<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 2-60770
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
--------
Post-Effective Amendment No. 40 [ X ]
--------
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 40
------
DELAWARE GROUP CASH RESERVE, INC.
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
(Name and Address of Agent for Service)
Approximate Date of Public Offering: May 30, 1996
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ X ] on May 30, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of
Rule 485
Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year was filed on May 24, 1996.
<PAGE> 2
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
--- C O N T E N T S ---
This Post-Effective Amendment No. 40 to Registration File No. 2-60770
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
<PAGE> 3
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
CROSS-REFERENCE SHEET*
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
A Class B Class/ Consultant
C Class Class
<S> <C> <C> <C> <C>
1 Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Cover Cover
2 Synopsis . . . . . . . . . . . . . . . . . . . . . . Synopsis; Synopsis; Synopsis;
Summary of Summary of Summary of
Expenses Expenses Expenses
3 Condensed Financial Information . . . . . . . . . . Financial Financial Financial
Highlights Highlights Highlights
4 General Description of Registrant . . . . . . . . . Investment Investment Investment
Objective Objective Objective
and Policy; and Policy; and Policy;
Shares Shares Shares
5 Management of the Fund . . . . . . . . . . . . . . Management Management Management
of the Fund of the Fund of the Fund
6 Capital Stock and Other Securities . . . . . . . . The Delaware The Delaware The Delaware
Difference; Difference; Difference;
Dividends Dividends Dividends
and and and
Distributions; Distributions; Distributions;
Shares Shares Shares
</TABLE>
*
This filing relates to Registrant's Delaware Cash Reserve A Class, Delaware
Cash Reserve B Class, Delaware Cash Reserve C Class and Delaware Cash Reserve
Consultant Class. There are separate prospectuses for each of the Delaware
Cash Reserve A Class and Delaware Cash Reserve Consultant Class and a combined
prospectus for the Delaware Cash Reserve B Class and Delaware Cash Reserve C
Class. The four classes have a common Part B and Part C.
<PAGE> 4
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
CROSS-REFERENCE SHEET*
PART A
(Continued)
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- -------------
A Class B Class/ Consultant
C Class Class
<S> <C> <C> <C> <C>
7 Purchase of Securities Being Offered . . . . . . . . Cover, Cover, Cover,
Buying Buying Buying
Shares, Shares, Shares,
Net Asset Net Asset Net Asset
Value Per Value Per Value Per
Share, Share, Share,
Management Management Management
of the Fund of the Fund of the Fund
8 Redemption or Repurchase Buying Buying Buying
Shares, Shares, Shares,
Redemption Redemption Redemption
Exchange Exchange Exchange
9 Legal Proceedings . . . . . . . . . . . . . . . . . None None None
</TABLE>
<PAGE> 5
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
CROSS REFERENCE SHEET
PART B
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
10 Cover Page . . . . . . . . . . . . . . . . . . . . . . . . Cover
11 Table of Contents . . . . . . . . . . . . . . . . . . . . Table of Contents
12 General Information and History . . . . . . . . . . . . . General Information
13 Investment Objectives and Policies . . . . . . . . . . . . Investment Objective
and Policy
14 Management of the Registrant . . . . . . . . . . . . . . . Officers and Directors
15 Control Persons and Principal Holders of Securities . . . Officers and Directors
16 Investment Advisory and Other Services . . . . . . . . . . Plans Under Rule 12b-1
for the Consultant Class
Shares and the Class B
Shares (under Purchasing
Shares); Investment
Management Agreement;
Officers and Directors;
General Information;
Financial Statements
17 Brokerage Allocation . . . . . . . . . . . . . . . . . . . Trading Practices
18 Capital Stock and Other Securities . . . . . . . . . . . . Capitalization and
Noncumulative Voting
(under General
Information)
19 Purchase, Redemption and Pricing of Securities
Being Offered . . . . . . . . . . . . . . . . . . . . . . Purchasing Shares;
Offering Price;
Redemption;
Exchange Privilege
20 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . Taxes
21 Underwriters . . . . . . . . . . . . . . . . . . . . . . Purchasing Shares
22 Calculation of Performance Data . . . . . . . . . . . . . Performance Information
23 Financial Statements . . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
<PAGE> 6
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
CROSS REFERENCE SHEET
PART C
<TABLE>
<CAPTION>
Location in
Item No. Description Part C
- -------- ----------- -------------
<S> <C> <C>
24 Financial Statements and Exhibits . . . . . . . . . Item 24
25 Persons Controlled by or under Common
Control with Registrant . . . . . . . . . . . . . Item 25
26 Number of Holders of Securities . . . . . . . . . . Item 26
27 Indemnification . . . . . . . . . . . . . . . . . . Item 27
28 Business and Other Connections of Investment Adviser Item 28
29 Principal Underwriters . . . . . . . . . . . . . . . Item 29
30 Location of Accounts and Records . . . . . . . . . . Item 30
31 Management Services . . . . . . . . . . . . . . . . Item 31
32 Undertakings . . . . . . . . . . . . . . . . . . . . Item 32
</TABLE>
<PAGE> 7
(DCR-A)
The Delaware Group includes funds with a wide range of investment objectives.
Stock funds, income funds, tax-free funds, money market funds, global and
international 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 Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006
_________________________________________
DELAWARE CASH RESERVE
_________________________________________
A CLASS
_________________________________________
No Sales Charge
P R O S P E C T U S
_________________________________________
MAY 30, 1996
WHILE THE FUND WILL MAKE EVERY EFFORT TO MAINTAIN A STABLE NET ASSET VALUE
OF $1 PER SHARE, THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
THE SHARES OF THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
DELAWARE
GROUP
----------
<PAGE> 8
(DCR-A)
DELAWARE CASH RESERVE PROSPECTUS
A CLASS SHARES MAY 30, 1996
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS: NATIONWIDE 800-523-1918
REPRESENTATIVES OF FINANCIAL INSTITUTIONS: NATIONWIDE 800-659-2259
This Prospectus describes the Delaware Cash Reserve A Class ("Class A
Shares") of Delaware Group Cash Reserve, Inc. (the "Fund"). 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 Class A Shares are not subject to
front-end or contingent deferred sales charges and are not subject to annual
12b-1 Plan distribution expenses. See Buying Shares.
This Prospectus relates only to the Class A 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,
1996, 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, with
out charge, by writing to Delaware Distributors, L.P. 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 Consultant Class
("Consultant Class Shares"), Delaware Cash Reserve B Class ("Class B Shares")
and Delaware Cash Reserve C Class ("Class C Shares"). Shares of those classes
may be subject to sales charges and other expenses, which may affect their
performance. A prospectus for the Consultant Class Shares and a prospectus for
Class B Shares and Class C Shares can be obtained by writing to Delaware
Distributors, L.P. at the above address or by calling the above number.
-1-
<PAGE> 9
(DCR-A)
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE RETIREMENT PLANNING
SYNOPSIS BUYING SHARES
SUMMARY OF EXPENSES REDEMPTION AND EXCHANGE
FINANCIAL HIGHLIGHTS DIVIDENDS AND DISTRIBUTIONS
INVESTMENT OBJECTIVE AND POLICY TAXES
SUITABILITY NET ASSET VALUE PER SHARE
INVESTMENT STRATEGY MANAGEMENT OF THE FUND
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
</TABLE>
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.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND
ARE NOT BANK OR CREDIT UNION DEPOSITS.
-2-
<PAGE> 10
(DCR-A)
SYNOPSIS
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager furnishes investment services to the Fund,
subject to the supervision and direction of the Fund's Board of Directors.
Under the Fund's 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.
The Manager or its affiliate, Delaware International Advisers Ltd.,
also manages the other funds in the Delaware Group. Delaware Distributors,
L.P. (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 A Shares offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge and are
not subject to distribution fees under a Rule 12b-1 distribution plan. See
Buying Shares.
MINIMUM INVESTMENT
Generally, the minimum initial investment for the Class A Shares is
$1,000. Subsequent investments must generally be at least $100. The minimum
purchase amounts for retirement plans may vary. 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. For further details, 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 an open-end management investment company and its
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act"). See Shares under Management of the Fund.
REDEMPTION AND EXCHANGE
Class A Shares of the Fund are redeemed or exchanged at the net asset
value calculated after receipt of the redemption or exchange request. See
Redemption and Exchange.
-3-
<PAGE> 11
(DCR-A)
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
-------------------------------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.46%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 0.95%
=====
</TABLE>
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in the Class A
Shares will bear directly or indirectly.
*CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
**Exchanges are subject to the requirements of each fund and a
front-end sales charge may apply.
For expense information about the Consultant Class Shares, Class B
Shares and Class C Shares, see the separate prospectuses relating to those
classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment 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, the Fund charges no redemption fees.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$10 $30 $52 $117
</TABLE>
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.
-4-
<PAGE> 12
(DCR-A)
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Cash Reserve, Inc. and have been audited by Ernst & Young LLP,
independent auditors. The data should be read in conjunction with the
financial statements, related notes, and the report of Ernst & Young LLP
covering such financial information and highlights, all of which are
incorporated by reference into Part B. Further information about the Fund's
performance is contained in its Annual Report to shareholders. A copy of the
Fund's Annual Report (including the report of Ernst & Young LLP) may be
obtained from the Fund upon request at no charge.
-5-
<PAGE> 13
DCR-A-CHT
<TABLE>
<CAPTION>
YEAR ENDED
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period(1) . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . 0.0490 0.0394 0.0227 0.0283 0.0501
Net Gains or Losses on Securities
(both realized and unrealized). . . . . . none none none none none
---- ---- ---- ---- ----
Total From Investment Operations . . . . . 0.0490 0.0394 0.0227 0.0283 0.0501
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment income) . . . (0.0490) (0.0394) (0.0227) (0.0283) (0.0501)
Distributions (from capital gains) . . . . . --- --- --- --- ---
Returns of Capital . . . . . . . . . . . . . --- --- --- --- ---
------- ------- ------- ------- -------
Total Distributions . . . . . . . . . . . (0.0490) (0.0394) (0.0227) (0.0283) (0.0501)
-------- -------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
- ---------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 5.01% 4.01% 2.28% 2.87% 5.13%
- ---------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) . . $585,485 $605,993 $699,112 $672,034 $911,548
Ratio of Expenses to Average Daily Net Assets 0.95% 1.01% 1.00% 0.90% 0.81%
Ratio of Net Investment Income to
Average Daily Net Assets . . . . . . . . . 4.90% 3.91% 2.27% 2.88% 5.04%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
3/31/91 3/29/90 3/30/89 3/31/88 3/26/87
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period(1) . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . 0.0727 0.0820 0.0730 0.0629 0.0571
Net Gains or Losses on Securities
(both realized and unrealized). . . . . . none none none none none
---- ---- ---- ---- ----
Total From Investment Operations . . . . . 0.0727 0.0820 0.0730 0.0629 0.0571
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment income) . . . (0.0727) (0.0820) (0.0730) (0.0629) (0.0571)
Distributions (from capital gains) . . . . . --- --- --- --- ---
Returns of Capital . . . . . . . . . . . . . --- --- --- --- ---
------- ------ ------- ------- -------
Total Distributions . . . . . . . . . . . (0.0727) (0.0820) (0.0730) (0.0629) (0.0571)
------- -------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
- -----------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 7.52% 8.51% 7.55% 6.48% 5.86%
- -----------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) . . $1,042,489 $1,087,547 $1,073,044 $986,408 $996,964
Ratio of Expenses to Average Daily Net Assets 0.78% 0.82% 0.90% 0.88% 0.90%
Ratio of Net Investment Income to
Average Daily Net Assets . . . . . . . . . 7.24% 8.20% 7.32% 6.29% 5.76%
</TABLE>
______________________________
(1) All figures prior to January 1, 1991 have been restated to reflect a stock
recapitalization.
<PAGE> 14
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 suited 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.
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.
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
Standard & Poor's Ratings Group ("S&P") and P-2 or better by Moody's Investors
Service, Inc. ("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.
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
-6-
<PAGE> 15
(DCR-A)
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 S&P or Aaa by 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 Fund may invest in these
and other types of asset-backed securities that may be developed in the future.
It is the Fund's 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.
RULE 144A SECURITIES
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain institutional buyers such as the Fund. The Fund may invest no more
than 10% of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security;
(ii) whether at least three dealers are willing to purchase or sell the
security and the number of potential purchasers; (iii) whether at least two
dealers are making a market in the security; and (iv) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 10% limit on
investments in such securities, the Manager will determine what action to take
to ensure that the Fund continues to adhere to such limitation.
-7-
<PAGE> 16
(DCR-A)
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.
-8-
<PAGE> 17
(DCR-A)
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
FUND INFORMATION, LITERATURE, PRICE, YIELD AND PERFORMANCE
FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
INFORMATION ON EXISTING REGULAR INVESTMENT ACCOUNTS AND
RETIREMENT PLAN ACCOUNTS WIRE INVESTMENTS, WIRE LIQUIDATIONS,
TELEPHONE LIQUIDATIONS AND 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 Delaware Group'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. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available 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. Accounts in which there has been activity,
other than a reinvestment of dividends, will receive a monthly statement
confirming transactions for that period. You should examine statements
immediately and promptly report any discrepancy by calling the Shareholder
Service Center.
DUPLICATE CONFIRMATIONS
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
-9-
<PAGE> 18
(DCR-A)
TAX INFORMATION
In January of each year, the Fund will mail you information on the tax
status of your dividends and distributions.
DIVIDEND PAYMENTS
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.
For more information, see Dividend Reinvestment Plan under Buying
Shares - Additional Methods of Adding to Your Investment or call the
Shareholder Service Center.
EXCHANGE PRIVILEGE
The Exchange Privilege permits shareholders to exchange all or part of
their Class A Shares into shares of the other funds in the Delaware Group,
subject to the eligibility and minimum purchase requirements set forth in each
fund's prospectus, including any applicable front-end sales charges.
For additional information on exchanges, see Investing by Exchange
under Buying Shares and Redemption and Exchange.
WEALTH BUILDER OPTION
You may elect to have amounts in your account automatically invested
in other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A Shares. See Redemption and Exchange.
DELAWARE GROUP ASSET PLANNER
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned allocation strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor an
allocation strategy that meets their personal needs and goals. See Buying
Shares.
MONEYLINE DIRECT DEPOSIT SERVICE
If you elect to have your dividends and distributions paid in cash and
such dividends and distributions are in an amount of $25 or more, you may
choose the MoneyLine Direct Deposit Service and have such payments transferred
from your Fund account to your predesignated bank account. See Dividends and
Distributions. In addition, you may elect to have your Systematic Withdrawal
Plan payments transferred from your Fund account to your predesignated bank
account through this service. See Systematic Withdrawal Plans under Redemption
and Exchange. Your funds will normally be credited to your bank account two
business days after the payment date. There are no fees for this service. You
can initiate the MoneyLine Direct Deposit Service by completing an
Authorization Agreement. If your name and address are not identical to the
name and address on your Fund account, you must have your signature guaranteed.
This service is not available for retirement plans.
-10-
<PAGE> 19
(DCR-A)
FINANCIAL INFORMATION ABOUT THE FUND
Each fiscal year, you will receive an audited annual report 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 Delaware Group's newsletters covering topics of
interest about your investment alternatives and services.
-11-
<PAGE> 20
(DCR-A)
RETIREMENT PLANNING
The Class A Shares are also suitable for tax-deferred retirement
plans. Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials.
Fees are quoted upon request. 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 by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer
may also elect to make additional contributions to this plan.
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.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in
shares.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Permits employers to establish a tax-qualified plan based on salary
deferral contributions.
-12-
<PAGE> 21
(DCR-A)
BUYING SHARES
PURCHASE AMOUNTS
Generally, the minimum for initial investments of Class A Shares is
$1,000. Subsequent investments must generally be $100 or more. For purchases
under a Uniform Gifts to Minors Act or Uniform Transfers to Minors Act or
through an Automatic Investing Plan, there is a minimum initial purchase of
$250 and a minimum subsequent purchase of $25. Minimum purchase requirements
do not apply to retirement plans other than IRAs for which there is a minimum
initial purchase of $250, and a minimum subsequent purchase of $25, regardless
of which class is selected. All purchases are at net asset value. There is no
front-end or contingent deferred sales charge.
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 shares of the Fund 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 or, in the case of a
retirement plan account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to Delaware Cash Reserve A
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 A 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 dividend statements that you
will receive from the Fund. Use of this investment slip can help expedite
processing of 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 Shareholder
Service Center at 800-523-1918 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 or, in the case of a retirement plan account,
an appropriate retirement plan application, to Delaware Cash Reserve A Class,
New Accounts, to 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 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.
-13-
<PAGE> 22
(DCR-A)
DELAWARE GROUP ASSET PLANNER
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. As previously described, the Delaware Group
Asset Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
percentages in Delaware Group funds or, with the help of a financial adviser,
you may design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing
Delaware Group accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
funds' prospectuses. The minimum initial investment per Strategy is $2,000;
subsequent investments must be at least $100. Individual fund minimums do not
apply to investments made using the Asset Planner service. Class A, Class B,
Class C and Consultant Class Shares are available through the Asset Planner
service; however, only shares within the same class may be used within the same
Strategy. (For purposes of the Delaware Group Asset Planner service,
consultant class shares may be used in the same strategy with Class A shares.)
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year.
However, for all IRA accounts established with the same Social Security number
under the Asset Planner service, the annual maintenance fee will be limited to
$35 irrespective of the number of Strategies selected. For example, if a
shareholder transfers regular IRA assets and rollover assets from a qualified
plan into an IRA through the Delaware Group Asset Planner service and, to avoid
commingling, maintains more than one Strategy registered under the same Social
Security number, only one $35 annual fee needs to be paid. The fee, payable to
Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from
one of the funds within your Asset Planner account if not paid by September
30th. See Part B.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware
Group, you may write and authorize an exchange of part or all of your
investment into the Fund. The Class B Shares and Class C Shares of the Fund
and of any other fund in the Delaware Group which offers such classes of shares
may not be exchanged into the Class A Shares. If you wish to open an account
by exchange, call the Shareholder Service Center for more information.
-14-
<PAGE> 23
(DCR-A)
ADDITIONAL METHODS OF ADDING TO YOUR INVESTMENT
Call the Shareholder Service Center for more information if you wish
to use the following services:
1. 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 Fund
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.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
2. Direct Deposit
YOU MAY WISH TO HAVE YOUR EMPLOYER OR BANK 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.
* * *
Should investments through an automatic investing plan or by direct
deposit 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 account, you are obligated to reimburse
the Fund.
3. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidation of shares in your accounts in other funds in the Delaware
Group, subject to the same conditions and limitations as other exchanges noted
above.
You may also elect to invest in other mutual funds in the Delaware
Group through our Wealth Builder Option. Under this automatic exchange
program, you can authorize regular monthly amounts (minimum of $100 per fund)
to be liquidated from your Fund account and invested automatically into one or
more funds in the Delaware Group. If, in connection with the election of
Wealth Builder Option, you wish to open a new account in such other fund or
funds to receive the automatic investment, such new account must meet such
other funds' minimum initial purchase requirements. Investments under this
option are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above. You can terminate your
participation at any time by written notice to the Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
-15-
<PAGE> 24
(DCR-A)
4. 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
sales charge or you may be permitted to reinvest your distributions in certain
other funds in the Delaware Group without a sales charge, subject to
eligibility and minimum purchase requirements set forth in each fund's
prospectus. The dividends from Class A Shares may not be invested in the Class
B Shares or Class C Shares of the Fund or any other Class B Shares or Class C
Shares of the funds in the Delaware Group of funds which offer such a class of
shares. For more information about reinvestments in shares of other funds in
the Delaware Group, call the Shareholder Service Center.
PURCHASE PRICE AND EFFECTIVE DATE
The offering price (net asset value) of the Class A Shares is
determined as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the 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 order. If a
purchase is canceled 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 to reject purchase orders paid by third- party checks or checks that are
not drawn on a domestic branch of a United States financial institution. If a
check drawn on a foreign financial institution is accepted, you may be subject
to additional bank charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification,
to charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive
months. Holders of such accounts may be notified of their below minimum status
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for
that quarter and each subsequent calendar quarter until the account is brought
up to the minimum balance. The service fee will be deducted from the account
during the first week of each calendar quarter for the previous quarter, and
will be used to help defray the cost of maintaining low balance accounts. No
fees will be charged without proper notice and no contingent deferred sales
charge will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $1,000 as a result of
redemptions. An investor making the minimum initial investment may be subject
to involuntary redemption if he or she redeems any portion of his or her
account.
CONSULTANT CLASS SHARES, CLASS B SHARES AND CLASS C SHARES
In addition to offering the Class A Shares, the Fund also offers
Consultant Class Shares, Class B Shares and Class C Shares, which are described
in separate prospectuses. Consultant Class Shares, Class B Shares and Class C
Shares are available for sale through brokers, financial institutions and
-16-
<PAGE> 25
(DCR-A)
other entities which have a dealer agreement with the Fund's Distributor or a
service agreement with the Fund. 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. Class B Shares and Class C Shares have
no front-end sales charge, are subject to annual 12b-1 expenses equal to a
maximum of 1% (.25% of which are service fees paid to the Distributor, dealers
and others) and are subject to a contingent deferred sales charge upon
redemption. To obtain a prospectus which describes Consultant Class Shares,
Class B Shares or Class C Shares, contact the Distributor by calling the phone
number listed on the back cover of this Prospectus.
-17-
<PAGE> 26
(DCR-A)
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 equity funds, more aggressive bond funds or
tax-advantaged funds. Exchanges are subject to the requirements of each fund
and all exchanges of shares constitute taxable events. All exchanges are
subject to the eligibility and minimum purchase requirements set forth in each
fund's prospectus. Any applicable front-end sales charge will apply to
exchanges from this Fund and any other money market fund, to other funds,
except for exchanges involving assets that were previously invested in a fund
with a front-end sales charge and/or resulted from the reinvestment of
dividends. Class A Shares may not be exchanged for Class B Shares or Class C
Shares. Shares acquired in an exchange must be registered in the state where
the acquiring shareholder resides. 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 and
the consequence of any exchange transaction.
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.
Your shares will be redeemed or exchanged out of the Fund at a price
based on the net asset value next determined after the Fund receives your
request in good order. Redemption or exchange requests received in good order
after the time the offering price of shares is determined, as noted above, will
be processed on 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 A Shares account number,
account registration, and the total number of shares or dollar amount of the
transaction. Exchange instructions and redemption requests must be signed by
the record owner(s) exactly as the shares are registered. With regard to
exchanges, you must also provide the name of the fund you want to receive the
proceeds. You may request a redemption or an exchange by calling the Fund at
800-523-1918. The Fund issues certificates for shares only if you submit a
specific request. Any certificates that have been issued for shares you wish
to redeem or exchange must accompany your order. The Fund may suspend,
terminate or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail the proceeds until it
is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. 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 written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.
Various redemption and exchange methods are outlined below. There is
no fee charged by the Fund or the Distributor for redeeming or exchanging your
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.
-18-
<PAGE> 27
(DCR-A)
All authorizations given by shareholders, including selection of any
of the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
The Class A Shares of Delaware Group funds that carry a front-end
sales charge will be subject to a contingent deferred sales charge ("Limited
CDSC") upon redemption if the shares were purchased at net asset value without
the payment of a front-end sales charge and if a dealer's commission was paid
to a financial adviser, except in certain limited instances. Such shares may
be exchanged for shares of the Class A Shares of the Fund without the
imposition of the Limited CDSC at the time of the exchange. However, upon
subsequent redemption from the Class A Shares of the Fund or after a subsequent
exchange into a fund that is subject to the Limited CDSC, such shares will be
subject to the Limited CDSC imposed by the original fund whose shares were
initially exchanged into the Class A Shares. Shareholders will be given credit
for the period during which the Class A Shares were held.
CHECKWRITING FEATURE
CHECKWRITING IS A CONVENIENT ACCESS FEATURE THAT ALLOWS YOU TO EARN
DIVIDENDS UNTIL YOUR CHECK IS PRESENTED TO THE FUND.
You can request special checks by marking the box on the Investment
Application. There is a one-time $5 charge for this service.
Checks must be drawn for $500 or more and, unless otherwise indicated
on the Investment Application or checkwriting authorization form, must be
signed by all owners of the account.
You will be subject to CoreStates Bank, N.A.'s rules and regulations
governing similar accounts. If the amount of the check is greater than the
value of the shares in your account, the check will be returned and you may be
subject to a charge.
You may request a stop payment on checks by providing the Fund with a
written authorization (oral requests will be accepted only if followed promptly
with written authorization). Such requests will remain in effect for six
months unless renewed or canceled. There will be a $5 charge per check for
each six-month period.
Checks paid will be returned to you semi-annually (January and July).
If you need a copy of a check prior to the regular mailing you may call the
Shareholder Service Center.
The Checkwriting Feature is not available for retirement plans. Also,
since dividends are declared daily, you may not use the Checkwriting Feature to
close your account. (See Part B for additional information.)
WRITTEN REDEMPTION
You can write to the Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your Class A 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.
-19-
<PAGE> 28
(DCR-A)
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. If your shares are in certificate form, the
certificate must accompany your request and also be in good order.
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 A Shares into
another mutual fund in the Delaware Group. Written exchanges are subject to
the same conditions and limitations as other exchanges noted above.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you can only
redeem or exchange by written request and you must return your certificates.
The Telephone Redemption-Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. 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.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Class A 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, you are acknowledging prior receipt of a
prospectus for the fund into which your 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, you must complete an Authorization Form and have 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. There are no fees for this redemption method,
but the mail time may delay getting funds into your bank account. Simply call
the Shareholder Service Center prior to the time the offering price of shares
is determined, as noted above.
-20-
<PAGE> 29
(DCR-A)
TELEPHONE EXCHANGE
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change.
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. Any such exchange is
subject to the same conditions and limitations as other exchanges noted above.
Telephone exchanges may be subject to limitations as to amounts or frequency.
SYSTEMATIC WITHDRAWAL PLAN
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON
FIXED INCOMES, SINCE IT PROVIDES THEM WITH A STABLE SUPPLEMENTAL AMOUNT. With
accounts of at least $5,000, you may elect monthly withdrawals of $25
(quarterly $75) or more. The Fund does not recommend any particular monthly
amount, as each shareholder's situation and needs vary. Payments are normally
made by check. In the alternative, you may elect to have your payments
transferred from your Fund account to your predesignated bank account through
the MoneyLine Direct Deposit Service. There are no fees for this redemption
method. See MoneyLine Direct Deposit Service under The Delaware Difference for
more information about this service.
2. Retirement Plans
For shareholders eligible under the applicable Retirement Plan to
receive benefits in periodic payments, the Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals, depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine Direct Deposit Service described
above is not available for retirement plans.
For more information on both of these plans, call the Shareholder
Service Center.
-21-
<PAGE> 30
(DCR-A)
DIVIDENDS AND DISTRIBUTIONS
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.
Purchases of 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 declares a dividend to all shareholders of record at the time
the offering price 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.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the per share dividends and
distributions on the Class A Shares will be higher than the per share dividends
and distributions on the Consultant Class Shares, the Class B Shares and the
Class C Shares as the Class A Shares will not incur the expenses under the
12b-1 Plans for the Consultant Class Shares, the Class B Shares and the Class C
Shares. See Consultant Class Shares, Class B Shares and Class C Shares under
Buying Shares. For the seven-day period ended March 31, 1996, the annualized
current yield of the Class A Shares was 4.49% and the compounded effective
yield was 4.60%.
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.
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 United States 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.
If you elect to take your dividends and distributions in cash and such
dividends and distributions are in an amount of $25 or more, you may elect the
MoneyLine Direct Deposit Service to enable such payments to be transferred from
your Fund account to your predesignated bank account. This service is not
available for retirement plans. See MoneyLine Direct Deposit Service under The
Delaware Difference for more information about this service.
-22-
<PAGE> 31
(DCR-A)
TAXES
The tax discussion set forth below 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.
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, if any. 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.
Dividends which are declared in October, November or December to
shareholders of record in such a month 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.
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, if any, 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 Investment Application your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
-23-
<PAGE> 32
(DCR-A)
NET ASSET VALUE PER SHARE
The purchase and redemption price of the Fund's shares is equal to the
net asset value ("NAV") per share of the Class A Shares that is next computed
after the order is received. 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 the 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.
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 Consultant Class Shares, Class B Shares and Class C
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 each class is expected to be equivalent.
See Part B for additional information.
-24-
<PAGE> 33
(DCR-A)
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, 1996, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $29 billion in assets in the various institutional (approximately
$18,576,143,000) and investment company (approximately $10,699,380,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and
a wholly-owned subsidiary of Lincoln National Corporation ("Lincoln National")
was completed. DMH and the Manager are now wholly-owned subsidiaries, and
subject to the ultimate control, 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. In connection with the merger, a new
Investment Management Agreement between the Fund and the Manager was executed
following shareholder approval.
The Manager manages the Fund's portfolio, makes investment decisions
and implements them. The Manager also administers the Fund's affairs and 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,
1996.
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.
-25-
<PAGE> 34
(DCR-A)
PERFORMANCE INFORMATION
From time to time, the Fund may publish the "yield" and "effective
yield" for the Class A Shares. Both yield figures are based on historical
earnings and are not intended to indicate future performance. The "yield" of
the Class A 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 A
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. Yield fluctuates and is not guaranteed.
The Fund may also publish aggregate and average annual total return
information concerning the Class which will reflect the compounded rate of
return of an investment in the Class over a specified period of time and will
assume the investment of all distributions at net asset value. Past
performance is not a guarantee of future results.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Fund under a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995. The Distributor bears all of the costs of promotion and
distribution.
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. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent
may be performed by certain other entities and the Transfer Agent may elect to
enter into an agreement to pay such other entities for these services.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
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. The Class A
Shares' ratio of expenses to average daily net assets for the fiscal year ended
March 31, 1996 was 0.95%.
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 is an open-end management investment
company and its portfolio of assets is diversified as defined by the 1940 Act.
The Fund currently has authorized capital of ten billion shares of common
stock, $.001 par value per share.
All such shares have equal voting rights and are equal in all other
respects. 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,
-26-
<PAGE> 35
(DCR-A)
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 1940 Act. 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.
The Fund also offers Consultant Class Shares, Class B Shares and Class
C 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 A 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
Consultant Class Shares, Class B Shares and Class C Shares. Similarly, as a
general matter, shareholders of Consultant Class Shares, Class B Shares and
Class C Shares may vote only on matters affecting the Plan that relates to the
Class of shares that they hold. However, the Class B Shares may vote on a
proposal to increase materially the fees to be paid by the Fund under the Rule
12b-1 Plan relating to the Consultant Class Shares.
Cash Reserve A Class is known as Delaware Cash Reserve A Class. From
May 1992 to May 1994, Delaware Cash Reserve A Class was known as Delaware Cash
Reserve class, and prior to May 1992, it was known as the original class. Cash
Reserve Consultant Class is known as Delaware Cash Reserve Consultant Class.
From November 1992 to May 1994, Delaware Cash Reserve Consultant Class was
known as Delaware Cash Reserve Consultant class, from May 1992 to November
1992, it was known as Delaware Cash Reserve (Institutional) class, and prior to
May 1992, it was known as the consultant class. Cash Reserve B Class is known
as Delaware Cash Reserve B Class. Cash Reserve C Class is known as Delaware
Cash Reserve C Class.
Effective on or after June 15, 1996, the Fund's custodian will be
Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006. Prior to
that time, the Fund's custodian was Morgan Guaranty Trust Company of New York,
60 Wall Street, New York, NY 10260.
-27-
<PAGE> 36
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international 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 Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006
___________________________________________
DELAWARE CASH RESERVE
___________________________________________
B CLASS
___________________________________________
C CLASS
___________________________________________
P R O S P E C T U S
___________________________________________
MAY 30, 1996
WHILE THE FUND WILL MAKE EVERY EFFORT TO MAINTAIN A STABLE NET ASSET
VALUE OF $1 PER SHARE, THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO
SO. THE SHARES OF THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
DELAWARE
GROUP
- -------------
<PAGE> 37
(DCR-BC)
DELAWARE CASH RESERVE
B CLASS SHARES PROSPECTUS
C CLASS SHARES MAY 30, 1996
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS: (SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES: (BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
REPRESENTATIVES OF FINANCIAL INSTITUTIONS: NATIONWIDE 800-659-2259
This Prospectus describes the Delaware Cash Reserve B Class (the
"Class B Shares") and the Delaware Cash Reserve C Class (the "Class C Shares")
(collectively, the "Classes") of Delaware Group Cash Reserve, Inc. (the
"Fund"). The Fund is a professionally-managed mutual fund seeking maximum
current income while preserving principal and maintaining liquidity. The Fund
is a money market fund and intends to achieve its objective by investing its
assets in a diversified portfolio of money market instruments.
Class B Shares and Class C 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.
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 which will be assessed against the shares for approximately
eight years after purchase. See Automatic Conversion of Class B Shares under
Classes of Shares. Class C Shares are subject to a CDSC which may be imposed
upon redemptions made within 12 months of purchase and annual 12b-1 plan
expenses which will be assessed against the shares for the life of the
investment. There is no front-end sales charge imposed upon purchases of Class
B Shares or Class C Shares. See Summary of Expenses.
This Prospectus relates only to the Classes listed above and sets
forth information that you should read and consider before you invest. Please
retain it for future reference. Part B of the Fund's registration statement,
dated May 30, 1996, 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, L.P. at the
above address or by calling the above numbers. The Fund's financial statements
appear in its Annual Report which will accompany each response to requests for
Part B.
The Fund also offers the Delaware Cash Reserve A Class (the "Class A
Shares") and the Delaware Cash Reserve Consultant Class (the "Consultant Class
Shares"). Prospectuses for Class A Shares and Consultant Class Shares can be
obtained by writing to Delaware Distributors, L.P. at the above address or by
calling the above numbers.
-1-
<PAGE> 38
(DCR-BC)
Because the Fund offers four classes of shares, an investor is able to
choose the method of purchasing shares that is most suitable for his or her
needs. In choosing the most suitable class, an investor should consider the
differences among the four classes, including the effect of a CDSC and 12b-1
Plan expenses, given the amount of the purchase and the length of time the
investor expects to hold the shares, among other circumstances. Generally, the
Fund's Class B Shares should be purchased only in conjunction with an
investment program involving other funds which offer Class B Shares. Likewise,
the Fund's Class C Shares should be purchased only in conjunction with an
investment program involving other funds which offer Class C Shares. See
Suitability under Investment Objective and Policy. Class A Shares or
Consultant Class Shares of the Fund are appropriate for investors seeking a
taxable money market investment not involving such a program. See Suitability
under Investment Objective and Policy and Class A Shares and Consultant Class
Shares under Classes of Shares.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE RETIREMENT PLANNING
SYNOPSIS CLASSES OF SHARES
SUMMARY OF EXPENSES HOW TO BUY SHARES
FINANCIAL HIGHLIGHTS REDEMPTION AND EXCHANGE
INVESTMENT OBJECTIVE AND POLICY DIVIDENDS AND DISTRIBUTIONS
SUITABILITY TAXES
INVESTMENT STRATEGY NET ASSET VALUE PER SHARE
THE DELAWARE DIFFERENCE MANAGEMENT OF THE FUND
PLANS AND SERVICES
[/R]
</TABLE>
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.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND
ARE NOT BANK OR CREDIT UNION DEPOSITS.
-2-
<PAGE> 39
(DCR-BC)
SYNOPSIS
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager furnishes investment services to the Fund,
subject to the supervision and direction of the Fund's 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 of 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.
The Manager or its affiliate, Delaware International Advisers Ltd.,
also manages the other funds in the Delaware Group. Delaware Distributors,
L.P. (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.
SALES CHARGES
Class B Shares and Class C Shares are available at net asset value,
without a front-end sales charge.
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 during
the third or fourth year following purchase; (iii) 2% if shares are redeemed
during the fifth year following purchase; and (iv) 1% if shares are redeemed
during the sixth year following purchase. Class B Shares are also subject to
annual 12b-1 Plan expenses which are assessed against such shares for
approximately eight years after purchase. See Automatic Conversion of Class B
Shares under Classes of Shares.
Class C Shares are subject to a CDSC of 1% if shares are redeemed
within 12 months of purchase and are subject to annual 12b-1 Plan expenses
which are assessed against such shares for the life of the investment. See
Classes of Shares and Distribution (12b-1) and Service under Management of the
Fund.
PURCHASE AMOUNTS
Generally, the minimum initial investment is $1,000 for either Class.
Subsequent investments must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed the maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative
purchases over a period of time. The minimum and maximum purchase amounts for
retirement plans may vary. See How to Buy Shares.
-3-
<PAGE> 40
(DCR-BC)
INVESTMENT OBJECTIVE
The objective of the Fund is to seek maximum current income while
preserving principal and maintaining liquidity. The Fund seeks to achieve its
objective by investing its assets in a diversified portfolio of money market
instruments. For further details, 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. The
Fund is an open-end management investment company and its portfolio of assets
is diversified as defined by the Investment Company Act of 1940 (the "1940
Act"). See Shares under Management of the Fund.
REDEMPTION AND EXCHANGE
Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption request subject, in
the case of redemptions, to any applicable CDSC. Neither the Fund nor the
Distributor assesses any additional charges for redemptions or exchanges of
Class B Shares or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares
that are offered. See Redemption and Exchange.
-4-
<PAGE> 41
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class B Shares and Class C Shares follows:
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS B SHARES CLASS C SHARES
------------------------------------------------ -------------- --------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . None None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, whichever is lower) . . . . . . . . . . . . 4.00%* 1.00%*
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . None** None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS) CLASS B SHARES CLASS C SHARES
----------------------------------------------------- -------------- --------------
<S> <C> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49% 0.49%
12b-1 Plan Expenses (including service fees) . . . . . . . . . . . 1.00%*** 1.00%***
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . 0.46% 0.46%****
----- -----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . 1.95% 1.95%
===== =====
</TABLE>
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in Class B Shares
or Class C Shares will bear directly or indirectly.
*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 during
the third or fourth year following purchase; (iii) 2% if shares are redeemed
during the fifth year following purchase; (iv) 1% if shares are redeemed during
the sixth year following purchase; and (v) 0% thereafter. Class C Shares are
subject to a CDSC of 1% if shares are redeemed within 12 months of purchase.
See Deferred Sales Charge Alternative - Class B Shares and Level Sales Charge
Alternative - Class C Shares under Classes of Shares.
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
***Class B Shares and Class C Shares are subject to separate 12b-1
Plans. 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"). See Distribution (12b-1) and Service
under Management of the Fund.
****"Other Operating Expenses" for Class C Shares are estimates based
on the actual expenses incurred by Class B Shares for its fiscal year ended
March 31, 1996.
-5-
<PAGE> 42
(DCR-BC)
For expense information relating to the Class A Shares and Consultant
Class Shares, see the separate prospectuses relating to those classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment in the Classes over various time periods, assuming
(1) a 5% annual rate of return, (2) redemption at the end of each time period
and (3) payment of a CDSC at the time of redemption, if applicable.
<TABLE>
<CAPTION>
ASSUMING REDEMPTION ASSUMING NO REDEMPTION
---------------------------------- ---------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares $60 $91 $125 $208+ $20 $61 $105 $208+
Class C Shares $30 $61 $105 $227 $20 $61 $105 $227
</TABLE>
+ At the end of approximately eight years after purchase, Class B Shares
will automatically be converted into Consultant Class Shares. The
above example assumes conversion of Class B Shares at the end of the
eighth year. 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. Information for the ninth and tenth years reflects expenses
of the Consultant Class Shares. See Automatic Conversion of Class B
Shares under Classes of Shares for a description of the automatic
conversion feature. Also see Class A Shares and Consultant Class
Shares under Classes of 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.
________________________________________________________________________________
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Cash Reserve, Inc. and have been audited by Ernst & Young LLP,
independent auditors. The data should be read in conjunction with the
financial statements, related notes, and the report of Ernst & Young LLP
covering such financial information and highlights, all of which are
incorporated by reference into Part B. Further information about the Fund's
performance is contained in its Annual Report to shareholders. A copy of the
Fund's Annual Report (including the report of Ernst & Young LLP) may be
obtained from the Fund upon request at no charge.
________________________________________________________________________________
-6-
<PAGE> 43
DCR/BC-CHT
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
-------------- --------------
PERIOD PERIOD
YEAR 5/2/94(1) 11/29/95(2)
ENDED THROUGH THROUGH
3/31/96 3/31/95 3/31/96
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . $1.0000 $1.0000 $1.0000
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . 0.0390 0.0279 0.0124
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . none none none
---- ---- ----
Total From Investment Operations . 0.0390 0.0279 0.0124
------ ------ ------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . (0.0390) (0.0279) (0.0124)
Distributions (from capital gains) . . . . . --- --- ---
Returns of Capital . . . . . . . . . . . . . --- --- ---
----------- ----------- ----------
Total Distributions . . . . . . . . . (0.0390) (0.0279) (0.0124)
-------- -------- --------
Net Asset Value, End of Period . . . . . . . $1.0000 $1.0000 $1.0000
======= ======= =======
- -------------------------------------------------------------------
TOTAL RETURN(3) . . . . . . . . . . . . . . . 3.97% 3.10% 1.24%
- ---------------
- ---------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . $8,127 $1,088 $304
Ratio of Expenses to Average
Daily Net Assets . . . . . . . . . . . . . 1.95% 2.01% 1.95%
Ratio of Net Investment Income to
Average Daily Net Assets . . . . . . . . 3.90% 2.91% 3.90%
</TABLE>
______________________________
(1) Date of initial public offering; ratios and total return have been
annualized.
(2) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(3) Total return does not reflect any applicable CDSC.
<PAGE> 44
(DCR-BC)
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.
Class B Shares and Class C 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.
Class B Shares and Class C Shares may be suitable for investors who desire the
additional investment and administrative services offered by such brokers and
other entities.
Class B Shares are designed for purchase as part of an investment
program in Class B Shares of the funds in the Delaware Group which offer that
class of shares ("Class B Funds"), or as a temporary defensive option for
holders of Class B Shares of other Class B Funds. Likewise, Class C Shares are
designed for purchase as part of an investment program in Class C Shares of the
funds in the Delaware Group which offer that class of shares ("Class C Funds"),
or as a temporary defensive option for holders of Class C Shares of other Class
C Funds. Unlike shares of most money market funds, Class B Shares and Class C
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 and Class C Shares are subject, Class B Shares and
Class C 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 or Class C Shares of other Class C
Funds, as applicable. See Additional Methods of Adding to Your Investment -
Dividend Reinvestment Plan under How to Buy Shares 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.
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 in accordance
with the maturity, quality and diversification conditions with which
-7-
<PAGE> 45
(DCR-BC)
taxable money market funds must comply. To be considered for purchase by the
Fund, a security or, as relevant, the issuer of such security must be rated in
one of the two highest rating categories (e.g., for commercial paper, A-2 or
better by Standard & Poor's Ratings Group ("S&P") and P-2 or better by Moody's
Investors Service, Inc. ("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 or, if such security or, as
relevant, its issuer is not so rated, the purchase of that security must be
approved or ratified by the Board of Directors. 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.
ASSET-BACKED SECURITIES
The Fund may also invest in securities which are backed by assets such
as receivables on home equity loans, credit card loans, and 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 S&P or Aaa by 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 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 Fund may invest in
these and other types of asset-backed securities that may be developed in the
future. It is the Fund's current policy to limit asset-backed investments to
those represented by interests in credit card loans, 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 loans, 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 loans, there is a risk that the holders may
not have either a proper or first security interest in all of the obligations
backing the 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. To lessen the effect of failures by obligors on
underlying assets to make payments, asset- backed securities may have credit
support supplied by a thirty party or derived from the structure of the
transaction. The Fund will not pay any additional fees for third-party credit
support, although such credit support may increase the price of a security.
For further discussion concerning the risks of investing in such asset-backed
securities, see Part B.
RULE 144A SECURITIES
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain
-8-
<PAGE> 46
(DCR-BC)
institutional buyers such as the Fund. The Fund may invest no more than 10% of
the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security;
(ii) whether at least three dealers are willing to purchase or sell the
security and the number of potential purchasers; (iii) whether at least two
dealers are making a market in the security; and (iv) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 10% limit on
investments in such securities, the Manager will determine what action to take
to ensure that the Fund continues to adhere to such limitation.
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 Fund's 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.
-9-
<PAGE> 47
(DCR-BC)
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
FUND INFORMATION, LITERATURE, PRICE, YIELD AND PERFORMANCE FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
INFORMATION ON EXISTING REGULAR INVESTMENT ACCOUNTS AND RETIREMENT
PLAN ACCOUNTS
WIRE INVESTMENTS, WIRE LIQUIDATIONS, TELEPHONE LIQUIDATIONS AND
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 Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your
account, the Fund, 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. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.
STATEMENTS AND CONFIRMATIONS
You will receive quarterly statements of your account summarizing all
transactions during the period. Accounts in which there has been activity
other than a reinvestment of dividends, will receive a confirm after each
transaction 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 financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
-10-
<PAGE> 48
(DCR-BC)
TAX INFORMATION
In January of each year, the Fund will mail to you information on the
tax status of your dividends and distributions.
DIVIDEND PAYMENTS
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.
EXCHANGE PRIVILEGE
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations.
For additional information on exchanges, see Investing by Exchange
under How to Buy Shares and Redemption and Exchange.
WEALTH BUILDER OPTION
You may elect to have amounts in your account automatically invested
in shares of other funds in the Delaware Group. Investments under this feature
are exchanges and are therefore subject to the same conditions and limitations
as exchanges of Class B Shares and Class C Shares. See Redemption and
Exchange.
DELAWARE GROUP ASSET PLANNER
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned allocation strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor an
allocation strategy that meets their personal needs and goals. See How to Buy
Shares.
MONEYLINE DIRECT DEPOSIT SERVICE
If you elect to have your dividends and distributions paid in cash and
such dividends and distributions are in an amount of $25 or more, you may
choose the MoneyLine Direct Deposit Service and have such payments transferred
from your Fund account to your predesignated bank account. See Dividends and
Distributions. In addition, you may elect to have your Systematic Withdrawal
Plan payments transferred from your Fund account to your predesignated bank
account through this service. See Systematic Withdrawal Plans under Redemption
and Exchange. Your funds will normally be credited to your bank account two
business days after the payment date. There are no fees for this service. You
can initiate the MoneyLine Direct Deposit Service by completing an
Authorization Agreement. If your name and address are not identical to the
name and address on your Fund account, you must have your signature guaranteed.
This service is not available for retirement plans.
-11-
<PAGE> 49
(DCR-BC)
FINANCIAL INFORMATION ABOUT THE FUND
Each fiscal year, you will receive an audited annual report 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 Delaware Group's newsletters covering topics of
interest about your investment alternatives and services.
-12-
<PAGE> 50
(DCR-BC)
RETIREMENT PLANNING
An investment in the Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available
for investment only by Individual Retirement Accounts, Simplified Employee
Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans. Class C Shares are available for all types of retirement
plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
on the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials.
Fees are quoted upon request. 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. Both Class B and Class
C Shares are available for investment by an IRA.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Both Class B and Class C Shares are available for
investment by a SEP/IRA.
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. Both Class B and Class C Shares are available for
investment by 403(b)(7) Plans.
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 of each of the Classes.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer
may also elect to make additional contributions to this plan. Class B Shares
are not available for purchase by such plans.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class
C Shares. Class B Shares are not available for purchase by such plans.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Permits employers to establish a tax-qualified plan based on salary
deferral contributions for investment in Class C Shares. Class B Shares are
not available for purchase by such plans.
-13-
<PAGE> 51
(DCR-BC)
CLASSES OF SHARES
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed on a
contingent deferred basis for Class B Shares ("deferred sales charge
alternative") or Class C Shares ("level sales charge alternative").
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within six years of purchase. Class B Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (.25% of which
are service fees to be paid to the Distributor, dealers or others for providing
personal service and/or maintaining shareholder accounts) of average daily net
assets of such shares for approximately eight years after purchase. Class B
Shares permit all of the investor's dollars to work from the time the
investment is made. At the end of approximately eight years after purchase,
the Class B Shares will automatically be converted into Consultant Class
Shares. See Automatic Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a contingent deferred sales
charge if they are redeemed within 12 months of purchase. Class C Shares are
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (.25% of which
are service fees to be paid to the Distributor, dealers or others for providing
personal service and/or maintaining shareholder accounts) of average daily net
assets of such shares for the life of the investment. Unlike Class B Shares,
Class C Shares do not convert to another class.
The alternative purchase arrangements described above permit investors
to choose the method of purchasing shares that is most suitable given the
amount of their purchase, the length of time they expect to hold their shares
and other relevant circumstances. Investors should determine whether, given
their particular circumstances, it is more advantageous to purchase Class B
Shares and have the entire initial purchase amount invested in the Fund with
their investment being subject to a CDSC if they redeem shares within six years
of purchase, or purchase Class C Shares and have the entire initial purchase
amount invested in the Fund with their investment being subject to a CDSC if
they redeem shares within 12 months of purchase. In comparing Class B Shares
to Class C Shares, investors should consider the duration of the annual 12b-1
Plan expenses to which each of the Classes is subject and the desirability of
an automatic conversion feature, which is available only for Class B Shares.
Certain investors might determine it to be advantageous to purchase
Class B Shares and have all their money invested initially, even though they
would be subject to a CDSC for up to six years after purchase, and annual 12b-1
Plan expenses of up to 1% until the shares are automatically converted into
Consultant Class Shares. Still other investors might determine it to be more
advantageous to purchase Class C Shares and have all of their funds invested
initially, recognizing that they would be subject to a CDSC for just 12 months
after purchase but that Class C Shares do not offer a conversion feature, so
their shares would be subject to annual 12b-1 Plan expenses of up to 1% for the
life of the investment.
In addition, prospective investors should consider the availability of
Class A Shares and Consultant Class Shares. See Class A Shares and Consultant
Class Shares, below.
-14-
<PAGE> 52
(DCR-BC)
For the distribution and related services provided to, and the
expenses borne on behalf of the Fund, the Distributor and others will be paid
from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred
upon redemption. Financial advisers may receive different compensation for
selling Class B and Class C Shares.
Dividends paid on Class B and Class C Shares, to the extent any
dividends are paid, will be calculated in the same manner, at the same time, on
the same day and will be in the same amount. See Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company
sales charges. The Fund and the Distributor intend to operate in compliance
with these rules.
DEFERRED SALES CHARGE ALTERNATIVE - CLASS B SHARES
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor compensates dealers
or brokers for selling Class B Shares at the time of purchase from its own
assets. As discussed below, however, Class B Shares are subject to annual
12b-1 Plan expenses of up to a maximum of 1% for 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 providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class
B Shares. Payments to the Distributor and others under the Class B 12b-1 Plan
may be in an amount equal to no more than 1% annually. The combination of the
CDSC and the proceeds of the 12b-1 Plan fees makes it possible for the Fund to
sell Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for the Class
B Shares described in this Prospectus, even after the exchange. Such CDSC
schedule may be higher than the CDSC schedule for the Class B Shares acquired
as a result of the exchange. See Redemption and Exchange.
AUTOMATIC CONVERSION OF CLASS B SHARES
Class B Shares, other than shares acquired through reinvestment of
distributions, held for eight years after purchase are eligible for automatic
conversion into Consultant Class Shares. Conversions of Class B Shares into
Consultant Class Shares will occur 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 of purchase before the shares will automatically
convert into Consultant Class Shares.
Class B Shares of a fund acquired through a reinvestment of
distributions 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 reinvestment of distributions.
-15-
<PAGE> 53
(DCR-BC)
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
LEVEL SALES CHARGE ALTERNATIVE - CLASS C SHARES
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the Fund will invest the full amount of the
investor's purchase payment. The Distributor compensates dealers or brokers
for selling Class C Shares at the time of purchase from its own assets. As
discussed below, however, Class C Shares are subject to annual 12b-1 Plan
expenses and, if redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for expenses related to providing distribution and
related services, and bearing related expenses, in connection with the sale of
Class C Shares. These payments support the compensation paid to dealers or
brokers for selling Class C Shares. Payments to the Distributor and others
under the Class C 12b-1 Plan may be in an amount equal to no more than 1%
annually.
Holders of Class C Shares exercising the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares
described in this Prospectus. See Redemption and Exchange.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. 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 those shares at
the time of redemption. No CDSC will be imposed on increases in net asset
value above the initial purchase price, nor will a CDSC be assessed on
redemptions of shares acquired through reinvestments of dividends or capital
gains distributions. For purposes of this formula, the "net asset value at the
time of purchase" will be the net asset value at purchase of either the Class B
Shares or the Class C Shares of the Fund, even if those shares are later
exchanged for shares of another Delaware Group fund. 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 that were acquired in the
exchange. The net asset values of the Class B Shares and the Class C Shares at
the time of purchase and at the time of redemption are expected to be the same
if the shares are redeemed directly from the Fund.
The following table sets forth the rates of the CDSC for Class B
Shares of the Fund:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE
OF DOLLAR AMOUNT
YEAR AFTER PURCHASE MADE SUBJECT TO CHARGE)
------------------------ ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
-16-
<PAGE> 54
(DCR-BC)
During the seventh year after purchase and, thereafter, until converted
automatically into Consultant Class Shares, Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of the average daily net
assets of those shares. See Automatic Conversion of Class B Shares, above.
Investors are reminded that the Consultant Class Shares into which the Class B
Shares will convert are subject to ongoing 12b-1 Plan expenses of up to a
maximum of .30% (currently, no more than .25%) of the average daily net assets
of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are
redeemed first, followed by shares acquired through the reinvestment of
dividends or distributions, and finally by shares held longest during the
six-year period. With respect to Class C Shares, it will be assumed that
shares held for more than 12 months are redeemed first, followed by shares
acquired through the reinvestment of dividends or distributions, and finally by
shares held for 12 months or less.
All investments made during a calendar month, regardless of what day
of 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 certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge under Redemption and
Exchange.
12B-1 DISTRIBUTION PLANS - CLASS B AND CLASS C SHARES
Under the distribution plans adopted by the Fund in accordance with
Rule 12b-1 under the 1940 Act, the Fund is permitted to pay the Distributor
annual distribution fees of up to 1% of the average daily net assets of each of
the Class B Shares and the Class C Shares. These fees, which are payable
monthly, compensate the Distributor for providing distribution and related
services and bearing certain expenses of each class. The 12b-1 Plans
applicable to Class B Shares and Class C Shares are designed to permit an
investor to purchase these shares through dealers or brokers without paying a
front-end sales charge while enabling the Distributor to compensate dealers and
brokers for the sale of such shares. For a more detailed discussion of the
12b-1 Plans relating to Class B and Class C Shares, see Distribution (12b-1)
and Service under Management of the Fund.
CLASS A SHARES AND CONSULTANT CLASS SHARES
In addition to offering Class B Shares and Class C Shares, the Fund
also offers Class A Shares and Consultant Class Shares, which are described in
separate prospectuses. Class A Shares can be purchased directly from the Fund
or its Distributor and have no front-end sales charge or CDSC and are not
subject to 12b-1 Plan distribution 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. Consultant Class Shares have no front-end sales
charge or CDSC; 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. To obtain a prospectus which describes the
Class A Shares or the Consultant Class Shares, contact the Distributor by
writing to the address or calling the telephone number listed on the back cover
of this Prospectus.
-17-
<PAGE> 55
<PAGE
(DCR-BC)
HOW TO BUY SHARES
PURCHASE AMOUNTS
Generally, the minimum initial investment is $1,000 for both Class B
Shares and Class C Shares. Subsequent purchases generally must be $100 or
more. For purchases under a Uniform Gifts to Minors Act or Uniform Transfers
to Minors Act or through an Automatic Investing Plan, there is a minimum
initial purchase of $250 and a minimum subsequent purchase of $25. Minimum
purchase requirements do not apply to retirement plans other than IRAs for
which there is a minimum initial purchase of $250, and a minimum subsequent
purchase of $25, regardless of which class is selected.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase
limitations by making cumulative purchases over a period of time. For
retirement plans, the maximum purchase limitations apply only to the initial
purchase of Class B Shares or Class C Shares by the plan.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of the Fund 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 or, in the case of a
retirement account, an appropriate retirement plan application must be
completed, signed and sent with a check payable to Delaware Cash Reserve B
Class or Delaware Cash Reserve C Class, at 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 or Delaware Cash
Reserve C 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. Use of this investment slip can help expedite
processing of 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 Shareholder
Service Center at 800-523-1918 to get an account number. If you do not call
first, processing of your investment may be delayed. In addition, you must
promptly send your Investment Application or, in the case of a retirement
account, an appropriate retirement plan application to Delaware Cash Reserve B
Class or Delaware Cash Reserve C Class, New Accounts, at 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 Shareholder Service Center by telephone of each wire you send.
-18-
<PAGE> 56
(DCR-BC)
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
DELAWARE GROUP ASSET PLANNER
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. As previously described, the Delaware Group
Asset Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
percentages in Delaware Group funds or, with the help of a financial adviser,
you may design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing
Delaware Group accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
funds' prospectuses. The minimum initial investment per Strategy is $2,000;
subsequent investments must be at least $100. Individual fund minimums do not
apply to investments made using the Asset Planner service. Class A, Class B,
Class C and Consultant Class Shares are available through the Asset Planner
service; however, only shares within the same class may be used within the same
Strategy. (For purposes of the Delaware Group Asset Planner service,
consultant class shares may be used in the same strategy with Class A shares.)
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year.
However, for all IRA accounts established with the same Social Security number
under the Asset Planner service, the annual maintenance fee will be limited to
$35 irrespective of the number of Strategies selected. For example, if a
shareholder transfers regular IRA assets and rollover assets from a qualified
plan into an IRA through the Delaware Group Asset Planner service and, to avoid
commingling, maintains more than one Strategy registered under the same Social
Security number, only one $35 annual fee needs to be paid. The fee, payable to
Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from
one of the funds within your Asset Planner account if not paid by September
30th. See Part B.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting and Wealth Builder Option. Systematic Withdrawal Plans are
available after the account has been open for two years.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware
Group, you may write and authorize an exchange of part or all of your
investment into shares of the Fund. If you wish to open an account by
exchange, call the Shareholder Service Center for more information. All
exchanges are subject to the eligibility and minimum purchase requirements set
forth in each fund's prospectus.
Holders of Class B Shares of the Fund are permitted to exchange all or
part of their Class B Shares only into Class B Shares of other Delaware Group
funds. Similarly, holders of Class C Shares of the Fund are permitted to
exchange all or part of their Class C Shares only into Class C Shares of other
Delaware Group funds. Class B Shares of the Fund and Class C Shares of the
Fund
-19-
<PAGE> 57
(DCR-BC)
acquired by exchange will continue to carry the CDSC and, in the case of Class
B Shares, the automatic conversion schedule of the fund from which the exchange
is made. The holding period of Class B Shares of the Fund acquired by exchange
will be added to that of the shares that were exchanged for purposes of
determining the time of the automatic conversion into Consultant Class Shares
of the Fund.
Permissible exchanges into Class B Shares or Class C Shares of the
Fund will be made without the imposition of a CDSC by the fund from which the
exchange is being made at the time of the exchange.
ADDITIONAL METHODS OF ADDING TO YOUR INVESTMENT
Call the Shareholder Service Center for more information if you wish
to use the following services:
1. 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 Fund
account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
2. Direct Deposit
YOU MAY HAVE YOUR EMPLOYER OR BANK 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.
* * *
Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, the Fund has the right to
liquidate your Fund shares to reimburse the government or transmitting bank.
If there are insufficient funds in your Fund account, you are obligated to
reimburse the Fund.
3. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidation of shares in your accounts in other funds in the Delaware
Group, subject to the same conditions and limitations as other exchanges noted
above.
You may also elect to invest in other mutual funds in the Delaware
Group through our Wealth Builder Option. Under this automatic exchange
program, you can authorize regular monthly amounts (minimum of $100 per fund)
to be liquidated from your Fund account and invested automatically into an
account in one or more funds in the Delaware Group. If, in connection with the
Wealth Builder Option, you wish to open a new account in such other fund or
funds to receive the automatic investment, such new account must meet such
other funds' minimum initial purchase requirements. Investments under this
option are exchanges and are therefore
-20-
<PAGE> 58
(DCR-BC)
subject to the same conditions and limitations as other exchanges noted above.
You can terminate your participation at any time by written notice to the Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
4. 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
sales charge at the time of reinvestment or the imposition of a CDSC upon
redemption. Or, you may invest your distributions in certain other funds in
the Delaware Group, subject to the exceptions noted below as well as 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 CDSC if those shares are later redeemed. See
Automatic Conversion of Class B Shares under Classes of Shares for information
concerning the automatic conversion of Class B Shares acquired by reinvesting
dividends.
Distributions on Class B Shares may be invested only in Class B Shares
of other Delaware Group funds. Distributions on Class C Shares may be invested
only in Class C Shares of other Delaware Group funds. For more information
about reinvestments, call the Shareholder Service Center.
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 the 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 order. If a
purchase is canceled 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 to reject purchase orders paid by third-party checks or checks that are
not drawn on a domestic branch of a United States financial institution. If a
check drawn on a foreign financial institution is accepted, you may be subject
to additional bank charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification,
to charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive
months. Holders of such accounts may be notified of their insufficient account
balance and advised that they have until the end of the current calendar
quarter to raise their balance to the stated minimum. If the account has not
reached the minimum balance requirement by that time, the Fund will charge a $9
fee for that quarter and each subsequent quarter until the account is brought
up to the minimum balance. The service fee will be deducted from the account
during the first week of each calendar quarter for the previous quarter, and
will be used to help defray the cost of maintaining low-
-21-
<PAGE> 59
(DCR-BC)
balance accounts. No fees will be charged without proper notice and no CDSC
will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain below the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC if he or she redeems any portion of his or her account.
-22-
<PAGE> 60
(DCR-BC)
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 equity, more aggressive bond or tax-advantaged
funds. Exchanges are subject to the requirements of each fund and all
exchanges of shares constitute taxable events. See Taxes. Further, in order
for an exchange to be processed, shares acquired must be registered in the
state where the acquiring shareholder resides. You may want to consult your
financial adviser or investment dealer to discuss which funds in the Delaware
Group will best meet your changing objectives and the consequences of any
exchange transaction. You may also call the Delaware Group directly for fund
information.
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.
Your shares will be redeemed or exchanged out of the Fund at a price
based on the net asset value per share next determined after the Fund receives
your request in good order, subject, in the case of a 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
on the next business day. See Purchase Price and Effective Date under How to
Buy Shares. A shareholder submitting a redemption may indicate that he or she
wishes to receive redemption proceeds of a specific dollar amount. In the case
of such a request, and in the case of certain redemptions from retirement plan
accounts, the Fund will redeem the number of shares necessary to deduct the
applicable CDSC and tender to the shareholder the requested amount, assuming
the shareholder holds enough shares in his or her account for the redemption to
be processed in this manner. Otherwise, the amount tendered to the shareholder
upon redemption will be reduced by the amount of the applicable CDSC or Limited
CDSC.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total
number of shares or dollar amount of the transaction. For exchange requests,
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. The Fund may suspend,
terminate, or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail the proceeds until it
is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. The Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address of
record.
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not subject
to a front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares ("Original Shares") that
exchange their shares for Class B Shares of other Class B Funds or Class C
Shares of other Class C Funds, as applicable (in each case, "New Shares") will
not be subject to a CDSC that might otherwise be due upon redemption of the
-23-
<PAGE> 61
(DCR-BC)
Original Shares. However, such shareholders will continue to be subject to the
CDSC and, in the case of Class B Shares, the automatic conversion schedule of
the Original Shares as described in this Prospectus and any CDSC assessed upon
redemption will be charged by the Fund. In an exchange of Class B Shares, the
Fund's CDSC schedule may be higher than the CDSC schedule relating to the New
Shares acquired as a result of the exchange. For purposes of computing the
CDSC that may be payable upon a disposition of the New Shares, the period of
time that an investor held the Original Shares is added to the period of time
that an investor held the New Shares. With respect to Class B Shares, the
automatic conversion schedule of the Original Shares may be longer than that of
the New Shares. Consequently, an investment in New Shares by exchange may
subject an investor to the higher 12b-1 fees applicable to Class B Shares of
the Fund for a longer period of time than if the investment in New Shares were
made directly.
Various redemption and exchange methods are outlined below. Except
for the CDSC applicable to certain redemptions of Class B and Class C Shares,
there is no fee charged by the Fund or the Distributor for redeeming or
exchanging your shares, but such fees could be charged in the future. You may
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, including selection of any
of the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
WRITTEN REDEMPTION
You can write to the Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your 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.
Payment is normally mailed the next business day, but no later than
seven days, after receipt of your redemption request.
WRITTEN EXCHANGE
You may also write to the Fund (at 1818 Market Street, Philadelphia,
PA 19103) to request an exchange of any or all of your shares into another
mutual fund in the Delaware Group, subject to the same conditions and
limitations as other exchanges noted above.
TELEPHONE REDEMPTION AND EXCHANGE
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. 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.
Neither the Fund nor its 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
-24-
<PAGE> 62
(DCR-BC)
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, you are acknowledging prior receipt of a
prospectus for the fund into which your 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 address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed 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, you must complete an Authorization Form and have 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 Class B and Class C Shares, there are no fees for this redemption method,
but the mail time may delay getting funds into your bank account. Simply call
the Shareholder Service Center prior to the time the offering price and net
asset value are determined, as noted above.
If expedited payment by check or wire could adversely affect the Fund,
the Fund may take up to seven days to pay.
TELEPHONE EXCHANGE
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change.
You or your investment dealer of record can exchange your shares into
any fund in the Delaware Group under the same registration, subject to the same
conditions and limitations as other exchanges noted above. 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.
SYSTEMATIC WITHDRAWAL PLANS
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON
FIXED INCOMES, SINCE IT CAN PROVIDE THEM WITH A STABLE SUPPLEMENTAL AMOUNT.
With accounts of at least $5,000, you may elect monthly withdrawals of $25
(quarterly $75) or more. The Fund does not recommend any particular monthly
amount, as each shareholder's situation and needs vary. Payments are normally
made by check. In the alternative, you may elect to have your payments
transferred from your Fund account to your predesignated bank account through
the MoneyLine Direct Deposit Service. Except for the CDSC which may be
applicable to Class B Shares and Class C Shares as noted below, there are no
fees for this redemption method. See MoneyLine Direct Deposit Service under
The Delaware Difference for more information about this service.
-25-
<PAGE> 63
(DCR-BC)
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals, depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine Direct Deposit Service is not
available for retirement plans.
* * *
The applicable CDSC for Class B Shares and Class C Shares redeemed via
a Systematic Withdrawal Plan, will be waived if, on the date that the Plan is
established, the annual amount selected to be withdrawn is less than 12% of the
account balance. If the annual amount selected to be withdrawn exceeds 12% of
the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or
were acquired through the reinvestment of distributions. The 12% annual limit
will be reset on the date that any Systematic Withdrawal Plan is modified (for
example, a change in the amount selected to be withdrawn or the frequency or
date of withdrawals), based on the balance in the account on that date. See
Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares, below.
For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE
The CDSC on certain redemptions of Class B Shares is waived in
connection with the following redemptions: (i) redemptions that result from
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) 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 account if the redemption results from the death
of all registered owners of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a
total and permanent disability (as defined in Section 72 of the Internal
Revenue Code) of all registered owners occurring after the purchase of the
shares being redeemed.
The CDSC on certain redemptions of Class C Shares is waived in
connection with the following redemptions: (i) redemptions that result from
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) returns of excess contributions to an IRA, 403(b)(7)
Deferred Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or
401(k) Defined Contribution Plan; (iii) required minimum distributions from an
IRA, 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution
Plan; (iv) distributions from a 403(b)(7) Deferred Compensation Plan, 457
Deferred Compensation Plan, Profit Sharing Plan or 401(k) Defined Contribution
Plan under hardship provisions of the plan; (v) distributions from a 403(b)(7)
Deferred Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing
Plan, Money Purchase Pension Plan or a 401(k) Defined Contribution Plan upon
attainment of normal retirement age under the plan or upon separation from
service; (vi) distributions from an IRA on or after attainment of age 59 1/2;
and (vii) distributions from an account if the redemption results from the
death of all registered owners of
-26-
<PAGE> 64
(DCR-BC)
the account (in the case of accounts established under the Uniform Gifts to
Minors or Uniform Transfers to Minors Acts or trust accounts, the waiver
applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Internal Revenue Code) of all
registered owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of the
account on the date that the Systematic Withdrawal Plan was established or
modified.
-27-
<PAGE> 65
(DCR-BC)
DIVIDENDS AND DISTRIBUTIONS
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.
Purchases by wire of shares begin earning dividends when converted
into Federal Funds and become available for investment, normally the next
business day after receipt. However, if the Fund is given prior notice of a
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 declares a dividend to all shareholders of record at the time
the offering price (net asset value) of shares is determined. See Purchase
Price and Effective Date under How to Buy Shares. Thus, when redeeming shares,
dividends continue to accrue up to and including the date of redemption.
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 Class B Shares and Class C Shares will be lower
than the per share dividends from net investment income on the Class A Shares
and the Consultant Class Shares as a result of the higher expenses under the
12b-1 Plan relating to each of the Class B Shares and Class C Shares; and (ii)
the per share dividends from net investment income on Class B Shares, Class C
Shares and Consultant Class Shares will be lower than the per share dividends
on Class A Shares as such class incurs no 12b-1 Plan expenses. See
Distribution (12b-1) and Service under Management of the Fund. For the
seven-day period ended March 31, 1996, the annualized current yield of the
Class B Shares and Class C Shares was 3.49% for each Class, and the compounded
effective yields were 3.56% and 3.55%, respectively.
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.
Both dividends and distributions will be automatically reinvested in
your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by the
United States 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.
If you elect to have your dividends and distributions in cash and such
dividends and distributions are in an amount of $25 or more, you may choose
MoneyLine Direct Deposit Service and have such payments transferred from your
Fund account to your predesignated bank account. This service is not available
for retirement plans. See MoneyLine Direct Deposit Service under The Delaware
Difference for more information about this service.
-28-
<PAGE> 66
(DCR-BC)
TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
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, if any. 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 to
shareholders of record in such a month 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 automatic conversion of Class B Shares into Consultant Class
Shares of the Fund at the end of approximately eight years after purchase will
be tax-free for federal income tax purposes. See Automatic Conversion of Class
B Shares under Buying Shares.
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 to 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, if any, 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 Investment Application your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
-29-
<PAGE> 67
(DCR-BC)
NET ASSET VALUE PER SHARE
The purchase price of Class B Shares and Class C Shares is equal to
the net asset value ("NAV") per share that is next computed after the order is
received. 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 the
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.
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, Class C Shares and Consultant Class
Shares alone will bear the 12b-1 Plan expenses payable under their respective
12b-1 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 each class is expected to be
equivalent.
See Part B for additional information.
-30-
<PAGE> 68
(DCR-BC)
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, 1996, the Manager and its affiliate,
Delaware International Advisers Ltd., were managing in the aggregate more than
$29 billion in assets in the various institutional (approximately
$18,576,143,000) and investment company (approximately $10,699,380,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and
a wholly-owned subsidiary of Lincoln National Corporation ("Lincoln National")
was completed. DMH and the Manager are now wholly-owned subsidiaries, and
subject to the ultimate control, 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. In connection with the merger, a new
Investment Management Agreement between the Fund and the Manager was executed
following shareholder approval.
The Manager manages the Fund's portfolio, makes investment decisions
and implements them. The Manager also administers the Fund's affairs and 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,
1996.
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.
-31-
<PAGE> 69
(DCR-BC)
PERFORMANCE INFORMATION
From time to time, the Fund may publish the "yield" and "effective
yield" for Class B Shares and Class C Shares. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Class B Shares and Class C 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 Class B Shares or Class C 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. Yield fluctuates and is not
guaranteed.
The Fund may also publish aggregate and average annual total return
information concerning Class B Shares and Class C Shares which will reflect the
compounded rate of return of an investment in the Class over a specified period
of time and will assume the reinvestment of all distributions at net asset
value and the deduction of any applicable CDSC at the end of the relevant
period. In addition, the Fund may present total return information that does
not reflect the deduction of any applicable CDSC. In this case, such total
return would be more favorable than total return information which includes
deductions of any applicable CDSC. Past performance is not a guarantee of
future results.
DISTRIBUTION (12B-1) AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Class B Shares and Class C Shares under a Distribution Agreement dated
April 3, 1995, as amended on November 29, 1995.
The Fund has adopted a separate distribution plan under Rule 12b-1 for
each of the Class B Shares and the Class C Shares (the "Plans"). The Plans
permit the Fund to pay the Distributor from assets of the respective Classes a
monthly fee for its services and expenses in distributing and promoting sales
of 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 Class B Shares and Class C 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 or the Class C Shares and increase sales of such
shares. In addition, the Fund may make payments from the assets of the Class B
Shares or the Class C 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 Plan expenses relating to each of the Class B Shares and the Class
C Shares are also used to pay the Distributor for advancing the commission
costs to dealers with respect to the initial sale of such shares.
The aggregate fees paid by the Fund from the respective assets of
Class B Shares and Class C Shares to the Distributor and others under the Plans
may not exceed 1% (.25% of which are service fees to be paid by the Fund to the
Distributor, dealers and others, for providing personal service and/or
maintaining shareholder accounts) of each of the Class B Shares' and the Class
C Shares' average daily net assets in any year. Class B Shares and Class C
Shares will not incur any distribution expenses beyond these limits. The
applicable limits 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
shares.
-32-
<PAGE> 70
(DCR-BC)
The Fund has also adopted a plan under Rule 12b-1 for 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. 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 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
Consultant Class Shares.
Class A Shares do not have a 12b-1 Plan. Such shares are not included
in calculating the expenses under the Plans, and the Plans are not used to
assist in the distribution and marketing of Class A Shares.
While 12b-1 Plan expenses may not exceed (i) 1% annually with respect
to Class B Shares and Class C Shares and (ii) .30% annually with respect to
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 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.
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. The ratio of
expenses to average daily net assets of the Class B Shares for the fiscal year
ended March 31, 1996 was 1.95% and reflects the impact of its 12b-1 Plan. The
Fund anticipates that the expense ratio for the Class C Shares will be
approximately equal to the expense ratio for the Class B Shares.
SHARES
The Fund was originally created in 1977, organized as a Pennsylvania
business trust in 1983 and reorganized as a Maryland corporation in 1990. The
Fund is an open-end management investment company and its portfolio of assets
is diversified as defined by the 1940 Act. The Fund currently has authorized
capital of ten billion shares of common stock, $.001 par value per share.
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 1940 Act. 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.
-33-
<PAGE> 71
(DCR-BC)
In addition to the Class B and Class C Shares, 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 other classes of shares of the Fund, except
that the Class A Shares are not subject to, and may not vote on matters
affecting, the 12b-1 Plans relating to Class B Shares, Class C Shares and
Consultant Class Shares. Similarly, as a general matter, shareholders of Class
B Shares, Class C Shares and Consultant Class Shares may vote only on matters
affecting the 12b-1 Plan that relates to the class of shares that they hold.
However, Class B Shares may vote on any proposal to increase materially the
fees to be paid by the Fund under the 12b-1 Plan relating to the Consultant
Class Shares.
Cash Reserve B Class is known as Delaware Cash Reserve B Class. Cash
Reserve C Class is known as Delaware Cash Reserve C Class. Cash Reserve A
Class is known as Delaware Cash Reserve A Class. From May 1992 to May 1994,
Delaware Cash Reserve A Class was known as Delaware Cash Reserve class, and
prior to May 1992, was known as the original class. Cash Reserve Consultant
Class is known as Delaware Cash Reserve Consultant Class. From November 1992
to May 1994, Delaware Cash Reserve Consultant Class was known as Delaware Cash
Reserve Consultant class, which from May 1992 to November 1992, was known as
Delaware Cash Reserve (Institutional) class, and which, prior to May 1992, was
known as the consultant class.
Effective on or after June 15, 1996, the Fund's custodian will be
Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006. Prior to
that time, the Fund's custodian was Morgan Guaranty Trust Company of New York,
60 Wall Street, New York, NY 10260.
-34-
<PAGE> 72
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international 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 Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006
_____________________________________
DELAWARE CASH RESERVE
_____________________________________
CONSULTANT CLASS
_____________________________________
_____________________________________
No Sales Charge
P R O S P E C T U S
_____________________________________
MAY 30, 1996
WHILE THE FUND WILL MAKE EVERY EFFORT TO MAINTAIN A STABLE NET ASSET VALUE
OF $1 PER SHARE, THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
THE SHARES OF THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT.
DELAWARE
GROUP
-----------
<PAGE> 73
(DCR-CC)
DELAWARE CASH RESERVE PROSPECTUS
CONSULTANT CLASS SHARES MAY 30, 1996
- -----------------------------------------------------------------------------
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS: (SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES: (BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
REPRESENTATIVES OF FINANCIAL INSTITUTIONS: NATIONWIDE 800-659-2259
This Prospectus describes the Delaware Cash Reserve Consultant Class
(the "Consultant Class Shares") of Delaware Group Cash Reserve, Inc. (the
"Fund"). 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. 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 charges, but are subject to annual 12b-1 Plan distribution expenses. See
Distribution (12b-1) and Service under Management of the Fund.
This Prospectus relates only to the Consultant Class 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, 1996, 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, L.P. 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 ("Class A
Shares"), Delaware Cash Reserve B Class ("Class B Shares") and Delaware Cash
Reserve C Class ("Class C Shares"). Shares of those classes may have sales
charges and other expenses, which may affect their performance. A prospectus
for the Class A Shares and a prospectus for the Class B and Class C Shares can
be obtained by writing to Delaware Distributors, L.P. at the above address or
by calling the above number.
-1-
<PAGE> 74
(DCR-CC)
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE RETIREMENT PLANNING
SYNOPSIS BUYING SHARES
SUMMARY OF EXPENSES REDEMPTION AND EXCHANGE
FINANCIAL HIGHLIGHTS DIVIDENDS AND DISTRIBUTIONS
INVESTMENT OBJECTIVE AND POLICY TAXES
SUITABILITY NET ASSET VALUE PER SHARE
INVESTMENT STRATEGY MANAGEMENT OF THE FUND
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
</TABLE>
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.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE
FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY
CREDIT UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND
ARE NOT BANK OR CREDIT UNION DEPOSITS.
-2-
<PAGE> 75
(DCR-CC)
SYNOPSIS
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager furnishes investment services to the Fund,
subject to the supervision and direction of the Fund's Board of Directors.
Under the Fund's 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.
The Manager or its affiliate, Delaware International Advisers Ltd.,
also manages the other funds in the Delaware Group. Delaware Distributors,
L.P. (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
Consultant Class Shares offered by this Prospectus are available at
net asset value, without a front-end or contingent deferred sales charge and
are subject to distribution fees under a Rule 12b-1 distribution plan. See
Buying Shares; and Distribution (12b-1) and Service under Management of the
Fund.
MINIMUM INVESTMENT
Generally, the minimum initial investment for the Consultant Class
Shares is $1,000. Subsequent investments must generally be at least $100. The
minimum purchase amounts for retirement plans may vary. 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. For further details, 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 an open-end management investment company and its
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act"). See Shares under Management of the Fund.
REDEMPTION AND EXCHANGE
Consultant Class Shares are redeemed or exchanged at the net asset
value calculated after receipt of the redemption or exchange request. See
Redemption and Exchange.
-3-
<PAGE> 76
(DCR-CC)
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
----------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
----------------------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25%
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 0.46%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . 1.20%
=====
</TABLE>
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in the Consultant
Class Shares will bear directly or indirectly.
*CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
**Exchanges are subject to the requirements of each fund and a
front-end sales charge may apply.
For expense information about the Class A Shares, Class B Shares and
Class C Shares, see the separate prospectuses relating to those Classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment 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, the Fund charges no redemption fees.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$12 $38 $66 $145
</TABLE>
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.
-4-
<PAGE> 77
(DCR-CC)
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Cash Reserve, Inc. and have been audited by Ernst & Young LLP,
independent auditors. The data should be read in conjunction with the
financial statements, related notes, and the report of Ernst & Young LLP
covering such financial information and highlights, all of which are
incorporated by reference into Part B. Further information about the Fund's
performance is contained in its Annual Report to shareholders. A copy of the
Fund's Annual Report (including the report of Ernst & Young LLP) may be
obtained from the Fund upon request at no charge.
-5-
<PAGE> 78
(DCR-CC)
DCR-CC-CHT
<TABLE>
<CAPTION>
PERIOD
3/10/88(1)
YEAR ENDED THROUGH
3/31/96 3/31/95 3/31/94 3/31/93 3/31/92 3/31/91 3/29/90 3/30/89 3/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period(2) . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . 0.0465 0.0369 0.0202 0.0259 0.0476 0.0702 0.0795 0.0705 0.0035
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . . none none none none none none none none none
------- ------- ------- ------- ------- ------- ------- ------- -------
Total From Investment Operations . . . . . 0.0465 0.0369 0.0202 0.0259 0.0476 0.0702 0.0795 0.0705 0.0035
------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . (0.0465) (0.0369) (0.0202) (0.0259) (0.0476) (0.0702) (0.0795) (0.0705) (0.0035)
Distributions (from capital gains) . . . . . --- --- --- --- --- --- --- --- ---
Returns of Capital . . . . . . . . . . . . . --- --- --- --- --- --- --- --- ---
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions . . . . . . . . . . . (0.0465) (0.0369) (0.0202) (0.0259) (0.0476) (0.0702) (0.0795) (0.0705) (0.0035)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= ======= ======= =======
- ---------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 4.75% 3.75% 2.04% 2.62% 4.87% 7.25% 8.24% 7.28% 5.91%
- ------------
- ---------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . $20,344 $18,386 $22,561 $13,191 $26,183 $27,581 $26,350 $13,841 $ 301
Ratio of Expenses to Average Daily Net Assets 1.20% 1.26% 1.25% 1.15% 1.06% 1.03% 1.07% 1.15% (1)
Ratio of Net Investment Income to
Average Daily Net Assets . . . . . . . . . 4.65% 3.66% 2.02% 2.63% 4.79% 6.99% 7.95% 7.07% (1)
</TABLE>
______________________________
(1) March 10, 1988 was the date of the Delaware Cash Reserve Consultant
Class' initial public sale; total return has been annualized; the
ratios of expenses and net investment income to average daily net
assets have been omitted as management believes that such ratios for
this relatively short period are not meaningful.
(2) All figures prior to January 1, 1991 have been restated to reflect a
stock recapitalization.
<PAGE> 79
(DCR-CC)
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 suited 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.
Consultant Class Shares of the Class 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.
Consultant Class Shares may be suitable for investors who desire the additional
investment and administrative services offered by such brokers and other
entities.
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.
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
Standard and Poor's Ratings Group ("S&P") and P-2 or better by Moody's
Investors Service, Inc. ("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.
-6-
<PAGE> 80
(DCR-CC)
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.
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 S&P or Aaa by
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 Fund may invest in these and other types of
asset-backed securities that may be developed in the future. It is the Fund's
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.
RULE 144A SECURITIES
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain institutional buyers such as the Fund. The Fund may invest no more
than 10% of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security;
(ii) whether at least three dealers are willing to purchase or sell the
security and the number of potential purchasers; (iii) whether at least two
dealers are making a market in the security; and (iv) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
transfer).
If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Fund's
holdings of illiquid securities exceed the Fund's
-7-
<PAGE> 81
(DCR-CC)
10% limit on investments in such securities, the Manager will determine what
action to take to ensure that the Fund continues to adhere to such limitation.
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.
-8-
<PAGE> 82
(DCR-CC)
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
FUND INFORMATION, LITERATURE, PRICE, YIELD AND PERFORMANCE FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
INFORMATION ON EXISTING REGULAR INVESTMENT ACCOUNTS AND RETIREMENT
PLAN ACCOUNTS WIRE INVESTMENTS, WIRE LIQUIDATIONS, TELEPHONE
LIQUIDATIONS AND 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 Delaware Group'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. Delaphone also provides current
performance information on the Fund, as well as other funds in the Delaware
Group. Delaphone is available 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. Accounts in which there has been activity,
other than a reinvestment of dividends, will receive a monthly statement
confirming transactions for that period. You should examine statements
immediately and promptly report any discrepancy by calling the Shareholder
Service Center.
DUPLICATE CONFIRMATIONS
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
-9-
<PAGE> 83
(DCR-CC)
TAX INFORMATION
In January of each year, the Fund will mail you information on the tax
status of your dividends and distributions.
DIVIDEND PAYMENTS
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.
For more information, see Dividend Reinvestment Plan under Buying Shares
- - Additional Methods of Adding to Your Investment or call the Shareholder
Service Center.
EXCHANGE PRIVILEGE
The Exchange Privilege permits shareholders to exchange all or part of
their Consultant Class Shares into shares of the other funds in the Delaware
Group, subject to the eligibility and minimum purchase requirements set forth
in each fund's prospectus, including any applicable front-end sales charges.
For additional information on exchanges, see Investing by Exchange under
Buying Shares and Redemption and Exchange.
WEALTH BUILDER OPTION
You may elect to have amounts in your account automatically invested in
other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Consultant Class Shares. See Redemption and Exchange.
DELAWARE GROUP ASSET PLANNER
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned allocation strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor an
allocation strategy that meets their personal needs and goals. See Buying
Shares.
MONEYLINE DIRECT DEPOSIT SERVICE
If you elect to have your dividends and distributions paid in cash and
such dividends and distributions are in an amount of $25 or more, you may
choose the MoneyLine Direct Deposit Service and have such payments transferred
from your Fund account to your predesignated bank account. See Dividends and
Distributions. In addition, you may elect to have your Systematic Withdrawal
Plan payments transferred from your Fund account to your predesignated bank
account through this service. See Systematic Withdrawal Plans under Redemption
and Exchange. Your funds will normally be credited to your bank account two
business days after the payment date. There are no fees for this service. You
can initiate the MoneyLine Direct Deposit Service by completing an
Authorization Agreement. If your name and address are not identical to the
name and address on your Fund account, you must have your signature guaranteed.
This service is not available for retirement plans.
-10-
<PAGE> 84
(DCR-CC)
FINANCIAL INFORMATION ABOUT THE FUND
Each fiscal year, you will receive an audited annual report 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 Delaware Group's newsletters covering topics of
interest about your investment alternatives and services.
-11-
<PAGE> 85
(DCR-CC)
RETIREMENT PLANNING
The Consultant Class Shares are also suitable for tax-deferred
retirement plans. Retirement plans may be subject to plan establishment fees,
annual maintenance fees and/or other administrative or trustee fees. Fees are
based upon the number of participants in the plan as well as the services
selected. Additional information about fees is included in retirement plan
materials. Fees are quoted upon request. 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 by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer
may also elect to make additional contributions to this plan.
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.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in
shares.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Permits employers to establish a tax-qualified plan based on salary
deferral contributions.
-12-
<PAGE> 86
(DCR-CC)
BUYING SHARES
The Consultant Class 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.
PURCHASE AMOUNTS
Generally, the minimum for initial investments of shares is $1,000.
Subsequent investments must generally be at least $100. For purchases under a
Uniform Gifts to Minors Act or Uniform Transfers to Minors Act or through an
Automatic Investing Plan, there is a minimum initial purchase of $250 and a
minimum subsequent purchase of $25. Minimum purchase requirements do not apply
to retirement plans other than IRAs for which there is a minimum initial
purchase of $250, and a minimum subsequent purchase of $25, regardless of which
class is selected. All purchases are at net asset value. There is no front-end
or contingent deferred sales charge.
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 shares of the Fund 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 or, in the case of a
retirement plan account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to Delaware Cash Reserve
Consultant 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 Consultant 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 dividend statements
that you will receive from the Fund. Use of this investment slip can help
expedite processing of 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 Shareholder Service
Center 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 or, in the case of a retirement plan account, an
appropriate retirement plan application, to Delaware Cash Reserve Consultant
Class, New Accounts, to 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 Shareholder Service Center by telephone of each wire you send.
-13-
<PAGE> 87
(DCR-CC)
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
DELAWARE GROUP ASSET PLANNER
To invest in Delaware Group funds using the Delaware Group Asset Planner
asset allocation service, you should complete a Delaware Group Asset Planner
Account Registration Form, which is available only from a financial adviser or
investment dealer. As previously described, the Delaware Group Asset Planner
service offers a choice of four predesigned asset allocation strategies (each
with a different risk/reward profile) in predetermined percentages in Delaware
Group funds or, with the help of a financial adviser, you may design a
customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing
Delaware Group accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
funds' prospectuses. The minimum initial investment per Strategy is $2,000;
subsequent investments must be at least $100. Individual fund minimums do not
apply to investments made using the Asset Planner service. Class A, Class B,
Class C and Consultant Class Shares are available through the Asset Planner
service; however, only shares within the same class may be used within the same
Strategy. (For purposes of the Delaware Group Asset Planner service,
consultant class shares may be used in the same strategy with Class A shares.)
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year.
However, for all IRA accounts established with the same Social Security number
under the Asset Planner service, the annual maintenance fee will be limited to
$35 irrespective of the number of Strategies selected. For example, if a
shareholder transfers regular IRA assets and rollover assets from a qualified
plan into an IRA through the Delaware Group Asset Planner service and, to avoid
commingling, maintains more than one Strategy registered under the same Social
Security number, only one $35 annual fee needs to be paid. The fee, payable to
Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from
one of the funds within your Asset Planner account if not paid by September
30th. See Part B.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
the Fund. The Class B Shares and Class C Shares of the Fund and the Class B
Shares and Class C Shares of the other funds in the Delaware Group which offer
such classes of shares may not be exchanged into the Consultant Class Shares.
If you wish to open an account by exchange, call the Shareholder Service Center
for more information.
-14-
<PAGE> 88
(DCR-CC)
ADDITIONAL METHODS OF ADDING TO YOUR INVESTMENT
Call the Shareholder Service Center for more information if you wish to
use the following services:
1. 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 Fund
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.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
2. Direct Deposit
YOU MAY WISH TO HAVE YOUR EMPLOYER OR BANK 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.
* * *
Should investments through an automatic investing plan or by direct
deposit 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 account, you are obligated to reimburse
the Fund.
3. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidation of shares in your accounts in other funds in the Delaware
Group, subject to the same conditions and limitations as other exchanges noted
above.
You may also elect to invest in other mutual funds in the Delaware Group
through our Wealth Builder Option. Under this automatic exchange program, you
can authorize regular monthly amounts (minimum of $100 per fund) to be
liquidated from your Fund account and invested automatically into one or more
funds in the Delaware Group. If, in connection with the election of Wealth
Builder Option, you wish to open a new account in such other fund or funds to
receive the automatic investment, such new account must meet such other funds'
minimum initial purchase requirements. Investments under this option are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges noted above. You can terminate your participation at any time
by written notice to the Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
-15-
<PAGE> 89
(DCR-CC)
4. 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 sales
charge or you may be permitted to reinvest your distributions in certain other
funds in the Delaware Group without a sales charge, subject to eligibility and
minimum purchase requirements set forth in each fund's prospectus. Dividends
on shares of the Consultant Class Shares may not be invested in the Class B
Shares or Class C Shares of the Fund or any other Class B Shares or Class C
Shares of the funds in the Delaware Group which offer such a class of shares.
For more information about reinvestments in shares of other funds in the
Delaware Group, call the Shareholder Service Center.
PURCHASE PRICE AND EFFECTIVE DATE
The offering price (net asset value) of the Consultant Class Shares is
determined as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the 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 order. If a purchase
is canceled 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 to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on
a foreign financial institution is accepted, you may be subject to additional
bank charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive
months. Holders of such accounts may be notified of their below minimum status
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for
that quarter and each subsequent calendar quarter until the account is brought
up to the minimum balance. The service fee will be deducted from the account
during the first week of each calendar quarter for the previous quarter, and
will be used to help defray the cost of maintaining low balance accounts. No
fees will be charged without proper notice and no contingent deferred sales
charge will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $1,000 as a result of
redemptions. An investor making the minimum initial investment may be subject
to involuntary redemption if he or she redeems any portion of his or her
account.
-16-
<PAGE> 90
(DCR-CC)
CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES
In addition to offering the Consultant Class Shares, the Fund also
offers Class A Shares, Class B Shares and Class C Shares, which are described
in separate prospectuses. 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. Class B Shares and Class C 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. Class B Shares and Class C Shares have no front-end
sales charge but are subject to annual 12b-1 expenses equal to a maximum of 1%.
Class B Shares and Class C Shares are also subject to a contingent deferred
sales charge upon redemption. To obtain a prospectus which describes the Class
A Shares, Class B Shares or Class C Shares, contact the Distributor by calling
the phone numbers listed on the back cover of this Prospectus.
-17-
<PAGE> 91
(DCR-CC)
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 equity funds, more aggressive bond funds or
tax-advantaged funds. Exchanges are subject to the requirements of each fund
and all exchanges of shares constitute taxable events. All exchanges are
subject to the eligibility and minimum purchase requirements set forth in each
fund's prospectus. Any applicable front-end sales charge will apply to
exchanges from this Fund and any other money market fund to other funds, except
for exchanges involving assets that were previously invested in a fund with a
front-end sales charge and/or resulted from the reinvestment of dividends.
Consultant Class Shares may not be exchanged for Class B Shares or Class C
Shares. Shares acquired in an exchange must be registered in the state where
the acquiring shareholder resides. 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 and
the consequence of any exchange transaction.
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.
Your shares will be redeemed or exchanged out of the Fund at a price
based on the net asset value next determined after the Fund receives your
request in good order. Redemption or exchange requests received in good order
after the time the offering price of shares is determined, as noted above, will
be processed on 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 Consultant Class Shares account
number, account registration, and the total number of shares or dollar amount
of the transaction. Exchange instructions and redemption requests must be
signed by the record owner(s) exactly as the shares are registered. With
regard to exchanges, you must also provide the name of the fund you want to
receive the proceeds. You may request a redemption or an exchange by calling
the Fund at 800-523-1918. The Fund issues certificates for shares only if you
submit a specific request. Any certificates that have been issued for shares
you wish to redeem or exchange must accompany your order. The Fund may
suspend, terminate or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail the proceeds until it
is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. 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 written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.
Various redemption and exchange methods are outlined below. There is no
fee charged by the Fund or the Distributor for redeeming or exchanging your
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.
-18-
<PAGE> 92
(DCR-CC)
All authorizations given by shareholders including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
Class A Shares of Delaware Group funds that carry a front-end sales
charge will be subject to a contingent deferred sales charge ("Limited CDSC")
upon redemption if the shares were purchased at net asset value without the
payment of a front-end sales charge and if a dealer's commission was paid to a
financial adviser, except in certain limited instances. Such shares may be
exchanged for shares of the Consultant Class Shares without the imposition of
the Limited CDSC at the time of the exchange. However, upon subsequent
redemption from the Consultant Class Shares or after a subsequent exchange into
a fund that is subject to the Limited CDSC, such shares will be subject to the
Limited CDSC imposed by the original fund whose shares were initially exchanged
into the Consultant Class Shares. Shareholders will be given credit for the
period during which the Consultant Class Shares were held.
CHECKWRITING FEATURE
CHECKWRITING IS A CONVENIENT ACCESS FEATURE THAT ALLOWS YOU TO EARN
DIVIDENDS UNTIL YOUR CHECK IS PRESENTED TO THE FUND.
You can request special checks by marking the box on the Investment
Application. There is a one-time $5 charge for this service.
Checks must be drawn for $500 or more and, unless otherwise indicated on
the Investment Application or checkwriting authorization form, must be signed
by all owners of the account.
You will be subject to CoreStates Bank, N.A.'s rules and regulations
governing similar accounts. If the amount of the check is greater than the
value of the shares in your account, the check will be returned and you may be
subject to a charge.
You may request a stop payment on checks by providing the Fund with a
written authorization (oral requests will be accepted only if followed promptly
with written authorization). Such requests will remain in effect for six
months unless renewed or canceled. There will be a $5 charge per check for
each six-month period.
Checks paid will be returned to you semi-annually (January and July).
If you need a copy of a check prior to the regular mailing you may call the
Shareholder Service Center.
The Checkwriting Feature is not available for retirement plans. Also,
since dividends are declared daily, you may not use the Checkwriting Feature to
close your account. (See Part B for additional information.)
WRITTEN REDEMPTION
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your Consultant Class 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.
-19-
<PAGE> 93
(DCR-CC)
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. If your shares are in certificate form, the
certificate must accompany your request and also be in good order.
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 Consultant Class Shares
into another mutual fund in the Delaware Group, subject to the same conditions
and limitations as other exchanges noted above.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you can only
redeem or exchange by written request and you must return your certificates.
The Telephone Redemption-Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. 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.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Consultant Class 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, you
are acknowledging prior receipt of a prospectus for the fund into which your
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, you must complete an Authorization Form and have 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. There are no fees for this redemption method,
but the mail time may delay getting funds into your bank account.
-20-
<PAGE> 94
(DCR-CC)
Simply call the Shareholder Service Center prior to the time the offering price
of shares is determined, as noted above.
TELEPHONE EXCHANGE
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change.
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. Any such exchange is
subject to the same conditions and limitations as other exchanges noted above.
Telephone exchanges may be subject to limitations as to amounts or frequency.
SYSTEMATIC WITHDRAWAL PLAN
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON FIXED INCOMES,
SINCE IT PROVIDES THEM WITH A STABLE SUPPLEMENTAL AMOUNT. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more.
The Fund does not recommend any particular monthly amount, as each
shareholder's situation and needs vary. Payments are normally made by check.
In the alternative, you may elect to have your payments transferred from your
Fund account to your predesignated bank account through the MoneyLine Direct
Deposit Service. There are no fees for this redemption method. See MoneyLine
Direct Deposit Service under The Delaware Difference for more information about
this service.
2. Retirement Plans
For shareholders eligible under the applicable Retirement Plan to
receive benefits in periodic payments, the Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals, depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine Direct Deposit Service described
above is not available for retirement plans.
For more information on both of these plans, call the Shareholder Service
Center.
-21-
<PAGE> 95
(DCR-CC)
DIVIDENDS AND DISTRIBUTIONS
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.
Purchases of 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 declares a dividend to all shareholders of record at the time
the offering price 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.
Each class 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 and Class C 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 and Class C Shares; and (ii) the per share dividends and
distributions on the Class B Shares, Class C 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.
See Class A Shares, Class B Shares and Class C Shares under Buying Shares and
Distribution (12b-1) and Service under Management of the Fund. For the
seven-day period ended March 31, 1996, the annualized current yield of the
Consultant Class Shares was 4.24% and the compounded effective yield was 4.33%.
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.
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 United States 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.
If you elect to take your dividends and distributions in cash and such
dividends and distributions are in an amount of $25 or more, you may elect the
MoneyLine Direct Deposit Service to enable such payments to be transferred from
your Fund account to your predesignated bank account. This service is not
available for retirement plans. See MoneyLine Direct Deposit Service under The
Delaware Difference for more information about this service.
-22-
<PAGE> 96
(DCR-CC)
TAXES
The tax discussion set forth below 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.
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, if any. 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.
Dividends which are declared in October, November or December to
shareholders of record in such a month 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.
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 Investment Application your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
-23-
<PAGE> 97
(DCR-CC)
NET ASSET VALUE PER SHARE
The purchase and redemption price of the Fund's shares is equal to the
net asset value ("NAV") per share of the Consultant Class Shares that is next
computed after the order is received. 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 the 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.
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, Class C 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 each class is expected to be equivalent.
See Part B for additional information.
-24-
<PAGE> 98
(DCR-CC)
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, 1996, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $29 billion in assets in the various institutional (approximately
$18,576,143,000) and investment company (approximately $10,699,380,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and
a wholly-owned subsidiary of Lincoln National Corporation ("Lincoln National")
was completed. DMH and the Manager are now wholly-owned subsidiaries, and
subject to the ultimate control, 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. In connection with the merger, a new
Investment Management Agreement between the Fund and the Manager was executed
following shareholder approval.
The Manager manages the Fund's portfolio, makes investment decisions and
implements them. The Manager also administers the Fund's affairs and 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,
1996.
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.
-25-
<PAGE> 99
(DCR-CC)
PERFORMANCE INFORMATION
From time to time, the Fund may publish the "yield" and "effective
yield" for the Consultant Class Shares. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Consultant Class 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 Consultant Class 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. Yield fluctuates and is not
guaranteed.
The Fund may also publish aggregate and average annual total return
information concerning the Class which will reflect the compounded rate of
return of an investment in the Class over a specified period of time and will
assume the investment of all distributions at net asset value. Past
performance is not a guarantee of future results.
DISTRIBUTION (12B-1) AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Fund under a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995.
The Fund has adopted a distribution plan under Rule 12b-1 (the "Plan")
for the Consultant Class 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 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 other entities which sell Consultant
Class Shares. In connection with the promotion of Consultant Class 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 Consultant Class Shares and increase sales of
the Class. In addition, the Fund may make payments from Class assets directly
to others, such as banks, who aid in the distribution of Class shares or
provide services to the Class, pursuant to service agreements with the Fund.
Registered representatives of brokers, dealers or other entities who have sold
a specified level of Delaware Group funds having a 12b-1 Plan, are paid a .25%
continuing trail fee by the Distributor from 12b-1 Plan payments of the Class
for assets maintained in the Class.
The aggregate fees paid by the Fund from Consultant Class Shares assets
to the Distributor and others under the Plan may not exceed .30% of the Class'
average daily net assets in any year. The Class 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
Class 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 Class shares.
The Plan does not apply to the Class A Shares, Class B Shares or Class C
Shares. Those shares are not included in calculating the Plan's fees, and the
Plan is not used to assist in the distribution and marketing of Class A Shares,
Class B Shares or Class C Shares.
-26-
<PAGE> 100
(DCR-CC)
While Plan payments may not exceed .30% annually, the Plan does 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 Plan. The monthly fee paid to
the Distributor is subject to the review and approval of the Fund's
unaffiliated directors who may reduce the fee or terminate the Plan at any
time.
The National Association of Securities Dealers, Inc. 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 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.
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. The
Consultant Class Shares' ratio of expenses to average daily net assets for the
fiscal year ended March 31, 1996 was 1.20%. The expense ratio of the
Consultant Class Shares reflects the impact of the 12b-1 Plan.
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 is an open-end management investment
company and its portfolio of assets is diversified as defined by the 1940 Act.
The Fund currently has authorized capital of ten billion shares of common
stock, $.001 par value per share.
All Fund shares have equal voting rights and are equal in all other
respects. 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 1940 Act. 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.
The Fund also offers Class A Shares, Class B Shares and Class C Shares
which represent a proportionate interest in the assets of the Fund and have the
same voting and other rights and preferences as the Consultant Class Shares,
except that Class A Shares, Class B Shares and Class C Shares are not subject
to, and may not vote on matters affecting, the Plan under Rule 12b-1 relating
to the Consultant Class Shares. Similarly, 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 Class C Shares. However, the
Class B Shares may vote on any proposal to increase materially the fees to be
paid by the Fund under the Rule 12b-1 Plan relating to the Consultant Class
Shares.
-27-
<PAGE> 101
(DCR-CC)
Cash Reserve Consultant Class is known as Delaware Cash Reserve
Consultant Class. From November 1992 to May 1994, the Delaware Cash Reserve
Consultant Class was known as the Delaware Cash Reserve Consultant class, from
May 1992 to November 1992, it was known as the Delaware Cash Reserve
(Institutional) class, and prior to May 1992, it was known as the consultant
class. Cash Reserve A Class is known as Delaware Cash Reserve A Class. From
May 1992 to May 1994, the Delaware Cash Reserve A Class was known as the
Delaware Cash Reserve class, and prior to May 1992, it was known as the
original class. Cash Reserve B Class is known as Delaware Cash Reserve B
Class. Cash Reserve C Class is known as Delaware Cash Reserve C Class.
Effective on or after June 15, 1996, the Fund's custodian will be
Bankers Trust Company, One Bankers Trust Plaza, New York, NY 10006. Prior to
that time, the Fund's custodian was Morgan Guaranty Trust Company of New York,
60 Wall Street, New York, NY 10260.
-28-
<PAGE> 102
(SAI-DCR/PART B)
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international 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 Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006
____________________________________________
DELAWARE CASH RESERVE
____________________________________________
A CLASS
____________________________________________
B CLASS
____________________________________________
C CLASS
____________________________________________
CONSULTANT CLASS
____________________________________________
CLASSES OF DELAWARE GROUP CASH RESERVE, INC.
____________________________________________
NO FRONT-END SALES CHARGE
PART B
STATEMENT OF
ADDITIONAL INFORMATION
____________________________________________
MAY 30, 1996
DELAWARE
GROUP
--------
<PAGE> 103
(SAI-DCR/PART B)
PART B--STATEMENT OF ADDITIONAL INFORMATION
MAY 30, 1996
DELAWARE GROUP CASH RESERVE, INC.
1818 MARKET STREET
PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS: (SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES: (BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
TABLE OF CONTENTS
COVER PAGE
INVESTMENT OBJECTIVE AND POLICY
PERFORMANCE INFORMATION
TRADING PRACTICES
PURCHASING SHARES
RETIREMENT PLANS
OFFERING PRICE
REDEMPTION
DIVIDENDS AND REALIZED SECURITIES
PROFITS DISTRIBUTIONS
TAXES
INVESTMENT MANAGEMENT AGREEMENT
OFFICERS AND DIRECTORS
EXCHANGE PRIVILEGE
GENERAL INFORMATION
APPENDIX A--DESCRIPTION OF RATINGS
APPENDIX B--IRA INFORMATION
FINANCIAL STATEMENTS
-1-
<PAGE> 104
(SAI-DCR/PART B)
Delaware Group Cash Reserve, Inc. (the "Fund") currently offers four
classes of shares (individually, a "Class" and collectively, the
"Classes")--the Delaware Cash Reserve A Class (the "Class A Shares"), the
Delaware Cash Reserve Consultant Class (the "Consultant Class Shares"), the
Delaware Cash Reserve B Class (the "Class B Shares") and the Delaware Cash
Reserve C Class (the "Class C Shares"). Shares of each Class are purchased at
net asset value, without a front-end sales charge. Class A Shares are not
subject to annual 12b-1 Plan expenses; Consultant Class Shares are subject to
annual 12b-1 Plan expenses; 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 for approximately eight years after
purchase; and Class C Shares are subject to a CDSC which may be imposed on
redemptions made within 12 months of purchase and annual 12b-1 Plan expenses
which are assessed against Class C Shares for the life of the investment. At
the end of approximately eight years after purchase, the investor's Class B
Shares will be automatically converted into Consultant Class Shares. See
Automatic Conversion of Class B Shares in the Prospectus for that Class. Such
conversion will constitute a tax-free exchange for federal income tax purposes.
See Taxes in the Prospectus for Class B Shares.
This Statement of Additional Information ("Part B" of the registration
statement) relates to each Class of shares of the Fund and supplements the
information contained in the current Prospectus for Class B Shares and Class C
Shares dated May 30, 1996, and the current Prospectus for each of the Class A
Shares and Consultant Class Shares dated May 30, 1996, as they may be amended
from time to time. It should be read in conjunction with the respective Class'
Prospectus. Part B is not itself a prospectus but is, in its entirety,
incorporated by reference into each Class' Prospectus. Each Class' Prospectus
may be obtained by writing or calling your investment dealer or by contacting
the Fund's national distributor, Delaware Distributors, L.P. (the
"Distributor"), 1818 Market Street, Philadelphia, PA 19103.
-2-
<PAGE> 105
(SAI-DCR/PART B)
INVESTMENT OBJECTIVE AND POLICY
The objective of the Fund is to obtain maximum current income
consistent with preservation of principal and maintenance of liquidity by
investing substantially all of its assets in a portfolio of money market
instruments. There is no assurance that this objective can be achieved. This
objective is a matter of fundamental policy and may not be changed without
approval by the holders of a majority of the outstanding voting securities of
the Fund, which is a vote by the holders of the lesser of a) more than 50% of
the outstanding voting securities or b) 67% of the voting securities present at
a shareholder meeting if 50% or more of the voting securities are present in
person or represented by proxy. See also General Information.
The Fund intends to achieve its objective by investing at least 80% of
its assets in a diversified portfolio of money market instruments. See Money
Market Instruments below and Appendix A--Description of Ratings.
The Fund maintains its net asset value at $1.00 per share by valuing
its securities on an amortized cost basis. See Offering Price. The Fund
maintains a dollar-weighted average portfolio maturity of not more than 90 days
and does not purchase any issue having a remaining maturity of more than 13
months. In addition, the Fund limits its investments, including repurchase
agreements, to those instruments which the Board of Directors determines
present minimal credit risks and which are of high quality. The Fund may sell
portfolio securities prior to maturity in order to realize gains or losses or
to shorten the average maturity if it deems such actions appropriate to
maintain a stable net asset value per share. 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.
While the Fund intends to hold its investments until maturity when
they will be redeemable at their full principal value plus accrued interest,
attempts may be made from time to time to increase its yield by trading to take
advantage of market variations. Also, revised evaluations of the issuer or
redemptions by shareholders of the Fund may cause sales of portfolio
investments prior to maturity or at times when such sales might otherwise not
be desirable. The Fund's right to borrow to make redemption payments may
reduce, but does not guarantee a reduction in, the need for such sales. The
Fund will not purchase new securities while any borrowings are outstanding.
See Taxes for the effect of any capital gains distributions.
A shareholder's rate of return will vary with the general interest
rate levels applicable to the money market instruments in which the Fund
invests. In the event of an increase in current interest rates or a national
credit crisis, or if one or more of the issuers became insolvent prior to the
maturity of the instruments, principal values could be adversely affected.
Investments in obligations of foreign banks and of overseas branches of U.S.
banks may be subject to less stringent regulations and different risks than
those of U.S. domestic banks. The rate of return and the net asset value will
be affected by such other factors as sales of portfolio securities prior to
maturity and the Fund's operating expenses.
MONEY MARKET INSTRUMENTS
The Fund will invest all of its available assets in money market
instruments maturing in one year or less. The types of instruments which the
Fund may purchase are described below:
1. U.S. Government Securities--Securities issued or guaranteed by
the U.S. Government, including Treasury Bills, Notes and
Bonds.
2. U.S. Government Agency Securities--Obligations issued or
guaranteed by agencies or instrumentalities of the U.S. Government whether
supported by the full faith and credit of the U.S. Treasury or the credit of a
particular agency or instrumentality.
-3-
<PAGE> 106
(SAI-DCR/PART B)
3. Bank Obligations--Certificates of deposit, bankers'
acceptances and other short-term obligations of U.S. commercial banks and their
overseas branches and foreign banks of comparable quality, provided each such
bank combined with its branches has total assets of at least one billion
dollars. Any obligations of foreign banks shall be denominated in U.S.
dollars. Obligations of foreign banks and obligations of overseas branches of
U.S. banks are subject to somewhat different regulations and risks than those
of U.S. domestic banks. In particular, a foreign country could impose exchange
controls which might delay the release of proceeds from that country. Such
deposits are not covered by the Federal Deposit Insurance Corporation. Because
of conflicting laws and regulations, an issuing bank could maintain that
liability for an investment is solely that of the overseas branch which could
expose the Fund to a greater risk of loss. The Fund will buy only short-term
instruments of banks in nations where these risks are minimal. The Fund will
consider these factors along with other appropriate factors in making an
investment decision to acquire such obligations and will only acquire those
which, in the opinion of management, are of an investment quality comparable to
other debt securities bought by the Fund. In addition, the Fund is subject to
certain maturity, quality and diversification conditions applicable to taxable
money market funds. Thus, if a bank obligation 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 rated in one of the two highest rating categories
by at least two nationally-recognized statistical rating organizations or, if
such security or, as relevant, its issuer 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.
4. Commercial Paper--The Fund may invest in short-term promissory
notes issued by corporations. 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 rated in one of the two highest rating categories
(e.g., A-2 or better by Standard & Poor's Ratings Group ("S&P") and P-2 or
better by Moody's Investors Service, Inc. ("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.
5. Short-term Corporate Debt--The Fund may invest in corporate
notes, bonds and debentures. 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 rated in one of the two highest rating categories
(e.g., 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. Such securities generally have greater liquidity and
are subject to considerably less market fluctuation than longer issues.
6. Repurchase Agreements--Instruments under which securities are
purchased from a bank or securities dealer with an agreement by the seller to
repurchase the securities. Under a repurchase agreement, the purchaser
acquires ownership of the security but the seller agrees, at the time of sale,
to repurchase it at a mutually agreed-upon time and price. The Fund will take
custody of the collateral under repurchase agreements. Repurchase agreements
may be construed to be collateralized loans by the purchaser to the seller
secured by the securities transferred. The resale price is in excess of the
purchase price and reflects an agreed-upon market rate unrelated to the coupon
rate or maturity of the purchased security. Such transactions afford an
opportunity for the Fund to invest temporarily available cash on a short-term
basis. The Fund's risk is limited to the seller's ability to buy the security
back at the agreed-upon sum at the agreed-upon time, since the repurchase
agreement is secured by the underlying obligation. Should such an issuer
default, the investment
-4-
<PAGE> 107
(SAI-DCR/PART B)
manager believes that, barring extraordinary circumstances, the Fund will be
entitled to sell the underlying securities or otherwise receive adequate
protection for its interest in such securities, although there could be a delay
in recovery. The Fund considers the creditworthiness of the bank or dealer
from whom it purchases repurchase agreements. The Fund will monitor such
transactions to assure that the value of the underlying securities subject to
repurchase agreements is at least equal to the repurchase price. The
underlying securities will be limited to those described above.
The ratings of S&P, Moody's and other rating services represent their
opinion as to the quality of the money market instruments which they undertake
to rate. It should be emphasized, however, that ratings are general and are
not absolute standards of quality. These ratings are the initial criteria for
selection of portfolio investments, but the Fund will further evaluate these
securities. See Appendix A--Description of Ratings.
ASSET-BACKED SECURITIES
The Fund may also invest in securities which are backed by assets such
as receivables on home equity loans, credit card loans, and 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 S&P or Aaa by Moody's). The credit quality
of most asset-backed securities depends primarily on the credit quality of the
assets underlying such securities, how well the entities issuing the securities
are insulated from the credit risk of the originator or affiliated entities,
and the amount of credit support provided to the securities. 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 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 Fund may invest in
these and other types of asset-backed securities that may be developed in the
future. It is the Fund's current policy to limit asset-backed investments to
those represented by interests in credit card loans, 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 also involve certain other
risks, including the risk that security interests cannot be adequately or in
many cases, ever, established. In addition, with respect to credit card loans,
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 loans, there is a risk that the
holders may not have either a proper or first security interest in all of the
obligations backing the 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.
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may have credit support supplied by a third party or derived from
the structure of the transaction. Such credit support falls into two
categories: (i) liquidity protection, and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by
the entity administering the pool of assets, to ensure that the receipt of
payments due on the underlying pool is timely. Protection against losses
-5-
<PAGE> 108
(SAI-DCR/PART B)
resulting from ultimate default enhances the likelihood of payments of the
obligations on at least some of the assets in the pool. Such protection may be
provided through guarantees, insurance policies or letters of credit obtained
by the issuer or sponsor from third parties, through various means of
structuring the transaction or through a combination of such approaches. The
Fund will not pay any additional fees for such credit support, although the
existence of credit support may increase the price of a security.
Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over-collateralization" (where the scheduled payments on,
or the principal amount of, the underlying assets exceeds that required to make
payments of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit information respecting the level of
credit risk associated with the underlying assets. Delinquencies or losses in
excess of those anticipated could adversely affect the return on an investment
in such issue.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions and fundamental
policies. These restrictions cannot be changed without approval by the holders
of a majority of the outstanding voting securities of the Fund, as described
above. The Fund may not under any circumstances:
1. Invest more than 20% of its assets in securities other than
money market instruments as defined under Investment Objective and Policy and
Money Market Instruments.
2. Borrow money in excess of one-third of the value of its net
assets and then only as a temporary measure for extraordinary purposes or to
facilitate redemptions. The Fund has no intention of increasing its net income
through borrowing. Any borrowing will be done from a bank and to the extent
that such borrowing exceeds 5% of the value of the Fund's net assets, asset
coverage of at least 300% is required. In the event that such asset coverage
shall at any time fall below 300%, the Fund shall, within three days thereafter
(not including Sunday or holidays) or such longer period as the Securities and
Exchange Commission may prescribe by rules and regulations, reduce the amount
of its borrowings to such an extent that the asset coverage of such borrowings
shall be at least 300%. The Fund will not pledge more than 10% of its net
assets. The Fund will not issue senior securities as defined in the Investment
Company Act of 1940 (the "1940 Act"), except for notes to banks.
3. Sell securities short or purchase securities on margin.
4. Write or purchase put or call options.
5. Underwrite the securities of other issuers, except that the
Fund may acquire portfolio securities under circumstances where, if the
securities are later publicly offered or sold by the Fund, it might be deemed
an underwriter for purposes of the Securities Act of 1933. Not more than 10%
of the value of the Fund's net assets at the time of acquisition will be
invested in such securities.
6. Purchase or sell commodities or commodity contracts.
-6-
<PAGE> 109
(SAI-DCR/PART B)
7. Purchase or sell real estate, but this shall not prevent the
Fund from investing in securities secured by real estate or interests therein,
or securities issued by companies which invest in real estate or interests
therein.
8. Make loans to other persons except by the purchase of
obligations in which the Fund is authorized to invest and to enter into
repurchase agreements. Not more than 10% of the Fund's total assets will be
invested in repurchase agreements maturing in more than seven days and in other
illiquid assets.
9. Invest more than 5% of the value of its assets in the
securities of any one issuer (other than obligations issued or guaranteed by
the U.S. Government or federal agencies) or acquire more than 10% of the voting
securities of such an issuer. Where securities are issued by one entity but
are guaranteed by another, "issuer" shall not be deemed to include the
guarantor so long as the value of all securities owned by the Fund which have
been issued or guaranteed by that guarantor does not exceed 10% of the value of
the Fund's assets.
10. Purchase more than 10% of the outstanding securities of any
issuer or invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
12. Invest more than 25% of its total assets in any particular
industry, except that the Fund may invest more than 25% of the value of its
total assets in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, certificates of deposit and bankers' acceptances
of banks with over one billion dollars in assets or bank holding companies
whose securities are rated A-2 or better by S&P or P-2 or better by Moody's.
In addition, the following investment restrictions may be changed by
the Board of Directors. The Fund may not:
(a) Retain in its portfolio securities issued by an issuer any of
whose officers, directors or security holders is an officer or director of the
Fund or of the investment manager of the Fund if after the purchase of the
securities of such issuer by the Fund one or more of such officers or directors
owns beneficially more than 1/2 of 1% of the shares or securities or both of
such issuer and such officers and directors owning more than 1/2 of 1% of such
shares or securities together own beneficially more than 5% of such shares or
securities.
(b) Invest funds of the Fund in the securities of companies which
have a record of less than three years' continuous operation if such purchase
at the time thereof would cause more than 5% of the Fund's total assets to be
invested in the securities of such company or companies. Such period of three
years may include the operation of any predecessor company or companies,
partnership or individual enterprise if the company whose securities are
proposed as an investment for funds of the Fund has come into existence as the
result of a merger, consolidation, reorganization or the purchase of
substantially all of the assets of such predecessor company or companies,
partnerships or individual enterprises.
(c) Invest in direct interests in oil, gas or other mineral
exploration or development programs.
-7-
<PAGE> 110
(SAI-DCR/PART B)
(d) Invest more than 25% of its assets in foreign banks except
that this limitation shall not apply to United States branches of foreign banks
which are subject to the same regulation as United States banks or to foreign
branches of United States banks where such a bank is liable for the obligations
of the branch.
Although not a fundamental investment restriction, the Fund currently
does not invest its assets in real estate limited partnerships.
-8-
<PAGE> 111
(SAI-DCR/PART B)
PERFORMANCE INFORMATION
For the seven-day period ended March 31, 1996, the annualized current
yield of the Class A Shares, the Class B Shares, the Class C Shares and the
Consultant Class Shares was 4.49%, 3.49%, 3.49% and 4.24%, respectively, and
the compounded effective yield was 4.60%, 3.56%, 3.55% and 4.33%, respectively.
These yields will fluctuate daily as income earned fluctuates. On this date,
the weighted average portfolio maturity was 44 days for each Class. The
current yield of Class A Shares is expected to be higher than that of
Consultant Class Shares, Class B Shares and Class C Shares because Class A
Shares are not subject to the maximum aggregate expenses under the Fund's 12b-1
Plans of .30% for Consultant Class Shares, 1% for Class B Shares and 1% for
Class C Shares. See Plans Under Rule 12b-1 for Consultant Class Shares, Class
B Shares and Class C Shares.
Shareholders and prospective investors will be interested in learning
from time to time the current and the effective compounded yield of a Class of
shares. As explained under Dividends and Realized Securities Profits
Distributions, dividends are declared daily from net investment income. In
order to determine the current return of the Fund's Classes, yield is
calculated as follows:
The calculation begins with the value of a hypothetical account of one
share at the beginning of a seven-day period; this is compared with the value
of that same account at the end of the same period (including shares purchased
for the account with dividends earned during the period). The net change in
the account value is generally the net income earned per share during the
period, which consists of accrued interest income plus or minus amortized
purchase discount or premium, less all accrued expenses (excluding expenses
reimbursed by the investment manager) but does not include realized gains or
losses or unrealized appreciation or depreciation.
The current yield of the Classes represents the net change in this
hypothetical account annualized over 366 days. In addition, a shareholder may
achieve a compounding effect through reinvestment of dividends which is
reflected in the effective yield shown below.
The following is an example, for purposes of illustration only, of the
current and effective yield calculations for the seven-day period ended March
31, 1996 for Class A Shares, Class B Shares, Class C Shares and Consultant
Class Shares.
-9-
<PAGE> 112
(SAI-DCR/PART B)
<TABLE>
<CAPTION>
CONSULTANT CLASS
CLASS A SHARES CLASS B SHARES CLASS C SHARES SHARES
<S> <C> <C> <C> <C>
Value of a hypothetical account with one
share at the beginning of the period . . . . . $1.00000000 $1.00000000 $1.00000000 $1.00000000
Value of the same account at the
end of the period . . . . . . . . . . . . . . $1.00085967 $1.00066841 $1.00066833 $1.00081186
=========== =========== =========== ===========
Net change in account value . . . . . . . . . . . .00085967(1) .00066841(1) .00066833(1) .00081186(1)
Base period return = net change in account
value\beginning account value . . . . . . . . .00085967 .00066841 .00066833 .00081186
Current yield [base period return x (366 / 7)] 4.49%(2) 3.49%(2) 3.49%(2) 4.24%(2)
366/7 =========== =========== =========== ===========
Effective yield (1 + base period) - 1 . . . . . . 4.60%(3) 3.56%(3) 3.55%(3) 4.33%(3)
=========== =========== =========== ===========
</TABLE>
Weighted average life to maturity of the portfolio on March 31, 1996 was 44
days.
(1) This represents the net income per share for the seven calendar days
ended March 31, 1996.
(2) This represents the average of annualized net investment income per
share for the seven calendar days ended March 31, 1996.
(3) This represents the current yield for the seven calendar days ended
March 31, 1996 compounded daily.
The average annual total rate of return for a Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. With respect to Class B Shares and
Class C Shares, each calculation will include the CDSC that would be applicable
upon complete redemption of such shares during the stated period. In addition,
the Fund may present total return information that does not reflect the
deduction of any applicable CDSC. The following formula will be used for the
actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase
order of $1,000;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical
$1,000 purchase at the end of the
period after the deduction of the
applicable CDSC, if any, with
respect to Class B Shares and Class
C Shares.
-10-
<PAGE> 113
(SAI-DCR/PART B)
Aggregate or cumulative total return is calculated in a similar
manner, except that the results are not annualized. The following table is an
example, for purposes of illustration only, of total return performance for
Class A Shares and Consultant Class Shares through March 31, 1996, calculated
as an average annual compounded rate of return for the periods indicated. For
this purpose, the calculations assume the reinvestment of all dividend
distributions paid during the indicated periods. Interest rates fluctuated
during the periods covered by the table and the Fund's results should not be
considered as representative of future performance. Total return for
Consultant Class Shares for periods prior to the commencement of operations of
such Class is based on the performance of Class A Shares. For periods prior to
the commencement of operations of Consultant Class Shares, the total return
does not reflect the 12b-1 payments applicable to such Class. If such payments
were reflected in the calculations, performance would have been affected.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CONSULTANT CLASS
CLASS A SHARES SHARES(1)
<S> <C> <C>
1 year
ended
3/31/96 5.01% 4.75%
3 years
ended
3/31/96 3.76% 3.51%
5 years
ended
3/31/96 3.86% 3.60%
10 years
ended
3/31/96 5.50% 5.27%
15 years
ended
3/31/96 7.28% 7.12%
Period
6/30/78(2)
through
3/31/96 7.99% 7.86%
</TABLE>
(1) Date of initial public offering was March 10, 1988.
(2) Date of initial public offering of Class A Shares.
-11-
<PAGE> 114
(SAI-DCR/PART B)
The performance of Class B Shares, as shown below, is the average
annual total return quotation through March 31, 1996. The average annual total
return for Class B Shares (including deferred sales charge) reflects the
deduction of the applicable CDSC that would be paid if the shares were redeemed
at March 31, 1996. The average annual total return for Class B Shares
(excluding deferred sales charge) assumes the shares were not redeemed at March
31, 1996 and, therefore, does not reflect the deduction of a CDSC.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS B SHARES CLASS B SHARES
(INCLUDING DEFERRED (EXCLUDING DEFERRED
SALES CHARGE) SALES CHARGE)
<S> <C> <C>
1 year
ended
3/31/96 (0.03%) 3.97%
Period
5/2/94(1)
through
3/31/96 1.51% 3.55%
</TABLE>
(1) Date of initial public offering of Class B Shares.
The performance of Class C Shares, as shown below, is the aggregate
total return quotation through March 31, 1996. The aggregate total return
quotation for Class C Shares (including deferred sales charge) reflects the
deduction of the applicable CDSC that would be paid if the shares were redeemed
at March 31, 1996. The aggregate total return for Class C Shares (excluding
deferred sales charge) assumes the shares were not redeemed at March 31, 1996
and, therefore, does not reflect the deduction of a CDSC.
AGGREGATE TOTAL RETURN
<TABLE>
<CAPTION>
CLASS C SHARES CLASS C SHARES
(INCLUDING DEFERRED (EXCLUDING DEFERRED
SALES CHARGE) SALES CHARGE)
<S> <C> <C>
Period
11/29/95(1)
through
3/31/96 0.24% 1.24%
</TABLE>
(1) Date of initial public offering; total return for this short of a time
period may not be representative of longer-term results.
-12-
<PAGE> 115
(SAI-DCR/PART B)
From time to time, the Fund may also quote current yield information
of each Class with the sample average rates paid on bank money market deposit
accounts. The bank money market deposit averages are the stated rates of 100
large banks and thrifts in the top five standard metropolitan statistical areas
as determined by the Bank Rate Monitor. The Fund's figures for a Class will be
the annualized yields representing an average of that Class' after-expense per
share earnings divided by cost per share for each day of the fiscal month, or
period, noted. Yield fluctuates depending on portfolio type, quality, maturity
and operating expenses. Principal is not insured and the results shown should
not be considered as representative of the yield which may be realized from an
investment made in the Fund at any time in the future.
In addition, the Fund may quote actual yield and total return
performance of each of the Classes in advertising and other types of literature
compared to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include
the average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts, as monitored by the
Bank Rate Monitor, and those of corporate and government security price indices
of various durations prepared by Lehman Brothers and Salomon Brothers, Inc.
These indices are not managed for any investment goal.
Statistical and performance information and various indices compiled
and maintained by organizations such as the following may also be used in
preparing exhibits comparing certain industry trends and competitive mutual
fund performance to comparable Fund activity and performance. From time to
time, certain mutual fund performance ranking information, calculated and
provided by these organizations, may also be used in the promotion of sales in
the Fund. Any indices used are not managed for any investment goal.
CDA Investment Technologies, Lipper Analytical Services, Inc. and
IBC/Donoghue are performance evaluation services that maintain
statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators,
such as historical and current price/earning information, individual
equity and fixed income price and return information.
Salomon Brothers and Lehman Brothers are statistical research firms
that maintain databases of international market, bond market,
corporate and government-issued securities of various maturities.
This information, as well as unmanaged indices compiled and maintained
by these firms, will be used in preparing comparative illustrations.
-13-
<PAGE> 116
(SAI-DCR/PART B)
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. Also, current rate information on municipal
debt obligations of various durations, as reported daily by The Bond Buyer, may
also be used. The Bond Buyer is published daily and is an industry-accepted
source for current municipal bond market information.
Comparative information on the Consumer Price Index may also be
included. The Consumer Price Index, as prepared by the U.S. Bureau of Labor
Statistics, is the most commonly used measure of inflation. It indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return on an investment.
Total return performance of each Class will reflect the reinvestment
of all dividends and any capital gains, if any, during the indicated period.
Shares of the Fund are sold without a front-end sales charge. Each calculation
for Class B Shares and Class C Shares will include any applicable CDSC upon
complete redemption of such shares. The performance of Class B and Class C
Shares may also be presented without including the impact of any CDSC. The
results will not reflect any income taxes payable by shareholders on the
reinvested distributions included in the calculations. An illustration of past
Fund performance should not be considered as representative of future results.
The following table is an example, for purposes of illustration only,
of cumulative total return performance for Class A Shares, Class B Shares,
Class C Shares and Consultant Class Shares through March 31, 1996. For these
purposes, the calculations assume the reinvestment of any realized securities
profits distributions and income dividends paid during the indicated periods.
Total return shown for Consultant Class Shares for the periods prior to the
commencement of operations of such Class is based on the performance of Class A
Shares. For the periods prior to the commencement of operations of Consultant
Class Shares, the total return does not reflect the 12b-1 payments applicable
to such Class. If such payments were reflected in the calculations,
performance would have been affected.
-14-
<PAGE> 117
(SAI-DCR/PART B)
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
CONSULTANT CLASS
CLASS A SHARES SHARES(1)
<S> <C> <C>
3 months
ended
3/31/96 1.14% 1.08%
6 months
ended
3/31/96 2.39% 2.26%
9 months
ended
3/31/96 3.68% 3.48%
1 year
ended
3/31/96 5.01% 4.75%
3 years
ended
3/31/96 11.73% 10.89%
5 years
ended
3/31/96 20.83% 19.33%
10 years
ended
3/31/96 70.89% 67.13%
15 years
ended
3/31/96 186.84% 180.52%
Period
6/30/78(2)
through
3/31/96 291.57% 282.94%
</TABLE>
(1) Date of initial public offering was March 10, 1988.
(2) Date of initial public offering of Class A Shares.
-15-
<PAGE> 118
(SAI-DCR/PART B)
<TABLE>
<CAPTION>
CLASS B SHARES CLASS B SHARES
(INCLUDING DEFERRED (EXCLUDING DEFERRED
SALES CHARGE) SALES CHARGE)
<S> <C> <C>
3 months
ended
3/31/96 (3.11%) 0.89%
6 months
ended
3/31/96 (2.12%) 1.88%
9 months
ended
3/31/96 (1.10%) 2.90%
1 year
ended
3/31/96 (0.03%) 3.97%
Period
5/2/94(1)
through
3/31/96 2.91% 6.91%
</TABLE>
(1) Date of initial public offering of Class B Shares.
<TABLE>
<CAPTION>
CLASS C SHARES CLASS C SHARES
(INCLUDING DEFERRED (EXCLUDING DEFERRED
SALES CHARGE) SALES CHARGE)
<S> <C> <C>
3 months
ended
3/31/96 (0.11%) 0.89%
Period
11/29/95(1)
through
3/31/96 0.24% 1.24%
</TABLE>
(1) Date of initial public offering of Class C Shares; total return for
this short of a time period may not be representative of longer-term
results.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the overriding investment philosophy of
Delaware Management Company, Inc. (the "Manager") and how that philosophy
impacts the Fund's, and other Delaware Group funds', investment disciplines
employed in seeking their objectives. The Distributor may also from time to
time cite general or specific information about the institutional clients of
the Manager, including the number of such clients serviced by the Manager.
-16-
<PAGE> 119
(SAI-DCR/PART B)
DOLLAR-COST AVERAGING
Money market funds, which are generally intended for your short-term
investment needs, can often be used as a basis for building a long-term
investment plan. For many people, deciding when to purchase long-term
investments, such as stock or longer-term bond funds, can be a difficult
decision. Unlike money market fund shares, prices of other securities, such as
stocks and bonds, tend to move up and down over various market cycles. Though
logic says to invest when prices are low, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a
regular basis (perhaps using assets from your money market fund) that money
will always buy more shares when the price is low and fewer when the price is
high. You can choose to invest at any regular interval--for example, monthly or
quarterly--as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important
things to remember. Dollar-cost averaging works best over longer time periods,
and it doesn't guarantee a profit or protect against losses in declining
markets. If you need to sell your investment when prices are low, you may not
realize a profit no matter what investment strategy you utilize. That's why
dollar-cost averaging can make sense for long-term goals. Since the potential
success of a dollar-cost averaging program depends on continuous investing,
even through periods of fluctuating prices, you should consider your
dollar-cost averaging program a long-term commitment and invest an amount you
can afford and probably won't need to withdraw. Investors should also consider
their financial ability to continue to purchase shares during low fund share
prices. Delaware Group offers three services -- Automatic Investing Program,
Direct Deposit Program and the Wealth Builder Option -- that can help to keep
your regular investment program on track. See Investing by Electronic Fund
Transfer -- Direct Deposit Purchase Plan and Automatic Investing Plan under
Purchasing Shares and Wealth Builder Option under Redemption and Exchange for
a complete description of these options including restrictions or limitations.
The example below illustrates how dollar-cost averaging can work. In
a fluctuating market, the average cost per share of a stock or bond fund over a
period of time will be lower than the average price per share of the fund for
the same time period.
<TABLE>
<CAPTION>
PRICE NUMBER OF
INVESTMENT PER SHARES
AMOUNT SHARE PURCHASED
<S> <C> <C> <C>
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $5.00 20
Month 4 $100 $10.00 10
-----------------------------------------------------
$400 $37.50 48
</TABLE>
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended to
represent the actual performance of the Fund. Dollar-cost averaging can be
appropriate for investments in shares of funds that tend to fluctuate in value.
Please obtain the prospectus of any Delaware Group fund in which you plan to
invest
-17-
<PAGE> 120
(SAI-DCR/PART B)
through a dollar-cost averaging program. The prospectus contains additional
information, including charges and expenses. Please read it carefully before
you invest or send money.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding and the following chart illustrates just how powerful
it can be.
COMPOUNDED RETURNS
Results at various assumed fixed rates of return on a $10,000
investment compounded monthly for 10 years:
<TABLE>
<CAPTION>
4% 6% 8%
Rate of Rate of Rate of
Return Return Return
------ ------ ------
<S> <C> <C> <C>
1 year $10,407 $10,617 $10,830
2 years $10,831 $11,272 $11,729
3 years $11,273 $11,967 $12,702
4 years $11,732 $12,705 $13,757
5 years $12,210 $13,488 $14,898
6 years $12,707 $14,320 $16,135
7 years $13,225 $15,203 $17,474
8 years $13,764 $16,141 $18,924
9 years $14,325 $17,137 $20,495
10 years $14,908 $18,194 $22,196
</TABLE>
These figures are calculated assuming a fixed constant investment
return and assume no fluctuation in the value of principal. These figures do
not reflect payment of applicable taxes or any CDSC, are not intended to be a
projection of investment results and do not reflect the actual performance
results of any of the Classes.
The Prospectuses and this Part B may be in use for a full year and,
accordingly, it can be expected that yields will fluctuate substantially from
the example shown above.
The yield quoted at any time represents the amount being earned on a
current basis and is a function of the types of instruments in the Fund's
portfolio, their quality and length of maturity and the Fund's operating
expenses. The length of maturity for the portfolio is the average dollar
weighted maturity of the portfolio. This means that the portfolio has an
average maturity of a stated number of days for its issues. The calculation is
weighted by the relative value of the investment.
The yield will fluctuate daily as the income earned on the investments
of the Fund fluctuates. Accordingly, there is no assurance that the yield
quoted on any given occasion will remain in effect for any period of time. It
should also be emphasized that the Fund is an open-end investment company and
that there is no guarantee that the net asset value per share or any stated
rate of return will remain constant. A shareholder's investment in the Fund is
not insured. Investors comparing results of the Fund with investment results
and yields from other sources such as banks or savings and loan associations
should understand these distinctions. Historical and comparative yield
information may, from time to time, be presented by the Fund. Although the
Fund determines the yield on the basis of a seven-calendar-day period, it may
from time to time use a different time span.
-18-
<PAGE> 121
(SAI-DCR/PART B)
Other funds of the money market type may calculate their yield on a
different basis and the yield quoted by the Fund could vary upward or downward
if another method of calculation or base period were used. Shareholders and
prospective investors who wish to learn the current yield of the Fund may call
toll free, nationwide 800-523-4640.
-19-
<PAGE> 122
(SAI-DCR/PART B)
TRADING PRACTICES
Portfolio transactions are executed by the Manager on behalf of the
Fund in accordance with the standards described below.
Brokers, dealers and banks are selected to execute transactions for
the purchase or sale of portfolio securities on the basis of the judgment of
the Manager of their professional capability to provide the service. The
primary consideration is to have brokers, dealers or banks execute transactions
at best price and execution. Best price and execution refers to many factors,
including the price paid or received for a security, the commission charged,
the promptness and reliability of execution, the confidentiality and placement
accorded the order and other factors affecting the overall benefit obtained by
the account on the transaction. Trades are generally made on a net basis where
securities are either bought or sold directly from or to a broker, dealer or
bank. In these instances, there is no direct commission charged, but there is
a spread (the difference between the buy and sell price) which is the
equivalent of a commission. When a commission is paid, the Fund pays
reasonably competitive brokerage commission rates based upon the professional
knowledge of its trading department as to rates paid and charged for similar
transactions throughout the securities industry. In some instances, the Fund
pays a minimal share transaction cost when the transaction presents no
difficulty.
Portfolio trading will be undertaken principally to accomplish the
Fund's objective. Since portfolio assets will consist of short-term
instruments, replacement of portfolio securities will occur frequently.
However, since the Manager expects to usually transact purchases and sales of
portfolio securities on a net basis, it is not anticipated that the Fund will
pay any significant brokerage commissions. The Manager is free to dispose of
portfolio securities at any time, subject to complying with the Internal
Revenue Code and the 1940 Act, when changes in circumstances or conditions make
such a move desirable in light of the investment objective.
The Manager may allocate out of all commission business generated by
all of the funds and accounts under its management, brokerage business to
brokers or dealers who provide brokerage and research services. These services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software and hardware
used in security analyses; and providing portfolio performance evaluation and
technical market analyses. Such services are used by the Manager in connection
with its investment decision-making process with respect to one or more funds
and accounts managed by it, and may not be used, or used exclusively, with
respect to the fund or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 and the Investment
Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services
and that such commissions are reasonable in relation to the value of the
brokerage and research services provided. In some instances, services may be
provided to the Manager which constitute in some part brokerage and research
services used by the Manager in connection with its investment decision-making
process and constitute in some part services used by the Manager in connection
with administrative or other functions not related to its investment
decision-making process. In such cases, the Manager will make a
-20-
<PAGE> 123
(SAI-DCR/PART B)
good faith allocation of brokerage and research services and will pay out of
its own resources for services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In addition, so long as no fund is disadvantaged, portfolio
transactions which generate commissions or their equivalent are allocated to
broker/dealers who provide daily portfolio pricing services to the Fund and to
other funds in the Delaware Group. Subject to best price and execution,
commissions allocated to brokers providing such pricing services may or may not
be generated by the funds receiving the pricing service.
The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. When a
combined order is executed in a series of transactions at different prices,
each account participating in the order may be allocated an average price
obtained from the executing broker. It is believed that the ability of the
accounts to participate in volume transactions will generally be beneficial to
the accounts and funds. Although it is recognized that, in some cases, the
joint execution of orders could adversely affect the price or volume of the
security that a particular account or fund may obtain, it is the opinion of the
Manager and the Board of Directors that the advantages of combined orders
outweigh the possible disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Manager may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of shares of the Fund as a factor
in the selection of brokers and dealers to execute Fund portfolio transactions.
-21-
<PAGE> 124
(SAI-DCR/PART B)
PURCHASING SHARES
The Distributor serves as the national distributor for the Fund's four
Classes - Class A Shares, Consultant Class Shares, Class B Shares and Class C
Shares, and has agreed to use its best efforts to sell each Class of shares.
Shares of the Fund are offered on a continuous basis.
Class A Shares can be purchased directly from the Fund or its
Distributor. Consultant Class Shares, Class B Shares and Class C Shares are
offered through brokers, financial institutions and other entities which have a
dealer agreement with the Fund's Distributor or a service agreement with the
Fund. In some states, banks and/or other institutions effecting transactions
in Consultant Class Shares, Class B Shares or Class C Shares may be required to
register as dealers pursuant to state laws.
Generally, the minimum initial investment is $1,000 for each of the
Classes. Subsequent purchases must generally be at least $100. The minimum
initial and subsequent investment with respect to Class A Shares will be waived
for purchases by officers, directors and employees of any Delaware Group fund,
the Manager or any of the Manager's affiliates if the purchases are made
pursuant to a payroll deduction program. Shares purchased pursuant to the
Uniform Gifts to Minors Act or Uniform Transfers to Minors Act and shares
purchased in connection with an Automatic Investing Plan are subject to a
minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Delaware Group Asset Planner service are subject to a
minimum initial investment of $2,000 per Asset Planner Strategy selected.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares; for Class C Shares, each purchase must be in an amount that is
less than $1,000,000. The Fund will reject any order for purchase of more than
$250,000 of Class B Shares and $1,000,000 or more for Class C Shares. An
investor may exceed these limitations by making cumulative purchases over a
period of time.
The Fund reserves the right to reject any order for the purchase of
its shares if in the opinion of management such rejection is in the Fund's best
interest. See Suitability in the Prospectuses for the Classes.
The shares of each of the Classes are sold without a front-end sales
charge at the net asset value per share next determined after the receipt and
effectiveness of a purchase order as described below. See the Prospectuses for
additional information on how to invest.
Class A Shares have no CDSC or annual 12b-1 Plan expenses. Consultant
Class Shares have no CDSC; such shares are subject to annual 12b-1 Plan
expenses of up to a maximum of .30% of the average daily net assets of such
shares.
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 during
the third or fourth year following purchase; (iii) 2% if shares are redeemed
during the fifth year following purchase; and (iv) 1% if shares are redeemed
during the sixth year following purchase. Class C Shares are subject to a CDSC
of 1% if shares are redeemed within 12 months of purchase. For both Class B
Shares and Class C Shares, the charge will be assessed on an amount equal to
the lesser of 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 values of Class B Shares and Class C Shares at the time of purchase
and at the time of redemption are expected to be the same if redeemed directly
from the Fund. In addition, no CDSC will be assessed on redemption of shares
received upon reinvestment of dividends or capital gains. See Redemption and
Exchange in the Prospectus for Class B Shares and Class C Shares for a list of
the
-22-
<PAGE> 125
(SAI-DCR/PART B)
instances in which the CDSC is waived. Class B Shares are subject to annual
12b-1 Plan expenses up to a maximum of 1% of the average daily net assets of
such Class for approximately eight years. During the seventh year after
purchase and, thereafter, until converted to Consultant Class Shares, Class B
Shares will continue to be subject to annual 12b-1 Plan expenses of 1% of
average daily net assets representing such shares. At the end of approximately
eight years after purchase, the investor's Class B Shares will be automatically
converted into Consultant Class Shares of the Fund. See Automatic Conversion
of Class B Shares in the Prospectus for Class B Shares. Such conversion will
constitute a tax-free exchange for federal income tax purposes. See Taxes in
the Prospectus for Class B Shares. Class C Shares are subject to annual 12b-1
Plan expenses up to a maximum of 1% of the average daily net assets of such
Class for the life of the investment.
With respect to Class A Shares and Consultant Class Shares,
certificates representing shares purchased are not ordinarily issued unless a
shareholder submits a specific request. Certificates are not issued in the
case of Class B Shares or Class C Shares. In the case of investments where
certificates are not issued, purchases are confirmed to the investor and
credited to the shareholder's account on the books maintained by Delaware
Service Company, Inc. (the "Transfer Agent"). The investor will have the same
rights of ownership with respect to such shares as if certificates had been
issued. With respect to Class A Shares and Consultant Class Shares, an
investor may receive a certificate representing shares purchased by sending a
letter to the Transfer Agent requesting the certificate. No charge is assessed
by the Fund for any certificate issued. Investors who hold certificates
representing their shares may only redeem these shares by written request.
PLANS UNDER RULE 12B-1 FOR CONSULTANT CLASS SHARES, CLASS B SHARES AND CLASS C
SHARES
The Fund has adopted a separate distribution plan under Rule 12b-1 for
each of the Consultant Class Shares, Class B Shares and Class C Shares (the
"Plans"). Each Plan permits the Fund to pay for certain distribution,
promotional and related expenses involved in the marketing of only the Class to
which the Plan applies. The Plans do not apply to Class A Shares. Such shares
are not included in calculating the Plans' expenses, and the Plans are not used
to assist in the distribution and marketing of Class A Shares. Holders of
Class A Shares may not vote on matters affecting the Plans.
The Plans permit the Fund, pursuant to the Distribution Agreement, to
pay out of the assets of Consultant Class Shares, Class B Shares and Class C
Shares, monthly fees to the Distributor for its services and expenses incurred
by it in distributing and promoting sales of the shares of such Classes. 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, and paying distribution
and maintenance fees to securities brokers and dealers who enter into
agreements with the Distributor. Registered representatives of brokers, dealers
or other entities, who have sold a specified level of Delaware Group funds
having a 12b-1 Plan, are paid a continuing trail fee of .25% of the average
daily net assets of the Consultant Class Shares by the Distributor from 12b-1
payments of Consultant Class Shares for assets maintained in that Class. The
12b-1 Plan fees relating to Class B Shares and Class C Shares are also used to
pay the Distributor for advancing commission costs to dealers with respect to
the initial sales of such shares.
In addition, the Fund may make payments out of the assets of
Consultant Class Shares, Class B Shares and Class C Shares directly to other
unaffiliated parties, such as banks, who either aid in the distribution of its
shares of, or provide services to, such Classes.
The maximum aggregate fee payable by the Fund under each respective
Plan, and the Fund's Distribution Agreement is on an annual basis .30% of the
Consultant Class Shares' average daily net assets for the year, and 1% (.25% of
which are service fees to be paid by the Fund to the Distributor, dealers or
others,
-23-
<PAGE> 126
(SAI-DCR/PART B)
for providing personal service and/or maintaining shareholder accounts) of each
of the Class B Shares' and the Class C Shares' average daily net assets for the
year. The Fund's Board of Directors may reduce these amounts at any time. The
Board of Directors has set the current fee for Consultant Class Shares at .25%
of average daily net assets. The Distributor has agreed to waive these fees to
the extent the fee for any day exceeds the net investment income realized by
Consultant Class Shares, Class B Shares or Class C Shares for such day.
All of the distribution expenses incurred by the Distributor and
others in excess of the amount paid on behalf of Consultant Class Shares, Class
B Shares or Class C Shares would be borne by such persons without any
reimbursement from that Class. Subject to seeking best price and execution,
the Fund may, from time to time, buy or sell portfolio securities from or to
firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
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 Plans and the Distribution Agreement, as amended, have been
approved by the Board of Directors of the Fund, including a majority of the
directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or indirect financial interest in the Plans, by
vote cast in person at a meeting duly called for the purpose of voting on the
Plans and the Distribution Agreement. Continuation of the Plans and the
Distribution Agreement, as amended, must be approved annually by the Board of
Directors in the same manner as specified above.
Each year, the directors must determine whether continuation of the
Plans is in the best interest of the shareholders of Consultant Class Shares,
Class B Shares and Class C Shares, respectively, and that there is a reasonable
likelihood of the Plan relating to a Class providing a benefit to that Class.
The Plans and the Distribution Agreement, as amended, may be terminated at any
time without penalty by a majority of those directors who are not "interested
persons" or by a majority vote of the outstanding voting securities of the
relevant Class. Any amendment materially increasing the maximum percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Class, as well as a majority vote
of those directors who are not "interested persons." Class B Shares may vote
on any proposal to increase materially the fees to be paid by the Fund under
the Plan relating to Consultant Class Shares. Also, any other material
amendment to the Plans must be approved by a majority vote of the directors
including a majority of the noninterested directors of the Fund having no
interest in the Plans. In addition, in order for the Plans to remain
effective, the selection and nomination of directors who are not "interested
persons" of the Fund must be effected by the directors who themselves are not
"interested persons" and who have no direct or indirect financial interest in
the Plans. Persons authorized to make payments under the Plans must provide
written reports at least quarterly to the Board of Directors for their review.
For the fiscal year ended March 31, 1996, payments from the Consultant
Class Shares pursuant to its Plan amounted to $44,229 and such payments were
used for the following purposes: Broker Sales Charges - $43,481; Telephone -
$592; Prospectus Printing - $112; and Promotional- Other - $44.
-24-
<PAGE> 127
(SAI-DCR/PART B)
For the fiscal year ended March 31, 1996, payments from the Class B
Shares pursuant to its Plan amounted to $19,774 and such payments were used for
the following purposes: Interest on Broker Sales Charges - $8,929; Broker
Trails - $4,976; Broker Sales Charges - $4,911; Commissions to Wholesalers -
$647; Prospectus Printing - $207; Wholesaler Expenses - $84; Dealer Service
Expenses - $12; and Telephone - $8.
For the period November 29, 1995 (date of initial public offering)
through March 31, 1996, payments from the Class C Shares pursuant to its Plan
amounted to $437 and such payments were used for the following purposes:
Broker Sales Charges - $225; Commissions to Wholesalers - $92; Wholesaler
Expenses - $90; Dealer Service Expenses - $20; Interest on Broker Sales Charges
- - $9; and Telephone - $1.
INVESTING BY MAIL
Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check or other negotiable bank draft, payable
to the specific Class desired, to P.O. Box 7977, Philadelphia, PA 19101.
Subsequent Purchases--Additional purchases may be made at any time by
mailing a check or other negotiable bank draft made payable to the specific
Class desired. The account to which the subsequent purchase is to be credited
should be identified by the name(s) of the registered owner(s) and by account
number. An investment slip (similar to a deposit slip) is provided at the
bottom of dividend statements that you will receive from the Fund. Use of this
investment slip can help to expedite processing of your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail. The Fund and the Transfer Agent will not be
responsible for inadvertent processing of post-dated checks or checks more than
six months old.
Direct Deposit Purchases by Mail--Shareholders of the Classes may
authorize a third party, such as a bank or employer, to make investments
directly to their Fund accounts. The Fund will accept these investments, such
as bank-by-phone, annuity payments and payroll allotments, by mail directly
from the third party. Investors should contact their employers or financial
institutions who in turn should contact the Fund for proper instructions.
INVESTING BY WIRE
Investors having an account with a bank that is a member or
correspondent of a member of the Federal Reserve System may purchase shares by
requesting their bank to transmit immediately available funds (Federal Funds)
by wire to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596,
(include shareholder's name and Class account number in the wire).
Initial Purchases--When making an initial investment by wire, you must
first telephone the Fund at 800-523-1918 to advise of your action and to be
assigned an account number. If you do not call first, it may not be possible
to process your order promptly, although in all cases shares purchased will be
priced at the close of business following receipt of Federal Funds. In
addition, you must promptly send your Investment Application or, in the case of
a retirement account, an appropriate retirement plan application, must be
promptly forwarded to the specific Class desired, to P.O. Box 7977,
Philadelphia, PA 19101.
-25-
<PAGE> 128
(SAI-DCR/PART B)
Subsequent Purchases--Additional investments may be made at any time
through the wire procedure described above. The Fund must be immediately
advised by telephone at 800-523-1918 of each transmission of funds by wire.
INVESTING BY ELECTRONIC FUND TRANSFER
Direct Deposit Purchase Plan--Investors may arrange for the Fund to
accept for investment, through an agent bank, preauthorized government or
private recurring payments by Electronic Fund Transfer. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and
delayed checks.
Automatic Investing Plan--The Automatic Investing Plan enables
shareholders to make regular monthly investments without writing checks.
Shareholders may authorize the Fund, in advance, to make arrangements for their
bank to withdraw a designated amount monthly directly from their checking
account for deposit into their Fund account. This type of investment will be
handled in either of the following two ways. (1) If the shareholder's bank is
member of the National Automated Clearing House Association ("NACHA"), the
amount of the investment will be electronically deducted from his or her
account by Electronic Fund Transfer ("EFT"). The shareholder's checking
account will reflect a debit each month at a specified date although no check
is required to initiate the transaction. (2) If the shareholder's bank is not
a member of NACHA, deductions will be made by preauthorized checks, known as
Depository Transfer Checks. Should the shareholder's bank become a member of
NACHA in the future, his or her investments would be handled electronically
through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such Plans must be for $25 or more. Investors wishing to take advantage
of these options should contact the Shareholder Service Center at 800-523-1918
for the necessary authorization forms and information. These services can be
discontinued by the shareholder at any time without penalty by giving written
notice.
Payments to the Fund from the federal government or agencies on behalf
of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a
reclamation, the Fund may liquidate sufficient shares from a shareholder's
account to reimburse the government or the private source. In the event there
are insufficient shares in the shareholder's account, the shareholder is
expected to reimburse the Fund.
WHEN ORDERS ARE EFFECTIVE
Transactions in money market instruments in which the Fund invests
normally require same day settlement in Federal Funds. The Fund intends at all
times to be as fully invested as possible in order to maximize its earnings.
Thus, purchase orders will be executed at the net asset value next determined
after their receipt by the Fund only if the Fund has received payment in
Federal Funds by wire. Dividends begin to
-26-
<PAGE> 129
(SAI-DCR/PART B)
accrue on the next business day. Thus, investments effective the day before a
weekend or holiday will not accrue earnings for that period but will earn
dividends on the next business day. If, however, 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. If remitted in
other than the foregoing manner, such as by money order or personal check,
purchase orders will be executed as of the close of regular trading on the New
York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open, on the day on which the payment is converted into Federal
Funds and is available for investment, normally one business day after receipt
of payment. Conversion into Federal Funds may be delayed when the Fund
receives (1) a check drawn on a nonmember bank of the Federal Reserve, (2) a
check drawn on a foreign bank, (3) a check payable in a foreign currency, or
(4) a check requiring special handling. With respect to investments made other
than by wire, the investor becomes a shareholder after declaration of the
dividend on the day on which the order is effective.
Information on how to procure a negotiable bank draft or to transmit
Federal Funds by wire is available at any national bank or any state bank which
is a member of the Federal Reserve System. Any commercial bank can transmit
Federal Funds by wire. The bank may charge the shareholder for these services.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason,
the Fund will automatically redeem from the shareholder's account the amount
credited by the check plus any dividends earned thereon.
REINVESTMENT OF DIVIDENDS IN OTHER DELAWARE GROUP FUNDS
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, shareholders may
automatically reinvest dividends and/or distributions from the Fund into
certain of the other mutual funds in the Delaware Group. Such investments will
be at net asset value at the close of business on the reinvestment date without
any front-end sales charge or exchange fee. The shareholder must notify the
Transfer Agent in writing and must have established an account in the fund into
which the dividends and/or distributions are to be invested. Any reinvestment
directed to a fund in which the investor does not then have an account, will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is proposed to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses. See also Dividend Reinvestment Plan in the Prospectuses.
Dividends on Class A Shares and Consultant Class Shares may be
reinvested in shares of any other mutual fund in the Delaware Group, other than
Class B Shares and Class C Shares of the funds in the Delaware Group that offer
those classes of shares. Dividends on Class B Shares may only be invested in
Class B Shares of another fund in the Delaware Group that offers such a class
of shares. Dividends on Class C Shares may only be invested in Class C Shares
of another fund in the Delaware Group that offers such a class of shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
-27-
<PAGE> 130
(SAI-DCR/PART B)
ACCOUNT STATEMENTS
A statement of account will be mailed quarterly summarizing all
transactions during that period and will include the regular dividend
information. However, in the case of Class A Shares and Consultant Class
Shares, accounts in which there has been activity, other than a reinvestment of
dividends will receive a monthly statement confirming transactions for that
period. In the case of Class B Shares and Class C Shares, accounts in which
there has been activity will receive a confirmation after each transaction.
-28-
<PAGE> 131
(SAI-DCR/PART B)
RETIREMENT PLANS
An investment in the Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available
for investment only by Individual Retirement Accounts, Simplified Employee
Pension Plans, 403(b)(7) Deferred Compensation Plans and 457 Deferred
Compensation Plans. The CDSC may be waived on certain redemptions of Class B
Shares and Class C Shares. See the Prospectus for Class B Shares and Class C
Shares under Redemption and Exchange - Waiver of Contingent Deferred Sales
Charge for a list of the instances in which the CDSC is waived.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000 for retirement plans. Each purchase of Class C Shares
must be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts
("IRAs") for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25 regardless of which Class is selected. Retirement
plans may be subject to plan establishment fees, annual maintenance fees and/or
other administrative or trustee fees. Fees are based upon the number of
participants in the plan as well as the services selected. Additional
information about fees is included in retirement plan materials. Fees are
quoted upon request. Annual maintenance fees may be shared by Delaware
Management Trust Company, the Transfer Agent, other affiliates of the Manager
and others that provide services to such Plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders.
Certain retirement plans may qualify to purchase Class A Shares. For
additional information on any of the Plans and Delaware's retirement services,
call the Shareholder Service Center telephone number.
IT IS ADVISABLE FOR AN INVESTOR CONSIDERING ANY ONE OF THE RETIREMENT
PLANS DESCRIBED BELOW TO CONSULT WITH AN ATTORNEY, ACCOUNTANT OR A QUALIFIED
RETIREMENT PLAN CONSULTANT. FOR FURTHER DETAILS, INCLUDING APPLICATIONS FOR
ANY OF THESE PLANS, CONTACT YOUR INVESTMENT DEALER OR THE DISTRIBUTOR.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the plans described below.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLANS
Prototype plans are available for self-employed individuals,
partnerships and corporations which replace the former Keogh and corporate
retirement plans. These plans contain profit sharing or money purchase pension
plan provisions. Contributions may be invested only in Class A Shares,
Consultant Class Shares and Class C Shares.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A document is available for an individual who wants to establish an
IRA by making contributions which may be tax-deductible, even if the individual
is already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year or elects to be treated
as having no compensation for the year. Investments in each of the Classes are
permissible.
-29-
<PAGE> 132
(SAI-DCR/PART B)
The Tax Reform Act of 1986 (the "Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the
full deduction for IRAs ($2,000 for each working spouse and $2,250 for
one-income couples) was retained for all taxpayers who are not covered by an
employer-sponsored retirement plan. Even if a taxpayer (or his or her spouse)
is covered by an employer-sponsored retirement plan, the full deduction is
still available if the taxpayer's adjusted gross income is below $25,000
($40,000 for taxpayers filing joint returns). A partial deduction is allowed
for married couples with incomes between $40,000 and $50,000, and for single
individuals with incomes between $25,000 and $35,000. The Act does not permit
deductions for contributions to IRAs by taxpayers whose adjusted gross income
before IRA deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer-sponsored retirement plan. Taxpayers who are not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one-income couples), and defer taxes on interest or other earnings from the
IRAs. Special rules apply for determining the deductibility of contributions
made by married individuals filing separate returns.
A company or association may establish a Group IRA for employees or
members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in
order to avoid premature distribution penalties, but distributions generally
must commence no later than April 1 of the calendar year following the year in
which the participant reaches age 70 1/2. Individuals are entitled to revoke
the account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are
subject to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC upon
redemption of Class B Shares and Class C Shares, see Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Classes of Shares in the
Prospectus for Class B Shares and Class C Shares.
See Appendix B for additional IRA information.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan
which permits employer contributions and salary deferral contributions in Class
A Shares, Consultant Class Shares and Class C Shares only.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Section 401(k) of the Internal Revenue Code of 1986 (the "Code")
permits employers to establish qualified plans based on salary deferral
contributions. Plan documents are available to enable employers to
-30-
<PAGE> 133
(SAI-DCR/PART B)
establish a plan. An employer may also elect to make profit sharing
contributions and/or matching contributions with investments in only Class A
Shares, Consultant Class Shares and Class C Shares or certain other funds in
the Delaware Group.
DEFERRED COMPENSATION PLAN FOR PUBLIC SCHOOLS AND NON-PROFIT ORGANIZATIONS
("403(B)(7)")
Section 403(b)(7) of the Code permits public school systems and
certain non-profit organizations to use mutual fund shares held in a custodial
account to fund deferred compensation arrangements for their employees. A
custodial account agreement is available for those employers who wish to
purchase shares of any of the Classes in conjunction with such an arrangement.
DEFERRED COMPENSATION PLAN FOR STATE AND LOCAL GOVERNMENT EMPLOYEES ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of any of the Classes. Although investors may
use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or
their investment dealers to obtain further information.
-31-
<PAGE> 134
(SAI-DCR/PART B)
OFFERING PRICE
The offering price of the Classes is the net asset value per share
next to be determined after an order is received and becomes effective. There
is no front-end sales charge.
The purchase will be effected at the net asset value next computed
after the receipt of Federal Funds provided they are received by the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open. The New York Stock Exchange is
scheduled to be open Monday through Friday throughout the year except for New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. When the New York Stock Exchange is closed,
the Fund will generally be closed, pricing calculations will not be made and
purchase and redemption orders will not be processed.
An example showing how to calculate the net asset value per share is
included in the Fund's financial statements which are incorporated by reference
into this Part B.
The investor becomes a shareholder at the close of and after
declaration of the dividend on the day on which the order is effective. See
Purchasing Shares. Dividends begin to accrue on the next business day. In the
event of changes in Securities and Exchange Commission requirements or the
Fund's change in time of closing, the Fund reserves the right to price at a
different time, to price more often than once daily or to make the offering
price effective at a different time.
The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. Expenses and fees are accrued
daily. The Fund's total net assets are determined by valuing the portfolio
securities at amortized cost.
The Board of Directors has adopted certain procedures to monitor and
stabilize the price per share. Calculations are made each day to compare part
of the Fund's value with the market value of instruments of similar character.
At regular intervals all issues in the portfolio are valued at market value.
Securities maturing in more than 60 days are valued more frequently by
obtaining market quotations from market makers. The portfolio will also be
valued by market makers at such other times as is felt appropriate. In the
event that a deviation of more than 1/2 of 1% exists between the Fund's $1.00
per share offering and redemption prices and the net asset value calculated by
reference to market quotations, or if there is any other deviation which the
Board of Directors believes would result in a material dilution to shareholders
or purchasers, the Board of Directors will promptly consider what action, if
any, should be initiated, such as changing the price to more or less than $1.00
per share.
Each Class of the Fund 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 the Class A Shares will not incur any of the expenses
under the Fund's 12b-1 Plans and Class B Shares, Class C 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 net asset value per share of each Class is
expected to be equivalent.
-32-
<PAGE> 135
(SAI-DCR/PART B)
REDEMPTION
Any shareholder may require the Fund to redeem shares by sending a
WRITTEN REQUEST, signed by the record owner or owners exactly as the shares are
registered, to the Fund at 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. Certificates are issued for
Class A Shares and Consultant Class Shares only if a shareholder specifically
requests them. Certificates are not issued for Class B Shares or Class C
Shares. If stock certificates have been issued for shares being redeemed, they
must accompany the written request. For redemptions of $50,000 or less paid to
the shareholder at the address of record, the request must be signed by all
owners of the shares or the investment dealer of record, but a signature
guarantee is not required. When the redemption is for more than $50,000, or if
payment is made to someone else or to another address, signatures of all record
owners and a signature guarantee are required. 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 request further documentation from
corporations, executors, retirement plans, administrators, trustees or
guardians. The redemption price is the net asset value next calculated after
receipt of the redemption request in good order. See Offering Price for time
of calculation of net asset value.
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 during
the third or fourth year following purchase; (iii) 2% if shares are redeemed
during the fifth year following purchase; and (iv) 1% if shares are redeemed
during the sixth year following purchase. Class C Shares are subject to a CDSC
of 1% if shares are redeemed within 12 months following purchase. See
Contingent Deferred Sales Charge - Class B Shares and Class C Shares under
Classes of Shares in the Fund's Prospectus relating to such shares. Except for
such CDSC and, with respect to the expedited payment by wire, for which there
is currently a $7.50 bank wiring cost, neither the Fund nor the Distributor
charges a fee for redemptions or repurchases, but such fees could be charged at
any time in the future.
Payment for shares redeemed will ordinarily be mailed the next
business day, but no later than seven days, after receipt of a redemption
request in good order. If a shareholder redeems an entire account, all
dividends accrued to the time of the withdrawal will be paid by separate check
at the end of that particular monthly dividend period.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result
of which disposal by the Fund of securities owned by it is not reasonably
practical or it is not reasonably practical for the Fund fairly to value its
assets, or in the event that the Securities and Exchange Commission has
provided for such suspension for the protection of shareholders, the Fund may
postpone payment or suspend the right of redemption. In such case, the
shareholder may withdraw the request for redemption or leave it standing as a
request for redemption at the net asset value next determined after the
suspension has been terminated.
See Account Statements under Purchasing Shares for information
relating to the mailing of confirmations of redemptions.
The Fund will process written redemption requests to the extent that
the purchase orders for the shares being redeemed have already settled. The
Fund will honor redemption requests as to shares for which a check was tendered
as payment, but the Fund will not mail the proceeds until it is reasonably
satisfied that the check has cleared. The hold period against a recent
purchase may be up to but not in excess of 15 days, depending upon the origin
of the investment check. Dividends will continue to be earned until the
redemption is processed. This potential delay can be avoided by making
investments by wiring Federal Funds.
-33-
<PAGE> 136
(SAI-DCR/PART B)
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason,
the Fund will automatically redeem from the shareholder's account the shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Fund or to the Distributor.
SMALL ACCOUNTS
Before the Fund involuntarily redeems shares from an account that,
under the circumstances noted in the Prospectuses, has remained below the
minimum amounts required by the relevant Prospectus, the shareholder will be
notified in writing that the value of the shares in the account is less than
the minimum amounts required by the Fund's Prospectuses and will be allowed 60
days from the date of notice to make an additional investment to meet the
required minimum. If no such action is taken by the shareholder, the proceeds
will be sent to the shareholder. Any redemption in an inactive account
established with a minimum investment may trigger mandatory redemption. No
CDSC will apply to the redemptions described in this paragraph of Class B
Shares and Class C Shares described above.
* * *
The Fund has made available certain redemption privileges, as
described below. The Fund reserves the right to suspend or terminate these
expedited payment procedures upon 60 days' written notice to shareholders.
EXPEDITED TELEPHONE REDEMPTIONS
Shareholders or their investment dealers of record wishing to redeem
any amount of shares of $50,000 or less for which certificates have not been
issued may call the Shareholder Service Center at 800-523-1918 prior to the
time the offering price and net asset value are determined, as noted above, and
have the proceeds mailed to them at the record address. Checks payable to the
shareholder(s) of record will normally be mailed the next business day, but no
later than seven days, after the receipt of the redemption request. This
option is only available to individual, joint and individual fiduciary-type
accounts.
In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
number listed above. An authorization form must have been completed by the
shareholder and filed with the Fund before the request is received.
Payment will be made by wire or check to the bank account designated
on the authorization form as follows:
1. PAYMENT BY WIRE: Request that Federal Funds be wired to the
bank account designated on the authorization form. Redemption proceeds will
normally be wired on the next business day following receipt of the redemption
request. There is a $7.50 wiring fee (subject to change) charged by CoreStates
Bank, N.A. which will be deducted from the withdrawal proceeds each time the
shareholder requests a redemption. If the proceeds are wired to the
shareholder's account at a bank which is not a member of the Federal Reserve
System, there could be a delay in the crediting of the funds to the
shareholder's bank account.
2. PAYMENT BY CHECK: Request a check be mailed to the bank
account designated on the authorization form. Redemption proceeds will
normally be mailed the next business day, but no later than seven days, from
the date of the telephone request. This procedure will take longer than the
Payment by Wire option (1 above) because of the extra time necessary for the
mailing and clearing of the check after the bank receives it.
-34-
<PAGE> 137
(SAI-DCR/PART B)
REDEMPTION REQUIREMENTS: In order to change the name of the bank and
the account number it will be necessary to send a written request to the Fund
with a signature guarantee. 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.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
The Fund will process telephone redemption requests to the extent that
the purchase orders for the shares being redeemed have already settled. The
Fund will honor redemption requests as to shares for which a check was tendered
as payment, but the Fund will not mail the proceeds until it is reasonably
satisfied that the check has cleared, which may take up to 15 days from the
purchase date.
If expedited payment under these procedures could adversely affect the
Fund, the Fund may take up to seven days to pay the shareholder.
Neither the Fund nor its 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. Telephone instructions received
from shareholders are generally tape recorded, and a written confirmation will
be provided for all purchase, exchange and redemption transactions initiated by
telephone.
CHECKWRITING FEATURE
Holders of Class A Shares and Consultant Class Shares holding shares
for which certificates have not been issued may request on the investment
application that they be provided with special forms of checks which may be
issued to redeem their shares by drawing on the Delaware Group Cash Reserve,
Inc. account with CoreStates Bank, N.A. Normally, it takes two weeks from the
date the shareholder's initial purchase check clears to receive the first order
of checks. The use of any form of check other than the Fund's check will not
be permitted unless approved by the Fund. The Checkwriting Feature is not
available for the Class B or Class C Shares of the Fund.
(1) These redemption checks must be made payable in an amount of $500
OR MORE.
(2) Checks must be signed by the shareholder(s) of record or, in
the case of an organization, by the authorized person(s). If registration is
in more than one name, unless otherwise indicated on the investment application
or your checkwriting authorization form, these checks must be signed by ALL
OWNERS before the Fund will honor them. Shareholders using redemption checks
will continue to be entitled to distributions paid on those shares up to the
time the checks are presented for payment.
(3) If a shareholder who recently purchased shares by check seeks
to redeem all or a portion of those shares through the Checkwriting Feature,
the Fund will honor the redemption request, but will not process the redemption
check until it is reasonably satisfied of the collection of the investment
check. The hold period against a recent purchase may be up to but not in
excess of 15 days, depending upon the origin of the investment check.
-35-
<PAGE> 138
(SAI-DCR/PART B)
(4) If the amount of the check is greater than the value of the
shares held in the shareholder's account, the check will be returned and the
shareholder may be subject to extra charges.
(5) Checks may not be used to close accounts.
The Fund reserves the right to revoke the Checkwriting Feature of
shareholders who overdraw their accounts or if, in the opinion of management,
such revocation is in the Fund's best interest.
Shareholders will be subject to CoreStates Bank, N.A.'s rules and
regulations governing similar accounts. There is a one-time $5 charge by the
Fund to shareholders for this service. This service may be terminated or
suspended at any time by CoreStates Bank, N.A., the Fund or the Transfer Agent.
The Fund and the Transfer Agent will not be responsible for the inadvertent
processing of post-dated checks or checks more than six months old.
Stop-Payment Requests--Investors may request a stop payment on checks
by providing the Fund with a written authorization to do so. Oral requests
will be accepted provided that the Fund promptly receives a written
authorization. Such requests will remain in effect for six months unless
renewed or cancelled. The Fund will use its best efforts to effect
stop-payment instructions, but does not promise or guarantee that such
instructions will be effective. Shareholders requesting stop payment will be
charged a $5 service fee per check for each six-month period, which will be
deducted from their accounts.
Return of Checks--Checks used in redeeming shares from a shareholder's
account will be accumulated and returned semi-annually. Shareholders needing a
copy of a redemption check before the regular mailing should contact the
Transfer Agent nationwide 800-523-1918.
SYSTEMATIC WITHDRAWAL PLANS
Holders of Class A Shares, Consultant Class Shares, Class B Shares and
Class C Shares who own or purchase $5,000 or more of shares for which
certificates have not been issued may establish a Systematic Withdrawal Plan
for monthly withdrawals of $25 or more or quarterly withdrawals of $75 or more,
although the Fund does not recommend any specific amount of withdrawal. This
$5,000 minimum does not apply for the Fund's prototype retirement plans.
Shares purchased with the initial investment and through reinvestment of cash
dividends and realized securities profits distributions will be credited to the
shareholder's account, and sufficient full and fractional shares will be
redeemed at the net asset value calculated on the third business day preceding
the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend) and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not
recommended for all investors and should be started only after careful
consideration of its operation and effect upon the investor's savings and
investment program. To the extent that withdrawal payments from the plan
exceed any dividends and/or realized securities profits distributions paid on
shares held under the plan, the withdrawal payments will represent a return of
capital and the share balance may in time be depleted, particularly in a
declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes, although the Fund expects to maintain a fixed net asset value. If
there were a gain or loss, it would be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
-36-
<PAGE> 139
(SAI-DCR/PART B)
Redemptions of Class B Shares or Class C Shares pursuant to a
Systematic Withdrawal Plan may be subject to a CDSC, unless the annual amount
selected to be withdrawn is less than 12% of the account balance on the date
that the Systematic Withdrawal Plan was established. See Waiver of Contingent
Deferred Sales Charge under Redemption and Exchange in the Prospectus for Class
B Shares and Class C Shares.
An investor wishing to start a Systematic Withdrawal Plan must
complete an authorization form. If the recipient of Systematic Withdrawal Plan
payments is other than the registered shareholder, the shareholder's signature
on this authorization must be guaranteed. 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. This plan may be terminated by the shareholder or the
Transfer Agent at any time by giving written notice. Shareholders should
consult their financial advisers to determine whether a Systematic Withdrawal
Plan would be suitable for them.
WEALTH BUILDER OPTION
Shareholders may elect to invest in one or more of the other mutual
funds in the Delaware Group 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 account and
invested automatically into an account in one or more other mutual funds in the
Delaware Group, subject to the conditions and limitations set forth in the
Prospectuses for the Classes. See Wealth Builder Option and Redemption and
Exchange in the Prospectuses.
The investment will be made on the 20th day of each month (or, if the
fund selected is not open that day, the next business day) at the public
offering price or net asset value, as applicable, of the fund selected on the
date of investment. No investment will be made for any month if the value of
the shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges.
Shareholders can also use the Wealth Builder Option to invest in one
of the Classes of shares through regular liquidations of shares in their
accounts in other mutual funds in the Delaware Group, subject to the conditions
and limitations described in the Classes' Prospectuses. 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:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
-37-
<PAGE> 140
(SAI-DCR/PART B)
DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS
The Fund declares a dividend of its net investment income on a daily
basis, to shareholders of record of each of the Classes' shares at the time of
the previous calculation of the Fund's net asset value, each day that the Fund
is open for business. The amount of net investment income will be determined
at the time the offering price and net asset value are determined (see Offering
Price), and shall include investment income accrued, less the estimated
expenses of the Fund incurred since the last determination of net asset value.
Gross investment income consists principally of interest accrued and, where
applicable, net pro-rata amortization of premiums and discounts since the last
determination. The dividend declared, as noted above, will be deducted
immediately before the net asset value calculation is made. See Offering
Price. Net investment income earned on days when the Fund is not open will be
declared as a dividend on the next business day.
Each of the Classes will share proportionately in the investment
income and expenses of the Fund, except that Consultant Class Shares, Class B
Shares and Class C Shares alone will incur distribution fees under their
respective 12b-1 Plans. See Plans Under Rule 12b-1 for Consultant Class
Shares, Class B Shares and Class C Shares.
Purchases of Fund 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. Investors desiring to
guarantee wire payments must have an acceptable financial condition and credit
history in the sole discretion of the Fund. The Fund reserves the right to
terminate this option at any time. Purchases by check earn dividends upon
conversion to Federal Funds, normally one business day after receipt.
Payment of dividends will be made 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. Dividends are automatically
reinvested in additional shares of the same Class of the Fund at the net asset
value in effect on the payable date, which provides the effect of compounding
dividends, unless the election to receive dividends in cash has been made.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If such
a shareholder's dividends increase to greater than $1.00, the shareholder would
have to file a new election in order to begin receiving dividends in cash
again. If a shareholder redeems an entire account, all dividends accrued to
the time of the withdrawal will be paid by separate check at the end of that
particular monthly dividend period, consistent with the payment and mailing
schedule described above. Any check in payment of dividends or other
distributions which cannot be delivered by the United States 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. The Fund may deduct from a
shareholder's account the costs of the Fund's effort to locate a shareholder if
a shareholder's mail is returned by the United States Post Office or the Fund
is otherwise unable to locate the shareholder or verify the shareholder's
mailing address. These costs may include a percentage of the account when a
search company charges a percentage fee in exchange for their location
services. To the extent necessary to maintain a $1.00 per share net asset
value, the Fund's Board of Directors will consider temporarily reducing or
suspending payment of daily dividends, or making a distribution of realized
securities profits or other distributions at the time the net asset value per
share has changed.
-38-
<PAGE> 141
(SAI-DCR/PART B)
Short-term realized securities profits or losses, if any, may be paid
with the daily dividend. Any such profits not so paid will be distributed
annually during the first quarter following the close of the fiscal year. See
Account Statements under Purchasing Shares for the statement mailing of
dividend information. Information as to the tax status of dividends will be
provided annually.
-39-
<PAGE> 142
(SAI-DCR/PART B)
TAXES
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of 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. See Taxes in the
Classes' Prospectuses.
-40-
<PAGE> 143
(SAI-DCR/PART B)
INVESTMENT MANAGEMENT AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the
supervision and direction of the Fund's Board of Directors.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on March 31,
1996 were approximately $10,699,380,000. Investment advisory services are also
provided to institutional accounts with assets on March 31, 1996 of
approximately $18,576,143,000.
Subject to the supervision and direction of the Board of Directors,
the Manager manages the Fund's portfolio in accordance with the Fund's stated
investment objective and policy and makes and implements all investment
decisions on behalf of the Fund.
The Investment Management Agreement for the Fund is dated April 3,
1995 and was approved by shareholders on March 29, 1995. The Agreement has an
initial term of two years and may be renewed each year so long as such renewal
and continuance are specifically approved at least annually by the directors or
by vote of a majority of the outstanding voting securities of the Fund, and
only if the terms and the renewal thereof have been approved by the vote of a
majority of the directors of the Fund, who are not parties thereto or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. The Agreement is terminable without
penalty on 60 days' notice by the directors of the Fund or by the Manager. The
Agreement will terminate automatically in the event of its assignment.
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 substantive review
of the Investment Management Agreement. The Manager pays the Fund's rent and
the salaries of all directors, officers and employees of the Fund who are
affiliated with the Manager. Investment management fees paid by the Fund were
0.49% of average daily net assets for the fiscal year ended March 31, 1996.
On March 31, 1996, the total net assets of the Fund were $614,259,953.
Investment management fees paid by the Fund were $3,155,870 for the fiscal year
ended March 31, 1994, $3,354,935 for the fiscal year ended March 31, 1995 and
$2,965,417 for the fiscal year ended March 31, 1996.
Except for those expenses borne by the Manager under the Investment
Management Agreement and the Distributor under the Distribution Agreement, the
Fund is responsible for all of its own expenses. Among others, these include
the investment management fees; shareholder servicing, dividend disbursing and
transfer agent fees and costs; custodian expenses; federal and state securities
registration fees; proxy costs; and the costs of preparing prospectuses and
reports sent to shareholders. The ratio of expenses to average daily net
assets for the fiscal year ended March 31, 1996 was 0.95% for Class A Shares,
1.20% for Consultant Class Shares and 1.95% for Class B Shares. The ratios for
Consultant Class Shares and Class B Shares reflect the impact of their
respective 12b-1 Plans. The Fund anticipates that the ratio of expenses to
average daily net assets of Class C Shares will be approximately equal to that
of Class B Shares.
-41-
<PAGE> 144
(SAI-DCR/PART B)
By California regulation, the Manager is required to waive certain
fees and reimburse the Fund for certain expenses to the extent that the Fund's
annual operating expenses, exclusive of taxes, interest, brokerage commissions
and extraordinary expenses, exceed specified percentages of average daily net
assets. At present, the most restrictive limit is 2 1/2% of its first $30
million of average daily net assets, 2% of the next $70 million of average
daily net assets and 1 1/2% of any additional average daily net assets. For
the fiscal year ended March 31, 1996, no reimbursement was necessary or paid.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor for the Classes
under a Distribution Agreement dated April 3, 1995, as amended on November 29,
1995. The Distributor is an affiliate of the Manager and bears all of the
costs of promotion and distribution, except for payments by the Fund on behalf
of Consultant Class Shares, Class B Shares and Class C Shares under their
respective 12b-1 Plans. Prior to January 3, 1995, Delaware Distributors, Inc.
("DDI") served as the national distributor of the Fund's shares. On that date
Delaware Distributors, L.P., a newly formed limited partnership, succeeded to
the business of DDI. All officers and employees of DDI became officers and
employees of Delaware Distributors, L.P. DDI is the corporate general partner
of Delaware Distributors, L.P. and both DDI and Delaware Distributors, L.P. are
indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent
pursuant to a Shareholders Services Agreement dated December 20, 1990. The
Transfer Agent is also an indirect, wholly-owned subsidiary of Delaware
Management Holdings, Inc.
-42-
<PAGE> 145
(SAI-DCR/PART B)
OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction
of its Board of Directors.
Certain officers and directors of the Fund hold identical positions in
each of the other funds in the Delaware Group. On April 30, 1996, the Fund's
officers and directors owned less than 1% of outstanding shares of the Class A
Shares, Consultant Class Shares, Class B Shares and Class C Shares.
As of April 30, 1996, management believes the following accounts held
5% or more of the outstanding shares of the Delaware Cash Reserve Consultant
Class: Francis A. Citera & William R. Quand, Jeffrey M. Rubin Trust, Phelan
Cahill & Quinlan Ltd., Target Benefit Plan, 311 S. Wacker Ste. 4200, Chicago,
IL 60606 held 2,549,519 shares (13.70%); and Helena Benzel, 315 N. 27th St.,
Allentown, PA 18104 held 1,095,411 shares (5.89%).
As of the same date, management believes the following accounts held
5% or more of the outstanding shares of the Delaware Cash Reserve C Class:
Delaware Management Company, Inc., Attn. Joseph H. Hastings, 1818 Market St.,
17th Fl., Philadelphia, PA 19103 held 25,407 shares (33.32%); Nancy Bacon, 380
E. Oleander Dr., Mt. Laurel, NJ 08054 held 10,219 shares (13,40%); Laurence E.
Heavisides, 77 Seneca Dr., Vernon, CT 06066 held 10,102 shares (13.25%); Robert
N. Bourdeau and Karen P. Bourdeau, 241 Holland Rd., Fiskdale, MA 01518 held
10,085 shares (13.23%); William J. Kulick, 2583 Old Telegraph Rd., Chesapeake
City, MD 21915 held 6,294 shares (8.25%); and Peter Pandolfi Trust U/W/O of
Marie Pandolfi, FBO Patricia Leigh Pandolfi, 10204 Grechen Ct., Manassas, VA
22110 held 4,220 shares (5.53%).
DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc. are direct
or indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
("DMH"). On April 3, 1995, a merger between DMH and a wholly-owned subsidiary
of Lincoln National Corporation ("Lincoln National") was completed. In
connection with the merger, a new Investment Management Agreement between the
Fund and the Manager was executed following shareholder approval. DMH and the
Manager are now wholly-owned subsidiaries, and subject to the ultimate control,
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.
Directors and principal officers of the Fund are noted below along
with their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.
-43-
<PAGE> 146
(SAI-DCR/PART B)
*WAYNE A. STORK (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee
of the Fund, 16 other investment companies in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.), Delaware
Management Holdings, Inc., DMH Corp., Delaware International
Holdings Ltd. and Founders Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc., Delaware
Distributors, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.
Director of Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
WINTHROP S. JESSUP (50)
Executive Vice President of the Fund and 16 other investment companies
in the Delaware Group (which excludes Delaware Pooled Trust,
Inc.) and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Capital Management, Inc.
Executive Vice President and Director of DMH Corp., Delaware
Management Company, Inc., Delaware International Holdings
Ltd. and Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc., Delaware International
Advisers Ltd., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various executive
capacities at different times within the Delaware
organization.
RICHARD G. UNRUH, JR. (56)
Executive Vice President of the Fund and each of the other 17
investment companies in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
WALTER P. BABICH (68)
Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.
_____________________________
*Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.
-44-
<PAGE> 147
(SAI-DCR/PART B)
ANTHONY D. KNERR (57)
Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University. In
addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.
ANN R. LEVEN (55)
Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of
the Smithsonian Institution, Washington, DC, and from 1975 to
1992, she was Adjunct Professor of Columbia Business School.
W. THACHER LONGSTRETH (75)
Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.
CHARLES E. PECK (70)
Director and/or Trustee of the Fund and each of the other 17
investment companies in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer
of The Ryland Group, Inc., Columbia, MD.
-45-
<PAGE> 148
(SAI-DCR/PART B)
DAVID K. DOWNES (56)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of the Fund, each of the other 17 investment companies
in the Delaware Group and Delaware Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment
& Retirement Services, Inc.
Senior Vice President/Chief Administrative Officer/Chief
Financial Officer/Treasurer of Delaware Management Holdings,
Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director
of DMH Corp.
Senior Vice President/Chief Administrative Officer and Director of
Delaware Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Chief Financial Officer and Director of Delaware International
Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Capital Management, Inc.
Senior Vice President and Director of Founders Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer
of Equitable Capital Management Corporation, New York, from
December 1985 through August 1992, Executive Vice President
from December 1985 through March 1992 and Vice Chairman from
March 1992 through August 1992.
GEORGE M. CHAMBERLAIN, JR. (49)
Senior Vice President and Secretary of the Fund, each of the other 17
investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Distributors, L.P.
Executive Vice President, Secretary and Director of Delaware
Management Trust Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Investment &
Retirement Services, Inc. and Delaware Capital Management,
Inc.
Corporate Vice President, Secretary and Director of Founders Holdings,
Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.
-46-
<PAGE> 149
(SAI-DCR/PART B)
PAUL E. SUCKOW (48)
Executive Vice President/Chief Investment Officer, Fixed Income of the
Fund, each of the other 17 investment companies in the
Delaware Group and Delaware Management Company, Inc.
Senior Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Holdings, Inc.
Senior Vice President and Director of Founders Holdings, Inc.
Director of Founders CBO Corporation.
Before returning to the Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed income portfolio
manager for the Delaware Group.
GARY A. REED (41)
Vice President/Senior Portfolio Manager of the Fund, of the nine other
income (including tax-exempt) funds in the Delaware Group, of
Delaware Management Company, Inc. and Delaware Capital
Management, Inc.
During the past five years, Mr. Reed has served in such capacities
within the Delaware organization.
JOSEPH H. HASTINGS (46)
Vice President/Corporate Controller of the Fund, each of the other 17
investment companies in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware
Capital Management, Inc., Founders Holdings, Inc. and
Delaware International Holdings Ltd.
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.
MICHAEL P. BISHOF (33)
Vice President/Treasurer of the Fund, each of the other 17 investment
companies in the Delaware Group, Delaware Management Company,
Inc., Delaware Distributors, Inc., Delaware Distributors,
L.P., Delaware Service Company, Inc., Founders Holdings, Inc.
and Founders CBO Corporation.
Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995,
a Vice President for CS First Boston Investment Management,
New York, NY from 1993 to 1994 and an Assistant Vice
President for Equitable Capital Management Corporation, New
York, NY from 1987 to 1993.
-47-
<PAGE> 150
(SAI-DCR/PART B)
The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received from the
Fund and the total compensation received from all Delaware Group funds for the
fiscal year ended March 31, 1996 and an estimate of annual benefits to be
received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of April 18, 1996.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
AGGREGATE ACCRUED BENEFITS FROM ALL 17
COMPENSATION AS PART OF UPON DELAWARE
NAME FROM FUND FUND EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>
W. Thacher Longstreth $7,544 None $30,000 $51,916
Ann R. Leven $8,716 None $30,000 $60,052
Walter P. Babich $8,812 None $30,000 $60,543
Anthony D. Knerr $8,550 None $30,000 $59,052
Charles E. Peck $7,544 None $30,000 $51,916
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of
his or her retirement from the Board, has attained the age of 70 and
served on the Board for at least five continuous years, is entitled to
receive payments from each fund in the Delaware Group for a period
equal to the lesser of the number of years that such person served as
a director or the remainder of such person's life. The amount of such
payments will be equal, on an annual basis, to the amount of the
annual retainer that is paid to directors of each fund at the time of
such person's retirement. If an eligible director retired as of April
18, 1996, he or she would be entitled to annual payments totaling
$30,000, in the aggregate, from all of the funds in the Delaware
Group, based on the number of funds in the Delaware Group as of that
date.
-48-
<PAGE> 151
(SAI-DCR/PART B)
EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes and
the shareholders of other classes of other funds in the Delaware Group are set
forth in the relevant prospectuses for such classes. The following supplements
that information. The Fund may modify, terminate or suspend the exchange
privilege upon 60 days' notice to shareholders.
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.
A shareholder requesting an exchange or purchase will be sent a
current prospectus and an exchange authorization form for any of the other
mutual funds in the Delaware Group. Exchange instructions must be signed by
the record owner(s) exactly as the shares are registered. This feature is
available only in states where the fund into which the exchange is being made
is registered.
An exchange constitutes, for tax purposes, the sale of one fund and
the purchase of another. The sale may involve either a capital gain or loss to
the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges
between funds in the Delaware Group on behalf of their clients by telephone or
other expedited means. This service may be discontinued or revised at any time
by the Transfer Agent. Such exchange requests may be rejected if it is
determined that a particular request or the total requests at any time could
have an adverse effect on any of the funds. Requests for expedited exchanges
may be submitted with a properly completed exchange authorization form, as
described above.
TELEPHONE EXCHANGE PRIVILEGE
Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the Fund receives written notice from the
shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 to effect an exchange. The
shareholder's current Fund account number must be identified, as well as the
registration of the account, the share or dollar amount to be exchanged and the
fund into which the exchange is to be made. Requests received on any day after
the time the offering price and net asset value are determined will be
processed the following day. See Offering Price. Any new account established
through the exchange will automatically carry the same registration,
shareholder information and dividend option as the account from which the
shares were exchanged. The exchange requirements of the fund into which the
exchange is being made, such as eligibility and investment minimums, must be
met and may entail the payment of a front-end sales charge which will be
deducted from the investment. (See the prospectus of the fund desired or
inquire by calling the Transfer Agent.) Certain funds are not available for
retirement plans.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Group. Telephone exchanges may be subject to limitations
as to amounts or frequency. The Transfer Agent and the Fund reserve the right
to record exchange instructions received by telephone and to reject exchange
requests at any time in the future.
-49-
<PAGE> 152
(SAI-DCR/PART B)
As described in the Fund's Prospectuses, neither the Fund nor its
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.
RIGHT TO REFUSE TIMING ACCOUNTS
With regard to accounts that are administered by market timing
services ("Timing Firms") to purchase or redeem shares based on changing
economic and market conditions ("Timing Accounts"), the Fund will refuse any
new timing arrangements, as well as any new purchases (as opposed to exchanges)
in Delaware Group funds from Timing Firms. The Fund reserves the right to
temporarily or permanently terminate the exchange privilege or reject any
specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of the Fund within two
weeks of an earlier exchange request out of the Fund, or (ii) makes more than
two exchanges out of the Fund per calendar quarter, or (iii) exchanges shares
equal in value to at least $5 million, or more than 1/4 of 1% of the Fund's net
assets. Accounts under common ownership or control, including accounts
administered so as to redeem or purchase shares based upon certain
predetermined market indicators, will be aggregated for purposes of the
exchange limits.
RESTRICTIONS ON TIMED EXCHANGES
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1) Decatur
Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delchester Fund, (7) Tax-Free
Pennsylvania Fund and (8) the Fund. No other Delaware Group funds are
available for timed exchanges. Assets redeemed or exchanged out of Timing
Accounts in Delaware Group funds not listed above may not be reinvested back
into that Timing Account. The Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow
a time pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if
the Fund receives or anticipates simultaneous orders affecting significant
portions of the Fund's assets. In particular, a pattern of exchanges that
coincide with a "market timing" strategy may be disruptive to the Fund and
therefore may be refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other
Delaware Group funds:
DELAWARE FUND seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend- oriented
valuation strategy to select securities issued by established companies that
are believed to demonstrate potential for income and capital growth. DEVON
FUND seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
TREND FUND seeks long-term growth by investing in common stocks issued
by emerging growth companies exhibiting strong capital appreciation potential.
-50-
<PAGE> 153
(SAI-DCR/PART B)
VALUE FUND seeks capital appreciation by investing primarily in common
stocks whose market values appear low relative to their underlying value or
future potential.
DELCAP FUND seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
DECATUR INCOME FUND seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. DECATUR TOTAL RETURN
FUND seeks long-term growth by investing primarily in securities that provide
the potential for income and capital appreciation without undue risk to
principal.
DELCHESTER FUND seeks as high a current income as possible by
investing principally high yield, high risk in corporate bonds, and also in
U.S. Government securities and commercial paper.
U.S. GOVERNMENT FUND seeks high current income by investing primarily
in long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
LIMITED-TERM GOVERNMENT FUND seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
instruments secured by such securities. U.S. GOVERNMENT MONEY FUND seeks
maximum current income with preservation of principal and maintenance of
liquidity by investing only in short-term securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements collateralized by such securities,
while maintaining a stable net asset value.
TAX-FREE USA FUND seeks high current income exempt from federal income
tax by investing in municipal bonds of geographically-diverse issuers.
TAX-FREE INSURED FUND invests in these same types of securities but with an
emphasis on municipal bonds protected by insurance guaranteeing principal and
interest are paid when due. TAX-FREE USA INTERMEDIATE FUND seeks a high level
of current interest income exempt from federal income tax, consistent with the
preservation of capital by investing primarily in municipal bonds.
TAX-FREE MONEY FUND seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.
TAX-FREE PENNSYLVANIA FUND seeks a high level of current interest
income exempt from federal and, to the extent possible, certain Pennsylvania
state and local taxes, consistent with the preservation of capital.
INTERNATIONAL EQUITY FUND seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. GLOBAL BOND FUND
seeks to achieve current income consistent with the preservation of principal
by investing primarily in global fixed income securities that may also provide
the potential for capital appreciation. GLOBAL ASSETS FUND seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. EMERGING MARKETS FUND
seeks long-term capital appreciation by investing primarily in equity
securities of issuers located or operating in emerging countries.
-51-
<PAGE> 154
(SAI-DCR/PART B)
ENTERPRISE FUND seeks to provide maximum appreciation of capital by
investing in medium-sized companies which have a dominant position within their
industry, are undervalued, or have potential for growth in earnings. U.S.
GROWTH FUND seeks to maximize capital appreciation by investing in companies of
all sizes which have low dividend yields, strong balance sheets and high
expected earnings growth rates relative to their industry. WORLD GROWTH FUND
seeks to maximize total return (capital appreciation and income), principally
through investments in an internationally diversified portfolio of equity
securities. NEW PACIFIC FUND seeks long-term capital appreciation by investing
primarily in companies which are domiciled in or have their principal business
activities in the Pacific Basin. FEDERAL BOND FUND seeks to maximize current
income consistent with preservation of capital. The fund attempts to achieve
this objective by investing primarily in securities issued by the U.S.
Government, its agencies and instrumentalities. CORPORATE INCOME FUND seeks to
provide high current income consistent with preservation of capital. The fund
attempts to achieve this objective primarily by investing in a diversified
portfolio of investment-grade fixed income securities issued by U.S.
corporations.
DELAWARE GROUP PREMIUM FUND offers ten funds available exclusively as
funding vehicles for certain insurance company separate accounts.
EQUITY/INCOME SERIES seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. HIGH YIELD SERIES seeks as high
a current income as possible by investing in rated and unrated corporate bonds,
U.S. Government securities and commercial paper. CAPITAL RESERVES SERIES seeks
a high stable level of current income while minimizing fluctuations in
principal by investing in a diversified portfolio of short- and
intermediate-term securities. MONEY MARKET SERIES seeks the highest level of
income consistent with preservation of capital and liquidity through
investments in short-term money market instruments. GROWTH SERIES seeks
long-term capital appreciation by investing its assets in a diversified
portfolio of securities exhibiting the potential for significant growth.
MULTIPLE STRATEGY SERIES seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. INTERNATIONAL EQUITY
SERIES seeks long-term growth without undue risk to principal by investing
primarily in equity securities of foreign issuers that provide the potential
for capital appreciation and income. VALUE SERIES seeks capital appreciation
by investing in small- to mid-cap common stocks whose market value appears low
relative to their underlying value or future earnings and growth potential.
Emphasis will also be placed on securities of companies that may be temporarily
out of favor or whose value is not yet recognized by the market. EMERGING
GROWTH SERIES seeks long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of emerging and other
growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. GLOBAL BOND
SERIES seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed income securities that may
also provide the potential for capital appreciation.
For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
-52-
<PAGE> 155
(SAI-DCR/PART B)
GENERAL INFORMATION
The Manager is the investment manager of the Fund. The Manager or its
affiliate, Delaware International Advisers Ltd., also manages the other funds
in the Delaware Group. The Manager, through a separate division, also manages
private investment accounts. While investment decisions of the Fund are made
independently from those of the other funds and accounts, investment decisions
for such other funds and accounts may be made at the same time as investment
decisions of the Fund.
Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to the Manager, Delaware International Advisers Ltd. or their
affiliates, are permitted to engage in personal securities transactions subject
to the exceptions set forth in Rule 17j-1 and the following general
restrictions and procedures: (1) certain blackout periods apply to personal
securities transactions of those persons; (2) transactions must receive advance
clearance and must be completed on the same day as the clearance is received;
(3) certain persons are prohibited from investing in initial public offerings
of securities and other restrictions apply to investments in private placements
of securities; (4) opening positions may only be closed-out at a profit after a
60-day holding period has elapsed; and (5) the Compliance Officer must be
informed periodically of all securities transactions and duplicate copies of
brokerage confirmations and account statements must be supplied to the
Compliance Officer.
The Distributor acts as national distributor for the Fund and for the
other mutual funds in the Delaware Group.
For the period May 2, 1994 (date of initial public offering) through
March 31, 1995, the Distributor, and, in its capacity as the Fund's national
distributor, DDI received CDSC payments in the aggregate amount of $4,034 with
respect to the Class B Shares. For the fiscal year ended March 31, 1996, the
Distributor received CDSC payments in the amount of $14,479 with respect to the
Class B Shares. Effective as of January 3, 1995, such payments have been made
to the Distributor.
For the period November 29, 1995 (date of initial public offering)
through March 31, 1996, the Distributor received CDSC payments in the amount of
$1.74 with respect to Class C Shares.
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the
other mutual funds in the Delaware Group. The Transfer Agent is paid a fee by
the Fund for providing these services consisting of an annual per account
charge of $11.00 plus transaction charges for particular services according to
a schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the disinterested directors.
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of the Fund's advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause the Fund to delete the
words "Delaware Group" from the Fund's name.
Effective on or after June 15, 1996, Bankers Trust Company, One
Bankers Trust Plaza, New York, NY 10006, will be custodian of the Fund's
securities and cash. As custodian for the Fund, Bankers Trust Company will
maintain a separate account or accounts for the Fund; receive, hold and release
portfolio securities on account of the Fund; receive and disburse money on
behalf of the Fund; and collect and receive income and other payments and
distributions on account of the Fund's portfolio securities. Prior to that
time, Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, NY
10260 served in such capacity.
-53-
<PAGE> 156
(SAI-DCR/PART B)
The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for the Fund by
Stradley, Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania.
CAPITALIZATION
The Fund has an authorized capital of ten billion shares of common
stock, $.001 par value per share. The directors are authorized to issue
different series and classes of shares of common stock. At present, only one
series has been issued which offers shares of four classes--Cash Reserve A
Class (which is known as the Delaware Cash Reserve A Class, and was known as
the Delaware Cash Reserve class from May 1992 to May 1994 and the original
class prior to May 1992); Cash Reserve Consultant Class (which is known as the
Delaware Cash Reserve Consultant Class, and was known as the Delaware Cash
Reserve Consultant class from November 1992 to May 1994, the Delaware Cash
Reserve (Institutional) class from May 1992 to November 1992 and the consultant
class prior to May 1992); Cash Reserve B Class (which is known as the Delaware
Cash Reserve B Class) and Cash Reserve C Class (which is known as the Delaware
Cash Reserve C Class). Two billion shares have been allocated to each of Class
A Shares, Class B Shares and Class C Shares and five hundred million shares
have been allocated to Consultant Class Shares.
General expenses of the Fund will be allocated on a pro-rata basis to
the Classes according to asset size, except that expenses of the 12b-1 Plans of
Consultant Class Shares, Class B Shares and Class C Shares will be allocated
solely to those respective Classes. Each Class represents a proportionate
interest in the assets of the Fund, and each has the same voting and other
rights and preferences as the other Class, except that Class A Shares may not
vote on any matter affecting the Consultant Class Shares', Class B Shares' or
Class C Shares' 12b-1 Plans. As a general matter, shareholders of Consultant
Class Shares, Class B Shares and Class C Shares may only vote on matters
affecting the 12b-1 Plan that relates to the Class of shares that they hold.
However, Class B Shares may vote on any proposal to increase materially the
fees to be paid by the Fund under the 12b-1 Plan relating to Consultant Class
Shares.
Shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable.
NONCUMULATIVE VOTING
FUND SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE
HOLDERS OF MORE THAN 50% OF THE SHARES OF THE FUND VOTING FOR THE ELECTION OF
DIRECTORS CAN ELECT ALL THE DIRECTORS IF THEY CHOOSE TO DO SO, AND, IN SUCH
EVENT, THE HOLDERS OF THE REMAINING SHARES WILL NOT BE ABLE TO ELECT ANY
DIRECTORS.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the Securities and Exchange
Commission.
SHAREHOLDER INQUIRIES
Shareholders who have questions concerning their accounts or wish to
obtain additional information may call the Transfer Agent nationwide
800-523-1918.
-54-
<PAGE> 157
(SAI-DCR/PART B)
APPENDIX A--DESCRIPTION OF RATINGS
BONDS
Excerpts from Moody's description of its two highest bond ratings:
AAA--judged to be the best quality. They carry the smallest degree of
investment risk; AA--judged to be of high quality by all standards.
Excerpts from S&P's description of its two highest bond ratings:
AAA--highest grade obligations. They possess the ultimate degree of protection
as to principal and interest; AA--also qualify as high grade obligations, and
in the majority of instances differ from AAA issues only in a small degree.
COMMERCIAL PAPER
Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing
the highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.
Excerpts from Duff and Phelps, Inc.'s description of its two highest
ratings: CATEGORY 1--TOP GRADE: Duff 1-Plus--Highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
ready access to alternative sources of funds, is clearly outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations. Duff
1--Very high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are minor.
Duff 1-Minus--High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are very
small. CATEGORY 2--GOOD GRADE: Duff 2--Good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing
internal funds' needs may enlarge total financing requirements, access to
capital market is good. Risk factors are small.
Excerpts from Fitch Investors Service, Inc.'s description of its two
highest ratings: F-1--Highest grade commercial paper assigned this rating is
regarded as having the strongest degree of assurance for timely payment.
F-2--Very good grade issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than the strongest issues.
-55-
<PAGE> 158
(SAI-DCR/PART B)
APPENDIX B--IRA INFORMATION
The Tax Reform Act of 1986 restructured, and in some cases eliminated,
the tax deductibility of IRA contributions. Under the Act, the full deduction
for IRAs ($2,000 for each working spouse and $2,250 for one-income couples) was
retained for all taxpayers who are not covered by an employer-sponsored
retirement plan. Even if a taxpayer (or his or her spouse) is covered by an
employer-sponsored retirement plan, the full deduction is still available if
the taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers
filing joint returns). A partial deduction is allowed for married couples with
incomes between $40,000 and $50,000, and for single individuals with incomes
between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active
participants in an employer-sponsored retirement plan. Taxpayers who are not
allowed deductions on IRA contributions still can make nondeductible IRA
contributions of as much as $2,000 for each working spouse ($2,250 for
one-income couples), and defer taxes on interest or other earnings from the
IRAs. Special rules apply for determining the deductibility of contributions
made by married individuals filing separate returns.
As illustrated in the following tables, maintaining an IRA remains a
valuable opportunity.
For many, an IRA will continue to offer both an up-front tax break
with its tax deduction each year and the real benefit that comes with
tax-deferred compounding. For others, losing the tax deduction will impact
their taxable income status each year. Over the long term, however, being able
to defer taxes on earnings still provides an impressive investment
opportunity--a way to have money grow faster due to tax- deferred compounding.
Even if your IRA contribution is no longer deductible, the benefits of
saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. Each
reflects a constant 7% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any fees.
Of course, earnings accumulated in your IRA will be subject to tax upon
withdrawal. If you choose a money market fund with a fluctuating income, like
the Fund, your bottom line at retirement could be lower--it could also be much
higher.
$2,000 INVESTED ANNUALLY ASSUMING A 7% ANNUALIZED RETURN
15% Tax Bracket Single - $0-$24,000
Joint - $0-$40,100
<TABLE>
<CAPTION>
HOW MUCH YOU
END OF CUMULATIVE HOW MUCH YOU HAVE WITH FULL
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA IRA DEDUCTION
<S> <C> <C> <C>
1 $ 2,000 $ 1,801 $ 2,140
5 10,000 10,143 12,307
10 20,000 23,685 29,567
15 30,000 41,764 53,776
20 40,000 65,901 87,730
25 50,000 98,126 135,353
30 60,000 141,149 202,146
35 70,000 198,587 295,827
40 80,000 275,271 427,219
</TABLE>
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 5.95% (7% less
15%)]
-56-
<PAGE> 159
(SAI-DCR/PART B)
28% Tax Bracket Single - $24,001-$58,150
Joint - $40,101-$96,900
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,513 $ 1,541 $ 2,140
5 10,000 8,365 8,861 12,307
10 20,000 19,061 21,288 29,567
15 30,000 32,738 38,719 53,776
20 40,000 50,227 63,166 87,730
25 50,000 72,590 97,454 135,353
30 60,000 101,187 145,545 202,146
35 70,000 137,754 212,995 295,827
40 80,000 184,512 307,598 427,219
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 5.04% (7% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 7%]
31% Tax Bracket Single - $58,151-$121,300
Joint - $96,901-$147,700
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,447 $ 1,477 $ 2,140
5 10,000 7,967 8,492 12,307
10 20,000 18,052 20,401 29,567
15 30,000 30,820 37,106 53,776
20 40,000 46,985 60,534 87,730
25 50,000 67,448 93,394 135,353
30 60,000 93,355 139,481 202,146
35 70,000 126,152 204,121 295,827
40 80,000 167,673 294,781 427,219
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 4.83% (7% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 7%]
-57-
<PAGE> 160
(SAI-DCR/PART B)
36% Tax Bracket* Single -$121,301-$263,750
Joint -$147,701-$263,750
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,337 $ 1,370 $ 2,140
5 10,000 7,313 7,876 12,307
10 20,000 16,418 18,923 29,567
15 30,000 27,754 34,417 53,776
20 40,000 41,867 56,147 87,730
25 50,000 59,437 86,626 135,353
30 60,000 81,312 129,373 202,146
35 70,000 108,545 189,329 295,827
40 80,000 142,451 273,420 427,219
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 4.48% (7% less
36%)]
[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 7%]
39.6% Tax Bracket* Single -over $263,750
Joint -over $263,750
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,259 $ 1,293 $ 2,140
5 10,000 6,851 7,433 12,307
10 20,000 15,277 17,859 29,567
15 30,000 25,643 32,481 53,776
20 40,000 38,392 52,989 87,730
25 50,000 54,075 81,753 135,353
30 60,000 73,366 122,096 202,146
35 70,000 97,094 178,679 295,827
40 80,000 126,281 258,040 427,219
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (7% less
39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 7%]
*
For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate. In
addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-58-
<PAGE> 161
(SAI-DCR/PART B)
$2,000 SINGLE INVESTMENT AT A RETURN OF 7% COMPOUNDED MONTHLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,050 $ 3,128 $ 3,239 $ 3,307 $ 3,621 $ 4,019
15 3,767 3,911 4,121 4,253 4,872 5,698
20 4,652 4,891 5,245 5,469 6,555 8,077
30 7,094 7,650 8,493 9,043 11,867 16,233
40 10,820 11,963 13,753 14,953 21,483 32,623
</TABLE>
$2,000 INVESTED ANNUALLY AT A RETURN OF 7% COMPOUNDED MONTHLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 25,411 $ 25,788 $ 26,322 $ 26,649 $ 28,125 $ 29,953
15 42,752 43,708 45,079 45,927 49,833 54,851
20 64,166 66,117 68,947 70,716 79,042 90,148
30 123,271 129,187 137,973 143,584 171,220 211,120
40 213,412 227,820 249,750 264,078 338,096 454,233
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-59-
<PAGE> 162
(SAI-DCR/PART B)
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on
April 15th of the following year--the latest, for each tax year.
<TABLE>
<S> <C> <C>
After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295
</TABLE>
Compounded returns for the longest period of time is the key. The
above illustration assumes a 10% rate of return and the reinvestment of all
proceeds.
And it pays to shop around. If you get just 2% more per year, it can
make a big difference when you retire. A constant 8% versus 10% return,
compounded monthly, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
<TABLE>
<CAPTION>
8% RETURN 10% RETURN
--------- ----------
<S> <C> <C>
10 years $31,291 $35,062
30 years $244,692 $361,887
</TABLE>
The statistical exhibits above are for illustration purposes only and
do not reflect the actual performance for the Fund either in the past or in the
future.
-60-
<PAGE> 163
(SAI-DCR/PART B)
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for the Fund and,
in its capacity as such, audits the financial statements contained in the
Fund's Annual Report. The Fund's Statement of Net Assets, Statement of
Operations, Statement of Changes in Net Assets and Notes to Financial
Statements, as well as the report of Ernst & Young LLP, for the fiscal year
ended March 31, 1996, are included in the Fund's Annual Report to shareholders.
The financial statements, the notes relating thereto and the report of Ernst &
Young LLP listed above are incorporated by reference from the Annual Report
into this Part B.
-61-
<PAGE> 164
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part A - Financial Highlights
*Part B - Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed above are
incorporated into this filing by reference into Part B from the
Registrant's Annual Report for the fiscal year ended March 31,
1996.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended and
supplemented through November 28, 1995,
incorporated into this filing by reference to
Post-Effective Amendment No. 39 filed November
20, 1995.
(b) Form of Articles Supplementary (November 28,
1995) incorporated into this filing by
reference to Post-Effective Amendment No. 39
filed November 20, 1995.
(2) By-Laws. By-Laws, as amended through May 30, 1995,
incorporated by reference to Post-Effective Amendment
No. 38 filed May 30, 1995.
(3) Voting Trust Agreement. Inapplicable.
i
<PAGE> 165
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
(4) Copies of All Instruments Defining the Rights of
Holders.
(a) Articles of Incorporation and Articles
Supplementary.
(a)(1) Articles Fifth and Ninth of the
Articles of Incorporation (September
12, 1990) and Article Second of the
Certificate of Correction to Articles
Supplementary (May 2, 1994)
incorporated into this filing by
reference to Post-Effective Amendment
No. 39 filed November 20, 1995.
(a)(2) Form of Articles Supplementary
(November 28, 1995) incorporated into
this filing by reference to Post-
Effective Amendment No. 39 filed
November 20, 1995.
(b) By-Laws. Articles II, III, as amended, and XIV
of the By-Laws incorporated into this filing by
reference to Post-Effective Amendment No. 38
filed May 30, 1995.
(5) Investment Management Agreement. Investment Management
Agreement between Delaware Management Company, Inc. and
the Registrant dated April 3, 1995 incorporated into
this filing by reference to Post-Effective Amendment No.
38 filed May 30, 1995.
(6) (a) Distribution Agreement.
(i) Form of Distribution Agreement (April
3, 1995) incorporated into this filing
by reference to Post- Effective
Amendment No. 39 filed November 20,
1995.
(ii) Form of Amendment No. 1 to Distribution
Agreement (November 29, 1995)
incorporated into this filing by
reference to Post-Effective Amendment
No. 39 filed November 20, 1995.
(b) Administration and Service Agreement. Form of
Administration and Service Agreement (as
amended November 1995) incorporated into this
filing by reference to Post-Effective Amendment
No. 39 filed November 20, 1996.
(c) Dealer's Agreement. Dealer's Agreement (as
amended November 1995) incorporated into this
filing by reference to Post-Effective Amendment
No. 39 filed November 20, 1996.
(d) Mutual Fund Agreement for the Delaware Group of
Funds (as amended November 1995) included as
Module.
ii
<PAGE> 166
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
(7) Bonus, Profit Sharing, Pension Contracts.
(a) Amended and Restated Profit Sharing Plan
(November 17, 1994) incorporated into this
filing by reference to Post-Effective Amendment
No. 38 filed May 30, 1995.
(b) Amendment to Profit Sharing Plan (December 21,
1995) included as Module.
(8) Custodian Agreement. Incorporated into this filing by
reference to Post-Effective Amendment No. 33 filed May
30, 1991.
(9) Other Material Contracts. Shareholders Services
Agreement incorporated into this filing by reference to
Post-Effective Amendment No. 33 filed May 30, 1991.
(10) Opinion of Counsel. Filed with letter relating to Rule
24f-2 on May 24, 1996.
(11) Consent of Auditors. Attached as Exhibit.
(12) Inapplicable.
(13) Initial Capital. Incorporated into this filing by
reference to Post-Effective Amendment No. 15 filed May
16, 1983.
(14) Model Plans. Incorporated into this filing by reference
to Post-Effective Amendment No. 35 filed June 1, 1993
and Post- Effective Amendment No. 38 filed May 30, 1995.
**(15) Plans under Rule 12b-1.
(a) Form of Plan under Rule 12b-1 for Class B
(November 29, 1995) incorporated into this
filing by reference to Post-Effective Amendment
No. 39 filed November 20, 1995.
(b) Form of Plan under Rule 12b-1 for Class C
(November 29, 1995) incorporated into this
filing by reference to Post-Effective Amendment
No. 39 filed November 20, 1995.
** Relates to Registrant's Delaware Cash Reserve Consultant Class,
Delaware Cash Reserve B Class and Delaware Cash Reserve C Class
only.
iii
<PAGE> 167
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
(c) Form of Plan under Rule 12b-1 for Consultant
Class (November 29, 1995) incorporated into
this filing by reference to Post-Effective
Amendment No. 39 filed November 20, 1995.
(16) Schedules of Computation for each Performance Quotation.
Incorporated into this filing by reference to
Post-Effective Amendment No. 38 filed May 30, 1995.
Schedules of Computation for each Performance Quotation
for periods not previously electronically filed attached
as Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Inapplicable.
(19) Other: Directors' Power of Attorney. Incorporated
into this filing by reference to Post-Effective
Amendment No. 38 filed May 30, 1995.
Item 25. Persons Controlled by or under Common Control with
Registrant. None.
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Delaware Group Cash Reserve, Inc.'s:
Delaware Cash Reserve A Class
Common Stock Par Value 43,667 Accounts as of
$.001 Per Share April 30, 1996
Delaware Cash Reserve B Class
Common Stock Par Value 249 Accounts as of
$.001 Per Share April 30, 1996
Delaware Cash Reserve C Class
Common Stock Par Value 20 Accounts as of
$.001 Per Share April 30, 1996
Delaware Cash Reserve Consultant Class
Common Stock Par Value 1,286 Accounts as of
$.001 Per Share April 30, 1996
</TABLE>
iv
<PAGE> 168
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Item 27. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed March 29, 1984 and Post-
Effective Amendment No. 38 filed May 30, 1995.
Item 28. Business and Other Connections of Investment Adviser.
Delaware Management Company, Inc. (the "Manager") also serves as
investment manager or sub-adviser to the other funds in the Delaware Group
(Delaware Group Delaware Fund, Inc., Delaware Group Trend Fund, Inc., Delaware
Group Value Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware Group
Decatur Fund, Inc., Delaware Group Delchester High-Yield Bond Fund, Inc.,
Delaware Group Government Fund, Inc., Delaware Group Limited-Term Government
Funds, Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc., Delaware Group
Premium Fund, Inc., Delaware Group Global & International Funds, Inc., Delaware
Pooled Trust, Inc., Delaware Group Dividend and Income Fund, Inc., Delaware
Group Global Dividend and Income Fund, Inc. and Delaware Group Adviser Funds,
Inc.) and provides investment advisory services to institutional accounts,
primarily retirement plans and endowment funds. In addition, certain directors
of the Manager also serve as directors/trustees of the other Delaware Group
funds, and certain officers are also officers of these other funds. A company
owned by the Manager's parent company acts as principal underwriter to the
mutual funds in the Delaware Group (see Item 29 below) and another such company
acts as the shareholder servicing, dividend disbursing and transfer agent for
all of the mutual funds in the Delaware Group.
The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and Director of
Delaware Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and
Director of the Registrant and, with the exception
of Delaware Pooled Trust, Inc., each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware International
Holdings Ltd. and Founders Holdings, Inc.; Chairman
of the Board and Director of Delaware Pooled Trust,
Inc., Delaware Distributors, Inc., Delaware Capital
Management, Inc. and Delaware Investment &
Retirement Services, Inc.; Chairman, Chief Executive
Officer and Director of Delaware International
Advisers Ltd.; and Director of Delaware Service
Company, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
v
<PAGE> 169
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -------------------------------------------------
Winthrop S. Jessup Executive Vice President and Director of Delaware
Management Company, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings,
Inc.; Executive Vice President of the Registrant
and, with the exception of Delaware Pooled Trust,
Inc., each of the other funds in the Delaware Group
and Delaware Management Holdings, Inc.; President
and Chief Executive Officer of Delaware Pooled
Trust, Inc.; Vice Chairman of Delaware
Distributors, L.P.; Vice Chairman and Director of
Delaware Distributors, Inc.; Director of Delaware
Management Trust Company, Delaware Service Company,
Inc., Delaware International Advisers Ltd. and
Delaware Investment & Retirement Services, Inc.;
and President and Director of Delaware Capital
Management, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware
Management Company, Inc.; Executive Vice President
of the Registrant and each of the other funds in
the Delaware Group; Senior Vice President of
Delaware Management Holdings, Inc.; and Director of
Delaware International Advisers Ltd.
Board of Directors, Chairman of Finance Committee,
Keystone Insurance Company since 1989, 2040 Market
Street, Philadelphia, PA; Board of Directors,
Chairman of Finance Committee, Mid Atlantic, Inc.
since 1989, 2040 Market Street, Philadelphia, PA
Paul E. Suckow Executive Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company, Inc.,
the Registrant and each of the other funds in the
Delaware Group; Senior Vice President/Chief
Investment Officer, Fixed Income of Delaware
Management Holdings, Inc.; Senior Vice President
and Director of Founders Holdings, Inc.; and
Director of Founders CBO Corporation
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vi
<PAGE> 170
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -------------------------------------------------
David K. Downes Senior Vice President, Chief Administrative Officer
and Chief Financial Officer of Delaware Management
Company, Inc., the Registrant and each of the other
funds in the Delaware Group; Chairman and Director
of Delaware Management Trust Company; Senior Vice
President, Chief Administrative Officer, Chief
Financial Officer and Treasurer of Delaware
Management Holdings, Inc.; Senior Vice President,
Chief Financial Officer, Treasurer and Director of
DMH Corp.; Senior Vice President, Chief
Administrative Officer of Delaware Distributors,
L.P.; Senior Vice President and Chief Administrative
Officer and Director of Delaware Distributors, Inc.;
Senior Vice President, Chief Administrative Officer,
Chief Financial Officer and Director of Delaware
Service Company, Inc.; Chief Financial Officer and
Director of Delaware International Holdings Ltd.;
Senior Vice President, Chief Financial Officer and
Treasurer of Delaware Capital Management, Inc.;
Senior Vice President and Director of Founders
Holdings, Inc.; Chief Executive Officer and Director
of Delaware Investment & Retirement Services, Inc.;
and Director of Delaware International Advisers Ltd.
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of
Delaware Management Company, Inc., DMH Corp.,
Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Capital Management, Inc.
and Delaware Investment & Retirement Services,
Inc.; Senior Vice President and Secretary of the
Registrant, each of the other funds in the Delaware
Group, Delaware Distributors, L.P. and Delaware
Management Holdings, Inc.; Executive Vice
President, Secretary and Director of Delaware
Management Trust Company; Corporate Vice President,
Secretary and Director of Founders Holdings, Inc.;
Secretary and Director of Delaware International
Holdings Ltd.; and Director of Delaware
International Advisers Ltd.
Director of ICI Mutual Insurance Co. since 1992,
P.O. Box 730, Burlington, VT
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vii
<PAGE> 171
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Richard J. Flannery Managing Director/Corporate Tax & Affairs of
Delaware Management Company, Inc., Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware Capital Management, Inc.,
Founders CBO Corporation and Delaware Investment &
Retirement Services, Inc.; Vice President of the
Registrant and each of the other funds in the
Delaware Group; Managing Director/Corporate Tax &
Affairs and Director of Founders Holdings, Inc.;
Managing Director and Director of Delaware
International Holdings Ltd.; and Director of
Delaware International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since 1991,
Bulltown Rd., Elverton, PA; Director and Member of
Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA
Michael P. Bishof(1) Vice President and Treasurer of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc. and Founders
CBO Corporation; and Vice President and Manager of
Investment Accounting of Delaware International
Holdings Ltd.
Eric E. Miller Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Founders Holdings, Inc., Delaware
Capital Management, Inc. and Delaware Investment &
Retirement Services, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
viii
<PAGE> 172
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Richelle S. Maestro Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware Capital Management, Inc.,
Founders Holdings, Inc. and Delaware Investment &
Retirement Services, Inc.; and Assistant Secretary
of Founders CBO Corporation and Delaware
International Holdings Ltd.
General Partner of Tri-R Associates since 1989,
10001 Sandmeyer Ln., Philadelphia, PA
John M. Zerr(2) Vice President and Assistant Secretary of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, DMH Corp.,
Delaware Distributors, L.P., Delaware Capital
Management, Inc. and Delaware Investment &
Retirement Services, Inc.
Secretary and Counsel of Renovisions, Inc. since
1990, 4284 South Dixi Road, Resaca, GA
Joseph H. Hastings Vice President/Corporate Controller of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Capital
Management, Inc., Founders Holdings, Inc. and
Delaware International Holdings Ltd.; Executive Vice
President, Chief Financial Officer and Treasurer of
Delaware Management Trust Company; Chief Financial
Officer and Treasurer of Delaware Investment &
Retirement Services, Inc.; and Assistant Treasurer
of Founders CBO Corporation
Bruce A. Ulmer Vice President/Director of Internal Audit of
Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp. and
Delaware Management Trust Company; and Vice
President/Internal Audit of Delaware Investment &
Retirement Services, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
ix
<PAGE> 173
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Steven T. Lampe(3) Vice President/Taxation of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Management
Holdings, Inc., DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company,
Founders Holdings, Inc., Founders CBO Corporation,
Delaware Investment & Retirement Services, Inc. and
Delaware Capital Management, Inc.
Lisa O. Brinkley(4) Vice President/Compliance of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management Company,
Inc., the Registrant, each of the other funds in the
Delaware Group, Delaware Distributors, L.P. and
Delaware Distributors, Inc.
Douglas L. Anderson Vice President/Operations of Delaware Management
Company, Inc. and Delaware Service Company, Inc.;
and Vice President/Operations and
Director of Delaware Management Trust Company
Michael T. Taggart Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of
the tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice
President of Founders Holdings, Inc.; and Treasurer
and Director of Founders CBO Corporation
J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of
the tax-exempt funds and the fixed income funds in
the Delaware Group
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of
the tax-exempt funds and the fixed income funds in
the Delaware Group and Delaware Capital Management,
Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
x
<PAGE> 174
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of
the tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice
President of Founders Holdings, Inc.; and Secretary
and Director of Founders CBO Corporation
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of
the tax-exempt funds and the fixed income funds in
the Delaware Group
Roger A. Early(5) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant, each of
the tax-exempt funds and the fixed income funds in
the Delaware Group
Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group
General Partner of Zeke Investment Partners since
1991, 569 Canterbury Lane, Berwyn, PA
George H. Burwell Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group
John B. Fields Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the equity funds
in the Delaware Group and Delaware Capital
Management, Inc.
David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group
Faye P. Staples(6) Vice President/Human Resources of Delaware
Management Company, Inc., Delaware Distributors,
L.P. and Delaware Distributors, Inc.; and Vice
President/Director of Human Resources of Delaware
Service Company, Inc.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE> 175
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
Daniel H. Carlson(7) Vice President/Marketing Manager of Delaware
Management Company, Inc.
(1) VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust
and VICE PRESIDENT, CS First Boston Investment Management prior to
June 1995.
(2) ATTORNEY, Ballard, Spahr, Andrews and Ingersoll prior to July 1995.
(3) TAX MANAGER, Price Waterhouse prior to October 1995.
(4) VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities Corporation
prior to June 1994 and ASSISTANT VICE PRESIDENT AND COMPLIANCE
OFFICER, Aetna Life and Casualty prior to March 1993.
(5) SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors prior
to July 1994.
(6) VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.
(7) PRINCIPAL AND CONSULTANT, Buck Consultants prior to October 1995.
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the Delaware
Group.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------------------- --------------------- -----------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management
Company, Inc. Limited Partner Investment Manager
Delaware Capital
Management, Inc. Limited Partner None
Winthrop S. Jessup Vice Chairman Executive Vice President
Keith E. Mitchell President and Chief None
Executive Officer
David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xii
<PAGE> 176
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------------------- --------------------- -----------------------
<S> <C> <C>
J. Lee Cook Senior Vice President/ None
Eastern Sales Division
Thomas E. Sawyer Senior Vice President/ None
Western Sales Division
Stephen H. Slack Senior Vice President/ None
Wholesaler
William F. Hostler Senior Vice President/ None
Marketing Services
Dana B. Hall Senior Vice President/ None
Key Accounts
Minette van Noppen Senior Vice President/ None
Retirement Services
J. Chris Meyer Senior Vice President/ None
Product Development
Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs
Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
John M. Zerr Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
Steven T. Lampe Vice President/Taxation Vice President/Taxation
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiii
<PAGE> 177
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------------------- --------------------- -----------------------
<S> <C> <C>
Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller
Rosemary E. Milner Vice President/Legal Vice President/Legal
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Daniel H. Carlson Vice President/ None
Marketing
Diane M. Anderson Vice President/ None
Retirement Services
Denise F. Guerriere Vice President/Client Services None
Julia R. Vander Els Vice President/ None
Client Services
Jerome J. Alrutz Vice President/ None
Client Services
Joanne A. Mettenheimer Vice President/ None
National Accounts
Christopher H. Price Vice President/Annuity None
Marketing & Administration
Thomas S. Butler Vice President/ None
DDI Administration
Steven J. DeAngelis Vice President/Product None
Development
Susan T. Friestedt Vice President/Customer None
Service
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiv
<PAGE> 178
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------------------- --------------------- -----------------------
<S> <C> <C>
Dinah J. Huntoon Vice President/National None
Accounts
Ellen M. Krott Vice President/ None
Communications
Holly W. Riemel Vice President/ None
Telemarketing
Frank Albanese Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William S. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Alan D. Kessler Vice President/Wholesaler None
William M. Kimbrough Vice President/Wholesaler None
Mac McAuliffe Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Faye P. Staples Vice President/ None
Human Resources
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xv
<PAGE> 179
Form N-1A
File No. 2-60770
Delaware Group Cash Reserve, Inc.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at 1818
Market Street, Philadelphia, PA 19103 or One Commerce Square,
Philadelphia, PA 19103.
Item 31. Management Services. None.
Item 32. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the
record holders of not less than 10% of the outstanding shares.
xvi
<PAGE> 180
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 28th day of May, 1996.
DELAWARE GROUP CASH RESERVE, INC.
By /s/ Wayne A. Stork
-----------------------------------
Wayne A. Stork
Chairman of the Board, President
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Chairman of the Board, President
/s/ Wayne A. Stork Chief Executive Officer and Director May 28, 1996
- -----------------------------------
Wayne A. Stork
Senior Vice President/Chief Administrative
Officer/Chief Financial Officer (Principal
Financial Officer and Principal
/s/ David K. Downes Accounting Officer) May 28, 1996
- ----------------------------------
David K. Downes
/s/Walter P. Babich * Director May 28, 1996
- ----------------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director May 28, 1996
- ---------------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director May 28, 1996
- ---------------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director May 28, 1996
- ---------------------------------
W. Thacher Longstreth
/s/Charles E. Peck * Director May 28, 1996
- ---------------------------------
Charles E. Peck
</TABLE>
*By /s/ Wayne A. Stork
- --------------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
<PAGE> 181
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
<PAGE> 182
INDEX TO EXHIBITS
Exhibit No. Exhibit
EX-99.B6D Mutual Fund Agreement for the Delaware Group of Funds
(Module Name (as amended November 1995)
MFAGMT95)
EX-99.B7B Amendment to Profit Sharing Plan (December 21, 1995)
(Module Name
AMEND_PROF_SHAR)
EX-99.B11 Consent of Auditors
EX-99.B16 Schedules of Computation for each Performance Quotation
for periods not previously electronically filed
EX-27 Financial Data Schedules
<PAGE> 1
<PAGE>
MUTUAL FUND AGREEMENT
FOR THE DELAWARE GROUP OF FUNDS
Gentlemen:
We are the national distributor for the Delaware Group of Funds with exclusive
right to sell and distribute Fund shares. (The term "Funds" in this Agreement
refers to each or any of the Funds that from time to time comprise the Delaware
Group and for whom we act as distributor.) You have indicated that you wish to
act as agent for your customers in connection with the purchase, sale and
redemption of Fund shares and desire to provide certain services to your
customers relating to their ownership of Fund shares, all in accordance with the
terms of this Agreement.
AGENT FOR CUSTOMERS: In placing orders for the purchase and sale of Fund shares,
you will be acting as agent for your customers and will not have any authority
to act as agent for us, any of the Funds or any of our affiliates or
representatives. Neither you nor any of your employees or agents are authorized
to make any representations concerning the Funds or Fund shares except those
contained in the then current "Prospectus" and in written information issued by
the Fund or by us as a supplement to the Prospectus. In purchasing Fund shares
your customers may rely on such authorized information.
OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by
the Fund or its agent, Delaware Service Co., Inc., will be at the public
offering price applicable to each order as set forth in the Prospectus. The
manner of computing the net asset value, the public offering price and the
effective time of orders received from you are described in the Prospectus for
each Fund. We reserve the right at any time, without notice, to suspend the sale
of Fund shares or withdraw the public offering.
SALES, ORDERS AND CONFIRMATIONS: All orders must be made subject to
confirmation. Your orders must be wired, telephoned or written to the Fund or
its agent. You agree to place orders on behalf of your customers for the number
of shares, and at the price, as in bona fide orders from your customers. We will
not accept any conditional orders. We will send a written confirmation of each
trade indicating that the trade was on a fully disclosed basis to your customer.
It is agreed and understood that, whether shares are registered in the
purchaser's name, in your name or in the name of your nominee, your customer
will have full beneficial ownership of the Fund shares.
AGENCY FEES: On each order accepted by us for a Fund with a sales charge, we
understand that you will charge your customer an agency commission or agency
transaction fee ("agency fee") as set forth in the schedule of sales concessions
and agency fees set forth in that Fund's Prospectus, as it may be amended from
time to time. This fee shall be subject to the provisions of all terms set forth
in the Prospectus for volume purchases and special plans and accounts (e.g.
retirement plans, letters of intent, etc.) You will not receive from us a
<PAGE>
dealer's concession or similar allowance out of the sales charge. In accordance
with interpretations by the Staff of the Securities and Exchange Commission (the
"Commission"), the agency fee will be your sole charge to your customers for
placing such orders. You may elect to make payments in either of two ways: (a)
you may send us the public offering price for the Fund shares purchased less the
amount of the agency fee due you or (b) you or your customer may send us the
entire public offering price for the Fund shares and we will, on a periodic
basis, remit to you the agency fee due. You will notify us in writing of which
method of payment you elect. If any shares sold to your customer under the terms
of this Agreement are repurchased by the Fund or by us, or are tendered to a
Fund for redemption or repurchase, within seven (7) business days after the date
of the confirmation of the original purchase order, you will promptly refund to
us full agency fee paid or allowed to you on such shares.
PAYMENT AND ISSUANCE OF CERTIFICATES: Regardless of the payment method elected,
Fund shares purchased by you for your customers hereunder shall be paid for in
full by check payable to the Fund at its office within three business days after
our acceptance of your order. If not so paid, the Fund reserves the right,
without notice, to cancel the sale and to hold you responsible for any loss,
including lost profit, sustained by us or the Fund in consequence. Certificates
representing Fund shares will not be issued unless a specific request is
received from you or your customer. Certificates, if requested, will be issued
in the names indicated by registration instructions accompanying payment.
REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will repurchase its shares from shareholders on demand.
You agree that you will not make any representations to shareholders relating to
the purchase of their Fund shares other than the statements contained in the
Prospectus and the underlying organizational documents of the Fund, to which it
refers, and that you will quote to your customers as the redemption price only
the price determined by the Fund.
12b-1 PLAN: With respect to any Fund that has a Distribution Plan under Rule
12b-1 (a "12b-1Plan") of the Investment Company Act of 1940 (the "1940 Act"), we
expect you will provide shareholder and administrative services to your
customers who own Fund shares, such as: answering inquiries regarding the Fund;
assisting in changing dividend options, account designations and addresses;
establishing and maintaining shareholder accounts and records; arranging for
bank wires; or such other services as the Fund may require to the extent
permitted by applicable statutes, rules or regulations. You will promptly answer
all written complaints received by you relating to Fund accounts or promptly
forward such complaints to us and assist us in answering such complaints. For
such services we will pay you a fee as set by us from time to time, based on a
portion of the net asset value of the accounts of your clients in the Fund. We
are permitted to make this payment under the terms of the 12b-1 Plan adopted by
2
<PAGE>
certain of the Funds, as such 12b-1 Plans may be in effect from time to time.
Each Fund reserves the right, at any time, to suspend payments under its 12b-1
Plan. You will furnish the Fund and us with such information as may be
reasonably requested by the Fund or its directors or trustees or by us with
respect to fees paid to you pursuant to this Agreement. In accordance with
interpretations and rulings to the Staff of the Commission, you will not charge
your customers any fees for services for which you are being compensated under a
12b-1 Plan of a Fund.
SALES OF NO-LOAD - NON 12b-1 PLAN FUNDS: In connection with any orders placed by
you on behalf of your customers for shares of Funds that do not charge a sales
load and do not have a 12b-1 Plan, we understand that you may charge your
customers a limited service or transaction fee, in accordance with
interpretations and rulings of the Staff of the Commission.
LEGAL COMPLIANCE: This Agreement and any transaction with or payment to you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are and at all times during its
effectiveness you will be (a) a registered broker-dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws, if
any, to act as a broker or dealer in securities, and a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD"); or (b) a
"bank" as defined in Section 3(a)(6) of the Securities and Exchange Act of 1934
(or other financial institution) and not otherwise required to register as a
broker or dealer under such Act. You agree to notify us promptly in writing if
this representation ceases to be true. You also agree that you will comply with
the rules of the NASD including, in particular, Sections 2 and 26 of Article III
thereof, to the extent applicable, that you will maintain adequate records with
respect to your customers and their transactions, and that such transactions
will be without recourse against you by your customers. We recognize that, in
addition to applicable provisions of state and federal securities laws, you may
be subject to the provisions of the Glass-Steagall Act and other laws governing,
among other things, the conduct of activities by federal and state chartered and
supervised financial institutions and their affiliated organizations. Because
you will be the only one having a direct relationship with the customer, you
will be responsible in that relationship for insuring compliance with all laws
and regulations, including those of all applicable federal and state regulatory
authorities and bodies having jurisdiction over you or your customers to the
extent applicable to securities purchases hereunder.
BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we shall furnish you with information identifying the states under the
securities laws of which it is believed a Fund's shares may be sold. You will
not transact orders for Fund shares in states which we indicate Fund shares may
not be sold.
LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicly available by the Fund, in
3
<PAGE>
reasonable quantities upon your request. We shall file Fund sales literature and
promotional material with the NASD and SEC as required. You may not publish or
use any sales literature or promotional material with respect to the Funds
without our prior review and written approval.
CUSTOMERS: The name of your customers will remain your sole property and will
not be used by us except for servicing or informational mailings and other
correspondence in the normal course of business.
NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at 1818 Market Street, Philadelphia, PA 19103. Any notice from us to you
shall be deemed to have been duly given if mailed or telegraphed to you at the
address set forth above. Each of us may change the address to which notices
shall be sent by notice to the other in accordance with the terms hereof.
TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Fund and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, us or any one or more of our dealers,
based upon the claim that you and such dealers or any of them constitute a
partnership, an unincorporated business or other separate entity.
AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you promptly notify us in writing to the contrary, you
will be deemed to have accepted such modifications.
GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach. Nothing contained
herein shall constitute you, us and any dealers an association or partnership.
All references in this Agreement to the "Prospectus" include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto, provided that any requirement in this Agreement to deliver
a copy of the Prospectus shall not include the Statement of Additional
Information unless requested by the customer. This Agreement is to be construed
in accordance with the laws of the State of Delaware.
4
<PAGE>
Please confirm this Agreement by executing one copy of this Agreement below and
returning it to us. Keep the enclosed duplicate copy for your records.
Date: DELAWARE DISTRIBUTORS, L.P.
----------------------------
BY: DELAWARE DISTRIBUTORS, INC.
General Partner
BY:
--------------------------------
Accepted and Agreed to:
- ---------------------------------
(Name of Firm)
BY:
------------------------------
Name:
Title:
5
<PAGE> 1
AMENDMENT NO. 1
TO THE
SECOND AMENDMENT AND RESTATEMENT OF THE
PROFIT SHARING PLAN OF
DELAWARE GROUP DELAWARE FUND, INC.
EFFECTIVE APRIL 1, 1989
This Amendment is made this 21st day of December, 1995, by Delaware
Group Delaware fund, Inc. (the "Employer").
WITNESSETH:
-----------
WHEREAS, the Employer adopted the second amendment and restatement of
the Profit Sharing Plan of Delaware Management Company, Inc. (the "Plan"),
effective April 1, 1989; and
WHEREAS, the Employer desires to clarify the provisions of the Plan
pertaining to the crediting of service for vesting purposes.
NOW THEREFORE, Section 2.28 of the Plan is hereby amended as follows:
"2.28 "Year of Service" shall mean the completion by an Employee of
1,000 or more Hours of Service during his initial Eligibility
Computation Period and during any Plan Year, beginning with the Plan
Year which commences after the Employee first performs an Hour of
Service. However, for the period from October 1, 1988 through March 31,
1990, an Employee shall be given credit for a Year of Service if he
completes 1,000 Hours of Service during the period October 1, 1988 to
September 30, 1989 and shall be given credit for an additional Year of
Service if he completes 1,000 Hours of Service during the period April
1, 1989 to March 31, 1990. For purposes of determining a Participant's
nonforfeitable right to his Employer Contribution Account, Years of
Service shall include an Employee's prior service with Delaware
Management Company, Inc. or any other Entity required to be aggregated
with Delaware Management Company, Inc. under Sections 414(b) or (c) of
the Code."
IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed by its duly authorized officers and its corporate seal to be impressed
hereon the date first written above.
ATTEST: DELAWARE GROUP DELAWARE FUND, INC.
/s/ George M. Chamberlain, Jr. By: /s/ Wayne A. Stork
- ------------------------------- -------------------------
Senior Vice President/Secretary Chairman
<PAGE> 1
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses of Delaware Group Cash Reserve, Inc. for the A
Class, B Class and C Class, and Consultant Class and "Financial Statements" in
the Statement of Additional Information of Delaware Group Cash Reserve, Inc.
and to the incorporation by reference in this Post-Effective Amendment No. 40 to
the Registration Statement (Form N-1A)(No. 2-60770) of Delaware Group Cash
Reserve, Inc. of our report dated May 3, 1996, included in the 1996 Annual
Report to Shareholders of Delaware Group Cash Reserve, Inc.
Philadelphia, Pennsylvania /s/ Ernst & Young LLP
May 24, 1996 ----------------------
Ernst & Young LLP
<PAGE> 2
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Delaware Group Cash Reserve, Inc.
We have audited the accompanying statement of net assets of Delaware Group Cash
Reserve, Inc. as of March 31, 1996, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Cash Reserve, Inc. at March 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Philadelphia, Pennsylvania /s/ Ernst & Young LLP
---------------------
May 3, 1996 Ernst & Young LLP
<PAGE> 1
DELAWARE CASH RESERVES CLASS B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
------
1
$1000(1 - T) = $1,039.68
T = 3.97%
LIFE OF
FUND
---------
1.91506849
$1000(1 - T) = $1,069.10
T = 3.55%
<PAGE> 2
DELAWARE CASH RESERVES CLASS B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
---------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
------
1
$1000(1 - T) = $999.68
T = -.03%
LIFE OF
FUND
---------
1.91506849
$1000(1 - T) = $1,029.10
T = 1.51%
<PAGE> 3
DELAWARE CASH RESERVES CLASS B
TOTAL RETURN PERFORMANCE
ONE YEAR (EXCLUDING CDSC)
-----------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $1.00
Initial Shares 1000.000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
-----------------------------------------------------
<S> <C> <C> <C> <C>
1996 1000.000 $0.039 39.684 1,039.684
-----------------------------------------------------
Ending Shares 1039.684
Ending NAV $1.00
---------
Investment Return $1,039.68
Total Return Performance
------------------------
Investment Return $1,039.68
Less Initial Investment $1,000.00
---------
$39.68 /$1,000.00 x 100
Total Return: 3.97%
</TABLE>
<PAGE> 4
DELAWARE CASH RESERVES CLASS B
TOTAL RETURN PERFORMANCE
ONE YEAR (INCLUDING CDSC)
----------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $1.00
Initial Shares 1000.000
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
----------------------------------------------------
<S> <C> <C> <C> <C>
1996 1000.000 $0.039 39.684 1,039.684
----------------------------------------------------
Ending Shares 1039.684
Ending NAV $1.00
----------
$1,039.68
Less CDSC $40.00
----------
Investment Return $999.68
Total Return Performance
------------------------
Investment Return $999.68
Less Initial Investment $1,000.00
----------
($0.32)/$1,000.00 x 100
Total Return: -0.03%
</TABLE>
<PAGE> 5
DELAWARE CASH RESERVES CLASS C
TOTAL RETURN PERFORMANCE
THREE MONTHS (EXCLUDING CDSC)
------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $1.00
Initial Shares 1000.000
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
-----------------------------------------------------
<S> <C> <C> <C> <C>
1996 1000.000 $0.009 8.900 1,008.900
-----------------------------------------------------
Ending Shares 1008.900
Ending NAV $1.00
---------
Investment Return $1,008.90
Total Return Performance
------------------------
Investment Return $1,008.90
Less Initial Investment $1,000.00
---------
$8.90 /$1,000.00 x 100
Total Return: 0.89%
</TABLE>
<PAGE> 6
DELAWARE CASH RESERVES CLASS C
TOTAL RETURN PERFORMANCE
THREE MONTHS (INCLUDING CDSC)
----------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $1.00
Initial Shares 1000.000
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
----------------------------------------------------
<S> <C> <C> <C> <C>
1996 1000.000 $0.009 8.900 1,008.900
----------------------------------------------------
Ending Shares 1008.900
Ending NAV $1.00
---------
$1,008.90
Less CDSC $10.00
---------
Investment Return $998.90
Total Return Performance
------------------------
Investment Return $998.90
Less Initial Investment $1,000.00
---------
($1.10)/$1,000.00 x 100
Total Return: -0.11%
</TABLE>
<PAGE> 7
DELAWARE CASH RESERVES CLASS C
TOTAL RETURN PERFORMANCE
LIFE OF FUND (EXCLUDING CDSC)
-----------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $1.00
Initial Shares 1000.000
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
-----------------------------------------------------
<S> <C> <C> <C> <C>
1996 1000.000 $0.012 12.421 1,012.421
-----------------------------------------------------
Ending Shares 1012.421
Ending NAV $1.00
---------
Investment Return $1,012.42
Total Return Performance
------------------------
Investment Return $1,012.42
Less Initial Investment $1,000.00
---------
$12.42 /$1,000.00 x 100
Total Return: 1.24%
</TABLE>
<PAGE> 8
DELAWARE CASH RESERVES CLASS C
TOTAL RETURN PERFORMANCE
LIFE OF FUND (INCLUDING CDSC)
----------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $1.00
Initial Shares 1000.000
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
----------------------------------------------------
<S> <C> <C> <C> <C>
1996 1000.000 $0.012 12.421 1,012.421
----------------------------------------------------
Ending Shares 1012.421
Ending NAV $1.00
---------
$1,012.42
Less CDSC $10.01
---------
Investment Return $1,002.41
Total Return Performance
------------------------
Investment Return $1,002.41
Less Initial Investment $1,000.00
---------
$2.41 /$1,000.00 x 100
Total Return: 0.24%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000230173
<NAME> DELAWARE GROUP CASH RESERVE, INC.
<SERIES>
<NUMBER> 001
<NAME> DELAWARE CASH RESERVE A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 600,074,057
<INVESTMENTS-AT-VALUE> 600,074,057
<RECEIVABLES> 15,318,869
<ASSETS-OTHER> 2,002,206
<OTHER-ITEMS-ASSETS> 18,448
<TOTAL-ASSETS> 617,413,580
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,153,627
<TOTAL-LIABILITIES> 3,153,627
<SENIOR-EQUITY> 614,259,953
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 585,484,926
<SHARES-COMMON-PRIOR> 605,992,700
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 585,484,926
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35,429,997
<OTHER-INCOME> 0
<EXPENSES-NET> 5,793,756
<NET-INVESTMENT-INCOME> 29,636,241
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28,739,955
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 863,751,720
<NUMBER-OF-SHARES-REDEEMED> 912,087,916
<SHARES-REINVESTED> 27,828,422
<NET-CHANGE-IN-ASSETS> (11,207,053)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,020,028
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,793,756
<AVERAGE-NET-ASSETS> 585,847,609
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .049
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000230173
<NAME> DELAWARE GROUP CASH RESERVE, INC.
<SERIES>
<NUMBER> 002
<NAME> DELAWARE CASH RESERVE B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 600,074,057
<INVESTMENTS-AT-VALUE> 600,074,057
<RECEIVABLES> 15,318,869
<ASSETS-OTHER> 2,002,206
<OTHER-ITEMS-ASSETS> 18,448
<TOTAL-ASSETS> 617,413,580
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,153,627
<TOTAL-LIABILITIES> 3,153,627
<SENIOR-EQUITY> 614,259,953
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 8,127,114
<SHARES-COMMON-PRIOR> 1,088,011
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,127,114
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35,429,997
<OTHER-INCOME> 0
<EXPENSES-NET> 5,793,756
<NET-INVESTMENT-INCOME> 29,636,241
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 74,692
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,054,027
<NUMBER-OF-SHARES-REDEEMED> 6,083,457
<SHARES-REINVESTED> 68,533
<NET-CHANGE-IN-ASSETS> (11,207,053)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,020,028
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,793,756
<AVERAGE-NET-ASSETS> 1,972,470
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .039
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .039
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000230173
<NAME> DELAWARE GROUP CASH RESERVE, INC.
<SERIES>
<NUMBER> 003
<NAME> DELAWARE CASH RESERVE C CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 600,074,057
<INVESTMENTS-AT-VALUE> 600,074,057
<RECEIVABLES> 15,318,869
<ASSETS-OTHER> 2,002,206
<OTHER-ITEMS-ASSETS> 18,448
<TOTAL-ASSETS> 617,413,580
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,153,627
<TOTAL-LIABILITIES> 3,153,627
<SENIOR-EQUITY> 614,259,953
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 304,072
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 304,072
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35,429,997
<OTHER-INCOME> 0
<EXPENSES-NET> 5,793,756
<NET-INVESTMENT-INCOME> 29,636,241
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,591
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 664,891
<NUMBER-OF-SHARES-REDEEMED> 362,411
<SHARES-REINVESTED> 1,592
<NET-CHANGE-IN-ASSETS> (11,207,053)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,020,028
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,793,756
<AVERAGE-NET-ASSETS> 129,695
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .012
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .012
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000230173
<NAME> DELAWARE GROUP CASH RESERVE, INC.
<SERIES>
<NUMBER> 004
<NAME> DELAWARE CASH RESERVE CONSULTANT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 600,074,057
<INVESTMENTS-AT-VALUE> 600,074,057
<RECEIVABLES> 15,318,869
<ASSETS-OTHER> 2,002,206
<OTHER-ITEMS-ASSETS> 18,448
<TOTAL-ASSETS> 617,413,580
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,153,627
<TOTAL-LIABILITIES> 3,153,627
<SENIOR-EQUITY> 614,259,953
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 20,343,841
<SHARES-COMMON-PRIOR> 18,386,295
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20,343,841
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35,429,997
<OTHER-INCOME> 0
<EXPENSES-NET> 5,793,756
<NET-INVESTMENT-INCOME> 29,636,241
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 820,003
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 162,437,882
<NUMBER-OF-SHARES-REDEEMED> 161,283,826
<SHARES-REINVESTED> 803,490
<NET-CHANGE-IN-ASSETS> (11,207,053)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,020,028
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,793,756
<AVERAGE-NET-ASSETS> 17,620,770
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .047
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .047
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
