prior to joining Delaware Investments in __________, he served as a
Senior Vice President and Senior Portfolio Manager of Voyageur Asset Management.
Mr. McCullagh currently has over 29 years' experience in municipal bond trading,
underwriting and portfolio management.
WHAT ARE THE FEES AND EXPENSES OF EACH FUND AND WHAT MIGHT THEY BE AFTER THE
TRANSACTIONS?
7
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 ended August 31,
2004. In connection with the Transactions, DMC has agreed contractually to waive
its fees and/or pay expenses of the Funds for the period beginning November 1,
2004 through March 31, 2006 to the extent necessary to limit the total operating
expenses of each Fund to the median level of that Fund's peer group as
determined by Lipper, Inc. This arrangement is estimated to result in lower
total operating expenses for the Acquiring Funds after the Transactions.
FEE TABLES FOR
THE ARIZONA FUND AND THE ARIZONA INSURED FUND
A. CLASS A SHARES
Actual
--------------------------------------- Pro forma
Arizona Insured
Arizona Fund - Arizona Insured Fund - Class A
Class A Fund - Class A After Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)............................... 4.50% 4.50% 4.50%
Maximum Contingent Deferred Sales Charge
(Load) imposed on redemptions (as a
percentage of original purchase price or
redemption price, whichever is lower)......... None(1) None(1) None(1)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees............................ 0.55% 0.50% 0.50%
Distribution and Service (12b-1) Fees...... 0.25% 0.25% 0.25%
Other Expenses............................. 0.19% 0.15% 0.14%
Total Annual Fund Operating Expenses....... 0.99% 0.90% 0.99%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)........ (0.24%) 0.00% (0.09%)
Net Expenses............................... 0.75% 0.90% 0.80%
----- ----- -----
B. CLASS B SHARES
Actual
--------------------------------------- Pro forma
Arizona Insured
Arizona Fund - Arizona Insured Fund - Class B
Class B Fund - Class B After Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price).............................. None None None
Maximum Contingent Deferred Sales Charge
(Load) imposed on redemptions (as a
percentage of original purchase price or
redemption price, whichever is lower).......... 4.00%(3) 4.00%(3) 4.00%(3)
8
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees............................ 0.55% 0.50% 0.50%
Distribution and Service (12b-1) Fees...... 1.00% 1.00% 1.00%
Other Expenses............................. 0.19% 0.15% 0.14%
Total Annual Fund Operating Expenses....... 1.74% 1.65% 1.64%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)........ (0.24%) 0.00% (0.09%)
Net Expenses............................... 1.50% 1.65% 1.55%
----- ----- -----
C. CLASS C SHARES
Actual
--------------------------------------- Pro forma
Arizona Insured
Arizona Fund - Arizona Insured Fund - Class C
Class C Fund - Class C After Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)............................... None None None
Maximum Deferred Sales Charge (Load)
imposed on redemptions (as a percentage of
original purchase price or redemption price,
whichever is lower)........................... 1.00%(4) 1.00%(4) 1.00%(4)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees................................ 0.55% 0.50% 0.50%
Distribution and Service (12b-1) Fees.......... 1.00% 1.00% 1.00%
Other Expenses................................. 0.19% 0.15% 0.14%
Total Annual Fund Operating Expenses........... 1.74% 1.65% 1.64%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)............ (0.24%) 0.00% (0.097%)
Net Expenses................................... 1.50% 1.65% 1.55%
----- ----- -----
(1) A purchase of Class A shares of $1 million of more may be made at net asset
value. However, if you buy the shares through a financial advisor who is
paid a commission, a contingent deferred sales charge will apply to
redemptions made within two years of purchase.
(2) DMC has contracted to waive its fee and/or pay expenses of each Fund
through October 31, 2004, to the extent necessary to limit the total
operating expenses (excluding 12b-1 fees, taxes, interest, brokerage fees,
extraordinary expenses and certain insurance costs) from exceeding 0.50% of
average daily net assets of the Arizona Fund and 0.70% of average daily net
assets of the Arizona Insured Fund. Beginning November 1, 2004 and through
March 31, 2006, DMC has contracted to waive its fee and/or pay expenses of
each Fund for such period to the extent necessary to limit the total
operating expenses of each Fund to the median level of the Fund's peer
group, as determined by Lipper, Inc.
(3) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 4.00%, which declines to
3.00% during the second year, 2.25% during the third year, 1.50% during the
forth and fifth years, 1.00% during the sixth year and 0% thereafter until
they convert to Class A shares.
(4) Class C shares redeemed within one year of purchase are subject to a 1.00%
contingent deferred sales charge.
9
EXAMPLES
These examples are intended to help you compare the costs of investing
in Arizona Fund shares with the cost of investing in Arizona Insured Fund shares
of the comparable class, both before and after the Transaction. You can also use
these examples to compare the costs of the Arizona Funds with the costs of other
mutual funds. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 in the Arizona Fund and the Arizona Insured Fund for the
time periods indicated and then sell all of your shares at the end of those
periods. The examples assume a 5% return each year.(1) This is an example only
and does not represent future expenses, which may be greater or less than those
shown below. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
Class A Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Arizona Fund $523 $728 $950 $1,588
Arizona Insured Fund $538 $724 $926 $1,508
Pro forma Arizona Insured Fund (after the Transaction) $528 $712 $912 $1,489
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Arizona Fund $553 $750 $1,071 $1,833
Arizona Insured Fund $568 $745 $1,047 $1,754
Pro forma Arizona Insured Fund (after the Transaction) $558 $733 $1,033 $1,736
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ----- ------- ------- --------
Arizona Fund $253 $525 $921 $2,032
Arizona Insured Fund $268 $520 $897 $1,955
Pro forma Arizona Insured Fund (after the Transaction) $258 $508 $883 $1,936
You would pay the following expenses on the same investment if you did not sell
your shares:
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Arizona Fund $153 $525 $921 $1,833
Arizona Insured Fund $168 $520 $897 $1,754
Pro forma Arizona Insured Fund (after the Transaction) $158 $503 $883 $1,736
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Arizona Fund $153 $525 $921 $2,032
Arizona Insured Fund $168 $520 $897 $1,955
Pro forma Arizona Insured Fund (after the Transaction) $158 $508 $883 $1,936
(1) Each Fund's actual rate of return may be greater or less than the
hypothetical 5% return we used here. This example reflects the net operating
expenses with fee waivers and expense limits for the period through March
31, 2006 and the total operating expenses without the fee waivers and
expense limits for the period commencing April 1, 2006 through year 10.
(2) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expense of the Class A shares.
THESE ARE JUST EXAMPLES. THEY DO NOT REPRESENT PAST OR FUTURE EXPENSES
OR RETURNS. Each of the Funds pays its own operating expenses. The effects of
these expenses are reflected in the net asset value and are not directly charged
to your account. The expenses of each of the Funds are comprised of expenses
attributable to each Fund, respectively, as well as expenses not attributable to
any particular series of that Trust that are allocated among the various series
of the Trust.
10
FEE TABLES FOR
THE CALIFORNIA INSURED FUND AND THE CALIFORNIA FUND
A. CLASS A SHARES
Actual
--------------------------------------- Pro forma
California Fund -
California Insured California Fund Class A After
Fund - Class A - Class A Transaction
------------------ --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)............................... 4.50% 4.50% 4.50%
Maximum Contingent Deferred Sales Charge
(Load) imposed on redemptions (as a
percentage of original purchase price or
redemption price, whichever is lower)......... None(1) None(1) None(1)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees............................ 0.50% 0.55% 0.55%
Distribution and Service (12b-1) Fees...... 0.25% 0.25% 0.25%
Other Expenses............................. 0.16% 0.16% 0.15%
Total Annual Fund Operating Expenses....... 0.91% 0.96% 0.95%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)........ 0.00% (0.46%) (0.02%)
Net Expenses............................... 0.91% 0.50% 0.93%
----- ----- -----
B. CLASS B SHARES
Actual
--------------------------------------- Pro forma
California Fund -
California Insured California Fund Class B After
Fund - Class B - Class B Transaction
------------------ --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price).............................. None None None
Maximum Contingent Deferred Sales Charge
(Load) imposed on redemptions (as a
percentage of original purchase price or
redemption price, whichever is lower)......... 4.00%(3) 4.00%(3) 4.00%(3)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees............................ 0.50% 0.55% 0.55%
Distribution and Service (12b-1) Fees...... 1.00% 1.00% 1.00%
Other Expenses............................. 0.16% 0.16% 0.15%
Total Annual Fund Operating Expenses....... 1.66% 1.71% 1.70%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)........ 0.00% (0.46%) (0.02%)
Net Expenses............................... 1.66% 1.25% 1.68%
----- ----- -----
11
C. CLASS C SHARES
Actual
--------------------------------------- Pro forma
California California Fund -
Insured Fund - California Fund Class C After
Class C - Class C Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)............................... None None None
Maximum Deferred Sales Charge (Load)
imposed on redemptions (as a percentage of
original purchase price or redemption price,
whichever is lower)........................... 1.00%(4) 1.00%(4) 1.00%(4)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees................................ 0.50% 0.55% 0.55%
Distribution and Service (12b-1) Fees.......... 1.00% 1.00% 1.00%
Other Expenses................................. 0.16% 0.16% 0.15%
Total Annual Fund Operating Expenses........... 1.66% 1.71% 1.70%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)............ 0.00% (0.46%) (0.02%)
Net Expenses................................... 1.66% 1.25% 1.68%
----- ----- -----
(1) A purchase of Class A shares of $1 million of more may be made at net asset
value. However, if you buy the shares through a financial advisor who is
paid a commission, a contingent deferred sales charge will apply to
redemptions made within two years of purchase.
(2) DMC has contracted to waive its fee and/or pay expenses of each Fund through
October 31, 2004, to the extent necessary to limit the total operating
expenses (excluding 12b-1 fees, taxes, interest, brokerage fees,
extraordinary expenses and certain insurance costs) from exceeding 0.75% of
average daily net assets of the California Insured Fund. DMC has voluntarily
agreed to waive its fees and/or pay expenses until such time as the waiver
is revoked in order to prevent total operating expenses (excluding 12b-1
fees, taxes, interest, brokerage fees, extraordinary expenses and certain
insurance costs) from exceeding 0.25% of average daily net assets of the
California Fund. The fees and expenses shown in the table above do not
reflect DMC's voluntary fee waiver and expense cap for the California Fund.
The following table shows operating expenses of the California Fund as of
August 31, 2004, taking into account DMC's voluntary fee waivers and
payments:
Management Fees................................ [ ]
Distribution and Service (12b-1) Fees.......... [ ]
Other Expenses................................. [ ]
Total Annual Fund Operating Expenses........... [ ]
Fee Waiver/Expense Reimbursement(2)............ [ ]
Net Expenses................................... [ ]
Beginning November 1, 2004 and through March 31, 2006, DMC has contracted to
waive its fee and/or pay expenses of each Fund for such period to the extent
necessary to limit the total operating expenses of each Fund to the median
level of the Fund's peer group, as determined by Lipper, Inc.
(3) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 4.00%, which declines to
3.00% during the second year, 2.25% during the third year, 1.50% during the
forth and fifth years, 1.00% during the sixth year and 0% thereafter until
they convert to Class A shares.
(4) Class C shares redeemed within one year of purchase are subject to a 1.00%
contingent deferred sales charge.
EXAMPLES
These examples are intended to help you compare the costs of investing
in the California Insured Fund shares with the cost of investing in the
California Fund shares of the comparable class, both before and after the
Transaction. You can also use these examples to compare the costs of the
California Funds with the costs of other mutual funds. We show the cumulative
12
amount of Fund expenses on a hypothetical investment of $10,000 in the
California Insured Fund and the California Fund for the time periods indicated
and then sell all of your shares at the end of those periods. The examples
assume a 5% return each year.(1) This is an example only and does not represent
future expenses, which may be greater or less than those shown below. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Class A Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $539 $727 $931 $1,519
California Fund $499 $698 $914 $1,535
Pro forma California Fund (after the Transaction) $542 $735 $943 $1,543
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $569 $748 $1,052 $1,766
California Fund $527 $719 $1,035 $1,781
Pro forma California Fund (after the Transaction) $571 $759 $1,071 $1,802
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $263 $523 $902 $1,965
California Fund $227 $494 $885 $1,981
Pro forma California Fund (after the Transaction) $271 $534 $921 $2,007
You would pay the following expenses on the same investment if you did not sell
your shares:
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $169 $523 $902 $1,766
California Fund $127 $494 $885 $1,781
Pro forma California Fund (after the Transaction) $171 $534 $921 $1,802
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $169 $523 $902 $1,965
California Fund $127 $494 $885 $1,981
Pro forma California Fund (after the Transaction) $171 $534 $921 $2,007
(1) Each Fund's actual rate of return may be greater or less than the
hypothetical 5% return we used here. For the California Insured Fund, this
example reflects the net operating expenses with fee waivers and expense
limits for the period through March 31, 2006 and the total operating
expenses without the fee waiver and expense limits for the period commencing
April 1, 2006 through year 10. For the California Fund, this example
reflects: (i) the net operating expenses without the voluntary fee waiver
and expense limits for the period through October 31, 2004; (ii) the net
operating expenses with the fee waivers and expense limits for the period
commencing November 1, 2004 through March 31, 2006; and (ii) the total
operating expenses without the fee waiver and expense limits for the period
commencing April 1, 2006 through year 10.
(2) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expense of the Class A shares.
THESE ARE JUST EXAMPLES. THEY DO NOT REPRESENT PAST OR FUTURE EXPENSES
OR RETURNS. Each of the Funds pays its operating expenses. The effects of these
expenses are reflected in the net asset value and are not directly charged to
your account. The expenses of each of the Funds are comprised of expenses
attributable to each Fund, respectively, as well as expenses not attributable to
any particular series of that Trust that are allocated among the various series
of the Trust.
13
FEE TABLES FOR
THE FLORIDA FUND AND THE FLORIDA INSURED FUND
A. CLASS A SHARES
Actual
--------------------------------------- Pro forma
Florida Insured
Florida Fund - Florida Insured Fund - Class A
Class A Fund - Class A After Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)............................... 4.50% 4.50% 4.50%
Maximum Contingent Deferred Sales Charge
(Load) imposed on redemptions (as a
percentage of original purchase price or
redemption price, whichever is lower)......... None(1) None(1) None(1)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees............................ 0.55% 0.50% 0.50%
Distribution and Service (12b-1) Fees...... 0.25% 0.25% 0.25%
Other Expenses............................. 0.19% 0.19% 0.19%
Total Annual Fund Operating Expenses....... 0.99% 0.94% 0.94%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)........ (0.24%) (0.04%) (0.03%)
Net Expenses............................... 0.75% 0.90% 0.90%
----- ----- -----
B. CLASS B SHARES
Actual Pro forma
---------------------------------------
Florida Insured
Florida Fund - Florida Insured Fund - Class B
Class B Fund - Class B After Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price).............................. None None None
Maximum Contingent Deferred Sales Charge
(Load) imposed on redemptions (as a
percentage of original purchase price or
redemption price, whichever is lower)......... 4.00%(3) 4.00%(3) 4.00%(3)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees............................ 0.55% 0.50% 0.50%
Distribution and Service (12b-1) Fees...... 1.00% 1.00% 1.00%
Other Expenses............................. 0.19% 0.19% 0.19%
Total Annual Fund Operating Expenses....... 1.74% 1.69% 1.69%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)........ (0.24%) (0.04%) (0.03%)
Net Expenses............................... 1.50% 1.65% 1.66%
----- ----- -----
14
C. CLASS C SHARES
Actual
--------------------------------------- Pro forma
Florida Insured
Florida Fund - Florida Insured Fund - Class C
Class C Fund - Class C After Transaction
-------------- --------------- -----------------
SHAREHOLDER FEES
(paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)............................... None None None
Maximum Deferred Sales Charge (Load)
imposed on redemptions (as a percentage of
original purchase price or redemption price,
whichever is lower)........................... 1.00%(4) 1.00%(4) 1.00%(4)
ANNUAL FUND OPERATING EXPENSES
(deducted from Fund assets)
Management Fees................................ 0.55% 0.50% 0.50%
Distribution and Service (12b-1) Fees.......... 1.00% 1.00% 1.00%
Other Expenses................................. 0.19% 0.19% 0.19%
Total Annual Fund Operating Expenses........... 1.74% 1.69% 1.69%
----- ----- -----
Fee Waiver/Expense Reimbursement(2)............ (0.24%) (0.04%) (0.03%)
Net Expenses................................... 1.50% 1.65% 1.66%
----- ----- -----
(1) A purchase of Class A shares of $1 million of more may be made at net asset
value. However, if you buy the shares through a financial advisor who is
paid a commission, a contingent deferred sales charge will apply to
redemptions made within two years of purchase.
(2) DMC has contracted to waive its fee and/or pay expenses of each Fund through
October 31, 2004, to the extent necessary to limit the total operating
expenses (excluding 12b-1 fees, taxes, interest, brokerage fees,
extraordinary expenses and certain insurance costs) from exceeding 0.50% of
average daily net assets of the Florida Fund and 0.65% of average daily net
assets of the Florida Insured Fund. Beginning November 1, 2004 and through
March 31, 2006, DMC has contracted to waive its fee and/or pay expenses of
each Fund for such period to the extent necessary to limit the total
operating expenses of each Fund to the median level of the Fund's peer
group, as determined by Lipper, Inc.
(3) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 4.00%, which declines to
3.00% during the second year, 2.25% during the third year, 1.50% during the
forth and fifth years, 1.00% during the sixth year and 0% thereafter until
they convert to Class A shares.
(4) Class C shares redeemed within one year of purchase are subject to a 1.00%
contingent deferred sales charge.
15
EXAMPLES
These examples are intended to help you compare the costs of investing
in Florida Fund shares with the cost of investing in Florida Insured Fund shares
of the comparable class, both before and after the Transaction. You can also use
these examples to compare the costs of the Florida Funds with the costs of other
mutual funds. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 in the Florida Fund and the Florida Insured Fund for the
time periods indicated and then sell all of your shares at the end of those
periods. The examples assume a 5% return each year.(1) This is an example only
and does not represent future expenses, which may be greater or less than those
shown below. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
Class A Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $523 $728 950 1,588
Florida Insured Fund $538 $732 943 1,549
Pro forma Florida Insured Fund (after the Transaction) $539 $733 944 1,550
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $553 $750 $1,071 $1,833
Florida Insured Fund $568 $754 $1,064 $1,795
Pro forma Florida Insured Fund (after the Transaction) $569 $755 $1,065 $1,796
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $253 $525 $921 $2,032
Florida Insured Fund $268 $529 $914 $1,994
Pro forma Florida Insured Fund (after the Transaction) $269 $530 $915 $1,995
You would pay the following expenses on the same investment if you did not sell
your shares:
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $153 $525 $921 $1,833
Florida Insured Fund $168 $529 $914 $1,795
Pro forma Florida Insured Fund (after the Transaction) $169 $530 $915 $1,796
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $153 $525 $921 $2,032
Florida Insured Fund $168 $529 $914 $1,994
Pro forma Florida Insured Fund (after the Transaction) $169 $530 $915 $1,995
(1) Each Fund's actual rate of return may be greater or less than the
hypothetical 5% return we used here. This example reflects the net operating
expenses with fee waivers and expense limits for the period through March
31, 2006 and the total operating expenses without the fee waivers and
expense limits for the period commencing April 1, 2006 through year 10.
(2) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expense of the Class A shares.
THESE ARE JUST EXAMPLES. THEY DO NOT REPRESENT PAST OR FUTURE EXPENSES
OR RETURNS. Each of the Funds pays its operating expenses. The effects of these
expenses are reflected in the net asset value and are not directly charged to
your account. The expenses of each of the Funds are comprised of expenses
attributable to each Fund, respectively, as well as expenses not attributable to
any particular series of that Trust that are allocated among the various series
of the Trust.
16
HOW DO THE PERFORMANCE RECORDS OF THE FUNDS COMPARE?
The performance of the Funds as of [June 30,], 2004, is shown
below:
TOTAL RETURNS
CUMULATIVE RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------ ----------------------------
INCEPTION
DATE(1) 3 MONTH YTD 1 YEAR 3 YEAR 5 YEAR 10 YEAR
---- ------- --- ------ ------ ------ -------
Arizona Fund--Class A
Arizona Insured Fund--Class A
Arizona Fund--Class B
Arizona Insured Fund--Class B
Arizona Fund--Class C
Arizona Insured Fund--Class C
California Insured Fund - Class A
California Fund - Class A
California Insured Fund - Class B
California Fund - Class B
California Insured Fund - Class C
California Fund - Class C
Florida Fund - Class A
Florida Insured Fund - Class A
Florida Fund - Class B
Florida Insured Fund - Class B
Florida Fund - Class C
Florida Insured Fund - Class C
WHERE CAN I FIND MORE FINANCIAL INFORMATION ABOUT THE FUNDS?
The Funds' Annual Report, which is included with the Statement of
Additional Information, contains a discussion of the Funds' performance during
the past fiscal year and shows per share information for each of the past five
fiscal years. This document is available upon request. (See "More Information
About the Funds.") The Fund Prospectus also contains further financial
information about the Funds.
17
WHAT ARE OTHER KEY FEATURES OF THE FUNDS?
Investment Management Fees. DMC is the investment manager of all of the
Funds. DMC has entered into separate investment management agreements relating
to each of the Funds that provide for reductions in fee rate for a Fund as the
assets of the Fund increase. The investment manage fee for the Funds are:
------------------------- -----------------------------------------------
FUND INVESTMENT MANAGEMENT FEE
------------------------- -----------------------------------------------
Arizona Fund 0.55% on first $500 million
(Acquired Fund) 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of $2,500 million
------------------------- -----------------------------------------------
Arizona Insured Fund 0.50% on first $500 million
(Acquiring Fund) 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of $2,500 million
------------------------- -----------------------------------------------
------------------------- -----------------------------------------------
California Insured Fund 0.50% on first $500 million
(Acquired Fund) 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of $2,500 million
------------------------- -----------------------------------------------
California Fund 0.55% on first $500 million
(Acquiring Fund) 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of $2,500 million
------------------------- -----------------------------------------------
------------------------- -----------------------------------------------
Florida Fund 0.55% on first $500 million
(Acquired Fund) 0.50% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of $2,500 million
------------------------- -----------------------------------------------
Florida Insured Fund 0.50% on first $500 million
(Acquiring Fund) 0.475% on next $500 million
0.45% on next $1,500 million
0.425% on assets in excess of $2,500 million
------------------------- -----------------------------------------------
18
DMC has contracted to waive that portion, if any, of the annual
management fees payable by each 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 the median level of expenses of the Fund's peer group, as determined
by Lipper, Inc. (exclusive of taxes, interest, brokerage commissions,
extraordinary expenses, and applicable 12b-1 expenses) for the period beginning
November 1, 2004 through March 31, 2006.
Distribution Services. Pursuant to underwriting agreements relating to
each of the Funds, Delaware Distributors, L.P. (the "Distributor"), 2005 Market
Street, Philadelphia, Pennsylvania 19103-7094, 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 and Class C Shares under their
respective 12b-1 Plans. The Distributor is an indirect, wholly owned subsidiary
of Delaware Management Holdings, Inc. and an affiliate of DMC.
Pursuant to a contractual arrangement with the Distributor, Lincoln
Financial Distributors, Inc. ("LFD"), 2001 Market Street, Philadelphia,
Pennsylvania 19103-7055, 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 DMC.
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 and Class C
shares (collectively, the "Rule 12b-1 Plans" and, each individually, a "Rule
12b-1 Plan").
19
Each Rule 12b-1 Plan permits the relevant Fund to pay out of the assets
of the Class A shares, Class B shares and Class C 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 Class B and Class C shares. In addition, each Fund's Rule
12b-1 Plan permits the relevant Fund may make payments out of the assets of the
Class A shares, Class B shares and Class C shares 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 Fund's average daily net assets of Class A shares; and 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. The Boards of Trustees for
the Trusts 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 and Class
C shares are borne by such persons without any reimbursement from such Classes.
Purchase, Exchange and Redemption Procedures. Procedures for the
purchase, exchange and redemption of each Fund's shares are identical. You may
refer to the Acquiring Funds Prospectus under the section entitled "About Your
Account" for the purchase, exchange, and redemption procedures applicable to the
purchases, exchanges and redemptions of the Funds' shares.
Dividend, Distributions and Taxes. For all Funds, dividends are
declared daily and paid monthly, while capital gains, if any, are distributed
annually. For more information about dividends, distributions and the tax
implications of investing in a Fund, please see the Fund Prospectus under the
section entitled "About Your Account--Dividends, distributions and taxes."
REASONS FOR THE TRANSACTION
Based on the considerations described below, each Board of Trustees,
including all of the Independent Trustees, on behalf of its applicable Acquired
Fund(s), has determined that the applicable Transaction(s) would be in the best
interest of the Acquired Fund's shareholders and that the interests of the
Acquired Fund's shareholders would not be diluted as a result of the
Transaction.
At meetings of the Boards of Trustees for the Trusts held on August
18-19, 2004 and September 10, 2004, DMC presented each Plan to the Trustees and
provided the Trustees with data and analysis regarding the proposed
Transactions. At the meetings, the Boards considered a number of factors,
including the following:
20
o The compatibility of the Acquired Fund's investment objective,
policies and restrictions with the investment objective,
policies and restrictions of the corresponding Acquiring Fund;
o The relative investment performance of the Funds;
o The relative past and current growth in assets of the Funds
and their respective future prospects for growth;
o The past and anticipated future inability of the Acquired
Funds to achieve satisfactory asset growth;
o The relative size of the Acquired Funds as compared to the
corresponding Acquiring Funds;
o The relative expense ratios of the Funds and the impact of the
proposed Transactions on the expense ratios;
o The anticipated tax consequences of the Transactions with
respect to each Fund and its shareholders;
o The estimated costs of each Transactions and the extent to
which the Funds would bear such costs; and
o The potential benefits of the proposed Transactions for the
shareholders of the Acquired Funds.
In considering such factors, the Board questioned Trust management
about the compatibility of investment objectives, policies and restrictions
between each Acquired Fund and its corresponding Acquiring Fund, the performance
and growth in assets of the Funds, the costs and anticipated tax consequences of
the Transactions and the potential benefits to shareholders of the Funds. The
Board's considerations and conclusions are summarized below.
The Board noted that the investment objective for each Acquired Fund is
identical to the investment objective of the corresponding Acquiring Funds. The
Board also noted that the portfolios of each Acquired Fund have historically
been managed in the substantially same manner as the portfolios of the
corresponding Acquiring Funds. The Board considered the differences with respect
to investing in insured municipal securities and the slight differences in
credit quality, noting there were no significant differences in the average
credit quality of the portfolio securities. The Board concluded that the
investment strategies and policies of the Acquired Funds are substantially
similar to the investment strategies and policies of the corresponding Acquiring
Funds and, therefore, the Transactions would be in the Acquired Funds'
shareholders' best interest, provided that other benefits would be derived from
the Transactions (as described below).
21
With respect to performance, DMC informed the Boards that with respect
to the Transaction involving the Arizona Fund and Arizona Insured Fund, the
Arizona Fund has a slightly stronger year-to-date performance record; however,
the corresponding Acquiring Fund has a stronger performance record for the
1-year, 3-year and 5-year periods. With respect to the transaction involving the
California Insured Fund and the California Fund, the Board noted that the
Acquiring Fund has a stronger performance record for the year-to-date, 1-year,
3-year and 5-year periods. Finally, with respect to the Florida Fund and the
Florida Insured Fund, the Board noted that the Acquired Fund has a slightly
better year-to-date, 1-year and 3-year performance record; however, the
corresponding Acquiring Fund has a slightly stronger performance record for the
5-year period and has a yield advantage of 11 basis points over the Acquired
Fund. The Board noted the following comparisons of performance records for the
5-year period as of June 30, 2004, for Class A shares for each Fund:
----------------------------------- -------------------------------
ACQUIRED FUND ACQUIRING FUND
----------------------------------- -------------------------------
Arizona Fund: 3.84% Arizona Insured Fund: 4.98%
----------------------------------- -------------------------------
----------------------------------- -------------------------------
California Insured Fund: 4.94% California Fund: 5.08%
----------------------------------- -------------------------------
----------------------------------- -------------------------------
Florida Fund: 5.04% Florida Insured Fund: 5.06%
----------------------------------- -------------------------------
Considering all of the relevant performance data, the Boards determined
that, although the differences are not necessarily significant in each case,
each Acquiring Fund offers a stronger long-term track record as compared to its
corresponding Acquired Fund.
The Board also considered sales and redemption data and relative
asset growth for each Fund, as presented by DMC. The Board noted that, although
the Arizona Fund better net cash flows than its corresponding Acquiring Fund for
the one-year period ended on June 30, 2004, and the Florida Fund had better cash
flows than its corresponding Acquiring Fund for the one-year period ended on
December 31, 2003, neither the Arizona Fund nor the Florida Fund has attracted
assets at a sufficient level to make such Funds cost effective. The Board also
noted that, as of June 30, 2004, the Arizona Insured Fund had 375.5% more assets
than its corresponding Acquired Fund and the Florida Insured Fund had 474.0%
more assets than its corresponding Acquired Fund. The Board considered that the
California Fund experienced better net cash flows that its corresponding
Acquired Fund for the one-year periods ended on December 31, 2003 and June 30,
2004, and that the California Fund had 35.6% more assets that its corresponding
Acquired Fund. Based on the relative asset levels between each Acquired Fund and
its corresponding Acquiring Fund, as well as the anticipated future growth in
assets of the Funds, the Board concluded that by combining each Acquired Fund
with its corresponding Acquiring Fund, each Fund's shareholders would enjoy a
greater asset base over which expenses may be spread. Based on the presentation
by DMC, the Board also concluded that combining each Acquired Fund with its
corresponding Acquiring Fund should eliminate the duplicate marketing efforts
for the Acquired Funds and the corresponding Acquiring Funds, which are
similarly managed, and, therefore, the Transactions should facilitate the
marketing efforts for the Acquiring Fund. The Board concluded that, in so doing,
the Transaction potentially would enhance asset growth for the benefit of
shareholders of both Funds.
22
In deciding whether to recommend approval of the Transactions to
shareholders, the Boards of Trustees considered the fees and expense ratios of
the Acquiring Funds and the corresponding Acquired Funds and the impact of
contractual fees waivers thereon. The Board noted that the investment management
fee for the California Insured Fund is slightly lower than the investment
management fee for the corresponding Acquiring Fund. The Board considered the
potential benefits afforded by a larger fund through economies of scale. The
Board also noted and considered the impact of the current and anticipated fee
waivers and expense limitations, as described below.
At the Board meetings, DMC informed the Board that, with the fee
waivers and expense limitations in place at that time, the total expenses for
the Arizona Fund and the Florida Fund are lower than the total expenses for the
corresponding Acquiring Funds of such Funds. The Board noted, however, that DMC
had adopted fee waiver and expense limitation agreements for the Arizona Fund
and the Florida Fund that were set below the median expense levels of each such
Fund's peer group (as determined by Lipper, Inc.) in an attempt to attract
assets. The Board also considered that the fee waivers and expense limitations
were due to expire on October 31, 2004 and that DMC would not maintain the
historically low cap on fees for the Arizona Fund and the Florida Fund when such
fee waivers and expense limitation agreements expired. Finally, the Board
considered the proposal of DMC to contractually waive its fee and/or pay the
expenses of each Fund for the period beginning November 1, 2004 through one-year
after the Closing Date, to the extent necessary to limit the total operating
expenses of each Fund (exclusive of 12b-1 fees, taxes, interest, brokerage fees,
extraordinary expenses and certain insurance costs) to the median level of the
Fund's peer group, as determined by Lipper, Inc.
The Boards determined that as a result of the Transactions,
shareholders would potentially benefit from certain savings in total and net
annual operating expenses due to economies of scale (e.g., a Fund with higher
aggregate net assets may also be able to reduce or eliminate certain costs and
expenses), although there can be no assurance that operational savings will be
realized. The Boards also determined that the shareholders will benefit from the
contractual fee waivers and expense limitations that would commence November 1,
2004 in connection with the proposed Transactions, as well as the savings as a
result of an Acquiring Fund acquiring municipal securities and other assets in a
Transaction as opposed to acquiring them in the open market.
DMC informed the Board that each Transaction will be structured as a
tax-free reorganization. DMC also informed the Boards as to the cost of the
Transactions, including the costs associated with the solicitation of proxies.
The Boards of Trustees considered that such expenses would be shared one-third
by the Acquiring Funds, one-third by the Acquired Funds and one-third by DMC,
except that the expenses borne by the Florida Fund with respect to its
Transaction would be no more than $15,000.
The Boards of Trustees of the Trusts approved the Plans, concluding
that the Transactions are in the best interests of the shareholders of each
respective Fund and that no dilution of value would result to the shareholders
of any Fund from the Transactions. The Boards of Trustees of the Trusts then
decided to recommend that shareholders of each Acquired Fund vote to approve the
Transaction. The Trustees approving the Plans and making the foregoing
determinations included all of the Independent Trustees.
23
FOR THE REASONS DISCUSSED ABOVE, THE BOARDS OF TRUSTEES OF THE TRUSTS, ON BEHALF
OF THE ACQUIRED FUNDS, UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1.
If the shareholders of an Acquired Fund do not approve the applicable
applicable Plan, the Board of Trustees of that Fund may consider other possible
courses of action for the Fund, including liquidation and dissolution.
INFORMATION ABOUT THE TRANSACTIONS
This is only a summary of the Plans. You should read the actual Plan
relating to your Acquired Fund. They are attached as Exhibits A and B and are
incorporated herein by reference.
HOW WILL THE TRANSACTIONS BE CARRIED OUT?
If the shareholders of an Acquired Fund approve the Plan, the
Transaction will take place after the parties to the Plan, including the
delivery of certain documents, satisfy various conditions. If the shareholders
of an Acquired Fund do not approve the applicable Plan, the Transaction will not
take place with respect to that Acquired Fund.
If the shareholders of an Acquired Fund approve the Plan, the Acquired
Fund will deliver to the corresponding Acquiring Fund substantially all of its
assets and the corresponding Acquiring Fund will assume all of the liabilities
of the Acquired Fund on the Closing Date. In exchange, the Trust, on behalf of
the Acquired Fund, will receive Acquiring Fund's shares to be distributed pro
rata to the Acquired Fund's shareholders. The value of the assets to be
delivered to the Acquiring 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 Acquired Fund will be permanently
closed as of the close of business of the NYSE on the business day before the
Closing Date. The Acquired 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 corresponding Acquiring Fund.
To the extent permitted by law, the Plan may be amended without
shareholder approval. The respective Boards of Trustees of the Acquired and the
Acquiring Funds 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 Acquired Fund.
24
WHO WILL PAY THE EXPENSES OF THE TRANSACTIONS?
The expenses resulting from an Acquired Fund's participation in a
Transaction, including solicitation of proxies, will be shared by the following
parties in the percentages indicated: 33.33% by the Acquired Fund, 33.33% by the
Acquiring Fund, and 33.34% by DMC.
WHAT ARE THE TAX CONSEQUENCES OF THE TRANSACTIONS?
Each 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 (the "Code"). Based on certain assumptions made and
representations to be made on behalf of each Acquired Fund and the corresponding
Acquiring 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 Acquired Funds will not recognize any gain or loss as a result of the
exchange of their shares of an Acquired Fund for shares of the corresponding
Acquiring Fund, and (ii) the corresponding Acquiring Fund and its shareholders
will not recognize any gain or loss upon receipt of the Acquired Fund's assets
and liabilities.
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.
WHAT SHOULD I KNOW ABOUT SHARES OF THE ACQUIRING FUNDS?
If a Transaction is approved for an Acquired Fund, full and fractional
shares of the corresponding Acquiring Fund will be distributed to shareholders
of the Acquired 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 have full voting rights. The shares of the Acquiring
Fund will be recorded electronically in each shareholder's account. The
Acquiring Fund will then send a confirmation to each shareholder. As described
in the Fund Prospectus, the Acquiring Funds do not issue share certificates
except for Class A Shares and then only when requested. As of the Closing Date,
any certificates representing shares of the Acquired Funds will be cancelled.
The Acquiring Fund shares to be issued in the Transactions have the
same rights and privileges as the shares of your Acquired 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.
For purposes of calculating any applicable contingent deferred sales
charges, the period you have held your shares in an Acquired Fund will be
counted toward, and carried over as, the holding period of the shares you
receive in the corresponding Acquiring Fund.
Like the Acquired Funds, the Acquiring Funds do not routinely hold
annual meetings of shareholders. The Acquiring Funds may hold special meetings
for matters requiring shareholder approval. A meeting of an Acquiring 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.
25
WHAT ARE THE CAPITALIZATIONS OF THE FUNDS AND WHAT MIGHT THE CAPITALIZATIONS BE
AFTER THE TRANSACTION?
The following table sets forth, as of August 31, 2004, the separate
capitalizations of the Acquiring Funds and the corresponding Acquired Funds, and
the estimated capitalization of the Acquiring Funds as adjusted to give effect
to the proposed Transactions. The capitalization of an Acquiring Fund is likely
to be different when the applicable Transaction is actually consummated.
Arizona
Insured
Arizona Arizona Fund after
Fund Insured Fund Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $ 30,871,677 $ 30,871,677 $173,313,349
Total shares outstanding 2,998,285 12,481,893 15,186,505
Class A net assets (millions) $ 20,249,266 $122,436,469 $142,685,735
Class A shares outstanding 1,966,975 10,730,590 12,505,285
Class A net asset value per share $ 10.29 $ 11.41 $ 11.41
Class B net assets (millions) $ 7,456,602 $ 13,354,490 $ 20,811,152
Class B shares outstanding 724,610 1,169,592 1,822,540
Class B net asset value per share $ 10.29 $ 11.42 $ 11.42
Class C net assets (millions) $ 3,165,749 $ 6,650,713 $173,313,349
Class C shares outstanding 306,700 581.711 858,680
Class C net asset value per share $ 10.32 $ 11.43 $ 11.43
California
California California Fund after
Insured Fund Fund Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $33,009,069 $44,921,594 $77,930,663
Total shares outstanding 2,999,315 4,037,071 7,005,183
Class A net assets (millions) $24,748,327 $24,797,519 $49,545,846
Class A shares outstanding 2,248,556 2,231,830 4,459,402
Class A net asset value per share $ 11.01 $ 11.11 $ 11.11
Class B net assets (millions) $ 6,894,516 $14,529,884 $21,424,000
Class B shares outstanding 626,275 1,302,406 1,920,194
Class B net asset value per share $ 11.01 $ 11.16 $ 11.16
Class C net assets (millions) $ 1,366,226 $ 5,594,191 $ 6,960,417
Class C shares outstanding 124,484 502,835 625,587
Class C net asset value per share $ 10.98 $ 11.13 $ 11.13
26
Florida
Insured
Florida Florida Fund after
Fund Insured Fund Transaction
(unaudited) (unaudited) (estimated)
Net assets (millions) $15,738,027 $93,680,889 $109,418,916
Total shares outstanding 1,425,641 8,324,003 9,722,472
Class A net assets (millions) $ 9,824,062 $87,590,413 $ 97,414,475
Class A shares outstanding 890,529 7,783,120 8,656,370
Class A net asset value per share $ 11.03 $ 11.25 $ 11.25
Class B net assets (millions) $ 3,756,866 $ 5,002,341 $ 8,759,207
Class B shares outstanding 339,927 444,251 777,898
Class B net asset value per share $ 11.05 $ 11.26 $ 11.26
Class C net assets (millions) $ 2,157,099 $ 1,088,135 $ 3,245,234
Class C shares outstanding 195,185 96,632 288,204
Class C net asset value per share $ 11.05 $ 11.26 $ 11.26
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RISKS
This section describes the investment objectives, principal investment
strategies and the key investment policies of the Funds, and certain noteworthy
differences between such objectives, strategies and policies, as well as the
risks associated with such objectives, strategies and policies. For a complete
description of each Fund's investment strategies, policies and risks, you should
read the Fund Prospectus, which is included with this Proxy
Statement/Prospectus.
ARE THERE ANY SIGNIFICANT DIFFERENCES BETWEEN THE INVESTMENT OBJECTIVES OF THE
ACQUIRED FUNDS AND THEIR CORRESPONDING ACQUIRING FUNDS?
The investment objective of each Acquired Fund is identical to the
investment objective of its corresponding Acquiring Fund. Each Fund's investment
objective is to seek to provide its investors with as high a level of current
income exempt from federal income tax and from the personal income tax in its
respective state, as is consistent with preservation of capital. Each Fund's
investment objective is fundamental and 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 the meeting
("Majority Vote").
27
ARE THERE ANY SIGNIFICANT DIFFERENCES BETWEEN THE INVESTMENT STRATEGIES AND
POLICIES OF THE ACQUIRED FUNDS AND THEIR CORRESPONDING ACQUIRING FUNDS?
Each Fund has adopted a fundamental investment policy to invest at
least 80% of its net assets in municipal securities the income from which is
exempt from federal income taxes, including the federal alternative minimum tax,
and the respective state personal income tax. The principal difference between
the investment strategies of each Acquired Fund and its corresponding Acquiring
Fund relates to the Fund's investment policy regarding insured municipal
securities and lower-rated securities. Each of the Insured Funds has adopted a
non-fundamental investment policy to invest at least 80% of its net assets in
insured municipal securities. The Non-Insured Funds have not adopted such an
investment policy; however, each Non-Insured Fund may invest without limitation
in insured municipal securities. As described above, DMC historically has
managed the portfolios of the Insured Funds and the Non-Insured Funds in a
substantially similar manner with respect to investments in insured municipal
securities.
Each of the Funds invests primarily in tax exempt obligations, commonly
known as municipal bonds, which are debt obligations issued by or on behalf of a
state or territory, its agencies, instrumentalities, municipalities or other
political sub-divisions. There are several different types of municipal bonds,
including general obligation bonds, revenue bonds and municipal lease
obligations. The Insured Funds may invest in general obligation and revenue
bonds, as well as other tax-free municipal securities, provided that, under
normal market conditions and after the application of insurance, at least 80% of
the Insured Fund's net assets are invested in insured municipal securities that
are rated at least AAA by Standard & Poor's Ratings Services ("S&P"), Aaa by
Moody's Investors Service ("Moody's") or an equivalent rating by another
nationally recognized statistical rating organization ("NRSRO"). In addition, at
least 80% of the Insured Fund's net assets must be invested in bonds that are
fully insured by companies that must have at least a AAA-rated claims paying
ability by S&P or an equivalent rating by another NRSRO. These restrictions
apply at the time the Insured Fund purchases a security. Each Insured Fund may
have up to 35% of its total assets invested in securities that have been
downgraded to AA by S&P or Aaa by Moody's since the Insured Fund initially
purchased the securities.
The Non-Insured Funds do not have such limitations with respect to
insured municipal bonds; however, the Non-Insured Funds do have limitations with
respect to the credit quality of their portfolio securities. As a matter of
non-fundamental policy, each Non-Insured Fund will primarily invest in bonds
rated in the top four rating categories by an NRSRO or bonds that are unrated,
but which DMC, as the investment manager, determines to be of comparable
quality. Each Non-Insured Fund may invest up to 20% of its net assets in
high-yield, lower-rated fixed income securities, provided that such securities
are rated at least B or higher by S&P, are similarly rated by another NRSRO, or
are unrated but deemed to be of comparable minimum quality as determined by DMC.
This limit applies to a Non-Insured Fund's portfolio holding in debt securities
and any derivative securities that a Non-Insured Fund may hold in its portfolio.
The quality limitation applies at the time of purchase and a Non-Insured Fund
may not have more than 5% of its assets invested in securities that have been
downgraded to a rating lower that the lowest rating permitted for the
Non-Insured Fund.
28
With the exception of the California Insured Fund, shareholders in an
Acquired Fund, if they approve the Plan, will become shareholders in the
corresponding Acquiring Fund that is also an Insured Fund. With respect to the
Transaction involving the California Insured Fund and the California Fund, the
California Insured Fund's shareholders, if they approve the Plan as described
herein, will become shareholders in a Non-Insured Fund. As described above,
however, DMC historically has managed the portfolios of the Insured Funds and
the Non-Insured Funds in a similar manner.
As a result of the Transaction, and assuming the average credit quality
of the portfolio securities remained unchanged, the shareholders of the
California Insured Fund will become shareholders in the California Fund that has
a slightly lower average credit quality for its portfolio securities. All other
Acquired Fund shareholders will become shareholders in a corresponding Acquiring
Fund that has the same or slightly higher average credit quality for their
respective portfolio securities. As of September 30, 2004, the average credit
quality of the portfolio securities of the Acquired Funds were the same or
slightly different than the average credit quality of the corresponding
Acquiring Funds, as indicated in the chart below.
-------------------------------- -------------------------------------
ACQUIRED FUND ACQUIRING FUND
-------------------------------- -------------------------------------
Arizona Fund: AA Arizona Insured Fund: AAA
-------------------------------- -------------------------------------
-------------------------------- -------------------------------------
California Insured Fund: AA California Fund: A
-------------------------------- -------------------------------------
-------------------------------- -------------------------------------
Florida Fund: AA Florida Insured Fund: AA
-------------------------------- -------------------------------------
Each Fund may invest up to 20% of its assets in private activity or
private placement bonds. Such securities are used to finance certain
non-government activities, and the interest income from these securities is
subject to the federal alternative minimum tax.
Depending on market conditions and other factors, each of the Funds
invests in securities with maturities of varying lengths. In general, each Fund
seeks to maintain an average weighted portfolio maturity of approximately 15 to
25 years.
Each Fund has adopted a fundamental policy that prohibits the Fund from
concentrating its investments in the securities of issuers primarily engaged in
the same industry. Generally, this fundamental investment restriction prohibits
a Fund from investing 25% of the value of the Fund's assets in securities of
issuers in any one industry. Certain types of bonds and obligations are excluded
from this restriction. In particular, the Funds' restrictions on concentration
do not apply to obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or in tax-exempt securities or certificates of
deposit.
29
Each Fund may invest more than 25% of its total assets in certain
sectors of the municipal bond market. Specifically, each Fund may invest more
than 25% of its total assets in industrial development bonds. In addition, each
of the Arizona Fund, the California Fund and the Florida Fund may invest more
than 25% of its total assets in one or more of the following sectors of the
municipal bond marker: transportation; education and industrial obligations.
All of the Funds are "non-diversified" for purposes of the Investment
Company Act of 1940, as amended (the "1940 Act"). Generally, a "diversified"
investment company may not, with respect to 75% of its assets, invest more than
5% of its assets in any one issuer and may not own more than 10% of the
outstanding voting securities of any one issuer. Because each Fund is
non-diversified, it is not subject to these diversification requirements.
Although the Funds are non-diversified for purposes of the 1940 Act, each Fund
intends to meet the diversification requirements of a regulated investment
company under Subchapter M of the Code. Under the Code, the Funds have the
flexibility to invest as much as 50% of their assets in as few as two issuers,
provided that no single issuer accounts for more than 25% of a Fund's portfolio.
The remaining 50% of a Fund's assets must be diversified so that no more than 5%
of a Fund's assets are invested in the securities of a single issuer.
Pending the investment or reinvestment of its assets, each Insured Fund
may invest up to 35% of its net assets in non-insured, short-term tax-exempt
instruments (e.g., tax-exempt money market securities), provided that such
instruments are rated in either the highest short-term or long-term rating
category by an NRSRO. The Non-Insured Funds may invest without limit in
short-term, tax-exempt obligations on a temporary, defensive basis. When DMC,
the Funds' investment manager, believes that unusual or adverse economic, market
or other conditions warrant a more defensive posture, DMC may temporarily select
investments for a Fund other than those investments that are the Fund's primary
focus and the Fund may invest its assets without regard to its stated maturity
strategy. When investing in this manner a Fund may be unable to achieve its
investment objective.
HOW DO THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS DIFFER?
The Funds have adopted identical fundamental investment policies. A
Fund may not change any of its fundamental investment policies without a prior
Majority Vote of its shareholders. The Funds' fundamental investment
restrictions are listed in the Funds' Statement of Additional Information dated
November 30, 2004 relating to the Fund Prospectus, which is incorporated by
reference into the Statement of Additional Information relating to this
Prospectus/Proxy Statement and is available upon request.
30
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 the Funds will meet their investment objectives. A Fund's
ability to achieve its objective will depend, among other things, on the
portfolio managers' analytical and portfolio management skills. As with most
investments in mutual funds, the best results are achieved when investments in
the Funds are held for a number of years.
The risks of investing in the Funds are basically the same as those of
other investments in municipal securities of similar quality. Investments in the
Funds are subject to several risks, which are explained below.
Interest Rate Risk. Interest rate risk is generally the most
significant type of risk for the Funds. Interest rate risk is the risk that
securities, and in particular bonds with longer maturities, will decrease in
value if interest rates rise. These changes can be unpredictable, and as such,
the Funds will generally not try to increase return by aggressively capitalizing
on interest rate changes. The Funds seek to manage this risk by adjusting the
average maturity of the Funds' portfolio securities.
Income Risk. Income risk is the risk that a Fund's income will decrease
due to falling interest rates. Because a Fund can only distribute what it earns,
a Fund's distributions to its shareholders may decline when interest rates fall.
Market Risk. Market risk is the risk that a majority of securities in a
certain market--such as 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 bond market or municipal bond market as
a whole. Additionally, all of the Funds may engage in transactions where payment
occurs before the actual delivery of the security. Because the market price of
the security may fluctuate during the time after payment but prior to delivery,
the Funds assume the risk that the value of the security at delivery may be less
than the purchase price.
Credit Risk. Credit risk is the possibility that an issuer of a debt
security--or an entity that insures the debt security--will be unable to make
interest payments on, and to pay the principal of, a security when due. A change
in the credit risk associated with a particular debt security may cause a
corresponding change in that security's price and, therefore, impact the Fund's
net asset value. The purpose of insurance is protect against credit risk. In the
event of a default of an insured municipal security, the insurer is
contractually required to make payments of interest and principal under the
terms of the municipal security. To the extent that the Insured Funds invest
more of their assets in insured municipal securities as compared to the
Non-Insured Funds, the Insured Funds may be subject to less credit risk. There
is no assurance, however, that the company insuring the payment of interest and
principal when due to the bondholders will meet its obligations. Moreover, this
insurance is does not guarantee the market value of the insured municipal
securities held in a Fund's portfolio and it does not guarantee the value of an
investment in the Fund.
Call Risk. Call risk is the likelihood that a security will be prepaid
(commonly referred to as being "called") before maturity. An issuer is more
likely to call its bonds when interest rates are falling, because the issuer can
issue new bonds with lower interest payments. If a bond is called, a Fund may
have to replace it with a lower-yielding security. DMC takes this type of risk
into consideration, and when appropriate, attempts to invest in bonds that
protect investors against early prepayment.
31
High-Yield Bond Risk. Investing in lower-rated, higher-risk bonds
entails the risk of losing principal, which may be greater than the risk of
principal loss associated with investment-grade bonds. In addition, high-yield
securities generally have more credit risk than higher-rated securities, and the
risk of default or price changes due to changes in the issuer's credit quality
is greater with lower-rated securities. Issuers of lower-rated securities are
typically in weaker financial health than issuers of higher-rated securities,
and their ability to make interest payments or repay principal is less certain.
The market price of lower-rated, high-yield securities may fluctuate more than
higher-rated securities and may decline significantly in periods of general or
regional economic difficulty. High-yield securities may not trade frequently,
and when they do trade, their prices may be significantly higher or lower than
expected. Thus, high-yield securities may be less liquid and more volatile than
higher-quality securities.
The Insured Funds may not invest in such high-yield, high-risk bonds.
Each Non-Insured Fund may invest up to 20% of its net assets in such securities,
subject to the minimum quality limitations as described above. To the extent
that the Non-Insured Funds invest in such high-yield, high-risk bonds, the
Non-Insured Funds may be subject to the risks associated with such investments,
such as the loss of principal, credit risk, liquidity risk and volatility, as
compared to the Insured Funds.
Industry Concentration Risk. Industry concentration risk is the risk
that the value of securities in a particular industry will decline because of
changing expectations for the performance of that industry. Although the Funds
have a fundamental policy that prohibits concentration, each Fund under certain
circumstances is permitted to invest more than 25% of its assets in debt
securities of issuers within a single segment of the bond market. To the extent
that Fund invests in this manner, the Fund may have a greater exposure to risks
associated with that particular segment of the bond market.
Geographic Concentration Risk. Largely because of tax avoidance
considerations, the Funds typically invest primarily in debt obligations issued
by their respective states and, therefore, events in that state are likely to
affect the Fund's investments and performance. These events may include economic
or political policy changes; tax base erosion; state constitutional limits on
tax increases; budget deficits and other financial difficulties; and changes in
the ratings assigned to municipal issuers within that state.
Diversification. Because each Fund is non-diversified, each Fund may be
more susceptible than a fully diversified fund to adverse economic, political,
business, or regulatory developments affecting a single issuer, industry, or
economic sector. This, in turn, can affect the Fund's net asset value.
WHAT VOTE IS NECESSARY TO APPROVE THE PLAN?
Provided that a quorum is present, the approval of the Plan for each
Acquired Fund requires an affirmative Majority Vote of the Acquired Fund's
shareholders.
32
MORE INFORMATION ABOUT THE FUNDS
Administration, Transfer Agency and Fund Accounting Services. Delaware
Service Company, Inc. ("DSC"), 2005 Market Street, Philadelphia, Pennsylvania
19103-7094, an affiliate of DMC, acts as the administrator, 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 fund
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 transfer agency, shareholder services, fund
accounting and administration 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
Acquiring and Acquired Funds, on a pro rata basis.
Custodial Services. Mellon Bank, N.A., is the custodian of the
securities and other assets of the Funds. The main office of Mellon Bank, N.A.
is One Mellon Center, Pittsburgh, PA 15258.
Additional Information. More information about the Funds is included in
(i) the Fund Prospectus, which is attached to and considered a part of this
Proxy Statement/Prospectus, (ii) their Statement of Additional Information dated
November 30, 2004; (iii) the Annual Report to Shareholders dated for the fiscal
year ended August 31, 2004 ("Annual Report"), and (iv) the Statement of
Additional Information dated December ___, 2004 (relating to this Proxy
Statement/Prospectus ), which is incorporated by reference herein. You may
request free copies of the Statements of Additional Information and/or the
Annual Report, which have been filed with the SEC, by calling 1-800-523-1918 or
by writing to the Trusts at Attention: Account Services, 2005 Market Street,
Philadelphia, PA 19103.
This Proxy Statement/Prospectus, which constitutes part of a
Registration Statement filed by the Acquiring Funds with the SEC under the
Securities Act of 1933, as amended, omits certain of the information contained
in such Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits and amendments thereto for further information
with respect to the Acquiring Funds and the shares they offer. 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.
Each Fund also 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 1940 Act. 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.
33
PROPOSAL TWO: TO ELECT A BOARD OF TRUSTEES
You are being asked to elect a Board of Trustees for Voyageur Mutual
Funds and Voyageur Investment Trust, as applicable.
WHO ARE THE NOMINEES FOR TRUSTEE? The nominees for the Board of
Trustees for the Trusts are the same nominees that will be considered by the
shareholders of each of the Delaware Companies at the Meeting. The nominees are:
Jude T. Driscoll, John A. Fry, Anthony D. Knerr, Ann R. Leven, Thomas F.
Madison, Janet L. Yeomans, [Nominee] and [Nominee]. Each of the nominees (except
for Messrs. Driscoll, Fry, [Nominee] and [Nominee]) presently is a Trustee of
each Trust. Mr. Fry, who is a trustee or director of other Delaware Companies,
was recommended to the Trusts' Nominating and Corporate Governance Committee
(together, the "Nominating Committee") by the current Independent Trustees.
Mr./Ms. [Nominee] was recommended to the Nominating Committee [ ]. Mr./Ms.
[Nominee] was recommended to the Nominating Committee by [ ]. Among the nominees
standing for election, only Jude T. Driscoll would be deemed to be an
"Interested Trustee." The remaining nominees would be deemed to be Independent
Trustees, i.e. Trustees who are not "interested persons" of the Trust, as that
term is defined under the 1940 Act.
If elected, these persons will serve as Trustees until the next meeting
of shareholders called for the purpose of electing Trustees, and/or until their
successors have been elected and qualify for office. It is not expected that any
nominee will withdraw or become unavailable for election, but in such a case,
the power given by you in the Proxy Card may be used by the persons named as
proxies to vote for a substitute nominee or nominees as recommended by the
current Board of Trustees.
NUMBER OF
PORTFOLIOS
LENGTH OF IN FUND
POSITION(S) TIME SERVED PRINCIPAL COMPLEX OTHER
HELD WITH AS A TRUSTEE OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE THE TRUSTS OF THE TRUSTS PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------- ---------------- --------------- ------------------------ -------------- -------------------
NOMINEE FOR INTERESTED TRUSTEE
Jude T. Driscoll(1) Chairman, N/A CEO, Delaware 77 Director- [List
2005 Market Street President and Investments (since Delaware
Philadelphia, PA Chief 2003). Since August Operating
19103-7094 Executive 2000, Mr. Driscoll has Companies]
41 Officer served in various
executive capacities
at different times at
Delaware Investments(2)
Senior Vice President,
Research and Trading -
Conseco Capital
Management, Inc. (June
1998 - July 2000)
34
NOMINEES FOR INDEPENDENT TRUSTEE
John A. Fry Nominee N/A President - Franklin & 77 Director -
2005 Market Street Marshall College (June Community Health
Philadelphia, PA 2002 - Present) Systems
19103-7094
44 Executive Vice
President - University
of Pennsylvania (April
1995 - June 2002)
Anthony D. Knerr Trustee 7 years Founder/Managing 94 None
2005 Market Street Director - Anthony
Philadelphia, PA Knerr & Associates
19103-7094 (1990 - Present)
65 (Strategic Counseling)
Ann R. Leven Trustee 7 years Treasurer/Chief Fiscal 94 Director -
2005 Market Street Officer - National Systemax Inc.
Philadelphia, PA Gallery of Art
19103-7094 (1994 - 1999) Director - Andy
63 Warhol Foundation
Thomas E. Madison Trustee 7 years President/Chief 94 Director - Banner
2005 Market Street Executive Officer - MLM Health
Philadelphia, PA Partners, Inc. (January
19103-7094 1993 - Present) (Small Director -
68 Business Investing and CenterPoint Energy
Counseling)
Director -
Digitial River Inc.
Director - Rimage
Corporation
Director - Valmont
Industries, Inc.
Janet L. Yeomans Trustee 4 Years Vice President/Mergers 94 None
2005 Market Street & Acquisitions - 3M
Philadelphia, PA Corporation (January
19103-7094 2003 - Present)
56
Ms. Yeomans has
held various
management
positions at 3M
Corporation since 1983.
[New Nominee 1] Nominee N/A [to be completed] N/A [to be completed]
[New Nominee 2] Nominee N/A [to be completed] N/A [to be completed]
(1) Mr. Driscoll would be considered to be an "Interested Trustee" because he
is an executive officer of the Trusts' investment manager. Mr. Driscoll
acquired shares of common stock of Lincoln National Corporation ("LNC"),
of which the Trusts' investment manager is a wholly-owned subsidiary, in
the ordinary course of business during 2003, but those transactions
involved less than 1% of the outstanding shares of common stock of LNC.
(2) Delaware Investments is the marketing name for Delaware Management
Holdings, Inc. and its subsidiaries, including the Trusts' investment
manager, principal underwriter/distributor and administrator.
35
The following table shows each nominee's ownership of shares of each
Trust and of all other registered investment companies in the Delaware
Investments Family of Funds (the "Fund Complex") as of December 1, 2004.
- ----------------------------------------- ---------------------------------- -----------------------------------------
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED INVESTMENT
SHARES OF BENEFICIAL INTEREST OF COMPANIES OVERSEEN BY TRUSTEE IN THE
NAME OF NOMINEE THE TRUSTS BENEFICIALLY OWNED FUND COMPLEX
- ---------------------------------------- ---------------------------------- -----------------------------------------
INTERESTED NOMINEE
- ----------------------------------------- ---------------------------------- -----------------------------------------
Jude T. Driscoll $1 - $10,000
- ----------------------------------------- ---------------------------------- -----------------------------------------
- ------------------------------------------ --------------------------------- -----------------------------------------
INDEPENDENT NOMINEES
- ------------------------------------------ --------------------------------- -----------------------------------------
John A. Fry Over $100,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Anthony D. Knerr $10,001 - $50,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Ann R. Leven Over $100,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Thomas F. Madison $10,001 - $50,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Janet A. Yeomans $10,001 - $50,000
- ------------------------------------------ --------------------------------- -----------------------------------------
[New Nominee 1]
- ------------------------------------------ --------------------------------- -----------------------------------------
[New Nominee 2]
- ------------------------------------------ --------------------------------- -----------------------------------------
BOARD, SHAREHOLDER AND COMMITTEE MEETINGS. During the last full fiscal
year, each Trust held six Board meetings. Each of the currently serving Trustees
attended at least 75% of those meetings.
Each Trust has an Audit Committee for the purpose of meeting, at least
annually, with the Trust's officers and independent auditors to oversee the
quality of financial reporting and the internal controls of such Trust, and for
such other purposes as the Board of Trustees of the Trust may from time to time
direct. The Audit Committee of each Trust consists of the following three
Trustees appointed by the Board: Ann R. Leven, Chairperson; Thomas F. Madison;
and Janet L. Yeomans, each of whom is an "Independent Trustee." Members of the
Audit Committee serve for three years or until their successors have been
appointed and qualified. The Audit Committee held five meetings for the fiscal
year ended August 31, 2004.
The Nominating Committee is currently comprised of Anthony D. Knerr,
Chairperson, and John H. Durham (who is retiring and therefore not standing for
re-election), each of whom is an Independent Trustee. The Nominating Committee
recommends nominees for (i) Independent Trustees for consideration by the
incumbent Independent Trustees of each Trust, and (ii) Interested Trustees for
consideration by the full Board of each Trust. The Nominating Committee for each
Trust held seven meetings during the fiscal year ended August 31, 2004.
The Board of Trustees of each Trust has adopted a formal charter for
their Nominating Committee setting forth such Committee's responsibilities. A
current copy of the Nominating Committee's charter is available on the Trusts'
website at www.delawareinvestments.com.
36
The Nominating Committee will consider shareholder recommendations for
nomination to the Board of Trustees of a Trust only in the event that there is a
vacancy on the Board of Trustees. Shareholders who wish to submit
recommendations for nominations to the Board to fill a vacancy must submit their
recommendations in writing to Anthony D. Knerr, Chairman of the Nominating
Committee, c/o the applicable Trust at 2005 Market Street, Philadelphia,
Pennsylvania 19103. Shareholders should include appropriate information on the
background and qualifications of any person recommended to the Nominating
Committee (e.g., a resume), as well as the candidate's contact information and a
written consent from the candidate to serve if nominated and elected.
Shareholder recommendations for nominations to the Board will be accepted on an
ongoing basis and such recommendations will be kept on file for consideration
when there is a vacancy on the Board of Trustees.
The Nominating Committee generally identifies candidates for Board
membership through personal and business contacts of Trustees and shareholders.
In addition, the Nominating Committee may use a search firm to identify
candidates for the Board of Trustees, if deemed necessary and appropriate to use
such a firm. The Nominating Committee's process for evaluating a candidate
generally includes a review of the candidate's background and experience, a
check of the candidate's references and other due diligence and, when
appropriate, interviews with Nominating Committee members. In evaluating a
candidate, the Nominating Committee will also consider whether the candidate, if
elected, would be an Independent Trustee.
The Nominating Committee has not established any specific minimum
requirements that candidates must meet in order to be recommended by the
Nominating Committee for nomination for election to the Board. Rather, the
Nominating Committee seeks candidates who, in its judgment, will serve the best
interests of the Trusts' long-term shareholders and whose background will
complement the experience, skills and diversity of the other Trustees and add to
the overall effectiveness of the Board.
BOARD COMPENSATION. Each Independent Trustee receives compensation from
each of the Delaware Companies of which he/she is a member of the Board of
Trustees. Interested Trustees are compensated by DMC, and do not receive
compensation from the Trusts. Each Independent Trustee currently receives a
total annual retainer of $70,000 for serving as a Trustee of all 32 registered
investment companies within the Fund Complex, plus a $5,000 fee per Board
meeting attended (normally four regular meetings, each of which are two-day
meetings). The Coordinating Trustee for the Delaware Companies receives an
additional annual retainer totaling $25,000. The chairperson of the Audit
Committee receives an additional annual retainer of $10,000 and the chairperson
of the Nominating Committee receives an annual retainer of $1,500. Each Member
of the Audit Committee receives an additional fee of $2,500 for each Audit
Committee meeting attended and each member of the Nominating Committee receives
an additional fee of $1,700 for each committee meeting attended. Prior to August
2004, the Trustees' fees were allocated equally per each of the investment
companies in the Fund Complex, and the Trustees' retainers were allocated
ratably among the investment companies in the Fund Complex based on net asset
levels. After August 2004, the Trustees' fees and retainers were allocated
ratably among the investment companies in the Fund Complex based on relative net
asset levels.
37
Under the terms of each Trust's retirement plan for the Independent
Trustees, each Independent Trustee who, at the time of his or her retirement
from all Boards of Trustees in the Fund Complex, has attained the age of 70 and
has served on the Boards of Trustees for at least five continuous years, is
entitled to receive payments from the Fund Complex for a period of time equal to
the lesser of the number of years that the person served as a Trustee or the
remainder of the person's life. The annual amount of such payments will be equal
to the amount of the annual retainer that is paid to the Independent Trustees of
the Fund Complex at the time of the person's retirement. If an eligible Trustee
of a Trust had retired as of August 31, 2004, he or she would have been entitled
to annual payments in the amount of $70,000 from the Fund Complex, borne pro
rata by the registered investment companies therein based on their relative net
assets. The following table identifies the amount each Trustee received from
each Trust during its last fiscal year and from the Fund Complex as a whole
during the twelve months ended August 31, 2004.
Pension or Total
Retirement Compensation From
Aggregate Aggregate Benefits Estimated Fund Complex for
Compensation Compensation from Accrued as Part Annual the 12 months
from Voyageur Voyageur of Trust Benefits Upon ended August 31,
Mutual Funds Investment Trust Expenses Retirement 2004
---------------- ------------------- ----------------- ---------------- -------------------
JUDE T. DRISCOLL None None None None None
WALTER P. BABICH* [$ ] [$ ] None $70,000 [$ ]
JOHN H. DURHAM* [$ ] [$ ] None $70,000 [$ ]
JOHN A. FRY None None None $70,000 [$ ]
ANTHONY D. KNERR [$ ] [$ ] None $70,000 [$ ]
ANN R. LEVEN [$ ] [$ ] None $70,000 [$ ]
THOMAS E. MADISON [$ ] [$ ] None $70,000 [$ ]
JANET L. YEOMANS [$ ] [$ ] None $70,000 [$ ]
* Messrs. Babich and Durham have announced their intention to retire from the
Boards of Trustees effective as of the date of the Meeting and therefore are not
standing for re-election.
OFFICERS. The Board of Trustees and the senior management of a Trust
appoint officers each year, and from time to time as necessary. The following
individuals are executive officers of the Trusts: Jude T. Driscoll, Joseph H.
Hastings, Richelle S. Maestro and Michael P. Bishof. Exhibit C includes
biographical information and the past business experience of such officers,
except for Mr. Driscoll, whose information is set forth herein along with the
other nominees. Exhibit C also identifies which of these executive officers are
also officers of DMC. The above officers of the Trusts own shares of common
stock and/or options to purchase shares of common stock of LNC, the ultimate
parent of DMC. They are considered to be "interested persons" of the Trusts
under the 1940 Act.
REQUIRED VOTE. Provided that a quorum is present at the Meeting, either
in person or by proxy, the Trustees of each Trust shall be elected by a
plurality of the votes cast by shareholders of all series of such Trust voting
together.
38
THE BOARDS OF TRUSTEES UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR"
ALL NOMINEES FOR TRUSTEE
PROPOSAL 3 -- APPROVAL OF AN AGREEMENT AND PLAN OF REDOMESTICATION THAT PROVIDES
FOR THE REORGANIZATION OF VOYAGEUR INVESTMENT TRUST FROM A MASSACHUSETTS
BUSINESS TRUST TO A DELAWARE STATUTORY TRUST (CALIFORNIA INSURED FUND AND
FLORIDA FUND ONLY)
The Trustees of Voyageur Investment Trust unanimously recommend that
shareholders of the California Insured Fund and the Florida Fund approve an
Agreement and Plan of Redomestication (the "Agreement"), substantially in the
form attached to this Proxy Statement/Prospectus as Exhibit D, which would
change the state of organization of Voyageur Investment Trust. This proposed
change calls for the reorganization of Voyageur Investment Trust from a
Massachusetts business trust into a newly formed Delaware statutory trust. This
proposed reorganization is referred to throughout this Proxy
Statement/Prospectus as the "Redomestication." To implement the Redomestication,
the Trustees of Voyageur Investment Trust have approved the Agreement, which
contemplates the continuation of the current business of Voyageur Investment
Trust in the form of a new Delaware statutory trust, named "Delaware Investments
Municipal Trust" (the "DE Trust"). As of the effective date of the
Redomestication, the DE Trust will have series (each a "DE Fund" and, together,
the "DE Funds") that correspond to each of the then current series of Voyageur
Investment Trust (each an "MA Fund" and, together, the "MA Funds"). Each DE Fund
will have the same name as its corresponding MA Fund.
WHY AM I BEING ASKED TO VOTE ON THE REDOMESTICATION?
The Board of Trustees of Voyageur Investment Trust (the "VIT Board") is
submitting the Redomestication to the vote of shareholders of all the MA Funds
in Voyageur Investment Trust, including the shareholders of the California
Insured and Florida Funds. In particular, you are entitled to vote and are being
asked to vote on the Redomestication even in the event the reorganization for
your particular Acquired Fund into its corresponding Acquiring Fund is approved
by shareholders.
WHAT WILL THE REDOMESTICATION MEAN FOR THE FUNDS AND FOR YOU?
If the Agreement is approved by shareholders and the Redomestication is
implemented, the DE Funds would have the same investment goals, policies, and
restrictions as their corresponding MA Funds. The Board, including any persons
elected under Proposal 1, and officers of the DE Trust would be the same as
those of Voyageur Investment Trust, and would operate the DE Trust and the DE
Funds in the same manner as these persons previously operated Voyageur
Investment Trust and the MA Funds except as otherwise described below. Thus, on
the effective date of the Redomestication, you would hold an interest in the
applicable DE Fund that is equivalent to your then interest in the corresponding
MA Fund. For all practical purposes, a shareholder's investment in Voyageur
Investment Trust and the MA Funds would not change.
39
WHY ARE THE TRUSTEES RECOMMENDING APPROVAL OF THE AGREEMENT AND THE
REDOMESTICATION?
Most of the funds within the Delaware Investments Family of Funds are
series of Delaware statutory trusts. Voyageur Investments Trust, however, is
organized as a Massachusetts business trust. The lack of uniformity among the
laws applicable to the various Delaware Investments Funds poses administrative
complications and costs that the VIT Board desires to eliminate. Consequently,
the VIT Board proposes that Voyageur Investment Trust be redomesticated to
Delaware.
The VIT Board desires to achieve administrative economies, such as
eliminating, frequent filings within the Commonwealth of Massachusetts, which
are expected to result from the Redomestication. Delaware statutory trusts
provide much greater flexibility for a fund to respond quickly to changes in
market or regulatory conditions. This enhanced flexibility had caused a number
of major fund complexes, including the Delaware Investments Family of Funds, to
adopt this form of organization in recent years. The MA Funds are also expected
to benefit from the administrative economies that will result from having
uniform organizational documents and uniform state reporting and filing
obligations. Accordingly, the VIT Board believes that it is in the best
interests of the shareholders to approve the Agreement.
WHAT ARE THE ADVANTAGES OF A DELAWARE STATUTORY TRUST?
Investment companies formed as Delaware statutory trusts have certain
advantages over investment companies organized as Massachusetts business trusts.
Under Delaware law, investment companies are able to simplify their operations
by reducing administrative burdens. For example, Delaware law allows greater
flexibility in drafting and amending an investment company's governing
documents, which can result in greater efficiencies of operation and savings for
an investment company and its shareholders. Delaware law does not require that
the Declaration of Trust and any amendments to the Declaration of Trust be filed
with the State of Delaware, while Massachusetts law requires that the
Declaration of Trust and any amendments to the Declaration of Trust be filed
with the Commonwealth of Massachusetts and the clerk of the city in
Massachusetts in which the fund has a usual place of business. Voyageur
Investment Trust's Declaration of Trust thus requires that any instrument,
including VIT Board resolutions, that establishes or designates any series shall
be treated as an amendment to the Declaration of Trust, which must therefore be
filed in Massachusetts. Such filings are not required by the DE Trust's
Declaration of Trust. In addition, the simpler Delaware procedures allow the DE
Trust to file a one-page Certificate of Trust with the State of Delaware, which
rarely needs to be amended. Another advantage of Delaware statutory trusts is
greater certainty regarding limiting the liability of shareholders for
obligations of the trust or its trustees and regarding limiting the liability of
one series for obligations of other series within the trust.
40
Furthermore, as described below, in Delaware there is a
well-established body of legal precedent in the area of corporate law that may
be relevant in deciding issues pertaining to the DE Trust. This could benefit
the DE Trust and its shareholders by, for example, making litigation involving
the interpretation of provisions in the DE Trust's governing documents less
likely or, if litigation should be initiated, less burdensome or expensive.
HOW DO THE MASSACHUSETTS BUSINESS TRUST LAW AND VOYAGEUR INVESTMENT TRUST'S
GOVERNING DOCUMENTS COMPARE TO THE DELAWARE STATUTORY TRUST LAW AND THE DE
TRUST'S GOVERNING DOCUMENTS?
The following summary compares certain rights and characteristics of
Voyageur Investment Trust and its shares to the DE Trust and its shares. The
summary is qualified in its entirety by the more complete comparisons of
Massachusetts business trust law and Delaware statutory trust law, and a
comparison of the relevant provisions of the governing documents of Voyageur
Investment Trust and the DE Trust, attached as Exhibit E to this Proxy
Statement/Prospectus, which is entitled "A COMPARISON OF GOVERNING DOCUMENTS AND
STATE LAW."
Reorganizing Voyageur Investment Trust from a Massachusetts business
trust to a Delaware statutory trust is expected to provide several benefits to
Voyageur Investment Trust and its shareholders. The operations of a Delaware
statutory trust formed under the Delaware Act are governed by a declaration of
trust and by-laws. The DE Trust's Agreement and Declaration of Trust
("Declaration of Trust") and By-Laws streamline some of the provisions in
Voyageur Investment Trust's current Declaration of Trust and By-Laws, and, thus,
should lead to enhanced flexibility in management and administration as compared
to Voyageur Investment Trust's current operation as a Massachusetts business
trust. As a Delaware statutory trust, the DE Trust may be able to adapt more
quickly and cost effectively to new developments in the mutual fund industry and
the financial markets.
Funds formed as Delaware statutory trusts under the Delaware Statutory
Trust Act (the "Delaware Act") are granted a significant amount of operational
flexibility, resulting in efficiencies of operation that may translate into
savings for a fund, such as the DE Trust, and the fund's shareholders. For
example, the Delaware Act authorizes trust management to take various actions
without requiring shareholder approval if permitted by the governing instrument,
such as fund mergers or the sale of all or substantially all of the assets of a
trust, or a series thereof (see discussion below). Additionally, unlike
Massachusetts business trust law, the Delaware Act permits any amendment to the
statutory trust's governing instrument without the need for a state or city
filing, which can reduce administrative burdens and costs.
Moreover, to the extent provisions in the DE Trust's Declaration of
Trust and By-Laws are addressed by rules and principles established under
Delaware corporate law and the laws governing other Delaware business entities
(such as limited partnerships and limited liability companies), the Delaware
courts may look to such other laws to help interpret provisions of the DE
Trust's Declaration of Trust and By-Laws. Applying this body of law to the
operation of the DE Trust should prove beneficial because these laws are
extensively developed and business-oriented. In addition, Delaware's Chancery
Court is dedicated to business law matters, which means that the judges tend to
be more specialized in the nuances of the law that will be applied to the DE
Trust. These legal advantages tend to make more certain the resolution of legal
controversies and help to reduce legal costs resulting from uncertainty in the
law.
41
Shares of the DE Trust and Voyageur Investment Trust each have one vote
per full share and a proportionate fractional vote for each fractional share.
Both the DE Trust and Voyageur Investment Trust provide for noncumulative voting
in the election of their Trustees. Like Voyageur Investment Trust, the DE Trust
is not required by its governing instrument to hold annual shareholder meetings.
For both Voyageur Investment Trust and the DE Trust, shareholder meetings may be
called at any time by the Board, by the chairperson of the Board or by the
president of the Trust for the purpose of taking action upon any matter deemed
by the Board to be necessary or desirable. In addition, a meeting of the
shareholders of the DE Trust for the purpose of electing one or more trustees
may be called, to the extent provided by the 1940 Act and the rules and
regulations thereunder, by the DE Trust shareholders. Voyageur Investment Trust
and the DE Trust each provides certain rights to its shareholders to inspect a
fund's books and records.
While shareholders of the DE Trust will have similar distribution and
voting rights as they currently have as shareholders of Voyageur Investment
Trust, there are certain differences. The organizational structures differ in
record date parameters for determining shareholders entitled to notice, to vote,
and to a distribution. Under the DE Trust's Declaration of Trust, all or
substantially all of the DE Trust's assets may be sold to another fund or trust
without shareholder approval unless required by the 1940 Act. Both the DE Trust
and Voyageur Investment Trust and any series thereof may be liquidated or
dissolved, in each case by the Trustees without shareholder approval.
Massachusetts business trust law does not specifically provide that the
shareholders of Voyageur Investment Trust are not subject to any personal
liability for any claims against, or liabilities of, Voyageur Investment Trust
solely by reason of being or having been a shareholder of Voyageur Investment
Trust or that the liabilities of one series are not enforceable against another
series of that trust. Under the Delaware Act, shareholders of the DE Trust will
be entitled to the same limitation of personal liability as is extended to
shareholders of a private corporation organized for profit under the General
Corporation Law of the State of Delaware. In addition the Delaware Act permits
the DE Trust to limit the enforceability of the liabilities of one DE Fund
solely to the assets of that DE Fund.
WHAT ARE THE PROCEDURES AND CONSEQUENCES OF THE REDOMESTICATION?
Immediately upon completion of the proposed Redomestication, the DE
Trust will continue the business of Voyageur Investment Trust, and each DE Fund:
(i) will have the same investment goals, policies and restrictions as those of
its corresponding MA Fund existing on the date of the Redomestication; (ii) will
hold the same portfolio of securities previously held by such corresponding MA
Fund; and (iii) will be operated under substantially identical overall
management, investment management, distribution, and administrative arrangements
as those of its corresponding MA Fund. As the successor to Voyageur Investment
Trust's operations, the DE Trust will adopt Voyageur Investment Trust's
registration statement under the federal securities laws with amendments to show
the new Delaware statutory trust structure.
Meetings of shareholders of Voyageur Investment Trust may be called by
Trustees, the Chairperson of the Board or the president of the Trust.
42
The DE Trust was created solely for the purpose of becoming the
successor organization to, and carrying on the business of, Voyageur Investment
Trust. To accomplish the Redomestication, the Agreement provides that Voyageur
Investment Trust, on behalf of each MA Fund, will transfer all of its portfolio
securities, any other assets and its liabilities to the DE Trust, on behalf of
each corresponding DE Fund. In exchange for these assets and liabilities, the DE
Trust will issue shares of each DE Fund to Voyageur Investment Trust, which will
then distribute those shares pro rata to shareholders of the corresponding MA
Fund. Through this procedure, you will receive exactly the same number, class
and dollar amount of shares of each DE Fund as you held in the corresponding MA
Fund immediately prior to the Redomestication. You will retain the right to any
declared, but undistributed, dividends or other distributions payable on the
shares of an MA Fund that you may have had as of the effective date of the
Redomestication. As soon as practicable after the date of the Redomestication,
Voyageur Investment Trust will be dissolved and will cease its existence.
The Trustees may terminate the Agreement and abandon the
Redomestication at any time prior to the effective date of the Redomestication
if the Trustees determine that proceeding with the Redomestication is
inadvisable. If the Redomestication is not approved by shareholders of Voyageur
Investment Trust, or if the Trustees abandon the Redomestication, Voyageur
Investment Trust will continue to operate as a Massachusetts business trust. If
the Redomestication is approved by shareholders, it is expected to be completed
in the first half of 2005.
WHAT EFFECT WILL THE REDOMESTICATION HAVE ON THE CURRENT INVESTMENT ADVISORY
AGREEMENTS?
As a result of the Redomestication, the DE Trust will be subject to new
investment advisory agreements between the DE Trust and DMC on behalf of each of
the DE Funds that will be identical in all material respects to the current
investment advisory agreements between DMC and Voyageur Investment Trust on
behalf of each of the MA Funds.
WHAT EFFECT WILL THE REDOMESTICATION HAVE ON THE SHAREHOLDER SERVICING
AGREEMENTS AND DISTRIBUTION PLANS?
The DE Trust, on behalf of the DE Funds, will enter into agreements
with Delaware Service Company, Inc. ("DSC") for fund accounting, transfer
agency, dividend disbursing and shareholder services that are substantially
identical to the agreements currently in place for Voyageur Investment Trust
with DSC. Delaware Distributors, L.P. ("DDLP"), will serve as the distributor
for the shares of the DE Funds under a separate underwriting agreement that is
substantially identical to the underwriting agreement currently in effect for
Voyageur Investment Trust with DDLP.
As of the effective date of the Redomestication, each DE Fund will have
a distribution plan under Rule 12b-1 of the 1940 Act relating to the
distribution of that DE Fund's classes of shares, which is identical in all
material respects to the distribution plan currently in place for the
corresponding classes of shares of the corresponding MA Fund. It is anticipated
that there will be no material change to the distribution plan as a result of
the Redomestication.
43
WHAT IS THE EFFECT OF SHAREHOLDER APPROVAL OF THE AGREEMENT?
Under the 1940 Act, the shareholders of a mutual fund must elect
trustees and approve the initial investment advisory agreement(s) for the fund.
In addition, if a mutual fund wants to operate under a manager of managers
structure (as described more fully below under Proposal 4), shareholders must
also approve the use of such structure. Theoretically, if the Agreement is
approved by shareholders and Voyageur Investment Trust is reorganized to a
Delaware statutory trust, the shareholders would need to vote on these three
items for the DE Trust.
The DE Trust and the DE Funds must obtain shareholder approval of these
items in order to comply with the 1940 Act and to operate after the
Redomestication. The Trustees, however, have determined that it is in the best
interests of the shareholders to avoid the considerable expense of another
shareholder meeting to obtain these approvals after the Redomestication. The
Trustees, therefore, have determined that by approving the Agreement you are
also approving, for purposes of the 1940 Act: (1) the election of the Trustees
of Voyageur Investment Trust who are in office at the time of the
Redomestication (including the Trustees elected under Proposal 1) as trustees of
the DE Trust; (2) new investment advisory agreements between the DE Trust and
DMC on behalf of each DE Fund, which are identical in all material respects to
the investment advisory agreements currently in place for the MA Funds; and (3)
the manager of managers structure for a DE Fund, as described in Proposal 4, but
only in the event that such Proposal has been approved by shareholders of the
corresponding MA Fund.
Prior to the Redomestication, if the Agreement is approved by
shareholders of Voyageur Investment Trust, the officers will cause Voyageur
Investment Trust, as the sole shareholder of the DE Trust and each DE Fund, to
vote its shares FOR the matters specified above (or, with respect to the use of
the manager of managers structure, in the same manner as shareholders of the
particular MA Fund have voted on Proposal 4). This action will enable the DE
Trust to satisfy the requirements of the 1940 Act without involving the time and
expense of another shareholder meeting.
WHAT IS THE CAPITALIZATION AND STRUCTURE OF THE DE TRUST?
The DE Trust was formed as a Delaware statutory trust on September 30,
2004 pursuant to the Delaware Act. As of the effective date of the
Redomestication, the DE Trust will have separate series, each of which will
correspond to the similarly named series of Voyageur Investment Trust, each with
an unlimited number of shares of beneficial interest without par value
authorized. The shares of each DE Fund will be allocated into classes to
correspond to the current classes of shares of the corresponding MA Fund.
As of the effective date of the Redomestication, like the existing
shares you hold, outstanding shares of the DE Trust will be fully paid,
nonassessable (e.g., you will not owe any further money to Voyageur Investment
Trust to own your shares), and have no preemptive or subscription rights (e.g.,
no special rights to purchase shares in advance of other investors). The DE
Trust will also have the same fiscal year as Voyageur Investment Trust.
44
ARE THERE ANY TAX CONSEQUENCES FOR SHAREHOLDERS?
The Redomestication is designed to be "tax-free" for federal income tax
purposes so that you will not experience a taxable gain or loss when the
Redomestication is completed. Generally, the basis and holding period of your
shares in a DE Fund will be the same as the basis and holding period of your
shares in the corresponding MA Fund. Consummation of the Redomestication is
subject to receipt of a legal opinion from the law firm of Stradley Ronon
Stevens & Young, LLP, counsel to the DE Trust and Voyageur Investment Trust,
that, under the Code, the Redomestication will not give rise to the recognition
of income, gain, or loss for federal income tax purposes to Voyageur Investment
Trust, the MA Funds, the DE Trust, or the DE Funds, or to their shareholders.
WHAT IF I CHOOSE TO SELL MY SHARES AT ANY TIME?
A request to sell MA Fund shares that is received and processed prior
to the effective date of the Redomestication will be treated as a redemption of
shares of that MA Fund. A request to sell shares that is received and processed
after the effective date of the Redomestication will be treated as a request for
the redemption of the same number of shares of the corresponding DE Fund.
WHAT IS THE EFFECT OF MY VOTING "FOR" THE AGREEMENT?
By voting "FOR" the Agreement, and if the Redomestication is approved
and completed, you will become a shareholder of a mutual fund organized as a
Delaware statutory trust, with trustees, investment advisory and subadvisory
agreements, a distribution plan, and other service arrangements that are
substantially identical to those currently in place for your corresponding MA
Fund or Funds. In addition, if the Redomestication is approved and completed,
you will have the same exchange and conversion rights that you have currently,
including counting the time you held shares of an MA Fund for purposes of
calculating any redemption fee on shares you receive of the corresponding DE
Fund.
HOW DOES PROPOSAL 1 AFFECT THIS PROPOSAL 3?
In the event that shareholders of the California Insured Fund approve
Proposal 1 (a reorganization into the California Fund) and such reorganization
is completed, then the California Insured Fund will not participate in the
Redomestication if the Redomestication is approved by shareholders of Voyageur
Investment Trust. Rather, the California Insured Fund will be reorganized into
the California Fund, a series of Voyageur Mutual Funds, which is already a
Delaware statutory trust. In the event that shareholders of the California
Insured Fund do not approve Proposal 1, then the California Insured Fund will
participate in the Redomestication if the Redomestication is approved by
shareholders of Voyageur Investment Trust.
In the event that shareholders of the Florida Fund approve Proposal 1
(a reorganization into Florida Insured Fund) and such reorganization is
completed, then the Florida Fund will be reorganized into the Florida Insured
Fund, another series of Voyageur Investment Trust. Whether Voyageur Investment
Trust (including the Florida Insured Fund) is then redomesticated into the DE
Trust will depend on whether shareholders of Voyageur Investment Trust approve
the Redomestication in this Proposal 3. In the event that shareholders of the
Florida Fund do not approve Proposal 1, then the Florida Fund will participate
in the Redomestication if the Redomestication is approved by shareholders of
Voyageur Investment Trust.
45
WHAT IS NECESSARY TO APPROVE THE AGREEMENT?
Assuming a quorum is present, the approval of the Agreement requires an
affirmative Majority Vote of the outstanding shares of the series of the Trust.
THE VIT BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 3.
PROPOSAL 4: TO APPROVE A MANAGER OF MANAGERS STRUCTURE
WHY AM I BEING ASKED TO VOTE ON THIS PROPOSAL?
The Manager of Managers Structure (as defined below) is intended to
enable the Funds to operate with greater efficiency by allowing DMC to employ
subadvisers best suited to the needs of the Funds without incurring the expense
and delays associated with obtaining shareholder approval of subadvisers or
subadvisory agreements. Ordinarily, federal law requires shareholders of a
mutual fund to approve a new subadvisory agreement among a mutual fund, its
investment manager and a subadviser before such subadvisory agreement may become
effective. Specifically, Section 15 of the 1940 Act makes it unlawful for any
person to act as an investment adviser (including as a subadviser) to a mutual
fund, except pursuant to a written contract that has been approved by
shareholders. Section 15 also requires that an investment advisory agreement
(including a subadvisory agreement) provide that it will terminate automatically
upon its "assignment," which, under the 1940 Act, generally includes the
transfer of an advisory agreement itself or the transfer of control of the
investment adviser through the transfer of a controlling block of the investment
adviser's outstanding voting securities.
To comply with Section 15 of the 1940 Act, a Fund must obtain
shareholder approval of a subadvisory agreement in order to employ one or more
subadvisers, replace an existing subadviser, change the terms of a subadvisory
agreement, or continue the employment of an existing subadviser when that
subadviser's agreement terminates because of an "assignment."
Pursuant to the current Investment Management Agreements between the
Trusts and DMC (collectively, the "Investment Management Agreement"), DMC,
subject to the supervision of the Boards and approval of shareholders, serves as
each Fund's investment manager. As such, DMC is responsible for, among other
things, managing the assets of each Fund and making decisions with respect to
purchases and sales of securities on behalf of the Funds. DMC is permitted under
the Investment Management Agreement, at its own expense, to select and contract
with one or more subadvisers to perform some or all of the services for a Fund
for which DMC is responsible under such Agreement. If DMC delegates investment
advisory duties to a subadviser, DMC remains responsible for all advisory
services furnished by the subadviser. Before DMC may engage a subadviser for a
Fund, shareholders of the Fund must approve the agreement with such subadviser.
46
The proposed "manager of managers" structure, however, would permit
DMC, as the Funds' investment manager, to appoint and replace subadvisers, enter
into subadvisory agreements, and amend and terminate subadvisory agreements on
behalf of a Fund without shareholder approval (the "Manager of Managers
Structure"). The employment of the Manager of Managers Structure on behalf of a
Fund, however, is contingent upon either (i) the Delaware Companies' and DMC's
receipt of exemptive relief from the U.S. Securities and Exchange Commission
(the "SEC"), or (ii) the adoption of a rule by the SEC authorizing the
employment of a Manager of Managers Structure. In either case, the Fund must
obtain shareholder approval before it may implement the Manager of Managers
Structure. Because a meeting of shareholders is needed to elect a Board of
Trustees and to vote on other matters, the Board of Trustees determined to seek
shareholder approval of the Manager of Managers Structure at the Meeting to
avoid additional meeting and proxy solicitation costs in the future. There can
be no assurance that exemptive relief will be granted by the SEC or that a rule
authorizing the employment of a Manager of Managers structure will be adopted.
Adoption and use by a Fund of the Manager of Managers Structure would
only enable DMC to hire and replace a subadviser (or materially amend a
subadvisory agreement) without shareholder approval. The Manager of Managers
Structure would not: (i) permit investment management fees paid by the Fund to
be increased without shareholder approval; nor (ii) change DMC's
responsibilities to a Fund, including DMC's responsibility for all advisory
services furnished by a subadviser.
At their August 18-19, 2004 Boards of Trustees meetings, the Boards of
the Delaware Companies, including a majority of the Independent Trustees,
generally approved the use of the Manager of Managers Structure, subject to
shareholder approval and action by the SEC as described above. As noted above,
the Manager of Managers Structure is intended to enable the Funds to operate
with greater efficiency and without incurring the expense and delays associated
with obtaining shareholder approval of subadvisers or subadvisory agreements.
While DMC and the Boards do not currently expect to use the Manager of Managers
Structure after receipt of necessary SEC approval (by order or rule) by hiring
one or more subadvisers to manage all or a portion of a Fund's portfolio, DMC
and the Boards do intend to make use of such structure in the future in the
event they believe that doing so would likely enhance Fund performance by
introducing a different investment style or focus. The Boards determined to seek
shareholder approval of the Manager of Managers Structure in connection with the
Meeting that was otherwise required to be held to avoid an additional meeting
and proxy solicitation costs in the future.
DMC and the Boards believe that the employment of the Manager of
Managers Structure will: (1) enable the Boards to act more quickly and with less
expense to a Fund in order to appoint an initial or a new subadviser when DMC
and the Board believe that such appointment would be in the best interests of
that Fund's shareholders; and (2) help the Funds to enhance performance by
permitting DMC to allocate and reallocate a Fund's assets among itself and one
or more subadvisers when DMC and the Board believe that it would be in the best
interests of that Fund's shareholders-- for example, to engage a subadviser with
a different investment style if deemed appropriate by DMC.
47
Based on the above, the Boards are hereby soliciting shareholder
approval of the employment of the Manager of Managers Structure with respect to
each Fund, including the Acquired Funds.
HOW DOES THIS PROPOSAL AFFECT MY RIGHT TO VOTE ON SUBADVISORY AGREEMENTS?
If Proposal 4 is approved, DMC in the future would be permitted to
appoint and replace subadvisers for a Fund and to enter into, and approve
amendments to subadvisory agreements without first obtaining shareholder
approval. The employment of the Manager of Managers Structure is contingent upon
the receipt by the Delaware Companies and DMC of exemptive relief from the SEC
and/or the adoption of a rule by the SEC authorizing the employment of the
Manager of Managers Structure. In all cases, however, the applicable Board,
including a majority of the Independent Trustees, must approve new or amended
subadvisory agreements and shareholder approval would not be necessary, and
DMC's responsibilities to a Fund would remain unchanged and there would be no
increase in investment management fees paid by a Fund without further
shareholder approval. Until receipt of exemptive relief from the SEC and/or the
adoption of an SEC rule authorizing the employment of a Manager of Managers
Structure, DMC will only enter into new or amended subadvisory agreements with
shareholder approval, to the extent required by law.
Subadvisory agreements with subadvisers that are affiliated with DMC
("Affiliated Subadvisers"), if any, generally would remain subject to the
shareholder approval requirement. The Delaware Companies and DMC may in the
future seek SEC exemptive relief or rely on relief obtained by an affiliate, or
rely on any further SEC rule, which would permit DMC to enter into new or
materially modify subadvisory agreements with Affiliated Subadvisers without
shareholder approval. Therefore, under Proposal 4, we are seeking shareholder
approval to apply the Manager of Managers Structure to Affiliated Subadvisers,
subject to necessary regulatory relief.
If Proposal 4 is not approved by a Fund's shareholders, then DMC would
only enter into new or amended subadvisory agreements with shareholder approval,
causing delay and expense in making a change deemed beneficial to that Fund and
its shareholders by that Fund's Board.
WHAT ARE THE CONDITIONS OF THE ORDER AND THE RULE?
The Delaware Companies and DMC expect to file an exemptive application
with the SEC within the next [ ] requesting an order permitting DMC to employ a
Manager of Managers Structure with respect to the mutual funds for which DMC
serves as investment manager, including the Funds (the "Order"). On October 23,
2003, the SEC proposed Rule 15a-5 under the 1940 Act that, if adopted as
proposed, would permit the Delaware Companies and DMC to employ a Manager of
Managers Structure with respect to the Funds without obtaining the Order (the
"Proposed Rule"), provided that shareholders of a Fund approve the Manager of
Managers Structure prior to its implementation. To date, the Proposed Rule has
not been adopted. In connection with seeking shareholder approval of Proposals
1-3, you are also being asked to approve Proposal 4 and permit the
implementation of the Manager of Managers Structure for your Fund contingent
upon the receipt by the Delaware Companies and DMC of the Order or the adoption
of the Proposed Rule, whichever is earlier. There is no assurance that exemptive
relief will be granted or that the Proposed Rule will be adopted.
48
The Order would grant a Fund relief from Section 15(a) of the 1940 Act
and certain rules under the 1940 Act so that the Delaware Companies and DMC may
employ the Manager of Managers Structure with respect to a Fund, subject to
certain conditions, including the approval of this Proposal 4 by the Fund's
shareholders. Neither a Fund nor DMC would rely on the Order unless all such
conditions have been met. Upon finalization of the Proposed Rule, it is expected
that the Order will expire and that a Fund using the Manager of Managers
Structure will comply with the then final rule's requirements. The ultimate
conditions that would be included in the final rule are expected to be similar
to those included in the Order, but the conditions could differ to some extent
from the conditions imposed under the rule. The conditions for relief that will
be in the application for the Order are expected to be substantially similar to
those customarily included in similar applications filed by other investment
company complexes and approved by the SEC. Such conditions are as follows:
(1) DMC will provide, pursuant to the Investment Management Agreement,
general management services to a Fund, including overall supervisory
responsibility of the general management and investment of the Fund's assets
and, subject to review and approval of the appropriate Board, will (i) set the
Fund's overall investment strategies, (ii) evaluate, select and recommend
subadvisers to manage all or a portion of the Fund's assets, (iii) allocate and,
when appropriate, reallocate the Fund's assets among one or more subadvisers,
(iv) monitor and evaluate subadviser performance, and (v) implement procedures
reasonably designed to ensure that subadvisers comply with the Fund's investment
objective, policies and restrictions;
(2) Before a Fund may rely on the Order, the operation of the Fund
pursuant to a Manager of Managers Structure will be approved by a majority of
the Fund's outstanding voting shares as defined in the 1940 Act;
(3) The prospectus for the Fund will disclose the existence, substance
and effect of the Order. In addition, the Fund will hold itself out to the
public as employing the Manager of Managers Structure. The prospectus will
prominently disclose that DMC has ultimate responsibility, subject to oversight
by the Board, to oversee the subadvisers and recommend their hiring,
termination, and replacement;
(4) Within 90 days of the hiring of any new subadviser, the Fund will
furnish its shareholders with an information statement containing all
information about the new subadviser, including, as applicable, aggregate fees
paid to DMC and Affiliated Subadvisers and aggregate fees paid to non-affiliated
subadvisers. The information statement provided by the Fund will include all
information required by Regulation 14C, Schedule 14C and Item 22 of Schedule 14A
under the Securities Exchange Act of 1934, as amended (except as modified by the
Order to permit the aggregate fee disclosure previously described);
(5) No trustee or officer of the applicable Delaware Company nor
director or officer of DMC will own directly or indirectly (other than through a
pooled investment vehicle that is not controlled by such person) any interest in
a subadviser except for (i) ownership of interests in DMC or any entity that
controls, is controlled by, or is under common control, with DMC; or (ii)
ownership of less than 1% of the outstanding securities of any class of equity
or debt of a publicly traded company that is either a subadviser or an entity
that controls, is controlled by or is under common control with a subadviser;
49
(6) At all times, a majority of the Board will be Independent Trustees,
and the nomination of new or additional Independent Trustees will be placed
within the discretion of the then-existing Independent Trustees;
(7) Whenever a subadviser change is proposed for the Fund with an
Affiliated Subadviser, the Board, including a majority of the Independent
Trustees, will make a separate finding, reflected in the applicable Board
minutes, that such change is in the best interests of the Fund and its
shareholders and does not involve a conflict of interest from which DMC or the
Affiliated Subadviser derives an inappropriate advantage;
(8) As applicable, the Fund will disclose in its registration statement
the aggregate fee disclosure referenced in condition four above;
(9) Independent counsel knowledgeable about the 1940 Act and the duties
of Independent Trustees will be engaged to represent the applicable Trust's
Independent Trustees. The selection of such counsel will be placed within the
discretion of the Independent Trustees;
(10) DMC will provide the Board, no less frequently than quarterly,
with information about DMC's profitability on a per-Fund basis. This information
will reflect the impact on profitability of the hiring or termination of any
subadviser during the applicable quarter;
(11) Whenever a subadviser is hired or terminated, DMC will provide the
Board with information showing the expected impact on DMC's profitability;
(12) DMC and the Acquired Fund will not enter into a subadvisory
agreement with any Affiliated Subadviser without such agreement, including the
compensation to be paid thereunder, being approved by the shareholders of the
Acquired Fund;(1) and
(13) The Order will expire on the effective date of the Proposed Rule,
if adopted.
WHAT ARE THE BENEFITS TO THE FUND?
The Board believes that it is in the best interests of each Fund's
shareholders to allow DMC the maximum flexibility to appoint, supervise and
replace subadvisers and to amend subadvisory agreements without incurring the
expense and potential delay of seeking specific shareholder approval. The
process of seeking shareholder approval is administratively expensive to a Fund
and may cause delays in executing changes that the Board and DMC have determined
are necessary or desirable. These costs are often borne entirely by the Fund. If
shareholders approve the policy authorizing a Manager of Managers Structure for
a Fund, the Board would be able to act more quickly and with less expense to the
Fund to appoint an unaffiliated subadviser, when the Board and DMC believe that
the appointment would be in the best interests of the Fund and its shareholders.
- --------
(1) However, a discussed above, you are being asked to approve the Manager of
Managers Structure with respect to Affiliated Subadvisers as well as
subadvisers who are not affiliated with DMC, subject to receipt of further
regulatory approval either through an SEC rule or exemptive relief.
50
Although shareholder approval of new subadvisory agreements and
amendments to existing subadvisory agreements is not required under the proposed
Manager of Managers Structure, the Board, including a majority of the
Independent Trustees, would continue to oversee the subadviser selection process
to help ensure that shareholders' interests are protected whenever DMC would
seek to select a subadviser or modify a subadvisory agreement. Specifically, the
Board, including a majority of the Independent Trustees, would still be required
to evaluate and approve all subadvisory agreements as well as any modification
to an existing subadvisory agreement. In reviewing new subadvisory agreements or
modifications to existing subadvisory agreements, the Board will analyze all
factors that it considers to be relevant to the determination, including the
nature, quality and scope of services to be provided by the subadviser, the
investment performance of the assets managed by the subadviser in the particular
style for which a subadviser is sought, as well as the subadviser's compliance
with Federal securities laws and regulations.
WHAT DID THE BOARD CONSIDER IN REVIEWING THIS PROPOSAL?
In determining that the Manager of Managers Structure was in the best
interests of Fund shareholders, the Boards, including a majority of the
Independent Trustees, considered the factors below, and such other factors and
information it deemed relevant, prior to approving and recommending the approval
of the Manager of Managers Structure:
(1) A Manager of Managers Structure will enable DMC to employ
subadvisers with varying investment styles or investment focuses to help enhance
performance by expanding the securities in which a Fund invests;
(2) A Manager of Managers Structure will enable DMC to promptly
reallocate Fund assets among itself and one or more subadvisers in response to
varying market conditions;
(3) A Manager of Managers Structure will enable the Board to act more
quickly, with less expense to a Fund, in appointing new subadvisers when the
Board and DMC believe that such appointment would be in the best interests of
Fund shareholders;
(4) DMC would be directly responsible for (i) establishing procedures
to monitor a subadviser's compliance with the Fund's investment objectives and
policies, (ii) analyzing the performance of the subadviser and (iii)
recommending allocations and reallocations of Fund assets among itself and one
or more subadvisers; and
(5) No subadviser could be appointed, removed or replaced without Board
approval and involvement.
51
Further, the Independent Trustees were advised by independent legal
counsel with respect to these matters.
HOW DOES PROPOSAL 1 AFFECT THIS PROPOSAL 4?
Trust management and the Boards are submitting to the vote of
shareholders of all Funds, including the Acquiring Funds, the use of the Manager
of Managers Structure. In particular, you are being asked to vote on this
Proposal in the event the reorganization for your particular Acquired Fund is
not approved by shareholders or the reorganization of your Acquired Fund into
its corresponding Acquiring Fund is not otherwise completed.
In the event, however, shareholders of your Acquired Fund approve
Proposal 1 (a reorganization with the corresponding Acquiring Fund) and such
reorganization is completed, then the Manager of Managers Structure will not be
used for your Acquired Fund and may only be used with the corresponding
Acquiring Fund if approved by the Acquiring Fund's shareholders at the Meeting.
Shareholders of an Acquired Fund will not have the right to vote on the Manager
of Managers Structure as it applies to the corresponding Acquiring Fund.
THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 4
VOTING INFORMATION
HOW WILL THE SHAREHOLDER VOTING BE HANDLED?
Only shareholders of record of the Acquired Funds at the close of
business on December 1, 2004 (the "Record Date") will be entitled to notice of
and 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. If sufficient
votes to approve a Proposal on behalf of an Acquired Fund are not received by
the date of the Meeting, the Meeting may be adjourned to permit further
solicitations of proxies. The holders of a majority of shares of an Acquired
Fund entitled to vote at the Meeting and present in person or by proxy (whether
or not sufficient to constitute a quorum) may adjourn the Meeting as to that
Fund for that Proposal. The Meeting as to one or more Acquired Funds may also be
adjourned by the Chairperson of the Meeting. Any adjournment may be with respect
to one or more Proposals for an Acquired Fund, but not necessarily for all
Proposals for all Acquired Funds.
Abstentions and broker non-votes will be included for purposes of
determining whether a quorum is present at the Meeting for a particular matter,
and will have the same effect as a vote "against" Proposals 1, 3 and 4, but will
have no affect with respect to Proposal 2, which is the election of Trustees.
Broker non-votes are proxies from brokers or nominees indicating that such
persons have not received voting instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power.
HOW DO I ENSURE MY VOTE IS ACCURATELY RECORDED?
You may attend the Meeting and vote in person. You may also vote by
completing, signing and returning the enclosed proxy card in the enclosed
postage paid envelope, or by telephone or through the Internet. If you return
your signed proxy card or vote by telephone or through Internet, your votes will
be officially cast at the Meeting by the persons appointed as proxies. A proxy
card is, in essence, a ballot. If you simply sign and date the proxy card but
give no voting instructions, your shares will be voted in favor of the Proposals
and in accordance with the views of management upon any unexpected matters that
come before the Meeting or adjournment of the Meeting. If your shares are held
of record by a broker-dealer and you wish to vote in person at the Meeting, you
should obtain a Legal Proxy from your broker of record and present it at the
Meeting.
52
MAY I REVOKE MY PROXY?
Shareholders may revoke their proxy at any time before it is voted by
sending a written notice to the applicable Trust expressly revoking their proxy,
by signing and forwarding to the applicable Trust a later-dated proxy, or by
attending the Meeting and voting in person. If your shares are held in the name
of your broker, you will have to make arrangements with your broker to revoke a
previously executed proxy.
WHAT OTHER MATTERS WILL BE VOTED UPON AT THE MEETING?
The Boards of Trustees of the Trusts do not intend to bring any matters
before the Meeting other than those described in this Proxy
Statement/Prospectus. The Boards are 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 on the Record Date will be entitled to vote
at the Meeting. The outstanding shares of the Trusts entitled to vote as of the
Record Date are set forth in the table below.
FUND SHARES
- ------------------------------------------------------------------------- -------------------------------------------
VOYAGER MUTUAL FUNDS
Arizona Fund
California Fund
Delaware Minnesota High Yield Municipal Bond Fund
Delaware Tax-Free Idaho Fund
Delaware Tax-Free New York Fund
VOYAGER INVESTMENT TRUST
California Insured Fund
Florida Fund
Florida Insured Fund
Delaware Tax-Free Missouri Insured Fund
Delaware Tax-Free Oregon Insured Fund
53
WHAT OTHER SOLICITATIONS WILL BE MADE?
This proxy solicitation is being made by the Board of Trustees of the
Trusts for use at the Meeting. The cost of this proxy solicitation will be
shared as set forth below. In addition to solicitation by mail, solicitations
also may be made by advertisement, telephone, telegram, facsimile transmission
or other electronic media, or personal contacts. The Trusts will request
broker-dealer firms, custodians, nominees and fiduciaries to forward proxy
materials to the beneficial owners of the shares of record. The Trusts may
reimburse broker-dealer firms, custodians, nominees and fiduciaries for their
reasonable expenses incurred in connection with such proxy solicitation. In
addition to solicitations by mail, officers and employees of each Trust, without
extra pay, may conduct additional solicitations by telephone, telecopy and
personal interviews. The Trusts have engaged [DF King & Co.] to solicit proxies
from brokers, banks, other institutional holders and individual shareholders at
an anticipated cost of approximately $[ ] to $[ ], including out of pocket
expenses, which will be borne as described below. Fees and expenses may be
greater depending on the effort necessary to obtain shareholder votes. The
Trusts' have also agreed to indemnify [D.F. King] against certain liabilities
and expenses, including liabilities under the federal securities laws. The Trust
expects that the solicitations will be primarily by mail, but also may include
telephone, telecopy or oral solicitations. If a Trust does not receive your
proxy card by a certain time, you may receive a telephone call from [DF King &
Co.] asking you to vote.
WHO WILL PAY THE EXPENSES OF THE PROPOSALS?
The costs of the of Proposals, including the costs of soliciting
proxies, will be borne by one or more of the Trusts, the other Delaware
Companies and DMC, as described below.
With respect to Proposal 1, except as provided below, the expenses
resulting from an Acquired Fund's participation in a Transaction, including
solicitation of proxies, will be shared by the following parties in the
percentages indicated: 33.33% by the Acquired Fund, 33.33% by the Acquiring
Fund, and 33.34% by DMC. The expenses borne by the Florida Fund in connection
with the Transaction will limited to no more than $15,000 and DMC will bear the
Florida Fund's one-third portion of expenses that exceed $15,000.
With respect to Proposal 2, the election of Trustees of the Trusts (and
to the Boards of Trustees/Directors of the other Delaware Companies), the
Trusts, along with the other Delaware Companies participating in the Meeting,
will bear the expenses equally in connection with the election of such nominees.
With respect to Proposal 3, because the Redomestication will benefit
Voyageur Investment Trust and its shareholders, the Board of Trustees of
Voyageur Investment Trust has authorized that the expenses incurred in the
Redomestication, including the estimated costs associated with soliciting
proxies with respect to this Proposal, shall be paid by Voyageur Investment
Trust (and therefore indirectly by shareholders), whether or not the
Redomestication is approved by shareholders.
54
With respect to Proposal 4, the Trusts, along with the other Delaware
Companies participating in the Meeting, will bear the expenses equally in
connection with seeking shareholder approval for use of a manager of managers
structure.
HOW DO I SUBMIT A SHAREHOLDER PROPOSAL?
Neither Trust is required to, and they do not intend to, hold regular
annual shareholders' meetings. A shareholder wishing to submit a proposal for
consideration for inclusion in a proxy statement for the next shareholders'
meeting should send his or her written proposal to the offices of the Trust,
directed to the attention of its Secretary, at the address of its principal
executive office printed on the first page of this Proxy Statement/Prospectus,
so that it is received within a reasonable time before any such meeting. The
inclusion and/or presentation of any such proposal is subject to the applicable
requirements of the proxy rules under the 1934 Act. Submission of a proposal by
a shareholder does not guarantee that the proposal will be included in the
Trust's proxy statement or presented at the meeting.
PRINCIPAL HOLDERS OF SHARES
On the Record Date, the officers and Trustees of each Trust, as a
group, owned less than 1% of the outstanding voting shares of any series, or
class thereof, of the Trust.
To the best knowledge of the Trusts, as of the Record Date, no person,
except as set forth in the table at Exhibit F, owned of record 5% or more of the
outstanding shares of any class of any series of the Trusts. Except as noted in
Exhibit F, the Trusts has no knowledge of beneficial ownership.
INDEPENDENT ACCOUNTANTS AND AUDIT COMMITTEE REPORT
The firm of Ernst & Young LLP has been selected as the independent
auditor for the Trusts. In accordance with Independence Standards Board Standard
No. 1 ("ISB No. 1"), Ernst & Young LLP has confirmed to each Trust's Audit
Committee regarding the independence of Ernst & Young LLP. The Audit Committee
must approve all audit and non-audit services provided by Ernst & Young LLP
relating to the operations or financial reporting of the Trusts. The Audit
Committee reviews any audit or non-audit services to determine whether they are
appropriate and permissible under applicable law.
Each Trust's Audit Committee has adopted policies and procedures to
provide a framework for the Audit Committee's consideration of non-audit
services by Ernst & Young LLP. These policies and procedures require that any
non-audit service to be provided by Ernst & Young LLP to a Trust, DMC or any
entity controlling, controlled by or under common control with DMC that relate
directly to the operations and financial reporting of a Trust are subject to
pre-approval by the Audit Committee or the Chairperson of the Audit Committee
before such service is provided.
55
As required by its charter, each Trust's Audit Committee has reviewed
and discussed with Trust management and representatives from Ernst & Young LLP
the audited financial statements for the Trust's last fiscal year. The Audit
Committee has discussed with the independent auditors the matters required to be
discussed by Statement of Auditing Standards 61. The Audit Committee also
received the written disclosures and the letter from its independent auditors
required by ISB No. 1, and discussed with a representative of Ernst & Young LLP
the independent auditor's independence. Each Trust's Board of Trustees
considered the financial information systems design and implementation fees and
other fees received by Ernst & Young LLP from DMC and its affiliates during the
last fiscal year in connection with its consideration of the auditors'
independence.
AUDIT FEES. The aggregate fees billed by Ernst & Young LLP in
connection with the annual audit of each Trust's financial statements and for
services normally provided by the independent auditors in connection with
statutory and regulatory filings or engagements for the fiscal years ended
August 31, 2004 and 2003 for the Trusts are set forth below:
- ----------------------------------------- ------------------------------------- --------------------------------------
AUDIT FEES AUDIT FEES
TRUST FOR FYE 8/31/04 FOR FYE 8/31/03
- ----------------------------------------- ------------------------------------- --------------------------------------
Voyageur Mutual Funds
- ----------------------------------------- ------------------------------------- --------------------------------------
Voyageur Investment Trust
- ----------------------------------------- ------------------------------------- --------------------------------------
AUDIT-RELATED FEES. The aggregate fees billed by the Trusts independent
auditors for services relating to the performance of the audit of each Trust
financial statements and not reported above under "Audit Fees" are described
below for the fiscal years ended August 31, 2004 and 2003. The percentage of
these fees relating to services approved by the Audit Committee pursuant to the
de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C)
of Regulation S-X was 0%.
- ----------------------------------------- ------------------------------------- --------------------------------------
AUDIT-RELATED FEES AUDIT-RELATED FEES
TRUST FOR FYE 8/31/04 FOR FYE 8/31/03
- ----------------------------------------- ------------------------------------- --------------------------------------
Voyageur Mutual Funds
- ----------------------------------------- ------------------------------------- --------------------------------------
Voyageur Investment Trust
- ----------------------------------------- ------------------------------------- --------------------------------------
The aggregate fees billed by Ernst & Young LLP for services relating to
the performance of the audit of the financial statements of DMC and other
service providers under common control with DMC that relate directly to the
operations or financial reporting of a Trust for the fiscal years ended August
31, 2004 and 2003. The percentage of these fees relating to services approved by
the Audit Committee pursuant to the de minimis exception from the pre-approval
requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These
audit-related services were as follows: issuance of agreed-upon procedures
reports to the Boards of Trustees in connection with the annual accounting
service agent contract renewal and the pass-through of internal legal costs
relating to the operations of the Trust.
56
TAX FEES. The aggregate fees billed by the Trusts' independent auditors
for tax-related services provided to each Trust are described below for the
fiscal years ended August 31, 2004 and 2003. The percentage of these fees
relating to services approved by the Audit Committee pursuant to the de minimis
exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of
Regulation S-X was 0%. These tax-related services were as follows: review of
income tax and excise tax returns.
- ----------------------------------------- ------------------------------------- --------------------------------------
TAX FEES TAX FEES
TRUST FOR FYE 8/31/04 FOR FYE 8/31/03
- ----------------------------------------- ------------------------------------- --------------------------------------
Voyageur Mutual Funds
- ----------------------------------------- ------------------------------------- --------------------------------------
Voyageur Investment Trust
- ----------------------------------------- ------------------------------------- --------------------------------------
The aggregate fees billed by the Trusts' independent auditors for
tax-related services provided to DMC and other service providers under common
control with DMC that relate directly to the operations or financial reporting
of the Trusts were $0 for each Trust last two completed fiscal years ended on
August 31, 2004 and August 31, 2003.
ALL OTHER FEES. The aggregate fees billed for all services provided by
the independent auditors to the Trusts other than those set forth above were
[$0] for the prior two fiscal years.
The aggregate fees billed for all services other than those set forth
above provided by the Trusts' independent auditors to DMC and other service
providers under common control with and that relate directly to the operations
or financial reporting of the Trusts were [$0] for the Trusts prior two fiscal
years.
AGGREGATE NON-AUDIT FEES TO THE TRUSTS, DMC AND SERVICE PROVIDER
AFFILIATES. The aggregate non-audit fees billed by the independent auditors for
services rendered to Voyageur Mutual Funds and to DMC and other service
providers under common control with DMC, were $[ ] and $[ ] for fiscal years
ended August 31, 2004 and August 31, 2003, respectively. The aggregate non-audit
fees billed by the independent auditors for services rendered to the Voyageur
Investment Trust and DMC and other service providers under common control with
DMC were $[ ] and $[ ] for fiscal years ended August 31, 2004 and August 31,
2003, respectively.
In connection with its selection of the independent auditors, the Audit
Committee has considered the independent auditors' provision of non-audit
services to DMC and other service providers under common control with the DMC
that were not required to be pre-approved pursuant to Rule 2-01(c)(7)(ii) of
Regulation S-X. The Audit Committee has determined that the independent
auditors' provision of these services is compatible with maintaining the
auditors' independence.
COMMUNICATIONS TO THE BOARDS OF TRUSTEES
Shareholders who wish to communicate to the full Boards of Trustees may
address correspondence to [Walter P. Babich,] Coordinating Trustee for the
Trusts, c/o Voyageur Mutual Funds (or) Voyageur Investment Trust (as the case
may be) at 2005 Market Street, Philadelphia, Pennsylvania, 19103. Shareholders
may also send correspondence to the Coordinating Trustee or any individual
Trustee c/o Voyageur Mutual Funds (or) Voyageur Investment Trust (as the case
may be) at 2005 Market Street, Philadelphia, Pennsylvania 19103. Without opening
any such correspondence, Trust management will promptly forward all such
correspondence to the intended recipient(s).
57
DELAWARE INVESTMENTS Your prompt response will
save your Fund the expense
of additional mailings.
Please fold and detach card at perforation before mailing
VOYAGEUR [ ]
JOINT MEETING OF SHAREHOLDERS
FORM OF PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Richelle S.
Maestro, Brian L. Murray, Jr., David P. O'Connor and Michael P. Bishof or any
one of them, attorneys, with full power of substitution, to vote all shares of
the Delaware Tax-Free [ ] Fund (the "Fund"), a series of the Voyageur [ ] (the
"Trust"), as indicated above which the undersigned is entitled to vote at a
Joint Meeting of Shareholders of the Trust to be held at the offices of Delaware
Investments located at 2001 Market Street, 2nd Floor Auditorium, Philadelphia,
PA 19103-7055 on March 15, 2005 at 4 p.m., Eastern time, and at any adjournments
thereof. All powers may be exercised by two or more of said proxy holders or
substitutes voting or acting or, if only one votes and acts, then by that one.
This proxy shall be voted on the proposals described in the Proxy
Statement/Prospectus as specified on the reverse side.
Receipt of the Notice of Joint Meeting and the accompanying Proxy
Statement/Prospectus is hereby acknowledged.
Date: ______________________
NOTE: Please sign exactly as your
name appears on this proxy card.
When signing in a fiduciary capacity,
such as executor, administrator,
trustee, attorney, guardian, etc.,
please so indicate. Corporate and
partnership proxies should be
signed by an authorized person
indicating the person's title.
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE
* Please fold and detach card at perforation before mailing *
Please refer to the Proxy Statement/Prospectus discussion of each of these
proposals.
IF NO SPECIFICATION IS MADE AND THIS PROXY IS SIGNED AND RETURNED, THE PROXY
SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with the views
of management.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
1. To approve the Plan of Reorganization between FOR AGAINST ABSTAIN
the Trust on behalf of the Fund, and Voyageur [
], on behalf of the Delaware Tax-Free [ ] Fund
(the "Acquiring Fund") which provides for: (i) [ ] [ ] [ ]
the acquisition by the Acquiring Fund of
substantially all of the assets of the Fund, in
exchange for shares of the Acquiring Fund and
the assumption by the Acquiring Fund of the
liabilities of the Fund; (ii) the pro rata
distribution of shares of the Acquiring Fund to
the shareholders of the Fund; and (iii) the
liquidation and dissolution of the Fund.
2. To elect the 8 nominees specified as Trustees: FOR all WITHHOLD
Jude T. Driscoll, John A. Fry, Anthony D. nominees listed Authority to
Knerr, Ann R. Leven, Thomas F. Madison, Janet (except as marked to vote for all
L. Yeomans, [Nominee], [Nominee] the contrary at nominees.
left).
[ ] [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
-------------------------------------------------
3. [For Voyageur Investment Trust only] To approve FOR AGAINST ABSTAIN
an Agreement and Plan of Redomestication of the
Trust from a Massachusetts business trust to a [ ] [ ] [ ]
Delaware statutory trust.
4. To approve the use of a "manager of managers" FOR AGAINST ABSTAIN
structure whereby the investment manager of the
funds of the Trust will be able to hire and [ ] [ ] [ ]
replace subadvisers without shareholder
approval.
EXHIBITS TO COMBINED
PROXY STATEMENT AND PROSPECTUS
EXHIBIT
A Form of Agreement and Plan of Reorganization
B Form of Plan of Reorganization by Voyageur Investment Trust (on behalf
of the Florida and Florida Insured Fund)
C Executive Officers of the Funds
D Form of Agreement and Plan of Redomestication between Voyageur
Investment Trust and Delaware Investments Municipal Trust
E A Comparison of Governing Documents and State Law
F Principal Holder of Shares
OTHER DOCUMENTS INCLUDED WITH
THIS PROXY STATEMENT/PROSPECTUS
o Prospectus of Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free
California Fund and Delaware Tax-Free Florida Insured Fund dated
November 30, 2004, as previously filed via EDGAR, is incorporated into
this filing by reference to Post-Effective Amendment No. [ ] filed on
[ ]. [To be completed by Pre-Effective Amendment].
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
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 [ ] (the
"[Surviving] Trust"), a statutory trust created under the laws of the State of
Delaware, with its principal place of business at 2005 Market Street,
Philadelphia, Pennsylvania 19103, on behalf of its series, Delaware [ ] Fund
("[Surviving] Fund"), and [Delaware Group] [ ] [Fund/Trust] (the "[Target]
Trust"), a statutory trust created under the laws of the State of Delaware, with
its principal place of business also at 2005 Market Street, Philadelphia,
Pennsylvania 19103, on behalf of its series Delaware [ ] Fund ("[Target] Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of: (i) the acquisition by the [Surviving] Trust
on behalf of the [Surviving] Fund of substantially all of the property, assets
and goodwill of the [Target] Fund in exchange solely for (a) shares of
beneficial interest, no par value, of the [Surviving] Fund - Class A
("[Surviving] Fund Class A Shares"), (b) shares of beneficial interest, no par
value, of the [Surviving] Fund - Class B ("[Surviving] Fund Class B Shares"),
(c) shares of beneficial interest, no par value, of the [Surviving] Fund - Class
C ("[Surviving] Fund Class C Shares"), (d) shares of beneficial interest, no par
value, of the [Surviving] Fund - Class R ("[Surviving] Fund Class R Shares"),
(e) shares of beneficial interest, no par value, of the [Surviving] Fund -
Institutional Class ("[Surviving] Fund Institutional Class Shares"), and (f) the
assumption by the [Surviving] Trust on behalf of the [Surviving] Fund of all of
the liabilities of the [Target] Fund; (ii) the distribution of (a) [Surviving]
Fund Class A shares to the shareholders of [Target] Fund - Class A Shares
("[Target] Fund Class A Shares"), (b) [Surviving] Fund Class B Shares to the
shareholders of [Target] Fund - Class B Shares ("[Target] Fund Class B Shares"),
(c) [Surviving] Fund Class C Shares to the shareholders of [Target] Fund - Class
C Shares ("[Target] Fund Class C Shares"), (d) [Surviving] Fund Class R Shares
to the shareholders of [Target] Fund - Class R Shares ("[Target] Fund Class R
Shares"), and (e) [Surviving] Fund Institutional Class Shares to the
shareholders of [Target] Fund - Institutional Class Shares ("[Target] Fund
Institutional Class Shares"), according to their respective interests in
complete liquidation of the [Target] Fund; and (iii) the dissolution of the
[Target] 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 [TARGET] FUND
(a) Subject to the terms and conditions of this Agreement, and
in reliance on the representations and warranties of the [Surviving] Trust
herein contained, and in consideration of the delivery by the [Surviving] Trust
of the number of its shares of beneficial interest of the [Surviving] Fund
hereinafter provided, the [Target] Trust, on behalf of the [Target] Fund, agrees
that it will sell, convey, transfer and deliver to the [Surviving] Trust, on
behalf of the [Surviving] 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 [Target] 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 [Target] 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 [Target] 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 [Target] Fund as liability reserves, (2) to discharge all of the
[Target] 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 [Target] Trust shall reasonably deem to exist against the [Target] 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
[Target] Fund (hereinafter "Net Assets"). The [Target] Trust, on behalf of the
[Target] Fund, 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 [Target] Trust agrees to use commercially
reasonable efforts to identify all of the [Target] Fund's Liabilities prior to
the Valuation Date and to discharge all such known Liabilities on or prior to
the Valuation Date.
2
(b) Subject to the terms and conditions of this Agreement, and
in reliance on the representations and warranties of the [Target] Trust on
behalf of the [Target] Fund herein contained, and in consideration of such sale,
conveyance, transfer, and delivery, the [Surviving] Trust agrees at the Closing
to assume the Liabilities, on behalf of the [Surviving] Fund, and to deliver to
the [Target] Trust on behalf of the [Target] Fund: (i) the number of [Surviving]
Fund Class A Shares, determined by dividing the net asset value per share of
[Target] Fund Class A Shares as of the Close of Business on the Valuation Date
by the net asset value per share of [Surviving] 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 [Target] Fund Class A Shares as of Close of Business
on the Valuation Date; (ii) the number of [Surviving] Fund Class B Shares,
determined by dividing the net asset value per share of [Target] Fund Class B
Shares as of Close of Business on the Valuation Date by the net asset value per
share of [Surviving] Fund Class B Shares as of Close of Business on the
Valuation Date, and multiplying the result by the number of outstanding shares
of [Target] Fund Class B Shares as of Close of Business on the Valuation Date;
(iii) the number of [Surviving] Fund Class C Shares, determined by dividing the
net asset value per share of [Target] Fund Class C Shares as of Close of
Business on the Valuation Date by the net asset value per share of [Surviving]
Fund Class C Shares as of Close of Business on the Valuation Date, and
multiplying the result by the number of outstanding shares of [Target] Fund
Class C Shares as of Close of Business on the Valuation Date; (iv) the number of
[Surviving] Fund Class R Shares, determined by dividing the net asset value per
share of [Target] Fund Class R Shares as of Close of Business on the Valuation
Date by the net asset value per share of [Surviving] Fund Class R Shares as of
Close of Business on the Valuation Date, and multiplying the result by the
number of outstanding shares of [Target] Fund Class R Shares as of Close of
Business on the Valuation Date; and (v) the number of [Surviving] Fund
Institutional Class Shares, determined by dividing the net asset value per share
of [Target] Fund Institutional Class Shares as of Close of Business on the
Valuation Date by the net asset value per share of [Surviving] Fund
Institutional Class Shares as of Close of Business on the Valuation Date, and
multiplying the result by the number of outstanding shares of [Target] 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.
3
(c) As soon as practicable following the Closing, the [Target]
Trust shall dissolve the [Target] Fund and distribute pro rata to the [Target]
Fund's shareholders of record as of the Close of Business on the Valuation Date,
the shares of beneficial interest of the [Surviving] Fund received by the
[Target] Fund pursuant to this Section 1. Such dissolution and distribution
shall be accomplished by the establishment of accounts on the share records of
the [Surviving] 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
[Target] Fund as of the Close of Business on the Valuation Date. Fractional
shares of beneficial interest of the [Surviving] Fund shall be carried to the
third decimal place. Unless requested, no certificates representing shares of
beneficial interest of the [Surviving] Fund will be issued to shareholders of
the [Target] Fund Shares irrespective of whether such shareholders hold their
shares in certificated form.
(d) At the Closing, each outstanding certificate that, prior
to Closing, represented shares of beneficial interest of the [Target] Fund,
shall be cancelled and shall no longer be evidence ownership; provided, however,
that the shareholders of the [Target] Fund holding such certificates shall be
entitled to surrender such certificates to the transfer agent for the
[Surviving] Trust and request in exchange therefor a certificate or certificates
representing the number of whole shares of beneficial interest of the class of
[Surviving] Fund shares into which the corresponding shares of beneficial
interest of the [Target] Fund theretofore represented by the certificate or
certificates so surrendered shall have been converted. Certificates for
fractional shares of beneficial interest of the [Surviving] Fund shall not be
issued, but such fractional shares shall continue to be carried by the
[Surviving] Trust in book entry form for the account of such shareholder.
(e) At the Closing, each shareholder of record of the [Target]
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 [Target] Fund that such person
had on such Distribution Record Date.
4
2. VALUATION
(a) The value of the [Target] Fund's Net Assets to be acquired
by the [Surviving] Fund hereunder shall be computed as of Close of Business on
the Valuation Date using the valuation procedures set forth in the [Target]
Fund's currently effective prospectus and statement of additional information.
(b) The net asset value of a share of beneficial interest of
the [Surviving] Fund Class A Shares, [Surviving] Fund Class B Shares,
[Surviving] Fund Class C Shares, [Surviving] Fund Class R Shares and [Surviving]
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 [Surviving] Fund's currently effective prospectus and statement
of additional information.
(c) The net asset value of a share of beneficial interest of
the [Target] Fund Class A Shares, [Target] Fund Class B Shares, [Target] Fund
Class C Shares, [Target] Fund Class R Shares and [Target] 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 [Target] 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 [Surviving] Trust, 2005 Market Street, Philadelphia, Pennsylvania
19103 at approximately 9:00 a.m. Eastern time on the first business day
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 [Surviving] Trust or [Target] Trust, accurate appraisal of the
value of the net assets of the [Target] Fund or the [Surviving] 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 [Target] Fund and the [Surviving] Fund is
practicable in the judgment of the [Surviving] Trust and [Target] Trust. The
[Target] Trust shall have provided for delivery as of the Closing of those Net
Assets of the [Target] Fund to be transferred to the [Surviving Fund's]
Custodian, [Mellon Bank, N.A., One Mellon Center, Pittsburgh, PA 15258]
[JPMorgan Chase Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245]. Also, the
[Target] 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 [Target] 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 [Surviving] Trust shall issue and deliver a
certificate or certificates evidencing the shares of the [Surviving] Fund to be
delivered at the Closing to said transfer agent registered in such manner as the
[Target] Trust may request, or provide evidence satisfactory to the [Target]
Trust in such manner as the [Target] Trust may request that such shares of
beneficial interest of the [Surviving] Fund have been registered in an open
account on the books of the [Surviving] Fund.
5
4. REPRESENTATIONS AND WARRANTIES BY THE [TARGET] TRUST
The [Target] Trust represents and warrants to the [Surviving]
Trust that:
(a) The [Target] Trust is a statutory trust created under the
laws of the [State of Delaware] [Commonwealth of Massachusetts] on [ ], and is
validly existing and in good standing under the laws of that [State]
[Commonwealth]. The [Target] Trust, of which the [Target] 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 [Target] Trust is authorized to issue an unlimited
number of shares of beneficial interest of the [Target] Fund, with no par value.
Each outstanding share of the [Target] 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 [Target] Fund
Annual Report to Shareholders for the fiscal year ended [ ], audited by Ernst &
Young, LLP, copies of which have been delivered to the [Surviving] Trust, and
any unaudited financial statements, copies of which may be furnished to the
[Surviving] Trust, fairly present the financial position of the [Target] 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.
(d) The books and records of the [Target] Fund made available
to the [Surviving] 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 [Target] Fund.
(e) The statement of assets and liabilities to be furnished by
the [Target] 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
[Surviving] Fund to be issued pursuant to Section 1 hereof will accurately
reflect the Net Assets of the [Target] 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 [Target] Trust has the necessary power and authority
to conduct its business and the business of the [Target] Fund as such businesses
are now being conducted.
6
(h) The [Target] 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.
(i) The [Target] 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 [Target] 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 [Target] Trust nor the [Target] 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 [Target] Trust does not have any unamortized or unpaid
organizational fees or expenses.
(l) The [Target] Trust has elected to treat the [Target] Fund
as a regulated investment company ("RIC") for federal income tax purposes under
Part I of Subchapter M of the Code, the [Target] 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.
5. REPRESENTATIONS AND WARRANTIES BY THE [SURVIVING] TRUST
The [Surviving] Trust represents and warrants to the [Target]
Trust that:
(a) The [Surviving] Trust is a statutory trust created under
the laws of the [State of Delaware] [Commonwealth of Massachusetts] on [ ], and
is validly existing and in good standing under the laws of that [State]
[Commonwealth]. The [Surviving] Trust, of which the [Surviving] 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 [Surviving] Trust is authorized to issue an unlimited
number of shares of beneficial interest, without par value, of the [Surviving]
Fund. Each outstanding share of the [Surviving] 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
[Surviving] 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.
7
(c) At the Closing, each class of shares of beneficial
interest of the [Surviving] 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 [Target] 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.
(d) The statement of assets and liabilities of the [Surviving]
Fund to be furnished by the [Surviving] 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 [Surviving] Fund to be issued pursuant to Section 1 hereof will
accurately reflect the net assets of the [Surviving] 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 [Surviving] 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 [Surviving] Trust has the necessary power and
authority to conduct its business and the business of the [Surviving] Fund as
such businesses are now being conducted.
(g) The [Surviving] 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.
(h) The [Surviving] 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 [Surviving] Trust nor the [Surviving] 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 [Surviving] Fund made
available to the [Target] 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 [Surviving] Fund.
(k) The [Surviving] Trust has elected to treat the [Surviving]
Fund as a regulated investment company ("RIC") for federal income tax purposes
under Part I of Subchapter M of the Code, the [Surviving] 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.
8
6. REPRESENTATIONS AND WARRANTIES BY THE [TARGET] TRUST AND
THE [SURVIVING] TRUST
The [Target] Trust and the [Surviving] 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 [Target]
Fund or the [Surviving] Fund, as appropriate, all Tax (as defined below) returns
and reports (including information returns), which are required to be filed by
such [Target] Fund or [Surviving] 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 [Target] Fund or [Surviving] Fund. On behalf of
the [Target] Fund or the [Surviving] 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 [Target] Fund or
[Surviving] Fund, as appropriate, as of the Close of Business on the Valuation
Date 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
[Target] Fund or [Surviving] 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 [Target] Fund or [Surviving] 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 [Target] Fund or [Surviving] Fund, as
appropriate.
(d) All information provided to the [Target] Trust by the
[Surviving] Trust, and by the [Target] Trust to the [Surviving] Trust, for
inclusion in, or transmittal with, the Combined Proxy Statement and Prospectus
with respect to this Agreement pursuant to which approval of the [Target]
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.
9
(e) Except in the case of the [Target] Trust with respect to
the approval of the [Target] 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 [TARGET] TRUST
(a) The [Target] Trust covenants to operate business of the
[Target] Fund as presently conducted between the date hereof and the Closing.
(b) The [Target] Trust undertakes that the [Target] Fund will
not acquire the shares of beneficial interest of the [Surviving] Fund for the
purpose of making distributions thereof other than to the [Target] Fund's
shareholders.
(c) The [Target] Trust covenants that by the Closing, all of
the [Target] 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 [Target] Trust will at the Closing provide the
[Surviving] Trust with:
(1) A statement of the respective tax basis of all
investments to be transferred by the [Target] Fund to the
[Surviving] Fund.
(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 [Target] Fund with respect
to each shareholder, for all of the shareholders of record of
the [Target] Fund's shares as of the Close of Business on the
Valuation Date, who are to become holders of the [Surviving]
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 [Target] Trust shall call and
the [Target] Trust shall hold, a Special Meeting of the [Target] Fund's
shareholders to consider and vote upon this Agreement (the "Special Meeting")
and the [Target] Trust shall take all other actions reasonably necessary to
obtain approval of the transactions contemplated herein. The [Target] 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.
10
(f) The [Target] Trust shall supply to the [Surviving] 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.
8. COVENANTS OF THE [SURVIVING] TRUST
(a) The [Surviving] Trust covenants that the shares of
beneficial interest of the [Surviving] Fund to be issued and delivered to the
[Target] 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 [Surviving] Fund shall have any
statutory or contractual preemptive right of subscription or purchase in respect
thereof.
(b) The [Surviving] Trust covenants to operate the business of
the [Surviving] Fund as presently conducted between the date hereof and the
Closing.
(c) The [Surviving] Trust covenants that by the Closing, all
of the [Surviving] 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 [Surviving] Trust shall supply to the [Target] 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 [Surviving] 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 [Surviving] Fund issuable hereunder, and
will use its best efforts to provide that such Registration Statement becomes
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
[Target] 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.
11
9. CONDITIONS PRECEDENT TO BE FULFILLED BY THE [TARGET] TRUST AND
THE [SURVIVING] TRUST
The obligations of the [Target] Trust and the [Surviving]
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.
(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 [Target] Fund at an annual or special meeting
or any adjournment thereof.
(e) That the [Target] 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 [Target] Fund or the
[Surviving] Fund.
12
(g) That prior to or at the Closing, the [Target] Trust and
the [Surviving] 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 [Target] Trust and the [Surviving]
Trust in certificates delivered to SRSY:
(1) The acquisition by the [Surviving] Fund of
substantially all of the assets and the assumption of the
liabilities of the [Target] Fund in exchange solely for the
[Surviving] Fund shares to be issued pursuant to Section 1
hereof, followed by the distribution by the [Target] Fund to
its shareholders of the [Surviving] Fund shares in complete
liquidation of the [Target] Fund, will qualify as a
reorganization within the meaning of Section 368(a)(1) of the
Code, and the [Surviving] Fund and the [Target] 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
[Target] Fund upon the transfer of substantially all of its
assets to and the assumption of the liabilities by the
[Target] Fund in exchange solely for the voting shares of the
[Surviving] Fund (to be issued in accordance with Section 1
hereof) under Section 361(a) and Section 357(a) of the Code;
(3) No gain or loss will be recognized by the
[Surviving] Fund upon the receipt by it of substantially all
of the assets and the assumption of the liabilities of the
[Target] Fund in exchange solely for the voting shares of the
[Surviving] 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
[Target] Fund upon the distribution of the [Surviving] Fund
shares to the [Target] Fund shareholders in accordance with
Section 1 hereof in liquidation of the [Target] Fund under
Section 361(c)(1) of the Code.
(5) The basis of the assets of the [Target] Fund
received by the [Surviving] Fund will be the same as the basis
of such assets to the [Target] Fund immediately prior to the
exchange under Section 362(b) of the Code;
(6) The holding period of the assets of the [Target]
Fund received by the [Surviving] Fund will include the period
during which such assets were held by the [Target] Fund under
Section 1223(2) of the Code;
(7) No gain or loss will be recognized by the
shareholders of the [Target] Fund upon the exchange of their
shares in the [Target] Fund for the voting shares (including
fractional shares to which they may be entitled) of the
[Surviving] Fund (to be issued in accordance with Section 1
hereof) under Section 354(a) of the Code;
13
(8) The basis of the [Surviving] Fund shares received
by the [Target] 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
[Target] Fund exchanged therefor under Section 358(a)(1) of
the Code;
(9) The holding period of the [Surviving] Fund's
shares received by the [Target] 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 [Target] Fund's shares surrendered in exchange
therefor, provided that the [Target] Fund shares were held as
a capital asset on the date of the Reorganization under
Section 1223(l) of the Code; and
(10) The [Surviving] 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
[Target] 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 [Surviving] Trust shall have received an opinion
in form and substance reasonably satisfactory to it from SRSY, counsel to the
[Target] 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:
(1) The [Target] Trust was created as a [statutory
trust] [business trust] under the laws of the [State of
Delaware] [Commonwealth of Massachusetts] on [ ], and is
validly existing and in good standing under the laws of the
[State of Delaware] [Commonwealth of Massachussetts];
(2) The [Target] Trust is authorized to issue an
unlimited number of shares of beneficial interest, without par
value, of the [Target] Trust and of the [Target] Fund.
Assuming that the initial shares of beneficial interest of the
[Target] Fund were issued in accordance with the 1940 Act, and
the Agreement and Declaration of Trust and By-Laws of the
[Target] Trust, and that all other such outstanding shares of
the [Target] Fund were sold, issued and paid for in accordance
with the terms of the [Target] 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 [Target] Trust is an open-end, investment
company of the management type registered as such under the
1940 Act;
14
(4) Except as disclosed in the [Target] 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 [Target] Trust,
the unfavorable outcome of which would materially and
adversely affect the [Target] Trust or the [Target] Fund;
(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
[Target] 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 [Target] 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 [Target] Trust is a party or by which the
[Target] Trust is otherwise bound; and
(7) This Agreement has been validly authorized,
executed and delivered by the [Target] Trust and represents
the legal, valid and binding obligation of the [Target] Trust
and is enforceable against the [Target] 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 [Target] Trust with regard to
matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of the [Target] Trust.
(i) That the [Target] Trust shall have received an opinion in
form and substance reasonably satisfactory to it from SRSY, counsel to the
[Surviving] 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:
(1) The [Surviving] Trust was created as a statutory
trust under the laws of the [State of Delaware] [Commonwealth
of Massachusetts] on [ ], and is validly existing and in good
standing under the laws of the [State of Delaware]
[Commonwealth of Massachusetts];
15
(2) The [Surviving] 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 [Surviving] Fund were issued in accordance with the
1940 Act and the [Surviving] Trust's Agreement and Declaration
of Trust and By-Laws, and that all other such outstanding
shares of the [Surviving] Fund were sold, issued and paid for
in accordance with the terms of the [Surviving] 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 [Surviving] Trust is an open-end investment
company of the management type registered as such under the
1940 Act;
(4) Except as disclosed in the [Surviving] 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 [Surviving]
Trust, the unfavorable outcome of which would materially and
adversely affect the [Surviving] Trust or the [Surviving]
Fund;
(5) The shares of beneficial interest of the
[Surviving] 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 [Surviving] Trust or the [Surviving] 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
[Surviving] 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 [Surviving] 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 [Surviving]
Trust is a party or by which the [Surviving] Trust is
otherwise bound; and
(8) This Agreement has been validly authorized,
executed and delivered by the [Surviving] Trust and represents
the legal, valid and binding obligation of the [Surviving]
Trust and is enforceable against the [Surviving] Trust in
accordance with its terms.
16
In giving the opinions set forth above, SRSY may state that it
is relying on certificates of the officers of the [Surviving] Trust with regard
to matters of fact and certain certifications and written statements of
governmental officials with respect to the good standing of the [Surviving]
Trust.
(j) That the [Surviving] Trust's Registration Statement with
respect to the shares of beneficial interest of the [Surviving] Fund to be
delivered to the [Target] 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 [Surviving]
Fund to be delivered in accordance with Section 1 hereof shall be eligible for
sale by the [Surviving] 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 [Target] Fund shareholder.
(l) That at the Closing, the [Target] Trust, on behalf of the
[Target] Fund, transfers to the [Surviving] Fund aggregate Net Assets of the
[Target] 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 [Target] 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 [insert
allocations as set forth in the Proxy Statement/Prospectus].
(b) Any other provision of this Agreement to the contrary
notwithstanding, any liability of the [Target] Trust under this Agreement with
respect to any series of the [Target] Trust, or in connection with the
transactions contemplated herein with respect to any series of the [Target]
Trust, shall be discharged only out of the assets of that series of the [Target]
Trust, and no other series of the [Target] Trust shall be liable with respect
thereto.
(c) Any other provision of this Agreement to the contrary
notwithstanding, any liability of the [Surviving] Trust under this Agreement
with respect to any series of the [Surviving] Trust, or in connection with the
transactions contemplated herein with respect to any series of the [Surviving]
Trust, shall be discharged only out of the assets of that series of the
[Surviving] Trust, and no other series of the [Surviving] 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 [Target] Fund) prior to the Closing as follows:
17
(1) by mutual consent of the [Target] Trust and the
[Surviving] Trust;
(2) by the [Surviving] Trust if any condition
precedent to its obligations set forth in Section 9 has not
been fulfilled or waived by the [Surviving] Trust; or
(3) by the [Target] Trust if any condition precedent
to its obligations set forth in Section 9 has not been
fulfilled or waived by the [Target] Trust.
(b) If the transactions contemplated by this Agreement have
not been consummated by [ ], this Agreement shall automatically terminate on
that date, unless a later date is agreed to by both the [Target] Trust and the
[Surviving] 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 [Target] Trust or
the [Surviving] 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 [Target] Trust or the
[Surviving] 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 [Target] Trust nor
the [Surviving] 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 [Target] Trust or the [Surviving]
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.
(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
[Target] Trust or the Board of Trustees of the [Surviving] 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 [Target]
Fund, unless such further vote is required by applicable law or by mutual
consent of the parties.
12. LIABILITY OF THE [SURVIVING] TRUST AND THE [TARGET] TRUST
(a) Each party acknowledges and agrees that all obligations of
the [Surviving] Trust under this Agreement are binding only with respect to the
[Surviving] Fund; that any liability of the [Surviving] Trust under this
Agreement with respect to the [Surviving] Fund, or in connection with the
transactions contemplated herein with respect to [Surviving] Fund, shall be
discharged only out of the assets of the [Surviving] Fund; that no other series
of the [Surviving] Trust shall be liable with respect to this Agreement or in
connection with the transactions contemplated herein; and that neither the
[Target] Trust nor the [Target] Fund shall seek satisfaction of any such
obligation or liability from the shareholders of the [Surviving] Trust, the
directors, officers, employees or agents of the [Surviving] Trust, or any of
them.
18
(b) Each party acknowledges and agrees that all obligations of
the [Target] Trust under this Agreement are binding only with respect to the
[Target] Fund; that any liability of the [Target] Trust under this Agreement
with respect to the [Target] Fund, or in connection with the transactions
contemplated herein with respect to the [Target] Fund, shall be discharged only
out of the assets of the [Target] Fund; that no other series of the [Target]
Trust shall be liable with respect to this Agreement or in connection with the
transactions contemplated herein; and that neither the [Surviving] Trust nor the
[Surviving] Fund shall seek satisfaction of any such obligation or liability
from the shareholders of the [Target] Trust, the trustees, officers, employees
or agents of the [Target] Trust, or any of them.
13. FINAL TAX RETURNS AND FORMS 1099 OF THE [TARGET] FUND
(a) After the Closing, the [Target] 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 [Target] Trust with respect to the
[Target] 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 [Target] Trust or the [Target] 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 [Target] Fund to
the extent such expenses have been or should have been accrued by the [Target]
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 [Surviving] Trust and the [Target] 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 [Target] Fund and [Surviving] Fund for its taxable period
first ending after the Closing and for all prior taxable periods.
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.
19
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
[Target] Trust or the [Surviving] Trust at 2005 Market Street, Philadelphia, PA
19103, Attention: Secretary.
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.
20
IN WITNESS WHEREOF, the [Target] Trust and the [Surviving]
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.
[TARGET] TRUST, ON BEHALF OF THE
[TARGET] FUND
------------------------------------------------
By:
-----------------------------------------
Title:
-----------------------------------------
[SURVIVING] TRUST, ON BEHALF OF THE
[SURVIVING] FUND
------------------------------------------------
By:
-----------------------------------------
Title:
-----------------------------------------
21
EXHIBIT B
FORM OF PLAN OF REORGANIZATION BY VOYAGEUR INVESTMENT TRUST
(ON BEHALF OF THE FLORIDA AND FLORIDA INSURED FUND)
PLAN OF REORGANIZATION
This PLAN OF REORGANIZATION (the "Plan"), made as of this ___
day of _______________ 2004, is adopted by Voyageur Investment Trust (the
"Trust"), a statutory trust created under the laws of the Commonwealth of
Massachusetts, with its principal place of business at 2005 Market Street,
Philadelphia, Pennsylvania 19103, on behalf of two of its series, Delaware
Tax-Free Florida Insured Fund (the "Acquiring Fund"), and Delaware Tax-Free
Florida Fund (the "Acquired Fund").
The reorganization (hereinafter referred to as the
"Reorganization") will consist of: (i) the acquisition by the Acquiring 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
Acquiring Fund - Class A ("Acquiring Fund Class A Shares"), (b) shares of
beneficial interest, no par value, of the Acquiring Fund - Class B ("Acquiring
Fund Class B Shares"), (c) shares of beneficial interest, no par value, of the
Acquiring Fund - Class C ("Acquiring Fund Class C Shares"), (d) shares of
beneficial interest, no par value, of the Acquiring Fund - Class R ("Acquiring
Fund Class R Shares"), (e) shares of beneficial interest, no par value of the
Acquiring Fund - Institutional Class ("Acquiring Fund Institutional Class
Shares"), and (f) the assumption by the Acquiring Fund of all of the liabilities
of the Acquired Fund; (ii) the distribution of (a) Acquiring Fund Class A shares
to the shareholders of Acquired Fund - Class A Shares ("Acquired Fund Class A
Shares"), (b) Acquiring Fund Class B Shares to the shareholders of Acquired Fund
- - Class B Shares ("Acquired Fund Class B Shares"), (c) Acquiring Fund Class C
Shares to the shareholders of Acquired Fund - Class C Shares ("Acquired Fund
Class C Shares"), (d) Acquiring Fund Class R Shares to the shareholders of
Acquired Fund - Class R Shares ("Acquired Fund Class R Shares"), and (e)
Acquiring 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 Plan
hereinafter set forth.
1. SALE AND TRANSFER OF ASSETS AND LIABILITIES, LIQUIDATION AND
DISSOLUTION OF THE ACQUIRED FUND
(a) Subject to the terms and conditions of this Plan, the
Trust, on behalf of the Acquired Fund, will sell, convey, transfer and deliver
to the Acquiring 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 Plan (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 Acquired Fund 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 shall use
commercially reasonable efforts to identify all of the Acquired Fund's
Liabilities prior to the Valuation Date and shall discharge all such known
Liabilities on or prior to the Valuation Date.
(b) Subject to the terms and conditions of this Plan, the
Trust shall assume the Liabilities, on behalf of the Decatur Income Fund, and
shall deliver to the Acquired Fund: (i) the number of Acquiring 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 Acquiring 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 Acquiring 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
Acquiring 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 Acquiring 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 Acquiring 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 Class C Shares as of Close of
Business on the Valuation Date; (iv) the number of Acquiring 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 Acquiring 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 Acquiring 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 Acquiring 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.
2
(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 Acquiring 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
Acquiring 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 Acquiring Fund shall be carried to the third decimal
place. Unless requested, no certificates representing shares of beneficial
interest of the Acquiring Fund will be issued to shareholders of the Acquired
Fund Shares irrespective of whether such shareholders hold their shares in
certificated form.
(d) At the Closing, each outstanding certificate that, prior
to Closing, represented shares of beneficial interest of the [Target] Fund,
shall be cancelled and shall no longer be evidence ownership; provided, however,
that the shareholders of the [Target] Fund holding such certificates shall be
entitled to surrender such certificates to the transfer agent for the Trust and
request in exchange therefor a certificate or certificates representing the
number of whole shares of beneficial interest of the class of [Surviving] Fund
shares into which the corresponding shares of beneficial interest of the
[Target] Fund theretofore represented by the certificate or certificates so
surrendered shall have been converted. Certificates for fractional shares of
beneficial interest of the [Surviving] Fund shall not be issued, but such
fractional shares shall continue to be carried by the Trust in book entry form
for the account of such shareholder.
(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.
2. VALUATION
(a) The value of the Acquired Fund's Net Assets to be acquired
by the Acquiring 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 Acquiring Fund Class A Shares, Acquiring Fund Class B Shares, Acquiring Fund
Class C Shares, Acquiring Fund Class R Shares and Acquiring 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
Acquiring 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
3. CLOSING AND VALUATION DATE
The Valuation Date shall be ___________, 2004, or such later
date as the Trust may designate. The Closing shall take place at the principal
office of the Trust, 2005 Market street, Philadelphia, Pennsylvania 19103 at
approximately 9:00 a.m. Eastern time on the first business day 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 Trust,
accurate appraisal of the value of the net assets of the Acquired Fund or the
Acquiring 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
Acquiring Fund is practicable in the judgment of the 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 Acquiring Fund's Custodian, JPMorgan Chase Bank, 4
Chase Metrotech Center, Brooklyn, NY 11245. 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 Trust shall issue
and deliver a certificate or certificates evidencing the registered shares of
the Acquiring Fund to be delivered at the Closing to said transfer agent or
provide evidence that such shares of beneficial interest of the Acquiring Fund
have been registered in an open account on the books of the Acquiring Fund.
4. NECESSARY FINDINGS OF FACT BY THE TRUST ON BEHALF OF THE
ACQUIRED FUND
The Trust hereby designates the following findings of fact as
a necessary pre-condition to the consummation of the Reorganization:
(a) 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.
(b) The financial statements appearing in the Acquired Fund's
Annual Report to Shareholders for the fiscal year ended _______________, audited
by Ernst & Young, LLP, and any unaudited financial statements, 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.
(c) The books and records of the Acquired Fund are true and
correct in all material respects and contain no material omissions with respect
to the business and operations of the Acquired Fund.
4
(d) 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 Acquiring 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.
(e) At the Closing, the 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 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 Internal Revenue Code of 1986, as amended (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.
5. NECESSARY FINDINGS OF FACT BY THE TRUST ON BEHALF OF THE
ACQUIRING FUND
The Trust hereby designates the following findings of fact as
a necessary pre-condition to the consummation of the Reorganization:
(a) The Trust is authorized to issue an unlimited number of
shares of beneficial interest, without par value, of the Acquiring Fund. Each
outstanding share of the Acquiring 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 Acquiring 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.
(b) At the Closing, each class of shares of beneficial
interest of the Acquiring Fund to be issued pursuant to this Plan 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 Plan to be
consummated.
(c) The statement of assets and liabilities of the Acquiring
Fund 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 Acquiring Fund to be issued pursuant to Section 1 hereof will accurately
reflect the net assets of the Acquiring Fund and outstanding shares of
beneficial interest, as of such date, in conformity with generally accepted
accounting principles applied on a consistent basis.
5
(d) At the Closing, the 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 (c) 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.
(e) The books and records of the Acquiring Fund are true and
correct in all material respects and contain no material omissions with respect
to the business and operations of the Acquiring Fund.
(f) The Trust has elected to treat the Acquiring Fund as a
regulated investment company ("RIC") for federal income tax purposes under Part
I of Subchapter M of the Code, the Acquiring 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.
6. NECESSARY FINDINGS OF FACT BY THE TRUST ON BEHALF OF THE
ACQUIRED FUND AND THE ACQUIRING FUND
The Trust hereby designates the following findings of fact as a
necessary pre-condition to the consummation of the Reorganization:
(a) The Trust is a business trust created under the laws of
the Commonwealth of Massachusetts on ____________, and is validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. The Trust,
of which the Acquired Fund and the Acquiring Fund are 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 cap(b) The Trust has the necessary power and authority to conduct its
business and the business of the Acquired Fund and Acquiring Fund as such
businesses are now being conducted.
(b) The Trust is not a party to or obligated under any
provision of its Plan 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 Plan.
(c) The Trust has full power and authority to enter into and
perform its obligations under this Plan, subject to approval of the
Reorganization by the Acquired Fund's shareholders. Except as provided in the
immediately preceding sentence, the execution, delivery and performance of this
Plan have been validly authorized, executed and delivered by it, and this Plan
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.
6
(d) The Trust does not have any unamortized or unpaid
organizational fees or expenses.
(e) Neither the Trust, the Acquired Fund nor Acquiring 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.
(f) 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 Plan. 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.
(g) There are no known actual or proposed deficiency
assessments with respect to any taxes payable by it.
(h) It has duly and timely filed, on behalf of the Acquired
Fund and Acquiring Fund, as appropriate, all Tax (as defined below) returns and
reports (including information returns), which are required to be filed by the
Acquired Fund or Acquiring 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 the Acquired Fund or Acquiring Fund. On behalf of the Acquired Fund
or the Acquiring 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 Acquiring Fund, as appropriate, as
of the Close of Business on the Valuation Date 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 Acquiring 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
Acquiring Fund, as appropriate, is currently being audited by the Internal
Revenue Service or by any state or local taxing authority. As used in this Plan,
"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 Acquiring Fund, as appropriate.
(i) All information provided by the Trust for inclusion in, or
transmittal with, the Combined Proxy Statement and Prospectus with respect to
this Plan pursuant to which approval of the Acquired Fund 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.
7
(j) Except with respect to the approval of the Acquired Fund's
shareholders of the Plan, 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 Plan, 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 Massachusetts
business trust laws (including, in the case of each of the foregoing, the rules
and regulations thereunder).
7. OBLIGATIONS OF THE TRUST ON BEHALF OF THE ACQUIRED FUND
(a) The Trust shall operate business of the Acquired Fund as
presently conducted between the date hereof and the Closing.
(b) The Trust, on behalf of the Acquired Fund, shall not
acquire the shares of beneficial interest of the Acquiring Fund for the purpose
of making distributions thereof other than to the Acquired Fund's shareholders.
(c) The Trust shall file, 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 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) At the Closing, the Trust shall provide:
(1) A statement of the respective tax basis of all
investments to be transferred by the Acquired Fund to the
Acquiring Fund.
(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 Acquiring
Fund as a result of the transfer of assets that is the subject
of this Plan, 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 Plan (the "Special Meeting") and the Trust shall
take all other actions reasonably necessary to obtain approval of the
transactions contemplated herein. The Trust shall mail to each shareholder of
record entitled to vote at the Special Meeting at which action on this Plan 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.
8
(f) At the Closing, the Trust shall provide the statement of
the assets and liabilities described in Section 4(e) of this Plan in conformity
with the requirements described in such Section.
8. OBLIGATIONS OF THE TRUST ON BEHALF OF THE ACQUIRING FUND
(a) The shares of beneficial interest of the Acquiring 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 Acquiring Fund shall have any
statutory or contractual preemptive right of subscription or purchase in respect
thereof.
(b) The Trust shall operate the business of the Acquiring Fund
as presently conducted between the date hereof and the Closing.
(c) The Trust shall file, by the Closing, all of the Acquiring
Fund's federal and other tax returns and reports required by law to be filed on
or before such date 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) At the Closing, the Trust shall provide the statement of
assets and liabilities described in Section 5(c) of this Plan in conformity with
the requirements described in such Section.
(e) The Trust will file with the U.S. 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 Acquiring Fund issuable hereunder, and will use its best efforts
to provide that such Registration Statement becomes 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 ON BEHALF OF
THE ACQUIRED FUND AND THE ACQUIRING FUND
The consummation of this Plan and the Reorganization hereunder
shall be subject to the following respective conditions:
(a) That (1) all the necessary findings of fact 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 performance of
all obligations required by this Plan to be performed by the Trust shall have
been performed at or prior to the Closing; and (3) the Trust shall have executed
a certificate signed by the President or Vice-President and by the Secretary or
equivalent officer to the foregoing effect.
9
(b) The Trust shall provide a copy of the resolutions
approving this Plan adopted by the Trust'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
the Trust or would prohibit the transactions contemplated hereby.
(d) That this Plan and the 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 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 Acquiring Fund.
(g) That prior to or at the Closing, the 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 Plan and in accordance with customary representations provided by the Trust
in certificates delivered to SRSY:
(1) The acquisition by the Acquiring Fund of
substantially all of the assets and the assumption of the
liabilities of the Acquired Fund in exchange solely for the
Acquiring Fund shares to be issued pursuant to Section 1
hereof, followed by the distribution by the Acquired Fund to
its shareholders of the Acquiring 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 Acquiring Fund and the Acquired Fund will each
be a "party to the reorganization" within the meaning of
Section 368(b) of the Code;
10
(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
Acquiring Fund (to be issued in accordance with Section 1
hereof) under Section 361(a) and Section 357(a) of the Code;
(3) No gain or loss will be recognized by the
Acquiring 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
Acquiring 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 Acquiring 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 Acquiring 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 Acquiring 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
Acquiring Fund (to be issued in accordance with Section 1
hereof) under Section 354(a) of the Code;
(8) The basis of the Acquiring 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 Acquiring 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
11
(10) The Acquiring 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
Department of the 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 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:
(1) The Trust was created as a statutory trust under
the laws of the Commonwealth of Massachusetts on ____________,
and is validly existing and in good standing under the laws of
the Commonwealth of Massachussetts;
(2) The Trust is an open-end, investment company of
the management type registered as such under the 1940 Act;
(3) The Trust is authorized to issue an unlimited
number of shares of beneficial interest, without par value, of
the Trust, the Acquired Fund and Acquiring Fund.
(4) Assuming that the initial shares of beneficial
interest of the Acquired Fund were issued in accordance with
the 1940 Act, and the Plan 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;
(5) Assuming that the initial shares of beneficial
interest of the Acquiring Fund were issued in accordance with
the 1940 Act and the Trust's Plan and Declaration of Trust and
By-Laws, and that all other such outstanding shares of the
Acquiring Fund were sold, issued and paid for in accordance
with the terms of the Acquiring 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;
12
(6) Except as disclosed in each of the Acquired
Fund's and Acquiring 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, the Acquired Fund
or the Acquiring Fund;
(7) The shares of beneficial interest of the
Acquiring 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 Plan, will have been validly
issued and fully paid and will be non-assessable by the Trust
or the Acquiring Fund, and to such counsel's knowledge, no
shareholder has any preemptive right to subscription or
purchase in respect thereof;
(8) 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 Plan, except
such as have been obtained under the 1933 Act, the 1934 Act,
the 1940 Act, and Massachusetts 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);
(9) Neither the execution, delivery nor performance
of this Plan 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
(10) This Plan 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.
(j) That the Trust's Registration Statement with respect to
the shares of beneficial interest of the Acquiring 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.
13
(k) That the shares of beneficial interest of the Acquiring
Fund to be delivered in accordance with Section 1 hereof shall be eligible for
sale by the 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 Acquiring 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 PLANS
(a) The expenses of entering into and carrying out the
provisions of this Plan, whether or not consummated, shall be borne one-third by
the Acquired Fund, one-third by Acquiring Fund, and one-third by Delaware
Management Company, a series of Delaware Management Business Trust and
investment manager of Acquiring Fund and the Acquired Fund.
(b) Any other provision of this Plan to the contrary
notwithstanding, any liability of the Trust under this Plan 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.
11. TERMINATION; WAIVER; ORDER
(a) Anything contained in this Plan to the contrary
notwithstanding, the Trust may terminate this Plan and the Reorganization may be
abandoned at any time (whether before or after adoption thereof by the
shareholders of the Acquired Fund) prior to the Closing.
(b) If the transactions contemplated by this Plan have not
been consummated by ______________, this Plan shall automatically terminate on
that date, unless a later date is established by the Trust.
(c) In the event of termination of this Plan 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 the Trust or its trustees,
officers, agents or shareholders in respect of this Plan.
(d) At any time prior to the Closing, any of the terms or
conditions of this Plan may be waived by the Trust.
(e) The respective necessary findings of fact and obligations
contained in Sections 4-8 hereof shall expire with, and be terminated by, the
consummation of the Plan, and neither the Trust, nor any of its officers,
trustees, agents or shareholders shall have any liability with respect to such
necessary findings of fact or obligations after the Closing. This provision
shall not protect any officer, trustee, agent or shareholder of the Trust
against any liability for which such 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.
14
(f) If any order or orders of the Commission with respect to
this Plan 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
to be acceptable, such terms and conditions shall be binding as if a part of
this Plan without further vote or approval of the shareholders of the Acquired
Fund, unless such further vote is required by applicable law.
12. LIABILITY OF THE TRUST
The Trust acknowledges that: (i) all obligations of the Trust
under this Plan are binding only with respect to the Trust, the Acquired Fund
and Acquiring Fund; (ii) any liability of the Trust under this Plan with respect
to the Acquiring Fund, or in connection with the transactions contemplated
herein with respect to Acquiring Fund, shall be discharged only out of the
assets of the Acquiring Fund; (iii) any liability of the Trust under this Plan
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; and (iv) no other series of the Trust
shall be liable with respect to this Plan or in connection with the transactions
contemplated herein, and that neither the Trust, the Acquired Fund nor the
Acquiring Fund shall seek satisfaction of any such obligation or liability from
the shareholders of any other series of the Trust.
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 Reorganization contemplated by this Plan;
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. ENTIRE AGREEMENT AND AMENDMENTS
This Plan embodies the entire Plan of Reorganization by the
Trust on behalf of the Acquired Fund and Acquiring Fund and there are no
agreements, understandings, restrictions, or warranties regarding the
Reorganization other than those set forth herein or herein provided for. This
Plan may only be amended in writing at the direction of the Board of Trustees of
the Trust. Neither this Plan nor any interest herein may be assigned without the
prior written consent of the Trust.
15
15. GOVERNING LAW
This Plan shall be governed by and carried out in accordance
with the laws of the Commonwealth of Massachusetts.
16. EFFECT OF FACSIMILE SIGNATURE
A facsimile signature of an authorized officer of Trust on
this Plan and/or any transfer document contemplated hereunder shall have the
same effect as if executed in the original by such officer.
THE TRUST HAS ADOPTED THIS PLAN OF REORGANIZATION AND IT SHALL
BE DEEMED EFFECTIVE, ALL AS OF THE DAY AND YEAR FIRST-ABOVE WRITTEN.
VOYAGEUR INVESTMENT TRUST, ON BEHALF OF THE
DELAWARE TAX-FREE FLORIDA FUND AND THE
DELAWARE TAX-FREE FLORIDA INSURED FUND
By:
-----------------------------------------
Title:
-----------------------------------------
16
EXHIBIT C
EXECUTIVE OFFICERS OF THE TRUSTS
EXHIBIT C
EXECUTIVE OFFICERS OF THE TRUSTS
JOSEPH H. HASTINGS (AGE 54) Executive Vice President/Interim Chief
Financial Officer/Treasurer/Controller of the Funds and of the other 24
investment companies within Delaware Investments, and of Delaware Management
Holdings, Inc., DMH Corp., Delaware Investments U.S., Inc., DIAL Holding
Company, Inc., Delaware Management Company, Inc., Delaware Management Business
Trust, Delaware Management Company, Delaware Lincoln Cash Management, Delaware
Lincoln Investment Advisers and Delaware Capital Management (each a series of
Delaware Management Business Trust), Delaware Service Company, Inc., Lincoln
National Investment Companies, Inc., LNC Administrative Services Corporation and
Delaware General Management, Inc.; Executive Vice President/Chief Financial
Officer/Treasurer/Director of Delaware Management Trust Company; Executive Vice
President/Chief Financial Officer of Retirement Financial Services, Inc.;
Executive Vice President/Interim Chief Financial Officer/Controller of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Executive
Vice President/Interim Chief Financial Officer of Delaware International
Holdings Ltd.; and Executive Vice President of Delaware Distributors, Inc. and
Delaware Distributors, L.P. During the past five years, Mr. Hastings has served
in various executive capacities at different times within Delaware Investments.
RICHELLE S. MAESTRO (AGE 45) Executive Vice President/General
Counsel/Secretary of the Funds and of the other 24 investment companies within
Delaware Investments, and of Delaware Management Company, Inc., Delaware
Investment Advisers, Delaware Lincoln Cash Management, and Delaware Capital
Management (each a series of Delaware Management Business Trust); Executive Vice
President/General Counsel/Secretary and Director/Trustee of Delaware Management
Holdings, Inc., DMH Corp., DIAL Holding Company, Inc., Delaware Investments
U.S., Inc., Delaware General Management, Inc., Delaware Management Company,
Inc., Delaware Service Company, Inc., Delaware Distributors, Inc., Retirement
Financial Services, Inc., Lincoln National Investment Companies, Inc., and LNC
Administrative Services Corporation; Executive President/Deputy General
Counsel/Director of Delaware International Holdings Ltd.; Senior Vice
President/General Counsel/Secretary and Director/Trustee of Delaware Management
Business Trust and Delaware Distributors, L.P.; Senior Vice President/General
Counsel/Secretary of Delaware Management Trust Company; and Vice
President/General Counsel of Lincoln National Convertible Securities Fund, Inc.
and Lincoln National Income Fund, Inc. During the past five years, Ms. Maestro
has served in various executive capacities at different times within Delaware
Investments.
1
MICHAEL P. BISHOF (AGE 40) Senior Vice President/Investment Accounting
of the Funds and of the other 24 investment companies within Delaware
Investments, and of Delaware Management Company and Delaware Capital Management
(each a series of Delaware Management Business Trust) and Delaware Distributors,
L.P.; Senior Vice President/Treasurer/Investment Accounting of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Senior
Vice President/Manager of Investment Accounting of Delaware International
Advisers Ltd.; and Chief Financial Officer of Lincoln National Convertible
Securities Fund, Inc. and Lincoln National Income Fund, Inc. During the past
five years, Mr. Bishof has served in various executive capacities at different
times within Delaware Investments.
2
EXHIBIT D
FORM OF AGREEMENT AND PLAN OF REDOMESTICATION BETWEEN
VOYAGEUR INVESTMENT TRUST AND DELAWARE INVESTMENTS MUNICIPAL TRUST
AGREEMENT AND PLAN OF REDOMESTICATION
BETWEEN VOYAGEUR INVESTMENT TRUST
AND DELAWARE INVESTMENTS MUNICIPAL TRUST
This Agreement and Plan of Reorganization ("AGREEMENT") is made as of
this ___ day of ___________, 2004 by and between DELAWARE INVESTMENTS MUNICIPAL
TRUST, a Delaware statutory trust (the "DELAWARE TRUST"), and VOYAGEUR
INVESTMENT TRUST, a Massachusetts business trust (the "MASSACHUSETTS TRUST")
(the Delaware Trust and the Massachusetts Trusts are hereinafter collectively
referred to as the "TRUSTS").
In consideration of the mutual promises contained herein, and
intending to be legally bound, the Trusts hereto agree as follows:
1. PLAN OF REORGANIZATION.
(a) Upon satisfaction of the conditions precedent described in Section
3 hereof, the Massachusetts Trust will convey, transfer and deliver to the
Delaware Trust at the closing provided for in Section 2 hereof (hereinafter
referred to as the "CLOSING") all of the then-existing assets allocated to each
class of shares of each of the Massachusetts Trust's [five] series of shares to
the corresponding class and series of shares of the Delaware Trust. In
consideration thereof, the Delaware Trust agrees at the Closing to: (i) assume
and pay when due, to the extent that there exist Massachusetts Trust obligations
and liabilities on or after the Effective Date of the Reorganization (as defined
in Section 2 hereof), all of such obligations and liabilities, whether absolute,
accrued, contingent or otherwise, including all fees and expenses in connection
with this Agreement, which fees and expenses shall, in turn, include, without
limitation, costs of legal advice, accounting, printing, mailing, proxy
solicitation and transfer taxes, if any, such obligations and liabilities
allocated to each class of shares of each series of the Massachusetts Trust to
become the obligations and liabilities of the corresponding class of shares and
series of the Delaware Trust; (ii) adopt as its own the Massachusetts Trust's
Notification of Registration on Form N-8A ("FORM N-8A") for purposes of the
Investment Company Act of 1940, as amended ("1940 ACT"); (iii) file with the
U.S. Securities and Exchange Commission (the "COMMISSION") an amendment to such
Form N-8A pursuant to Section 8(a) of the 1940 Act; and (iv) deliver, in
accordance with paragraph (b) of this Section 1, full and fractional shares of
beneficial interest, without par value, of the Delaware Trust of each class of
shares of the [five] separate series of the Delaware Trust denominated as
[Delaware Tax-Free California Insured Fund,] [Delaware Tax-Free Florida Fund,]
Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund
and Delaware Tax-Free Oregon Insured Fund (hereinafter individually and
collectively referred to as "SERIES OF THE DELAWARE TRUST"), equal in number to
the number of full and fractional shares of beneficial interest, without par
value, of, respectively, the corresponding class of shares of the Massachusetts
Trust's [five][three] separate series bearing substantially the same name and
class structure as the corresponding Series of the Delaware Trust (hereinafter
individually and collectively referred to as "SERIES OF THE MASSACHUSETTS
TRUST") outstanding immediately prior to the Effective Date of the
Reorganization. The reorganization contemplated hereby is intended to qualify as
a reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended ("CODE"). The Massachusetts Trust shall distribute to the
shareholders of each class of shares of each Series of the Massachusetts Trust
the shares of the corresponding class of shares and Series of the Delaware Trust
in accordance with this Agreement and the resolutions of the Massachusetts
Trust's Board Trustees authorizing the transactions contemplated by this
Agreement.
1
(b) In order to effect the delivery of the shares of the Series of the
Delaware Trust described in Section 1(a)(iv) hereof, the Delaware Trust will
establish an open account for each shareholder of each class of shares of each
Series of the Massachusetts Trust and, on the Effective Date of the
Reorganization, will credit to such account full and fractional shares of
beneficial interest, without par value, of the corresponding class of shares and
Series of the Delaware Trust equal to the number of full and fractional shares
of beneficial interest such shareholder holds in that corresponding class of
shares and Series of the Massachusetts Trust at the close of regular trading on
the New York Stock Exchange, Inc. ("NYSE") on the business day immediately
preceding the Effective Date of the Reorganization. Fractional shares of each
Series of the Delaware Trust will be carried to the third decimal place. At the
close of regular trading on the NYSE on the business day immediately preceding
the Effective Date of the Reorganization, the net asset value per share of each
class of shares of each Series of the Delaware Trust shall be deemed to be the
same as the net asset value per share of the corresponding class of shares and
Series of the Massachusetts Trust. On the Effective Date of the Reorganization,
each certificate representing shares of the Series of the Massachusetts Trust
will be deemed to represent the same number and the corresponding class of
shares and Series of the Delaware Trust. Simultaneously with the crediting of
the corresponding class of shares and Series of the Delaware Trust to the
shareholders of record of the Series of the Massachusetts Trust, the
corresponding class of shares and Series of the Massachusetts Trust held by such
shareholders shall be cancelled. Shareholders of each Series of the
Massachusetts Trust will have the right to deliver their share certificates of
that Series of the Massachusetts Trust in exchange for share certificates of the
corresponding class of shares and Series of the Delaware Trust. However, a
shareholder need not deliver such certificates to the Delaware Trust unless the
shareholder so desires.
(c) As soon as practicable after the Effective Date of the
Reorganization, the Massachusetts Trust shall take all necessary actions to
effect a complete dissolution of the Company under Massachusetts law.
(d) The expenses of entering into and carrying out this Agreement will
be borne by [PLEASE CONFIRM: Delaware Management Company, a series of Delaware
Management Business Trust ("DMC")].
2. CLOSING AND EFFECTIVE DATE OF THE REORGANIZATION.
The Closing shall consist of: (i) the conveyance, transfer and
delivery of the Massachusetts Trust's assets to the Delaware Trust, in exchange
for the assumption and payment, when due, by the Delaware Trust of the
Massachusetts Trust's obligations and liabilities; (ii) the adoption by the
Delaware Trust as its own of the Massachusetts Trust's Form N-8A for purposes of
the 1940 Act; (iii) the filing with the Commission of an amendment to such Form
N-8A pursuant to Section 8(a) of the 1940 Act containing such amendments to the
Form N-8A as are determined by the Delaware Trust's Board of Trustees to be
necessary and appropriate as a result of the transactions contemplated by this
Agreement; and (iv) the issuance and delivery of the Delaware Trust's shares,
all in accordance with Section 1 hereof, together with related acts necessary to
consummate such transactions. The Closing shall occur either on (a) the business
day immediately following the later of the receipt of all necessary regulatory
approvals and the final adjournment of the meeting of shareholders of the
Massachusetts Trust at which this Agreement is considered and approved, or (b)
such later date as the Trusts may mutually agree ("EFFECTIVE DATE OF THE
REORGANIZATION").
2
3. CONDITIONS PRECEDENT.
The obligations of the Massachusetts Trust and the Delaware Trust to
effectuate the transactions hereunder shall be subject to the satisfaction of
each of the following conditions:
(a) Such authority and orders from the Commission and state
securities commissions as may be necessary to permit the Trusts to
carry out the transactions contemplated by this Agreement shall have
been received;
(b) (i) One or more post-effective amendments to the
Massachusetts Trust's Registration Statement on Form N-1A
("REGISTRATION STATEMENT") under the Securities Act of 1933, as
amended, and the 1940 Act, containing such amendments to such
Registration Statement as are determined under the supervision of the
Massachusetts Trust's Board of Trustees to be necessary and
appropriate as a result of this Agreement, shall have been filed with
the Commission; (ii) the Delaware Trust shall have adopted as its own
such Registration Statement, as so amended; and (iii) the most recent
post-effective amendment or amendments to the Massachusetts Trust's
Registration Statement shall have become effective, and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall have been
initiated or threatened by the Commission (other than any such stop
order, proceeding or threatened proceeding which shall have been
withdrawn or terminated);
(c) Each party shall have received an opinion of Stradley
Ronon Stevens & Young, LLP ("SRS&Y"), to the effect that, assuming the
reorganization contemplated hereby is carried out in accordance with
this Agreement, the laws of the States of Delaware and Maryland, and
in accordance with customary representations provided by the Trusts in
a certificate(s) delivered to SRS&Y, the reorganization contemplated
by this Agreement qualifies as a "reorganization" under Section 368 of
the Code, and thus will not give rise to the recognition of income,
gain or loss for federal income tax purposes to the Massachusetts
Trust, the Delaware Trust or the shareholders of the Massachusetts
Trust or the Delaware Trust;
(d) The Massachusetts Trust shall have received an opinion of
SRS&Y, dated the Effective Date of the Reorganization, addressed to
and in form and substance reasonably satisfactory to the Massachusetts
Trust, to the effect that: (i) the Delaware Trust is a statutory trust
duly formed and in good standing under the laws of the State of
Delaware; (ii) this Agreement and the transactions contemplated
thereby and the execution and delivery of this Agreement have been
duly authorized and approved by all requisite action of the Delaware
Trust and this Agreement has been duly executed and delivered by the
Delaware Trust and is a legal, valid and binding agreement of the
Delaware Trust in accordance with its terms; and (iii) the shares of
the Delaware Trust to be issued in the reorganization have been duly
authorized and, upon issuance thereof in accordance with this
Agreement, will have been validly issued and fully paid and will be
nonassessable by the Delaware Trust;
3
(e) The Delaware Trust shall have received the opinion of
SRS&Y, dated the Effective Date of the Reorganization, addressed to
and in form and substance reasonably satisfactory to the Delaware
Trust, to the effect that: (i) the Massachusetts Trust is organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts; (ii) the Massachusetts Trust is an
open-end investment company of the management type registered under
the 1940 Act; and (iii) this Agreement and the transactions
contemplated hereby and the execution and delivery of this Agreement
have been duly authorized and approved by all requisite corporate
action of the Massachusetts Trust and this Agreement has been duly
executed and delivered by the Massachusetts Trust and is a legal,
valid and binding agreement of the Massachusetts Trust in accordance
with its terms;
(f) The shares of each Series of the Delaware Trust to be
delivered under this Agreement shall be eligible for sale with each
state commission, agency or jurisdiction with which such eligibility
is required in order to permit shares of each Series of the Delaware
Trust lawfully to be delivered to each shareholder of the
corresponding Series of the Massachusetts Trust on the Effective Date
of the Reorganization;
(g) This Agreement and the transactions contemplated hereby
shall have been duly adopted and approved by the appropriate action of
the Massachusetts Trust's Board of Trustees and the shareholders of
each Series of the Massachusetts Trust;
(h) The shareholders of each Series of the Massachusetts Trust
shall have approved the transactions contemplated by this Agreement,
which approval is deemed to be approval to direct the Massachusetts
Trust to vote, and the Massachusetts Trust shall have voted, as sole
shareholder of each Series of the Delaware Trust, to:
(1) Elect as trustees of the Delaware Trust the
following individuals: Jude T. Driscoll, Walter P. Babich,
John H. Durham, Anthony D. Knerr, Ann R. Leven, Thomas F.
Madison and Janet L. Yeomans; and
(2) Approve an Investment Management Agreement
between DMC and the Delaware Trust on behalf of each Series of
the Delaware Trust, which is substantially identical to the
then-current Investment Management Agreement between DMC and
the Massachusetts Trust on behalf of each Series of the
Massachusetts Trust;
(i) The Delaware Trust's Board of Trustees shall have duly
adopted and approved this Agreement and the transactions contemplated
hereby and shall have taken the following actions by unanimous consent
or, where required, at a meeting duly called for such purposes:
4
(1) Approval of the Investment Management Agreement
described in paragraph (h)(2) of this Section 3 on behalf of
each Series of the Delaware Trust;
(2) Approval of a Distribution Agreement between
Delaware Distributors, L.P. and the Delaware Trust on behalf
of each Series of the Delaware Trust;
(3) Approval of Second Amended and Restated Financial
Intermediary Distribution Agreement dated August 21, 2003
between Delaware Distributors, L.P. and Lincoln Financial
Distributors, Inc. on behalf of the Delaware Trust;
(4) Approval of a Form of Dealer Agreement between
Delaware Distributors, L.P. and securities dealers, dated
January [ ], 2001, as amended, on behalf of each Series of the
Delaware Trust;
(5) Approval and adoption pursuant to Rule 18f-3
under the 1940 Act of a Multiple Class Plan for the Delaware
Trust on behalf of its Series of the Delaware Trust for Class
A, Class B, and Class C shares;
(6) Approval, creation and designation of Class A,
Class B and Class C, shares for the Series of the Delaware
Trust;
(7) Approval and adoption pursuant to Rule 12b-1
under the 1940 Act of a Class A Distribution Plan, Class B
Distribution Plan and Class C Distribution Plan for Series of
the Delaware Trust;
(8) Approval of a Shareholder Services Agreement
between Delaware Service Company, Inc. and the Delaware Trust,
on behalf of each Series of the Delaware Trust;
(9) Approval of a Fund Accounting Agreement between
Delaware Service Company, Inc. and the Delaware Trust;
(10) Approval of the assignment to the Delaware Trust
of the Massachusetts Trust's (i) Amended and Restated Mutual
Fund Custody and Services Agreement dated [ ], between Mellon
Bank, N.A. and the Massachusetts Trust on behalf of the Series
of the Delaware Trust;
(11) Selection of Ernst & Young LLP as the Delaware
Trust's independent auditors for the fiscal year ending August
31, [2005];
(12) Authorization of the issuance by the Delaware
Trust, prior to the Effective Date of the Reorganization, of
one share of beneficial interest of each class of each Series
of the Delaware Trust to the Massachusetts Trust in
consideration for the payment of $1.00 for each such share for
the purpose of enabling the Massachusetts Trust to vote on the
matters referred to in paragraph (h) of this Section 3;
5
(13) Submission of the matters referred to in
paragraph (h) of this Section 3 to the Massachusetts Trust as
sole shareholder of each class of each Series of the Delaware
Trust; and
(14) Authorization of the issuance and delivery by
the Delaware Trust of shares of each Series of the Delaware
Trust on the Effective Date of the Reorganization and the
assumption by the Series of the Delaware Trust of the
obligations and liabilities of the corresponding Series of the
Massachusetts Trust in exchange for the assets of the
corresponding Series of the Massachusetts Trust pursuant to
the terms and provisions of this Agreement.
At any time prior to the Closing, any of the foregoing conditions may
be waived or amended, or any additional terms and conditions may be fixed, by
the Massachusetts Trust's Board of Trustees or the Delaware Trust's Board of
Trustees, if, in the judgment of such Board, such waiver, amendment, term or
condition will not affect in a materially adverse way the benefits intended to
be accorded to its shareholders under this Agreement.
4. DISSOLUTION OF THE MASSACHUSETTS TRUST.
Promptly following the consummation of the distribution of each class
of shares of each Series of the Delaware Trust to holders of the corresponding
class of shares and Series of the Massachusetts Trust under this Agreement, the
officers of the Massachusetts Trust shall take all steps necessary under
Massachusetts law to dissolve its corporate status, including publication of any
necessary notices to creditors, receipt of any necessary pre-dissolution
clearances from the Commonwealth of Massachusetts, and filing a Termination of
Trust with the Office of the Secretary of State of the Commonwealth of
Massachusetts.
5. TERMINATION.
The Massachusetts Trust's Board of Trustees may terminate this
Agreement and abandon the reorganization contemplated hereby, notwithstanding
approval thereof by the shareholders of the Series of the Massachusetts Trust,
at any time prior to the Effective Date of the Reorganization if, in the
judgment of such Board, the facts and circumstances make proceeding with this
Agreement inadvisable.
6. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement between the Trusts and
there are no agreements, understandings, restrictions or warranties among the
Trusts other than those set forth herein or herein provided for.
7. FURTHER ASSURANCES.
The Massachusetts Trust and the Delaware Trust shall take such further
action as may be necessary or desirable and proper to consummate the
transactions contemplated hereby.
6
8. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
9. GOVERNING LAW.
This Agreement and the transactions contemplated hereby shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
7
IN WITNESS WHEREOF, the Delaware Trust and the Massachusetts Trust
have each caused this Agreement and Plan of Reorganization to be executed on its
behalf by a Vice President and attested by its Secretary or an Assistant
Secretary, all as of the day and year first-above written.
VOYAGEUR INVESTMENT TRUST
(a Massachusetts business trust)
Attest: By:
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
DELAWARE INVESTMENTS MUNICIPAL TRUST
(a Delaware statutory trust)
Attest: By:
Name: Name:
----------------------- ---------------------------
Title: Title:
----------------------- ---------------------------
8
EXHIBIT E
A COMPARISON OF GOVERNING DOCUMENTS AND STATE LAW
EXHIBIT E
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
GOVERNING A Delaware statutory trust (a "DST") is formed by A Massachusetts business trust (an "MBT") is
DOCUMENTS/ a governing instrument and the filing of a created by filing a declaration of trust with the
GOVERNING BODY certificate of trust with the Delaware Secretary Secretary of the Commonwealth of Massachusetts and
of State. The Delaware law governing a DST is with the clerk of every city or town in
referred to in this comparison as the "Delaware Massachusetts where the trust has a usual place of
Act." business.
A DST is an unincorporated association organized An MBT is an unincorporated association organized
under the Delaware Act whose operations are under the Massachusetts statute governing business
governed by its governing instrument (which may trusts (the "Massachusetts Statute") and is
consist of one or more instruments). Its business considered to be a hybrid, having characteristics
and affairs are managed by or under the direction of both corporations and common law trusts. An
of one or more trustees (referred to herein as the MBT's operations are governed by a trust
"trustees" or the "board"). instrument and by-laws. The business and affairs
of an MBT are managed by or under the direction of
a board of trustees.
If a DST is a registered investment company under
the Investment Company Act of 1940, as amended
(the "1940 Act"), such DST is not required to have
a trustee who is a resident of Delaware or who has
a principal place of business in Delaware;
provided that notice that the DST is such a
registered investment company is set forth in the
DST's certificate of trust and the DST has a
registered office and a registered agent for
service of process in Delaware.
The governing instrument for Delaware Investments The governing instrument for the MBT, Voyageur
Municipal Trust (the "DE Trust"), a DST, is Investment Trust (the "Trust"), is comprised of an
comprised of an agreement and declaration of trust Amended and Restated Agreement and Declaration of
(the "DE Declaration") and by-laws (the "DE Trust (the "MA Declaration") and Amended and
By-Laws"). The DE Trust's governing body is the Restated By-Laws (the "MA By-Laws"). The Trust's
board. governing body is a board of Trustees (referred to
herein as the "Trustees" or "the Board").
Each trustee of the DE Trust holds office for the Each Trustee shall serve during the continued
lifetime of the DE Trust or until such trustee's lifetime of the Trust until he or she dies,
earlier death, resignation, having been declared resigns or is removed (as described below), or, if
bankrupt or incompetent by a court, removal, or, sooner, until the next meeting of shareholders
if sooner than any such events, until the next called for the purpose of electing Trustees and
meeting of shareholders called for the purpose of until the election and qualification of his or her
electing trustees and until the election and successor.
qualification of his or her successor.
1
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
DESIGNATION OF Under the Delaware Act, the ownership interests in Under the Massachusetts Statute, the ownership
OWNERSHIP SHARES OR a DST are denominated as "beneficial interests" interests in an MBT are denominated as "beneficial
INTERESTS and are held by "beneficial owners." However, interests" and are held by "beneficial owners."
there is flexibility as to how a governing However, there is flexibility as to how a
instrument refers to "beneficial interests" and governing instrument refers to "beneficial
"beneficial owners" and the governing instrument interests" and "beneficial owners" and the
may identify "beneficial interests" and governing instrument may identify "beneficial
"beneficial owners" as "shares" and interests" and "beneficial owners" as "shares" and
"shareholders," respectively. "shareholders," respectively.
The DE Trust's beneficial interests, without par The Trust's beneficial interests, without par
value, are designated as "shares" and its value, are designated as "shares" and its
beneficial owners are designated as beneficial owners are designated as
"shareholders." This comparison will use the "shareholders." This comparison will use the
"share" and "shareholder" terminology. "share" and "shareholder" terminology.
SERIES AND CLASSES Under the Delaware Act, the governing instrument The Massachusetts Statute is largely silent as to
may provide for classes, groups or series of an MBT's ability to issue one or more series or
shares, shareholders or trustees, having such classes of beneficial interests or any
relative rights, powers and duties as set forth in requirements for the creation of such series or
the governing instrument. Such classes, groups or classes, although the trust documents creating an
series may be created in the DST's governing MBT may provide methods or authority to create
instrument or otherwise in the manner provided in such series or classes without seeking shareholder
the governing instrument. No state filing is approval.
necessary and, unless required by the governing
instrument, shareholder approval is not needed.
Except to the extent otherwise provided in the
governing instrument of a DST, where the DST is a
registered investment company under the 1940 Act,
any class, group or series of shares established
by the governing instrument shall be a class,
group or series preferred as to distributions or
dividends over all other classes, groups or series
with respect to assets specifically allocated to
such class, group or series as contemplated by
Section 18 (or any amendment or successor
provision) of the 1940 Act and any regulations
issued thereunder.
2
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
The DE Declaration authorizes the board to divide The MA Declaration provides that the beneficial
the DE Trust's shares into separate and distinct interest in the Trust shall at all times be
series and to divide any series into separate divided into an unlimited number of shares,
classes of shares as permitted by the Delaware without par value. Subject to the provisions of
Act. Such series and classes will have the rights the MA Declaration, each share shall have the
and preferences set forth in the DE Declaration voting rights, shall be entitled to receive
unless otherwise provided in resolutions of the dividends, when and declared with respect
board with respect to such series or class. The thereto. No shares shall have any priority or
board may classify or reclassify any unissued preference over any other share of the same series
shares or any shares of the DE Trust or any series or class with respect to dividends or
or class, that were previously issued and are distributions upon termination of the Trust or of
reacquired, into one or more series or classes such series or class made pursuant to the MA
that may be established and designated from time Declaration. The Trustees may from time to time
to time. The trustees may from time to time divide or combine the shares of any particular
divide or combine the shares of any particular series or class into a greater or lesser number of
series into a greater or lesser number of shares shares of that series or class without changing
of that series so long as such division or the proportionate beneficial interest of the
combination does not materially change the shares of that series or class in the assets
proportionate beneficial interests of the shares belonging to that series or class or in any way
of that series in the assets held with respect to affecting the rights of shares of any other series
that series or materially affect the rights of or class.
shares of any other series.
The DE Declaration provides that the establishment The MA Declaration provides that the establishment
and designation of any series or class shall be and designation of any series or class of shares,
effective, without the requirement of shareholder in addition to the series established and
approval, upon the adoption of a resolution by a designated in the MA Declaration, shall be
majority of the then board of trustees, which effective upon (i) the execution by a majority of
resolution shall set forth such establishment and the then Trustees of an instrument setting forth
designation and may provide, to the extent such establishment and designation and the
permitted by the Delaware Act, for rights and relative rights and preferences of such series or
preferences of such series or class (including class, (ii) upon the execution of an instrument in
variations in the relative rights and preferences writing by an officer of the Trust pursuant to the
as between the different series and classes) vote of a majority of the Trustees, or (iii) as
otherwise than as provided in the DE Declaration. otherwise provided in such instrument. Each
instrument establishing and designating any series
Notwithstanding any other provisions of the DE shall have the status of an amendment to the MA
Declaration, the board has the power to amend the Declaration.
DE Declaration at any time, in its sole
discretion, without shareholder action, to add,
delete or modify any provisions relating to the
shares; provided, that before adopting any such
amendment without shareholder approval, the board
determines that it is consistent with the fair and
equitable treatment of all shareholders and that
shareholder approval is not otherwise required by
the 1940 Act or other applicable law.
3
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
If shares have been issued, shareholder approval
is required for any amendments to the DE
Declaration that would materially adversely affect
the rights and preferences of the shares of any
series or class already issued; provided that, if
the board determines that the DE Trust should no
longer be operated as an investment company under
the 1940 Act, the board may adopt such amendments
to the DE Declaration to delete those terms the
board identifies as being required by the 1940
Act.
The board has approved resolutions that, together
with the DE Declaration and the DE By-Laws,
provide the shareholders of each series and class
of the DE Trust with rights and preferences that
are similar in many respects to those of the
shareholders of the corresponding series and class
of the Trust.
Assets and Liabilities Assets and Liabilities
The DE Declaration also provides that each series The MA Declaration provides that all consideration
of the DE Trust shall be separate and distinct received by the Trust for the issue or sale of
from any other series of the DE Trust, and each shares of a particular series or any classes
class of a series shall be separate and distinct thereof, together with all assets in which such
from any other class of the series. The DE Trust consideration is invested or reinvested, all
shall maintain separate and distinct records on income, earnings, profits and proceeds thereof,
the books of the DE Trust for each series. The DE from whatever source derived, including, without
Trust shall hold and account for the assets and limitation, any proceeds derived from the sale,
liabilities belonging to any such series exchange or liquidation of such assets, and any
separately from the assets and liabilities of the funds or payments derived from any reinvestment of
DE Trust or any other series. such proceeds in whatever form the same may be,
shall be held by the Trustees in trust for the
All consideration received on sale of shares of a benefit of the holders of shares of that series or
particular series, together with all assets in class thereof, and shall irrevocably belong to
which such consideration is invested or that series (and be allocable to any classes
reinvested, all income, earnings, profits, and thereof) for all purposes, subject only to the
proceeds shall irrevocably be held with respect to rights of creditors, and shall be so recorded upon
that series for all purposes, subject only to the the books of account of the Trust. Such
rights of creditors with respect to that series, consideration, assets, income, earnings, profits
and shall be so recorded upon the books of account and proceeds, including any proceeds derived from
of the Trust. Such consideration, assets, income, the sale, exchange or liquidation of such assets,
earnings, profits and proceeds, in whatever form and any funds or payments derived from any
the same may be, are referred to as "assets held reinvestment of such proceeds, in whatever form
with respect to" that series. the same may be, are referred to in the MA
Declaration and herein as "assets belonging to"
The assets held with respect to each particular that series (and allocable to any classes
series shall be charged against the liabilities of thereof). In the event that there are any assets,
the DE Trust held with respect to that series and income, earnings, profits, and proceeds thereof,
all expenses, costs, charges and reserves funds, or payments which are not readily
attributable to that series. The liabilities, identifiable as belonging to any particular series
expenses, costs, charges, and reserves so charged (collectively, "General Assets"), the Trustees
to a series are referred to as "liabilities held shall allocate such General Assets to, between or
with respect to" that series. among any one or more of the series established
and designated from time to time in such manner
The board is authorized to cause to be paid out of and on such basis as the Trustees, in their sole
the principal or income, or partly out of the discretion, deem fair and equitable and any
principal and/or income, of the DE Trust or any General Assets so allocated to a particular series
particular series or class, and to charge or shall belong to that series (and be allocable to
allocate the same to, between or among such one or any classes thereof). Each such allocation by the
more of the series or classes, as the board deems Trustees shall be conclusive and binding upon the
fair, all expenses, fees, charges, taxes and shareholders of all series (including any classes
liabilities arising in connection with the thereof) for all purposes. The assets belonging
maintenance, operation or management of the Trust to each particular series shall be charged with
or a particular series or class. If any assets or the liabilities of the Trust in respect to that
liabilities are not readily identifiable as assets series, and all expenses, costs, charges and
or liabilities held with respect to a particular reserves attributable to that series and any
series, the board shall allocate such assets or general liabilities of the Trust which are not
liabilities to, between or among any one or more readily identifiable as belonging to any
of the series in such manner and on such basis as particular series shall be allocated and charged
the board, in its sole discretion, deems fair and by the Trustees to and among any one or more of
equitable. Each such allocation by board shall be the series established and designated from time to
conclusive and binding upon the shareholders of time in a manner and on such basis as the Trustees
all series for all purposes. in their sole discretion deem fair and equitable.
In addition, the liabilities in respect of a
particular class of shares of a particular series
and all expenses, costs, charges and reserves
belonging to that class of shares, and any general
liabilities, expenses, costs, charges or reserves
of that particular series which are not readily
identifiable as belonging to any particular class
of shares of that series shall be allocated and
charged by the Trustees to and among any one or
more of the classes of shares of that series,
established and designated from time to time in
such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable.
The liabilities, expenses, costs, charges, and
reserves so charged to a series or class thereof
are referred to as "liabilities belonging to" that
series or class thereof. Each allocation of
liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding
upon the holders of all series (including any
classes thereof) for all purposes. Any creditor
of any series may look only to the assets of that
series to satisfy such creditor's debt.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Dividends and Distributions Dividends and Distributions
The DE Declaration provides that no dividend or Dividends and distributions on shares of a
distribution, including, without limitation, any particular series or any class thereof may be paid
distribution paid upon dissolution of the DE Trust with such frequency as the Trustees may determine,
or of any series, nor any redemption of, the which may be daily or otherwise pursuant to a
shares of any series or class of such series shall standing resolution or resolutions adopted only
be effected by the DE Trust other than from the once or with such frequency as the Trustees may
assets held with respect to such series, nor, determine, to the holders of shares of that series
except as specifically provided in the DE or class, from such of the income and capital
Declaration, shall any shareholder of any gains, accrued or realized, from the assets
particular series otherwise have any right or belonging to that series, or in the case of a
claim against the assets held with respect to any class, belonging to that series and allocable to
other series or the DE Trust generally, except, in that class, as the Trustees may determine, after
the case of a right or claim against the assets providing for actual and accrued liabilities
held with respect to any other series, to the belonging to that series or class. All dividends
extent that such shareholder has such a right or and distributions on shares of a particular series
claim under the DE Declaration as a shareholder of or class in proportion to the number of shares of
such other series. that series or class held by such holders at the
date and time of record established for the
No share of the DE Trust has any priority or payment of such dividends or distributions, except
preference over any other share of the same series that in connection with any dividend or
or class with respect to dividends or distribution program or procedure the Trustees may
distributions paid in the ordinary course of determine that no dividend or distribution shall
business or distributions upon dissolution of the be payable on shares as to which the shareholder's
Trust or of such series or class under the DE purchase order and/or payment have not been
Declaration. All dividends and distributions will received by the time or times established by the
be made ratably among all shareholders of a Trustees under such program or procedure. Such
particular class of series from the property of dividends and distributions may be made in cash or
the Trust held with respect to such series shares of that series or class or a combination
according to the number of shares of the class of thereof as determined by the Trustees or pursuant
such series held of record by such shareholders on to any program that the Trustees may have in
the record date for the dividend or distribution. effect at the time for the election by each
The board has full discretion, subject to the 1940 shareholder of the mode or making of such dividend
Act, to determine which items will be treated as or distribution to that shareholder. Any such
income and which items as capital; and each such dividend or distribution paid in shares will be
determination and allocation is conclusive and paid at the net asset value thereof as determined
binding upon the shareholders. The board may in accordance with the MA By-Laws. The MA
prescribe and set forth in the DE By-laws or a Declaration further provides that the Trustees
resolution of the board the bases and time for shall have full discretion to determine which
determining the per share or net asset value of items shall be treated as income and which items
the shares of any series or net income as capital; and each such determination and
attributable to the shares of any series, or the allocation shall be conclusive and binding on the
declaration and payment of dividends and shareholders.
distributions on the shares of any series, as the
board deems necessary or desirable. The right of
shareholders to receive dividends or other
distributions on shares may be set forth in a
distribution plan adopted by the board and amended
from time to time pursuant to Rule 18f-3 of the
1940 Act.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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The DE By-Laws provide that dividends on the
shares of the Trust may be declared by the board
at any regular or special meeting, pursuant to
applicable law, and dividends may be paid in cash,
in property, or in shares of the Trust. Before
payment of any dividend the board may set aside
out of any funds of the Trust available for
dividends such sum or sums as the board think
proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or
maintaining any property of the Trust, or for such
other purpose as the board deems to be in the best
interests of the Trust, and may abolish any such
reserve in the manner in which the reserve was
created.
AMENDMENTS TO The Delaware Act provides broad flexibility as to The Massachusetts Statute provides broad
GOVERNING DOCUMENTS the manner of amending and/or restating the flexibility as to the manner of amending or
governing instrument of a DST. Amendments to the restating the governing instrument of an MBT. The
DE Declaration that do not change the information Massachusetts Statute provides that the Trustees
in the DST's certificate of trust are not required shall, within thirty (30) days after the adoption
to be filed with the Delaware Secretary of State. of any amendment to the declaration of trust, file
a copy with the Secretary of the Commonwealth of
the Commonwealth of Massachusetts and with the
clerk of every city or town in Massachusetts where
the Trust has a usual place of business.
Declaration of Trust Declaration of Trust
The DE Declaration may be restated and/or amended The MA Declaration may be amended at any time by
at any time by a written instrument signed by a an instrument in writing signed by a majority of
majority of the board and, if required, by the Trustees when authorized to do so by a vote of
approval of such amendment by the shareholders, by a majority of the shares entitled to vote, except
the affirmative vote of the majority of votes cast that a shareholder vote is not required for
at a shareholders' meeting at which a quorum is amendments made to add to, delete, replace or
present. Notwithstanding the above, the board otherwise modify any provisions relating to the
expressly reserves the right to amend or repeal shares contained in the MA Declaration for the
any provisions contained in the DE Declaration of purpose of (i) responding to or complying with any
Trust or the Certificate of Trust in accordance regulation, orders, rulings or interpretations of
with its powers to add, delete or modify any any governmental agency or any laws, now or
provisions relating to shares, as described above hereafter applicable to the Trust, provided that
under "Series and Classes," and all rights, before adopting such an amendment without
contractual and otherwise, conferred upon shareholder approval, the Trustees shall determine
shareholders are granted subject to such that it is consistent with the fair and equitable
reservation. treatment of all shareholders, (ii) designating
and establishing series or classes in addition to
the series or classes established in the MA
Declaration, (iii) having the purpose of changing
the name of the Trust, or (iv) for the purpose of
supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective
or inconsistent provision contained in the MA
Declaration.
By-Laws By-Laws
The DE By-laws may be restated and/or amended at The MA By-Laws may be restated and/or amended at
any time, without the approval of the any time, without the approval of the
shareholders, by an instrument in writing signed shareholders, by an instrument in writing signed
by, or a resolution of, a majority of the then by, or a resolution of, a majority of the then
board. Board of Trustees.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Certificate of Trust
Pursuant to the DE Declaration, the Certificate of
Trust may be restated and/or amended by a similar
procedure to that stated above for amendments
and/or restatements of the DE Declaration.
PREEMPTIVE RIGHTS Under the Delaware Act, a governing instrument may The MA Statute contains no specific provision with
AND REDEMPTION OF contain any provision relating to the rights, respect to the rights, duties or obligations of
SHARES duties and obligations of the shareholders. shareholders.
Unless otherwise provided in the governing
instrument, a shareholder shall have no preemptive
right to subscribe to any additional issue of
shares or another interest in a DST.
Unless otherwise provided in the Trust's The MA Declaration provides that shareholders
prospectus, as amended from time to time, the DE shall have no preemptive or other right to
Declaration provides that no shareholder shall subscribe to any additional shares or other
have the preemptive or other right to subscribe securities issued by the Trust.
for new or additional shares or other securities
issued by the DE Trust or any series thereof.
The DE Trust shall redeem its shares offered by The MA Declaration provides that the Trust shall
any shareholder for redemption, upon the purchase such shares as are offered by any
presentation of a proper document and redemption shareholder for redemption, upon the presentation
request to the Trust or its designated agent or of a proper instrument of transfer together with a
under any other redemption procedures as the board request directed to the Trust or a person
authorizes. The DE Trust will pay the net asset designated by the Trust that the Trust purchase
value for the shares redeemed, pursuant to the DE such shares or in accordance with such other
By-Laws and applicable law. The Trust will pay procedures for redemption as the Trustees may from
the shareholder for the redeemed shares within time to time authorize. The Trust will pay the
seven days after the date the request is received net asset value next determined of the shares, in
in proper form. The DE Trust is not obligated to accordance with the Bylaws, the 1940 Act and the
redeem shares and the board may suspend or rules of the Securities and Exchange Commission
postpone redemptions of shares when the New York (the "Commission"), subject to any contingent
Stock Exchange (the "Exchange") is closed for deferred sales charge or redemption charge in
other than weekends or holidays, when trading on effect at the time of redemption. Payment for
the Exchange is restricted, or during any National said shares shall be made by the Trust to the
Financial Emergency which makes it impracticable shareholders within seven days after the date on
for any series of the Trust to dispose of its which the request is made or in accordance with
portfolio holdings or to determine fairly the such other procedures, consistent with the 1940
value of its the net assets or during any other Act and the rules of the Commission, as the
period under order of the Securities and Exchange Trustees may from time to time authorize. The
Commission ("SEC") for the protection of Trust may postpone payment of the redemption price
investors. If the shareholder has certificates and may suspend the right of the holders of shares
for shares, the shareholder must, with any of any series or any class to require the Trust to
redemption request, surrender any outstanding redeem shares during any period or at any time
certificate(s) in form for transfer, provide proof when and to the extent permissible under the 1940
of the authenticity of signatures as reasonably Act. The Trust may also purchase or repurchase
required and provide proper stock transfer stamps, shares at a price not exceeding the net asset
if applicable. value of such shares in effect when the purchase
or repurchase or any contract to purchase or
repurchase is made.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Payments for redeemed shares may be made in cash, The redemption price may in any case be paid
or, at the option of the board, or an authorized wholly or partly in kind if the Trustees determine
officer or officers, be made in kind or partially that such payment is advisable in the interest of
in cash and partially in kind. For any payment in the remaining shareholders of the series the
kind, the board, or its delegatee, has absolute shares of which are being redeemed. In making any
discretion as to what security or securities of such payment wholly or partly in kind, the Trust
the DE Trust shall be distributed in kind and the shall, so far as may be practicable, deliver
amount of the same. In-kind securities will be assets which approximate the diversification of
valued at the value at which they were appraised all of the assets belonging at the time to the
for the then current net asset value of the shares series the shares of which are being redeemed.
of the Trust, provided that any shareholder who Subject to the foregoing, the fair value,
cannot legally, under the 1940 Act or Employee selection and quantity of securities or other
Retirement Income Security Act, as amended property so paid or delivered as all or part of
("ERISA"), acquire securities so distributed in the redemption price may be determined by or under
kind, shall receive cash. Shareholders shall bear authority of the Trustees. In no case shall the
the expenses of in-kind transactions, including, Trust be liable for any delay of any corporation
but not limited to, transfer agency fees, or other person in transferring securities
custodian fees and costs of disposition of such selected for delivery as all or part of any
securities. If payment for redeemed shares is not payment in kind.
exclusively in cash, any securities delivered in
kind will be delivered as promptly to effect
transfers of such securities on the books of the
issuing corporations as practicably can be done,
which may not necessarily occur within such
seven-day period. In no case is the Trust liable
for any delay by any issuing corporation or other
person in transferring in-kind securities. The
right of any shareholder to receive dividends or
distributions on shares redeemed and all other
rights of such shareholder with respect to shares
redeemed, except the right to receive payment for
such shares, shall cease when the purchase price
of such shares is fixed.
The board may, without the vote or consent of the The Trust shall have the right at its option and
shareholders, and subject to the 1940 Act, redeem at any time to redeem shares of any shareholder at
shares or authorize the closing of any shareholder the net asst value thereof as described the MA
account, subject to such conditions as may be Declaration (i) if at such time such shareholder
established by the board. owns shares of any series or class thereof having
an aggregate net asset value of less than an
amount determined from time to time by the
Trustees; or (ii) to the extent that such
shareholder own shares equal to or in excess of a
percentage determined from time to time by the
Trustees of the outstanding shares of the Trust or
of any series or class thereof.
DISSOLUTION AND Unless dissolved under the DE Declaration, the DE Unless terminated as described below, the Trust
TERMINATION EVENTS Trust has a perpetual existence. The DE Trust may shall continue without limitation of time. The
be dissolved at any time by vote of a majority of Trust may be terminated at any time by vote of at
the shares of the DE Trust entitled to vote or by least 66-2/3% of the shares of each series
the board by written notice to the shareholders. entitled to vote and voting separately by series
Any series may be dissolved at any time by vote of or by the Trustees by written notice to the
a majority of the shares of that series or by the shareholders. Any series may be terminated at any
board by written notice to the shareholders of time by vote of at least 66-2/3% of the shares of
that series. that series or by the Trustees by written notice
to the shareholders of that series.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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LIQUIDATION UPON Under the Delaware Act, a DST that has dissolved The Massachusetts Statute does not contain
DISSOLUTION OR shall first pay or make reasonable provision to specific provisions with respect to the
TERMINATION pay all known claims and obligations, including liquidation upon dissolution or termination of an
those that are contingent, conditional and MBT.
unmatured, and all known claims and obligations
for which the claimant is unknown. Any remaining
assets shall be distributed to the shareholders or
as otherwise provided in the governing instrument.
Under the Delaware Act, a series that has
dissolved shall first pay or make reasonable
provision to pay all known claims and obligations
of the series, including those that are
contingent, conditional and unmatured, and all
known claims and obligations of the series for
which the claimant is unknown. Any remaining
assets of the series shall be distributed to the
shareholders of such series or as otherwise
provided in the governing instrument.
The DE Declaration provides that, upon dissolution The MA Declaration provides that, upon termination
of the DE Trust, the trustees shall (in accordance of the Trust (or any series, as the case may be),
with the Delaware Act) pay or make reasonable after paying or otherwise providing for all
provision to pay all claims and obligations of charges, taxes, expenses and liabilities
each series (or the particular dissolved series, belonging, severally, to each series (or the
as the case may be), including all contingent, applicable series, as the case may be), whether
conditional or unmatured claims and obligations due or accrued or anticipated as may be determined
known to the Trust, whether or not the identity of by the Trustees, the Trust shall in accordance
the claimant is known. If the series has with such procedures as the Trustees consider
sufficient assets, such claims, obligations and, appropriate reduce the remaining assets belonging,
if any, provisions for payment will be paid in severally, to each series (or the applicable
full. If the series has insufficient assets, such series, as the case may be), to distributable form
claims, obligations and, if any, provisions for in cash or shares or other securities, or any
payment will be paid according to their priority combination thereof, and distribute the proceeds
and, among claims and obligations of equal belonging to each series (or the applicable
priority, ratably to the extent of available series, as the case my be), to the shareholders of
assets. Any remaining assets (including without that series, ratably according to the number of
limitation, cash, securities or any combination shares of that series held by the several
thereof) of the series shall be distributed to the shareholders on the date of termination.
shareholders of such series, ratably according to
the number of shares of such series held by the
shareholders on the record date for such
dissolution distribution.
VOTING RIGHTS, Under the Delaware Act, the governing instrument The Massachusetts Statute does not contain
MEETINGS, NOTICE, may set forth any provision relating to trustee specific provisions with respect to the voting
QUORUM, RECORD and shareholder voting rights, including the rights of the shareholders of an MBT.
DATES AND PROXIES withholding of such rights from certain trustees
or shareholders. If voting rights are granted, the
governing instrument may contain any provision
relating to meetings, notice requirements, written
consents, record dates, quorum requirements,
voting by proxy and any other matter pertaining to
the exercise of voting rights. The governing
instrument may also provide for the establishment
of record dates for allocations and distributions
by the DST.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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The DE Declaration provides that, subject to its The MA Declaration provides that shareholders
provisions regarding voting by series or class, shall have power to vote only (i) for the election
the shareholders have the power to vote only (i) of Trustees as provided in the MA Declaration,
for the election of trustees, including filling (ii) with respect to any amendment of the MA
vacancies on the board pursuant to the DE Declaration to the extent and as provided for
Declaration; (ii) with respect to such additional therein, (iii) to the same extent as the
matters relating to the Trust as may be required stockholders of a Massachusetts business
by the DE Declaration, DE By-Laws, 1940 Act or any corporation as to whether or not a court action,
registration statement of the Trust filed with the proceeding or claim should be or should not be
SEC; and (iii) on such other matters as the board brought or maintained derivatively or as a class
may consider necessary or desirable. action on behalf of the Trust or the shareholders,
(iv) with respect to the termination of the Trust
or any series to the extent and as provided in the
MA Declaration, and (v) with respect to such
additional matters relating to the Trust as may be
required by the MA Declaration, the MA By-Laws or
any registration of the Trust with the Commission
(or any successor agency) or any state, or as the
Trustees may consider necessary or desirable.
At any time when no shares of a series or class
thereof are outstanding, the Trustees may exercise
all rights of shareholders of that series or class
thereof with respect to matters affecting that
series and may with respect to that series or
class thereof take any action required by law, the
MA Declaration or the MA By-Laws to be taken by
the shareholders.
One Vote Per Share One Vote Per Share
The shareholder of record (on the record date The MA Declaration provides that each whole share
established pursuant to the DE Declaration, shall be entitled to one vote as to any matter on
Article V, Section 5) of each share shall be which it is entitled to vote and each fractional
entitled to one vote for each full share, and a share shall be entitled to a proportionate
fractional vote for each fractional share. fractional vote.
Voting by Series or Class Voting by Series or Class
The DE Declaration provides that all shares of the The MA Declaration provides that, except as
DE Trust entitled to vote on a matter shall vote otherwise provided therein, the shareholders of
on the matter, separately by series and, if any particular series or class shall not be
applicable, by class; provided that: (i) where the entitled to vote on any matters as to which such
1940 Act requires all shares of the DE Trust to be series or class is not affected. On any matter
voted in the aggregate without differentiation submitted to a vote of shareholders, all shares of
between the separate series or classes, then all the Trust then entitled to vote shall be voted by
of the DE Trust's shares shall vote in the individual series and class thereof, unless
aggregate; and (ii) if any matter affects only the otherwise required by the 1940 Act or other
interests of some but not all series or classes, applicable law or as specifically required under
then only the shareholders of such affected series the MA Declaration or the MA Bylaws or as
or classes shall be entitled to vote on the matter. otherwise determined by the Trustees. If any
question on which the shareholders are entitled to
vote would adversely affect the rights of any
series or class of shares, the vote of a majority
(or such larger vote as may be required) of the
shares of such series or class which are entitled
to vote, voting separately, shall be required to
decide such question.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Shareholders' Meetings Shareholders' Meetings
The Delaware Act does not mandate annual The MA Statute does not mandate that an MBT hold
shareholders' meetings. annual shareholders' meetings.
The DE Declaration provides that a shareholders' The MA Declaration provides that no annual or
meeting may be called by the board for the purpose regular meeting of shareholders is required. The
of electing trustees, for such other purposes as MA Declaration also provides that meetings of the
may be prescribed by law, the DE Declaration or shareholders may be called by the Trustees for the
the DE By-Laws, and for the purpose of taking purpose of electing Trustees as provided for
action upon any other matter deemed by the board therein and for such other purposes as may be
to be necessary or desirable. Also, a meeting of prescribed by law, by the MA Declaration or by the
shareholders for the purpose of electing one or MA By-Laws. Meetings of the shareholders may also
more trustees may be called, to the extent be called by the Trustees from time to time for
provided by the 1940 Act and the rules and the purpose of taking action upon any other matter
regulations thereunder, by the shareholders. deemed by the Trustees to be necessary or
desirable. A meeting of shareholders may be held
The DE By-Laws provide that a shareholders' at any place designated by the Trustees. Written
meeting may be called at any time by the board, notice of any meeting of shareholders shall be
the Chairperson or the President. If the Trust is given or caused to be given by the Trustees by
required under the 1940 Act to hold a mailing such notice at least seven days before
shareholders' meeting to elect trustees, the such meeting, postage prepaid, stating the time
meeting shall be deemed an "annual meeting" for and place of the meeting, to each shareholder at
that year for purposes of the 1940 Act. the shareholder's address as it appears on the
records of the Trust. Whenever notice of a
meeting is required to be given to a shareholder
under the MA Declaration or the MA By-Laws, a
written waiver thereof, executed before or after
the meeting by such shareholder or his or her
attorney thereunto authorized and filed with the
records of the meeting, shall be deemed equivalent
to such notice.
The MA By-Laws provide that a meeting of the
shareholders may be called at any time by the
Board of Trustees, the Chairperson (as defined
therein) or by the President (as defined therein).
If the Trust is required, under the 1940 Act, or
otherwise, to hold a shareholders' meeting to
elect Trustees, the meeting shall be deemed an
"annual meeting" for that year, including for
purposes of the 1940 Act.
The DE By-Laws provide that notice of any The MA By-Laws also provide that all notices of
shareholders' meeting shall be sent or otherwise meetings of shareholders shall be sent or
given not less than seven nor more than one otherwise given, (as described below) not less
hundred and twenty days before the date of the than seven (7) nor more than one-hundred twenty
meeting. The notice shall specify (i) the place, (120) days before the date of the meeting. The
date and hour of the meeting, and (ii) The general notice shall specify (i) the place, date and hour
nature of the business to be transacted. The of the meeting, and (ii) the general nature of the
notice of any meeting at which trustees are to be business to be transacted. The notice of any
elected also shall include the name of any meeting at which Trustees are to be elected also
nominee(s) who, at the time of the notice, are shall include the name of any nominee or nominees
intended to be presented for election. Except with whom at the time of the notice are intended to be
respect to adjournments as provided in the DE presented for election. Except with respect to
By-Laws, no business shall be transacted at such adjournments as provided for in the MA By-Laws, no
meeting other than that specified in the notice. business shall be transacted at such meeting other
than that specified in the notice.
Notice of any shareholders' meeting shall be given
either personally or by first-class mail, courier Notice of any meeting of shareholders shall be
or telegraphic, facsimile, electronic mail or given either personally or by first-class mail,
other written communication, charges prepaid, courier or telegraphic, facsimile, electronic mail
addressed to the shareholder at the address of or other written communication, charges prepaid,
that shareholder appearing on the books of the DE addressed to the shareholder at the address of
Trust or its transfer agent or given by the that shareholder appearing on the books of the
shareholder to the DE Trust for the purpose of Trust or its transfer agent or given by the
notice. If no such address appears on the DE shareholder to the Trust for the purpose of
Trust's books or is given, notice is deemed to notice. If no such address appears on the Trust's
have been given if sent to that shareholder by books or is given, notice shall be deemed to have
first-class mail, courier, or telegraphic, been given if sent to that shareholder by
facsimile, electronic mail or other written first-class mail, courier, or telegraphic,
communication to the DE Trust's principal facsimile, electronic mail or other written
executive office. Notice shall be deemed to have communication to the Trust's principal executive
been given at the time when delivered personally office. Notice shall be deemed to have been given
or deposited in the mail, with a courier or sent at the time when delivered personally or deposited
by telegram, facsimile, electronic mail or other in the mail, with a courier or sent by telegram,
means of written communication. facsimile, electronic mail or other means of
written communication.
If any notice addressed to a shareholder, at the
address on record with the DE Trust, is returned If any notice addressed to a shareholder at the
to the DE Trust marked to indicate the notice address of that shareholder appearing on the books
cannot be delivered at that address, all future of the Trust is returned to the Trust marked to
notices or reports shall be deemed to have been indicate that the notice to the shareholder cannot
duly given without further mailing, or substantial be delivered at that address, all future notices
equivalent thereof, if such notices shall be or reports shall be deemed to have been duly given
available to the shareholder on written demand of without further mailing, or substantial equivalent
the shareholder at the offices of the DE Trust for thereof, if such notices shall be available to the
one year from the date of giving the notice. shareholder on written demand of the shareholder
at the principal executive office of the Trust for
a period of one year from the date of the giving
of the notice.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Record Dates Record Dates
As set forth above, the Delaware Act authorizes The Massachusetts Statute does not contain a
the governing instrument of a DST to set forth any specific provision that addresses the record dates
provision relating to record dates. of meetings of shareholders of an MBT.
The DE Declaration provides that, for purposes of The MA Declaration provides that, for the purpose
determining the shareholders entitled to notice of determining the shareholders who are entitled
of, or to vote at, any shareholders' meeting or to vote or act at any meeting or any adjournment
entitled to give consent to action without a thereof, the Trustees may from time to time fix a
meeting, the board may fix in advance a record time as the record date for determining the
date that may not be more than one hundred and shareholders having the right to notice of and to
eighty days nor less than seven days before the vote at such meeting and any adjournment thereof,
date of the shareholders' meeting. and in such case only shareholders of record on
the record date shall have such right,
notwithstanding any transfer of shares on the
books of the Trust after the record date. Without
fixing a record date, the Trustees may close the
register or transfer books for all or any part of
the period between a record date and a meeting of
shareholders. The MA Declaration further provides
that nothing contained therein shall be construed
as precluding the Trustees from setting different
record dates for different series.
Pursuant to the DE Declaration, if the board does The MA By-Laws provide that the Board of Trustees
not fix a record date: (i) the record date for may fix a date not more than ninety (90) days
determining shareholders entitled to notice of, before the date of a meeting of shareholders. In
and to vote at, a meeting will be at the close of the absence of such fixed record date: (i) the
business on the business day next preceding the date for determination of shareholders shall be
day on which notice is given, or, if notice is the later of the close of business on the day on
waived, at the close of business on the business which notice of the meeting is mailed or the
day which is five business days next preceding to thirtieth day before the meeting; and (ii) the
the day on which the meeting is held; and (ii) the date for determining shareholders entitled to
record date for determining shareholders entitled receive payment of a dividend or an allotment of
to give consent to action in writing without a any rights shall be the close of business on the
meeting, (a) when no prior action by the board has day on which the resolution of the Board of
been taken, shall be the day on which the first Trustees is adopted.
written consent is given, or (b) when prior action
of the board has been taken, shall be the close of
business on the day on which the board adopts the
resolution taking such prior action or the
seventy-fifth day before the date of such other
action, whichever is later.
To determine the shareholders of the DE Trust or
any series or class thereof entitled to payment of
a dividend or any other distribution of assets of
the DE Trust or any series or class thereof, the
DE Declaration authorizes the board, from time to
time, to fix a record date, which shall be before
the date for the payment of such dividend or such
other distribution. The board may set different
record dates for different series or classes.
Quorum for Shareholders' Meeting Quorum for Shareholders' Meeting
To transact business at a shareholders' meeting, The MA Declaration provides that, except when a
the DE Declaration provides that, except when a larger quorum is required by the 1940 Act or other
larger quorum is required by applicable law, applicable law, the MA By-Laws or the MA
thirty-three and one-third percent of the shares Declaration, 10% of the shares entitled to vote
present in person or represented by proxy and shall constitute a quorum at a shareholders'
entitled to vote at the meeting shall constitute a meeting. Any meeting of shareholders may be
quorum at such meeting. When a separate vote by adjourned from time to time by a majority of the
one or more series or classes is required, votes properly cast upon the question, whether or
thirty-three and one-third percent of the shares not a quorum is present, and the meeting may be
of each such series or class present in person or held as adjourned within a reasonable time after
represented by proxy and entitled to vote shall the date set for the original meeting without
constitute a quorum at such series or class further notice.
shareholders' meeting.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Shareholder Vote Shareholder Vote
The DE Declaration provides that, subject to any The MA By-Laws provide that, when a quorum is
provision of the DE Declaration, the DE By-Laws or present at any meeting, a majority of the shares
applicable law that requires a different vote: (i) voted shall decide any questions and a plurality
in all matters other than the election of shall elect a Trustee, except when a larger vote
trustees, the affirmative vote of the majority of is required by any provision of the MA
votes cast at a shareholders' meeting at which a Declaration, the MA By-Laws or the 1940 Act or
quorum is present shall be the act of the other applicable law.
shareholders; and (ii) trustees shall be elected
by a plurality of the votes cast at a
shareholders' meeting at which a quorum is
present.
Shareholder Vote on Certain Transactions Shareholder Vote on Certain Transactions
Pursuant to the DE Declaration, the board, by act The MA Declaration provides that the Trustees may
of a majority of the trustees, may cause the cause the assets of the Trust or the assets of any
merger or consolidation with or into one or more one or more series to be merged into or
statutory trusts or other business entities consolidated with another trust or company, or to
formed, organized or existing under the laws of the Trust to be held as assets belonging to
the State of Delaware, any other state, the United another series, or its shares exchanged under or
States or any foreign country or other foreign pursuant to any state or federal statute, if any,
jurisdiction. Any such merger or consolidation or otherwise to the extent permitted by law, if
shall not require the vote of the shareholders such merger or consolidation or share exchange has
affected thereby, unless such vote is required by been authorized by vote of a majority of the
the 1940 Act, or unless such merger or outstanding shares, as such phrase is defined in
consolidation would result in an amendment of the the 1940 Act; provided that in all respects not
DE Declaration that would otherwise require the governed by statute or applicable law, the
approval of such shareholders. Also, the board, Trustees shall have power to prescribe the
by act of a majority of the trustees, may cause procedure necessary or appropriate to accomplish a
(i) the DE Trust to convert to a common-law trust, sale of assets, merger or consolidation.
a general partnership, limited partnership or a
limited liability company organized, formed or
created under Delaware state law as permitted
under the Delaware Act; (ii) the shares of the DE
Trust or any series to be converted into
beneficial interests in another statutory trust
(or series thereof) created pursuant to the DE
Declaration; (iii) the shares to be exchanged
under or pursuant to any state or federal statute
to the extent permitted by law; or (iv) the DE
Trust to sell or transfer all or substantially all
of the assets of the DE Trust or any one or more
of its series to another trust, statutory trust,
partnership, limited partnership, limited
liability company, association or corporation
organized under the laws of any state, or to one
or more separate series thereof, or to the DE
Trust to be held as assets of one or more other
series of the DE Trust, in exchange for cash,
shares or other securities (which may include
shares of such other series) whether or not such
sale or transfer is subject to the liabilities of
the series the assets of which are so sold or
transferred; provided that, if required by the
1940 Act, no such statutory conversion, share
conversion, share exchange or sale or transfer of
assets shall be effective unless approved (at a
shareholders' meeting called for that purpose) by
the "vote of a majority of the outstanding voting
securities," as defined in the 1940 Act, of the DE
Trust or series, as applicable.
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Cumulative Voting Cumulative Voting
The DE Declaration provides that shareholders are The MA Declaration provides that there shall be no
not entitled to cumulative voting in the election cumulative voting in the election of Trustees.
of trustees or on any other matter.
Proxies Proxies
Under the Delaware Act, unless otherwise provided The MA Statute does not contain specific
in the governing instrument of a DST, on any provisions with respect to the shareholders of an
matter that is to be voted on by the trustees or MBT voting by proxy.
the shareholders, the trustees or shareholders (as
applicable) may vote in person or by proxy and The MA Declaration provides that shares may be
such proxy may be granted in writing, by means of voted in person or by proxy. A proxy with respect
"electronic transmission" (as defined in the to shares held in the name of two or more persons
Delaware Act) or as otherwise permitted by shall be valid if executed by any one of them
applicable law. Under the Delaware Act, the term unless at or prior to exercise of the proxy the
"electronic transmission" is defined as any form Trust receives a specific written notice to the
of communication not directly involving the contrary from any one of them. A proxy purporting
physical transmission of paper that creates a to be executed by or on behalf of a shareholder
record that may be retained, retrieved and shall be deemed valid unless challenged at or
reviewed by a recipient thereof and that may be prior to its exercise and the burden of proving
directly reproduced in paper form by such a the invalidity shall rest on the challenger.
recipient through an automated process.
The DE Declaration provides that shares may be The MA By-Laws provide that every shareholder
voted in person or by proxy. The DE By-Laws entitled to vote for Trustees or on any other
permit a shareholder to authorize another matter shall have the right to do so either in
person(s) to act as proxy by signing the proxy and person or by one or more agents authorized by a
filing it with the secretary of the DE Trust. A written proxy signed by the shareholder and filed
proxy is deemed signed if the shareholder's name with the Secretary of the Trust. A proxy shall be
is placed on the proxy (whether by manual deemed signed if the shareholder's name is placed
signature, typewriting, telegraphic transmission, on the proxy (whether by manual signature,
electronic transmission or otherwise) by the typewriting, telegraphic transmission or
shareholder or the shareholder's otherwise) by the shareholder or the shareholder's
attorney-in-fact. A validly executed proxy that attorney-in-fact. A validly executed proxy which
does not state that it is irrevocable continues in does not state that it is irrevocable shall
full force and effect unless (i) revoked by the continue in full force and effect unless (i)
shareholder executing it by a written notice revoked by the shareholder executing it by a
delivered to the DE Trust prior to the exercise of written notice delivered to the Trust prior to the
the proxy or by the shareholder's execution of a exercise of the proxy or by the shareholder's
subsequent proxy or attendance and vote in person execution of a subsequent proxy or attendance and
at the meeting; or (ii) written notice of the vote in person at the meeting; or (ii) written
death or incapacity of the shareholder is received notice of the death or incapacity of the
by the DE Trust before the proxy's vote is shareholder is received by the Trust before the
counted. Unless a proxy expressly provides proxy's vote is counted; provided, however, that
otherwise, it is not valid more than eleven months no proxy shall be valid after the expiration of
after its date. In addition, the DE By-Laws eleven (11) months from the date of the proxy
provide that the revocability of a proxy that unless otherwise provided in the proxy. The
states on its face that it is irrevocable shall be revocability of a proxy that states on its face
governed by the provisions of the General that it is irrevocable shall be governed by the
Corporation Law of the State of Delaware. applicable provisions of the Business Corporation
Law of the Commonwealth of Massachusetts.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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The DE By-Laws provide that the DE Trust may The MA By-Laws further provide that, with respect
accept proxies by electronic transmission (as to any shareholders' meeting, the Trust may accept
defined in the Delaware Act) or telephonic, proxies by any electronic, telephonic,
computerized, telecommunications or any other computerized, telecommunications or other
reasonable alternative to the execution of a reasonable alternative to the execution of a
written instrument authorizing the proxy to act, written instrument authorizing the proxy to act,
provided the shareholder's authorization is provided the shareholder's authorization is
received within eleven months before the meeting. received within eleven (11) months before the
A proxy with respect to shares held in the name of meeting. A proxy with respect to shares held in
two or more persons is valid if executed by any the name of two or more Persons shall be valid if
one of them unless at or prior to exercise of the executed by any one of them unless at or prior to
proxy the DE Trust receives a specific written exercise of the proxy the Trust receives a
notice to the contrary from any one of them. A specific written notice to the contrary from any
proxy purporting to be executed by or on behalf of one of them. A proxy purporting to be executed by
a shareholder shall be deemed valid unless or on behalf of a shareholder shall be deemed
challenged at or prior to its exercise and the valid unless challenged at or prior to its
burden of proving invalidity shall rest with the exercise and the burden of proving invalidity
challenger. shall rest with the challenger.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Action by Written Consent Action by Written Consent
Under the Delaware Act, unless otherwise provided The MA Statute does not contain specific
in the governing instrument of a DST, on any provisions with respect to action taken by written
matter that is to be voted on by the trustees or consent of the shareholders or the trustees of an
the shareholders, such action may be taken without MBT.
a meeting, without prior notice and without a vote
if a written consent(s), setting forth the action
taken, is (are) signed by the trustees or
shareholders (as applicable) having not less than
the minimum number of votes that would be
necessary to take such action at a meeting at
which all trustees or interests in the DST (as
applicable) entitled to vote on such action were
present and voted. Unless otherwise provided in
the governing instrument, a consent transmitted by
"electronic transmission" (as defined in the
Delaware Act) by a trustee or shareholder (as
applicable) or by a person(s) authorized to act
for a trustee or shareholder (as applicable) will
be deemed to be written and signed for this
purpose.
Shareholders. The DE Declaration authorizes Shareholders. The MA Declaration provides that
shareholders to take action without a meeting and any action taken by shareholders may be taken
without prior notice if a written consent(s) without a meeting if shareholders holding a
setting forth the action taken is (are) signed by majority of the shares entitled to vote on the
the holders of not less than the minimum number of matter (or such larger proportion thereof as shall
votes that would be necessary to authorize or take be required by any express provision of the MA
that action at a meeting at which all shares Declaration or by the MA Bylaws) and/or holding a
entitle to vote on that action were present and majority (or such larger proportion as aforesaid)
voted. Any shareholder giving a written consent, of the shares of any series or class entitled to
the shareholder's proxy holders, or a personal vote separately on the matter consent to the
representative of the shareholder may revoke the action in writing and such written consents are
consent by a writing received by the secretary of filed with the records of the meetings of
the DE Trust before written consents of the number shareholders. Such consent shall be treated for
of shares required to authorize the proposed all purposes as a vote taken at a meeting of
action have been filed with the secretary. If the shareholders.
consents of all shareholders entitled to vote have
not been solicited in writing and if the unanimous
written consent of all such shareholders have not
been received, the secretary shall give prompt
notice of the action taken without a meeting to
such shareholders. This notice shall be given in
the manner specified in the DE By-Laws.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Board of Trustees. The DE Declaration authorizes Board of Trustees. The MA By-Laws provide that,
the board or any committee of the board to take except as required by law, including the 1940 Act
action without a meeting if a majority of the and the rules and regulations thereunder, on any
members of the board, or committee thereof, as the matter required or permitted to be voted on by the
case may be, collectively consent in writing to Board of Trustees or a committee of the Board of
that action. Trustees, the Board of Trustees or committee
thereof may take such action without a meeting,
The DE By-Laws provide that, except as required by without prior notice and without a vote, if a
law, including the 1940 Act and the rules and consent or consents in writing, setting forth the
regulations thereunder, on any matter required or action so taken, shall be signed by the Trustees
permitted to be voted on by the board or a having not less than the minimum number of votes
committee of the board, the board or committee that would be necessary to authorize or take such
thereof may take such action without a meeting, action at a meeting at which all Trustees entitled
without prior notice and without a vote, if a to vote thereon were present and voted.
consent or consents in writing, setting forth the
action so taken, shall be signed by the trustees
having not less than the minimum number of votes
that would be necessary to authorize or take such
action at a meeting at which all trustees entitled
to vote thereon were present and voted.
REMOVAL OF TRUSTEES The governing instrument of a DST may contain any The MA Statute does not contain specific
provision relating to the removal of trustees; provisions with respect to the removal of the
provided however, that there shall at all times be trustees of an MBT.
at least one trustee of the DST.
Under the DE Declaration, any trustee may be The MA Declaration provides that the Trustees may
removed, with or without cause, by the board, by remove Trustees with or without cause.
action of a majority of the trustees then in
office at a duly constituted meeting.
Shareholders have the power to remove a trustee
only to the extent provided by the 1940 Act and
the rules and regulations thereunder.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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VACANCIES ON BOARD The DE Declaration provides that vacancies on the The MA Declaration provides that the Trustees may
OF TRUSTEES board may be filled by action of a majority of the fill vacancies on the Board of Trustees, including
trustees then in office at a duly constituted vacancies arising from an increase in the number
meeting. No such vacancy shall operate to of Trustees. No such vacancy shall operate to
dissolve the DE Trust or any of its series or to annul the MA Declaration or to revoke any existing
revoke any existing agency created pursuant to the agency created pursuant to the terms of the MA
terms of the DE Declaration. Whenever a vacancy Declaration.
in the board occurs, until such vacancy is filled
as provided in the DE Declaration, the trustee(s)
in office, regardless of the number, shall have
all the powers granted to the board and shall
discharge all the duties imposed upon the board by
the DE Declaration. In the event of the death,
declination, resignation, retirement, removal,
declaration as bankrupt or incapacity of all of
the then trustees, the DE Trust's investment
adviser(s) is (are) empowered to appoint new
trustees subject to the provisions of Section
16(a) of the 1940 Act.
The DE By-Laws provide that vacancies in the board The MA By-Laws provide that vacancies in the Board
may be filled by a majority of the remaining of Trustees may be filled by a majority of the
trustees, though less than a quorum, or by a sole remaining Trustees, though less than a quorum, or
remaining trustee, unless the board calls a by a sole remaining Trustee, unless the Board of
meeting of shareholders for the purpose of filling Trustees calls a meeting of shareholders for the
such vacancies; provided that, whenever and for so purpose of filling such vacancies.
long as the DE Trust is a participant in or Notwithstanding the above, whenever and for so
otherwise has in effect a plan under Rule 12b-1 long as the Trust is a participant in or otherwise
under the 1940 Act, the selection and nomination has in effect a plan under which the Trust may be
of the trustees who are not "interested persons" deemed to bear expenses of distributing its shares
of the DE Trust, as defined in the 1940 Act (the as that practice is described in Rule 12b-1 under
"Independent Trustees"), is committed to the the 1940 Act, then the selection and nomination of
discretion of the Independent Trustees. If all the Trustees who are not "interested persons" of
trustee offices become vacant, an authorized the Trust, as that term is defined in the 1940 Act
officer of Delaware Management Company, a series (the "Independent Trustees") shall be, and is,
of Delaware Management Business Trust, or any committed to the discretion of the Independent
successor entity thereto or affiliate thereof Trustees.
serving as investment adviser to the DE Trust
("DMC"), on behalf DMC, shall serve as the sole The MA By-Laws further provide that, in the event
remaining trustee effective upon the vacancy in that all Trustee offices become vacant, an
the office of the last trustee. In such case, authorized officer of Delaware Management Company,
such officer of DMC, as the sole remaining a series of Delaware Management Business Trust, or
trustee, shall, as soon as practicable, fill all any successor entity thereto or affiliate thereof
of the vacancies on the board of Trustees; serving as investment adviser to the Trust
provided that, upon filling such vacancies, the ("DMC"), on behalf DMC, shall serve as the sole
percentage of trustees who are Independent remaining Trustee effective upon the vacancy in
Trustees shall be no less than that required by the office of the last Trustee. In such case,
the 1940 Act. Thereupon, such officer of DMC such officer of DMC, as the sole remaining
shall resign as trustee and a meeting of the Trustee, shall, as soon as practicable, fill all
shareholders shall be called, as required by the of the vacancies on the Board of Trustees;
1940 Act, for the election of trustees. provided, however, that, upon filling such
vacancies, the percentage of Trustees who are
Independent Trustees of the Trust shall be no less
than that required by the 1940 Act. Thereupon,
such officer of DMC shall resign as Trustee and a
meeting of the shareholders shall be called, as
required by the 1940 Act, for the election of
Trustees.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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The MA By-Laws also provide that whenever a
vacancy in the Board of Trustees shall occur (by
reason of death, resignation, removal, an increase
in the authorized number of Trustees or other
cause), until such vacancy is filled as provided
herein or the number of authorized Trustees
constituting the Board of Trustees is decreased
pursuant to the MA Declaration, the Trustee(s)
then in office, regardless of the number and even
if less than a quorum, shall have all the powers
granted to the Board of Trustees and shall
discharge all the duties imposed upon the Board of
Trustees by the MA Declaration and the MA By-Laws
as though such number constitutes the entire Board
of Trustees.
SHAREHOLDER Under the Delaware Act, except to the extent The Massachusetts Statute does not include an
LIABILITY otherwise provided in the governing instrument of express provision relating to the limitation of
a DST, shareholders of a DST are entitled to the liability of the beneficial owners of an MBT.
same limitation of personal liability extended to Therefore, the owners of an MBT could potentially
shareholders of a private corporation organized be liable for the obligations of the MBT,
for profit under the General Corporation Law of notwithstanding any express provision in the
the State of Delaware (such shareholders are governing instrument stating that the beneficial
generally not liable for the obligations of the owners are not personally liable in connection
corporation). with trust property or the acts, obligations or
affairs of the MBT.
Under the DE Declaration, shareholders are The MA By-Laws provide that, in case any
entitled to the same limitation of personal shareholder or former shareholder shall be held to
liability as that extended to shareholders of a be personally liable solely by reason of his or
private corporation organized for profit under the her being or having been a shareholder of the
General Corporation Law of the State of Delaware. Trust or of a particular series or class thereof
However, the board may cause any shareholder to and not because of his or her acts or omissions or
pay for charges of the DE Trust's custodian or for some other reason, the shareholder or former
transfer, dividend disbursing, shareholder shareholder (or his or her heirs, executors,
servicing or similar agent by setting off such administrators or other legal representatives or
amount due from such shareholder from (i) declared in the case of a corporation or other entity, its
but unpaid dividends or distributions owed such corporate or other general successor) shall be
shareholder, or (ii) a reduction in the number of entitled out of the assets of the series or in the
shares in the account of such shareholder by that case of a class, allocable to such class, of which
number of full and/or fractional shares which he is a shareholder or former shareholder to be
represents the outstanding amount of such charges held harmless from the indemnified against all
due from such shareholder. loss and expense arising from such liability.
TRUSTEE/AGENT Subject to the provisions in the governing The Massachusetts Statute does not include an
LIABILITY instrument, the Delaware Act provides that a express provision limiting the liability of the
trustee or any other person appointed, elected or trustees of an MBT. The trustees of an MBT could
engaged to manage the DST, when acting in such potentially be held personally liable for the
capacity, will not be personally liable to any obligations of the MBT.
person other than the DST or a shareholder of the
DST for any act, omission or obligation of the DST
or any trustee. To the extent that at law or in
equity, a trustee has duties (including fiduciary
duties) and liabilities to the DST and its
shareholders, such duties and liabilities may be
expanded or restricted by the governing instrument.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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The DE Declaration provides that to the fullest The MA Declaration provides that the Trustees
extent that limitations on the liability of shall not be responsible for liable in any event
trustees and officers are permitted by the for any neglect or wrong-doing of any officer,
Delaware Act, the officers and trustees are not agent, employee, manager or principal underwriter
responsible or liable in any event for any act or of the Trust, nor shall any Trustee be responsible
omission of any agent, employee, investment for the act or omission of any other Trustee, but
adviser or principal underwriter of the DE Trust, nothing therein contained shall protect any
or with respect to each trustee and officer, the Trustee against any liability to which he would
act or omission of any other trustee or officer, otherwise be subject by reason of willful
respectively. This limitation on liability misfeasance, bad faith, gross negligence or
applies to events occurring at the time the person reckless disregard of the duties involved in the
serves as a trustee or officer of the DE Trust conduct of his or her office.
whether or not such person is a trustee or officer
at the time of any proceeding in which liability The MA Declaration further provides that every
is asserted. Nothing in the DE Declaration note, bond, contract, instrument, certificate or
protects any officer or trustee from or against undertaking and every other act or thing
any liability to the DE Trust or any shareholder whatsoever issued, executed or done by or on
to which such officer or trustee would otherwise behalf of the Trust or the Trustees or any of them
be subject by reason of willful misfeasance, bad in connection with the Trust shall be conclusively
faith, gross negligence or reckless disregard of deemed to have been issued, executed or done only
the duties involved in the conduct of such in or with respect to their or his or her capacity
person's office (such reasons referred to as as Trustees or Trustee, and such Trustees or
"Disqualifying Conduct"). Every contract, act or Trustee shall not be personally liable thereon.
document whatsoever issued, executed or done by or
on behalf of the DE Trust, the officers or the
trustees or any of them in connection with the DE
Trust shall be conclusively deemed to have been
issued, executed or done only in such person's
capacity as trustee and/or as officer, and such
trustee or officer, as applicable, shall not be
personally liable therefor, except for
Disqualifying Conduct. No officer or trustee
shall be liable to the DE Trust for errors of
judgment or mistakes of fact or law. The officers
and trustees may obtain the advice of counsel or
other experts with respect to the meaning and
operation of the DE Declaration and their duties
as officers or trustees. No such officer or
trustee shall be liable for any act or omission in
accordance with such advice and no inference
concerning liability shall arise from a failure to
follow such advice. The officers and trustees are
not required to give any bond as such, nor any
surety if a bond is required.
INDEMNIFICATION Subject to such standards and restrictions, if Although the Massachusetts Statute is silent as to
any, contained in the governing instrument of a the indemnification of trustees, officers and
DST, the Delaware Act authorizes a DST to shareholders, indemnification is expressly
indemnify and hold harmless any trustee, provided for in the MA Declaration.
shareholder or other person from and against any
and all claims and demands.
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DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
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Pursuant to the DE Declaration, the DE Trust, out The MA Declaration provides that the Trust shall
of the DE Trust's property, shall indemnify and indemnify each of its Trustees and officers
hold harmless each and every officer and trustee (including persons who serve at the Trust's
from and against any and all claims and demands request as directors, officers or trustees of
whatsoever arising out of or related to such another organization in which the Trust has any
officer's or Trustee's performance of his or her interest as a shareholder, creditor or otherwise)
duties as an officer or trustee of the Trust. (hereinafter referred to as a "Covered Person")
Nothing in the DE Declaration indemnifies or hold against all liabilities and expenses, including
harmless any officer or Trustee from or against but not limited to amounts paid in satisfaction of
any liability to the DE Trust or any shareholder judgments, in compromise or as fines and
to which such officer or trustee would otherwise penalties, and counsel fees incurred by any
be subject by reason of Disqualifying Conduct. Covered Person in connection with the defense or
disposition of any action, suit or other
The DE By-Laws provide that the DE Trust shall proceeding, whether civil or criminal, before any
indemnify any person who was or is a party or is court or administrative or legislative body, in
threatened to be made a party to any: which such Covered Person may be or may have been
o proceeding (other than an action by or in involved as a party or otherwise or with which
the right of the Trust) by reason of the fact such Covered Person may be or may have been
that such person is or was an agent of the threatened, while in office or thereafter, by
Trust, against expenses, judgments, reason of being or having been such a Covered
penalties, fines, settlements and other Person except with respect to any matter as to
amounts actually and reasonably incurred in which such Covered Person shall have been finally
connection with such proceeding, if such adjudicated in any such action, suit or other
person acted in good faith and in a manner proceeding to be liable to the Trust or its
that such person reasonably believed to be in shareholders by reason of willful misfeasance, bad
the best interests of the DE Trust and in the faith, gross negligence or reckless disregard of
case of a criminal proceeding, had no the duties involved in the conduct of such Covered
reasonable cause to believe such person's Person's office. Expenses, including counsel fees
conduct was unlawful; or so incurred by any such Covered Person (but
o threatened, pending or completed action excluding amounts paid in satisfaction of
by or in the right of the DE Trust to procure judgments, in compromise or as fines or
a judgment in its favor by reason of the fact penalties), shall be paid from time to time by the
that the person is or was an agent of the DE Trust in advance of the final disposition of any
Trust, against expenses actually and such action, suit or proceeding upon receipt of an
reasonably incurred by that person in undertaking by or on behalf of such Covered Person
connection with the defense or settlement of to repay amounts so paid to the Trust if it is
that action if that person acted in good ultimately determined that indemnification of such
faith and in a manner that person reasonably expense is not authorized under the MA
believed to be in the best interests of the Declaration; provided, however, that either (a)
DE Trust. such Covered Person shall have provided
appropriate security for such undertaking, (b) the
"Agent" means any person who is or was a trustee, Trust shall be insured against losses arising from
officer, employee or other agent of the DE Trust any such advance payments or (c) either a majority
or is or was serving at the request of the DE of the disinterested Trustees acting on the matter
Trust as a trustee, director, officer, employee or (provided that a majority of the disinterested
agent of another foreign or domestic corporation, Trustees then in office act on the matter), or
partnership, joint venture, trust or other independent legal counsel in a written opinion,
enterprise or was a trustee, director, officer, shall have determined, based upon a review of
employee or agent of a foreign or domestic readily available facts (as opposed to a full
corporation which was a predecessor of another trial type inquiry) that there is reason to
enterprise at the request of such predecessor believe that such Covered Person will be found
entity entitled to indemnification under the MA
Declaration.
21
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
For purposes of the foregoing two bullet points: As to any matter disposed of (whether by
(a) the termination of any proceeding by judgment, compromise payment pursuant to a consent decree or
order, or settlement shall not of itself create a otherwise) without an adjudication by a court, or
presumption that the person did not act in good by any other body before which the proceeding was
faith or in a manner which the person reasonably brought, that such Covered Person is liable to the
believed to be in the best interests of the DE Trust or its shareholders by reason of willful
Trust or that the person had reasonable cause to misfeasance, bad faith, gross negligence or
believe that the person's conduct was unlawful; reckless disregard of the duties involved in the
and (b) the termination of any proceeding by conduct of his or her office, indemnification
conviction, or a plea of nolo contendere or its shall be provided if (a) approved, after notice
equivalent, or an entry of an order of probation that it involves such indemnification by at least
prior to judgment, creates a rebuttable a majority of the disinterested Trustees acting on
presumption that the person did not act in good the matter (provided that a majority of the
faith, or in a manner which the person reasonably disinterested Trustees then in office act on the
believed to be in the best interests of the Trust matter) upon a determination, based upon a review
or that the person had reasonable cause to believe of readily available facts (as opposed to a full
that the person's conduct was unlawful. trial type inquiry) that such Covered Person is
not liable to the Trust or its shareholders by
Notwithstanding any contrary provision in the DE reason of willful misfeasance, bad faith, gross
By-Laws, there is no right to indemnification for negligence or reckless disregard of the duties
any liability arising by reason of Disqualifying involved in the conduct of his or her office, or
Conduct. (b) there has been obtained an opinion in writing
of independent legal counsel based upon a review
No indemnification shall be made under the above of readily available facts (as opposed to a full
two bullet points: trial type inquiry) to the effect that such
(a) In respect of any claim, issue or indemnification would not protect such Covered
matter as to which that person shall have been Person against any liability to the Trust to which
adjudged to be liable in the performance of that he would otherwise be subject by reason of willful
person's duty to the DE Trust, unless and only to misfeasance, bad faith, gross negligence or
the extent that the court in which that action was reckless disregard of the duties involved in the
brought shall determine upon application that in conduct of his or her office. Any approval
view of all the circumstances of the case, that pursuant to the MA Declaration shall not prevent
person was not liable by reason of the the recovery from any Covered Person of any amount
Disqualifying Conduct and is fairly and reasonably paid to such Covered Person in accordance with the
entitled to indemnity for the expenses which the MA Declaration as indemnification if such Covered
court shall determine; or Person is subsequently adjudicated by a court of
(b) In respect of any claim, issue, or competent jurisdiction to have been liable to the
matter as to which that person shall have been Trust or its shareholders by reason of willful
adjudged to be liable on the basis that personal misfeasance, bad faith, gross negligence or
benefit was improperly received by him, whether or reckless disregard of the duties involved in the
not the benefit resulted from an action taken in conduct of such Covered Person's office.
the person's official capacity; or
(c) Of amounts paid in settling or
otherwise disposing of a threatened or pending
action, with or without court approval, or of
expenses incurred in defending a threatened or
pending action which is settled or otherwise
disposed of without court approval, unless the
required approval described below is obtained.
No indemnification or advance shall be made under The MA Declaration provides that the right of
the DE By-Laws in any circumstances where it would indemnification provided therein shall not be
be inconsistent with: exclusive of or affect any other rights to which
(a) A provision of the DE Declaration, a such Covered Person may be entitled. As used in
resolution of the shareholders, or an agreement the MA Declaration, the term "Covered Person"
which prohibits or otherwise limits shall include such person's heirs, executors and
indemnification, which was in effect at the time administrators and a "disinterested Trustee" is a
of accrual of the alleged cause of action asserted Trustee who is not an "interested person" of the
in the proceeding in which the expenses were Trust as defined in Section 2(a)(19) of the 1940
incurred or other amounts were paid; or Act (or who has been exempted from being an
(b) Any condition expressly imposed by a "interested person" by any rule, regulation or
court in approving a settlement. order of the Commission), and against whom none of
such actions, suits or other proceedings or
another action, suit or other proceeding on the
same or similar grounds is then or has been
pending.
22
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
The foregoing DE By-Laws provisions do not apply
to any proceeding against any trustee, investment
manager or other fiduciary of an employee benefit
plan in that person's capacity as such, even
though that person may also be an agent of the DE
Trust.
The DE By-Laws provide that nothing contained in Nothing contained in the MA Declaration shall
Article VI of the DE By-Laws (which addresses affect any rights to indemnification to which
indemnification) shall affect any right to personnel of the Trust, other than Trustees and
indemnification to which persons other than officers, and other persons may be entitled by
trustees and officers of the DE Trust or any contract or otherwise under law, nor the power of
subsidiary thereof may be entitled by contract or the Trust to purchase and maintain liability
otherwise. insurance on behalf of any such person; provided,
however, that the Trust shall not purchase or
maintain any such liability insurance in
contravention of applicable law, including without
limitation the 1940 Act.
Subject to the foregoing, the DE By-Laws provide The MA By-Laws provide that expenses incurred in
that The DE Trust may advance expenses incurred in defending any proceeding may be advanced by the
defending any proceeding, before the final Trust before the final disposition of the
disposition of the proceeding on receipt of an proceeding on receipt of an undertaking by or on
undertaking by or on behalf of the agent to repay behalf of the agent to repay the amount of the
the amount of the advance unless it shall be advance unless it shall be determined ultimately
determined ultimately that the agent is entitled that the agent is entitled to be indemnified as
to be indemnified as authorized in the DE By-Laws, authorized in the MA By-Laws, provided the agent
provided the agent provides a security for his provides a security for his or her undertaking, or
undertaking, or a majority of a quorum of the a majority of a quorum of the disinterested,
Independent Trustees, who are non-party trustees, non-party trustees, or an independent legal
or an independent legal counsel in a written counsel in a written opinion, determine that based
opinion, determines that, based on a review of on a review of readily available facts, there is
readily available facts, there is reason to reason to believe that said agent ultimately will
believe that said agent ultimately will be found be found entitled to indemnification.
entitled to indemnification. The DE By-Laws also
provide that to the extent that an agent of the DE
Trust has been successful on the merits in defense
of any proceeding referred to in the above two
bullet points or in defense of any claim, issue or
matter therein, before the court or other body
before whom the proceeding was brought, the agent
shall be indemnified against expenses actually and
reasonably incurred by the agent in connection
therewith, provided that the board, including a
majority who are Independent Trustees and
non-party trustees, also determines that, based
upon a review of the facts, the agent was not
liable by reason of Disqualifying Conduct.
INSURANCE The Delaware Act is silent as to the right of a The Massachusetts Statute does not contain
DST to purchase insurance on behalf of its specific provisions with respect to the ability of
trustees or other persons. an MBT to obtain insurance on behalf of its
trustees or other persons.
However, as the policy of the Delaware Act is to The MA Declaration provides that the Trustees
give maximum effect to the principle of freedom of shall have the power and authority to purchase and
contract and to the enforceability of governing pay for entirely out of Trust property such
instruments, the DE Declaration authorizes the insurance as they may deem necessary or
board, to the fullest extent permitted by appropriate for the conduct of the business,
applicable law, to purchase with DE Trust assets, including without limitation, insurance policies
insurance for liability and for all expenses insuring the assets of the Trust and payment of
reasonably incurred or paid or expected to be paid distributions and principal on its portfolio
by a trustee or officer in connection with any investments, and insurance policies insuring the
claim, action, suit or proceeding in which such shareholders, Trustees, officers, employees,
person becomes involved by virtue of such person's agents, investment advisers, principal
capacity or former capacity with the DE Trust, underwriters, or independent contractors of the
whether or not the DE Trust would have the power Trust individually against all claims and
to indemnify such person against such liability liabilities of every nature arising by reason of
under the DE Declaration. holding, being or having held any such office or
position, or by reason of any action alleged to
have been taken or omitted by any such person as
Trustee, officer, employee, agent, investment
adviser, principal underwriter, or independent
contractor, including any action taken or omitted
that may be determined to constitute negligence,
whether or not the Trust would have the power to
indemnify such person against liability.
23
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
The DE By-Laws provide that upon and in the event The MA By-Laws provide that, upon and in the event
of a determination by the board to purchase such of a determination by the Board of Trustees to
insurance, the DE Trust shall be entitled to purchase such insurance, the Trust shall be
purchase and maintain insurance on behalf of any entitled to purchase and maintain insurance on
agent of the DE Trust against any liability behalf of any agent of the Trust against any
asserted against or incurred by the agent in such liability asserted against or incurred by the
capacity or arising out of the agent's status as agent in such capacity or arising out of the
such. agent's status as such.
SHAREHOLDER RIGHT Under the Delaware Act, except to the extent The Massachusetts Statute does not contain
OF INSPECTION otherwise provided in the governing instrument and specific provisions relating to shareholders'
subject to reasonable standards established by the rights of inspection.
trustees, each shareholder has the right, upon
reasonable demand for any purpose reasonably
related to the shareholder's interest as a
shareholder, to obtain from the DST certain
information regarding the governance and affairs
of the DST.
The DE By-Laws provide that The DE Trust will keep The MA By-Laws provide that the Trust shall keep
at its principal executive office the original or at its principal executive office or at the office
a copy of the DE By-Laws, as amended, which will of its transfer agent or registrar a record of its
be open to inspection by the shareholders at all shareholders, providing the names and addresses of
reasonable times during office hours. all shareholders and the number, series and
classes of shares held by each shareholder.
The accounting books and records and minutes of
proceedings of the shareholders and the board and The MA By-Laws further provide that the Trust
any committee or committees of the board will be: shall keep at its principal executive office the
original or a copy of those By-Laws as amended to
o kept wherever designated by the board or date, which shall be open to inspection by the
in the absence of such designation, at the shareholders at all reasonable times during office
principal executive office of the DE Trust; hours.
o kept either in written form or in any
other form capable of being converted into The MA By-Laws also provide that the accounting
written form; and books and records and minutes of proceedings of
o open to inspection upon the written the shareholders and the Board of Trustees and any
demand of any shareholder or holder of a committee or committees of the Board of Trustees
voting trust certificate at any reasonable shall be kept at such place or places designated
time during usual business hours for a by the Board of Trustees or in the absence of such
purpose reasonably related to the holder's designation, at the principal executive office of
interests as a shareholder or as the holder the Trust, shall be kept either in written form or
of a voting trust certificate. The inspection in any other form capable of being converted into
may be made in person or by an agent or written form. The minutes and accounting books and
attorney. records shall be open to inspection upon the
written demand of any shareholder or holder of a
voting trust certificate at any reasonable time
during usual business hours for a purpose
reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust
certificate. The inspection may be made in person
or by an agent or attorney.
24
DELAWARE STATUTORY TRUST MASSACHUSETTS BUSINESS TRUST
------------------------ ----------------------------
DERIVATIVE ACTIONS Under the Delaware Act, a shareholder may bring a The Massachusetts Statute does not contain
derivative action if trustees with authority to do specific provisions addressing derivative actions.
so have refused to bring the action or if a demand
upon the trustees to bring the action is not
likely to succeed. A shareholder may bring a
derivative action only if the shareholder is a
shareholder at the time the action is brought and:
(i) was a shareholder at the time of the
transaction complained about or (ii) acquired the
status of shareholder by operation of law or
pursuant to the governing instrument from a person
who was a shareholder at the time of the
transaction. A shareholder's right to bring a
derivative action may be subject to such
additional standards and restrictions, if any, as
are set forth in the governing instrument.
The DE Declaration has no provision regarding The MA Declaration has a provision regarding
derivative actions. shareholder voting with respect to derivative
actions, as described above.
MANAGEMENT The DE Trust, upon completion of the The Trust is an open-end management investment
INVESTMENT COMPANY Reorganization, will be an open-end management company under the 1940 Act (i.e., a management
CLASSIFICATION investment company under the 1940 Act (i.e., a investment company whose securities are
management investment company whose securities are redeemable). Each series of the Trust is
redeemable). non-diversified under the 1940 Act.
25
EXHIBIT F
PRINCIPAL HOLDER OF SHARES
STATEMENT OF ADDITIONAL INFORMATION
FOR
VOYAGEUR INSURED FUNDS
VOYAGEUR MUTUAL FUNDS
VOYAGEUR INVESTMENT TRUST
DATED [DECEMBER __, 2004]
Acquisition of the Assets and Assumption of Liabilities of the
DELAWARE TAX-FREE ARIZONA FUND
(a series of Voyageur Mutual Funds)
By and in exchange for shares of the
DELAWARE TAX-FREE ARIZONA INSURED FUND
(a series of Voyageur Insured Funds)
Acquisition of the Assets and Assumption of Liabilities of the
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
(a series of Voyageur Investment Trust)
By and in exchange for shares of the
DELAWARE TAX-FREE CALIFORNIA FUND
(a series of Voyageur Mutual Funds)
Acquisition of the Assets and Assumption of Liabilities of the
DELAWARE TAX-FREE FLORIDA FUND
(a series of Voyageur Investment Trust)
By and in exchange for shares of the
DELAWARE TAX-FREE FLORIDA INSURED FUND
(a series of Voyageur Investment Trust)
This Statement of Additional Information (SAI) relates specifically to:
(1) the proposed acquisition of substantially all of the assets of Delaware
Tax-Free Arizona Fund (the "Arizona Fund") in exchange for shares of Delaware
Tax-Free Arizona Insured Fund (the "Arizona Insured Fund") and the assumption by
Arizona Insured Fund of the liabilities of the Arizona Fund; (2) the proposed
acquisition of substantially all of the assets of Delaware Tax-Free California
Insured Fund (the "California Insured Fund") in exchange for shares of Delaware
Tax-Free California Fund (the "California Fund") and the assumption by
California Fund of the liabilities of the California Insured Fund; and (3) the
proposed acquisition of substantially all of the assets of Delaware Tax-Free
Florida Fund (the "Florida Fund") in exchange for shares of Delaware Tax-Free
Florida Insured Fund (the "Florida Insured Fund") and the assumption by Florida
Insured Fund of the liabilities of the Florida 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 Tax-Free
Arizona Insured Fund, Delaware Tax-Free California Fund and
Delaware Tax-Free Florida Insured Fund, dated November 30,
2004 as previously filed via EDGAR is incorporated herein by
reference to Voyageur Mutual Funds Post-Effective Amendment
No. 29 on Form N-1A filed [ ], 2004 and will be mailed to any
Shareholder who requests this SAI. [To be added in a
Pre-Effective Amendment to this Registration on Form N-14
filed subsequent to the filing of Post-Effective Amendment No.
29.]
2. Annual Report of Delaware Tax-Free Arizona Insured Fund,
Delaware Tax-Free California Fund and Delaware Tax-Free
Florida Insured Fund for the fiscal year ended August 31, 2004
as previously filed via EDGAR is incorporated herein by
reference to Voyageur Mutual Funds N-CSR filed [ ], 2004 and
will be mailed to any Shareholder who requests this SAI. [To
be added in a Pre-Effective Amendment to this Registration on
Form N-14 filed subsequent to the filing of the Annual Report
on Form N-CSR for fiscal year ended August 31, 2004.]
3. Pro Forma Financial Statements for the Reorganization of
Delaware Tax-Free Arizona Fund into Delaware Tax-Free Arizona
Insured Fund.
4. Pro Forma Financial Statements for the Reorganization of
Delaware Tax-Free California Insured Fund into Delaware
Tax-Free California Fund.
5. Pro Forma Financial Statements for the Reorganization of
Delaware Tax-Free Florida Fund into Delaware Tax-Free Florida
Insured Fund.
This SAI is not a prospectus; you should read this SAI in conjunction
with the Proxy Statement/Prospectus dated [December __, 2004], relating to the
above-referenced transactions. You can request a copy of the Proxy
Statement/Prospectus by calling 1-800-523-1918 or by writing to the Delaware
Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund or Delaware
Tax-Free Florida Insured Fund at Attention: Account Services, 2005 Market
Street, Philadelphia, PA 19103-7094.
Pro Forma Financial Statements for the Reorganization of
Delaware Tax-Free Arizona Fund into Delaware Tax-Free Arizona Insured Fund
Delaware Tax-Free Arizona Insured Fund
Pro Forma Portfolio of Investments
As of [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS (B)
AS OF AUGUST 31, 2004
(UNAUDITED)
% OF NET DELAWARE TAX-FREE ARIZONA INSURED FUND
ASSETS PAR/SHARES MARKET VALUE
---------- --------------------------------------------
MUNICIPAL BONDS 96.46%
AIRPORT REVENUE BONDS 9.63%
Phoenix Civic Improvement Corporation Airport Revenue Series B
5.25% 7/1/27 (FGIC)(AMT) $ - $ -
5.25% 7/1/32 (FGIC)(AMT) 9,300,000 9,508,970
Tucson Airport Authority 5.35% 6/1/31 (AMBAC)(AMT) 5,000,000 5,131,950
-----------------------
14,640,920
-----------------------
CHARTER SCHOOL REVENUE BONDS 1.03%
Pima County Industrial Development Authority (Life School College
Project) Series A 7.875% 7/1/21 0 0
-----------------------
0
-----------------------
CITY GENERAL OBLIGATION BONDS 0.59%
DC Ranch Community Facilities 5.00% 7/15/27 (AMBAC) 1,000,000 1,025,450
-----------------------
1,025,450
-----------------------
CONVENTION CENTER / AUDITORIUM / HOTEL REVENUE BONDS 2.36%
Arizona Tourism & Sports Authority Tax Revenue Multipurpose Stadium
Facilities Series A
5.00% 7/1/28 (MBIA) 2,500,000 2,556,275
5.00% 7/1/31 (MBIA) 750,000 765,248
-----------------------
3,321,523
-----------------------
DEDICATED TAX & FEES REVENUE BONDS 5.21%
Phoenix Industrial Development Authority Lease Revenue (Capitol Mall
LLC II Project) 5.00% 9/15/28 (AMBAC) 4,000,000 4,077,120
Pinal County Certificates of Participation 5.125% 6/1/21 (AMBAC) 4,675,000 4,947,786
-----------------------
9,024,906
-----------------------
ESCROWED TO MATURITY BONDS 0.20%
Phoenix Street & Highway Revenue 6.50% 7/1/09 (AMBAC) 350,000 352,041
-----------------------
352,041
-----------------------
DELAWARE TAX-FREE ARIZONA FUND
PAR/SHARES MARKET VALUE
----------------------------------------------
MUNICIPAL BONDS
AIRPORT REVENUE BONDS
Phoenix Civic Improvement Corporation Airport Revenue Series B
5.25% 7/1/27 (FGIC)(AMT) $1,000,000 $1,026,920
5.25% 7/1/32 (FGIC)(AMT) 1,000,000 1,022,470
Tucson Airport Authority 5.35% 6/1/31 (AMBAC)(AMT)
------------------------
2,049,390
------------------------
CHARTER SCHOOL REVENUE BONDS
Pima County Industrial Development Authority (Life School College
Project) Series A 7.875% 7/1/21 2,000,000 1,785,080
------------------------
1,785,080
------------------------
CITY GENERAL OBLIGATION BONDS
DC Ranch Community Facilities 5.00% 7/15/27 (AMBAC) 0 0
------------------------
0
------------------------
CONVENTION CENTER / AUDITORIUM / HOTEL REVENUE BONDS
Arizona Tourism & Sports Authority Tax Revenue Multipurpose Stadium
Facilities Series A
5.00% 7/1/28 (MBIA) 0 0
5.00% 7/1/31 (MBIA) 750,000 765,248
------------------------
765,248
------------------------
DEDICATED TAX & FEES REVENUE BONDS
Phoenix Industrial Development Authority Lease Revenue (Capitol Mall
LLC II Project) 5.00% 9/15/28 (AMBAC) 0 0
Pinal County Certificates of Participation 5.125% 6/1/21 (AMBAC) 0 0
------------------------
0
------------------------
ESCROWED TO MATURITY BONDS
Phoenix Street & Highway Revenue 6.50% 7/1/09 (AMBAC) 0 0
------------------------
0
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
PAR/SHARES MARKET VALUE
-----------------------------------------------
MUNICIPAL BONDS
AIRPORT REVENUE BONDS
Phoenix Civic Improvement Corporation Airport Revenue Series B
5.25% 7/1/27 (FGIC)(AMT) $ 1,000,000 $ 1,026,920
5.25% 7/1/32 (FGIC)(AMT) 10,300,000 10,531,440
Tucson Airport Authority 5.35% 6/1/31 (AMBAC)(AMT) 5,000,000 5,131,950
------------------------
16,690,310
------------------------
CHARTER SCHOOL REVENUE BONDS
Pima County Industrial Development Authority (Life School College
Project) Series A 7.875% 7/1/21 2,000,000 1,785,080
------------------------
1,785,080
------------------------
CITY GENERAL OBLIGATION BONDS
DC Ranch Community Facilities 5.00% 7/15/27 (AMBAC) 1,000,000 1,025,450
------------------------
1,025,450
------------------------
CONVENTION CENTER / AUDITORIUM / HOTEL REVENUE BONDS
Arizona Tourism & Sports Authority Tax Revenue Multipurpose Stadium
Facilities Series A
5.00% 7/1/28 (MBIA) 2,500,000 2,556,275
5.00% 7/1/31 (MBIA) 1,500,000 1,530,496
------------------------
4,086,771
------------------------
DEDICATED TAX & FEES REVENUE BONDS
Phoenix Industrial Development Authority Lease Revenue (Capitol Mall
LLC II Project) 5.00% 9/15/28 (AMBAC) 4,000,000 4,077,120
Pinal County Certificates of Participation 5.125% 6/1/21 (AMBAC) 4,675,000 4,947,786
------------------------
9,024,906
------------------------
ESCROWED TO MATURITY BONDS
Phoenix Street & Highway Revenue 6.50% 7/1/09 (AMBAC) 350,000 352,041
------------------------
352,041
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(B)
AS OF AUGUST 31, 2004
(UNAUDITED)
% OF NET DELAWARE TAX-FREE ARIZONA INSURED FUND
ASSETS PAR/SHARES MARKET VALUE
---------- --------------------------------------------
HIGHER EDUCATION REVENUE BONDS 12.31%
Arizona State Board of Regents Certificates of Participation 5.125%
6/1/25 (AMBAC) $ 1,250,000 $ 1,299,313
Arizona Board of Regents (Northern Arizona University)
5.00% 6/1/34 (FGIC) 0 0
5.50% 6/1/34 (FGIC) 0 0
Arizona State University Certificates of Participation 5.00% 9/1/30
(AMBAC) 2,500,000 2,554,300
Glendale Industrial Development Authority Educational Facilities
(American Graduate School International)
5.625% 7/1/20 (Connie Lee) 1,000,000 1,066,500
5.875% 7/1/15 (Connie Lee) 2,500,000 2,668,225
Glendale Industrial Development Authority (Midwestern University)
Series A 5.875% 5/15/31 0 0
Mohave County Community College 6.00% 3/1/20 (MBIA) 1,000,000 1,133,720
South Campus Group Student Housing Revenue (Arizona State
University South Campus Project) 5.625% 9/1/35 (MBIA) 1,000,000 1,086,130
Southern Arizona Capital Facilities Finance (University of Arizona
Project) 5.10% 9/1/33 (MBIA) 2,650,000 2,720,012
Tucson Industrial Development Authority (University of Arizona-Marshall
Foundation) Series A 5.00% 7/15/27 (AMBAC) 0 0
University of Arizona Certificates of Participation
5.125% 6/1/21 (AMBAC) 1,000,000 1,058,350
5.75% 6/1/19 (AMBAC) 1,000,000 1,114,940
University of Arizona Certificates of Participation
(University of Arizona Project) Series B 5.125% 6/1/22 (AMBAC) 0 0
-----------------------
14,701,490
-----------------------
HOSPITAL REVENUE BONDS 12.51%
Maricopa County Industrial Development Authority (Catholic Healthcare
West) Series A 5.50% 7/1/26 1,000,000 998,660
Mesa Industrial Development Authority (Discovery Health Systems)
Series A 5.625% 1/1/29 (MBIA) 9,250,000 9,917,757
Mohave County Industrial Development Authority (Chris/Silver Ridge)
6.375% 11/1/31 (GNMA) 0 0
Phoenix Industrial Development Authority Hospital Revenue (John C.
Lincoln Health) Series B 5.75% 12/1/16 (Connie Lee) 4,110,000 4,584,047
Scottsdale Industrial Development Authority Hospital Revenue
(Scottsdale Healthcare) 5.70% 12/1/21 0 0
University Medical Center Corporation Arizona Hospital Revenue 5.00% 7/1/33 1,000,000 985,660
University Medical Center Hospital 5.00% 7/1/24 0 0
Winslow Industrial Development Authority Hospital Revenue (Winslow
Memorial Hospital Project) 5.50% 6/1/22 0 0
Yavapai County Industrial Development Authority (Yavapai Regional
Medical Center) 5.25% 8/1/21 (RADIAN) 1,000,000 1,047,810
-----------------------
17,533,934
-----------------------
DELAWARE TAX-FREE ARIZONA FUND
PAR/SHARES MARKET VALUE
-----------------------------------------------
HIGHER EDUCATION REVENUE BONDS 12.31%
Arizona State Board of Regents Certificates of Participation 5.125%
6/1/25 (AMBAC) $ 0 $ 0
Arizona Board of Regents (Northern Arizona University)
5.00% 6/1/34 (FGIC) 1,000,000 1,017,210
5.50% 6/1/34 (FGIC) 1,250,000 1,352,812
Arizona State University Certificates of Participation 5.00% 9/1/30
(AMBAC) 500,000 510,860
Glendale Industrial Development Authority Educational Facilities
(American Graduate School International)
5.625% 7/1/20 (Connie Lee) 0 0
5.875% 7/1/15 (Connie Lee) 0 0
Glendale Industrial Development Authority (Midwestern University)
Series A 5.875% 5/15/31 1,000,000 1,053,670
Mohave County Community College 6.00% 3/1/20 (MBIA) 0 0
South Campus Group Student Housing Revenue (Arizona State
University South Campus Project) 5.625% 9/1/35 (MBIA) 0 0
Southern Arizona Capital Facilities Finance (University of Arizona
Project) 5.10% 9/1/33 (MBIA) 600,000 615,852
Tucson Industrial Development Authority (University of Arizona-Marshall
Foundation) Series A 5.00% 7/15/27 (AMBAC) 1,000,000 1,023,060
University of Arizona Certificates of Participation
5.125% 6/1/21 (AMBAC) 0 0
5.75% 6/1/19 (AMBAC) 0 0
University of Arizona Certificates of Participation
(University of Arizona Project) Series B 5.125% 6/1/22 (AMBAC) 1,000,000 1,052,270
------------------------
6,625,734
------------------------
HOSPITAL REVENUE BONDS
Maricopa County Industrial Development Authority (Catholic Healthcare
West) Series A 5.50% 7/1/26 0 0
Mesa Industrial Development Authority (Discovery Health Systems)
Series A 5.625% 1/1/29 (MBIA) 750,000 804,143
Mohave County Industrial Development Authority (Chris/Silver Ridge)
6.375% 11/1/31 (GNMA) 185,000 194,742
Phoenix Industrial Development Authority Hospital Revenue (John C.
Lincoln Health) Series B 5.75% 12/1/16 (Connie Lee) 0 0
Scottsdale Industrial Development Authority Hospital Revenue
(Scottsdale Healthcare) 5.70% 12/1/21 500,000 520,160
University Medical Center Corporation Arizona Hospital Revenue 5.00% 7/1/33 0 0
University Medical Center Hospital 5.00% 7/1/24 800,000 796,456
Winslow Industrial Development Authority Hospital Revenue (Winslow
Memorial Hospital Project) 5.50% 6/1/22 1,000,000 781,620
Yavapai County Industrial Development Authority (Yavapai Regional
Medical Center) 5.25% 8/1/21 (RADIAN) 1,000,000 1,047,809
------------------------
4,144,930
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
PAR/SHARES MARKET VALUE
-----------------------------------------------
HIGHER EDUCATION REVENUE BONDS 12.31%
Arizona State Board of Regents Certificates of Participation 5.125%
6/1/25 (AMBAC) $ 1,250,000 $ 1,299,313
Arizona Board of Regents (Northern Arizona University)
5.00% 6/1/34 (FGIC) 1,000,000 1,017,210
5.50% 6/1/34 (FGIC) 1,250,000 1,352,812
Arizona State University Certificates of Participation 5.00% 9/1/30
(AMBAC) 3,000,000 3,065,160
Glendale Industrial Development Authority Educational Facilities
(American Graduate School International)
5.625% 7/1/20 (Connie Lee) 1,000,000 1,066,500
5.875% 7/1/15 (Connie Lee) 2,500,000 2,668,225
Glendale Industrial Development Authority (Midwestern University)
Series A 5.875% 5/15/31 1,000,000 1,053,670
Mohave County Community College 6.00% 3/1/20 (MBIA) 1,000,000 1,133,720
South Campus Group Student Housing Revenue (Arizona State
University South Campus Project) 5.625% 9/1/35 (MBIA) 1,000,000 1,086,130
Southern Arizona Capital Facilities Finance (University of Arizona
Project) 5.10% 9/1/33 (MBIA) 3,250,000 3,335,864
Tucson Industrial Development Authority (University of Arizona-Marshall
Foundation) Series A 5.00% 7/15/27 (AMBAC) 1,000,000 1,023,060
University of Arizona Certificates of Participation
5.125% 6/1/21 (AMBAC) 1,000,000 1,058,350
5.75% 6/1/19 (AMBAC) 1,000,000 1,114,940
University of Arizona Certificates of Participation
(University of Arizona Project) Series B 5.125% 6/1/22 (AMBAC) 1,000,000 1,052,270
------------------------
21,327,224
------------------------
HOSPITAL REVENUE BONDS
Maricopa County Industrial Development Authority (Catholic Healthcare
West) Series A 5.50% 7/1/26 1,000,000 998,660
Mesa Industrial Development Authority (Discovery Health Systems)
Series A 5.625% 1/1/29 (MBIA) 10,000,000 10,721,900
Mohave County Industrial Development Authority (Chris/Silver Ridge)
6.375% 11/1/31 (GNMA) 185,000 194,742
Phoenix Industrial Development Authority Hospital Revenue (John C.
Lincoln Health) Series B 5.75% 12/1/16 (Connie Lee) 4,110,000 4,584,047
Scottsdale Industrial Development Authority Hospital Revenue
(Scottsdale Healthcare) 5.70% 12/1/21 500,000 520,160
University Medical Center Corporation Arizona Hospital Revenue 5.00% 7/1/33 1,000,000 985,660
University Medical Center Hospital 5.00% 7/1/24 800,000 796,456
Winslow Industrial Development Authority Hospital Revenue (Winslow
Memorial Hospital Project) 5.50% 6/1/22 1,000,000 781,620
Yavapai County Industrial Development Authority (Yavapai Regional
Medical Center) 5.25% 8/1/21 (RADIAN) 2,000,000 2,095,619
------------------------
21,678,864
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS (B)
AS OF AUGUST 31, 2004
(UNAUDITED)
% OF NET DELAWARE TAX-FREE ARIZONA INSURED FUND
ASSETS PAR/SHARES MARKET VALUE
---------------------------------------------------------
INVESTOR OWNED UTILITIES REVENUE BONDS 0.59%
Maricopa County Pollution Control Corporation Revenue (El Paso
Electric Co. Project) Series A 6.375% 8/1/15 $ 0 $ 0
-----------------------
0
-----------------------
MISCELLANEOUS REVENUE BONDS 0.34%
Marana Municipal Property Corporation 5.00% 7/1/28 (AMBAC) 0 0
-----------------------
0
-----------------------
MULTI FAMILY HOUSING REVENUE BONDS 8.76%
Maricopa County Industrial Development Authority Multifamily Housing
Revenue (Sly-Mar Apartments Project) 6.10% 4/20/36 (GNMA)(AMT) 1,300,000 1,396,798
Peoria Industrial Development Authority Multifamily Housing Revenue
(Casa Del Rio) Series A 7.30% 2/20/28 (GNMA)
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Capital Mews Apartments) 5.70% 12/20/40 (GNMA)(AMT) 2,000,000 2,089,460
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Sunrise Vista Apartments) Series A 1.42% 6/1/31 (AMT) 1,600,000 1,600,000
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Ventana Palms Apartments)
6.15% 10/1/29 (MBIA) 510,000 543,380
6.20% 10/1/34 (MBIA) 940,000 1,003,694
Pima County Industrial Development Authority Multifamily Housing
Revenue (Columbus Village) Series A
6.00% 10/20/31 (GNMA) 1,150,000 1,160,856
6.05% 10/20/41 (GNMA) 1,520,000 1,534,318
Yuma Industrial Development Authority Multifamily Revenue 6.10%
9/20/19 (GNMA)(AMT) 2,340,000 2,583,992
Yuma Industrial Development Authority Multifamily Revenue (Regency
Apartments) Series A 5.50% 12/20/32 (GNMA)(FHA) 2,000,000 2,003,860
-----------------------
13,916,358
-----------------------
MUNICIPAL LEASE REVENUE BONDS 7.50%
Arizona School Facilities Board Certificates of Participation Series A
5.00% 9/1/18 (FGIC) 1,000,000 1,082,190
Maricopa County Industrial Development Authority Correctional
Facilities (Phoenix West Prison) 5.375% 7/1/22 (ACA) 250,000 256,160
Phoenix Industrial Development Authority Lease Revenue (Capitol Mall
LLC Project) 5.50% 9/15/27 (AMBAC) 5,000,000 5,366,600
Salt River Project Arizona Agricultural Improvement & Power District
Certificates of Participation 5.00% 12/1/18 (MBIA) 2,500,000 2,682,550
Sedona Partner Certificates of Participation Series 1999 5.75% 7/1/16
University of Arizona Certificates of Participation Series B 5.00% 6/1/31
(AMBAC) 2,250,000 2,292,143
-----------------------
11,679,643
-----------------------
POLITICAL SUBDIVISION GENERAL OBLIGATION BONDS 2.37%
Eagle Mountain Community Facility District 6.50% 7/1/21 0 0
Phoenix Variable Purpose Series B 5.00% 7/1/27 1,435,000 1,474,204
-----------------------
1,474,204
-----------------------
DELAWARE TAX-FREE ARIZONA FUND
PAR/SHARES MARKET VALUE
-----------------------------------------------
INVESTOR OWNED UTILITIES REVENUE BONDS
Maricopa County Pollution Control Corporation Revenue (El Paso
Electric Co. Project) Series A 6.375% 8/1/15 $ 1,000,000 $ 1,030,350
------------------------
1,030,350
------------------------
MISCELLANEOUS REVENUE BONDS
Marana Municipal Property Corporation 5.00% 7/1/28 (AMBAC) 575,000 587,110
------------------------
587,110
------------------------
MULTI FAMILY HOUSING REVENUE BONDS
Maricopa County Industrial Development Authority Multifamily Housing
Revenue (Sly-Mar Apartments Project) 6.10% 4/20/36 (GNMA)(AMT) 700,000 752,122
Peoria Industrial Development Authority Multifamily Housing Revenue
(Casa Del Rio) Series A 7.30% 2/20/28 (GNMA) 500,000 518,440
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Capital Mews Apartments) 5.70% 12/20/40 (GNMA)(AMT) 0 0
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Sunrise Vista Apartments) Series A 1.42% 6/1/31 (AMT) 0 0
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Ventana Palms Apartments)
6.15% 10/1/29 (MBIA) 0 0
6.20% 10/1/34 (MBIA) 0 0
Pima County Industrial Development Authority Multifamily Housing
Revenue (Columbus Village) Series A
6.00% 10/20/31 (GNMA) 0 0
6.05% 10/20/41 (GNMA) 0 0
Yuma Industrial Development Authority Multifamily Revenue 6.10%
9/20/19 (GNMA)(AMT) 0 0
Yuma Industrial Development Authority Multifamily Revenue (Regency
Apartments) Series A 5.50% 12/20/32 (GNMA)(FHA) 0 0
------------------------
1,270,562
------------------------
MUNICIPAL LEASE REVENUE BONDS
Arizona School Facilities Board Certificates of Participation Series A
5.00% 9/1/18 (FGIC) 0 0
Maricopa County Industrial Development Authority Correctional
Facilities (Phoenix West Prison) 5.375% 7/1/22 (ACA) 750,000 768,480
Phoenix Industrial Development Authority Lease Revenue (Capitol Mall
LLC Project) 5.50% 9/15/27 (AMBAC) 0 0
Salt River Project Arizona Agricultural Improvement & Power District
Certificates of Participation 5.00% 12/1/18 (MBIA)
Sedona Partner Certificates of Participation Series 1999 5.75% 7/1/16 500,000 545,315
University of Arizona Certificates of Participation Series B 5.00% 6/1/31
(AMBAC) 0 0
------------------------
1,313,795
------------------------
POLITICAL SUBDIVISION GENERAL OBLIGATION BONDS
Eagle Mountain Community Facility District 6.50% 7/1/21 1,010,000 1,093,487
Phoenix Variable Purpose Series B 5.00% 7/1/27 1,500,000 1,540,980
------------------------
2,634,467
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
PAR/SHARES MARKET VALUE
-----------------------------------------------
INVESTOR OWNED UTILITIES REVENUE BONDS
Maricopa County Pollution Control Corporation Revenue (El Paso
Electric Co. Project) Series A 6.375% 8/1/15 $ 1,000,000 $ 1,030,350
------------------------
1,030,350
------------------------
MISCELLANEOUS REVENUE BONDS
Marana Municipal Property Corporation 5.00% 7/1/28 (AMBAC) 575,000 587,110
------------------------
587,110
------------------------
MULTI FAMILY HOUSING REVENUE BONDS
Maricopa County Industrial Development Authority Multifamily Housing
Revenue (Sly-Mar Apartments Project) 6.10% 4/20/36 (GNMA)(AMT) 2,000,000 2,148,920
Peoria Industrial Development Authority Multifamily Housing Revenue
(Casa Del Rio) Series A 7.30% 2/20/28 (GNMA) 500,000 518,440
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Capital Mews Apartments) 5.70% 12/20/40 (GNMA)(AMT) 2,000,000 2,089,460
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Sunrise Vista Apartments) Series A 1.42% 6/1/31 (AMT) 1,600,000 1,600,000
Phoenix Industrial Development Authority Multifamily Housing Revenue
(Ventana Palms Apartments)
6.15% 10/1/29 (MBIA) 510,000 543,380
6.20% 10/1/34 (MBIA) 940,000 1,003,694
Pima County Industrial Development Authority Multifamily Housing
Revenue (Columbus Village) Series A
6.00% 10/20/31 (GNMA) 1,150,000 1,160,856
6.05% 10/20/41 (GNMA) 1,520,000 1,534,318
Yuma Industrial Development Authority Multifamily Revenue 6.10%
9/20/19 (GNMA)(AMT) 2,340,000 2,583,992
Yuma Industrial Development Authority Multifamily Revenue (Regency
Apartments) Series A 5.50% 12/20/32 (GNMA)(FHA) 2,000,000 2,003,860
------------------------
15,186,920
------------------------
MUNICIPAL LEASE REVENUE BONDS
Arizona School Facilities Board Certificates of Participation Series A
5.00% 9/1/18 (FGIC) 1,000,000 1,082,190
Maricopa County Industrial Development Authority Correctional
Facilities (Phoenix West Prison) 5.375% 7/1/22 (ACA) 1,000,000 1,024,640
Phoenix Industrial Development Authority Lease Revenue (Capitol Mall
LLC Project) 5.50% 9/15/27 (AMBAC) 5,000,000 5,366,600
Salt River Project Arizona Agricultural Improvement & Power District
Certificates of Participation 5.00% 12/1/18 (MBIA) 2,500,000 2,682,550
Sedona Partner Certificates of Participation Series 1999 5.75% 7/1/16 500,000 545,315
University of Arizona Certificates of Participation Series B 5.00% 6/1/31
(AMBAC) 2,250,000 2,292,143
------------------------
12,993,438
------------------------
POLITICAL SUBDIVISION GENERAL OBLIGATION BONDS
Eagle Mountain Community Facility District 6.50% 7/1/21 1,010,000 1,093,487
Phoenix Variable Purpose Series B 5.00% 7/1/27 2,935,000 3,015,184
------------------------
4,108,671
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS (B)
AS OF AUGUST 31, 2004
(UNAUDITED)
% OF NET DELAWARE TAX-FREE ARIZONA INSURED FUND
ASSETS PAR/SHARES MARKET VALUE
---------- --------------------------------------------
PRE-REFUNDED BONDS (A) 8.63%
Maricopa County School District #3 (Tempe Elementary) Series E 5.70%
7/1/16-09 (FGIC) $ 1,025,000 $ 1,174,681
Oro Valley Common Trust Funds Partnership 5.75% 7/1/17-06 (MBIA) 1,000,000 1,082,560
Puerto Rico Commonwealth Public Improvement 5.125% 7/1/30-11 770,000 867,089
Puerto Rico Commonwealth Public Improvement Series A
5.00% 7/1/27-12 1,000,000 1,119,760
5.125 %7/1/31-11 1,205,000 1,354,577
Puerto Rico Public Buildings Authority Guaranteed Government Facilities
Revenue Series D 5.25% 7/1/36-12
Puerto Rico Public Buildings Authority Series D 5.25% 7/1/27-12 730,000 828,331
Surprise Municipal Property Excise Tax Revenue 5.70% 7/1/20-09 5,000,000 5,730,150
Yuma Industrial Development Authority Hospital Revenue (Yuma
Regional Medical Center) 5.00% 8/1/31-11 (FSA) 0 0
-----------------------
12,157,148
-----------------------
PUBLIC POWER REVENUE BONDS 3.90%
Energy Management Services (Arizona State University - Main Campus)
5.25% 7/1/17 (MBIA) 1,500,000 1,655,490
Salt River Project Arizona Agricultural Improvement & Power District
Electric System Revenue (Salt River Project) Series A 5.00% 1/1/31 2,000,000 2,038,780
Salt River Project Arizona Agricultural Improvement & Power District
Electric System Revenue (Salt River Project) Series B 5.00% 1/1/31 (MBIA) 2,000,000 2,038,780
-----------------------
5,733,050
-----------------------
PUBLIC UTILITY DISTRICT REVENUE BONDS 3.55%
Maricopa County Pollution Control (Palo Verde Project) Series A 5.05%
5/1/29 (AMBAC) 5,000,000 5,122,700
-----------------------
5,122,700
-----------------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS 2.50%
Cochise County Unified School District #68 7.50% 7/1/10 (FGIC) 1,000,000 1,238,810
Maricopa County School District #14 (Creighton School Improvement
Project of 1990) Series C 6.50% 7/1/08 (FGIC) 1,000,000 1,148,660
Maricopa County School District #38 (Madison Elementary) 5.00%
7/1/14 (FSA) 1,750,000 1,951,303
-----------------------
4,338,773
-----------------------
SINGLE FAMILY HOUSING REVENUE BONDS 0.23%
Pima County Industrial Development Authority Single Family Housing
Revenue 6.10% 5/1/31 (GNMA)(AMT) 240,000 250,980
Pima County Industrial Development Authority Single Family Mortgage
Revenue Series A 6.125% 11/1/33 (GNMA)(FNMA)(FHLMC)(AMT) 0 0
-----------------------
250,980
-----------------------
TERRITORIAL GENERAL OBLIGATION BONDS 0.85%
Puerto Rico Commonwealth Refunding Public Improvements Series A
5.50% 7/1/19 1,300,000 1,481,220
-----------------------
1,481,220
-----------------------
DELAWARE TAX-FREE ARIZONA FUND
PAR/SHARES MARKET VALUE
-----------------------------------------------
PRE-REFUNDED BONDS (A)
Maricopa County School District #3 (Tempe Elementary) Series E 5.70%
7/1/16-09 (FGIC) $ 0 $ 0
Oro Valley Common Trust Funds Partnership 5.75% 7/1/17-06 (MBIA) 0 0
Puerto Rico Commonwealth Public Improvement 5.125% 7/1/30-11 0 0
Puerto Rico Commonwealth Public Improvement Series A
5.00% 7/1/27-12 0 0
5.125 %7/1/31-11 500,000 562,065
Puerto Rico Public Buildings Authority Guaranteed Government Facilities
Revenue Series D 5.25% 7/1/36-12 730,000 828,331
Puerto Rico Public Buildings Authority Series D 5.25% 7/1/27-12 550,000 624,085
Surprise Municipal Property Excise Tax Revenue 5.70% 7/1/20-09 0 0
Yuma Industrial Development Authority Hospital Revenue (Yuma
Regional Medical Center) 5.00% 8/1/31-11 (FSA) 700,000 784,525
------------------------
2,799,006
------------------------
PUBLIC POWER REVENUE BONDS
Energy Management Services (Arizona State University - Main Campus)
5.25% 7/1/17 (MBIA) 0 0
Salt River Project Arizona Agricultural Improvement & Power District
Electric System Revenue (Salt River Project) Series A 5.00% 1/1/31 1,000,000 1,019,390
Salt River Project Arizona Agricultural Improvement & Power District
Electric System Revenue (Salt River Project) Series B 5.00% 1/1/31 (MBIA) 0 0
------------------------
1,019,390
------------------------
PUBLIC UTILITY DISTRICT REVENUE BONDS
Maricopa County Pollution Control (Palo Verde Project) Series A 5.05%
5/1/29 (AMBAC) 1,000,000 1,024,540
------------------------
1,024,540
------------------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS
Cochise County Unified School District #68 7.50% 7/1/10 (FGIC) 0 0
Maricopa County School District #14 (Creighton School Improvement
Project of 1990) Series C 6.50% 7/1/08 (FGIC) 0 0
Maricopa County School District #38 (Madison Elementary) 5.00%
7/1/14 (FSA) 0 0
------------------------
0
------------------------
SINGLE FAMILY HOUSING REVENUE BONDS
Pima County Industrial Development Authority Single Family Housing
Revenue 6.10% 5/1/31 (GNMA)(AMT) 0 0
Pima County Industrial Development Authority Single Family Mortgage
Revenue Series A 6.125% 11/1/33 (GNMA)(FNMA)(FHLMC)(AMT) 145,000 153,005
------------------------
153,005
------------------------
TERRITORIAL GENERAL OBLIGATION BONDS
Puerto Rico Commonwealth Refunding Public Improvements Series A
5.50% 7/1/19 0 0
------------------------
0
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
PAR/SHARES MARKET VALUE
-----------------------------------------------
PRE-REFUNDED BONDS (A)
Maricopa County School District #3 (Tempe Elementary) Series E 5.70%
7/1/16-09 (FGIC) $ 1,025,000 $ 1,174,681
Oro Valley Common Trust Funds Partnership 5.75% 7/1/17-06 (MBIA) 1,000,000 1,082,560
Puerto Rico Commonwealth Public Improvement 5.125% 7/1/30-11 770,000 867,089
Puerto Rico Commonwealth Public Improvement Series A
5.00% 7/1/27-12 1,000,000 1,119,760
5.125 %7/1/31-11 1,705,000 1,916,642
Puerto Rico Public Buildings Authority Guaranteed Government Facilities
Revenue Series D 5.25% 7/1/36-12 730,000 828,331
Puerto Rico Public Buildings Authority Series D 5.25% 7/1/27-12 1,280,000 1,452,416
Surprise Municipal Property Excise Tax Revenue 5.70% 7/1/20-09 5,000,000 5,730,150
Yuma Industrial Development Authority Hospital Revenue (Yuma
Regional Medical Center) 5.00% 8/1/31-11 (FSA) 700,000 784,525
------------------------
14,956,154
------------------------
PUBLIC POWER REVENUE BONDS
Energy Management Services (Arizona State University - Main Campus)
5.25% 7/1/17 (MBIA) 1,500,000 1,655,490
Salt River Project Arizona Agricultural Improvement & Power District
Electric System Revenue (Salt River Project) Series A 5.00% 1/1/31 3,000,000 3,058,170
Salt River Project Arizona Agricultural Improvement & Power District
Electric System Revenue (Salt River Project) Series B 5.00% 1/1/31 (MBIA) 2,000,000 2,038,780
------------------------
6,752,440
------------------------
PUBLIC UTILITY DISTRICT REVENUE BONDS
Maricopa County Pollution Control (Palo Verde Project) Series A 5.05%
5/1/29 (AMBAC) 6,000,000 6,147,240
------------------------
6,147,240
------------------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS
Cochise County Unified School District #68 7.50% 7/1/10 (FGIC) 1,000,000 1,238,810
Maricopa County School District #14 (Creighton School Improvement
Project of 1990) Series C 6.50% 7/1/08 (FGIC) 1,000,000 1,148,660
Maricopa County School District #38 (Madison Elementary) 5.00%
7/1/14 (FSA) 1,750,000 1,951,303
------------------------
4,338,773
------------------------
SINGLE FAMILY HOUSING REVENUE BONDS
Pima County Industrial Development Authority Single Family Housing
Revenue 6.10% 5/1/31 (GNMA)(AMT) 240,000 250,980
Pima County Industrial Development Authority Single Family Mortgage
Revenue Series A 6.125% 11/1/33 (GNMA)(FNMA)(FHLMC)(AMT) 145,000 153,005
------------------------
403,985
------------------------
TERRITORIAL GENERAL OBLIGATION BONDS
Puerto Rico Commonwealth Refunding Public Improvements Series A
5.50% 7/1/19 1,300,000 1,481,220
------------------------
1,481,220
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS (B)
AS OF AUGUST 31, 2004
(UNAUDITED)
% OF NET DELAWARE TAX-FREE ARIZONA INSURED FUND
ASSETS PAR/SHARES MARKET VALUE
---------- -------------------------------------------
TERRITORIAL REVENUE BONDS 6.03%
Puerto Rico Commonwealth Public Improvement (Unrefunded Balance)
5.125% 7/1/30 (FSA) $ 480,000 $ 496,282
Puerto Rico Commonwealth Public Improvement Series A 5.125% 2,370,000 2,410,124
Puerto Rico Electric Power Authority Power Revenue Series NN 5.00%
7/1/32 (MBIA) 1,750,000 1,799,595
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 1,500,000 1,669,020
Puerto Rico Public Buildings Authority Guaranteed Government Facilities
Revenue Series D (Unrefunded Portion) 5.25% 7/1/36 0 0
Puerto Rico Public Buildings Authority Revenue Series D (Unrefunded
Balance) 5.25% 7/1/27 270,000 279,315
Puerto Rico Public Buildings Authority Revenue Series I 5.25% 7/1/33 500,000 517,440
Virgin Islands Public Finance Authority 5.00% 10/1/31 (ACA) 1,000,000 1,000,350
-----------------------
8,172,126
-----------------------
TRANSPORTATION REVENUE BONDS 3.37%
Arizona State Transportation Board Highway Revenue Series A
5.00% 7/1/21 2,500,000 2,650,925
5.00% 7/1/23 1,000,000 1,048,640
Arizona State Transportation Board Highway Revenue Series B
5.25% 7/1/21 1,000,000 1,076,680
5.25% 7/1/22 1,000,000 1,071,140
-----------------------
5,847,385
-----------------------
WATER & SEWER REVENUE BONDS 3.99%
Glendale Water & Sewer Revenue 5.00% 7/1/28 (AMBAC) 2,000,000 2,045,020
Phoenix Civic Improvement Corporation Wastewater Systems Revenue
Junior Lien
5.00% 7/1/24 (FGIC) 1,000,000 1,029,960
5.00% 7/1/26 (FGIC) 3,750,000 3,848,738
-----------------------
6,923,718
-----------------------
TOTAL MUNICIPAL BONDS 137,697,569
SHORT TERM INVESTMENTS 1.29%
Federated Arizona Muni Cash Trust 1,126,773 1,126,773
-----------------------
TOTAL SHORT TERM INVESTMENTS 1,126,773
-----------------------
-----------------------
TOTAL INVESTMENTS AT MARKET 97.75% $ 138,824,342
-----------------------
TOTAL INVESTMENTS AT COST $ 131,622,084
-----------------------
DELAWARE TAX-FREE ARIZONA FUND
PAR/SHARES MARKET VALUE
-----------------------------------------------
TERRITORIAL REVENUE BONDS
Puerto Rico Commonwealth Public Improvement (Unrefunded Balance)
5.125% 7/1/30 (FSA) $ 0 $ 0
Puerto Rico Commonwealth Public Improvement Series A 5.125% 1,000,000 1,016,930
Puerto Rico Electric Power Authority Power Revenue Series NN 5.00%
7/1/32 (MBIA) 750,000 771,255
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 0 0
Puerto Rico Public Buildings Authority Guaranteed Government Facilities
Revenue Series D (Unrefunded Portion) 5.25% 7/1/36 270,000 277,393
Puerto Rico Public Buildings Authority Revenue Series D (Unrefunded
Balance) 5.25% 7/1/27 200,000 206,900
Puerto Rico Public Buildings Authority Revenue Series I 5.25% 7/1/33 0 0
Virgin Islands Public Finance Authority 5.00% 10/1/31 (ACA) 0 0
------------------------
2,272,478
------------------------
TRANSPORTATION REVENUE BONDS
Arizona State Transportation Board Highway Revenue Series A
5.00% 7/1/21 0 0
5.00% 7/1/23 0 0
Arizona State Transportation Board Highway Revenue Series B
5.25% 7/1/21 0 0
5.25% 7/1/22 0 0
------------------------
0
------------------------
WATER & SEWER REVENUE BONDS
Glendale Water & Sewer Revenue 5.00% 7/1/28 (AMBAC) 0 0
Phoenix Civic Improvement Corporation Wastewater Systems Revenue
Junior Lien
5.00% 7/1/24 (FGIC) 0 0
5.00% 7/1/26 (FGIC) 0 0
------------------------
0
------------------------
TOTAL MUNICIPAL BONDS 29,475,085
SHORT TERM INVESTMENTS
Federated Arizona Muni Cash Trust 1,111,745 1,111,745
------------------------
TOTAL SHORT TERM INVESTMENTS 1,111,745
------------------------
------------------------
TOTAL INVESTMENTS AT MARKET $ 30,586,830
------------------------
TOTAL INVESTMENTS AT COST $ 29,891,573
------------------------
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
PAR/SHARES MARKET VALUE
----------------------------------------------
TERRITORIAL REVENUE BONDS
Puerto Rico Commonwealth Public Improvement (Unrefunded Balance)
5.125% 7/1/30 (FSA) $ 480,000 $ 496,282
Puerto Rico Commonwealth Public Improvement Series A 5.125% 3,370,000 3,427,054
Puerto Rico Electric Power Authority Power Revenue Series NN 5.00%
7/1/32 (MBIA) 2,500,000 2,570,850
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 1,500,000 1,669,020
Puerto Rico Public Buildings Authority Guaranteed Government Facilities
Revenue Series D (Unrefunded Portion) 5.25% 7/1/36 270,000 277,393
Puerto Rico Public Buildings Authority Revenue Series D (Unrefunded
Balance) 5.25% 7/1/27 470,000 486,215
Puerto Rico Public Buildings Authority Revenue Series I 5.25% 7/1/33 500,000 517,440
Virgin Islands Public Finance Authority 5.00% 10/1/31 (ACA) 1,000,000 1,000,350
------------------------
10,444,604
------------------------
TRANSPORTATION REVENUE BONDS
Arizona State Transportation Board Highway Revenue Series A
5.00% 7/1/21 2,500,000 2,650,925
5.00% 7/1/23 1,000,000 1,048,640
Arizona State Transportation Board Highway Revenue Series B
5.25% 7/1/21 1,000,000 1,076,680
5.25% 7/1/22 1,000,000 1,071,140
------------------------
5,847,385
------------------------
WATER & SEWER REVENUE BONDS
Glendale Water & Sewer Revenue 5.00% 7/1/28 (AMBAC) 2,000,000 2,045,020
Phoenix Civic Improvement Corporation Wastewater Systems Revenue
Junior Lien
5.00% 7/1/24 (FGIC) 1,000,000 1,029,960
5.00% 7/1/26 (FGIC) 3,750,000 3,848,738
------------------------
6,923,718
------------------------
TOTAL MUNICIPAL BONDS 167,172,654
SHORT TERM INVESTMENTS
Federated Arizona Muni Cash Trust 2,238,518 2,238,518
------------------------
TOTAL SHORT TERM INVESTMENTS 2,238,518
------------------------
------------------------
TOTAL INVESTMENTS AT MARKET $ 169,411,172
------------------------
TOTAL INVESTMENTS AT COST $ 161,513,657
------------------------
- ------------------------------------------------------------------------------
(A) For pre-refunded bonds, the stated maturity is followed by the year in
which the bond is pre-refunded.
(B) No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon completion of the acquisition, no
securities would need to be sold in order for the Acquiring Fund to comply
with its Prospectus and SEC and IRS guidelines and restrictions. However,
the foregoing sentence shall not restrict in any way the ability of the
investment advisor of any of the Funds from buying or selling securities in
the normal course of such Fund's business and operations.
SUMMARY OF ABBREVIATIONS:
ACA - Insured by American Capital Access
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
CIFG - Insured by CDC IXIS Financial Guaranty
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FHLMC - Insured by the Federal Home Loan Mortgage Corporation
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
See Pro Forma Notes to Financial Statements
Delaware Tax-Free Arizona Insured Fund
Pro Forma Combined
Statement of Assets and Liabilities
As of [August 31, 2004]
(Unaudited)
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
AS OF AUGUST 31, 2004
(UNAUDITED)
Delaware
Tax-Free Ariona
Delaware Delaware Insured Fund
Tax-Free Arizona Tax-Free Pro Forma Pro Forma
Insured Fund Arizona Fund Adjustments Combined
---------------- ------------ ------------- --------------
ASSETS
Investments, at market value $ 138,824,342 $ 30,586,830 $ -- $ 169,411,172
Cash 88,409 18,312 -- 106,721
Receivable for fund shares sold 71,330 16,500 -- 87,830
Receivable for securities sold 2,170,213 -- -- 2,170,213
Interest receivable 1,651,016 308,694 -- 1,959,710
------------- ------------- ------------- -------------
Total Assets 142,805,310 30,930,336 -- 173,735,645
------------- ------------- ------------- -------------
LIABILITIES
Accrued expenses and other liabilities 363,638 58,659 -- 422,297
------------- ------------- ------------- -------------
Total Liabilities 363,638 58,659 -- 422,297
------------- ------------- ------------- -------------
Net Assets $ 142,441,672 $ 30,871,677 $ -- $ 173,313,349
============= ============= ============= =============
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 134,970,175 $ 32,745,720 $ -- $ 167,715,895
Undistributed net investment income
(Distribution in excess of net investment income) 7,314 (1,681) -- 5,633
Accumulated net realized gain (loss) on investments 261,925 (2,567,619) -- (2,305,694)
Unrealized appreciation of investments 7,202,258 695,257 -- 7,897,515
------------- ------------- ------------- -------------
Net Assets $ 142,441,672 $ 30,871,677 $ -- $ 173,313,349
============= ============= ============= =============
OUTSTANDING SHARES 12,481,893 2,998,285 (293,673) 15,186,505
RETAIL CLASS A SHARES 10,730,590 1,966,975 (192,280) 12,505,285
RETAIL CLASS B SHARES 1,169,592 724,610 (71,662) 1,822,540
RETAIL CLASS C SHARES 581,711 306,700 (29,731) 858,680
NET ASSET VALUE PER SHARE:
RETAIL CLASS A SHARES $ 11.41 $ 10.29 $ 11.41
RETAIL CLASS B SHARES $ 11.42 $ 10.29 $ 11.42
RETAIL CLASS C SHARES $ 11.43 $ 10.32 $ 11.43
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free Arizona Insured Fund
Pro Forma Combined
Statement of Operations
for the Twelve Months Ended [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE ARIZONA INSURED FUND
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED AUGUST 31, 2004
(UNAUDITED)
Delaware
Tax-Free
Arizona Insured
Delaware Delaware Fund
Tax-Free Tax-Free ----------------
Arizona Arizona Pro Forma Pro Forma
Insured Fund Fund Adjustments Combined
------------ ------------ ----------- ---------------
INVESTMENT INCOME
Interest income $ 7,512,395 $ 1,728,598 $ -- $ 1,728,598
------------ ------------ ----------- ------------
EXPENSES
Management fees 746,015 180,872 (16,604)(A) 910,283
Distribution expenses - Class A 319,858 53,200 373,058
Distribution expenses - Class B 140,754 80,980 221,734
Distribution expenses - Class C 74,821 35,909 110,730
Dividend disbursing and transfer agent fees and expenses 82,939 15,423 98,362
Accounting and administration expenses 55,837 12,330 (1,898)(B) 66,269
Reports and statements to shareholders 15,675 2,760 18,435
Registration fees 15,900 14,353 (14,353)(B) 15,900
Legal and professional fees 31,496 10,269 (14,712)(B) 27,053
Trustees' fees 8,403 1,976 (2,012)(C) 8,367
Custodian fees 9,018 2,868 (1,852)(B) 10,034
Other 9,702 2,199 3,398 (D),(E) 15,299
------------ ------------ ----------- ------------
1,510,418 413,139 (48,033) 1,875,524
Less expenses absorbed or waived -- (77,954) (137,297)(F) (215,251)
Less expenses paid indirectly (1,418) (310) 1,515 (E) (213)
------------ ------------ ----------- ------------
Total expense 1,509,000 334,875 (183,815) 1,660,060
------------ ------------ ----------- ------------
NET INVESTMENT INCOME 6,003,395 1,393,723 183,815 68,538
------------ ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 336,166 (1,274,013) -- (1,274,013)
Change in unrealized appreciation/(depreciation)
of investments 3,703,965 2,176,285 -- 2,176,285
------------ ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 4,040,131 902,272 -- 902,272
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,043,526 $ 2,295,995 $ 183,815 $ 970,810
============ ============ =========== ============
(A) Decrease to reflect lower management fee for the survivng fund.
(B) Decrease to reflect appropriate expense levels by merging the funds.
(C) Based on trustees' compensation plan for the surviving fund.
(D) Increase to reflect appropriate expense levels by merging the funds.
(E) Effective January 1, 2004, expenses of the Fund are no longer paid through
commission arrangements with brokers.
(F) The current expense limitation expires October 31, 2004. Effective November
1, 2004, each Fund's expense limitation (excluding distribution expenses)
will become 0.55%.
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free Arizona Insured Fund
Pro Forma Combined
Annual Fund Operating Expenses
As of [AUGUST 31, 2004]
(Unaudited)
Delaware Tax-Free Arizona Insured Fund
Pro Forma Notes to Financial Statements
As of [AUGUST 31, 2004]
(Unaudited)
Delaware Tax-Free Arizona Insured Fund
Pro Forma Notes to Financial Statements
August 31, 2004 (Unaudited)
Voyageur Insured Funds (the "Trust") is organized as a Delaware statutory trust
and offers two series: Delaware Tax-Free Arizona Insured Fund and Delaware
Tax-Free Minnesota Insured Fund. These financial statements and related notes
pertain to the Delaware Tax-Free Arizona Insured Fund (the "Fund"). The Trust is
an open-end investment company. The Fund is considered non-diversified under the
Investment Company Act of 1940, as amended. The Fund offers Class A, Class B,
Class C shares. Class A shares are sold with a front-end sales charge of up to
4.50%. Class B shares are sold with a contingent deferred sales charge that
declines from 4.00% to zero depending upon the period of time the shares are
held. Class B shares will automatically convert to Class A shares on a quarterly
basis approximately eight years after purchase. Class C shares are sold with a
contingent deferred sales charge of 1%, if redeemed during the first 12 months.
The investment objective of the Fund is to seek a high level of current income
exempt for federal income tax and the Arizona state personal income tax as is
consistent with preservation of capital.
1. BASIS OF PRO FORMA PRESENTATION
The accompanying pro forma financial statements are presented to show the effect
of the proposed acquisition of the Delaware Tax-Free Arizona Fund by the
Delaware Tax-Free Arizona Insured Fund, as if such acquisition had taken place
as of September 1, 2003.
Under the terms of the Plan of Reorganization, the combination of the Delaware
Tax-Free Arizona Fund and the Delaware Tax-Free Arizona Insured Fund will be
accounted for by a method of accounting for tax-free mergers of investment
companies. The acquisition would be accomplished by an acquisition of the net
assets of the Delaware Tax-Free Arizona Fund in exchange for shares of the
Delaware Tax-Free Arizona Insured Fund at net asset value. The statement of
assets and liabilities and the related statement of operations of the Delaware
Tax-Free Arizona Fund and the Delaware Tax-Free Arizona Insured Fund have been
combined as of and for the twelve months ended August 31, 2004.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements of the Delaware Tax-Free Arizona Fund and Delaware
Tax-Free Arizona Insured Fund included in their annual report dated August 31,
2004.
The following notes refer to the accompanying pro forma financial statements as
if the above-mentioned acquisition of the Delaware Tax-Free Arizona Fund by the
Delaware Tax-Free Arizona Insured Fund had taken place as of September 1, 2003.
2. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Fund's Board of
Trustees.
Federal Income Taxes - The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting - Investment income and common expenses are allocated to the
classes of the Fund on the basis of "settled shares" of each class in relation
to the net assets of the Fund. Realized and unrealized gain (loss) on
investments is allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and other expenses are paid monthly. Security transactions are
recorded on the date the securities are purchased or sold (trade date). Costs
used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. The Fund declares dividends
daily from net investment income and pays such dividends monthly and declares
and pays distributions from net realized gain on investments, if any, annually.
The Fund may receive earnings credits from its custodian when positive cash
balances are maintained, which are used to offset custody fees. The earnings
credits for the twelve months ended August 31, 2004 were approximately $213. The
expenses paid under the above arrangement is included in the "custodian fees"
expense caption on the Statement of Operations with the corresponding expense
offset shown as "expenses paid indirectly."
3. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.50% on the first $500 million of average daily net assets of the Fund,
0.475% on the next $500 million, 0.45% on the next $1.5 billion and 0.425% on
average daily net assets in excess $2.5 billion.
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse the Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, and extraordinary expenses, do not exceed 0.55% of average
daily net assets of the Fund through March 31, 2006.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Fund pays
DSC a monthly fee based on average assets subject to certain minimums for
accounting and administration services. The Fund pays DSC a monthly fee based on
the number of shareholder accounts for dividend and disbursing and transfer
agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.25% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
4. LINE OF CREDIT
The Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $177,300,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Fund had no amount outstanding as of August 31, 2004, or at any time during the
period.
5. CREDIT AND MARKET RISK
The Fund concentrates its investments in securities issued by Arizona
municipalities. The value of these investments may be adversely affected by new
legislation within Arizona, regional or local economic conditions and differing
levels of supply and demand for municipal bonds. Many municipalities insure
repayment for their obligations. Although bond insurance reduces the risk of
loss due to default by an issuer, such bonds remain subject to the risk of loss
due to default by an issuer, such bonds remain subject to the risk that the
market may fluctuate for other reasons and there is no assurance that the
insurance company will meet its obligations. These securities have been
identified in the Statement of Net Assets.
Pro Forma Financial Statements for the Reorganization of
Delaware Tax-Free California Insured Fund into Delaware Tax-Free California Fund
Delaware Tax-Free California Fund
Pro Forma Portfolio of Investments
As of [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(Unaudited)
% of Net Delaware Tax-Free California Fund
Assets Shares/Par Market Value
------------- ---------------------------------------
MUNICIPAL BONDS 96.86%
AIRPORT REVENUE BONDS 2.60%
San Jose Airport Revenue Series A 5.00% 3/1/31 (FGIC) $1,000,000 $1,011,330
Sacramento County Airport System Revenue Series A 5.00% 7/1/32 (FSA) 0 0
-------------------
1,011,330
-------------------
CONTINUING CARE / RETIREMENT REVENUE BONDS 5.45%
Abag Finance Authority of California (Nonprofit Corporations-Lincoln
Glen Manor) 6.10% 2/15/25 (RADIAN) 2,000,000 2,202,080
California Health Facilities Financing (The Episcopal Home) 5.30%
2/1/32 (RADIAN) 1,000,000 1,021,280
-------------------
3,223,360
-------------------
DEDICATED TAX & FEES REVENUE BONDS 5.16%
Poway Unified School District 5.60% 9/1/33 1,000,000 1,000,290
San Bernardino County Special Tax Community Facilities 5.90% 9/1/33 1,000,000 1,000,370
San Francisco Bay Area Rapid Transit District Sales Tax Revenue
5.125% 7/1/36 (AMBAC) 0 0
-------------------
2,000,660
-------------------
HIGHER EDUCATION REVENUE BONDS 10.71%
California Educational Facilities Authority Revenue (Pepperdine
University) Series A 5.50% 8/1/32 1,000,000 1,038,220
California Educational Facilities Authority Revenue (University of the
Pacific) 5.25% 5/1/34 1,000,000 1,023,910
California Educational Facilities Authority Revenue (University of The
Pacific) 5.75% 11/1/30 (MBIA) 0 0
California State University Systemwide Revenue Series A 5.25%
11/1/20 (FSA) 1,000,000 1,094,729
California Statewide Communities Development Authority Revenue
(Bentley School) 6.75% 7/1/32 1,000,000 1,024,910
California Statewide Communities Revenue Authority East Campus
Apartments LLC Series A 5.625% 8/1/34 (ACA) 1,000,000 1,019,710
San Diego County Certificates of Participation (University of San
Diego) 5.375% 10/1/41 1,000,000 1,025,270
-------------------
6,226,749
-------------------
HOSPITAL REVENUE BONDS 5.56%
Abag Finance Authority of California (Nonprofit Corporations-San Diego
Hospital Association) Series A 6.125% 8/15/20 1,250,000 1,333,188
California Health Facilities Financing Authority (Adventist Health
Systems) Series A 5.00% 3/1/33 1,000,000 990,250
California Health Facilities Financing Authority (Catholic Healthcare
West) Series G 5.25% 7/1/23 500,000 490,875
California Infrastructure & Economic Development Bank Revenue
(Kaiser Hospital Associates I, LLC) Series A 5.55% 8/1/31 1,000,000 1,029,560
-------------------
3,843,873
-------------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
SHARES/PAR MARKET VALUE
---------------------------------
MUNICIPAL BONDS
AIRPORT REVENUE BONDS
San Jose Airport Revenue Series A 5.00% 3/1/31 (FGIC) $ 0 $ 0
Sacramento County Airport System Revenue Series A 5.00% 7/1/32 (FSA) 1,000,000 1,012,870
---------------
1,012,870
---------------
CONTINUING CARE / RETIREMENT REVENUE BONDS
Abag Finance Authority of California (Nonprofit Corporations-Lincoln
Glen Manor) 6.10% 2/15/25 (RADIAN) 0 0
California Health Facilities Financing (The Episcopal Home) 5.30%
2/1/32 (RADIAN) 1,000,000 1,021,280
---------------
1,021,280
---------------
DEDICATED TAX & FEES REVENUE BONDS
Poway Unified School District 5.60% 9/1/33 0 0
San Bernardino County Special Tax Community Facilities 5.90% 9/1/33 1,000,000 1,000,370
San Francisco Bay Area Rapid Transit District Sales Tax Revenue
5.125% 7/1/36 (AMBAC) 1,000,000 1,022,650
---------------
2,023,020
---------------
HIGHER EDUCATION REVENUE BONDS
California Educational Facilities Authority Revenue (Pepperdine
University) Series A 5.50% 8/1/32 0 0
California Educational Facilities Authority Revenue (University of the
Pacific) 5.25% 5/1/34 0 0
California Educational Facilities Authority Revenue (University of The
Pacific) 5.75% 11/1/30 (MBIA) 1,000,000 1,097,490
California State University Systemwide Revenue Series A 5.25%
11/1/20 (FSA) 0 0
California Statewide Communities Development Authority Revenue
(Bentley School) 6.75% 7/1/32 1,000,000 1,024,910
California Statewide Communities Revenue Authority East Campus
Apartments LLC Series A 5.625% 8/1/34 (ACA) 0 0
San Diego County Certificates of Participation (University of San
Diego) 5.375% 10/1/41 0 0
---------------
2,122,400
---------------
HOSPITAL REVENUE BONDS
Abag Finance Authority of California (Nonprofit Corporations-San Diego
Hospital Association) Series A 6.125% 8/15/20 0 0
California Health Facilities Financing Authority (Adventist Health
Systems) Series A 5.00% 3/1/33 0 0
California Health Facilities Financing Authority (Catholic Healthcare
West) Series G 5.25% 7/1/23 500,000 490,875
California Infrastructure & Economic Development Bank Revenue
(Kaiser Hospital Associates I, LLC) Series A 5.55% 8/1/31 0 0
---------------
490,875
---------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
---------------------------------
MUNICIPAL BONDS
AIRPORT REVENUE BONDS
San Jose Airport Revenue Series A 5.00% 3/1/31 (FGIC) $1,000,000 $1,011,330
Sacramento County Airport System Revenue Series A 5.00% 7/1/32 (FSA) 1,000,000 1,012,870
--------------
2,024,200
--------------
CONTINUING CARE / RETIREMENT REVENUE BONDS
Abag Finance Authority of California (Nonprofit Corporations-Lincoln
Glen Manor) 6.10% 2/15/25 (RADIAN) 2,000,000 2,202,080
California Health Facilities Financing (The Episcopal Home) 5.30%
2/1/32 (RADIAN) 2,000,000 2,042,560
--------------
4,244,640
--------------
DEDICATED TAX & FEES REVENUE BONDS
Poway Unified School District 5.60% 9/1/33 1,000,000 1,000,290
San Bernardino County Special Tax Community Facilities 5.90% 9/1/33 2,000,000 2,000,740
San Francisco Bay Area Rapid Transit District Sales Tax Revenue
5.125% 7/1/36 (AMBAC) 1,000,000 1,022,650
--------------
4,023,680
--------------
HIGHER EDUCATION REVENUE BONDS
California Educational Facilities Authority Revenue (Pepperdine
University) Series A 5.50% 8/1/32 1,000,000 1,038,220
California Educational Facilities Authority Revenue (University of the
Pacific) 5.25% 5/1/34 1,000,000 1,023,910
California Educational Facilities Authority Revenue (University of The
Pacific) 5.75% 11/1/30 (MBIA) 1,000,000 1,097,490
California State University Systemwide Revenue Series A 5.25%
11/1/20 (FSA) 1,000,000 1,094,729
California Statewide Communities Development Authority Revenue
(Bentley School) 6.75% 7/1/32 2,000,000 2,049,820
California Statewide Communities Revenue Authority East Campus
Apartments LLC Series A 5.625% 8/1/34 (ACA) 1,000,000 1,019,710
San Diego County Certificates of Participation (University of San
Diego) 5.375% 10/1/41 1,000,000 1,025,270
--------------
8,349,149
--------------
HOSPITAL REVENUE BONDS
Abag Finance Authority of California (Nonprofit Corporations-San Diego
Hospital Association) Series A 6.125% 8/15/20 1,250,000 1,333,188
California Health Facilities Financing Authority (Adventist Health
Systems) Series A 5.00% 3/1/33 1,000,000 990,250
California Health Facilities Financing Authority (Catholic Healthcare
West) Series G 5.25% 7/1/23 1,000,000 981,750
California Infrastructure & Economic Development Bank Revenue
(Kaiser Hospital Associates I, LLC) Series A 5.55% 8/1/31 1,000,000 1,029,560
--------------
4,334,748
--------------
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(Unaudited)
% of Net Delaware Tax-Free California Fund
Assets Shares/Par Market Value
------------- ---------------------------------------
MISCELLANEOUS REVENUE BONDS 4.13%
San Diego County Certificates of Participation 5.70% 2/1/28 $1,200,000 $1,086,588
San Diego County Certificates of Participation (The Burnham Institute)
6.25% 9/1/29 1,000,000 1,034,050
San Diego County Certificates of Participation 5.75% 7/1/31 (MBIA) 0 0
-------------------
2,120,638
-------------------
MULTI FAMILY HOUSING REVENUE BONDS 11.69%
California Statewide Communities Development Authority Multifamily
Housing Revenue (Citrus Gardens Apartments Project) Series D1 5.375%
7/1/32 1,000,000 1,011,730
California Statewide Communities Development Authority Multifamily
Housing Revenue (East Tabor Apartments) 6.85% 8/20/36 (GNMA)
(AMT) 0 0
California Statewide Communities Development Authority Multifamily
Housing Revenue (Silver Ridge Apartments) 5.80% 8/1/33 (AMT) 1,000,000 1,077,150
Los Angeles Multifamily Housing Revenue (Park Plaza) 5.50% 1/20/43
(GNMA)(AMT) 0 0
Palm Springs Mobile Home Park Revenue (Sahara Mobile Home Park)
5.75% 5/15/37 1,000,000 1,016,630
Santa Clara County Housing Authority (Rivertown Apartments Project)
Series A 5.85% 8/1/31 (AMT) 1,000,000 1,013,660
Ventura County Area Housing Authority Multifamily Housing Revenue
(Glen Oaks Apartments) Series A 6.35% 7/20/34 (GNMA) 0 0
-------------------
4,119,170
-------------------
MUNICIPAL LEASE REVENUE BONDS 8.64%
California State Public Works Board Lease Revenue 5.00% 3/1/27
(AMBAC) 0 0
California State Public Works Board (Department of Corrections) Series
C 5.25% 6/1/28 1,500,000 1,539,000
Franklin-McKinley School District Certificates of Participation (Financing
Project) Series B 5.00% 9/1/27 (AMBAC) 0 0
Golden State Tobacco Securitization
5.50% 6/1/43 (RADIAN) 1,000,000 1,044,010
5.625% 6/1/33 1,000,000 1,036,960
San Juan Basin Authority (Ground Water Recovery Project) 5.00%
12/1/34 (AMBAC) 0 0
-------------------
3,619,970
-------------------
PARKING REVENUE BONDS 1.36%
San Diego Redevelopment Agency 6.40% 9/1/25 1,000,000 1,061,650
-------------------
1,061,650
-------------------
PORTS & HARBORS REVENUE BONDS 2.71%
Port of Oakland 5.375% 11/1/27 (FGIC)(AMT) 1,000,000 1,039,360
Port of Oakland 5.75% 11/1/29 (FGIC)(AMT) 0 0
-------------------
1,039,360
-------------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
SHARES/PAR MARKET VALUE
---------------------------------
MISCELLANEOUS REVENUE BONDS
San Diego County Certificates of Participation 5.70% 2/1/28 $ 0 $ 0
San Diego County Certificates of Participation (The Burnham Institute)
6.25% 9/1/29 0 0
San Diego County Certificates of Participation 5.75% 7/1/31 (MBIA) 1,000,000 1,100,170
---------------
1,100,170
---------------
MULTI FAMILY HOUSING REVENUE BONDS
California Statewide Communities Development Authority Multifamily
Housing Revenue (Citrus Gardens Apartments Project) Series D1 5.375%
7/1/32 800,000 809,384
California Statewide Communities Development Authority Multifamily
Housing Revenue (East Tabor Apartments) 6.85% 8/20/36 (GNMA)
(AMT) 1,500,000 1,594,981
California Statewide Communities Development Authority Multifamily
Housing Revenue (Silver Ridge Apartments) 5.80% 8/1/33 (AMT) 0 0
Los Angeles Multifamily Housing Revenue (Park Plaza) 5.50% 1/20/43
(GNMA)(AMT) 1,430,000 1,484,354
Palm Springs Mobile Home Park Revenue (Sahara Mobile Home Park)
5.75% 5/15/37 0 0
Santa Clara County Housing Authority (Rivertown Apartments Project)
Series A 5.85% 8/1/31 (AMT) 0 0
Ventura County Area Housing Authority Multifamily Housing Revenue
(Glen Oaks Apartments) Series A 6.35% 7/20/34 (GNMA) 1,018,000 1,100,987
---------------
4,989,706
---------------
MUNICIPAL LEASE REVENUE BONDS
California State Public Works Board Lease Revenue 5.00% 3/1/27
(AMBAC) 1,000,000 1,019,100
California State Public Works Board (Department of Corrections) Series
C 5.25% 6/1/28 0 0
Franklin-McKinley School District Certificates of Participation (Financing
Project) Series B 5.00% 9/1/27 (AMBAC) 1,060,000 1,078,836
Golden State Tobacco Securitization
5.50% 6/1/43 (RADIAN) 0 0
5.625% 6/1/33 0 0
San Juan Basin Authority (Ground Water Recovery Project) 5.00%
12/1/34 (AMBAC) 1,000,000 1,015,870
---------------
3,113,806
---------------
PARKING REVENUE BONDS
San Diego Redevelopment Agency 6.40% 9/1/25 0 0
---------------
0
---------------
PORTS & HARBORS REVENUE BONDS
Port of Oakland 5.375% 11/1/27 (FGIC)(AMT) 0 0
Port of Oakland 5.75% 11/1/29 (FGIC)(AMT) 1,000,000 1,076,440
---------------
1,076,440
---------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
----------------------------------
MISCELLANEOUS REVENUE BONDS
San Diego County Certificates of Participation 5.70% 2/1/28 $1,200,000 $1,086,588
San Diego County Certificates of Participation (The Burnham Institute)
6.25% 9/1/29 1,000,000 1,034,050
San Diego County Certificates of Participation 5.75% 7/1/31 (MBIA) 1,000,000 1,100,170
--------------
3,220,808
--------------
MULTI FAMILY HOUSING REVENUE BONDS
California Statewide Communities Development Authority Multifamily
Housing Revenue (Citrus Gardens Apartments Project) Series D1 5.375%
7/1/32 1,800,000 1,821,114
California Statewide Communities Development Authority Multifamily
Housing Revenue (East Tabor Apartments) 6.85% 8/20/36 (GNMA)
(AMT) 1,500,000 1,594,981
California Statewide Communities Development Authority Multifamily
Housing Revenue (Silver Ridge Apartments) 5.80% 8/1/33 (AMT) 1,000,000 1,077,150
Los Angeles Multifamily Housing Revenue (Park Plaza) 5.50% 1/20/43
(GNMA)(AMT) 1,430,000 1,484,354
Palm Springs Mobile Home Park Revenue (Sahara Mobile Home Park)
5.75% 5/15/37 1,000,000 1,016,630
Santa Clara County Housing Authority (Rivertown Apartments Project)
Series A 5.85% 8/1/31 (AMT) 1,000,000 1,013,660
Ventura County Area Housing Authority Multifamily Housing Revenue
(Glen Oaks Apartments) Series A 6.35% 7/20/34 (GNMA) 1,018,000 1,100,987
--------------
9,108,876
--------------
MUNICIPAL LEASE REVENUE BONDS
California State Public Works Board Lease Revenue 5.00% 3/1/27
(AMBAC) 1,000,000 1,019,100
California State Public Works Board (Department of Corrections) Series
C 5.25% 6/1/28 1,500,000 1,539,000
Franklin-McKinley School District Certificates of Participation (Financing
Project) Series B 5.00% 9/1/27 (AMBAC) 1,060,000 1,078,836
Golden State Tobacco Securitization
5.50% 6/1/43 (RADIAN) 1,000,000 1,044,010
5.625% 6/1/33 1,000,000 1,036,960
San Juan Basin Authority (Ground Water Recovery Project) 5.00%
12/1/34 (AMBAC) 1,000,000 1,015,870
--------------
6,733,776
--------------
PARKING REVENUE BONDS
San Diego Redevelopment Agency 6.40% 9/1/25 1,000,000 1,061,650
--------------
1,061,650
--------------
PORTS & HARBORS REVENUE BONDS
Port of Oakland 5.375% 11/1/27 (FGIC)(AMT) 1,000,000 1,039,360
Port of Oakland 5.75% 11/1/29 (FGIC)(AMT) 1,000,000 1,076,440
--------------
2,115,800
--------------
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(Unaudited)
% of Net Delaware Tax-Free California Fund
Assets Shares/Par Market Value
------------- ---------------------------------------
*PRE-REFUNDED BONDS 1.94%
Oakland Industrial Revenue (Harrison Foundation) Series B 6.00%
1/1/29-10 (AMBAC) $ 0 $ 0
-------------------
0
-------------------
PUBLIC POWER REVENUE BONDS 2.75%
California State Department Water Reserve Power Supply Revenue
Series A 5.375% 5/1/21 1,000,000 1,073,290
-------------------
1,073,290
-------------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS 5.95%
Fairfield-Suisun Unified School District 5.50% 8/1/28 (MBIA) 500,000 542,330
Lawndale Elementary School District 5.00% 8/1/32 (FSA) 0 0
San Diego Unified School District 5.00% 7/1/28 (FSA) 1,000,000 1,022,510
Sequoia Unified High School District 5.125% 7/1/31 (FSA) 0 0
-------------------
1,564,840
-------------------
SCHOOL DISTRICT REVENUE BONDS 1.25%
California Statewide Community Development (Viewpoint School
Project) 5.00% 10/1/28 (ACA) 1,000,000 972,130
-------------------
972,130
-------------------
STATE GENERAL OBLIGATION BONDS 5.56%
California State
5.00% 2/1/33 1,000,000 1,007,800
5.50% 11/1/33 1,000,000 1,058,570
California State Economic Recovery Series A 5.25% 1/1/10 500,000 558,310
California State Veterans Series B 5.70% 12/1/32 (AMT) 640,000 652,877
-------------------
3,277,557
-------------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
SHARES/PAR MARKET VALUE
---------------------------------
*PRE-REFUNDED BONDS
Oakland Industrial Revenue (Harrison Foundation) Series B 6.00%
1/1/29-10 (AMBAC) $1,300,000 $1,514,162
---------------
1,514,162
---------------
PUBLIC POWER REVENUE BONDS
California State Department Water Reserve Power Supply Revenue
Series A 5.375% 5/1/21 1,000,000 1,073,290
---------------
1,073,290
---------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS
Fairfield-Suisun Unified School District 5.50% 8/1/28 (MBIA) 0 0
Lawndale Elementary School District 5.00% 8/1/32 (FSA) 1,000,000 1,018,210
San Diego Unified School District 5.00% 7/1/28 (FSA) 1,000,000 1,022,510
Sequoia Unified High School District 5.125% 7/1/31 (FSA) 1,000,000 1,030,740
---------------
3,071,460
---------------
SCHOOL DISTRICT REVENUE BONDS
California Statewide Community Development (Viewpoint School
Project) 5.00% 10/1/28 (ACA) 0 0
---------------
0
---------------
STATE GENERAL OBLIGATION BONDS
California State
5.00% 2/1/33 0 0
5.50% 11/1/33 1,000,000 1,058,570
California State Economic Recovery Series A 5.25% 1/1/10 0 0
California State Veterans Series B 5.70% 12/1/32 (AMT) 0 0
---------------
1,058,570
---------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
---------------------------------
*PRE-REFUNDED BONDS
Oakland Industrial Revenue (Harrison Foundation) Series B 6.00%
1/1/29-10 (AMBAC) $1,300,000 $1,514,162
--------------
1,514,162
--------------
PUBLIC POWER REVENUE BONDS
California State Department Water Reserve Power Supply Revenue
Series A 5.375% 5/1/21 2,000,000 2,146,580
--------------
2,146,580
--------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS
Fairfield-Suisun Unified School District 5.50% 8/1/28 (MBIA) 500,000 542,330
Lawndale Elementary School District 5.00% 8/1/32 (FSA) 1,000,000 1,018,210
San Diego Unified School District 5.00% 7/1/28 (FSA) 2,000,000 2,045,020
Sequoia Unified High School District 5.125% 7/1/31 (FSA) 1,000,000 1,030,740
--------------
4,636,300
--------------
SCHOOL DISTRICT REVENUE BONDS
California Statewide Community Development (Viewpoint School
Project) 5.00% 10/1/28 (ACA) 1,000,000 972,130
--------------
972,130
--------------
STATE GENERAL OBLIGATION BONDS
California State
5.00% 2/1/33 1,000,000 1,007,800
5.50% 11/1/33 2,000,000 2,117,140
California State Economic Recovery Series A 5.25% 1/1/10 500,000 558,310
California State Veterans Series B 5.70% 12/1/32 (AMT) 640,000 652,877
--------------
4,336,127
--------------
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(Unaudited)
% of Net Delaware Tax-Free California Fund
Assets Shares/Par Market Value
------------- ---------------------------------------
TAX INCREMENT / SPECIAL ASSESSMENT BONDS 10.63%
Commerce California Joint Powers Financing Authority (Redevelopment
Projects) Series A 5.00% 8/1/28 (RADIAN) $1,000,000 $1,006,040
La Quinta Redevelopment Agency Tax Allocation 5.10% 9/1/31 1,000,000 1,023,260
Lake Elisnore Public Financing Authority 5.50% 9/1/30 1,000,000 1,008,890
Poway Redevelopment Agency Certificates of Participation 5.75%
6/15/33 (MBIA) 0 0
Riverside County Redevelopment Agency 5.25% 10/1/35 (AMBAC) 0 0
Southern California Logistics Airport Authority (Southern California
Logistics Airport Project) 6.50% 12/1/31 1,000,000 1,018,290
-------------------
4,056,480
-------------------
TERRITORIAL REVENUE BONDS 2.86%
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 1,000,000 1,112,680
-------------------
1,112,680
-------------------
WASTE DISPOSAL REVENUE BONDS 5.28%
Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/31
(AMBAC)(AMT) 2,000,000 2,051,320
Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/27 (AMBAC) (AMT) 0 0
-------------------
2,051,320
-------------------
WATER & SEWER REVENUE BONDS 2.62%
California State Department of Water Resources Water Systems
Revenue (Central Valley Project) Series X 5.00% 12/1/29 (FGIC) 0 0
Metropolitan Water District Southern California Waterworks Revenue
Authority Series B-1 5.00% 10/1/36 (FGIC) 1,000,000 1,018,670
-------------------
1,018,670
-------------------
TOTAL MUNICIPAL BONDS 43,393,727
SHORT TERM INVESTMENTS 0.62%
Federated California Municipal Trust 394,990 394,990
-------------------
TOTAL SHORT TERM INVESTMENTS 394,990
-------------------
-------------------
TOTAL INVESTMENTS AT MARKET 97.48% $ 43,788,717
-------------------
TOTAL INVESTMENTS AT COST $ 42,642,179
-------------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
SHARES/PAR MARKET VALUE
---------------------------------
TAX INCREMENT / SPECIAL ASSESSMENT BONDS
Commerce California Joint Powers Financing Authority (Redevelopment
Projects) Series A 5.00% 8/1/28 (RADIAN) $ 0 $ 0
La Quinta Redevelopment Agency Tax Allocation 5.10% 9/1/31 1,000,000 1,023,260
Lake Elisnore Public Financing Authority 5.50% 9/1/30 0 0
Poway Redevelopment Agency Certificates of Participation 5.75%
6/15/33 (MBIA) 1,400,000 1,547,112
Riverside County Redevelopment Agency 5.25% 10/1/35 (AMBAC) 1,590,000 1,655,301
Southern California Logistics Airport Authority (Southern California
Logistics Airport Project) 6.50% 12/1/31 0 0
---------------
4,225,673
---------------
TERRITORIAL REVENUE BONDS
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 1,000,000 1,112,680
---------------
1,112,680
---------------
WASTE DISPOSAL REVENUE BONDS
Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/31
(AMBAC)(AMT) 0 0
Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/27 (AMBAC) (AMT) 2,000,000 2,060,340
---------------
2,060,340
---------------
WATER & SEWER REVENUE BONDS
California State Department of Water Resources Water Systems
Revenue (Central Valley Project) Series X 5.00% 12/1/29 (FGIC) 1,000,000 1,020,590
Metropolitan Water District Southern California Waterworks Revenue
Authority Series B-1 5.00% 10/1/36 (FGIC) 0 0
---------------
1,020,590
---------------
TOTAL MUNICIPAL BONDS 32,087,332
SHORT TERM INVESTMENTS
Federated California Municipal Trust 90,190 90,190
---------------
TOTAL SHORT TERM INVESTMENTS 90,190
---------------
---------------
TOTAL INVESTMENTS AT MARKET $ 32,177,522
---------------
TOTAL INVESTMENTS AT COST $ 30,574,347
---------------
DELAWARE TAX-FREE
CALIFORNIA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
---------------------------------
TAX INCREMENT / SPECIAL ASSESSMENT BONDS
Commerce California Joint Powers Financing Authority (Redevelopment
Projects) Series A 5.00% 8/1/28 (RADIAN) $1,000,000 $1,006,040
La Quinta Redevelopment Agency Tax Allocation 5.10% 9/1/31 2,000,000 2,046,520
Lake Elisnore Public Financing Authority 5.50% 9/1/30 1,000,000 1,008,890
Poway Redevelopment Agency Certificates of Participation 5.75%
6/15/33 (MBIA) 1,400,000 1,547,112
Riverside County Redevelopment Agency 5.25% 10/1/35 (AMBAC) 1,590,000 1,655,301
Southern California Logistics Airport Authority (Southern California
Logistics Airport Project) 6.50% 12/1/31 1,000,000 1,018,290
--------------
8,282,153
--------------
TERRITORIAL REVENUE BONDS
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 2,000,000 2,225,360
--------------
2,225,360
--------------
WASTE DISPOSAL REVENUE BONDS
Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/31
(AMBAC)(AMT) 2,000,000 2,051,320
Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/27 (AMBAC) (AMT) 2,000,000 2,060,340
--------------
4,111,660
--------------
WATER & SEWER REVENUE BONDS
California State Department of Water Resources Water Systems
Revenue (Central Valley Project) Series X 5.00% 12/1/29 (FGIC) 1,000,000 1,020,590
Metropolitan Water District Southern California Waterworks Revenue
Authority Series B-1 5.00% 10/1/36 (FGIC) 1,000,000 1,018,670
--------------
2,039,260
--------------
TOTAL MUNICIPAL BONDS 75,481,059
SHORT TERM INVESTMENTS
Federated California Municipal Trust 485,180 485,180
--------------
TOTAL SHORT TERM INVESTMENTS 485,180
--------------
--------------
TOTAL INVESTMENTS AT MARKET $ 75,966,239
--------------
TOTAL INVESTMENTS AT COST $ 73,216,526
--------------
ACA - Insured by American Capital Access
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
CIFG - Insured by CDS IXIS Financial Guaranty
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
(A) No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon completion of the acquisition, no
securities would need to be sold in order for the Acquiring Fund to comply
with its Prospectus and SEC and IRS guidelines and restrictions. However,
the foregoing sentence shall not restrict in any way the ability of the
investment advisor of any of the Funds from buying or selling securities in
the normal course of such Fund's business and operations.
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free California Fund
Pro Forma Combined
Statement of Assets and Liabilities
As of [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
AS OF AUGUST 31, 2004
(UNAUDITED)
DELAWARE
TAX-FREE
DELAWARE CALIFORNIA
DELAWARE TAX-FREE FUND
TAX-FREE CALIFORNIA PRO FORMA PRO FORMA
CALIFORNIA FUND INSURED FUND ADJUSTMENTS COMBINED
--------------- ------------ ----------- ------------
ASSETS
Investments, at market value $ 43,788,717 $ 32,177,522 $ -- $ 75,966,239
Cash 23,108 20,669 -- 43,777
Receivable for fund shares sold 128,142 -- -- 128,142
Receivable for securities sold 512,039 512,039 -- 1,024,078
Interest receivable 574,035 370,285 -- 944,320
------------ ------------ ------------ ------------
Total Assets 45,026,041 33,080,515 -- 78,106,556
------------ ------------ ------------ ------------
LIABILITIES
Payable for fund shares repurchased 14,368 -- -- 14,368
Distributions payable 47,400 31,778 -- 79,178
Accrued expenses and other liabilities 42,679 39,668 -- 82,347
------------ ------------ ------------ ------------
Total Liabilities 104,447 71,446 -- 175,893
------------ ------------ ------------ ------------
Net Assets $ 44,921,594 $ 33,009,069 $ -- $ 77,930,663
============ ============ ============ ============
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 44,623,907 $ 31,333,825 $ -- $ 75,957,732
Undistributed net investment income 1,300 -- -- 1,300
Accumulated net realized gain (loss) on investments (850,151) 72,069 -- (778,082)
Unrealized appreciation of investments 1,146,538 1,603,175 -- 2,749,713
------------ ------------ ------------ ------------
Net Assets $ 44,921,594 $ 33,009,069 $ -- $ 77,930,663
============ ============ ============ ============
OUTSTANDING SHARES 4,037,071 2,999,315 (31,203) 7,005,183
RETAIL CLASS A SHARES 2,231,830 2,248,556 (20,984) 4,459,402
RETAIL CLASS B SHARES 1,302,406 626,275 (8,487) 1,920,194
RETAIL CLASS C SHARES 502,835 124,484 (1,732) 625,587
NET ASSET VALUE PER SHARE:
RETAIL CLASS A SHARES $ 11.11 $ 11.01 $ 11.11
RETAIL CLASS B SHARES $ 11.16 $ 11.01 $ 11.16
RETAIL CLASS C SHARES $ 11.13 $ 10.98 $ 11.13
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free California Fund
Pro Forma Combined
Statement of Operations
For the Twelve Months Ended [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED AUGUST 31, 2004
(UNAUDITED)
DELAWARE
TAX-FREE
CALIFORNIA
DELAWARE FUND
DELAWARE TAX-FREE -----------
TAX-FREE CALIFORNIA PRO FORMA PRO FORMA
CALIFORNIA FUND INSURED FUND ADJUSTMENTS COMBINED
--------------- ------------ ----------- ------------
ASSETS
INVESTMENT INCOME
Interest income $ 2,390,211 $ 1,994,904 $ -- $ 4,385,115
----------- ----------- ---------- -----------
Total Investment Income 2,390,211 1,994,904 -- 4,385,115
----------- ----------- ---------- -----------
EXPENSES
Management fees 251,894 195,234 19,316 (A) 466,444
Distribution expenses - Class A 60,003 72,176 132,179
Distribution expenses - Class B 154,009 75,423 229,432
Distribution expenses - Class C 64,643 27,298 91,941
Dividend disbursing and transfer agent fees and expenses 22,982 18,516 41,498
Accounting and administration expenses 17,119 14,630 (884)(B) 30,865
Reports and statements to shareholders 3,100 1,855 4,955
Registration fees 2,900 2,340 (2,340)(B) 2,900
Legal and professional fees 18,565 13,842 (7,501)(B) 24,906
Trustees' fees 2,658 2,399 (1,894)(C) 3,163
Custodian fees 4,205 3,930 (1,710)(D) 6,425
Other 1,799 5,376 3,400 (D),(E) 10,575
----------- ----------- ---------- -----------
603,877 433,019 8,387 1,045,283
Less expenses absorbed or waived (209,994) -- 196,756 (F) (13,238)
Less expenses paid indirectly (520) (359) 695 (E) (184)
----------- ----------- ---------- -----------
Total expense 393,363 432,660 205,838 1,031,861
----------- ----------- ---------- -----------
NET INVESTMENT INCOME 1,996,848 1,562,244 (205,838) 3,353,254
----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 457,665 187,797 -- 645,462
Change in unrealized appreciation/(depreciation)
of investments 985,791 889,503 -- 1,875,294
----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,443,456 1,077,300 -- 2,520,756
----------- ----------- ---------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,440,304 $ 2,639,544 $ (205,838) $ 5,874,010
=========== =========== ========== ===========
(A) Increase to reflect higher management fee for the surviving fund.
(B) Decrease to reflect appropriate expense levels by merging the funds.
(C) Based on trustees' compensation plan for the surviving fund.
(D) Increase to reflect appropriate expense levels by merging the funds.
(E) Effective January 1, 2004 expenses of the Fund are no longer paid through
commission arrangements with brokers.
(F) The current expense limitation expires October 31, 2004. Effective November
1, 2004 each Fund's expense limitation (excluding distribution expenses)
will become 0.68%.
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free California Fund
Pro Forma Combined
Annual Fund Operating Expenses
As of [AUGUST 31, 2004]
(Unaudited)
Delaware Tax-Free California Fund
Pro Forma Notes to Financial Statements
As of [AUGUST 31, 2004]
Delaware Tax-Free California Fund
Pro Forma Notes to Financial Statements
August 31, 2004 (Unaudited)
Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust
and offers six series: Delaware Arizona Fund, Delaware Tax-Free California Fund,
Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund,
Delaware National High-Yield Municipal Bond Fund and Delaware Tax-Free New York
Fund. These financial statements and related notes pertain to the Delaware
Tax-Free California Fund (the "Fund"). The Trust is an open-end investment
company. The Fund is considered non-diversified under the Investment Company Act
of 1940, as amended. The Fund offers Class A, Class B and Class C shares. Class
A shares are sold with a front-end sales charge of up to 4.50%. Class B shares
are sold with a contingent deferred sales charge that declines from 4.00% to
zero depending upon the period of time the shares are held. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately eight
years after purchase. Class C shares are sold with a contingent deferred sales
charge of 1%, if redeemed during the first 12 months.
The investment objective of the Fund is to seek a high level of current income
exempt for federal income tax and the California state personal income tax, as
is consistent with preservation of capital.
1. BASIS OF PRO FORMA PRESENTATION
The accompanying pro forma financial statements are presented to show the effect
of the proposed acquisition of the Delaware Tax-Free California Insured Fund by
the Delaware Tax-Free California Fund, as if such acquisition had taken place as
of September 1, 2003.
Under the terms of the Plan of Reorganization, the combination of the Delaware
Tax-Free California Insured Fund and the Delaware Tax-Free California Fund will
be accounted for by a method of accounting for tax-free mergers of investment
companies. The acquisition would be accomplished by an acquisition of the net
assets of the Delaware Tax-Free California Insured Fund in exchange for shares
of the Delaware Tax-Free California Fund at net asset value. The statement of
assets and liabilities and the related statement of operations of the Delaware
Tax-Free California Fund and the Delaware Tax-Free California Insured Fund have
been combined as of and for the twelve months ended August 31, 2004.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements of the Delaware Tax-Free California Fund and
Delaware Tax-Free California Insured Fund included in their annual report dated
August 31, 2004.
The following notes refer to the accompanying pro forma financial statements as
if the above-mentioned acquisition of the Delaware Tax-Free California Insured
Fund by the Delaware Tax-Free California Fund had taken place as of September 1,
2003.
2. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Fund's Board of
Trustees.
Federal Income Taxes - The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting - Investment income and common expenses are allocated to the
classes of the Fund on the basis of "settled shares" of each class in relation
to the net assets of the Fund. Realized and unrealized gain (loss) on
investments is allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and other expenses are paid monthly. Security transactions are
recorded on the date the securities are purchased or sold (trade date). Costs
used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. The Fund declares dividends
daily from net investment income and pays such dividends monthly and declares
and pays distributions from net realized gain on investments, if any, annually.
The Fund may receive earnings credits from its custodian when positive cash
balances are maintained, which are used to offset custody fees. The earnings
credits for the twelve months ended August 31, 2004 were approximately $184. The
expenses paid under the above arrangement is included in the "custodian fees"
expense caption on the Statement of Operations with the corresponding expense
offset shown as "expenses paid indirectly."
3. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.55 % on the first $500 million of average daily net assets of the
Fund, 0.50% on the next $500 million, 0.45% on the next $1.5 billion and 0.425%
on average daily net assets in excess $2.5 billion.
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse the Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, and extraordinary expenses, do not exceed 0.68% of average
daily net assets of the Fund through March 31, 2006.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Fund pays
DSC a monthly fee based on average assets subject to certain minimums for
accounting and administration services. The Fund pays DSC a monthly fee based on
the number of shareholder accounts for dividend and disbursing and transfer
agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.25% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
4. LINE OF CREDIT
The Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $177,300,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Fund had no amount outstanding as of August 31, 2004, or at any time during the
period.
5. CREDIT AND MARKET RISK
The Fund concentrates its investments in securities issued by California
municipalities. The value of these investments may be adversely affected by new
legislation within California, regional or local economic conditions and
differing levels of supply and demand for municipal bonds. Many municipalities
insure repayment for their obligations. Although bond insurance reduces the risk
of loss due to default by an issuer, such bonds remain subject to the risk of
loss due to default by an issuer, such bonds remain subject to the risk that the
market may fluctuate for other reasons and there is no assurance that the
insurance company will meet its obligations. These securities have been
identified in the Statement of Net Assets.
(Unaudited) Pro Forma Financial Statements for the Reorganization of
Delaware Tax-Free Florida Fund into Delaware Tax-Free Florida Insured Fund
Delaware Tax-Free Florida Insured Fund
Pro Forma Portfolio of Investments
As of [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE FLORIDA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(Unaudited)
Delaware Tax-Free
% of Net Florida Insured Fund
Assets Shares/Par Market Value
------------- --------------------------------
MUNICIPAL BONDS 98.50%
AIRPORT REVENUE BONDS 3.79%
Capital Trust Agency Florida Revenue (Orlando/Cargo Project) 6.75%
1/1/32 (AMT) $ 0 $ 0
Miami-Dade County Florida Aviation Revenue Series A 5.00% 10/1/33
(FSA)(AMT) 0 0
Lee County Florida Airport Revenue Series B
5.75% 10/1/33 (FSA) 3,000,000 3,273,060
--------------
3,273,060
--------------
CONTINUING CARE / RETIREMENT REVENUE BONDS 0.25%
Volusia County Health Facilities Authority (John Knox Village) Series A
6.00% 6/1/17 (RADIAN) 0 0
--------------
0
--------------
CORPORATE BACKED REVENUE BONDS 0.14%
Jacksonville Sewer & Solid Waste Disposal Facilities Authority
(Anheuser Busch Project) 5.875% 2/1/36 (AMT) 0 -
--------------
0
--------------
DEDICATED TAX & FEES REVENUE BONDS 12.45%
Dade County Special Obligation Series B 5.00% 10/1/35 (AMBAC) 0 0
Florida State Department of Transportation 5.00% 7/1/31 (FGIC) 1,875,000 1,913,119
Jacksonville Florida Excise Taxes Revenue Series B 5.00% 10/1/26
(AMBAC) 1,000,000 1,025,690
+Palm Beach County Florida Criminal Justice Facilities Revenue
Inverse Floater 9.97% 6/1/12 (FGIC) 7,500,000 9,977,475
--------------
12,916,284
--------------
HIGHER EDUCATION REVENUE BONDS 2.95%
Broward County, Florida Educational Facilities Authority Revenue (Nova
Southeastern University) 5.25% 4/1/27 (RADIAN) 1,000,000 1,023,240
Dade County Florida Educational Facilities Authority (University of
Miami) Series A
5.75% 4/1/29 (AMBAC) 2,000,000 2,206,860
--------------
3,230,100
--------------
Delaware Tax-Free Florida Fund
Shares/Par Market Value
-----------------------------------
MUNICIPAL BONDS
AIRPORT REVENUE BONDS
Capital Trust Agency Florida Revenue (Orlando/Cargo Project) 6.75%
1/1/32 (AMT) $395,000 $371,817
Miami-Dade County Florida Aviation Revenue Series A 5.00% 10/1/33
(FSA)(AMT) 500,000 501,460
Lee County Florida Airport Revenue Series B
5.75% 10/1/33 (FSA) 0 0
-----------------
873,277
-----------------
CONTINUING CARE / RETIREMENT REVENUE BONDS
Volusia County Health Facilities Authority (John Knox Village) Series A
6.00% 6/1/17 (RADIAN) 250,000 268,388
-----------------
268,388
-----------------
CORPORATE BACKED REVENUE BONDS
Jacksonville Sewer & Solid Waste Disposal Facilities Authority
(Anheuser Busch Project) 5.875% 2/1/36 (AMT) 150,000 154,979
-----------------
154,979
-----------------
DEDICATED TAX & FEES REVENUE BONDS
Dade County Special Obligation Series B 5.00% 10/1/35 (AMBAC) 700,000 707,070
Florida State Department of Transportation 5.00% 7/1/31 (FGIC) 0 0
Jacksonville Florida Excise Taxes Revenue Series B 5.00% 10/1/26
(AMBAC) 0 0
+Palm Beach County Florida Criminal Justice Facilities Revenue
Inverse Floater 9.97% 6/1/12 (FGIC) 0 0
-----------------
707,070
-----------------
HIGHER EDUCATION REVENUE BONDS
Broward County, Florida Educational Facilities Authority Revenue (Nova
Southeastern University) 5.25% 4/1/27 (RADIAN) 0 0
Dade County Florida Educational Facilities Authority (University of
Miami) Series A
5.75% 4/1/29 (AMBAC) 0 0
-----------------
0
-----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
--------------------------------------
MUNICIPAL BONDS
AIRPORT REVENUE BONDS
Capital Trust Agency Florida Revenue (Orlando/Cargo Project) 6.75%
1/1/32 (AMT) $395,000 $371,817
Miami-Dade County Florida Aviation Revenue Series A 5.00% 10/1/33
(FSA)(AMT) 500,000 501,460
Lee County Florida Airport Revenue Series B
5.75% 10/1/33 (FSA) 3,000,000 3,273,060
----------------
4,146,337
----------------
CONTINUING CARE / RETIREMENT REVENUE BONDS
Volusia County Health Facilities Authority (John Knox Village) Series A
6.00% 6/1/17 (RADIAN) 250,000 268,388
----------------
268,388
----------------
CORPORATE BACKED REVENUE BONDS
Jacksonville Sewer & Solid Waste Disposal Facilities Authority
(Anheuser Busch Project) 5.875% 2/1/36 (AMT) 150,000 154,979
----------------
154,979
----------------
DEDICATED TAX & FEES REVENUE BONDS
Dade County Special Obligation Series B 5.00% 10/1/35 (AMBAC) 700,000 707,070
Florida State Department of Transportation 5.00% 7/1/31 (FGIC) 1,875,000 1,913,119
Jacksonville Florida Excise Taxes Revenue Series B 5.00% 10/1/26
(AMBAC) 1,000,000 1,025,690
+Palm Beach County Florida Criminal Justice Facilities Revenue
Inverse Floater 9.97% 6/1/12 (FGIC) 7,500,000 9,977,475
----------------
13,623,354
----------------
HIGHER EDUCATION REVENUE BONDS
Broward County, Florida Educational Facilities Authority Revenue (Nova
Southeastern University) 5.25% 4/1/27 (RADIAN) 1,000,000 1,023,240
Dade County Florida Educational Facilities Authority (University of
Miami) Series A
5.75% 4/1/29 (AMBAC) 2,000,000 2,206,860
----------------
3,230,100
----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
Delaware Tax-Free
% of Net Florida Insured Fund
Assets Shares/Par Market Value
------------- --------------------------------
HOSPITAL REVENUE BONDS 18.47%
Escambia County Health Facilities Authority (Florida Health Care
Facilities - VHA Program) 5.95% 7/1/20 (AMBAC) $4,500,000 $4,659,210
Highlands County Health Facilities Authority (Adventist Health
System/Sunbelt) Series A 6.00% 11/15/31 1,000,000 1,067,740
Hillsborough County Florida Industrial Development (Tampa General
Hospital Project) Series B 5.25% 10/1/34 0 0
Indian River County Hospital District (Indian River Memorial Hospital)
6.10% 10/1/18 (FSA) 3,000,000 3,288,990
North Miami Health Facilities Authority (Catholic Health Services) LOC
Suntrust Bank-Miami 6.00% 8/15/16 0 0
Orange County, Florida Health Facilities Authority Revenue (Adventist
Health System) 5.625% 11/15/32 1,000,000 1,036,050
Orange County, Florida Health Facilities Authority Revenue (Orlando
Regional Healthcare) 5.75% 12/1/32 0 0
Palm Beach County Health Facilities Authority Revenue Refunding
Hospital (Boca Raton Community Hospital) 5.625% 12/1/31 2,000,000 2,055,580
South Broward Hospital District Revenue (Memorial Healthcare System)
5.625% 5/1/32 2,500,000 2,629,275
Tallahassee Health Facilities (Tallahassee Memorial Regional Medical
Center) Series B 6.00% 12/1/15 (MBIA) 2,500,000 2,525,675
--------------
17,262,520
--------------
MISCELLANEOUS REVENUE BONDS 1.06%
Florida State Board of Education (Lottery Revenue) Series A 6.00%
7/1/14 (FGIC) 0 0
--------------
0
--------------
MULTI FAMILY HOUSING REVENUE BONDS 26.76%
Dade County Housing Finance Authority (Lincoln Fields Apartments
Section 8)
6.25% 7/1/24 (MBIA) 0 0
Duval Housing Finance Authority (St. Augustine Apartments) 6.00% 3/1/21 0 0
Florida Housing Finance Agency (The Vineyards Project) Series H
6.40% 11/1/15 0 0
Florida Housing Finance Agency (Spinnaker Cove Apartments) Series
G LOC First Union National Bank of North Carolina 6.50% 7/1/36
(AMBAC)(AMT) 500,000 519,435
Florida Housing Finance Agency (Crossings Indian Run Apartments
HUD) Series V LOC First Union National Bank of North Carolina 6.10%
12/1/26 (AMBAC)(AMT) 750,000 777,945
Florida Housing Finance Agency (Landings at Sea Forest Apartments)
Series T LOC First Union National Bank of North Carolina
5.85% 12/1/18 (AMBAC)(FHA)(AMT) 420,000 438,715
6.05% 12/1/36 (AMBAC)(FHA)(AMT) 700,000 722,337
Florida Housing Finance Agency (Leigh Meadows Apartments Section 8)
Series N 6.30% 9/1/36 (AMBAC)(AMT) 2,000,000 2,075,480
Florida Housing Finance Agency (Leigh Meadows Apartments Section 8)
Series N LOC First Union National Bank of North Carolina 6.20% 9/1/26
(AMBAC)(AMT) 2,765,000 2,870,706
Florida Housing Finance Agency (Mariner Club Apartments) Series K-1
6.25% 9/1/26 (AMBAC)(AMT) 2,000,000 2,078,020
6.375% 9/1/36 (AMBAC)(AMT) 3,500,000 3,636,080
Florida Housing Finance Agency (Riverfront Apartments Section 8)
Series A 6.25% 4/1/37 (AMBAC)(AMT) 1,000,000 1,044,390
Florida Housing Finance Agency (Sterling Palms Apartments) Series D-1
LOC First Union National Bank of North Carolina
6.30% 12/1/16 (AMBAC)(AMT) 1,000,000 1,044,320
6.40% 12/1/26 (AMBAC)(AMT) 1,500,000 1,557,600
6.50% 6/1/36 (AMBAC)(AMT) 6,540,000 6,788,978
Florida Housing Finance Agency (Woodbridge Apartments Project)
Series L 6.25% 6/1/36 (AMBAC)(AMT) 2,000,000 2,077,180
Florida Housing Finance Agency (Woodbridge Apartments) Series L LOC
First Union National Bank of North Carolina 6.15% 12/1/26
(AMBAC)(AMT) 1,750,000 1,817,970
Volusia County Housing Finance Authority (San Marco Apartments)
Series A 5.60% 1/1/44 (FSA)(AMT) 0 0
--------------
27,449,156
--------------
Delaware Tax-Free Florida Fund
Shares/Par Market Value
-----------------------------------
HOSPITAL REVENUE BONDS
Escambia County Health Facilities Authority (Florida Health Care
Facilities - VHA Program) 5.95% 7/1/20 (AMBAC) 425,000 440,037
Highlands County Health Facilities Authority (Adventist Health
System/Sunbelt) Series A 6.00% 11/15/31 500,000 533,869
Hillsborough County Florida Industrial Development (Tampa General
Hospital Project) Series B 5.25% 10/1/34 150,000 148,715
Indian River County Hospital District (Indian River Memorial Hospital)
6.10% 10/1/18 (FSA) 0 0
North Miami Health Facilities Authority (Catholic Health Services) LOC
Suntrust Bank-Miami 6.00% 8/15/16 500,000 525,790
Orange County, Florida Health Facilities Authority Revenue (Adventist
Health System) 5.625% 11/15/32 0 0
Orange County, Florida Health Facilities Authority Revenue (Orlando
Regional Healthcare) 5.75% 12/1/32 250,000 259,700
Palm Beach County Health Facilities Authority Revenue Refunding
Hospital (Boca Raton Community Hospital) 5.625% 12/1/31 500,000 513,895
South Broward Hospital District Revenue (Memorial Healthcare System)
5.625% 5/1/32 500,000 525,855
Tallahassee Health Facilities (Tallahassee Memorial Regional Medical
Center) Series B 6.00% 12/1/15 (MBIA) 0 0
-----------------
2,947,861
-----------------
MISCELLANEOUS REVENUE BONDS
Florida State Board of Education (Lottery Revenue) Series A 6.00%
7/1/14 (FGIC) 1,000,000 1,161,680
-----------------
1,161,680
-----------------
MULTI FAMILY HOUSING REVENUE BONDS
Dade County Housing Finance Authority (Lincoln Fields Apartments
Section 8)
6.25% 7/1/24 (MBIA) 490,000 490,568
Duval Housing Finance Authority (St. Augustine Apartments) 6.00% 3/1/21 300,000 310,650
Florida Housing Finance Agency (The Vineyards Project) Series H
6.40% 11/1/15 500,000 514,550
Florida Housing Finance Agency (Spinnaker Cove Apartments) Series
G LOC First Union National Bank of North Carolina 6.50% 7/1/36
(AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Crossings Indian Run Apartments
HUD) Series V LOC First Union National Bank of North Carolina 6.10%
12/1/26 (AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Landings at Sea Forest Apartments)
Series T LOC First Union National Bank of North Carolina
5.85% 12/1/18 (AMBAC)(FHA)(AMT) 0 0
6.05% 12/1/36 (AMBAC)(FHA)(AMT) 0 0
Florida Housing Finance Agency (Leigh Meadows Apartments Section 8)
Series N 6.30% 9/1/36 (AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Leigh Meadows Apartments Section 8)
Series N LOC First Union National Bank of North Carolina 6.20% 9/1/26
(AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Mariner Club Apartments) Series K-1
6.25% 9/1/26 (AMBAC)(AMT) 0 0
6.375% 9/1/36 (AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Riverfront Apartments Section 8)
Series A 6.25% 4/1/37 (AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Sterling Palms Apartments) Series D-1
LOC First Union National Bank of North Carolina
6.30% 12/1/16 (AMBAC)(AMT) 0 0
6.40% 12/1/26 (AMBAC)(AMT) 0 0
6.50% 6/1/36 (AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Woodbridge Apartments Project)
Series L 6.25% 6/1/36 (AMBAC)(AMT) 0 0
Florida Housing Finance Agency (Woodbridge Apartments) Series L LOC
First Union National Bank of North Carolina 6.15% 12/1/26
(AMBAC)(AMT) 0 0
Volusia County Housing Finance Authority (San Marco Apartments)
Series A 5.60% 1/1/44 (FSA)(AMT) 500,000 513,895
-----------------
1,829,663
-----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
--------------------------------------
HOSPITAL REVENUE BONDS
Escambia County Health Facilities Authority (Florida Health Care
Facilities - VHA Program) 5.95% 7/1/20 (AMBAC) 4,925,000 5,099,247
Highlands County Health Facilities Authority (Adventist Health
System/Sunbelt) Series A 6.00% 11/15/31 1,500,000 1,601,609
Hillsborough County Florida Industrial Development (Tampa General
Hospital Project) Series B 5.25% 10/1/34 150,000 148,715
Indian River County Hospital District (Indian River Memorial Hospital)
6.10% 10/1/18 (FSA) 3,000,000 3,288,990
North Miami Health Facilities Authority (Catholic Health Services) LOC
Suntrust Bank-Miami 6.00% 8/15/16 500,000 525,790
Orange County, Florida Health Facilities Authority Revenue (Adventist
Health System) 5.625% 11/15/32 1,000,000 1,036,050
Orange County, Florida Health Facilities Authority Revenue (Orlando
Regional Healthcare) 5.75% 12/1/32 250,000 259,700
Palm Beach County Health Facilities Authority Revenue Refunding
Hospital (Boca Raton Community Hospital) 5.625% 12/1/31 2,500,000 2,569,475
South Broward Hospital District Revenue (Memorial Healthcare System)
5.625% 5/1/32 3,000,000 3,155,130
Tallahassee Health Facilities (Tallahassee Memorial Regional Medical
Center) Series B 6.00% 12/1/15 (MBIA) 2,500,000 2,525,675
----------------
20,210,381
----------------
MISCELLANEOUS REVENUE BONDS
Florida State Board of Education (Lottery Revenue) Series A 6.00%
7/1/14 (FGIC) 1,000,000 1,161,680
----------------
1,161,680
----------------
MULTI FAMILY HOUSING REVENUE BONDS
Dade County Housing Finance Authority (Lincoln Fields Apartments
Section 8)
6.25% 7/1/24 (MBIA) 490,000 490,568
Duval Housing Finance Authority (St. Augustine Apartments) 6.00% 3/1/21 300,000 310,650
Florida Housing Finance Agency (The Vineyards Project) Series H
6.40% 11/1/15 500,000 514,550
Florida Housing Finance Agency (Spinnaker Cove Apartments) Series
G LOC First Union National Bank of North Carolina 6.50% 7/1/36
(AMBAC)(AMT) 500,000 519,435
Florida Housing Finance Agency (Crossings Indian Run Apartments
HUD) Series V LOC First Union National Bank of North Carolina 6.10%
12/1/26 (AMBAC)(AMT) 750,000 777,945
Florida Housing Finance Agency (Landings at Sea Forest Apartments)
Series T LOC First Union National Bank of North Carolina
5.85% 12/1/18 (AMBAC)(FHA)(AMT) 420,000 438,715
6.05% 12/1/36 (AMBAC)(FHA)(AMT) 700,000 722,337
Florida Housing Finance Agency (Leigh Meadows Apartments Section 8)
Series N 6.30% 9/1/36 (AMBAC)(AMT) 2,000,000 2,075,480
Florida Housing Finance Agency (Leigh Meadows Apartments Section 8)
Series N LOC First Union National Bank of North Carolina 6.20% 9/1/26
(AMBAC)(AMT) 2,765,000 2,870,706
Florida Housing Finance Agency (Mariner Club Apartments) Series K-1
6.25% 9/1/26 (AMBAC)(AMT) 2,000,000 2,078,020
6.375% 9/1/36 (AMBAC)(AMT) 3,500,000 3,636,080
Florida Housing Finance Agency (Riverfront Apartments Section 8)
Series A 6.25% 4/1/37 (AMBAC)(AMT) 1,000,000 1,044,390
Florida Housing Finance Agency (Sterling Palms Apartments) Series D-1
LOC First Union National Bank of North Carolina
6.30% 12/1/16 (AMBAC)(AMT) 1,000,000 1,044,320
6.40% 12/1/26 (AMBAC)(AMT) 1,500,000 1,557,600
6.50% 6/1/36 (AMBAC)(AMT) 6,540,000 6,788,978
Florida Housing Finance Agency (Woodbridge Apartments Project)
Series L 6.25% 6/1/36 (AMBAC)(AMT) 2,000,000 2,077,180
Florida Housing Finance Agency (Woodbridge Apartments) Series L LOC
First Union National Bank of North Carolina 6.15% 12/1/26
(AMBAC)(AMT) 1,750,000 1,817,970
Volusia County Housing Finance Authority (San Marco Apartments)
Series A 5.60% 1/1/44 (FSA)(AMT) 500,000 513,895
----------------
29,278,819
----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
Delaware Tax-Free
% of Net Florida Insured Fund
Assets Shares/Par Market Value
------------- --------------------------------
MUNICIPAL LEASE REVENUE BONDS 3.85%
Osceola County Florida School Board Series A 5.25% 6/1/27 (AMBAC) $4,000,000 $4,213,560
--------------
4,213,560
--------------
PORTS & HARBORS REVENUE BONDS 0.29%
Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30
(MBIA)(AMT) 0 0
--------------
0
--------------
PRE-REFUNDED BONDS* 9.86%
Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30-10
(MBIA)(AMT) 0 0
Miramar Wastewater Improvement Assessment 6.75% 10/1/25-04 (FGIC) 2,425,000 2,460,260
Northern Palm Beach County Improvement District Special Assessment
(Abacoa Water Control) 7.20% 8/1/16 0 0
Pinellas County Educational Facilities Authority (Clearwater Christian
College) Private Placement 8.00% 2/1/11-06 0 0
Port St. Lucie Florida Utility Revenue 6.00% 9/1/24-04 (FGIC) 5,000,000 5,000,000
Tampa Utilities Tax Revenue Series A
6.00% 10/1/17-09 (AMBAC) 0 0
6.125% 10/1/18-09 (AMBAC) 0 0
Volusia County, Florida Industrial Development Authority Mortgage
Revenue (Bishops Glen Retirement Health Facilities Project) 7.50%
11/1/16-06 0 0
--------------
7,460,260
--------------
PUBLIC POWER REVENUE BONDS 2.82%
Jacksonville, Florida Electric Authority Revenue Electric System Series
3-C 5.50% 10/1/30 0 0
Florida State Municipal Power Agency Revenue (Stanton II Project)
5.00% 10/1/26 (AMBAC) 2,000,000 2,051,380
--------------
2,051,380
--------------
SINGLE FAMILY HOUSING REVENUE BONDS 0.49%
Florida Housing Finance Agency Homeowner Mortgage Series 1B
6.00% 7/1/17 0 0
Orange County Florida Housing Finance Authority Homeowner Revenue
Series B 5.25% 3/1/33 (AMT) 0 0
--------------
0
--------------
TAX INCREMENT / SPECIAL ASSESSMENT BONDS 3.66%
Hollywood Florida Community Redevelopment Agency 5.625% 3/1/24 900,000 940,743
Julinton Creek Plantation Community Development District Special
Assessment 5.00% 5/1/29 (MBIA) 0 0
Lake Bernadette Community Development District Special Assesment
Series A 8.00% 5/1/17 0 0
Midtown Miami FL Community Development 6.50% 5/1/37 750,000 771,915
Osceola County Celebration Community Development District
Assessment 6.10% 5/1/16 (MBIA) 470,000 476,401
Osceola County Enterprise Community Development District Special
Assessment 6.10% 5/1/16 (MBIA) 695,000 704,466
Tampa Palms Community Development District (Richmond Place
Project) 7.50% 5/1/18 0 0
--------------
2,893,525
--------------
TERRITORIAL GENERAL OBLIGATION BONDS 2.68%
Puerto Rico Commonwealth Public Improvement Series A 5.50% 7/1/19 (MBIA) 2,500,000 2,930,175
--------------
2,930,175
--------------
Delaware Tax-Free Florida Fund
Shares/Par Market Value
-----------------------------------
MUNICIPAL LEASE REVENUE BONDS
Osceola County Florida School Board Series A 5.25% 6/1/27 (AMBAC) 0 0
-----------------
0
-----------------
PORTS & HARBORS REVENUE BONDS
Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30
(MBIA)(AMT) 295,000 313,892
-----------------
313,892
-----------------
PRE-REFUNDED BONDS*
Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30-10
(MBIA)(AMT) 205,000 232,827
Miramar Wastewater Improvement Assessment 6.75% 10/1/25-04 (FGIC) 0 0
Northern Palm Beach County Improvement District Special Assessment
(Abacoa Water Control) 7.20% 8/1/16 300,000 335,295
Pinellas County Educational Facilities Authority (Clearwater Christian
College) Private Placement 8.00% 2/1/11-06 205,000 222,634
Port St. Lucie Florida Utility Revenue 6.00% 9/1/24-04 (FGIC) 0 0
Tampa Utilities Tax Revenue Series A
6.00% 10/1/17-09 (AMBAC) 1,000,000 1,164,209
6.125% 10/1/18-09 (AMBAC) 1,000,000 1,170,109
Volusia County, Florida Industrial Development Authority Mortgage
Revenue (Bishops Glen Retirement Health Facilities Project) 7.50%
11/1/16-06 180,000 201,361
-----------------
3,326,435
-----------------
PUBLIC POWER REVENUE BONDS
Jacksonville, Florida Electric Authority Revenue Electric System Series
3-C 5.50% 10/1/30 1,000,000 1,028,990
Florida State Municipal Power Agency Revenue (Stanton II Project)
5.00% 10/1/26 (AMBAC) 0 0
-----------------
1,028,990
-----------------
SINGLE FAMILY HOUSING REVENUE BONDS
Florida Housing Finance Agency Homeowner Mortgage Series 1B
6.00% 7/1/17 90,000 93,729
Orange County Florida Housing Finance Authority Homeowner Revenue
Series B 5.25% 3/1/33 (AMT) 440,000 445,588
-----------------
539,317
-----------------
TAX INCREMENT / SPECIAL ASSESSMENT BONDS
Hollywood Florida Community Redevelopment Agency 5.625% 3/1/24 300,000 313,580
Julinton Creek Plantation Community Development District Special
Assessment 5.00% 5/1/29 (MBIA) 200,000 203,576
Lake Bernadette Community Development District Special Assesment
Series A 8.00% 5/1/17 140,000 143,391
Midtown Miami FL Community Development 6.50% 5/1/37 250,000 257,305
Osceola County Celebration Community Development District
Assessment 6.10% 5/1/16 (MBIA) 0 0
Osceola County Enterprise Community Development District Special
Assessment 6.10% 5/1/16 (MBIA) 0 0
Tampa Palms Community Development District (Richmond Place
Project) 7.50% 5/1/18 185,000 194,010
-----------------
1,111,862
-----------------
TERRITORIAL GENERAL OBLIGATION BONDS
Puerto Rico Commonwealth Public Improvement Series A 5.50% 7/1/19 (MBIA) 0 0
-----------------
0
-----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
--------------------------------------
MUNICIPAL LEASE REVENUE BONDS
Osceola County Florida School Board Series A 5.25% 6/1/27 (AMBAC) 4,000,000 4,213,560
----------------
4,213,560
----------------
PORTS & HARBORS REVENUE BONDS
Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30
(MBIA)(AMT) 295,000 313,892
----------------
313,892
----------------
PRE-REFUNDED BONDS*
Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30-10
(MBIA)(AMT) 205,000 232,827
Miramar Wastewater Improvement Assessment 6.75% 10/1/25-04 (FGIC) 2,425,000 2,460,260
Northern Palm Beach County Improvement District Special Assessment
(Abacoa Water Control) 7.20% 8/1/16 300,000 335,295
Pinellas County Educational Facilities Authority (Clearwater Christian
College) Private Placement 8.00% 2/1/11-06 205,000 222,634
Port St. Lucie Florida Utility Revenue 6.00% 9/1/24-04 (FGIC) 5,000,000 5,000,000
Tampa Utilities Tax Revenue Series A
6.00% 10/1/17-09 (AMBAC) 1,000,000 1,164,209
6.125% 10/1/18-09 (AMBAC) 1,000,000 1,170,109
Volusia County, Florida Industrial Development Authority Mortgage
Revenue (Bishops Glen Retirement Health Facilities Project) 7.50%
11/1/16-06 180,000 201,361
----------------
10,786,695
----------------
PUBLIC POWER REVENUE BONDS
Jacksonville, Florida Electric Authority Revenue Electric System Series
3-C 5.50% 10/1/30 1,000,000 1,028,990
Florida State Municipal Power Agency Revenue (Stanton II Project)
5.00% 10/1/26 (AMBAC) 2,000,000 2,051,380
----------------
3,080,370
----------------
SINGLE FAMILY HOUSING REVENUE BONDS
Florida Housing Finance Agency Homeowner Mortgage Series 1B
6.00% 7/1/17 90,000 93,729
Orange County Florida Housing Finance Authority Homeowner Revenue
Series B 5.25% 3/1/33 (AMT) 440,000 445,588
----------------
539,317
----------------
TAX INCREMENT / SPECIAL ASSESSMENT BONDS
Hollywood Florida Community Redevelopment Agency 5.625% 3/1/24 1,200,000 1,254,323
Julinton Creek Plantation Community Development District Special
Assessment 5.00% 5/1/29 (MBIA) 200,000 203,576
Lake Bernadette Community Development District Special Assesment
Series A 8.00% 5/1/17 140,000 143,391
Midtown Miami FL Community Development 6.50% 5/1/37 1,000,000 1,029,220
Osceola County Celebration Community Development District
Assessment 6.10% 5/1/16 (MBIA) 470,000 476,401
Osceola County Enterprise Community Development District Special
Assessment 6.10% 5/1/16 (MBIA) 695,000 704,466
Tampa Palms Community Development District (Richmond Place
Project) 7.50% 5/1/18 185,000 194,010
----------------
4,005,387
----------------
TERRITORIAL GENERAL OBLIGATION BONDS
Puerto Rico Commonwealth Public Improvement Series A 5.50% 7/1/19 (MBIA) 2,500,000 2,930,175
----------------
2,930,175
----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
Delaware Tax-Free
% of Net Florida Insured Fund
Assets Shares/Par Market Value
------------- --------------------------------
TERRITORIAL REVENUE BONDS 7.11%
Puerto Rico Commonwealth Highway & Transportation Authority
Revenue Series B 6.00% 7/1/26 $ 0 $ 0
Puerto Rico Commonwealth Highway & Transportation Authority
Transportation Revenue Series D 5.25% 7/1/38 5,000,000 5,122,150
Puerto Rico Commonwealth Highway & Transportation Authority
Transportation Revenue Series G 5.00% 7/1/42 0 0
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 750,000 834,510
Puerto Rico Public Buildings Authority Revenue 5.25% 7/1/25 930,000 991,659
Puerto Rico Public Buildings Authority Revenue Series I 5.25% 7/1/33 0 0
--------------
6,948,319
--------------
TURNPIKE / TOLL ROAD REVENUE BONDS 0.31%
Dunes, Florida Community Development District Revenue-Intracoastal
Waterway Bridge (ITT Industries Corp.) 5.50% 10/1/07 0 0
Florida State Mid-Bay Bridge Authority Series D 6.125% 10/1/22 0 0
--------------
0
--------------
WATER & SEWER REVENUE BONDS 1.57%
Tampa Water and Sewer Revenue 6.00% 10/1/16 (FSA) 1,000,000 1,209,920
Village Center Community Development District Florida Utility Revenue
5.00% 10/1/36 (MBIA) 500,000 508,700
--------------
1,718,620
--------------
TOTAL MUNICIPAL BONDS 92,346,959
--------------
TOTAL INVESTMENTS AT MARKET 98.50% $ 92,346,959
--------------
TOTAL INVESTMENTS AT COST $ 86,712,415
--------------
Delaware Tax-Free Florida Fund
Shares/Par Market Value
-----------------------------------
TERRITORIAL REVENUE BONDS
Puerto Rico Commonwealth Highway & Transportation Authority
Revenue Series B 6.00% 7/1/26 $ 150,000 $ 157,260
Puerto Rico Commonwealth Highway & Transportation Authority
Transportation Revenue Series D 5.25% 7/1/38 0 0
Puerto Rico Commonwealth Highway & Transportation Authority
Transportation Revenue Series G 5.00% 7/1/42 300,000 300,618
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 0 0
Puerto Rico Public Buildings Authority Revenue 5.25% 7/1/25 0 0
Puerto Rico Public Buildings Authority Revenue Series I 5.25% 7/1/33 360,000 372,557
-----------------
830,435
-----------------
TURNPIKE / TOLL ROAD REVENUE BONDS
Dunes, Florida Community Development District Revenue-Intracoastal
Waterway Bridge (ITT Industries Corp.) 5.50% 10/1/07 175,000 177,307
Florida State Mid-Bay Bridge Authority Series D 6.125% 10/1/22 160,000 162,192
-----------------
339,499
-----------------
WATER & SEWER REVENUE BONDS
Tampa Water and Sewer Revenue 6.00% 10/1/16 (FSA) 0 0
Village Center Community Development District Florida Utility Revenue
5.00% 10/1/36 (MBIA) 0 0
-----------------
0
-----------------
TOTAL MUNICIPAL BONDS 15,433,348
-----------------
TOTAL INVESTMENTS AT MARKET $ 15,433,348
-----------------
TOTAL INVESTMENTS AT COST $ 14,492,870
-----------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
Pro Forma Combined
SHARES/PAR MARKET VALUE
--------------------------------------
TERRITORIAL REVENUE BONDS
Puerto Rico Commonwealth Highway & Transportation Authority
Revenue Series B 6.00% 7/1/26 $ 150,000 $ 157,260
Puerto Rico Commonwealth Highway & Transportation Authority
Transportation Revenue Series D 5.25% 7/1/38 5,000,000 5,122,150
Puerto Rico Commonwealth Highway & Transportation Authority
Transportation Revenue Series G 5.00% 7/1/42 300,000 300,618
Puerto Rico Electric Power Authority Power Revenue Series OO 5.00%
7/1/13 (CIFG) 750,000 834,510
Puerto Rico Public Buildings Authority Revenue 5.25% 7/1/25 930,000 991,659
Puerto Rico Public Buildings Authority Revenue Series I 5.25% 7/1/33 360,000 372,557
----------------
7,778,754
----------------
TURNPIKE / TOLL ROAD REVENUE BONDS
Dunes, Florida Community Development District Revenue-Intracoastal
Waterway Bridge (ITT Industries Corp.) 5.50% 10/1/07 175,000 177,307
Florida State Mid-Bay Bridge Authority Series D 6.125% 10/1/22 160,000 162,192
----------------
339,499
----------------
WATER & SEWER REVENUE BONDS
Tampa Water and Sewer Revenue 6.00% 10/1/16 (FSA) 1,000,000 1,209,920
Village Center Community Development District Florida Utility Revenue
5.00% 10/1/36 (MBIA) 500,000 508,700
----------------
1,718,620
----------------
TOTAL MUNICIPAL BONDS 107,780,307
----------------
TOTAL INVESTMENTS AT MARKET $ 107,780,307
----------------
TOTAL INVESTMENTS AT COST $ 101,205,285
----------------
- ------------------
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
CIFG - Insured by CDS IXIS Financial Guaranty
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FSA - Insured by Financial Security Assurance LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
+ An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term rates. Interest rate
disclosed is in effect as of August 31, 2004.
(A) No adjustments are shown to the unaudited pro forma combined portfolio of
investments due to the fact that upon completion of the acquisition, no
securities would need to be sold in order for the Acquiring Fund to comply
with its Prospectus and SEC and IRS guidelines and restrictions. However,
the foregoing sentence shall not restrict in any way the ability of the
investment advisor of any of the Funds from buying or selling securities in
the normal course of such Fund's business and operations.
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free Florida Insured Fund
Pro Forma Combined
Statement of Assets and Liabilities
As of [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE FLORIDA INSURED FUND
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
AS OF AUGUST 31, 2004
(UNAUDITED)
Delaware
Tax-Free
Florida
Delaware Delaware Insured Fund
Tax-Free Florida Tax-Free Pro Forma Pro Forma
Insured Fund Florida Fund Adjustments Combined
------------- ------------- ------------- -------------
ASSETS
Investments, at market value $ 92,346,959 $ 15,433,348 $ -- $ 107,780,307
Cash (Overdraft) (31,590) 203,914 -- 172,324
Receivable for fund shares sold 48,713 52,800 -- 101,513
Receivable for securities sold -- 45,000 -- 45,000
Interest receivable 1,690,455 249,336 -- 1,939,791
------------- ------------- ------------- -------------
Total Assets 94,054,537 15,984,398 -- 110,038,935
------------- ------------- ------------- -------------
LIABILITIES
Payable for fund shares repurchased 155,969 212,263 -- 368,232
Distributions payable 108,341 16,941 -- 125,282
Accrued expenses and other liabilities 109,338 17,167 -- 126,505
------------- ------------- ------------- -------------
Total Liabilities 373,648 246,371 -- 620,019
------------- ------------- ------------- -------------
Net Assets $ 93,680,889 $ 15,738,027 $ -- $ 109,418,916
============= ============= ============= =============
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 88,554,039 $ 15,493,458 $ -- $ 104,047,497
Distributions in excess of net investment income -- (181) -- (181)
Accumulated net realized loss on investments (507,694) (695,728) -- (1,203,422)
Unrealized appreciation of investments 5,634,544 940,478 -- 6,575,022
------------- ------------- ------------- -------------
Net Assets $ 93,680,889 $ 15,738,027 $ -- $ 109,418,916
============= ============= ============= =============
OUTSTANDING SHARES 8,324,003 1,425,641 (27,172) 9,722,472
RETAIL CLASS A SHARES 7,783,120 890,529 (17,279) 8,656,370
RETAIL CLASS B SHARES 444,251 339,927 (6,280) 777,898
RETAIL CLASS C SHARES 96,632 195,185 (3,613) 288,204
NET ASSET VALUE PER SHARE:
RETAIL CLASS A SHARES $ 11.25 $ 11.03 $ 11.25
RETAIL CLASS B SHARES $ 11.26 $ 11.05 $ 11.26
RETAIL CLASS C SHARES $ 11.26 $ 11.05 $ 11.26
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free Florida Insured Fund
Pro Forma Combined
Statement of Operations
For the Twelve Months Ended [AUGUST 31, 2004]
(Unaudited)
DELAWARE TAX-FREE FLORIDA INSURED FUND
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED AUGUST 31, 2004
(UNAUDITED)
Delaware
Tax-Free Florida
Delaware Insured Fund
Tax-Free Delaware ----------------
Florida Tax-Free Pro Forma Pro Forma
Insured Fund Florida Fund Adjustments Combined
------------ ------------ -------------- -----------
INVESTMENT INCOME
Interest income $ 5,596,815 $ 903,319 -- $ 6,500,134
----------- ----------- ---------- -----------
Total Investment Income 5,596,815 903,319 -- 6,500,134
----------- ----------- ---------- -----------
EXPENSES
Management fees 497,310 93,511 (8,580)(A) 582,241
Distribution expenses - Class A 232,883 25,349 -- 258,232
Distribution expenses - Class B 55,731 49,322 -- 105,053
Distribution expenses - Class C 9,589 19,525 -- 29,114
Dividend disbursing and transfer agent fees and expenses 77,679 9,538 -- 87,217
Accounting and administration expenses 37,223 6,357 (1,214)(B) 42,366
Reports and statements to shareholders 10,964 3,324 14,288
Registration fees 11,324 3,630 (3,630)(B) 11,324
Legal and professional fees 35,794 6,500 (4,818)(B) 37,476
Trustees' fees 4,202 1,638 (1,013)(C) 4,827
Custodian fees 4,961 1,450 (1,132)(B) 5,279
Other 6,759 1,554 1,146 (D),(E) 9,459
----------- ----------- ---------- -----------
984,419 221,698 (19,241) 1,186,876
Less expenses absorbed or waived (35,069) (40,947) (17,241)(F) (93,257)
Less expenses paid indirectly (3,363) (1,367) 955 (E) (3,775)
----------- ----------- ---------- -----------
Total expense 945,987 179,384 (35,527) 1,089,844
----------- ----------- ---------- -----------
NET INVESTMENT INCOME/(LOSS) 4,650,828 723,935 35,527 5,410,290
----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 177,786 32,818 -- 210,604
Change in unrealized appreciation/(depreciation)
of investments 1,004,732 127,476 -- 1,132,208
----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,182,518 160,294 -- 1,342,812
----------- ----------- ---------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,833,346 $ 884,229 $ 35,527 $ 6,753,102
=========== =========== ========== ===========
(A) Decrease to reflect lower management fee for the survivng fund.
(B) Decrease to reflect appropriate expense levels by merging the funds.
(C) Based on trustees' compensation plan for the surviving fund.
(D) Increase to reflect appropriate expense levels by merging the funds.
(E) Effective January 1, 2004 expenses of the Fund are no longer paid through
commission arrangements with brokers.
(F) The current expense limitation expires October 31, 2004. Effective
November 1, 2004 each Fund's expense limitation (excluding distribution
expenses) will become 0.66%.
SEE PRO FORMA NOTES TO FINANCIAL STATEMENTS
Delaware Tax-Free Florida Insured Fund
Pro Forma Combined
Annual Fund Operating Expenses
As of [AUGUST 31, 2004]
(Unaudited)
Delaware Tax-Free Florida Insured Fund
Pro Forma Notes to Financial Statements
As of [AUGUST 31, 2004]
(Unaudited)
Delaware Tax-Free Florida Insured Fund
Pro Forma Notes to Financial Statements
August 31, 2004 (Unaudited)
Voyageur Investment Trust (the "Trust") is organized as a Massachusetts business
trust and offers five series: Delaware Tax-Free California Insured Fund,
Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free Florida Fund, Delaware
Tax-Free Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund. These
financial statements and related notes pertain to the Delaware Tax-Free Florida
Insured Fund (the "Fund"). The Trust is an open-end investment company. The Fund
is considered non-diversified under the Investment Company Act of 1940, as
amended. The Fund offers Class A, Class B and Class C shares. Class A shares are
sold with a front-end sales charge of up to 4.50%. Class B shares are sold with
a contingent deferred sales charge that declines from 4.00% to zero depending
upon the period of time the shares are held. Class B shares will automatically
convert to Class A shares on a quarterly basis approximately eight years after
purchase. Class C shares are sold with a contingent deferred sales charge of 1%,
if redeemed during the first 12 months.
The investment objective of the Fund is to seek a high level of current income
exempt for federal income tax and the Florida state intangible tax, as is
consistent with preservation of capital.
1. BASIS OF PRO FORMA PRESENTATION
The accompanying pro forma financial statements are presented to show the effect
of the proposed acquisition of the Delaware Tax-Free Florida Fund by the
Delaware Tax-Free Florida Insured Fund, as if such acquisition had taken place
as of September 1, 2003.
Under the terms of the Plan of Reorganization, the combination of the Delaware
Tax-Free Florida Fund and the Delaware Tax-Free Florida Insured Fund will be
accounted for by a method of accounting for tax-free mergers of investment
companies. The acquisition would be accomplished by an acquisition of the net
assets of the Delaware Tax-Free Florida Fund in exchange for shares of the
Delaware Tax-Free Florida Insured Fund at net asset value. The statement of
assets and liabilities and the related statement of operations of the Delaware
Tax-Free Florida Fund and the Delaware Tax-Free Florida Insured Fund have been
combined as of and for the twelve months ended August 31, 2004.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements of the Delaware Tax-Free Florida Fund and Delaware
Tax-Free Florida Insured Fund included in annual their report dated August 31,
2004.
The following notes refer to the accompanying pro forma financial statements as
if the above-mentioned acquisition of the Delaware Tax-Free Florida Fund by the
Delaware Tax-Free Florida Insured Fund had taken place as of September 1, 2003.
2. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Fund's Board of
Trustees.
Federal Income Taxes - The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting - Investment income and common expenses are allocated to the
classes of the Fund on the basis of "settled shares" of each class in relation
to the net assets of the Fund. Realized and unrealized gain (loss) on
investments is allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and other expenses are paid monthly. Security transactions are
recorded on the date the securities are purchased or sold (trade date). Costs
used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. The Fund declares dividends
daily from net investment income and pays such dividends monthly and declares
and pays distributions from net realized gain on investments, if any, annually.
The Fund may receive earnings credits from its custodian when positive cash
balances are maintained, which are used to offset custody fees. The earnings
credits for the twelve months ended August 31, 2004 were approximately $3,775.
The expenses paid under the above arrangement is included in the "custodian
fees" expense caption on the Statement of Operations with the corresponding
expense offset shown as "expenses paid indirectly."
3. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.50% on the first $500 million of average daily net assets of the Fund,
0.475% on the next $500 million, 0.45% on the next $1.5 billion and 0.425% on
average daily net assets in excess $2.5 billion.
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse the Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, and extraordinary expenses do not exceed 0.66% of average
daily net assets of the Fund through March 31, 2006.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Fund pays
DSC a monthly fee based on average assets subject to certain minimums for
accounting and administration services. The Fund pays DSC a monthly fee based on
the number of shareholder accounts for dividend and disbursing and transfer
agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.25% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
4. LINE OF CREDIT
The Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $177,300,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Fund had no amount outstanding as of August 31, 2004, or at any time during the
period.
5. CREDIT AND MARKET RISK
The Fund concentrates its investments in securities issued by Florida
municipalities. The value of these investments may be adversely affected by new
legislation within Florida, regional or local economic conditions and differing
levels of supply and demand for municipal bonds. Many municipalities insure
repayment for their obligations. Although bond insurance reduces the risk of
loss due to default by an issuer, such bonds remain subject to the risk of loss
due to default by an issuer, such bonds remain subject to the risk that the
market may fluctuate for other reasons and there is no assurance that the
insurance company will meet its obligations. These securities have been
identified in the Statement of Net Assets.
PART C
OTHER INFORMATION
Item 15. Indemnification. Article VII of the Declaration of Trust (December
17, 1998) is incorporated by reference to Post-Effective Amendment
No. 23 to Registrant's registration statement filed on Form N-1A
[File No. 33-42827] and Article VI of the By-Laws is filed herewith
in Exhibit No. EX-99.2(a).
Item 16. Exhibits. The following exhibits are incorporated by reference to
the previously filed Post-Effective Amendment to Registrant's
registration statement on Form N-1A [File No. 33-63238] indicated
below, except Exhibits 2(a), 4(a), 5(b) and 9(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. 23 filed August 16, 1999.
(b) Certificate of Trust (December 17, 1998) incorporated
into this filing by reference to Post-Effective
Amendment No. 23 filed August 16, 1999.
(2) Copies of the existing by-laws or corresponding instruments of
the Registrant;
(a) Amended and Restated By-Laws (August 19, 2004), are
filed electronically herewith as Exhibit No. EX-99.2(a).
(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 Proxy Statement/Prospectus
contained in Part A of this Registration 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. 23 filed August 16, 1999.
5
(b) By-Laws. Article II of By-Laws is filed herewith in
Exhibit No. EX-99.2(a).
(6) Copies of all investment advisory contracts relating to the
management of the assets of the Registrant;
(a) Executed Investment Management Agreement (November 1,
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. 25 filed
October 30, 2000.
(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 (April 19, 2001) between
Delaware Distributors, L.P. and the Registrant on behalf
of each Fund, incorporated into this filing by reference
to Post-Effective Amendment No. 26 filed October 31,
2001.
(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, incorporated into this filing by reference
to Post-Effective Amendment No. 28 filed October 31,
2003.
(c) Dealer's Agreement (January 2001) incorporated into this
filing by reference to Post-Effective Amendment No. 27
filed November 18, 2002.
(d) Vision Mutual Fund Gateway Agreement (November 2000)
incorporated into this filing by reference to
Post-Effective Amendment No. 27 filed November 18, 2002.
(e) Registered Investment Advisers Agreement (January 2001)
incorporated into this filing by reference to
Post-Effective Amendment No. 27 filed November 18, 2002.
(f) Bank/Trust Agreement (January 2001) incorporated into
this filing by reference to Post-Effective Amendment No.
27 filed November 18, 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.
6
(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) Form of Amended and Restated Mutual Fund Custody and
Services Agreement (May 2002) between Mellon Bank, N.A.
and the Registrant incorporated into this filing by
reference to Post-Effective Amendment No. 27 filed
November 18, 2002.
(b) Form of Amendment No. 1 to Appendix D of the Amended and
Restated Mutual Fund Custody and Services Agreement
(September 2003) between Mellon Bank, N.A. and the
Registrant is filed electronically herewith as Exhibit
No. EX-99.9(b).
(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) Plans under Rule 12b-1 for Class A, Class B and C Shares
(April 19, 2001) incorporated into this filing by
reference to Post-Effective Amendment No. 26 filed
October 31, 2001.
(b) Plan under Rule 18f (May 2003) incorporated into this
filing by reference to Post-Effective Amendment No. 28
filed October 31, 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;
(a) 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) To be filed by amendment.
(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;
7
(a) Executed Shareholder Services Agreement (April 19, 2001)
between Delaware Service Company, Inc. and the
Registrant incorporated into this filing by reference to
Post-Effective Amendment No. 26 filed October 31, 2001.
(i) Executed Schedule B (May 15, 2003) to the
Shareholder Services Agreement incorporated into
this filing by reference to Post-Effective
Amendment No. 28 filed October 31, 2003.
(ii) Executed Amendment Letter (August 23, 2002) to the
Shareholder Services Agreement incorporated into
this filing by reference to Post-Effective
Amendment No. 28 filed October 31, 2003.
(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. 18
filed August 28, 1997.
(i) Executed Amendment No. 27 (October 1, 2003) to
Schedule A of Delaware Family of Funds Fund
Accounting Agreement incorporated into this filing
by reference to Post-Effective Amendment No. 28
filed October 31, 2003.
(ii) Executed Schedule B (May 16, 2002) to the Delaware
Group of Funds Fund Accounting Agreement
incorporated into this filing by reference to
Post-Effective Amendment No. 27 filed November 18,
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) To be filed by amendment.
(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 incorporated into this filing by
reference to Post-Effective Amendment No. 28 filed
October 31, 2003.
8
(17) Any additional exhibits which the Registrant may wish to file.
(a) Code of Ethics for Delaware Investments Family of Funds
incorporated into this filing by reference to
Post-Effective Amendment No. 27 filed November 18, 2002.
(b) Code of Ethics for Delaware Management Company, a series
of Delaware Management Business Trust, and Delaware
Distributors, L.P., incorporated into this filing by
reference to Post-Effective Amendment No. 28 filed
October 31, 2003.
(c) Code of Ethics for Lincoln Financial Distributors, Inc.
incorporated into this filing by reference to
Post-Effective Amendment No. 26 filed October 31, 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.
9
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 22nd day of
October, 2004.
VOYAGEUR MUTUAL FUNDS
By: /s/ 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
- ------------------------- ------------------------------------------ ----------------
/s/ Jude T. Driscoll Chairman/President/Chief Executive Officer October 22, 2004
- ------------------------ (Principal Executive Officer)
Jude T. Driscoll
Walter P. Babich * Trustee October 22, 2004
- ------------------------
Walter P. Babich
John H. Durham * Trustee October 22, 2004
- ------------------------
John H. Durham
Anthony D. Knerr * Trustee October 22, 2004
- ------------------------
Anthony D. Knerr
Ann R. Leven * Trustee October 22, 2004
- ------------------------
Ann R. Leven
Thomas F. Madison * Trustee October 22, 2004
- ------------------------
Thomas F. Madison
Janet L. Yeomans * Trustee October 22, 2004
- ------------------------
Janet L. Yeomans
Joseph H. Hastings * Executive Vice President/ October 22, 2004
- ------------------------ Chief Financial Officer
Joseph H. Hastings (Principal Accounting Officer)
* By: /s/ Jude T. Driscoll
---------------------
Jude T. Driscoll
as Attorney-in-Fact for
each of the persons indicated
10
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
EX-99.2(a) Amended and Restated By-Laws (August 19, 2004)
EX-99.9(b) Form of Amendment No. 1 to Appendix D of the Amended and
Restated Mutual Fund Custody and Services Agreement (September
2003) between Mellon Bank, N.A. and the Registrant
11