[Federal Register Volume 63, Number 50 (Monday, March 16, 1998)]
[Notices]
[Pages 12845-12846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6595]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23063; 812-10838]


Delaware Group Foundations Funds, et al.; Notice of Application

March 9, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an order under section 12(d)(1)(J) of 
the Investment Company Act of 1940 (the ``Act'') for an exemption from 
section 12(d)(1)(G)(i)(II).

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SUMMARY OF THE APPLICATIONS: Applicants seek an order that would permit 
a fund of funds relying on section 12(d)(1)(G) of the Act to make 
direct investments in securities and other instruments.

APPLICANTS: Delaware Group Foundation Funds, Delaware Group Equity 
Funds I, Inc., Delaware Group Equity Funds II, Inc., Delaware Group 
Equity Funds III, Inc., Delaware Group Equity Funds IV, Inc., Delaware 
Group Equity Funds V, Inc., Delaware Group Income Funds, Inc., Delaware 
Group Government Fund, Inc., Delaware Group Limited-Term Government 
Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free 
Money Fund, Inc., Delaware Group State Tax-Free Income Trust, Delaware 
Group Tax-Free Fund, Inc., Delaware Pooled Trust, Inc., Delaware Group 
Premium Fund, Inc., Delaware Group Global & International Funds, Inc., 
Delaware Group Adviser Funds, Inc. (collectively, the ``Delaware 
Funds''), Voyageur Funds, Inc., Voyageur Insured Funds, Inc., Voyageur 
Intermediate Tax Free Funds, Inc., Voyageur Investment Trust, Voyageur 
Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual Funds 
II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Tax Free Funds, 
Inc. (collectively, the ``Delaware-Voyageur Funds''), any future 
registered open-end management investment companies or series thereof 
which are part of the same ``group of investment companies,'' as 
defined in section 12(d)(1)(G)(ii) of the Act as: (a) the Delaware or 
Delaware-Voyageur Funds; or (b) other registered open-end management 
investment companies that are advised by Delaware Management Company, 
Inc. or any entity that controls, is controlled by, or under common 
control with Delaware Management Company, Inc. (together with any 
future series of existing Delaware Funds or Delaware-Voyageur Funds, 
the ``Future Funds'') (Delaware Funds, Delaware-Voyageur Funds, and 
Future Funds, collectively, the ``Delaware Group Funds'') and Delaware 
Management Company, Inc. (``DMC''), Delaware International Advisers 
Ltd. (``DIAL'') (together, the ``Advisers''), and Delaware 
Distributors, L.P. All existing entities that currently intend to rely 
on the order are named as applicants.

FILING DATES: The application was filed on October 27, 1997 and amended 
on December 16, 1997. Applicants have agreed to file an additional 
amendment, the substance of which is incorporated in this notice, 
during the notice period.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving the 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on April 3, 1998, 
and should be accompanied by proof of service on the applicants, in the 
form of an affidavit, or, for lawyers, a certificate of service. 
Hearing request should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons may request 
notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicants, One Commerce Square, 2005 Market Street, 
Philadelphia, PA 19103.

FOR FURTHER INFORMATION CONTACT: Annmarie J. Zell, Staff Attorney, at 
(202) 942-0532, or Christine Y. Greenlees, Branch Chief, at (202) 942-
0564 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, 
D.C. 20549 (telephone (202) 942-8090).

Applicants' Representations

    1. Delaware Group Foundation Funds (the ``Asset Allocator Fund''), 
a Delaware business trust, is registered under the act as an open-end 
management investment company and currently intends to offer three 
series, the Income Portfolio, the Balanced Portfolio and the Growth 
Portfolio (collectively, the ``Asset Allocator Portfolios''). Each 
Asset Allocator Portfolio will invest primarily in a combination of 
Delaware Group Funds (the ``Underlying Funds'') and, pursuant to the 
relief requested in the application, directly in individual securities, 
such as equity or fixed income securities and investment instruments 
including options and futures on securities or indices.
    2. DMC, an investment adviser registered under the Investment 
Advisers Act of 1940, will serve as investment adviser for the Asset 
Allocator Portfolios. DMC will charge an investment advisory fee that 
will be for services that are in addition to, rather than duplicative 
of, advisory services provided to the Underlying Funds, including asset 
allocation and re-allocation among the Underlying Funds and the 
management of direct investments in securities or other instruments. 
The Asset Allocator Portfolios will invest in the institutional class 
of shares of the Underlying Funds. These shares will be sold to and 
redeemed by the Asset Allocator Portfolios without the imposition of 
any front-end or deferred sales charges or redemption fees and will not 
carry rule 12b-1 fees.

Applicant's Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company may acquire securities of another investment company 
if such securities represent more than 3% of the acquired company's 
outstanding voting stock, more than 5% of the acquiring company's total 
assets, or if such securities, together with the securities of other 
investment companies, represent more than 10% of the acquiring 
company's total assets. Section 12(d)(1)(B) provides that no registered 
open-end investment company may sell its securities to another 
investment company if the sale will cause the acquiring company to own 
more than 3% of the acquired company's voting stock to be owned by 
investment companies.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (a) The acquiring company and the acquired 
company are part of the same group of investment companies; (b) the 
acquiring company holds only securities of acquired companies that are 
part of the same group of investment companies, government securities, 
and short-term

[[Page 12846]]

paper; (c) the aggregate sales loads and distribution-related fees of 
the acquiring company and the acquired company are limited; and (d) the 
acquired company has a policy that prohibits it from acquiring 
securities of registered open-end investment companies or registered 
unit investment trusts in reliance on section 12(d)(1)(F) or (G).
    3. The Asset Allocator Fund requests relief from section 
12(d)(1)(G)(i)(II) to the extent necessary to permit an Asset Allocator 
Portfolio and any Future Funds to operate as a fund of funds within 
each requirement of section 12(d)(1)(G) of the Act, with the exception 
of the requirement that the Asset Allocator Portfolios limit their 
investments in individual securities to Government securities and 
short-term paper.
    4. Section 12(d)(1)(J) provides that the SEC may exempt persons or 
transactions from any provision of section 12(d)(1) if and to the 
extent the exemption is consistent with the public interest and the 
protection of investors. Applicants believe that the structure of the 
Asset Allocator Portfolios will be substantially the same as the 
statutory fund of funds now permitted under section 12(d)(1)(G). 
Applicants also believe that Asset Allocator Portfolios' proposed 
direct investments in securities and instruments as described in the 
application do not raise any of the concerns that the requirements of 
section 12(d)(1)(G) were designed to address.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Applicants will company with all provisions of section 
12(d)(1)(G), except for section 12(d)(1)(G)(i)(II) to the extent that 
it restricts the Asset Allocator Portfolios from investing in 
individual securities or instruments described in the application.
    2. Before approving any investment advisory contract for the Asset 
Allocator Fund under section 15 of the Act, the Board of Trustees of 
the Asset Allocator Fund, including a majority of the Trustees who are 
not ``interested persons'' as defined in section 2(a)(19) of the Act, 
shall find that the investment advisory fee, if any, charged under the 
contract is based on services provided that are in addition to, rather 
than duplicative of, services provided pursuant to any Underlying 
Fund's investment advisory contract. The finding, and the basis upon 
which the finding was made, will be recorded fully in the minute books 
of the Asset Allocator Fund.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-6595 Filed 3-13-98; 8:45 am]
BILLING CODE 8010-01-M