<PAGE>
Supplement Dated April 15, 1995
to the Current Prospectuses
of the Following Delaware Group Funds
Delaware Group Delaware Fund, Inc., Delaware
Group Trend Fund, Inc., Delaware Group Value
Fund, Inc., Delaware Group Decatur Fund, Inc.,
Delaware Group DelCap Fund, Inc., Delaware
Group Delchester High-Yield Bond Fund, Inc.,
Delaware Group Government Fund, Inc.,
Delaware Group Tax-Free Fund, Inc., Delaware
Group Treasury Reserves, Inc., Delaware Group
Tax-Free Money, Inc., Delaware Group Cash
Reserve, Inc.
On March 29, 1995, shareholders of each of the above
referenced Funds or, as relevant, the series thereof, approved a new
Investment Management Agreement with Delaware Management
Company, Inc. ("DMC"), an indirect wholly-owned subsidiary of
Delaware Management Holdings, Inc. ("DMH"). The approval of
new Investment Management Agreements was subject to the
completion of the merger (the "Merger") between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln
National") which occurred on April 3, 1995. Accordingly, the
previous Investment Management Agreements terminated and the new
Investment Management Agreements became effective on that date.
As a result of the Merger, DMC and its two affiliates,
Delaware Service Company, Inc., the Funds' shareholder servicing,
dividend disbursing and transfer agent and Delaware Distributors,
L.P., the Funds' national distributor became indirect wholly-owned
subsidiaries of Lincoln National. Lincoln National, with headquarters
in Fort Wayne, Indiana, is a diversified organization with operations
in many aspects of the financial services industry, including insurance
and investment management.
Under the new Investment Management Agreements, DMC
will be paid at the same annual fee rates and on the same terms as it
was under the previous Investment Management Agreements. In
addition, the investment approach and operation of each Fund and, as
relevant, each series of a Fund, will remain substantially unchanged.
PS-OTH-4/95
<PAGE>
September 6, 1994
DELAWARE GROUP OF FUNDS
U.S. GOVERNMENT FUND
A CLASS
B CLASS
(MAY 2, 1994)
DELCHESTER FUND
A CLASS
B CLASS
(MAY 2, 1994)
TREASURY RESERVES INTERMEDIATE FUND
A CLASS
B CLASS
(MAY 2, 1994)
TAX-FREE USA INTERMEDIATE FUND
A CLASS
B CLASS
(MAY 2, 1994)
TAX-FREE USA FUND AND
TAX-FREE INSURED FUND
A CLASS
B CLASS
(MAY 2, 1994)
TAX-FREE PENNSYLVANIA FUND
A CLASS
B CLASS
(MAY 2, 1994)
DELAWARE CASH RESERVE
B CLASS
(MAY 30, 1994)
Supplement To Prospectuses
Dated As Noted Above
The following supplements the information which appears in the section
Dividend Reinvestment Plan under The Delaware Difference:
Beginning September 6, 1994, the following funds will offer Class B
Shares: Delaware Group Trend Fund, Inc., Delaware Group DelCap Fund, Inc.,
Delaware Fund and Dividend Growth Fund of Delaware Group Delaware Fund, Inc.,
Decatur Income Fund and Decatur Total Return Fund of Delaware Group Decatur
Fund, Inc., Delaware Group Value Fund, Inc., and the International Equity
Series of Delaware Group Global & International Funds, Inc.
ST-067 PS-ZZZ-8/94-U
<PAGE>
February 28, 1995
Delaware Group Cash Reserve, Inc.
Supplement to Prospectus
Dated May 30, 1994
Beginning April 1, 1995, following notice by the Fund, the Fund will assess
a service fee of $3.00 per month against any non-retirement accounts which
have remained below the $1,000 minimum balance for at least three
consecutive months. The fee will go to help defray the costs of maintaining
low balance accounts. No CDSCs will apply to such assessments.
PS-008-2/95-U
<PAGE>
NOVEMBER 9, 1994
DELAWARE CASH RESERVE
A CLASS
(May 30, 1994)
DELAWARE CASH RESERVE
B CLASS
(May 30, 1994)
DELAWARE CASH RESERVE
CONSULTANT CLASS
(May 30, 1994)
U.S. GOVERNMENT MONEY FUND
A CLASS
(March 25, 1994)
U.S. GOVERNMENT MONEY FUND
CONSULTANT CLASS
(March 25, 1994)
TAX-FREE MONEY FUND
A CLASS
(June 29, 1994)
TAX-FREE MONEY FUND
CONSULTANT CLASS
(June 29, 1994)
Supplement To Prospectuses As Noted Above
The following supplements the information appearing on the front cover of
the Prospectus:
Shares of this Fund are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
are not deposits, obligations of, guaranteed or endorsed by any bank and
involve investment risks including possible loss of principal.
Shares of the Fund are not NCUSIF insured, are not guaranteed by the credit
union, are not obligations of the credit union, and involve investment risk,
including the possible loss of principal. Shares of the Fund are not credit
union deposits.
PS-MM
<PAGE> 1
PROSPECTUS
MAY 30, 1994
DELAWARE CASH RESERVE
- ----------------------------------------------------------------------------
B CLASS SHARES
- ----------------------------------------------------------------------------
1818 Market Street
Philadelphia, PA 19103
- ----------------------------------------------------------------------------
For Prospectus and Performance:
Nationwide 800-523-4640
Philadelphia 988-1333
Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Philadelphia 988-1241
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Philadelphia 988-1050
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
- ----------------------------------------------------------------------------
Cover Page 1
- ----------------------------------------------------------------------------
Synopsis 2
- ----------------------------------------------------------------------------
Summary of Expenses 3
- ----------------------------------------------------------------------------
Investment Objective and Policy
Suitability 4
Investment Strategy 4
- ----------------------------------------------------------------------------
The Delaware Difference
Plans and Services 6
- ----------------------------------------------------------------------------
Retirement Planning 7
- ----------------------------------------------------------------------------
Buying Shares 8
- ----------------------------------------------------------------------------
Redemption and Exchange 11
- ----------------------------------------------------------------------------
Dividends and Distributions 14
- ----------------------------------------------------------------------------
Taxes 14
- ----------------------------------------------------------------------------
Net Asset Value Per Share 15
- ----------------------------------------------------------------------------
Management of the Fund 16
- ----------------------------------------------------------------------------
This Prospectus describes the Delaware Cash Reserve B Class of shares (the
"Class B Shares") of Delaware Group Cash Reserve, Inc. (the "Fund"). The Class
B Shares are available for sale through brokers, financial institutions and
other entities which have a dealer agreement with the Fund's Distributor or a
service agreement with the Fund. The Class B Shares are subject to a
contingent deferred sales charge ("CDSC") which may be imposed on redemptions
made within six years of purchase and annual 12b-1 Plan expenses assessed
against the shares for no longer than approximately eight years after
purchase. See Summary of Expenses; and Automatic Conversion of Class B Shares
under Buying Shares. The Fund is a professionally-managed mutual fund seeking
maximum current income while preserving principal and maintaining liquidity.
The Fund intends to achieve its objective by investing its assets in a
diversified portfolio of money market instruments.
The Fund is a money market fund. The minimum initial investment for the
Class B Shares is $1,000 and for subsequent investments is $100. The Class B
Shares are also subject to a maximum purchase limitation of $250,000. The
Fund will therefore reject any order for purchase of more than $250,000 of
Class B Shares. There is no front-end sales charge. See Buying Shares.
The Fund's Class B Shares should be purchased only in conjunction with an
investment program involving other funds which offer Class B Shares. Class
A Shares or Consultant Class Shares are appropriate for investors seeking a
taxable money market investment not involving such a program. See Suitability.
This Prospectus relates only to the Class B Shares and sets forth
information that you should read and consider before you invest. Please
retain it for future reference. Part B of the registration statement, dated
May 30, 1994, as it may be amended from time to time, contains additional
information about the Fund and has been filed with the Securities and
Exchange Commission. Part B is incorporated by reference into this Prospectus
and is available, without charge, by writing to Delaware Distributors, Inc.
at the above address or by calling the above numbers. The Fund's financial
statements appear in its Annual Report, which will accompany any response to
requests for Part B.
The Fund also offers the Delaware Cash Reserve A Class of shares (the
"Class A Shares") and the Delaware Cash Reserve Consultant Class of shares
(the "Consultant Class Shares"). The Class A Shares can be purchased directly
from the Fund or its Distributor, and have no front-end sales charge,
contingent deferred sales charge or annual 12b-1 Plan expenses. Consultant
Class Shares are available for sale through brokers, financial institutions
and other entities which have a dealer agreement with the Fund's Distributor
or a service agreement with the Fund, and have no front-end sales charge or
contingent deferred sales charge; such shares, however, are subject to annual
12b-1 Plan expenses. Prospectuses for the Class A Shares and the Consultant
Class Shares can be obtained by writing to Delaware Distributors, Inc. at the
above address or by calling the above numbers.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE> 2
SYNOPSIS
Capitalization
The Fund offers three classes of shares: the Class B Shares, the Class A
Shares and the Consultant Class Shares. The Fund has a present authorized
capitalization of ten billion shares of common stock with a $.001 par value
per share. Two billion shares of that stock have been allocated to the Class
B Shares; two billion shares have been allocated to the Class A Shares; and
five hundred million shares have been allocated to the Consultant Class
Shares. See Shares under Management of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") is the investment manager
for the Fund. The Manager or its affiliate, Delaware International Advisers
Ltd., manages the other funds in the Delaware Group. Delaware Distributors, Inc.
(the "Distributor") is the national distributor for the Fund and for all of the
other mutual funds in the Delaware Group. Delaware Service Company, Inc.
(the "Transfer Agent") is the shareholder servicing, dividend disbursing and
transfer agent for the Fund and for all of the other mutual funds in the
Delaware Group. See Management of the Fund.
Purchase Price
The Class B Shares offered by this Prospectus are available at net asset
value, without a front-end sales charge; such shares are subject to a CDSC of
(i) 4% if shares are redeemed within two years of purchase; (ii) 3% if shares
are redeemed within the third and fourth year of purchase; (iii) 2% if shares
are redeemed within the fifth year of purchase; and (iv) 1% if shares are
redeemed within the sixth year of purchase. The Class B Shares are also
subject to annual 12b-1 Plan expenses assessed against the shares for no
longer than approximately eight years after purchase. See Suitability; Buying
Shares and Automatic Conversion of Class B Shares thereunder; and Distribution
(12b-1) and Service under Management of the Fund.
Minimum Investment
The Class B Shares are available for sale through brokers, financial
institutions and other entities which have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund. The minimum initial
investment for the Class B Shares is $1,000 (see Part B or contact your
investment dealer for each Retirement Plan minimum), and subsequent
investments must be at least $100. Class B Shares are also subject to a maximum
purchase limitation of $250,000. See Buying Shares.
Investment Objective
The objective of the Fund is to seek maximum current income while preserving
principal and maintaining liquidity. The Fund intends to achieve its objective
by investing its assets in a diversified portfolio of money market instruments.
See Investment Objective and Policy.
Open-End Investment Company
The Fund was originally created in 1977, organized as a Pennsylvania
business trust in 1983 and reorganized as a Maryland corporation in 1990. In
addition, the Fund is a diversified, open-end management investment company.
See Shares under Management of the Fund.
Investment Management Fees
The Manager furnishes investment management services to the Fund, subject
to the supervision and direction of the Board of Directors. Under the
Investment Management Agreement, the annual compensation paid to the Manager
is equal to .5% on the first $500 million of average daily net assets of the
Fund, .475% on the next $250 million, .45% on the next $250 million, .425% on
the next $250 million, .375% on the next $250 million, .325% on the next $250
million, .3% on the next $250 million and .275% on the average daily net
assets over $2 billion, less all directors' fees paid to the unaffiliated
directors by the Fund. If the Fund's average daily net assets exceed $3
billion for any month, the Board of Directors will conduct a review of the
Investment Management Agreement. See Management of the Fund.
Redemption and Exchange
The Class B Shares of the Fund are redeemed at the net asset value
calculated after receipt of the redemption request, less any applicable CDSC.
The Class B Shares are exchanged at the net asset value calculated after the
exchange request. Neither the Fund nor the Distributor assesses any
additional charges for redemptions or exchanges of the Class B Shares.
See Redemption and Exchange.
2
<PAGE> 3
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
Annual Operating Expenses
Shareholder Transaction Expenses Class B Shares (as a percentage of average daily net assets)
- ------------------------------------------------------------------------ -----------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases Management Fees............................... 0.49%
(as a percentage of offering price).................. None 12b-1 Plan Expenses (including service fees).. 1.00%***
Maximum Sales Charge Imposed on Reinvested Dividends Other Operating Expenses...................... 0.51%+
(as a percentage of offering price).................. None -----
Contingent Deferred Sales Charge Total Operating Expenses...................... 2.00%+
(as a percentage of original purchase price =====
or redemption proceeds, whichever is lower).......... 4%*
Redemption Fees........................................ None**
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Class B Shares will bear
directly or indirectly. See Buying Shares. *The Class B Shares are subject to
a CDSC of (i) 4% if shares are redeemed within two years of purchase; (ii) 3%
if shares are redeemed within the third and fourth years of purchase; (iii)
2% if shares are redeemed within the fifth year of purchase; (iv) 1% if
shares are redeemed within the sixth year of purchase; and (v) 0% thereafter.
See Buying Shares. **CoreStates Bank, N.A. currently charges $7.50 per
redemption for redemptions payable by wire. ***Class B Shares are subject to
a 12b-1 Plan. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by rules of the
National Association of Securities Dealers, Inc. (the "NASD"). +"Other
Operating Expenses" and, thus, "Total Operating Expenses" are estimates based
upon the actual expenses incurred by the Consultant Class Shares, one of the
Fund's other classes of shares, for its fiscal year ended March 31, 1994. See
Class A Shares and the Consultant Class Shares for expense information about
those classes.
The following example illustrates the expenses that you would pay on a
$1,000 investment of Class B Shares of the Fund over various time periods
assuming (1) a 5% annual rate of return and (2) redemption at the end of each
time period. As noted in the table above, if Class B Shares are redeemed
within six years after purchase, the Fund charges a CDSC with respect to
Class B Shares.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$60 $93 $128 $213++
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of the period.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$20 $63 $108 $213++
++At the end of no more than approximately eight years after purchase, the
Class B Shares will automatically be converted into the Consultant Class
Shares of the Fund. The above example assumes conversion of Class B Shares at
the end of year eight. However, the conversion may occur as late as three
months after the eighth anniversary of purchase, during which time the higher
12b-1 Plan fees payable by Class B Shares will continue to be assessed. Years
nine and ten reflect expenses of the Consultant Class Shares. See Automatic
Conversion of Class B Shares under Buying Shares. The conversion will
constitute a tax-free exchange for federal income tax purposes. See Taxes.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
3
<PAGE> 4
INVESTMENT OBJECTIVE AND POLICY
As a money market fund, the Fund's objective is to provide maximum current
income, while preserving principal and maintaining liquidity. The Fund seeks to
do this by investing its assets in a diversified portfolio of money market
securities and managing the portfolio to maintain a constant $1.00 per share
value. While the Fund will make every effort to maintain a fixed net asset value
of $1.00 per share, there can be no assurance that this objective will be
achieved.
SUITABILITY
The Fund is suitable for investors who seek the current income available
from money market investments, along with easy access to their money and
stable principal value. Ownership of Fund shares also reduces the bookkeeping
and administrative inconveniences of directly purchasing money market
securities.
The Class B Shares are offered for sale through brokers, financial
institutions and other entities which have a Dealer Agreement with the Fund's
Distributor or a service agreement with the Fund. The Class B Shares may be
suitable for investors who desire the additional investment and
administrative services offered by such brokers and other entities.
The shares are designed for purchase as part of an investment program in
Class B Shares of Class B Funds (as defined below), or as a temporary
defensive option for holders of Class B Shares of other Class B Funds. Unlike
shares of most money market funds, the Fund's Class B Shares are subject to a
CDSC, as well as, relatively high Rule 12b-1 distribution and service fees.
Because of the 12b-1 Plan fees and the CDSC to which the Class B Shares are
subject, such Class B Shares should be purchased only by those having an
interest in participating in such an investment program or those holding or
intending to hold Class B Shares of other Class B Funds. See Dividend
Reinvestment Plan and Exchange Privilege under The Delaware Difference.
INVESTMENT STRATEGY
The Fund invests at least 80% of its assets in money market instruments in
order to achieve its objective. While there is no assurance that this
objective can be achieved, the Fund must follow certain policies that can
only be changed by shareholder approval.
Asset-Backed Securities
The Fund may also invest in securities which are backed by assets such as
receivables on home equity and credit card loans, and receivables regarding
automobile, mobile home and recreational vehicle loans, wholesale dealer
floor plans and leases. All such securities must be rated in the highest
rating category by a reputable credit rating agency (e.g., AAA by Standard &
Poor's Corporation ("S&P") or Aaa by Moody's Investors Service, Inc.
("Moody's")). Such receivables are securitized in either a pass-through or a
pay-through structure. Pass-through securities provide investors with an
income stream consisting of both principal and interest payments in respect
of the receivables in the underlying pool. Pay-through asset-backed
securities are debt obligations issued usually by a special purpose entity,
which are collateralized by the various receivables and in which the payments
on the underlying receivables provide the funds to pay the debt service on
the debt obligations issued. The Series may invest in these and other types
of asset-backed securities that may be developed in the future. It is the
Series' current policy to limit asset-backed investments to those represented
by interests in credit card receivables, wholesale dealer floor plans, home
equity loans and automobile loans.
The rate of principal payment on asset-backed securities generally depends
upon the rate of principal payments received on the underlying assets. Such
rate of payments may be affected by economic and various other factors such
as changes in interest rates. Therefore, the yield may be difficult to
predict and actual yield to maturity may be more or less than the anticipated
yield to maturity. Such asset-backed securities involve other risks,
including the risk that security interests cannot be adequately or in many
cases, ever, established. In addition, with respect to credit card
receivables, a number of state and federal consumer credit laws give debtors
the right to set off certain amounts owed on the credit cards, thereby
reducing the outstanding balance. In the case of automobile receivables,
there is a risk that the holders may not have either a proper or first
security interest in all of the obligations backing such receivables due to
the large number of vehicles involved in a typical issuance and technical
requirements under state laws. Therefore, recoveries on repossessed
collateral may not always be available to support payments on the securities.
For further discussion concerning the risks of investing in such asset-backed
securities, see Part B.
4
<PAGE> 5
Quality Restrictions
The Fund limits its investments to those which the Board of Directors has
determined present minimal credit risks and are of high quality and which
will otherwise meet the maturity, quality and diversification conditions with
which taxable money market funds must comply.
The Fund's investments include securities issued or guaranteed by the U.S.
government (e.g., Treasury Bills and Notes), or by the credit of its agencies
or instrumentalities (e.g., Federal Housing Administration and Federal Home
Loan Bank). The Fund may invest in the certificates of deposit and
obligations of both U.S. and foreign banks if they have assets of at least
one billion dollars in accordance with the maturity, quality and
diversification conditions with which taxable money market funds must comply.
The Fund may also purchase commercial paper and other corporate obligations;
if a security or, as relevant, its issuer is considered to be rated at the time
of the proposed purchase, it or, as relevant, its issuer must be so rated in
one of the two highest rating categories (e.g., for commercial paper, A-2 or
better by S&P and P-2 or better by Moody's; and, for other corporate
obligations, AA or better by S&P and Aa or better by Moody's) by at least two
nationally-recognized statistical rating organizations approved by the Board
of Directors or, if such security is not so rated, the purchase of the
security must be approved or ratified by the Board of Directors in accordance
with the maturity, quality and diversification conditions with which taxable
money market funds must comply. Appendix A of Part B describes the ratings of
S&P, Moody's, Duff and Phelps, Inc. and Fitch Investors Service, Inc., four
of the better-known statistical rating organizations.
Maturity Restrictions
The Fund maintains an average maturity of not more than 90 days. Also, it
does not purchase any instruments with an effective remaining maturity of
more than 13 months.
Investment Techniques
The Fund intends to hold its investments until maturity, but may sell them
prior to maturity for a number of reasons. These reasons include: to shorten
or lengthen the average maturity, to increase the yield, to maintain the
quality of the portfolio or to maintain a stable share value.
The Fund may also use repurchase agreements which are at least 100%
collateralized by securities in which the Fund can invest directly.
Repurchase agreements help the Fund to invest cash on a temporary basis.
Under a repurchase agreement, the Fund acquires ownership and possession of a
security, and the seller agrees to buy the security back at a specified time
and higher price. If the seller is unable to repurchase the security, the
Fund could experience delays and losses in liquidating the securities. To
minimize this possibility, the Fund considers the creditworthiness of banks
and dealers when entering into repurchase agreements.
The Fund may invest up to 10% of its portfolio in illiquid assets,
including repurchase agreements maturing in more than seven days. The Fund
may borrow money as a temporary measure for extraordinary purposes or to
facilitate redemptions, but it does not presently intend to do so.
If there were a national credit crisis, an issuer became insolvent or
interest rates were to rise, principal values could be adversely affected.
Investments in foreign banks and overseas branches of U.S. banks may be
subject to less stringent regulations and different risks than U.S. domestic
banks.
Part B provides more information on the Fund's investment policies and
restrictions.
5
<PAGE> 6
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
(Philadelphia 988-1333)
Fund Information; Literature;
Price, Yield and Performance Figures
Shareholder Service Center
800-523-1918
(Philadelphia 988-1241)
Information on Existing Regular Investment
Accounts and Retirement Plan Accounts;
Wire Investments; Wire Liquidations;
Telephone Liquidations; Telephone Exchanges
Delaphone
800-362-FUND
(800-362-3863)
Performance Information
You can call the Investor Information Center anytime to get current yield
information. Yield information is updated each weekday and is based on the
annualized yield over the past seven-day or longer period.
Shareholder Services
During business hours, you can call the Fund's Shareholder Service Center.
The representatives can answer any of your questions about your account, the
Fund, the various service features and other funds in the Delaware Group.
Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your
account faster than the mailed statements and confirmations seven days
a week, 24 hours a day.
Account Statements
A statement of account will be mailed each quarter summarizing all
transactions during the period. However, accounts in which there has been
activity, other than regular investment programs such as Automatic Investing
or Direct Deposit Plans, will receive a monthly statement reflecting
transactions for that period. You should examine statements and confirmations
immediately and promptly report any discrepancy by calling the Shareholder
Service Center.
Duplicate Confirmations
If your investment dealer is noted on your investment application, we will
send your dealer a duplicate confirmation. This makes it easier for your
investment dealer to help you manage your investments.
Tax Information
In January of each year, the Fund will mail you information on the tax
status of your dividends and distributions.
Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account without a
front-end sales charge at the time of reinvestment or the imposition of a
CDSC upon redemption. You may be permitted to invest your distributions in
the Class B Shares of the other funds in the Delaware Group which offer Class
B Shares subject to the minimum purchase and other requirements set forth in
each fund's prospectus. Such investments will not be subject to a front-end
sales charge at the time of purchase or the imposition of a contingent
deferred sales charge if those shares are later redeemed. See Automatic
Conversion of Class B Shares under Buying Shares for information concerning the
automatic conversion of shares acquired by reinvesting dividends.
The following funds currently offer Class B Shares: DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Delchester High-Yield Bond Fund, Inc.,
Delaware Group Government Fund, Inc., the Tax-Free USA Fund, the Tax-Free
Insured Fund and the Tax-Free USA Intermediate Fund of Delaware Group
Tax-Free Fund, Inc., the Treasury Reserves Intermediate Series of Delaware
Group Treasury Reserves, Inc., and the Fund ("Class B Funds"). The dividends
derived from Class B Shares may be invested only in the Class B Shares of the
Class B Funds. For more information about reinvestments, please call the
Shareholder Service Center.
6
<PAGE> 7
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their Class B Shares only into the Class B Shares of the Class B Funds,
subject to the minimum purchase and other requirements set forth in each
fund's prospectus. Such exchanges are effected at net asset value without the
assessment of a front-end sales charge or a CDSC at the time of the exchange.
Class B Shares of the Fund may be acquired in an exchange only if the shares
being offered in exchange are Class B Shares from the Class B Funds. Such
exchanges also will be effected at net asset value and without the imposition
of a front-end sales charge or a contingent deferred sales charge at the time
of purchase. See Investing by Exchange under How to Buy Shares and Redemption
and Exchange.
The exchange feature is available only in states where shares of the funds
being acquired can be sold. The Fund reserves the right to suspend or
terminate or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders. See Redemption and Exchange.
Wealth Builder Option
You may be permitted to elect to have amounts in your account automatically
invested in the Class B Shares of the Class B Funds. Investments under this
feature are exchanges and are therefore subject to the same conditions and
limitations as exchanges of Class B Shares of the Fund. See Redemption and
Exchange.
Financial Information about the Fund
Each fiscal year, you will receive an annual report containing financial
statements audited by Ernst & Young (the Fund's independent auditors), and an
unaudited semi-annual report. These reports provide detailed information
about the Fund's investments and performance. The Fund's fiscal year ends on
March 31.
The Delaware Digest
You will receive newsletters covering topics of interest about your
investment alternatives and services from the Delaware Group.
RETIREMENT PLANNING
The Class B Shares also may be suitable for the tax-deferred Retirement
Plans described below. As relevant, each of the Retirement Plans described
below is subject to an annual maintenance fee of $15 for each participant's
account, regardless of the number of funds selected. Fees are quoted upon
request. All of the fees noted above are subject to change. Additional
information about fees is contained in Part B. The minimum initial investment
for each Plan is $250; subsequent investments must be at least $25.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to Retirement Plan shareholders. For
additional information on any of the Plans and Delaware's retirement services,
call the Shareholder Service Center or see Part B.
Individual Retirement Account ("IRA")
Individuals, even if they participate in an employer-sponsored retirement
plan, may establish their own retirement program. Contributions to an IRA may
be tax-deductible and earnings are tax-deferred. Under the Tax Reform Act of
1986, the tax deductibility of IRA contributions is restricted, and in some
cases eliminated, for individuals who participate in certain employer-sponsored
retirement plans and whose annual income exceeds certain limits. Existing IRAs
and future contributions up to the IRA maximums, whether deductible or not,
still earn on a tax-deferred basis.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established on a group basis by an employer who wishes to
sponsor a tax-sheltered retirement program by making IRA contributions on
behalf of all eligible employees.
403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement
for the purchase of shares.
457 Deferred Compensation Plan
Permits employees of state and local governments and certain other entities
to enter into a deferred compensation arrangement for the purchase of shares.
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<PAGE> 8
BUYING SHARES
The Distributor serves as the national distributor for the Fund.
Class B Shares may be purchased through brokers, financial institutions and
other entities that have a dealer agreement with the Fund's Distributor or a
service agreement with the Fund. The minimum initial purchase of Class B
Shares is $1,000 and all subsequent purchases must be at least $100. Class B
Shares are also subject to a maximum purchase limitation of $250,000.
Retirement Plans have other minimums. Refer to Part B or call the Shareholder
Service Center for more information on these Plans.
The Class B Shares may be purchased at net asset value without the
imposition of a front-end sales charge at the time of purchase so that the
Fund will receive the full amount of the investor's purchase payment. The
Distributor compensates dealers or brokers for selling Class B Shares at the
time of purchase from its own funds. As discussed below, however, Class B
Shares are subject to annual 12b-1 Plan expenses for no longer than
approximately eight years after purchase and, if shares are redeemed within
six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for the distribution and related services provided to
and the related expenses borne on behalf of the Class B Shares in connection
with the sale of the Class B Shares, including compensation paid to dealers
or brokers for selling Class B Shares. Payments to the Distributor and others
under the 12b-1 Plan relating to the Class B Shares, is up to a maximum of
1.00% (.25% of which are service fees to be paid to the Distributor, dealers
and others for providing personal service and/or maintaining shareholder
accounts). The combination of the CDSC and the proceeds of the 12b-1 Plan
fees facilitates the ability of the Fund to sell the Class B Shares.
Holders of the Class B Shares exercising the exchange privilege described
below will continue to be subject to the CDSC schedule of the Class B Shares
described in this Prospectus. Such schedule may be higher than the CDSC
schedule relating to the Class B Shares acquired as a result of the exchange.
See Redemption and Exchange.
Automatic Conversion of Class B Shares
Except for shares acquired through a reinvestment of dividends, Class B
Shares held for eight years after purchase are eligible for automatic
conversion into Consultant Class Shares. The Fund will effect conversions of
Class B Shares into Consultant Class Shares only four times in any calendar
year, on the last business day of the second full week of March, June,
September and December (each, a "Conversion Date"). If the eighth anniversary
after a purchase of Class B Shares falls on a Conversion Date, an investor's
Class B Shares will be converted on that date. If the eighth anniversary
occurs between Conversion Dates, an investor's Class B Shares will be
converted on the next Conversion Date after such anniversary. Consequently,
if a shareholder's eighth anniversary falls on the day after a Conversion
Date, that shareholder will have to hold Class B Shares for as long as an
additional three months after the eighth anniversary after purchase before
the shares will automatically convert into Consultant Class Shares.
Class B Shares of a fund acquired through a reinvestment of dividends will
convert to the corresponding Class A Shares of that fund (or, in the case of
the Fund, the Consultant Class Shares) pro-rata with Class B Shares of that
fund not acquired through dividend reinvestments. See Dividend Reinvestment
Plan under The Delaware Difference.
All conversions of Class B Shares will be tax-free exchanges for federal
income tax purposes. See Taxes.
Contingent Deferred Sales Charge
Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, charged as a percentage of the dollar
amount subject thereto. The charge will be assessed on an amount equal to the
lesser of the net asset value at the time of purchase of the shares being
redeemed or the net asset value of the shares at the time of redemption. The
net asset value of the Class B Shares at the time of purchase and at the time
of redemption is expected to be the same if redeemed directly from the Fund.
For purposes of the above formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of the Class B Shares even
if those shares are later exchanged for Class B Shares of another Delaware
Group fund and, in the event of an exchange of the shares, the "net asset
value of such shares at the time of redemption" will be the net asset value
of the shares into which the shares have been exchanged. In addition, no CDSC
will be assessed on redemption of shares received upon reinvestment of
dividends or capital gains distributions.
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<PAGE> 9
The following table sets forth the rates of the CDSC:
Contingent Deferred
Sales Charge
(as a Percentage
Year After of Dollar Amount
Purchase Made Subject to Charge)
--------------- -------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted to
Consultant Class Shares, the Class B Shares will continue to be subject to
annual 12b-1 Plan expenses of 1% of the average daily net assets representing
such shares. At the end of no more than approximately eight years after
purchase, the investor's Class B Shares will be automatically converted into
the Consultant Class Shares of the Fund. Such conversion will constitute a
tax-free exchange for federal income tax purposes. See Taxes. The Consultant
Class Shares are subject to on-going 12b-1 Plan expenses of up to a maximum
of .30 of 1% (currently, no more than .25%) of the average daily net assets
representing such shares.
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in a manner that results in the lowest
possible rate being charged. Therefore, with respect to the Class B Shares,
it will be assumed that the redemption is first for shares held over six
years or shares acquired pursuant to reinvestment of dividends or
distributions and then of shares held longest during the six-year period. The
charge will not be applied to dollar amounts representing an increase in the
net asset value since the time of purchase, if any. All investments made
during a calendar month, regardless of when during the month the investment
occurred, will age one month on the last day of that month and each
subsequent month.
The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions effected pursuant to the Fund's right
to liquidate a shareholder's account if the aggregate net asset value of the
shares held in the account is less than the then effective minimum account
size; (ii) tax-free returns of excess contributions to an IRA or 403(b)(7)
Deferred Compensation Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan, or 457 Deferred Compensation Plan; and
(iv) distributions from an IRA, 403(b)(7) Deferred Compensation Plan or 457
Deferred Compensation Plan due to death or disability.
12b-1 Distribution Plan
Pursuant to the distribution plan adopted by the Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940 with respect to the Class B
Shares, the Fund is permitted to pay the Distributor annual distribution fees
payable monthly of 1% of the average daily net assets of the Class B Shares
in order to compensate the Distributor for providing distribution and related
services and bearing certain expenses on behalf of the Class B Shares. No
Class B Shares were sold prior to the date of this Prospectus. For a more
detailed discussion of the 12b-1 Plan relating to the Class B Shares, see
Distribution (12b-1) and Service.
Class A Shares and the Consultant Class Shares
In addition to offering the Class B Shares, the Fund offers two other
classes of shares, the Class A Shares and the Consultant Class Shares, each
of which are described in a separate prospectus. The Class A Shares can be
purchased directly from the Fund or its Distributor, and have no front-end or
contingent deferred sales charge or annual 12b-1 Plan expenses. The
Consultant Class Shares are available for sale through brokers, financial
institutions and other entities which have a Dealer Agreement with the Fund's
Distributor or a service agreement with the Fund. The Consultant Class Shares
have no front-end or contingent deferred sales charge; such class has a 12b-1
Plan whereby the Fund is permitted to pay the Distributor annual fees payable
monthly up to a maximum of .30% of the average daily net assets of such
shares in order to compensate the Distributor for providing distribution and
related services and bearing certain distribution-related expenses. All three
classes of the Fund's shares have a proportionate interest in the underlying
portfolio of securities of the Fund. For the fiscal year ended March 31,
1994, the Total Operating Expenses for the Class A Shares were 1.00% and for
the Consultant Class Shares were 1.25%. No Class B Shares were offered prior
to May 2, 1994. See Suitability.
Dividend Orders
Some shareholders want the dividends earned in one fund automatically
invested in another Delaware Group fund with a different investment objective.
For more information on the requirements of the other funds, see Dividend
Reinvestment Plan under The Delaware Difference or please call the
Shareholder Service Center.
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<PAGE> 10
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer.
Investing through Your Investment Dealer
You can make a purchase of the Class B Shares through most investment
dealers who, as part of the service they provide, must transmit orders
promptly. They may charge for this service. If you want a dealer but do not
have one, we can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application must be completed, signed and
sent with a check payable to Delaware Cash Reserve B Class to P.O. Box 7977,
Philadelphia, PA 19101.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Delaware Cash Reserve B Class. Your check should
be identified with your name(s) and account number. An investment slip
(similar to a deposit slip) is provided at the bottom of transaction
confirmations and dividend statements that you will receive from the Fund,
and should be used when you are making additional purchases. You can expedite
processing by including an investment slip with your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include
your name(s) and account number for the class in which you are investing).
1. Initial Purchases--Before you invest, telephone the Fund's Shareholder
Service Center at 800-523-1918 (in Philadelphia, 988-1241) to get an account
number. If you do not call first, it may delay processing your investment. In
addition, you must promptly send your Investment Application to Delaware Cash
Reserve B Class, New Accounts, P.O. Box 7977, Philadelphia, PA 19101.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Fund's Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a Retirement Plan Account, call the
Shareholder Service Center for special wiring instructions.
Investing by Exchange
If you have an investment in the Class B Shares of the Class B Funds, you
may write and authorize an exchange of part or all of your investment into the
Class B Shares of the Fund. Except for exchanges from other Class B Shares,
exchanges into the Class B Shares of the Fund will not be permitted from the
Class A Shares or other classes of shares within the Fund or of any of the
other funds in the Delaware Group. See Exchange Privilege under The Delaware
Difference and Redemption and Exchange.
Class B Shares of the Fund acquired by exchange will continue to carry the
contingent deferred sales charge and automatic conversion schedules of the
fund from which the exchange was made. The holding period of the Class B
Shares of the Fund will be added to that of the exchanged shares for purposes
of determining the time of automatic conversion into the Consultant Class
Shares of the Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information.
Permissible exchanges into Class B Shares of the Fund are effected at the
time of the exchange without the imposition of a contingent deferred sales
charge from the fund from which the shares are being exchanged.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to use
the following services:
1. Direct Deposit
You may wish your employer or bank to make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and
check clearing holds on payments such as social security, federal salaries,
Railroad Retirement benefits, etc.
2. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize the Fund to
transfer a designated amount monthly from your checking account to your Class
B Shares account. Many shareholders use this as an automatic savings plan for
IRAs and other purposes. Shareholders should allow a reasonable amount of
time for initial purchases and changes to these plans to become effective.
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<PAGE> 11
This option is not available to participants in the following plans: Salary
Reduction/SEP, Simplified Employee Pension/IRA, Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
* * *
Should investments by these two methods be reclaimed or returned for some
reason, the Fund has the right to liquidate your shares to reimburse the
government or transmitting bank. If there are insufficient funds in your
Class B Shares account, you are obligated to reimburse the Fund.
Purchase Price and Effective Date
The offering price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when such exchange is open.
Investments by Federal Funds wire will be effective upon receipt. If the
wire is received after the time the offering price of shares is determined,
as noted above, it will be effective the next business day. If the investment
is made by check, the check must be converted to Federal Funds before your
purchase can be effective (normally one business day after receipt).
Your purchase begins earning dividends the next business day after becoming
effective. See Dividends and Distributions for additional information.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase or exchange. If a
purchase is cancelled because your check is returned unpaid, you are
responsible for any loss incurred. The Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Group. The Fund
reserves the right, upon 60 days' written notice, to redeem accounts that
remain under $1,000 as a result of redemptions. An investor making the
minimum initial investment will be subject to involuntary redemption if he or
she redeems any portion of his or her account, without the imposition of a
CDSC.
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you
want an easy way to invest in more aggressive bond funds or tax-advantaged
funds. Exchanges are subject to the requirements of each fund. Shares
acquired in an exchange must be registered in the state where they are so
purchased. You may want to call us for more information or consult your
financial adviser or investment dealer to discuss which funds in the Delaware
Group will best meet your changing objectives.
Your shares will be redeemed or exchanged based on the net asset value next
determined after we receive your request in good order subject, in the case
of redemption, to any applicable CDSC. Redemption or exchange requests
received in good order after the time the net asset value is determined, as
noted above, will be processed the next business day. See Purchase Price and
Effective Date under Buying Shares. Except as otherwise noted below, for a
redemption request to be in "good order," you must provide your Class B
Shares account number, account registration, and the total number of shares
or dollar amount of the transaction. If a shareholder of Class B Shares
submits a redemption request for a specific dollar amount, the Fund will
redeem that number of shares necessary to tender to the shareholder the
requested amount to the extent enough shares are then held in the shareholder
account. With regard to exchanges, you must also provide the name of the fund
you want to receive the proceeds. Exchange instructions and redemption
requests must be signed by the record owner(s) exactly as the shares are
registered. You may request a redemption or an exchange by calling the Fund
at 800-523-1918 (in Philadelphia, 988-1241). The Fund reserves the right to
reject exchange requests at any time.
The Fund will not honor telephone or wire redemptions for Class B Shares
recently purchased by check unless it is reasonably satisfied that the
purchase check has cleared, which may take up to 15 days from the purchase
date. The Fund may honor written redemption requests, but will not mail the
proceeds until it is reasonably satisfied the purchase check has cleared. You
can avoid this potential delay if you purchase shares by wiring Federal
Funds. You may call the Shareholder Service Center to determine if your funds
are available for redemption. The Fund reserves the right to reject a
telephone redemption request or delay payment of telephone redemption
proceeds if there has been a recent change to the shareholder's address of
record.
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<PAGE> 12
The Class B Shares of the Fund may be exchanged only for the Class B Shares
of any of the Class B Funds. See Exchange Privilege under The Delaware
Difference. In each instance, permissible exchanges are subject to the
minimum purchase and other requirements set forth in each prospectus.
As described above, shareholders of the Class B Shares may exchange their
shares ("outstanding Class B Shares") for the Class B Shares of certain of
the Class B Funds ("new Class B Shares"). Shareholders of the Class B Shares
exercising the exchange privilege will not be subject to a CDSC that might
otherwise be due upon redemption of the outstanding Class B Shares. However,
such shareholders will continue to be subject to the CDSC and automatic
conversion schedules of the outstanding Class B Shares described in this
Prospectus and any CDSC assessed upon redemption will be charged by the Fund.
Such schedule may be higher than the CDSC schedule relating to the new Class B
Shares acquired as a result of the exchange. For purposes of computing the
CDSC that may be payable upon a disposition of the new Class B Shares, the
holding period for the outstanding Class B Shares is added to the holding
period of the new Class B Shares. The automatic conversion schedule of the
outstanding Class B Shares may be longer than that of the new Class B Shares.
Consequently, an investment in new Class B Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares for a longer
time than if the investment in new Class B Shares were made directly.
Different redemption and exchange methods are outlined below. Except for
the CDSC with respect to the Class B Shares, there is no fee charged by the
Fund or the Distributor for redeeming or exchanging your Class B Shares, but
such fees could be charged in the future. You may also have your investment
dealer arrange to have your shares redeemed or exchanged. Your investment
dealer may charge for this service.
All authorizations given by shareholders with respect to an account,
including selection of any of the features described below, shall continue in
effect until revoked or modified in writing and until such time as such
written revocation or modification has been received by the Fund or its
agent.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange.
The prospectus contains more complete information about the fund, including
charges and expenses.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your Class B Shares. The request must be signed by all
owners of the account or your investment dealer of record. For redemptions of
more than $50,000, or when the proceeds are not sent to the shareholder(s) at
the address of record, the Fund requires a signature by all owners of the
account and a signature guarantee for each owner. Each signature guarantee
must be supplied by an eligible guarantor institution. The Fund reserves the
right to reject a signature guarantee supplied by an eligible institution
based on its creditworthiness. The Fund may require further documentation
from corporations, executors, retirement plans, administrators, trustees or
guardians.
The redemption request is effective when it is received in good order.
Payment is normally mailed the next business day, but no later than seven
days after receipt of your request. The Fund does not issue certificates for
the Class B Shares.
Written Exchange
You can also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your Class B Shares into other
Class B Shares of the Class B Funds, subject to the same conditions and
limitations as other exchanges noted above.
Telephone Redemption and Exchange
The Telephone Redemption service enabling you to have redemption proceeds
mailed to your address of record and the Telephone Exchange service, both of
which are described below, are automatically provided unless the Fund
receives written notice from the shareholder to the contrary. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund
by telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.
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<PAGE> 13
Neither the Fund nor the Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption
or exchange of Fund shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone
are generally tape recorded, and a written confirmation will be provided for
all purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, the shareholder is acknowledging prior
receipt of a prospectus for the fund into which shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your record address. Checks will be
payable to the shareholder(s) of record and will normally be sent the next
business day, but no later than seven days, after receipt of the request.
This service is only available to individual, joint, and individual
fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires an Authorization Form with your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next
business day, but no later than seven days after receipt of your request, to
your predesignated bank account. Except for any CDSC which may be applicable
to the Class B Shares, there are no fees for this method, but the mail time
may delay getting funds into your bank account. Simply call the Fund's
Shareholder Service Center prior to the time the offering price of shares is
determined, as noted above.
Telephone Exchange
This is a convenient and efficient way to adjust your investment holdings
as your liquidity requirements and investment objectives change. Class B
Shares can be exchanged only for other Class B Shares of the Class B Funds,
subject to the same conditions and limitations as other exchanges noted
above.
You or your investment dealer of record can exchange shares into a Class B
Fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the requirements of each
fund, as described above. Telephone exchanges may be subject to limitations
as to amounts or frequency.
Wealth Builder Option
Holders of Class B Shares may elect to invest in the Class B Shares of
other Class B Funds through our Wealth Builder Option. Under this automatic
exchange program, shareholders can authorize regular monthly investments
(minimum of $100 per fund) to be liquidated from their Class B Shares account
and invested automatically into the shares of one or more Class B Funds.
Investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above.
Shareholders can also use the Wealth Builder Option to invest in the Class
B Shares through regular liquidations of shares in their accounts in other
funds in the Delaware Group, subject to the same conditions and limitations
as other exchanges into the Class B Shares of the Fund. See Investing by
Exchange under Buying Shares. Shareholders can terminate their participation
at any time by written notice to the Fund.
This option is not available to participants in the following plans: Salary
Reduction/SEP, Simplified Employee Pension/IRA, Profit Sharing and Money
Purchase Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
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<PAGE> 14
DIVIDENDS AND DISTRIBUTIONS
The Fund declares a dividend to all shareholders of record of the Class B
Shares at the time the offering price (net asset value) of shares is
determined. See Purchase Price and Effective Date under Buying Shares. Thus,
when redeeming shares, dividends continue to accrue up to and including the
date of redemption.
Purchases of the Class B Shares by wire begin earning dividends when
converted into Federal Funds and available for investment, normally the next
business day after receipt. However, if the Fund is given prior notice of
Federal Funds wire and an acceptable written guarantee of timely receipt from
an investor satisfying the Fund's credit policies, the purchase will start
earning dividends on the date the wire is received. Purchases by check earn
dividends upon conversion to Federal Funds, normally one business day after
receipt.
The Fund's dividends are declared daily and paid monthly on the last day of
each month. Payment by check of cash dividends will ordinarily be mailed
within three business days after the payable date. Short-term capital gains
distributions, if any, may be paid with the daily dividend; otherwise, they
will be distributed annually during the first quarter following the close of
the fiscal year.
Each class of shares of the Fund will share proportionately in the
investment income and expenses of the Fund, except that (i) the per share
dividends and distributions on the Class B Shares will be lower than the per
share dividends and distributions on the Class A Shares and the Consultant
Class Shares as a result of the higher expenses under the 12b-1 Plan relating
to the Class B Shares described on page 17; and (ii) the per share dividends
and distributions on both the Class B Shares and the Consultant Class Shares
will be lower than the per share dividends and distributions on the Class A
Shares as such class will not incur any expenses under the 12b-1 Plans
described on page 17.
No Class B Shares were offered prior to the date of this Prospectus.
Both dividends and distributions will be automatically reinvested in your
account unless you elect otherwise. Any check in payment of dividends or
other distributions which cannot be delivered by the Post Office or which
remains uncashed for a period of more than one year may be reinvested in the
shareholder's account at the then-current net asset value and the dividend
option may be changed from cash to reinvest. (See The Delaware Difference for
additional information.)
TAXES
The Fund has qualified, and intends to continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue Code (the
"Code"). As such, the Fund will not be subject to federal income tax, or to
any excise tax, to the extent its earnings are distributed as provided in the
Code.
The Fund intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. No portion of the Fund's
distributions will be eligible for the dividends-received deduction for
corporations.
Although the Fund does not expect to distribute any long-term capital
gains, any capital gains distributions paid by the Fund, whether received in
cash or in additional shares, are taxable to those investors who are subject
to income taxes as long-term capital gains, regardless of the length of time
an investor owns shares in the Fund.
The sale of Fund shares is a taxable event and may result in a capital gain
or loss to shareholders subject to tax. Capital gain or loss may be realized
from an ordinary redemption of shares or an exchange of shares between two
mutual funds (or two series or portfolios of a mutual fund). However, since
the Fund seeks to maintain a constant $1.00 share price for both purchases
and redemptions, shareholders are not expected to realize a capital gain or
loss upon sale, although a capital loss might result from the imposition of
the CDSC upon redemption.
Dividends which are declared in October, November or December but which,
for operational reasons, may not be paid to the shareholder until the
following January, will be treated for tax purposes as if paid by the Fund
and received by the shareholder on December 31 of the calendar year in which
they are declared.
The conversion of the Class B Shares into Consultant Class Shares of the
Fund at the end of no more than approximately eight years after purchase will
constitute a tax-free exchange for federal income tax purposes. Shareholders
should consult their own tax advisers regarding specific questions as to
federal, state, local or foreign taxes. See Automatic Conversion of Class B
Shares under Buying Shares.
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<PAGE> 15
In addition to federal taxes, shareholders may be subject to state and local
taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. government securities may be exempt from
state personal income taxes. Shares of the Fund are exempt from Pennsylvania
county personal property taxes.
Each year, the Fund will mail you information on the tax status of the
Fund's dividends and distributions. Shareholders will also receive each year
information as to the portion of dividend income that is derived from U.S.
government securities that are exempt from state income tax. Of course,
shareholders who are not subject to tax on their income would not be required
to pay tax on amounts distributed to them by the Fund.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied
with IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in the
Fund.
NET ASSET VALUE PER SHARE
The purchase price of the Class B Shares is equal to the net asset value
("NAV") per share of the Class B Shares. The NAV is computed as of the close
of regular trading on the New York Stock Exchange (ordinarily, 4 p.m.,
Eastern time) on days when such exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees
are accrued daily) and dividing by the number of shares outstanding.
The Fund's total net assets are determined by valuing the portfolio
securities at amortized cost. Under the direction of the Board of Directors,
certain procedures have been adopted to monitor the value of the Fund's
securities and stabilize the price per share at $1.00. Prior to January 1,
1991, the portfolio of the Fund was managed to maintain a constant $10 per
share value. The Fund accomplished this change by effecting a ten-to-one
stock split for shareholders of record on that date.
Each share of the Fund's three classes will bear, pro-rata, all of the
common expenses of the Fund. The net asset values of all outstanding shares of
each class of the Fund will be computed on a pro-rata basis for each
outstanding share based on the proportionate participation in the Fund
represented by the value of shares of that class. All income earned and
expenses incurred by the Fund will be borne on a pro-rata basis by each
outstanding share of a class, based on each class' percentage in the Fund
represented by the value of shares of such classes, except that Class A
Shares will not incur any of the expenses under the Fund's 12b-1 Plans and
Class B Shares and Consultant Class Shares alone will bear the 12b-1 Plan
expenses payable under their respective Plans. Due to the specific
distribution expenses and other costs that will be allocable to each class,
the dividends paid to each class of the Fund may vary. However, the NAV per
share of the Class B Shares, the Class A Shares and the Consultant Class
Shares is expected to be equivalent.
See Part B for additional information.
15
<PAGE> 16
MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of its
Board of Directors. Part B contains additional information regarding the
directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On March 31, 1994, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $25 billion in assets in the various institutional (approximately
$16,254,212,000) and investment company (approximately $9,642,945,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). By reason of its percentage ownership of DMH common
stock and through a Voting Trust Agreement with certain other DMH
shareholders, Legend Capital Group, L.P. ("Legend") controls DMH and the
Manager. As General Partners of Legend, Leonard M. Harlan and John K. Castle
have the ability to direct the voting of more than a majority of the shares
of DMH common stock and thereby control the Manager.
The Manager manages the Fund's portfolio, makes investment decisions and
implements them. The Manager also pays the Fund's rent and the salaries of
all the directors, officers and employees of the Fund who are affiliated with
the Manager.
The annual compensation paid by the Fund for investment management services
is equal to .5% on the first $500 million of average daily net assets of the
Fund, .475% on the next $250 million, .45% on the next $250 million, .425% on
the next $250 million, .375% on the next $250 million, .325% on the next $250
million, .3% on the next $250 million and .275% on the average daily net assets
over $2 billion, less all directors' fees paid to the unaffiliated directors by
the Fund. If the Fund's average daily net assets exceed $3 billion for any
month, the Board of Directors will conduct a review of the Investment
Management Agreement. Investment management fees paid by the Fund were 0.49%
of average daily net assets for the fiscal year ended March 31, 1994.
Portfolio Trading Practices
Portfolio trades are generally made on a net basis without brokerage
commissions. However, the price may include a mark-up or mark-down.
Banks, brokers or dealers are selected by the Manager to execute the Fund's
portfolio transactions.
The Manager uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed
with brokers or dealers who provide brokerage and research services to the
Manager or its advisory clients. These services may be used by the Manager in
servicing any of its accounts. Subject to best price and execution, the
Manager may consider a broker/dealer's sales of Fund shares in placing
portfolio orders, and may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees.
Performance Information
From time to time, the Fund may publish the "yield" and "effective yield"
for the Class B Shares. Both yield figures are based on historical earnings
and are not intended to indicate future performance. The "yield" of the Class
B Shares refers to the income generated by an investment in the Class over a
specified seven-day period. This income is then "annualized," which means the
amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of
the investment. The "effective yield" is calculated in a similar manner but,
when annualized, the income earned by an investment in the Class B Shares is
assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment.
The Fund may also publish aggregate and average annual total return
information concerning the Class B Shares which will reflect the compounded
rate of return of an investment in the Class B Shares over a specified period
of time and will assume the investment of all distributions at net asset
value. Yield fluctuates and is not guaranteed. Past performance is not an
indication of future results.
16
<PAGE> 17
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, Inc., serves as the national
distributor for the Class B Shares under an Amended and Restated Distribution
Agreement dated as of May 2, 1994.
The Fund has adopted a distribution plan under Rule 12b-1 (the "Plan") for
the Class B Shares which permits the Fund to pay the Distributor from Class
assets a monthly fee for its services and expenses in distributing and
promoting sales of its shares. These expenses include, among other things,
preparing and distributing advertisements, sales literature, and prospectuses
and reports used for sales purposes, compensating sales and marketing
personnel, holding special promotions for specified periods of time, and
paying distribution and maintenance fees to brokers, dealers and others. In
connection with the promotion of the Class B Shares, the Distributor may,
from time to time, pay to participate in dealer-sponsored seminars and
conferences, and reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising. The Distributor may pay or
allow additional promotional incentives to dealers as part of preapproved
sales contests and/or to dealers who provide extra training and information
concerning the Class B Shares and increase sales of such shares. In addition,
the Fund may make payments from the assets of the Class B Shares directly to
others, such as banks, who aid in the distribution of its shares or provide
services in respect of shares, pursuant to agreements with the Fund.
The 12b-1 Plan expenses relating to the Class B Shares are also used to pay
the Distributor for advancing the commission costs to dealers with respect to
the initial sale of such shares.
The aggregate fees paid by the Fund from the Class B Shares' assets to the
Distributor and others under the Plan may not exceed 1% (.25% of such amount
representing service fees to be paid by the Fund to the Distributor, dealers
and others, for providing personal service and/or maintaining shareholder
accounts) of the Class B Shares' average daily net assets in any year. The
Class B Shares will not incur any distribution expenses beyond these limits,
which may not be increased without shareholder approval. The Distributor may,
however, incur additional expenses and make additional payments to dealers
from its own resources to promote the distribution of Class B Shares.
The Fund has also adopted a plan under Rule 12b-1 for the Consultant Class
Shares. The aggregate fees paid by the Fund from the Consultant Class Shares'
assets to the Distributor and others under such Plan may not exceed .30% of
such Class' average daily net assets in any year. The Consultant Class Shares
will not incur any distribution expenses beyond this limit, which may not be
increased without shareholder approval. The Board of Directors has set the
current fee for the Consultant Class Shares at .25% of average daily net
assets. The Distributor may, however, incur additional expenses and make
additional payments to dealers from its own resources to promote the
distribution of the Consultant Class Shares.
The Class A Shares do not have a 12b-1 Plan. Such shares are not included
in calculating the expenses under the 12b-1 Plans, and the Plans are not used
to assist in the distribution and marketing of the Class A Shares.
While 12b-1 Plan expenses may not exceed 1% annually with respect to the
Class B Shares and .30% annually with respect to the Consultant Class Shares,
the 12b-1 Plans do not limit fees to amounts actually expended by the
Distributor. It is therefore possible that the Distributor may realize a
profit in any particular year. However, the Distributor currently expects
that its distribution expenses will likely equal or exceed payments to it
under the 12b-1 Plans. The monthly fees paid to the Distributor are subject
to the review and approval of the Fund's unaffiliated directors who may
reduce the fee or terminate the 12b-1 Plans at any time.
The NASD has adopted amendments to its Rules of Fair Practice relating to
investment company sales charges. The Fund and the Distributor intend to
operate in compliance with these rules.
The staff of the Securities and Exchange Commission ("SEC") has proposed
amendments to Rule 12b-1 and other related regulations that could impact Rule
12b-1 Distribution Plans. The Fund intends to amend the Plans, if necessary,
to comply with any new rules or regulations the SEC may adopt with respect to
Rule 12b-1.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under an Agreement dated December 20, 1990. The directors annually review
service fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
17
<PAGE> 18
Expenses
The Fund is responsible for all of its own expenses other than those
expenses borne by the Manager under the Investment Management Agreement and
those borne by the Distributor under the Distribution Agreement. No Class B
Shares were offered prior to May 2, 1994.
Shares
Delaware Group Cash Reserve, Inc. was originally created in 1977, organized
as a Pennsylvania business trust in 1983 and reorganized as a Maryland
corporation in 1990. The Fund currently has authorized capital of ten billion
shares of common stock, $.001 par value per share.
The Fund also offers Class A Shares and Consultant Class Shares. Shares of
each class represent a proportionate interest in the assets of the Fund and
have the same voting and other rights and preferences as the Class B Shares,
except that the Class A Shares are not subject to, and may not vote on
matters affecting, the Plans under Rule 12b-1 relating to the Class B Shares
and the Consultant Class Shares. Similarly, the shareholders of the
Consultant Class Shares are not subject to, and may not vote on matters
affecting, the Fund's Plan under Rule 12b-1 relating to the Class B Shares,
and the shareholders of the Class B Shares are not subject to, and may not
vote on matters affecting, the Fund's Plan under Rule 12b-1 relating to the
Consultant Class Shares.
All Fund shares have noncumulative voting rights which means that the
holders of more than 50% of the Fund's shares voting for the election of
directors can elect 100% of the directors if they choose to do so. Under
Maryland law, the Fund is not required, and does not intend, to hold annual
meetings of shareholders unless, under certain circumstances, it is required
to do so under the Investment Company Act of 1940. Shareholders of 10% or
more of the Fund's shares may request that a special meeting be called to
consider the removal of a director.
Cash Reserve B Class is known as Delaware Cash Reserve B Class. Prior to May
1994, the Delaware Cash Reserve A Class was known as the Delaware Cash Reserve
class, and prior to May 1992, was known as the original class. Prior to May
1994, the Delaware Cash Reserve Consultant Class was known as the Delaware
Cash Reserve Consultant class, which prior to November 1992, was known as the
Delaware Cash Reserve (Institutional) class, and which, prior to May 1992, was
known as the consultant class.
18
<PAGE> 19
SHARES OF THIS FUND ARE NOT FEDERALLY Delaware
INSURED BY THE FEDERAL DEPOSIT INSURANCE Cash Reserve
CORPORATION, THE FEDERAL RESERVE BOARD OR ------------
ANY OTHER AGENCY. SHARES ARE NOT DEPOSITS, B Class
OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY ANY BANK.
- ------------------------------------------
The Delaware Group includes 20 different PROSPECTUS
funds with a wide range of investment MAY 30, 1994
objectives. Stock funds, income
funds, tax-free funds, money market funds and
closed-end equity funds give investors the
ability to create a portfolio that fits their
personal financial goals. For more information
contact your financial adviser or call the
Delaware Group at 800-523-4640, in
Philadelphia 215-988-1333.
Investment Manager
Delaware Management Company, Inc. WHILE THE FUND WILL
One Commerce Square MAKE EVERY EFFORT TO
Philadelphia, PA 19103 MAINTAIN A STABLE NET ASSET
VALUE OF $1 PER SHARE, THERE
National Distributor IS NO ASSURANCE THAT THE
Delaware Distributors, Inc. FUND WILL BE ABLE TO DO SO.
1818 Market Street THE SHARES OF THE FUND ARE
Philadelphia, PA 19103 NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT.
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
Legal Counsel (Photo of George Washington
Stradley, Ronon, Stevens & Young Crossing the Delaware River)
One Commerce Square
Philadelphia, PA 19103
Independent Auditors
Ernst & Young
Two Commerce Square
Philadelphia, PA 19103
Custodian
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
P-055-5/94-RRD DELAWARE
Printed in the U.S.A. GROUP
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