File No. 333-119924
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As filed December 22, 2004
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] Pre-Effective Amendment No. 1
[ ] 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.
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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.
2
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.
3
PART A
Delaware Investments (sm)
A member of Lincoln Financial Group (R)
PROXY MATERIALS
DELAWARE TAX-FREE ARIZONA FUND
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
DELAWARE TAX-FREE FLORIDA FUND
Dear Shareholder:
I am writing to let you know that a meeting of shareholders of the Delaware
Investments mutual funds mentioned above (the "Funds") will be held on March 15,
2005. The purpose of the meeting is to vote on several important proposals that
affect the Funds and your investment in them. As a shareholder, you have the
opportunity to voice your opinion on the matters that affect your Funds. This
package contains information about the proposals and the materials to use when
voting by mail, telephone or through the Internet.
Please read the enclosed materials and cast your vote on the proxy card(s).
PLEASE VOTE YOUR SHARES PROMPTLY. YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
All of the proposals have been carefully reviewed by the respective Boards of
Trustees. The Trustees, most of whom are not affiliated with Delaware
Investments, are responsible for protecting your interests as a shareholder. The
Trustees believe these proposals are in the best interests of shareholders. They
recommend that you vote FOR each proposal.
The following Q&A is provided to assist you in understanding the proposals. Each
of the proposals is described in greater detail in the enclosed Proxy
Statement/Prospectus.
VOTING IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED. To cast your vote,
simply complete the proxy card(s) enclosed in this package. Be sure to sign the
card(s) before mailing it in the postage-paid envelope. You may also vote your
shares by touch-tone telephone or through the Internet. Simply call the
toll-free number or visit the web site indicated on your proxy card(s), enter
the control number found on the card(s), and follow the recorded or online
instructions.
If you have any questions before you vote, please call Georgeson Shareholder
Communications Inc., the Funds' proxy solicitor, at 1-800-___-____. They will
be glad to help you get your vote in quickly. You may also receive a telephone
call from Geogeson Shareholder Communications Inc. reminding you to vote your
shares. Thank you for your participation in this important initiative.
Sincerely,
/s/ Jude T. Driscoll
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Jude T. Driscoll
Chairman and Chief Executive Officer
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND
AND VOTE ON THE PROPOSALS
Below is a brief overview of the proposals to be voted upon. Your vote is
important. Please read the full text of the enclosed Proxy Statement/Prospectus,
which you should retain for future reference. If you need another copy of the
Proxy Statement/Prospectus, please call Delaware Investments at 1-800-523-1918.
We appreciate you placing your trust in Delaware Investments and we look forward
to helping you achieve your financial goals.
WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
You may be asked to vote on the following proposals:
1. To Approve a Plan of Reorganization
2. To Elect a Board of Trustees
3. To Approve a Plan of Redomestication--applies only to the Delaware
Tax-Free California Insured Fund and the Delaware Tax-Free Florida
Fund.
4. To Approve the use of a "Manager of Managers" structure
PROPOSAL 1: TO APPROVE A PLAN OF REORGANIZATION
WHAT REORGANIZATIONS ARE THE BOARDS PROPOSING?
Shareholders of each of the Funds that are listed below as an Acquired Fund are
being asked to consider and approve a reorganization ("Reorganization") that
will have the effect of reorganizing the Acquired Funds into corresponding
"Acquiring Funds" as follows:
SUB-PROPOSAL
NO. ACQUIRED FUND CORRESPONDS TO: ACQUIRING FUND
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1(a) The Delaware Tax-Free Arizona Fund, ---------------- Delaware Tax-Free Arizona Insured Fund,
a series of Voyageur Mutual Funds a series of Voyageur Insured Funds
1(b) The Delaware Tax-Free California ---------------- Delaware Tax-Free California Fund, a
Insured Fund, a series of Voyageur series of Voyageur Mutual Funds
Investment Trust
1(c) The Delaware Tax-Free Florida Fund, ---------------- Delaware Tax-Free Florida Insured Fund,
a series of Voyageur Investment Trust a series of Voyageur Investment Trust
HOW WILL THE REORGANIZATIONS BENEFIT SHAREHOLDERS?
The respective Boards considered a number of factors before approving the
Reorganizations. After considering these factors, the Boards concluded that
shareholders will potentially benefit from the Reorganizations in the following
ways:
o Shareholders would potentially benefit from certain savings in annual
operating expenses due to the larger size of the combined Funds (There
can be no assurance, however, that such savings will be realized.)
o Shareholders would benefit from certain fee waivers and expense
limitations implemented by Delaware Investments in connection with the
Reorganizations.
o The Reorganizations potentially would enhance asset growth for the
benefit of shareholders of both the Acquired Funds and the Acquiring
Funds.
o The investment strategies and policies of the Acquired Funds are
substantially identical to the investment strategies and policies of
the corresponding Acquiring Funds.
o 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. (Of course, past
performance is no guarantee of future results.)
HOW WILL THE REORGANIZATIONS WORK?
The Acquiring Fund will acquire 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. The Acquiring Fund will then distribute its shares on a pro rata
basis to the shareholders of the corresponding Acquired Fund. At the time of the
Reorganizations, any shares you own of an Acquired Fund will be cancelled and
you will receive new shares in the same class of the corresponding Acquiring
Fund that will have a value equal to the value of your shares in the Acquired
Fund. More detailed information about the transfer of assets and liabilities by
the Acquired Fund and the issuance of shares by the Acquiring Fund can be found
in the Proxy Statement/Prospectus.
WHAT IS THE ANTICIPATED TIMETABLE FOR THE REORGANIZATIONS?
The shareholder meeting is scheduled for March 15, 2005. It is currently
anticipated that the Reorganizations, if approved by shareholders, will take
place on or about April 8, 2005. Whether or not you plan to attend the Meeting,
please vote your shares by mail, 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.
PROPOSAL 2: TO ELECT A BOARD OF TRUSTEES
WHAT ROLE DOES THE BOARD PLAY?
The Trustees serve as the Funds' shareholders' representatives. Members of each
Board are fiduciaries and have an obligation to serve the best interests of
shareholders, including approving policy changes. In addition, the Trustees
review each Fund's performance, oversee Fund activities and review contractual
arrangements with companies that provide services to the Fund.
WHAT IS THE SIZE OF EACH BOARD AND WHAT DOES IT DO?
The Board of each Fund currently consists of six individuals. The Board's
purpose is to ensure that the shareholders' best interests are protected in the
operation of each Fund.
WHAT IS THE AFFILIATION OF THE BOARD AND DELAWARE INVESTMENTS?
Currently, there six "non-interested" Trustees and no "interested" Trustees
serving on the Boards of Voyageur Mutual Funds and Voyageur Investment Trust
(the "Trusts"). Trustees are determined to be "interested" by virtue of, among
other things, their affiliation with various entities under common control with
Delaware Investments. There are nine nominees, including one nominee who would
be deemed to be an "interested" Trustee. Of the remaining eight nominees, four
persons currently serve as "non-interested" Trustees on the Boards of the
Trusts.
ARE BOARD MEMBERS PAID?
"Interested" Trustees are compensated by Delaware Investments and do not receive
any compensation from the Funds. Non-interested Trustees have no affiliation
with Delaware Investments and are compensated by each individual Fund. Each
non-interested Trustee receives a fee for his or her service on the Board and,
if applicable, for his or her service on a committee of the Board. You can find
the compensation table, which details these fees, in the Proxy
Statement/Prospectus.
PROPOSAL 3: TO APPROVE A PLAN OF REDOMESTICATION (APPLIES ONLY TO THE DELAWARE
TAX-FREE CALIFORNIA INSURED FUND AND THE DELAWARE TAX-FREE FLORIDA FUND)
WHAT REDOMESTICATION IS THE BOARD PROPOSING?
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 as the "Redomestication," and
more information can be found in the Proxy Statement/Prospectus.
WHY IS THE BOARD OF VOYAGEUR INVESTMENT TRUST RECOMMENDING APPROVAL OF THE
REDOMESTICATION?
With the exception of Voyageur Investment Trust, all of the registered, open-end
management investment companies within the Delaware Investments Family of Funds
are Delaware statutory trusts. The lack of uniformity among the laws applicable
to the mutual funds within the Delaware Investments Family of Funds poses
administrative complications and costs that can be eliminated through the
Redomestication.
In addition, Delaware statutory trusts provide somewhat greater flexibility 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.
Accordingly, the Board of Voyageur Investment Trust believes that it is in the
best interests of the shareholders to approve the Redomestication.
HOW WILL THE REDOMESTICATION CHANGE A SHAREHOLDER'S INVESTMENT IN A SERIES OF
VOYAGEUR INVESTMENT TRUST?
The series of Voyageur Investment Trust and the corresponding series of the
newly formed Delaware statutory trust have the same investment goals, policies
and restrictions. For all practical purposes, a shareholder's investment in
Voyageur Investment Trust would not change as a result of the Redomestication.
HOW DOES PROPOSAL 1 AFFECT THIS PROPOSAL 3?
In the event that shareholders of the California Insured Fund approve the
Reorganization into the California Fund (Proposal 1) and that Reorganization is
completed, then the California Insured Fund will not participate in the
Redomestication (Proposal 3). 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 the Reorganization
into Florida Insured Fund (Proposal 1), then the Florida Fund will be
reorganized into the Florida Insured Fund, another series of Voyageur Investment
Trust. Whether the Florida Insured Fund is then redomesticated will depend on
whether shareholders of Voyageur Investment Trust approve the Redomestication
(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.
It is important that shareholders of the California Insured Fund and the Florida
Fund should vote on each Proposal.
PROPOSAL 4: TO APPROVE THE USE OF THE "MANAGER OF MANAGERS" STRUCTURE
WHAT IS THE "MANAGER OF MANAGERS" STRUCTURE?
The proposed "Manager of Managers" structure would permit Delaware Management
Company ("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 (as is
currently required).
WHY AM I BEING ASKED TO VOTE ON THE "MANAGER OF MANAGERS" STRUCTURE AT THIS
TIME?
The employment of the "Manager of Managers" Structure is contingent upon either
(i) 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, a Fund must obtain
shareholder approval before it may implement the Manager of Managers Structure.
Because a meeting of shareholders is needed to elect Trustees and to vote on
other matters, the Boards determined to seek shareholder approval of the
"Manager of Managers" structure at the shareholders' meeting to avoid additional
meeting and proxy solicitation costs in the future.
IF IT IS IMPLEMENTED, HOW WILL SHAREHOLDERS BENEFIT FROM THE "MANAGER OF
MANAGERS" STRUCTURE?
The "Manager of Managers" structure 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. In
particular, 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.
COMMON QUESTIONS AND GENERAL INFORMATION
HAVE THE BOARDS OF TRUSTEES APPROVED EACH PROPOSAL?
Yes. The Boards of Trustees have unanimously approved all of the proposals and
recommend that you vote to approve them.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled be entitled to one vote for each full share
and a fractional vote for each fractional share of each Fund that you own on the
record date. The record date is December 10, 2004.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy card(s)
and mailing it in the enclosed postage-paid envelope. You may also vote by
touch-tone telephone by calling the toll-free number printed on your proxy
card(s) and following the recorded instructions. In addition, you may also vote
through the Internet by visiting www.delawareinvestments.com and following the
on-line instructions. If you need any assistance, or have any questions
regarding the proposals or how to vote your shares, please call Georgeson
Shareholder Communications Inc., the Funds' proxy solicitor, at 1-800-___-____.
HOW DO I SIGN THE PROXY CARD?
Individual Accounts: Shareholders should sign exactly as their names appear
on the account registration shown on the card.
Joint Accounts: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the
registration.
All Other Accounts: The person signing must indicate his or her capacity.
For example, if Ms. Ann B. Collins serves as a trustee
for a trust account or other type of entity, she
should sign, "Ann B. Collins, Trustee."
HOW CAN I FIND MORE INFORMATION ON THE PROPOSALS?
You should read the Proxy Statement/Prospectus that provides details regarding
the Proposals. If you have any questions, please call Georgeson Shareholder
Communications Inc., the Funds' proxy solicitor, at 1-800-___-____.
WHOM SHOULD I CALL FOR ADDITIONAL INFORMATION ABOUT THIS PROXY STATEMENT?
Please call Georgeson Shareholder Communications Inc., the Funds' proxy
solicitor, at 1-800-___-____
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, Pennsylvania 19103
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 (the "Arizona Fund"), one series
of Voyageur Mutual Funds, 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, has been called by the Boards
of Trustees of Voyageur Mutual Funds and Voyageur Investment Trust, 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 Arizona Fund, the California Insured Fund and the Florida Fund
are each referred to as an "Acquired Fund." 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 the 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 each Acquiring Fund to the
shareholders of the corresponding Acquired Fund; and (iii) the
liquidation and dissolution of the Acquired Fund.
1
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:
Thomas L. Bennett Ann R. Leven
Jude T. Driscoll Thomas F. Madison
John A. Fry Janet L. Yeomans
Anthony D. Knerr J. Richard Zecher
Lucinda S. Landreth
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 each Acquired Fund as of the close of
business on December 10, 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,
/s/ Richelle S. Maestro
Richelle S. Maestro
Secretary
December 23, 2004
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TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF FURTHER
MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
PREFER, YOU MAY INSTEAD VOTE BY TELEPHONE OR THE INTERNET. YOU MAY REVOKE YOUR
PROXY AT ANY TIME AT OR BEFORE THE MEETING OR VOTE IN PERSON IF YOU ATTEND THE
MEETING, AS PROVIDED IN THE ATTACHED PROXY STATEMENT/PROSPECTUS.
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PROXY STATEMENT/PROSPECTUS
TABLE OF CONTENTS
PAGE
WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON?.....................................................................2
PROPOSAL ONE: TO APPROVE A PLAN OF REORGANIZATION ...............................................................3
What is the purpose of Proposal 1?.......................................................................4
How do the investment objectives, strategies and policies of the
Acquired Funds and the Acquiring Funds compare?..........................................................5
What are the principal risks associated with investments in the Funds?...................................6
What are the general tax consequences of a Transaction...................................................6
Who Manages the Funds?...................................................................................6
What are the fees and expenses of each fund and what might they
be after the Transactions?...............................................................................8
How do the performance records of the Funds compare?....................................................16
Where can I find more financial information about the Funds?............................................18
What are the key features of the Funds?.................................................................18
REASONS FOR THE TRANSACTIONS.....................................................................................20
INFORMATION ABOUT THE TRANSACTIONS...............................................................................23
How will the Transactions be carried out? ..............................................................23
Who will pay the expenses of the Transactions? .........................................................24
What are the tax consequences of the Transactions? .....................................................24
What should I know about shares of the Acquiring Funds? ................................................25
What are the capitalizations of the Funds and what might the
capitalizations be after the Transaction? ..............................................................26
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RISKS..........................................................27
Are there any significant differences between the investment
objectives of the Acquired Funds and their corresponding
Acquiring Funds? .......................................................................................27
Are there any significant differences between the investment
strategies and policies of the Acquired Funds and their
Correspondence Acquiring Funds? ........................................................................28
How do the fundamental investment restrictions of the
Funds differ? ..........................................................................................30
What are the risk factors associated with investments in
the Funds? .............................................................................................30
What vote is necessary to approve the Plan? ............................................................32
MORE INFORMATION ABOUT THE FUNDS.................................................................................32
PROPOSAL 2: TO ELECT A BOARD OF TRUSTEES........................................................................33
Who are the Nominees for Trustee? ......................................................................33
Board, Shareholder and Committee Meetings...............................................................36
i
Board Compensation......................................................................................38
Officers................................................................................................39
Required Vote...........................................................................................39
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) .................................................................39
Why am I being asked to vote on the Redomestication? ...................................................40
What will the Redomestication mean for the series of Voyageur Investment Trust and
for you? ...............................................................................................40
Why are the Trustees recommending approval of the
Agreement and the Redomestication? .....................................................................40
What are the advantages of a Delaware statutory trust? .................................................41
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? .............................................................................................41
What are the procedures and consequences of the
Redomestication? .......................................................................................43
What effect will the Redomestication have on the current
investment advisory agreement? .........................................................................44
What effect will the Redomestication have on the shareholder
servicing agreements and distribution plans? ...........................................................44
What is the effect of shareholder approval of the Agreement? ...........................................44
What is the capitalization and structure of the DE Trust? ..............................................45
Are there any tax consequences for shareholders? .......................................................45
What if I choose to sell my shares at any time? ........................................................46
What is the effect of my voting "For" the Agreement? ...................................................46
How does Proposal 1 affect this Proposal? ..............................................................46
What is necessary to approve the Agreement? ............................................................46
PROPOSAL 4: TO APPROVE A MANAGER OF MANAGERS STRUCTURE..........................................................47
Why am I being asked vote on this Proposal?.............................................................47
How does this Proposal affect my right to vote on
Subadvisory Agreements?.................................................................................49
What are the conditions of the Order and the Rule?......................................................49
What are the benefits of the Fund?......................................................................51
What did the Board consider in reviewing this Proposal?.................................................52
How does Proposal 1 affect this Proposal 4?.............................................................53
VOTING INFORMATION...............................................................................................53
PRINCIPAL HOLDERS OF SHARES......................................................................................56
INDEPENDENT AUDITORS AND AUDIT COMMITTEE REPORT..................................................................56
COMMUNICATIONS TO THE BOARDS OF TRUSTEES.........................................................................58
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EXHIBITS
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 HOLDERS OF SHARES AS OF DECEMBER 10, 2004
iii
PROXY STATEMENT/PROSPECTUS
DATED DECEMBER 23, 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 Voyageur Mutual Funds and
Voyageur Investment Trust, respectively (each, a "Board" and, collectively, the
"Boards"), 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;
(3) To approve an Agreement and Plan of Redomestication (applies to the
California Insured Fund and the 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 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
January 3, 2005.
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 23, 2004 (the "Statement of Additional
Information"), relating to this Proxy Statement/Prospectus contains more
information about the Acquiring Funds, the Acquired Funds (each, a "Fund" and,
collectively, the "Funds") and the proposed transactions, and 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 December 3, 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 described in this Proxy
Statement/Prospectus affect all Acquired Funds. Specifically, not all
shareholders will be voting on each of Sub-Proposals 1(a), 1(b) and 1(c), or 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
- ------------------------------------------------------------ ---------------------------------------------------------
1. To approve a Plan of Reorganization that provides (a) Arizona Fund - Plan of Reorganization between
for: (i) the acquisition by an Acquiring Fund of Voyageur Mutual Funds, on behalf of the Arizona Fund,
substantially all of the assets of the corresponding and Voyageur Insured Funds, on behalf of the Delaware
Acquired Fund, in exchange for shares of the Acquiring Tax-Free Arizona Insured Fund
Fund and the assumption by the Acquiring Fund of the
liabilities of the corresponding Acquired Fund; (ii) the (b) California Insured Fund - Plan of Reorganization
pro rata distribution of shares of the Acquiring Fund to between Voyageur Investment Trust, on behalf of
the shareholders of the corresponding Acquired Fund; and California Insured Fund, and Voyageur Mutual Funds, on
(iii) the liquidation and dissolution of the Acquired Fund. behalf of Delaware Tax-Free California Fund
(c) Florida Fund - Plan of Reorganization by Voyageur
Investment Trust, on behalf of the Florida Fund and
Delaware Tax-Free Florida Insured Fund
- ------------------------------------------------------------ ---------------------------------------------------------
2. To Elect Trustees Arizona Fund (voting together with all of the other
series of Voyageur Mutual Funds)
California Insured and Florida Funds (voting together
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
Trust from a Massachusetts business trust to a newly together with all of the other series of Voyageur
formed Delaware statutory trust. Investment 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 ------------------ Delaware Tax-Free Arizona Insured
Voyageur Mutual Funds Fund, a series of Voyageur Insured
Funds
1(b) The California Insured Fund, a ------------------ Delaware Tax-Free California Fund,
series of Voyageur Investment a series of Voyageur Mutual Funds
Trust
1(c) The Florida Fund, a series of ------------------ Delaware Tax-Free Florida Insured
Voyageur Investment Trust Fund, a series 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 Boards of Voyageur Mutual Funds and Voyageur Investment Trust
(individually a "Trust" and, together, the "Trusts") approved the Plans for the
respective Acquired Funds and recommend 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."
The Transactions, 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 Transactions,"
the Boards of the Trusts have concluded that the Transactions are in the best
interests of the respective shareholders of the Acquired Funds. The Boards 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 Companies 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 non-fundamental and
may be changed without prior shareholder approval.
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 has adopted a
fundamental investment policy to seek 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. As described below, a Fund may not change
its fundamental investment policies and restrictions without prior shareholder
approval. 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)--the insurance 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. None of
the Arizona Fund, the Florida Fund (each of which is an Acquired Fund) or 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. Although not required
to do so, each Non-Insured Fund has generally invested a significant portion of
its assets 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" below.
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 strength of issuers of the portfolio securities held by a Fund. The
risks associated with an investment in an Acquired Fund are substantially
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 is 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 may 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 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.
For further information about the risks of investing in the Funds, see
"Comparison of Investment Objectives, Policies and Risks" below.
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 the applicable Trust. The Boards and senior
management select officers who are responsible for the day-to-day operations of
the Funds.
6
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.
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 $93.1 billion in assets in
various institutional or separately managed, investment company and insurance
accounts.
THE FLORIDA FUNDS. Patrick P. Coyne, Joseph R. Baxter and Robert F.
Collins have primary responsibility for making the day-to-day investment
decisions for the Florida Fund and the Florida Insured Fund.
Mr. Coyne assumed joint responsibility for the Florida Fund and the
Florida Insured Fund on May 1, 1997. Mr. Baxter and Mr. Collins assumed
responsibility for the Funds on May 22, 2003 and June 25, 2004, respectively.
Patrick P. Coyne, Executive Vice President/Chief Investment Officer -
Head of Equity, 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. Mr. Coyne became the Chief
Investment Officer for equity investments in 2004, but continues to manage the
Florida Fund and the Florida Insured Fund. 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.
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.
Robert F. Collins, Vice President/Senior Portfolio Manager, is a
graduate of Ursinus College where he earned his Bachelor of Arts degree in
economics. Prior to joining Delaware Investments in 2004, he co-managed the
municipal portfolio management group within PNC Advisors, overseeing the
tax-exempt investments of high-net worth and institutional accounts. Previously,
Mr. Collins headed the municipal fixed income team at Wilmington Trust Company,
managing funds and high-net worth accounts. Mr. Collins is a CFA Charterholder
and a former president of the Financial Analysts of Wilmington.
THE ARIZONA AND CALIFORNIA FUNDS. Andrew M. McCullagh, Jr., Vice
President/Senior Portfolio Manager, Mr. Baxter and Mr. Collins, have 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.
Mr. McCullagh has been managing these Funds since their inception. Mr, Baxter
and Mr. Collins assumed responsibility for these Funds on April 22, 2004 and
June 25, 2004, respectively. 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 1998, he served as a Senior
Vice President and Senior Portfolio Manager of Voyageur Asset Management. Mr.
McCullagh currently has over 31 years' experience in municipal bond trading,
underwriting and portfolio management.
7
WHAT ARE THE FEES AND EXPENSES OF EACH FUND AND WHAT MIGHT THEY BE AFTER THE
TRANSACTIONS?
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 contracted to waive that
portion, if any, of the annual management fees payable by each Fund and to pay
certain expenses of each Fund 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 levels shown in the Fee Tables below.
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% 0.89%
Fee Waiver/Expense Reimbursement(2)........ (0.24%) (0.12%) (0.11%)
Net Expenses............................... 0.75% 0.78% 0.78%
==== ==== ====
8
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)
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%) (0.12%) (0.11%)
Net Expenses............................... 1.50% 1.53% 1.53%
==== ==== ====
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%) (0.12%) (0.11%)
Net Expenses................................... 1.50% 1.53% 1.53%
==== ==== ====
(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 had contracted to waive its fee and/or pay expenses of the Arizona Fund
and the Arizona Insured Fund through March 31, 2006, to the extent necessary
to limit the total operating expenses (excluding any 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 0.53% of average daily net assets of the Arizona Insured Fund.
(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
fourth and fifth years, 1.00% during the sixth year and 0% thereafter.
(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 $526 $713 $915 $1,497
Pro forma Arizona Insured Fund (after the
Transaction) $526 $711 $911 $1,487
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- --------------- ------ ------- ------- --------
Arizona Fund $553 $750 $1,071 $1,833
Arizona Insured Fund $556 $734 $1,036 $1,744
Pro forma Arizona Insured Fund (after the
Transaction) $556 $732 $1,031 $1,734
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Arizona Fund $253 $525 $921 $2,032
Arizona Insured Fund $256 $509 $886 $1,944
Pro forma Arizona Insured Fund (after the
Transaction) $256 $507 $881 $1,934
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 $156 $509 $886 $1,744
Pro forma Arizona Insured Fund (after the
Transaction) $156 $507 $881 $1,734
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Arizona Fund $153 $525 $921 $2,032
Arizona Insured Fund $156 $509 $886 $1,944
Pro forma Arizona Insured Fund (after the
Transaction) $156 $507 $881 $1,934
(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 the contractual fee waivers and expense limits for the
one-year period and the total operating expenses without the fee waivers and
expense limits for years two through ten.
(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.
10
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.
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)........ (0.04%) (0.08%) (0.07%)
Net Expenses............................... 0.87% 0.88% 0.88%
==== ==== ====
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)........ (0.04%) (0.08%) (0.07%)
Net Expenses............................... 1.62% 1.63% 1.63%
==== ==== ====
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)............ (0.04%) (0.08%) (0.07%)
Net Expenses................................... 1.62% 1.63% 1.63%
==== ==== ====
(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 had contracted to waive its fee and/or pay expenses of the California
Insured Fund and the California Fund through March 31, 2006, to the extent
necessary to limit the total operating expenses (excluding any 12b-1 fees,
taxes, interest, brokerage fees, extraordinary expenses and certain
insurance costs) from exceeding 0.62% of average daily net assets of the
California Insured Fund and 0.63% of average daily net assets of the
California Fund.
(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
fourth and fifth years, 1.00% during the sixth year and 0% thereafter.
(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
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:
12
Class A Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $535 $723 $927 $1,516
California Fund $536 $734 $950 $1,568
Pro forma California Fund (after the Transaction) $536 $732 $945 $1,558
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- --------------- ------ ------- ------- --------
California Insured Fund $565 $745 $1,048 $1,762
California Fund $566 $756 $1,071 $1,814
Pro forma California Fund (after the Transaction) $566 $754 $1,066 $1,804
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $265 $520 $898 $1,962
California Fund $266 $531 $921 $2,013
Pro forma California Fund (after the Transaction) $266 $529 $916 $2,003
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 $165 $520 $898 $1,762
California Fund $166 $531 $921 $1,814
Pro forma California Fund (after the Transaction) $166 $529 $916 $1,804
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
California Insured Fund $165 $520 $898 $1,962
California Fund $166 $531 $921 $2,013
Pro forma California Fund (after the Transaction) $166 $529 $916 $2,003
(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 the contractual fee waivers and expense limits for the
one-year period and the total operating expenses without the fee waivers and
expense limits for years two through ten.
(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 California 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 California Funds
are comprised of expenses attributable to each California 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)........ (0.09%) (0.07%) (0.07%)
Net Expenses............................... 0.90% 0.87% 0.87%
==== ==== ====
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)........ (0.09%) (0.07%) (0.07%)
Net Expenses............................... 1.65% 1.62% 1.62%
==== ==== ====
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)............ (0.09%) (0.07%) (0.07%)
Net Expenses................................... 1.65% 1.62% 1.62%
==== ==== ====
(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 had contracted to waive its fee and/or pay expenses of the Florida Fund
and the Florida Insured Fund through March 31, 2006, to the extent necessary
to limit the total operating expenses (excluding any 12b-1 fees, taxes,
interest, brokerage fees, extraordinary expenses and certain insurance
costs) from exceeding 0.65% of average daily net assets of the Florida Fund
and 0.62% of average daily net assets of the Florida Insured Fund.
(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
fourth and fifth years, 1.00% during the sixth year and 0% thereafter.
(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 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 $568 $763 $964 $1,601
Florida Insured Fund $535 $729 $940 $1,547
Pro forma Florida Insured Fund (after the
Transaction) $535 $729 $940 $1,547
15
Class B Shares(2) 1 Year 3 Years 5 Years 10 Years
- ----------------- ------ ------- ------- --------
Florida Fund $568 $764 $1,085 $1,846
Florida Insured Fund $565 $751 $1,061 $1,793
Pro forma Florida Insured Fund (after the
Transaction) $565 $751 $1,061 $1,793
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $268 $539 $935 $2,044
Florida Insured Fund $265 $526 $911 $1,992
Pro forma Florida Insured Fund (after the
Transaction) $265 $526 $911 $1,992
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 $168 $539 $935 $1,846
Florida Insured Fund $165 $526 $911 $1,793
Pro forma Florida Insured Fund (after the
Transaction) $165 $526 $911 $1,793
Class C Shares 1 Year 3 Years 5 Years 10 Years
- -------------- ------ ------- ------- --------
Florida Fund $168 $539 $935 $2,044
Florida Insured Fund $165 $526 $911 $1,992
Pro forma Florida Insured Fund (after the
Transaction) $165 $526 $911 $1,992
(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 the contractual fee waivers and expense limits for the
one-year period and the total operating expenses without the fee waivers and
expense limits for years two through ten.
(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.
HOW DO THE PERFORMANCE RECORDS OF THE FUNDS COMPARE?
As described under the section "Reasons for the Transactions," the
Board of each Trust considered a number of factors when reviewing the Plans. The
performance history of the Funds, as of June 30, 2004, was among the factors
that the Boards considered. The performance history of the Funds (without sales
charges) as of that date is shown below:
16
CUMULATIVE RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------ ----------------------------- 10 YEARS OR
FUND 3 MONTH YTD 1 YEAR 3 YEARS 5 YEARS SINCE INCEPTION(1)
- ---- ------- --- ------ ------- ------- ------------------
Arizona Fund--Class A -2.54% -0.40% 0.30% 3.58% 3.85% 5.65%
Arizona Insured Fund--Class A -2.54% -0.86% 0.36% 4.81% 4.99% 5.83%
Arizona Fund--Class B -2.82% -0.78% -0.54% 2.77% 3.08% 4.55%
Arizona Insured Fund--Class B -2.72% -1.23% -0.39% 4.05% 4.22% 4.93%
Arizona Fund--Class C -2.81% -0.78% -0.54% 2.79% 3.06% 4.64%
Arizona Insured Fund--Class C -2.80% -1.32% -0.39% 4.07% 4.22% 5.02%
California Insured Fund - Class A -2.84% -0.87% -0.14% 4.93% 4.94% 5.85%
California Fund - Class A -2.60% -0.42% 0.48% 5.44% 5.09% 6.35%
California Insured Fund - Class B -2.93% -1.24% -0.79% 4.18% 4.18% 5.18%
California Fund - Class B -2.86% -0.79% -0.27% 4.63% 4.29% 5.75%
California Insured Fund - Class C -3.03% -1.25% -0.89% 4.16% 4.19% 4.67%
California Fund - Class C -2.86% -0.79% -0.36% 4.65% 4.30% 5.48%
Florida Fund - Class A -1.92% -0.39% 0.86% 5.48% 5.04% 6.13%
Florida Insured Fund - Class A -2.15% -0.51% 0.37% 5.01% 5.07% 6.03%
Florida Fund - Class B -2.09% -0.75% 0.11% 4.68% 4.28% 5.04%
Florida Insured Fund - Class B -2.33% -0.87% -0.29% 4.24% 4.31% 5.33%
Florida Fund - Class C -2.19% -0.85% 0.01% 4.68% 4.29% 5.14%
Florida Insured Fund - Class C -2.33% -0.79% -0.29% 4.21% 4.29% 4.10%
(1) The inception dates for each of the Funds are listed below:
Arizona Fund Arizona Insured Fund
- ------------ --------------------
Class A: 03/02/95 Class A: 04/01/91
Class B: 06/29/95 Class B:03/10/95
Class C: 05/13/95 Class C:05/26/94
California Insured Fund California Fund
- ----------------------- ---------------
Class A: 10/15/92 Class A:03/02/95
Class B: 03/02/94 Class B: 08/23/95
Class C: 04/12/95 Class C: 04/09/96
Florida Fund Florida Insured Fund
- ------------ ---------------------
Class A: 03/02/95 Class A: 01/01/92
Class B: 09/15/95 Class B:03/11/94
Class C: 04/22/95 Class C: 09/30/97
17
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.
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 management fees 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
------------------------------- ----------------------------------------------------
In connection with the Transactions, DMC has contracted to waive that
portion, if any, of the annual management fees payable by each Fund and to pay
certain expenses of each Fund 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 levels shown in the Fee Tables beginning on page 8.
18
Distribution Services. Pursuant to underwriting agreements relating to
each of the Funds, Delaware Distributors, L.P. ("DDLP"), 2005 Market Street,
Philadelphia, Pennsylvania 19103, serves as the national distributor for the
shares of the Funds. DDLP 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. DDLP is an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc. and an
affiliate of DMC.
Pursuant to a contractual arrangement with DDLP, 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 DDLP 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").
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 DDLP
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 DDLP. The Rule 12b-1 Plan expenses relating to Class B shares
and Class C shares are also used to pay DDLP 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 to 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 DDLP, 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 for the Trusts may reduce
these amounts at any time. All of the distribution expenses incurred by DDLP 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 Fund 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.
19
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 TRANSACTIONS
Based on the considerations described below, each Board, including each
of the trustees who are deemed to be independent trustees (each, an "Independent
Trustee" and, collectively, the "Independent Trustees") under the Investment
Company Act of 1940, as amended (the "1940 Act"), 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 for the Trusts held on August 18-19, 2004 and
September 23, 2004, DMC presented the Plans 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:
o The compatibility of each 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 size of the Acquired Funds as compared to the
corresponding Acquiring 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 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 of the Transactions and the extent
to which the Funds would bear such costs; and
20
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 Fund. 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 Fund. The Board considered the differences with respect
to the Funds' investments 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 held by the Insured Funds
and the corresponding Non-Insured Funds. 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).
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 had a slightly stronger year-to-date performance record; however,
the corresponding Acquiring Fund had 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 had 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 had a slightly
better year-to-date, 1-year and 3-year performance record; however, the
corresponding Acquiring Fund had a slightly stronger performance record for the
5-year period and had a yield advantage of 11 basis points over the Acquired
Fund. The Board noted the following comparisons of average annual returns for
the 5-year period as of June 30, 2004, for Class A shares (at net asset value)
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%
- -----------------------------------------------------------------------------
21
Considering all of the relevant performance data, the Boards determined
that, although the differences were not necessarily significant in each case,
each Acquiring Fund offered 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 had 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 had
attracted net assets at a sufficient rate 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 than 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 than 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. The Board concluded that, in so doing, the Transaction
potentially would reduce marketing expenses and enhance asset growth for the
benefit of shareholders of both Funds.
In deciding whether to recommend approval of the Transactions to
shareholders, the Boards also 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 were lower than the total expenses for the
Arizona Insured Fund and the Florida Insured Fund, respectively. 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 historically
low 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 management fees and to pay certain 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 (exclusive of 12b-1 fees,
taxes, interest, brokerage fees, extraordinary expenses and certain insurance
costs) to the levels shown in the Fee Tables beginning at page 8.
22
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 would 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 purchasing them in the open market. Thus, the Board
concluded that the shareholders would benefit from lower expenses as a result of
the proposed Transactions.
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 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 limited to $15,000 or less and DMC will bear the balance of Florida
Fund's one-third portion of expenses that exceeds $15,000.
The Boards of the Trusts approved the Plans, concluding that the
Transactions are in the best interests of the shareholders of their respective
acquired Funds and that no dilution of value would result to the shareholders of
any Acquired Fund from the Transaction. The Boards 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.
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
Plan, the Board of the respective Trust 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 to this
Proxy Statement/Prospectus and are incorporated herein by reference.
23
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 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 the 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 an Acquired Fund and the
corresponding Acquiring Fund 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. In addition, the Board of an
Acquired Fund or the corresponding Acquiring Fund may terminate and abandon the
Transaction if certain conditions required under the Plan have not been
satisfied.
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; provided, however, that the expenses borne by
the Florida Fund with respect to its Transaction will be limited to $15,000 or
less. DMC will bear the balance of Florida Fund's one-third portion of expenses
that exceeds $15,000. The Funds will bear these transaction costs without regard
to any of the expense limits noted above.
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.
24
After the Transaction, the capital loss carryovers (together with any
current year loss and net unrealized depreciation in the value of the assets) of
the Funds will be subject to an annual limitation for federal income tax
purposes. Capital losses can generally be carried forward to each of the eight
(8) years succeeding the loss year to offset future capital gains. This
limitation may result in a portion of the capital loss carryovers of a Fund,
which might otherwise have been utilized to offset future capital gains, to
expire unutilized. At August 31, 2004, the Arizona Fund had $1,372,365 of tax
basis capital loss carryovers that expire as follows: $178,280 (2008),
$1,115,326 (2009), and $78,759 (2012), plus a post-October loss of $1,195,254.
At August 31, 2004, the Florida Fund had $695,728 of tax basis capital loss
carryovers that expire as follows: $52,610 (2008), and $643,118 (2009), and no
post-October loss. At August 31, 2004, the California Insured Fund had neither
tax basis capital loss carryovers nor a post-October loss. Post-October losses
represent losses realized on investment transactions from November 1, 2003,
through August 31, 2004 that, in accordance with federal income tax regulations,
the Acquired Funds have elected to defer and treat as having arisen in the
following fiscal year. The redomestication of Voyageur Investment Trust from a
Massachusetts business trust to a newly created Delaware statutory trust will
not result in any additional limitations of the availability of any capital loss
carryovers of the Florida Fund or the California Insured Fund.
You should consult your tax adviser regarding the effect, if any, of a
Transaction in light of your individual circumstances. You should also consult
your tax adviser about the state and local tax consequences, if any, of a
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 outstanding 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. For example, 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. If this
happens, holders of the remaining shares voting will not be able to elect any
trustees.
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 or by the chairperson
of the Board or by the president.
25
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.
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.
PRO FORMA ARIZONA INSURED FUND
ARIZONA ADJUSTMENTS TO AFTER TRANSACTION
ARIZONA FUND INSURED FUND CAPITALIZATION(1) (ESTIMATED)
------------ ------------ ----------------- -----------
Net assets (millions) $30,871,677 $142,441,672 ($38,934) $173,274,415
Total shares outstanding 2,998,285 12,481,893 15,186,505
Class A net assets (millions) $20,249,266 $122,436,469 ($32,054) $142,653,681
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) $7,456,662 $13,354,490 ($4,676) $20,806,476
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 ($2,204) $9,814,258
Class C shares outstanding 306,700 581,711 858,680
Class C net asset value per share $10.32 $11.43 $11.43
PRO FORMA CALIFORNIA FUND
CALIFORNIA ADJUSTMENTS TO AFTER TRANSACTION
INSURED FUND CALIFORNIA FUND CAPITALIZATION(1) (ESTIMATED)
------------ --------------- ----------------- -----------
Net assets (millions) $33,009,069 $44,921,594 ($40,400) $77,890,263
Total shares outstanding 2,999,315 4,037,071 7,005,183
Class A net assets (millions) $24,748,327 $24,797,519 ($25,686) $49,520,160
Class A shares outstanding 2,248,556 2,231,830 4,459,402
Class A net asset value per share $11.01 $11.11 $11.10
Class B net assets (millions) $6,894,516 $14,529,884 ($11,106) $21,412,894
Class B shares outstanding 626,275 1,302,406 1,920,194
Class B net asset value per share $11.01 $11.16 $11.15
Class C net assets (millions) $1,366,226 $5,594,191 ($3,608) $6,956,809
Class C shares outstanding 124,484 502,835 625,587
Class C net asset value per share $10.98 $11.13 $11.12
26
PRO FORMA FLORIDA INSURED FUND
FLORIDA ADJUSTMENTS TO AFTER TRANSACTION
FLORIDA FUND INSURED FUND CAPITALIZATION(1) (ESTIMATED)
------------ ------------ ----------------- -----------
Net assets (millions) $15,738,027 $93,680,889 ($33,440) $109,385,476
Total shares outstanding 1,425,641 8,324,003 9,722,472
Class A net assets (millions) $9,824,062 $87,590,413 ($29,772) $97,384,703
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 ($2,675) $8,756,532
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 ($993) $3,244,241
Class C shares outstanding 195,185 96,632 288,204
Class C net asset value per share $11.05 $11.26 $11.26
(1) The adjustments reflect the costs of the Transaction incurred by each Fund.
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.
27
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 present at such meeting of shareholders at which the
holders of more than 50% of the outstanding shares are present or represented by
proxy at the Meeting ("Majority Vote").
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 its 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 indicated above, each Non-Insured Fund,
although not required to do so, has generally invested a significant portion of
its assets 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. The Insured Funds may
not invest in non-investment grade municipal securities, commonly referred to as
high-yield securities. 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 Aa by Moody's
since the Insured Fund initially purchased the securities.
28
The Non-Insured Funds do not have such limitations with respect to
insured municipal securities; 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.
As a result of the Transaction, shareholders in an Acquired Fund,
except for the California Insured Fund, will become shareholders in the
corresponding Acquiring Fund that is also an Insured Fund. As a result of the
Transaction, the California Insured Fund's shareholders will become shareholders
in a Non-Insured Fund. Although not required to do so, each Non-Insured Fund has
generally invested a significant portion of its assets in insured municipal
securities.
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% or more 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 industry 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.
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 market: transportation; education and industrial obligations.
29
All of the Funds are "non-diversified" for purposes of 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
December 3, 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.
WHAT ARE THE RISK 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.
30
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 to 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 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.
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, 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 also not trade as
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.
31
The Insured Funds may not invest in such high-yield 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 in the section entitled
"Are there any significant differences between the investment strategies and
policies of the Acquired Funds and their corresponding Acquiring Funds" above.
To the extent that the Non-Insured Funds invest in such high-yield bonds, the
Non-Insured Funds may be subject to greater risks associated with such
investments, such as the loss of principal, credit risk, liquidity risk and
volatility, as compared to the Insured Funds.
Sector Risk. Sector risk is the risk that the value of securities in a
particular sector will decline because of changing expectations for the
performance of that sector. Although the Funds have a fundamental policy that
prohibits concentration in any one industry, 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 such 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 (as described
above), 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?
REQUIRED VOTE. Provided that "Quorum" requirements (as defined below)
have been satisfied, the Trustees for a Trust shall be elected by a plurality of
the votes cast by shareholders of all Funds of the Trust voting together.
"Quorum" means: (i) for all Trusts other than Voyageur Investment Trust,
one-third (33 1/3%) of the shares entitled to vote at the Meeting are present in
person or represented by proxy at the Meeting; or (ii) for Voyageur Investment
Trust, ten percent (10%) of the shares entitled to vote at the Meeting are
present in person or represented by proxy at the Meeting.
MORE INFORMATION ABOUT THE FUNDS
Administration, Transfer Agency and Fund Accounting Services. Delaware
Service Company, Inc. ("DSC"), 2005 Market Street, Philadelphia, Pennsylvania
19103, an affiliate of DMC, acts as the administrator, and 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 on a pro rata
basis.
32
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
December 3, 2004; (iii) the Annual Report to Shareholders for the year ended
August 31, 2004 ("Annual Report"), and (iv) the Statement of Additional
Information dated December 23, 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.
PROPOSAL TWO: TO ELECT A BOARD OF TRUSTEES
You are being asked to elect a Board for Voyageur Mutual Funds and a
Board for Voyageur Investment Trust.
WHO ARE THE NOMINEES FOR TRUSTEE? The nominees for the Boards of 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: Thomas L. Bennett,
Jude T. Driscoll, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R.
Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. Each of the
nominees (except for Messrs. Bennett, Driscoll, Fry and Zecher and Ms. Landreth)
presently is a Trustee of each Trust.
33
Messrs. Bennett, Fry and Zecher, and Ms. Landreth were identified by
independent executive search firms retained by the Trusts' Nominating and
Corporate Governance Committee (collectively, the "Nominating Committee"). The
executive search firms identified individuals for consideration by the
Nominating Committee based on the criteria described below. At the direction of
the Nominating Committee, the executive search firm further evaluated and
developed detailed background information for the individuals that the
Nominating Committee identified as potential candidates for nominees. After
reviewing this information, the Nominating Committee selected the nominees for
recommendation to the Board. The Nominating Committee's process for evaluating
nominees is described under "Board, Shareholder and Committee Meetings" below.
Among the nominees standing for election, only Mr. Driscoll would be deemed to
be an "Interested Trustee." The remaining nominees would be deemed to be
Independent Trustees.
If elected, these persons will serve as Trustees until their successors
are duly elected and qualified or until their earlier resignation, death or
retirement. Each nominee is currently available and has consented to be named in
this Proxy Statement and to serve if elected. 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. The following table provides certain background information for
each nominee, including the number of Funds and of all other registered
investment companies in the Delaware Investments Family of Funds (the "Fund
Complex") that the nominee oversees or will oversee.
LENGTH OF NUMBER OF
TIME SERVED PORTFOLIOS IN
AS A FUND OTHER
POSITION(S) TRUSTEE PRINCIPAL COMPLEX DIRECTORSHIPS
HELD WITH OF THE OCCUPATION(S) DURING PAST 5 OVERSEEN BY HELD BY
NAME, ADDRESS AND AGE THE TRUSTS TRUSTS YEARS TRUSTEE TRUSTEE
- ------------------------- ---------------- ------------ ------------------------------ --------------- ---------------
NOMINEE FOR INTERESTED TRUSTEE
Jude T. Driscoll(1) Chairman, N/A CEO, Delaware Investments 92 None
2005 Market Street President and (since 2003). Since August
Philadelphia, PA 19103 Chief 2000, Mr. Driscoll has
41 Executive served in various executive
Officer 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
Thomas L. Bennett Nominee Not Manager - Tower One LLC 84 None
2005 Market Street Applicable (June 1999 - Present)
Philadelphia, PA 19103 (Wireless Communications)
57
Manager - Tower Bridge
Telecom LLC (June 2001 -
Present)
(Wireless Communications)
Managing Director - Morgan
Stanley & Co. Incorporated
(1996 - March 2004). Since
January 1984, Mr. Bennett
has served in various
management and executive
capacities at different
times at Miller, Anderson &
Sherred, LLP and its
successor, Morgan Stanley &
Co. Incorporated
John A. Fry Nominee N/A President - Franklin & 92 Director -
2005 Market Street Marshall College (June 2002 Community
Philadelphia, PA 19103 - Present) Health Systems
44
Executive Vice President -
University of Pennsylvania
(April 1995 - June 2002)
Anthony D. Knerr Trustee 7 years Founder/Managing Director - 92 None
2005 Market Street Anthony Knerr & Associates
Philadelphia, PA 19103 (1990 - Present) (Strategic
65 Counseling)
Lucinda S. Landreth Nominee Not Chief Investment Officer - 84 None
2005 Market Street Applicable Assurant, Inc. (June 2002 to
Philadelphia, PA 19103 December 2004) (Insurance
52 Company)
Chief Investment Officer -
Fortis, Inc. (September 1997
to May 2001)
(Financial Services)
Ann R. Leven Trustee 7 years Treasurer/Chief Fiscal 92 Director -
2005 Market Street Officer - National Gallery Systemax Inc.
Philadelphia, PA 19103 of Art
63 (1994 - 1999) Director and
Audit
Committee
Chairperson -
Andy Warhol
Foundation
35
Thomas E. Madison Trustee 7 years President/Chief Executive 92 Director -
2005 Market Street Officer - MLM Partners, Banner Health
Philadelphia, PA 19103 Inc. (January 1993 -
68 Present) (Small Business Director and
Investing and Counseling) Audit
Committee
Member -
CenterPoint
Energy
Director and
Audit
Committee
Member -
Digitial
River Inc.
Director and
Audit
Committee
Member -
Rimage
Corporation
Director -
Valmont
Industries,
Inc.
Janet L. Yeomans Trustee 4 Years Vice President/Mergers & 92 None
2005 Market Street Acquisitions - 3M
Philadelphia, PA 19103 Corporation (January 2003 -
56 Present)
Ms. Yeomans has held
various management
positions at 3M
Corporation since 1983.
J. Richard Zecher, Ph.D. Nominee Not Vice Chairman - Investor 84 Director and
2005 Market Street Applicable Analytics, LLC Audit
Philadelphia, PA 19103 (May 1999 to Present) Committee
Member -
Founder/Principal - Sutton OXiGENE, Inc.
64 Asset Management (September
1998 to Present)
(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.
The following table shows each nominee's ownership of shares of each Fund
and of all other registered investment companies in the Fund Complex as of
October 31, 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 FUNDS BENEFICIALLY OWNED FUND COMPLEX
- ----------------------------------------- ---------------------------------- -----------------------------------------
INTERESTED NOMINEE
- ----------------------------------------- ---------------------------------- -----------------------------------------
Jude T. Driscoll None Over $100,000
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
INDEPENDENT NOMINEES
- ------------------------------------------ --------------------------------- -----------------------------------------
Thomas L. Bennett None None
- ------------------------------------------ --------------------------------- -----------------------------------------
John A. Fry None Over $100,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Anthony D. Knerr None $10,001 - $50,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Lucinda S. Landreth None None
- ------------------------------------------ --------------------------------- -----------------------------------------
Ann R. Leven None Over $100,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Thomas F. Madison None $10,001 - $50,000
- ------------------------------------------ --------------------------------- -----------------------------------------
Janet A. Yeomans None $10,001 - $50,000
- ------------------------------------------ --------------------------------- -----------------------------------------
J. Richard Zecher None None
- ----------------------------------------------------------------------------------------------------------------------
36
BOARD, SHAREHOLDER AND COMMITTEE MEETINGS. During its last fiscal year,
each Trust held five Board meetings. Each of the currently serving Trustees
attended at least 75% of those Board meetings and at least 75% of committee
meetings held within the last fiscal year by a committee on which the Trustee
serves as a member.
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 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. During each Trust's last fiscal year, the Audit Committee held
five meetings.
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 such Trust's last fiscal year ended August 31,
2004.
The Board of each Trust has adopted a formal charter for its 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.
The Nominating Committee will consider shareholder recommendations for
nomination to the Board of a Trust only in the event that there is a vacancy on
the Board. 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.
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 a Board, 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.
37
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 Boards. 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 Boards.
BOARD COMPENSATION. Each Independent Trustee receives compensation from
each of the Delaware Companies of which he/she is a member of the Board.
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 day per Board meeting attended
(normally four regular meetings, three of which are two-day in-person 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 Nominating 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 assets. After August 2004, the Trustees' fees and retainers were allocated
ratably among the investment companies in the Fund Complex based on relative net
assets.
Under the terms of the Delaware Companies' retirement plan, 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 Independent 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, as well as the estimated annual
benefits upon retirement.
38
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,
TRUSTEE(1) Mutual Funds Investment Trust Expenses Retirement 2004
---------------- ------------------- ----------------- ---------------- -------------------
JUDE T. DRISCOLL None None None None None
WALTER P. BABICH(2) $2,445 $2,806 None $70,000 $110,233
JOHN H. DURHAM(2) $2,279 $1,954 None $70,000 $102,093
JOHN A. FRY None(3) None(3) None $70,000 $ 90,573(3)
ANTHONY D. KNERR $2,167 $2,497 None $70,000 $109,466
ANN R. LEVEN $2,810 $2,466 None $70,000 $120,650
THOMAS E. MADISON $2,701 $2,381 None $70,000 $115,066
JANET L. YEOMANS $2,701 $2,381 None $70,000 $115,066
(1) Compensation information for Messrs. Bennett and Zecher and Ms. Landreth is
not applicable because such nominees were not members of the Boards of the
Trusts or any other investment company in the Fund Complex for the 12-month
period ended August 31, 2004.
(2) Messrs. Babich and Durham have announced their intention to retire from the
Boards effective as of the date of the Meeting and therefore are not
standing for re-election.
(3) In addition to this compensation, for the 12-month period ended on October
31, 2004, Mr. Fry received $8,827 in professional fees from the Voyageur
Funds, including Voyageur Mutual Funds and Voyageur Investment Trust, for
services provided to the Voyageur Fund's Board.
OFFICERS. The Board 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 above 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.
THE BOARDS OF TRUSTEES UNANIMOUSLY
RECOMMEND THAT YOU VOTE "FOR"
ALL NOMINEES FOR TRUSTEE
39
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 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. As described more fully below, the VIT Board approved the
Redomestication in order to eliminate certain administrative inefficiencies and
incremental costs and to establish a uniform structure among all of the mutual
funds (i.e., registered, open-end management investment companies) within the
Delaware Investments Family of Funds.
WHAT WILL THE REDOMESTICATION MEAN FOR THE SERIES OF VOYAGEUR INVESTMENT TRUST
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 2, 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.
40
WHY ARE THE TRUSTEES RECOMMENDING APPROVAL OF THE AGREEMENT AND THE
REDOMESTICATION?
With the exception of the series of Voyageur Investment Trust, all of
the registered, open-end management investment companies within the Delaware
Investments Family of Funds are series of Delaware statutory trusts. Voyageur
Investment 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.
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.
41
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 Statutory Trust Act (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 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.
42
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.
43
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
AGREEMENT?
As a result of the Redomestication, the DE Trust will be subject to a
new investment advisory agreement 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 agreement 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. 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.
44
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 in the same manner
they do currently 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.
45
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, an investment advisory agreement, 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 or contingent deferred sales charges 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.
46
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 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, materially 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.
47
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, a 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 and to
vote on other matters, the Board 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 by the SEC.
Adoption and use by a Fund of the Manager of Mangers 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 a Fund to be
increased without shareholder approval; or (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 meetings, the boards of trustees/directors
of the Delaware Companies, including a majority of the independent
trustees/directors, 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 a Fund's
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, which was otherwise required to be held, to avoid
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.
48
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: (i) the applicable Board,
including a majority of the Independent Trustees, must approve new or amended
subadvisory agreements; (ii) shareholder approval would not be necessary; (iii)
DMC's responsibilities to a Fund would remain unchanged; and (iv) 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 or interpretation, 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 in the near future 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 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.
49
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);
50
(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;
(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.
- --------
(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.
51
WHAT ARE THE BENEFITS TO THE FUNDS?
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 a subadviser, when the Board and DMC believe that the
appointment would be in the best interests of the Fund and its shareholders.
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 BOARDS 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 they 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 may invest;
(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
52
(5) No subadviser could be appointed, removed or replaced without Board
approval and involvement.
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.
WHAT VOTE IS NECESSARY TO APPROVE PROPOSAL NO. 4?
Each Fund will vote separately on Proposal 4. Accordingly, Proposal 4
will be approved with respect to a Fund only if shareholders of that Fund
approve Proposal 4. Such approval requires a Quorum to be present and an
affirmative Majority Vote.
THE BOARD 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 10, 2004 (the "Record Date") will be entitled to notice of
and to vote at the Meeting on the matters described in the Proxy
Statement/Prospectus, 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 with respect to that Proposal may be adjourned to
permit further solicitations of proxies. The holders of a majority of shares of
an Acquired Fund entitled to vote on a Proposal 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. It is anticipated
that the persons named as proxies on the enclosed proxy cards will use the
authority granted to them to vote on adjournment in their discretion.
53
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
on which you are entitled to vote 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.
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 the Trusts do not intend to bring any matters before the
Meeting with respect to the Acquired Funds other than those described in this
Proxy Statement/Prospectus. The Boards are not aware of any other matters to be
brought before the Meeting with respect to the Acquired Funds 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.
54
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 and the Funds thereof
entitled to vote as of the Record Date are set forth in the table below.
FUND NUMBER OF SHARES OUTSTANDING
- --------------------------------------------------------------------------------
VOYAGER MUTUAL FUNDS
Arizona Fund 2,909,075.592
California Fund 4,063,543.377
Delaware Minnesota High Yield Municipal Bond Fund 6,718,635.555
Delaware Tax-Free Idaho Fund 7,333,050.771
Delaware Tax-Free New York Fund 1,619,964.698
VOYAGER INVESTMENT TRUST
California Insured Fund 2,985,607.608
Florida Fund 1,455,098.995
Florida Insured Fund 8,301,720.012
Delaware Tax-Free Missouri Insured Fund 4,808,397.568
Delaware Tax-Free Oregon Insured Fund 4,309,440.162
WHAT OTHER SOLICITATIONS WILL BE MADE?
This proxy solicitation is being made by the Boards 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 registered, open-end management investment companies in the Fund
Complex, including the Trusts, have engaged Georgeson Shareholders
Communications, Inc. ("Georgeson") to solicit proxies from brokers, banks, other
institutional holders and individual shareholders at an anticipated cost of
approximately $425,000 to $770,000, 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 Georgeson 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.
As the Meeting date approaches, certain shareholders of each Acquired
Fund may receive a telephone call from a representative of Georgeson if their
votes have not yet been received. Proxies that are obtained telephonically will
be recorded in accordance with the procedures described below. These procedures
are designed to ensure that both the identity of the shareholder casting the
vote and the voting instructions of the shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the Georgeson
representative is required to ask for each shareholder's full name and address,
or the zip code or employer identification number, and to confirm that the
shareholder has received the proxy materials in the mail. If the shareholder is
a corporation or other entity, the Georgeson representative is required to ask
for the person's title and confirmation that the person is authorized to direct
the voting of the shares. If the information solicited agrees with the
information provided to Georgeson, then the Georgeson representative has the
responsibility to explain the process, read the Proposals listed on the proxy
card and ask for the shareholder's instructions on each Proposal. Although the
Georgeson representative is permitted to answer questions about the process, he
or she is not permitted to recommend to the shareholder how to vote, other than
to read any recommendation set forth in this Proxy Statement. Georgeson will
record the shareholder's instructions on the card. Within 72 hours, the
shareholder will be sent a letter or mailgram to confirm his or her vote and
asking the shareholder to call Georgeson immediately if his or her instructions
are not correctly reflected in the confirmation.
55
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
balance of Florida Fund's one-third portion of expenses that exceeds $15,000.
With respect to Proposal 2, the election of the Boards, 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 VIT Board 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.
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
appropriate 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 a 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 Fund, or class
thereof, of the Trusts.
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
herein, the Trusts has no knowledge of beneficial ownership.
56
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AND AUDIT COMMITTEE REPORT
The firm of Ernst & Young LLP has been selected as the independent
registered public accounting firm for each of the Trusts for their current
fiscal year. 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 be
provided by Ernst & Young LLP to determine whether they are appropriate and
permissible under applicable law.
The 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.
Representatives of Ernst & Young LLP are not expected to be present at
the Meeting, but will have the opportunity to make a statement if they wish, and
will be available should any matter arise requiring Ernst & Young LLP's
presence.
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 $78,080 $68,930
- ----------------------------------------------------------------------------------------------
Voyageur Investment Trust $65,070 $57,430
- ----------------------------------------------------------------------------------------------
AUDIT-RELATED FEES. There were no fees billed by Ernst & Young LLP for
assurance and other services reasonably related to the performance of the audit
of each Trust's financial statements and not reported above under "Audit Fees"
for each Trust's last two fiscal years ended August 31, 2004 and 2003.
The aggregate fees billed by Ernst & Young LLP for assurance and other
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 were $37,575 and $39,600, respectively.
These audit-related services were as follows: issuance of reports concerning
transfer agent's system of internal accounting control pursuant to Rule 17Ad-13
of the Exchange Act; and issuance of agreed upon procedures reports to the Board
in connection with the annual transfer agent and fund accounting service agent
contract renewals and the pass-through of internal legal costs relating to the
operation of the Trust. None of these services were approved by the Audit
Committee pursuant to the de minimis exception from the pre-approval requirement
under Regulation S-X.
57
TAX FEES. The aggregate fees billed by Ernst & Young LLP for tax
compliance, tax advice and tax planning (together, "Tax-Related Services")
provided to each Trust are set forth below for the fiscal years ended August 31,
2004 and 2003. None of these Tax-Related Services were approved by the Audit
Committee pursuant to the de minimis exception from the pre-approval requirement
under Regulation S-X. These Tax-Related Fees were as follows: review of income
tax returns and annual excise distribution calculations.
- ----------------------------------------------------------------------------------------
TAX FEES TAX FEES
TRUST FOR FYE 8/31/04 FOR FYE 8/31/03
- ----------------------------------------------------------------------------------------
Voyageur Mutual Funds $10,500 $7,500
- ----------------------------------------------------------------------------------------
Voyageur Investment Trust $8,750 $6,250
- ----------------------------------------------------------------------------------------
There were no fees billed by Ernst & Young LLP 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 for each
Trust's last two completed fiscal years ended on August 31, 2004 and 2003.
ALL OTHER FEES. There were no fees billed by Ernst & Young LLP for
products and services provided by the independent auditors to the Trusts other
than those set forth above for the Trusts' last two completed fiscal years ended
August 31, 2004 and 2003.
There were no fees billed for products and services other than those
set forth above provided by Ernst & Young LLP to DMC and other service providers
under common control with and that relate directly to the operations or
financial reporting of the Trusts for the Trusts' last two completed fiscal
years ended August 31, 2004 and 2003, respectively.
AGGREGATE NON-AUDIT FEES TO THE TRUSTS, DMC AND SERVICE PROVIDER
AFFILIATES. The aggregate non-audit fees billed by Ernst & Young LLP for
services rendered to Voyageur Mutual Funds, Voyageur Investment Trust and to DMC
and other service providers under common control with DMC, were $232,065 and
$185,250 for the Trusts' last two completed fiscal years ended August 31, 2004
and 2003, respectively.
In connection with its selection of the independent auditors, the Audit
Committee has considered Ernst and Young LLP's provision of non-audit services
to DMC and other service providers under common control with DMC that were not
required to be pre-approved pursuant to Regulation S-X. The Audit Committee has
determined that the provision of these services is compatible with maintaining
the Ernst & Young LLP's independence.
58
COMMUNICATIONS TO THE BOARDS OF TRUSTEES
Shareholders who wish to communicate to the full Boards of the Trusts
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).
59
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 December 3, 2004, as previously filed via EDGAR, is
incorporated into this filing by reference to Post-Effective
Amendment No. 29 to Voyageur Mutual Funds' Registration Statement
on Form N-1A [File No. 33-63238] filed on December 3, 2004.
60
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
Exhibit A, the Form of Agreement and Plan of Reorganization that was filed on
Form N-14 under the Securities Act of 1933, as amended [Accession No.
0000950116-04-003130] on October 25, 2004 is incorporated herein by reference.
EXHIBIT B
FORM OF PLAN OF REORGANIZATION BY VOYAGEUR INVESTMENT TRUST
(ON BEHALF OF THE FLORIDA AND FLORIDA INSURED FUND)
Exhibit B, the Form of Plan of Reorganization by Voyageur Investment Trust (on
behalf of the Florida and Florida Insured Fund) that was filed on Form N-14
under the Securities Act of 1933, as amended [Accession No.
0000950116-04-003130] on October 25, 2004 is incorporated herein by reference.
EXHIBIT C
EXECUTIVE OFFICERS OF THE TRUSTS
Exhibit C, the Executive Officers of the Trust that was filed on Form N-14 under
the Securities Act of 1933, as amended [Accession No. 0000950116-04-003130] on
October 25, 2004 is incorporated herein by reference.
EXHIBIT D
FORM OF AGREEMENT AND PLAN OF REDOMESTICATION BETWEEN
VOYAGEUR INVESTMENT TRUST AND DELAWARE INVESTMENTS MUNICIPAL
TRUST
Exhibit D, the Form of Agreement and Plan of Redomestication between the
Voyageur Investment Trust and Delaware Investments Municipal Trust that was
filed on Form N-14 under the Securities Act of 1933, as amended [Accession No.
0000950116-04-003130] on October 25, 2004 is incorporated herein by reference.
EXHIBIT E
A COMPARISON OF GOVERNING DOCUMENTS AND STATE LAW
Exhibit E, the Comparison of Governing Documents and State Law that was filed on
Form N-14 under the Securities Act of 1933, as amended [Accession No.
0000950116-04-003130] on October 25, 2004 is incorporated herein by reference.
FUND NAME / CLASS NAME AND ADDRESS OF ACCOUNT SHARE AMOUNT PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Arizona Fund RBC DAIN RAUSCHER FBO 350,746.539 18.16%
Class A shares GAYLORD RUBIN
BEVERLY RUBIN CO-TTEES
GAYLORD& BEVERLY RUBIN FAM TR
6580 N PRAYING MONK RD,
PARADISE VALLEY AZ 85253-4085
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 115,590.261 5.99%
ACCOUNT 4573-4429
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
--------------------------------------------------------------------
A G EDWARDS & SONS INC FBO 102,159.847 5.29%
FRANCES C CARTER
ACCOUNT 0085-008374
1 N JEFFERSON AVE
SAINT LOUIS MO 63103-2205
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Arizona Fund WELLS FARGO INVESTMENTS LLC 32,184.679 10.37%
Class C shares ACCOUNT 5273-9816
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
--------------------------------------------------------------------
UBS FINANCIAL SERVICES INC. FBO 20,730.564 6.68%
THE DAVIDSON FAMILY TRUST
DTD 2/2/93
CLARA DAVIDSON TTEES
400 S BROADWAY PLACE APT 1124,
TUCSON AZ 85710-3700
--------------------------------------------------------------------
RONALD W BOWDEN 19,645.161 6.33%
AND CHERYL BOWDEN TTEES
RONALD W & CHERYL L BOWDEN TRUST
DTD 9-28-99
PO BOX 1101,
YARNELL AZ 85362-1101
--------------------------------------------------------------------
LEGG MASON WOOD WALKER INC 19,318.488 6.23%
423-00154-16
PO BOX 1476
BALTIMORE MD 21203-1476
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 17,573.981 5.66%
ACCOUNT 2078-1746
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 16,168.241 5.21%
ACCOUNT 1901-5935
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Arizona Insured Fund MLPF&S FOR THE SOLE BENEFIT 799,995.554 7.75%
Class A shares OF ITS CUSTOMERS
ATTN FUND ADMIN
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------
1
FUND NAME / CLASS NAME AND ADDRESS OF ACCOUNT SHARE AMOUNT PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Arizona Insured Fund MLPF&S FOR THE SOLE BENEFIT 137,360.866 11.97%
Class B shares OF ITS CUSTOMERS SEC#97GC9
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Arizona Insured Fund MLPF & S FOR THE SOLE BENEFIT 135,986.558 23.96%
Class C shares OF ITS CUSTOMERS
ATTN FUND ADMIN-SEC#97EA5
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 43,219.297 7.61%
ACCOUNT 1972-1797
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 28,442.175 5.01%
ACCOUNT 4392-8254
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free California Fund MLPF & S FOR THE SOLE BENEFIT 257,340.203 11.19%
Class A shares OF ITS CUSTOMERS SEC#97GD4
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
NFSC FEBO # STL-692921 180,872.151 7.87%
MARGARET R PETERSON TTEE
SURVIVORS TR UNDER THE PETERSON
FAM TR, U/A 8/2/88
539 E WALNUT,
BURBANK California 91501-1723
--------------------------------------------------------------------
FIRST CLEARING LLC 123,434.705 5.37%
A/C 1214-8336
ATCHLEY FAMILY SURVIVORS
TRUST
10700 WHEAT FIRST DR,
GLEN ALLEN VA 23060-9243
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free California Fund MLPF&S FOR THE SOLE BENEFIT 66,209.286 5.48%
Class B shares OF ITS CUSTOMERS SEC#97GD2
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free California Fund MLPF&S FOR THE SOLE BENEFIT 112,523.886 20.21%
Class C shares OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
SEC #97MF7
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
RBC DAIN RAUSCHER FBO 31,108.974 5.59%
BOB B BUNDY & JEAN BUNDY,TTEES
BOB B BUNDY & JEAN BUNDY REV T
U/A DTD 10/06/1993
47489 TANGIER DR,
PALM DESERT California 92260-58313
- -----------------------------------------------------------------------------------------------------------------
2
FUND NAME / CLASS NAME AND ADDRESS OF ACCOUNT SHARE AMOUNT PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free California Insured Fund NFSC FEBO # STL-692921 272,325.810 12.03%
Class A shares MARGARET R PETERSON TTEE
SURVIVORS TR UNDER THE PETERSON
FAM TR, U/A 8/2/88
539 E WALNUT,
BURBANK California 91501-1723
--------------------------------------------------------------------
MLPF&S FOR THE SOLE BENEFIT 173,214.897 7.65%
OF ITS CUSTOMERS
ATTN FUND ADMIN SEC #97AL7
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
JOHN F HANLEY 123,843.611 5.47%
AND HELEN M HANLEY TTEES
JOHN F HANLEY FAMILY TRUST
U/A DTD 2/17/93
9799 EL DURANGO CIRCLE,
FOUNTAIN VALLEY California 92708-3512
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free California Insured Fund MLPF&S FOR THE SOLE BENEFIT 87,016.906 14.63%
Class B shares OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION SEC#97DT0
4800 DEER LAKE DR E 2RD FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 41,520.996 6.98%
ACCOUNT 3351-5187
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free California Insured Fund MLPF&S FOR THE SOLE BENEFIT 24,243.373 19.36%
Class C shares OF ITS CUSTOMERS
ATTN FUND ADMIN-SEC#97MF8
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 14,569.281 11.63%
ACCOUNT 8039-6103
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
--------------------------------------------------------------------
CITIGROUP GLOBAL MARKETS INC. 9,541.985 7.62%
00157404672
333 WEST 34TH STREET - 3RD FLOOR
NEW YORK NY 10001-2402
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 7,667.724 6.12%
ACCOUNT 2017-5823
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
--------------------------------------------------------------------
WELLS FARGO INVESTMENTS LLC 7,272.953 5.81%
ACCOUNT 2073-5270
608 2ND AVE S FL 8
MINNEAPOLIS MN 55402-1916
- -----------------------------------------------------------------------------------------------------------------
3
FUND NAME / CLASS NAME AND ADDRESS OF ACCOUNT SHARE AMOUNT PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Fund A G EDWARDS & SONS INC FBO 118,692.358 12.38%
Class A shares ROBIN MELVA ANDERSON
ACCOUNT 0085-005146
1 N JEFFERSON AVE
SAINT LOUIS MO 63103-2205
--------------------------------------------------------------------
EDWARD D JONES & CO FAO 52,927.995 5.52%
JOHN P THIMMESH &
PATTI THIMMESH TRUSTEES
EDJ# 894-09134-1-4
PO BOX 2500,
MARYLAND HTS MO 63043-8500
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Fund UBS FINANCIAL SERVICES INC. FBO 47,856.256 16.13%
Class B shares JUDITH GOLDSMITH 2000
IRREVOCABLE TRUST DTD 12/27/00
JOYCE PERNIN TRUSTEE
5781 BRIDLEWAY CIRCLE,
BOCA RATON FL 33496-3211
--------------------------------------------------------------------
MLPF&S FOR THE SOLE BENEFIT 43,643.289 14.71%
OF ITS CUSTOMERS SEC#97GC2
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
ATTN MUTUAL FUNDS 20,519.416 6.92%
FISERV SECURITIES INC
FAO 14048823
ONE COMMERCE SQUARE
2005 MARKET STREET SUITE 1200,
PHILADELPHIA PA 19103-7008
--------------------------------------------------------------------
FIRST CLEARING, LLC 16,970.333 5.72%
A/C 1084-0401
BARBARA ANN ALLARD REV TR
BARBARA ANN ALLARD TTEE UA
20 N CREEK LN
SARASOTA FL 34236
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Fund MLPF&S FOR THE SOLE BENEFIT 32,319.204 16.27%
Class C shares OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
SEC #97016
4800 DEER LAKE DR E 2ND FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
RAYMOND JAMES & ASSOC INC 26,235.716 13.21%
FBO PARMER FW&A
BIN# 50100337
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
--------------------------------------------------------------------
PERSHING LLC 21,343.696 10.75%
PO BOX 2052
JERSEY CITY NJ 07303-2052
PERSHING LLC 19,320.292 9.73%
PO BOX 2052
JERSEY CITY NJ 07303-2052
- -----------------------------------------------------------------------------------------------------------------
4
FUND NAME / CLASS NAME AND ADDRESS OF ACCOUNT SHARE AMOUNT PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------
MARY J MANNS 11,107.267 5.59%
2628 NANTUCKET LN
TALLAHASSEE FL 32309-2246
--------------------------------------------------------------------
MARJORIE NEHLSEN TTEE 10,050.251 5.06%
MARJORIE NEHLSEN TRUST
UA DTD 02/02/1995
12667 SW SUZY AVE
LAKE SUZY FL 34269-9370
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund MLPF& S FOR THE SOLE BENEFIT 523,028.038 6.71%
Class A shares OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
SECURITY # 970G2
4800 DEER LAKE DR E 2ND FLOOR,
JACKSONVILLE FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund MLPF&S FOR THE SOLE BENEFIT 60,932.349 14.13%
Class B shares OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION SEC#97DT2
4800 DEER LAKE DR E 2RD FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
NFSC FEBO # CWG-007790 22,461.815 5.21%
HELEN STURMAN TRUSTEE
HELEN A STURMAN REVOCABLE TRUST
AGREEME UA 6/14/91
8 NORMANDY A,
DELRAY BEACH FL 33484-4730
- -----------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund MLPF & S FOR THE SOLE BENEFIT 42,968.280 57.13%
Class C shares OF ITS CUSTOMERS
ATTN FUND ADMIN-SEC#97MG0
4800 DEER LAKE DR E 2RD FLOOR
JACKSONVILLE FL 32246-6484
--------------------------------------------------------------------
A G EDWARDS & SONS INC FBO 16,107.014 21.41%
MIRENA LANDERS TRUSTEE
J ROBERT LANDERS
ACCOUNT 0317-289049
1 N JEFFERSON AVE,
SAINT LOUIS MO 63103-2205
--------------------------------------------------------------------
SHAW RUBIN FAMILY 8,321.982 11.06%
PARTNERSHIP LLLP
600 THREE ISLAND BLVD APT 2108
HALLANDALE BEACH FL 33009-2888
--------------------------------------------------------------------
UBS FINANCIAL SERVICES INC. FBO 4,948.641 6.58%
ROSALIE MERGAMAN
3600 CONSHOHOCKEN AVE APT 205
PHILADELPHIA PA 19131-5303
- -----------------------------------------------------------------------------------------------------------------
5
DELAWARE INVESTMENTS Your prompt response will
save your Fund the expense
of additional mailings.
Please fold and detach card at perforation before mailing
VOYAGEUR MUTUAL FUNDS
JOINT MEETING OF SHAREHOLDERS
THIS PROXY IS BEING SOLICITED BY THE BOARD OF 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 California Insured Fund (the "Fund"), a series of the
Voyageur Investment Trust (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 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 Agreement and Plan of FOR AGAINST ABSTAIN
Reorganization between the Trust on behalf of
the Fund, and Voyageur Mutual Funds, on behalf
of the Delaware Tax-Free California 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 9 nominees specified as Trustees: FOR all nominees WITHHOLD
Thomas L. Bennett, Jude T. Driscoll, John A. listed (except Authority to
Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann as marked to vote for all
R. Leven, Thomas F. Madison, Janet L. Yeomans the contrary at nominees.
and J. Richard Zecher 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. To approve an Agreement and Plan of FOR AGAINST ABSTAIN
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.
PART B
STATEMENT OF ADDITIONAL INFORMATION
for
VOYAGEUR INSURED FUNDS
VOYAGEUR MUTUAL FUNDS
VOYAGEUR INVESTMENT TRUST
December 23, 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 [Accession No. 0000950116-04-003669] filed
December 3, 2004 and will be mailed to any Shareholder who requests this
SAI.
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/A
[Accession No. 0000950116-04-003451] filed November 16, 2004 and will be
mailed to any Shareholder who requests this SAI.
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 23, 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.
DELAWARE TAX FREE CALIFORNIA FUND
31-Aug-04
Principal
Amount
Municipal Bonds- 96.60%
Airport Revenue Bonds - 2.25%
798136LW5 San Jose Airport Revenue Series A 5.00% 3/1/31 (FGIC) $ 1,000,000 $ 1,011,330
1,011,330
Continuing Care / Retirement Revenue Bonds - 7.18%
00036TAX2 Abag Finance Authority of California (Nonprofit Corporations-Lincoln
Glen Manor) 6.10% 2/15/25 (RADIAN) 2,000,000 2,202,080
13033FPF1 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 - 4.45%
738855EE1 Poway Unified School District 5.60% 9/1/33 1,000,000 1,000,290
796844HF8 San Bernardino County Special Tax Community Facilities 5.90% 9/1/33 1,000,000 1,000,370
2,000,660
Higher Education Revenue Bonds - 13.86%
130175WT5 California Educational Facilities Authority Revenue (Pepperdine
University) Series A 5.50% 8/1/32 1,000,000 1,038,220
130175R46 California Educational Facilities Authority Revenue (University of the
Pacific) 5.25% 5/1/34 1,000,000 1,023,910
13077CCW2 California State University Systemwide Revenue Series A 5.25%
11/1/20 (FSA) 1,000,000 1,094,729
130911KV1 California Statewide Communities Development Authority Revenue
(Bentley School) 6.75% 7/1/32 1,000,000 1,024,910
13078RCL2 California Statewide Communities Revenue Authority East Campus
Apartments LLC Series A 5.625% 8/1/34 (ACA) 1,000,000 1,019,710
797391UV9 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 - 8.56%
00037CBB5 Abag Finance Authority of California (Nonprofit Corporations-San Diego
Hospital Association) Series A 6.125% 8/15/20 1,250,000 1,333,188
13033FNA4 California Health Facilities Financing Authority (Adventist Health
Systems) Series A 5.00% 3/1/33 1,000,000 990,250
13033FRR3 California Health Facilities Financing Authority (Catholic Healthcare
West) Series G 5.25% 7/1/23 500,000 490,875
13033WEM1 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
Miscellaneous Revenue Bonds - 4.72%
797391QT9 San Diego County Certificates of Participation 5.70% 2/1/28 1,200,000 1,086,588
797391RX9 San Diego County Certificates of Participation (The Burnham Institute)
6.25% 9/1/29 1,000,000 1,034,050
2,120,638
Multi Family Housing Revenue Bonds - 9.17%
13077VT69 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
13077VWP3 California Statewide Communities Development Authority Multifamily
Housing Revenue (Silver Ridge Apartments) 5.80% 8/1/33 (AMT) 1,000,000 1,077,150
69666YAS4 Palm Springs Mobile Home Park Revenue (Sahara Mobile Home Park)
5.75% 5/15/37 1,000,000 1,016,630
801617EM9 Santa Clara County Housing Authority (Rivertown Apartments Project)
Series A 5.85% 8/1/31 (AMT) 1,000,000 1,013,660
4,119,170
Municipal Lease Revenue Bonds - 8.06%
130684GV9 California State Public Works Board (Department of Corrections) Series
C 5.25% 6/1/28 1,500,000 1,539,000
Golden State Tobacco Securitization
38122NCM2 5.50% 6/1/43 (RADIAN) 1,000,000 1,044,010
38122NBU5 5.625% 6/1/33 1,000,000 1,036,960
3,619,970
Principal
Amount
Parking Revenue Bonds - 2.36%
797300PP9 San Diego Redevelopment Agency 6.40% 9/1/25 1,000,000 1,061,650
1,061,650
Ports & Harbors Revenue Bonds - 2.31%
735000EK3 Port of Oakland 5.375% 11/1/27 (FGIC)(AMT) 1,000,000 1,039,360
1,039,360
Public Power Revenue Bonds - 2.39%
13066YCR8 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 - 3.48%
304747DW5 Fairfield-Suisun Unified School District 5.50% 8/1/28 (MBIA) 500,000 542,330
797355PS7 San Diego Unified School District 5.00% 7/1/28 (FSA) 1,000,000 1,022,510
1,564,840
School District Revenue Bonds - 2.16%
130911VN7 California Statewide Community Development (Viewpoint School
Project) 5.00% 10/1/28 (ACA) 1,000,000 972,130
972,130
State General Obligation Bonds - 7.30%
California State
13062PPU0 5.00% 2/1/33 1,000,000 1,007,800
13062PLA8 5.50% 11/1/33 1,000,000 1,058,570
13067JAR2 California State Economic Recovery Series A 5.25% 1/1/10 500,000 558,310
13062NCE5 California State Veterans Series B 5.70% 12/1/32 (AMT) 640,000 652,877
3,277,557
Tax Increment / Special Assessment Bonds - 9.03%
20056NCS7 Commerce California Joint Powers Financing Authority (Redevelopment
Projects) Series A 5.00% 8/1/28 (RADIAN) 1,000,000 1,006,040
504194FP1 La Quinta Redevelopment Agency Tax Allocation 5.10% 9/1/31
1,000,000 1,023,260
50963JDT2 Lake Elisnore Public Financing Authority 5.50% 9/1/30 1,000,000 1,008,890
842472AC6 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 - 2.48%
74526QBN1 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 - 4.57%
795036BJ0 Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/31
(AMBAC)(AMT) 2,000,000 2,051,320
2,051,320
Water & Sewer Revenue Bonds - 2.27%
592663H43 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 (cost $42,247,190) 43,393,727
Money Market- 0.88%
Repurchase Agreements - 0.88%
0901FEDCA Federated California Muni 1.038% 9/1/04 394,990 394,990
394,990
Total Money Market (cost $394,990) 394,990
Total Market Value of Securities - 97.48%
(cost $42,642,180) 43,788,717
Receivables and Other Assets Net of Liabilities - 2.52% 1,132,877
Net Assets Applicable to 0 Shares Outstanding - 100.00% $ 44,921,594
Net Asset Value - [FUND NAME] A Class ([AMOUNT] / [NUMBER] Shares)
Net Asset Value - [FUND NAME] B Class ([AMOUNT] / [NUMBER] Shares)
Net Asset Value - [FUND NAME] C Class ([AMOUNT] / [NUMBER] Shares)
Components of Net Assets at [DATE]:
Shares of beneficial interest (unlimited authorization - no par)
Accumulated net realized [GAIN, LOSS] on investments
Net unrealized [APPRECIATION, DEPRECIATION] of investments
Total net assets
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Ginnie Mae
MBIA - Insured by the Municipal Bond Insurance Association
DELAWARE TAX FREE CALIFORNIA INSURED FUND
31-Aug-04
Principal
Amount
Municipal Bonds- 97.21%
Airport Revenue Bonds - 3.07%
786107GG1 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 - 3.09%
13033FPF1 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 - 6.13%
796844HF8 San Bernardino County Special Tax Community Facilities 5.90% 9/1/33 1,000,000 1,000,370
797669LN6 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 - 6.43%
130175NZ1 California Educational Facilities Authority Revenue (University of The
Pacific) 5.75% 11/1/30 (MBIA) 1,000,000 1,097,490
130911KV1 California Statewide Communities Development Authority Revenue
(Bentley School) 6.75% 7/1/32 1,000,000 1,024,910
2,122,400
Hospital Revenue Bonds - 1.49%
13033FRR3 California Health Facilities Financing Authority (Catholic Healthcare
West) Series G 5.25% 7/1/23 500,000 490,875
490,875
Miscellaneous Revenue Bonds - 3.33%
797391TR0 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 - 15.13%
13077VT69 California Statewide Communities Development Authority Multifamily
Housing Revenue (Citrus Gardens Apartments Project) Series D1 5.375%
7/1/32 800,000 809,384
13077VB76 California Statewide Communities Development Authority Multifamily
Housing Revenue (East Tabor Apartments) 6.85% 8/20/36 (GNMA)
(AMT) 1,500,000 1,594,981
544582TM1 Los Angeles Multifamily Housing Revenue (Park Plaza) 5.50% 1/20/43
(GNMA)(AMT) 1,430,000 1,484,354
923037AU9 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 - 9.43%
13068H6D1 California State Public Works Board Lease Revenue 5.00% 3/1/27
(AMBAC) 1,000,000 1,019,100
353865DN5 Franklin-McKinley School District Certificates of Participation (Financing
Project) Series B 5.00% 9/1/27 (AMBAC) 1,060,000 1,078,836
798250AT3 San Juan Basin Authority (Ground Water Recovery Project) 5.00%
12/1/34 (AMBAC) 1,000,000 1,015,870
3,113,806
Ports & Harbors Revenue Bonds - 3.26%
735000BB6 Port of Oakland 5.75% 11/1/29 (FGIC)(AMT) 1,000,000 1,076,440
1,076,440
Pre-Refunded Bonds - 4.59%
672323CV2 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 - 3.25%
13066YCR8 California State Department Water Reserve Power Supply Revenue
Series A 5.375% 5/1/21 1,000,000 1,073,290
1,073,290
Principal
Amount
School District General Obligation Bonds - 9.30%
519547CL5 Lawndale Elementary School District 5.00% 8/1/32 (FSA) 1,000,000 1,018,210
797355PS7 San Diego Unified School District 5.00% 7/1/28 (FSA) 1,000,000 1,022,510
817409NX9 Sequoia Unified High School District 5.125% 7/1/31 (FSA) 1,000,000 1,030,740
3,071,460
State General Obligation Bonds - 3.21%
13062PLA8 California State 5.50% 11/1/33 1,000,000 1,058,570
1,058,570
Tax Increment / Special Assessment Bonds - 12.80%
504194FP1 La Quinta Redevelopment Agency Tax Allocation 5.10% 9/1/31
1,000,000 1,023,260
738800FA4 Poway Redevelopment Agency Certificates of Participation 5.75%
6/15/33 (MBIA) 1,400,000 1,547,112
769123CM0 Riverside County Redevelopment Agency 5.25% 10/1/35 (AMBAC) 1,590,000 1,655,301
4,225,673
Territorial Revenue Bonds - 3.37%
74526QBN1 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 - 6.24%
795036BH4 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 - 3.09%
13066KMA4 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
1,020,590
Total Municipal Bonds (cost $30,484,157) 32,087,332
Money Market- 0.27%
Repurchase Agreements - 0.27%
0901FEDCA Federated California Muni 1.038% 9/1/04 90,190 90,190
90,190
Total Money Market (cost $90,190) 90,190
Total Market Value of Securities - 97.48%
(cost $30,574,347) 32,177,522
Receivables and Other Assets Net of Liabilities - 2.52% 831,547
Net Assets Applicable to 0 Shares Outstanding - 100.00% 33,009,069
Net Asset Value - [FUND NAME] A Class ([AMOUNT] / [NUMBER] Shares)
Net Asset Value - [FUND NAME] B Class ([AMOUNT] / [NUMBER] Shares)
Net Asset Value - [FUND NAME] C Class ([AMOUNT] / [NUMBER] Shares)
Components of Net Assets at [DATE]:
Shares of beneficial interest (unlimited authorization - no par)
Accumulated net realized [GAIN, LOSS] on investments
Net unrealized [APPRECIATION, DEPRECIATION] of investments
Total net assets
ACA - Insured by American Capital Access
FGIC - Insured by the Financial Guaranty Insurance Company
FNMA - Insured by Fannie Mae
MBIA - Insured by the Municipal Bond Insurance Association
Net Asset Value and Offering Price per Share - (Fund/Portfolio/Series Name) Net
asset value Class A
(A) Sales charge ([PERCENTAGE] of offering price, or [PERCENTAGE] of amount
invested per share)
(B) Offering price
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of [AMOUNT] or more.
See accompanying notes
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
DELAWARE TAX-FREE CALIFORNIA FUND
% OF NET ---------------------------------
ASSETS PAR/SHARES 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
--------------
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
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
---------------------------------
PAR/SHARES 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
--------------
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
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
PRO FORMA COMBINED
---------------------------------
PAR/SHARES 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
--------------
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
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
DELAWARE TAX-FREE CALIFORNIA FUND
% OF NET ---------------------------------
ASSETS PAR/SHARES MARKET VALUE
-------- -------------- --------------
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
--------------
*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
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
---------------------------------
PAR/SHARES MARKET VALUE
-------------- --------------
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% 800,000 809,384
7/1/32
California Statewide Communities Development Authority Multifamily
Housing Revenue (East Tabor Apartments) 6.85% 8/20/36 (GNMA) 1,500,000 1,594,981
(AMT)
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
--------------
*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
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
PRO FORMA COMBINED
---------------------------------
PAR/SHARES MARKET VALUE
-------------- --------------
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
--------------
*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
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
DELAWARE TAX-FREE CALIFORNIA FUND
% OF NET ---------------------------------
ASSETS PAR/SHARES MARKET VALUE
-------- -------------- --------------
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
--------------
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
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
---------------------------------
PAR/SHARES MARKET VALUE
-------------- --------------
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
--------------
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
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
PRO FORMA COMBINED
---------------------------------
PAR/SHARES MARKET VALUE
-------------- --------------
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
--------------
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
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA PORTFOLIO OF INVESTMENTS(A)
AS OF AUGUST 31, 2004
(UNAUDITED)
DELAWARE TAX-FREE CALIFORNIA FUND
% OF NET ---------------------------------
ASSETS PAR/SHARES MARKET VALUE
-------- -------------- --------------
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
---------------------------------
PAR/SHARES MARKET VALUE
-------------- --------------
SHORT TERM INVESTMENTS
Federated California Municipal Trust 90,190 90,190
--------------
90,190
--------------
TOTAL SHORT TERM INVESTMENTS
--------------
TOTAL INVESTMENTS AT MARKET $ 32,177,522
--------------
TOTAL INVESTMENTS AT COST $ 30,574,347
--------------
DELAWARE TAX-FREE CALIFORNIA
INSURED FUND
PRO FORMA COMBINED
---------------------------------
PAR/SHARES MARKET VALUE
-------------- --------------
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
Delaware Tax-Free California
Tax-Free California Fund Insured Fund
------------------------ ------------------------
ASSETS
Investments, at market value $ 43,788,717 $ 32,177,522
Cash 23,108 20,669
Receivable for fund shares sold 128,142 -
Receivable for securities sold 512,039 512,039
Interest receivable 574,035 370,285
------------------------ ------------------------
Total Assets 45,026,041 33,080,515
------------------------ ------------------------
LIABILITIES
Payable for fund shares repurchased 14,368 -
Distributions payable 47,400 31,778
Accrued expenses and other liabilities 42,679 39,668
------------------------ ------------------------
Total Liabilities 104,447 71,446
------------------------ ------------------------
Net Assets $ 44,921,594 $ 33,009,069
======================== ========================
INVESTMENT AT COST $ 42,642,179 $ 30,574,347
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 44,623,907 $ 31,333,825
Undistributed net investment income 1,300 -
Accumulated net realized gain (loss) on investments (850,151) 72,069
Unrealized appreciation of investments 1,146,538 1,603,175
------------------------ ------------------------
Net Assets $ 44,921,594 $ 33,009,069
======================== ========================
OUTSTANDING SHARES 4,037,071 2,999,315
RETAIL CLASS A SHARES 2,231,830 2,248,556
RETAIL CLASS B SHARES 1,302,406 626,275
RETAIL CLASS C SHARES 502,835 124,484
NET ASSETS
RETAIL CLASS A SHARES $ 24,797,519 $ 24,749,327
RETAIL CLASS B SHARES 14,529,884 6,894,516
RETAIL CLASS C SHARES 5,594,191 1,366,226
NET ASSET VALUE PER SHARE:
RETAIL CLASS A SHARES $ 11.11 $ 11.01
RETAIL CLASS B SHARES $ 11.16 $ 11.01
RETAIL CLASS C SHARES $ 11.13 $ 10.98
Delaware
Tax-Free California Fund
Pro Forma Pro Forma
Adjustments Combined
----------------------- ------------------------
ASSETS
Investments, at market value $ - $ 75,966,239
Cash - 43,777
Receivable for fund shares sold - 128,142
Receivable for securities sold - 1,024,078
Interest receivable - 944,320
------------------------ ------------------------
Total Assets - 78,106,556
------------------------ ------------------------
LIABILITIES
Payable for fund shares repurchased - 14,368
Distributions payable - 79,178
Accrued expenses and other liabilities - 82,347
------------------------ ------------------------
Total Liabilities - 175,893
------------------------ ------------------------
Net Assets $ - $ 77,930,663
======================== ========================
INVESTMENT AT COST $ - $ 73,216,526
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ - $ 75,957,732
Undistributed net investment income - 1,300
Accumulated net realized gain (loss) on investments - (778,082)
Unrealized appreciation of investments - 2,749,713
------------------------ ------------------------
Net Assets $ - $ 77,930,663
======================== ========================
OUTSTANDING SHARES (31,203) 7,005,183
RETAIL CLASS A SHARES (20,984) 4,459,402
RETAIL CLASS B SHARES (8,487) 1,920,194
RETAIL CLASS C SHARES (1,732) 625,587
NET ASSETS
RETAIL CLASS A SHARES $ - $ 49,546,846
RETAIL CLASS B SHARES - 21,424,400
RETAIL CLASS C SHARES - 6,960,417
NET ASSET VALUE PER SHARE:
RETAIL CLASS A SHARES $ 11.11
RETAIL CLASS B SHARES $ 11.16
RETAIL CLASS C SHARES $ 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
Delaware California Fund
Delaware Tax-Free ---------------
Tax-Free California Pro Forma Pro Forma
California Fund Insured Fund Adjustments Combined
--------------- --------------- ----------- ---------------
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) - 152,475(F) (57,519)
Less expenses paid indirectly (520) (359) 695(E) (184)
--------------- --------------- ----------- ---------------
Total expense 393,363 432,660 161,557 987,580
--------------- --------------- ----------- ---------------
NET INVESTMENT INCOME 1,996,848 1,562,244 (161,557) 3,397,535
--------------- --------------- ----------- ---------------
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 $ (161,557) $ 5,918,291
=============== =============== =========== ===============
- ----------
(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 certain expenses of the Fund are no longer paid
through commission arrangements with brokers. For the year ended 8/31/04 these
expenses totaled $695.
(F) The current expense limitation expires October 31, 2004. Effective
November 1,2004 each Fund's expense limitation (excluding distribution expenses)
will become 0.63%.
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
Delaware Delaware Tax-Free California Fund
Tax-Free California Fund Tax-Free California Insured Fund Pro Forma Combined
-------------------------------- -------------------------------- --------------------------------
Retail Retail Retail Retail Retail Retail Retail Retail Retail
Class A Class B Class C Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
-------- -------- -------- -------- -------- -------- -------- -------- --------
Management fees 0.55% 0.55% 0.55% 0.50% 0.50% 0.50% 0.55% 0.55% 0.55%
Rule 12b-1 fees 0.25% 1.00% 1.00% 0.25% 1.00% 1.00% 0.25% 1.00% 1.00%
Other expenses 0.16% 0.16% 0.16% 0.16% 0.16% 0.16% 0.15% 0.15% 0.15%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total fund operating
expenses 0.96% 1.71% 1.71% 0.91% 1.66% 1.66% 0.95% 1.70% 1.70%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Fee Waivers & payments -0.46% -0.46% -0.46% 0.00% 0.00% 0.00% -0.07% -0.07% -0.07% (A)
Expense Limit 0.50% 1.25% 1.25% 0.91% 1.66% 1.66% 0.88% 1.63% 1.63% (A)
======== ======== ======== ======== ======== ======== ======== ======== ========
(A) The expense limitations of the Fund's will be adjusted effective
November 1, 2004.
DELAWARE TAX-FREE CALIFORNIA FUND
PRO FORMA
CAPITALIZATION AND RATIOS Note: This page simply is a summary
AUGUST 31, 2004 from the previous worksheets
(UNAUDITED) and is not linked.
Delaware
Tax-Free California
Fund
Delaware Delaware -------------------
Tax-Free California Tax-Free California Pro Forma
Fund Insured Fund Combined
------------------- ------------------- -------------------
Net Assets
Retail Class A $ 24,797,519 $ 24,748,327 $ 49,545,846
Retial Class B 14,529,884 6,894,516 21,424,400
Retail Class C 5,594,191 1,366,226 6,960,417
------------------- ------------------- -------------------
Total $ 44,921,594 $ 33,009,069 $ 77,930,663
=================== =================== ===================
Net Asset Value Per Share
Retail Class A $ 11.11 $ 11.01 $ 11.11
Retial Class B $ 11.16 $ 11.01 $ 11.16
Retail Class C $ 11.13 $ 10.98 $ 11.13
Shares Outstanding
Retail Class A 2,231,830 2,248,556 4,459,402
Retial Class B 1,302,406 626,275 1,920,194
Retail Class C 502,835 124,484 625,587
Ratio of expenses to average net assets(A)
Before Fee Waivers
Retail Class A 0.96% 0.91% 0.95%
Retial Class B 1.71% 1.66% 1.70%
Retail Class C 1.71% 1.66% 1.70%
After Fee Waivers
Retail Class A 0.50% 0.91% 0.88%
Retial Class B 1.25% 1.66% 1.63%
Retail Class C 1.25% 1.66% 1.63%
- ----------
(A)Annualized
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 some 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 0.63% 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.
6. ANTICIPATED TAX STATUS OF THE REORGANIZATION
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. Based on certain assumptions made and representations to be
made on behalf of each "Acquired Fund" and the corresponding "Acquiring Fund"
(as defined in the Proxy Statement/Prospectus), 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 a Transaction in light of your
individual circumstances. You should also consult your tax adviser about the
state and local tax consequences, if any, of a Transaction because this
discussion only relates to the federal income tax consequences.
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 incorporated by
reference to Registrant's registration statement filed on Form N-14
[File No. 333-119924] on October 25, 2004.
Item 16. Exhibits. The following exhibits are incorporated by reference to
the previously filed documents as indicated below, except Exhibit
14(a):
(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) is
incorporated by reference to Registrant's
registration statement filed on Form N-14 filed
October 25, 2004.
(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
incorporated by reference to Registrant's
registration statement filed on Form N-14 filed
October 25, 2004.
(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.
6
(b) By-Laws. Article II of By-Laws is incorporated by
reference to Registrant's registration statement
filed on Form N-14 filed October 25, 2004.
(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;
7
Not Applicable.
(9) Copies of all custodian agreements and depository contracts
under Section 17(f) of the Investment Company Act of 1940,
as amended (the "1940 Act") for securities and similar
investments of the Registrant, including the schedule of
remuneration;
(a) 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 incorporated by reference to
Registrant's registration statement filed on Form
N-14 filed October 25, 2004.
(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.
8
(13) Copies of all material contracts of the Registrant not made
in the ordinary course of business which are to be performed
in whole or in part on or after the date of filing the
registration statement;
(a) Executed Shareholder Services Agreement (April 19,
2001) between Delaware Service Company, Inc. and the
Registrant 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) Consent of Ernst & Young LLP, Independent Registered
Public Accounting Firm for the Registrant, is
electronically filed herewith as Exhibit No.
EX-99(14)(a).
(15) All financial statements omitted pursuant to Item 14(a)(1);
Not Applicable.
(16) Manually signed copies of any power of attorney pursuant to
which the name of any person has been signed to the
registration statement; and
9
(a) Power of Attorney is incorporated into this filing
by reference to Post-Effective Amendment No. 28
filed October 31, 2003.
(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.
10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this registration statement under Rule 485(b) under the Securities Act and has
duly caused this registration statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Philadelphia and the Commonwealth
of Pennsylvania on the 22nd day of December, 2004.
VOYAGEUR MUTUAL FUNDS
By: /s/Joseph H. Hastings
----------------------------
Joseph H. Hastings
Executive Vice President
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/ December 22, 2004
- ------------------------ Chief Executive Officer
(Principal Executive Officer)
Jude T. Driscoll
/s/Walter P. Babich * Trustee December 22, 2004
- ------------------------
Walter P. Babich
/s/John H. Durham * Trustee December 22, 2004
- ------------------------
John H. Durham
/s/Anthony D. Knerr * Trustee December 22, 2004
- ------------------------
Anthony D. Knerr
/s/Ann R. Leven * Trustee December 22, 2004
- ------------------------
Ann R. Leven
/s/Thomas F. Madison * Trustee December 22, 2004
- ------------------------
Thomas F. Madison
/s/Janet L. Yeomans * Trustee December 22, 2004
- ------------------------
Janet L. Yeomans
/s/Joseph H. Hastings Executive Vice President/ December 22, 2004
- ------------------------ Chief Financial Officer
Joseph H. Hastings (Principal Accounting Officer)
11
* By: /s/Joseph H. Hastings
-----------------------------
Joseph H. Hastings
as Attorney-in-Fact for
each of the persons indicated
12
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-99.14(a) Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm
13