<PAGE>
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. 44 X
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AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 44
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DELAWARE GROUP CASH RESERVE, INC.
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(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
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George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
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(Name and Address of Agent for Service)
Approximate Date of Public Offering: May 30, 1999
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It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b)
X on May 30, 1999 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
If appropriate:
____ this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
Title of Securities Being Registered
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Delaware Cash Reserve A Class
Delaware Cash Reserve B Class
Delaware Cash Reserve C Class
Delaware Cash Reserve Consultant Class
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 44 to Registration File No. 2-60770
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheets
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
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CROSS-REFERENCE SHEET*
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PART A
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<TABLE>
<CAPTION>
Item No. Description Location in Prospectuses
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Delaware Group Cash Reserve, Inc.
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A Class/Consultant Class B Class/C Class
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<S> <C> <C> <C>
1 Front and Back Cover Pages Same Same
2 Risk/Return Summary: Fund profile Fund profile
Investments, Risks and Performance
3 Risk/Return Summary: Fund profile Fund profile
Fee Table
4 Investment Objectives, Principal How we manage How we manage
Investment Strategies, and Related the Fund the Fund
Risks
5 Management's Discussion of N/A N/A
Performance
6 Management, Organization and Who manages Who manages
Capital Structure the Fund the Fund
7 Shareholder Information How to buy How to buy
shares; How to shares; How to
redeem shares; redeem shares;
Special Services; Special
Dividends, Services;
distributions and Dividends,
taxes all under distributions
About your and taxes all
account under About
your account
8 Distribution Arrangements Choosing a share Choosing a share
class; How to class; How to
reduce sales reduce sales
charges under charges under
About your About your
account account
9 Financial Highlights Information Financial Financial
Highlights Highlights
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
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PART B
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Location in Statement
Item No. Description of Additional Information
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<S> <C> <C>
10 Cover Page and Table of Contents Same
11 Fund History General Information
12 Description of the Fund and Its Investments and Risks Investment Objective
and Policy
13 Management of the Fund Officers and Directors;
Purchasing Shares
14 Control Persons and Principal Holders of Securities Officers and Directors
15 Investment Advisory and Other Services Officers and Directors;
Purchasing Shares; Investment
Management Agreement;
General Information;
Financial Statements
16 Brokerage Allocation and Other Practices Trading Practices
17 Capital Stock and Other Securities Capitalization and
Noncumulative Voting
(under General Information)
18 Purchase, Redemption and Pricing of Shares Purchasing Shares; Redemption and
Exchange; Offering Price
19 Taxation of the Fund Taxes
20 Underwriters Purchasing Shares
21 Calculation of Performance Data Performance Information
22 Financial Statements Financial Statements
</TABLE>
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CROSS REFERENCE SHEET
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PART C
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<TABLE>
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Item No. Description Location in Part C
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23 Exhibits Item 23
24 Persons Controlled by or under Common
Control with Registrant Item 24
25 Indemnification Item 25
26 Business and Other Connections of the Investment Adviser Item 26
27 Principal Underwriters Item 27
28 Location of Accounts and Records Item 28
29 Management Services Item 29
30 Undertakings Item 30
</TABLE>
<PAGE>
DELAWARE
INVESTMENTS
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Philadelphia * London
Delaware Cash Reserve
Class A
Consultant Class
Prospectus
May 30, 1999
Money Market Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of Contents
Fund profile page
Delaware Cash Reserve
How we manage the Fund
Our investment strategies
The securities we typically invest in
The risks of investing in the Fund
Who manages the Fund page
Investment manager
Fund administration (Who's who)
About your account page
Investing in the Fund
How to buy shares
Retirement plans
How to redeem shares
Account minimum
Special services
Dividends, distributions and taxes
Certain management considerations page
Financial highlights page
<PAGE>
Profile: Delaware Cash Reserve
What are the Fund's goals?
Delaware Cash Reserve seeks to provide maximum current income, while preserving
principal and maintaining liquidity. Although the Fund will strive to achieve
its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
Delaware Cash Reserve invests in short-term money market securities, including
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities and short-term debt instruments of banks and corporations.
Delaware Cash Reserve is a money market fund. A money market fund is designed
for stability of principal; consequently, the level of income fluctuates.
We maintain an average maturity of 90 days or less. Also, we do not purchase any
instruments with an effective remaining maturity of more than 13 months. We
intend to hold our investments until maturity, but we may sell them prior to
maturity in order to shorten or lengthen the average maturity of the bonds in
the portfolio, increase the yield, maintain the quality of the portfolio or
maintain a stable share value.
What are the main risks of investing in the Fund?
Delaware Cash Reserve will be affected primarily by declines in interest rates
that would reduce the income provided by the Fund. For a more complete
discussion of risk, please turn to "The risks of investing in the Fund."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
Fund.
Who should invest in the Fund
o Investors with short-term financial goals who seek current income.
o Investors who do not want an investment whose value may fluctuate over
the short term.
o Investors who are looking for a short-term, relatively safe investment to
complement more long-term investments in their portfolio.
Who should not invest in the Fund
o Investors with long-term financial goals.
o Investors looking for relatively high current income.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
<PAGE>
How has the Fund performed?
This bar chart can help you evaluate the potential risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past ten calendar years, as well as average annual returns for Class A and
Consultant Class shares for one-, five- and ten-year periods.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A) ]
Year-by-year total return (Class A)
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1998 4.75%
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1997 4.84%
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1996 4.63%
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1995 5.11%
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1994 3.34%
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1993 2.30%
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1992 3.30%
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1991 5.81%
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1990 7.77%
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- ------------------------ -----------------------
1989 8.77%
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As of March 31, 1999, the Fund's Class A had a year-to-date return of 4.61%.
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 2.27% for the quarter ended June 30, 1989 and its lowest quarterly
return was 0.56% for the quarter ended June 30, 1993.
Average annual returns for periods ending 12/31/98
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Class A Consultant Class
- ------------------------ ----------------------- -----------------------
- ------------------------ ----------------------- -----------------------
1 year ended 12/31/98
4.75% 4.49%
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5 years ended 12/31/98
4.53% 4.27%
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- ------------------------ ----------------------- -----------------------
10 years ended 12/31/98
5.04% 4.78%
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Investors interested in obtaining the 7-day yield for either class can call
800.523.1918.
<PAGE>
What are the Fund's fees and expenses? Shareholder fees are paid directly from
your investment.
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Class A Consultant
Class
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Maximum sales charge (load) imposed on purchases as none none
a percentage of offering price
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Maximum sales charge (load) imposed on reinvested none none
dividends
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Redemption fees none none
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Exchange fees none(1) none(1)
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Annual fund operating expenses are deducted from the Fund's assets. We will not
charge you separately for these expenses. These expenses are based on amounts
incurred during the Fund's most recent fiscal year.
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Class A Consultant
Class
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Management fees 0.49% 0.49%
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Distribution and service (12b-1) fees none 0.25%(2)
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Other expenses 0.41% 0.41%
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Total operating expenses 0.90% 1.15%
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This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
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Class A Consultant
Class
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1 year $92 $117
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3 years $287 $365
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5 years $498 $633
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10 years $1,108 $1398
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(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange
your shares into a fund that has a front-end sales charge.
(2) Consultant Class shares are subject to a 12b-1 fee of 0.30% of average
daily net assets, but the board of directors has set the fee at 0.25% of
average daily net assets.
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods
we show.
<PAGE>
How we manage the Fund
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Our investment strategies
We invest primarily in short-term money market securities, including securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
and short-term debt instruments of banks and corporations.
We maintain an average maturity of 90 days or less. Also, we do not purchase any
securities with an effective remaining maturity of more than 397 days
(approximately 13 months). We may shorten or lengthen the Fund's average
maturity based on our analysis of interest rate trends.
We intend to hold our investments until maturity, but we may sell them prior to
maturity in order to shorten or lengthen the average maturity of the bonds in
the portfolio, increase the yield, maintain the quality of the portfolio or
maintain a stable share value.
<PAGE>
<TABLE>
<CAPTION>
The securities we typically invest in
<S> <C>
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Securities How we use them
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Direct U.S. Treasury obligations: Treasury bills, We may invest without limit in U.S. Treasury securities.
notes and bonds of varying maturities. U.S. Treasury We would typically invest in Treasury bills or longer term
securities are backed by the "full faith and credit" Treasury securities whose remaining effective maturity is
of the United States. less than 13 months.
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Certificates of deposit and obligations of both U.S. We may invest in certificates of deposit from banks that
and foreign banks: Debt instruments issued by a bank have assets of at least one billion dollars.
that pays interest.
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.
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Corporate commercial paper: Short-term debt We may invest in commercial paper that is rated P-1 or
obligations with maturities ranging from 2 to 270 P-2 by Moody's and/or A-1 or A-2 by S&P. The Fund will
days, issued by companies. not invest more than 5% of its total assets in
securities rated in the second highest category by a
nationally recognized statistical ratings organization
(NRSRO). The Fund may invest in commercial paper that is
not rated if the purchase is approved or ratified by the
Board of Directors.
- -------------------------------------------------------- ----------------------------------------------------------------
Asset-backed securities: Bonds or notes backed by We may invest without limit in asset-backed securities. We may
accounts receivables including home equity, automobile invest only in securities rated in the highest rating category
or credit loans. by an NRSRO. We currently intend to invest only in
asset-backed securities backed by credit card receivables,
home equity loans, automobile loans and wholesale dealer floor
plans.
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Repurchase agreements: An agreement between a buyer of We may use repurchase agreements as a short-term
securities such as the Fund and a seller of securities, investment for the Fund's cash position. In order to
in which the seller agrees to buy the securities back enter into these repurchase agreements, the Fund must
within a specified time at the same price the buyer paid have collateral of at least 102% of the repurchase
for them, plus an amount equal to an agreed upon price.
interest rate.
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Restricted securities: Privately placed securities We may invest without limitation in privately placed
whose resale is restricted under securities law. securities that are eligible for resale only among certain
institutional buyers without registration. These are commonly
known as "Rule 144A Securities." Other restricted securities
which are illiquid must be limited to 10% of total Fund assets.
- -------------------------------------------------------- ----------------------------------------------------------------
Illiquid securities: Securities that do not have a We may not invest more than 10% of total assets in
ready market, and cannot be easily sold, if at all, at illiquid securities including repurchase agreements
approximately the price that the Fund has valued them. that mature in more than seven days.
- -------------------------------------------------------- ----------------------------------------------------------------
</TABLE>
<PAGE>
Please see the Statement of Additional Information for additional descriptions
about the securities listed in the table above.
Borrowing from banks
The Fund may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions. To the extent that it does so, the Fund may be unable
to meet its investment objective. The Fund will not borrow money in excess of
one-third of the value of its net assets.
<PAGE>
The risks of investing in the Fund
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
money. Before you invest in the Fund you should carefully evaluate the risks.
The following are the chief risks you assume when investing in the Fund. Please
see the Statement of Additional Information for further discussion of these
risks.
<TABLE>
<CAPTION>
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Risks How we strive to manage them
Delaware Cash Reserve
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<S> <C>
Interest rate risk is the risk that securities, Because the Fund invests exclusively in short-term
particularly bonds with longer maturities, will decrease securities, interest rate changes are not a major risk
in value if interest rates rise. to the value of its portfolio. However, a decline in
interest rates would reduce the level of income provided
by the Fund.
- ------------------------------------------------------- ------------------------------------------------------------------
Credit risk is the risk that there is the possibility The Fund holds only high quality short-term securities.
that a bond's issuer (or an entity that insures the Therefore, it is generally not subject to significant
bond) will be unable to make timely payments of credit risk.
interest and principal.
We limit our investments to those that the board
of directors considers to be of high quality with
minimal credit risks. All investments must also meet the
maturity, quality and diversification standards that
apply to taxable money market funds.
If there were a national credit crisis or an issuer were to
become insolvent, the share value of the Fund could decline.
- ------------------------------------------------------- ------------------------------------------------------------------
Counterparty risk is the risk that the Fund may lose We try to minimize this risk by considering the
money because a party that we contract with to buy or creditworthiness or all parties before we enter into
sell securities fails to fulfill its side of the transactions with them. Where appropriate, we will also
agreement. hold collateral from the counterparties consistent with
applicable regulations.
- ------------------------------------------------------- ------------------------------------------------------------------
Inflation risk is the risk that the return from your The Fund is designed for short-term investment goals and
investments will be less than the increase in the cost therefore may not outpace inflation over longer time
of living due to inflation, thus preventing you from periods. For this reason, the Fund is not recommended as
reaching your financial goals. a primary investment for people with long-term goals.
- ------------------------------------------------------ ------------------------------------------------------------------
</TABLE>
<PAGE>
Who manages the Fund
Investment manager
The Fund is managed by Delaware Management Company, a series of Delaware
Management Business Trust, which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Delaware Management Company makes investment
decisions for the Fund, manages the Fund's business affairs and provides daily
administrative services. For its services to the Fund, the manager was paid
0.49% of average daily net assets for the last fiscal year.
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
Board of directors
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Manager The Fund Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Portfolio managers Service agent Distributor
Delaware Service Company, Inc. Delaware Distributors, L.P.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Financial advisers
Shareholders
Board of directors A mutual fund is governed by a board of directors which has
oversight responsibility for the management of the fund's business affairs.
Directors establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the board of directors must be independent of the fund's
investment manager or distributor. These independent fund directors, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Portfolio managers Portfolio managers are employed by the investment manager to
make investment decisions for individual portfolios on a day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and typically place them with a qualified bank custodian who
segregates fund securities from other bank assets.
<PAGE>
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to
National Association of Securities Dealers, Inc. (NASD) rules governing mutual
fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Financial advisers Financial advisers provide advice to their clients--analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect directors. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
<PAGE>
About your account
- -------------------
Investing in the Fund
Class A
o Class A shares are available for purchase at net asset value.
o Class A shares do not have an up-front sales charge.
o Class A shares are not subject to 12b-1 fees.
o Class A shares are not subject to any contingent deferred sales charge.
Consultant Class
o Consultant Class shares may be purchased through financial advisers,
including brokers, financial institutions and other entities that have a
dealer agreement with the Fund's distributor or a service agreement with
the Fund.
o Consultant Class shares do not have an up-front sales charge.
o Consultant Class shares are subject to an annual 12b-1 fee no greater than
0.30% (currently the 12b-1 fee is set at 0.25%) of average daily net
assets. The 12b-1 fee is typically used to compensate your financial
adviser for the ongoing guidance and service he or she provides to you.
o Consultant Class shares are not subject to a contingent deferred sales
charge.
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, P.O. Box
7577, Philadelphia, PA 19101. If you are making an initial purchase by mail, you
must include a completed investment application (or an appropriate retirement
plan application if you are opening a retirement account) with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014 12893 4013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that you may not exchange Class B or Class C shares into Class
A or Consultant Class shares. Also, you may not exchange Class A shares into
Class B or Class C shares. To open an account by exchange, call the Shareholder
Service Center at 800.523.1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service, or through our web site, www.delawareinvestments.com. For more
information about how to sign up for these services, call our Shareholder
Service Center at 800.523.1918.
Once you have completed an application, you can generally open an account with
an initial investment of $1,000--and make additional investments at any time for
as little as $100. If you are buying shares in an IRA or Roth IRA, under the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act; or through
an Automatic Investing Plan, the minimum purchase is $250, and you can make
additional investments of only $25. The minimum for an Education IRA is $500.
The minimums vary for retirement plans other than IRAs, Roth IRAs or Education
IRAs.
<PAGE>
About your account (continued)
How to buy shares (continued)
We determine the Fund's net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
strive to manage the value of the Fund's securities to stabilize the Fund's net
asset value at $1.00 per share. Although we make every effort to maintain a
stable net asset value, there is no assurance that we will always be able to do
so. We calculate net asset value by adding the market value of all the
securities and assets in the Fund's portfolio, deducting all liabilities, and
dividing the resulting number by the number of shares outstanding. The result is
the net asset value per share. We price the portfolio securities of the Fund at
amortized cost.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject any purchase
order.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in the Fund may be suitable
for group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in the Fund can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
<PAGE>
About your account (continued)
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of $50,000 or
more, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, the First Union Bank fee (currently
$7.50) will be deducted from your proceeds. Bank information must be on file
before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service, or
through our web site, www.delawareinvestments.com. For more information about
how to sign up for these services, call our Shareholder Service Center at
800.523.1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A HAND HOLDING A PEN]
Through checkwriting
You may redeem shares by writing checks of $500 or more. Checks must be signed
by all owners of the account unless you indicate otherwise on your Investment
Application. The checkwriting feature is not available for retirement plans.
Also, because dividends are declared daily, you may not close your account by
writing a check. When you write checks you are subject to the regulations of
First Union Bank and may be subject to a charge if the check amount exceeds the
value of your account.
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares, you
will receive the net asset value as determined on the business day we receive
your request. We will send you a check, normally the next business day, but no
later than seven days after we receive your request to sell your shares. If you
purchased your shares by check, we will wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.
<PAGE>
About your account (continued)
Account minimum
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs, Uniform Gift to Minors Act accounts or
accounts with automatic investing plans, $500 for Education IRAs) for three or
more consecutive months, you will have until the end of the current calendar
quarter to raise the balance to the minimum. If your account is not at the
minimum by the required time, you will be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your
account does not reach the minimum balance, the Fund may redeem your account
after 60 days' written notice to you.
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly investments
directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as Social Security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. You may not reinvest distributions in Class B or Class C
shares of the funds in the Delaware Investments family.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
don't pay sales charges on shares that are acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's prospectus and read it carefully before buying shares through an
exchange. You may not exchange Class B and Class C shares of the funds in the
Delaware Investments family into Class A or Consultant Class shares. Also, you
may not exchange Class A shares into Class B or Class C shares.
In certain circumstances, Class A shares of funds other than Delaware Cash
Reserve may be subject to a contingent deferred sales charge for up to two years
after purchase. This would occur if the fund normally had a front-end sales
charge, but the shares were purchased without paying a sales charge and a
financial adviser was paid a commission on the purchase. If you purchase Class A
shares of another Fund in this manner, you may exchange them for shares of
Delaware Cash Reserve A or Consultant Class. You will not have to pay the
contingent deferred sales charge at the time of the exchange. However, you may
have to pay the contingent deferred sales if you later redeem your shares of
Delaware Cash Reserve A or Consultant Class or if you exchange them for shares
of another fund and then redeem those shares. The time that you are invested in
Delaware Cash Reserve will count toward the fulfillment of the two-year holding
period.
<PAGE>
About your account (continued)
MoneyLineSM On Demand Service
Through our MoneyLineSM On Demand Service, you or your financial adviser may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans, except
for purchases into IRAs. MoneyLine has a minimum transfer of $25 and a maximum
transfer of $50,000.
MoneyLine Direct Deposit Service
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one. This service is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our MoneyLine Direct Deposit Service.
Dividends, distributions and taxes
Dividends are declared daily and paid monthly. Short-term capital gains may be
paid with the daily dividend or distributed annually. We automatically reinvest
all dividends and capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from the Fund is the same whether you reinvest
your dividends or receive them in cash. Distributions from the Fund's long-term
capital gains, if any, are taxable as capital gains, while distributions from
short-term capital gains and net investment income are generally taxable as
ordinary income. Any capital gains may be taxable at different rates depending
on the length of time the Fund held the assets. In addition, you may be subject
to state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." The Fund is taking steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the business of the Fund. The Year 2000 Problem may also
adversely affect the issuers of securities in which the Fund invests. The
portfolio manager and investment professionals of the Fund consider Year 2000
compliance in the securities selection and investment process. However, there
can be no guarantee that, even with their due diligence efforts, they will be
able to predict the affect of Year 2000 on any company or the performance of its
securities.
Investments by fund of funds
The Fund accepts investments from the series portfolios of Delaware Group
Foundation Funds, a fund of funds. From time to time, the Fund may experience
large investments or redemptions due to allocations or rebalancings by
Foundation Funds. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management.
For example, the Fund may be required to sell securities or invest cash at times
when it would not otherwise do so. These transactions could also have tax
consequences if sales of securities result in gains, and could also increase
transaction costs or portfolio turnover. The manager will monitor transactions
by Foundation Funds and will attempt to minimize any adverse effects on both the
Fund and Foundation Funds as a result of these transactions.
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve
A Class
Year Ended 3/31
- -----------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 0.045 0.048 0.045 0.049 0.039
- -----------------------------------------------------------------------------------------------------------------------
Total from investments operations 0.045 0.048 0.045 0.049 0.039
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Less dividends:
- -----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.045) (0.048) (0.045) (0.049) (0.039)
- -----------------------------------------------------------------------------------------------------------------------
Total dividends (0.045) (0.048) (0.045) (0.049) (0.039)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Total return 4.61% 4.88% 4.61% 5.01% 4.01%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $588,249 $524,477 $594,877 $585,485 $605,993
- -----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.90% 0.88% 0.88% 0.95% 1.01%
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.51% 4.78% 4.52% 4.90% 3.91%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STUB
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Delaware Cash Reserve
Consultant Class
Year Ended 3/31
- -----------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 0.043 0.045 0.043 0.047 0.037
- -----------------------------------------------------------------------------------------------------------------------
Total from investments operations 0.043 0.045 0.043 0.047 0.037
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Less dividends:
- -----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.043) (0.045) (0.043) (0.047) (0.037)
- -----------------------------------------------------------------------------------------------------------------------
Total dividends (0.043) (0.045) (0.043) (0.047) (0.037)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Total return 4.35% 4.62% 4.36% 4.75% 3.75%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000 omitted) $42,732 $40,037 $23,468 $20,344 $18,386
- -----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.15% 1.13% 1.13% 1.20% 1.26%
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.26% 4.53% 4.27% 4.65% 3.66%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
How to read the Financial highlights
Net investment income
Net investment income includes dividend and interest income earned from the
Fund's securities; it is after expenses have been deducted.
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in the Fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers, exclude applicable front-end and
contingent deferred sales charges, and assume the shareholder has reinvested all
dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in the Fund's portfolio,
minus any liabilities, that are attributable to that class of the Fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
<PAGE>
[begin glossary]
How to use this glossary
This glossary includes definitions of investment terms used throughout the
Prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Average maturity
An average of when the individual bonds and other debt securities held in a
portfolio will mature.
Bond
A debt security, like an IOU, issued by a company, municipality or government
agency. In return for lending money to the issuer, a bond buyer generally
receives fixed periodic interest payments and repayment of the loan amount on a
specified maturity date. A bond's price changes prior to maturity and is
inversely related to current interest rates. When interest rates rise, bond
prices fall, and when interest rates fall, bond prices rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are considered
investment grade. Bonds rated Ba/BB or lower are commonly known as junk bonds.
See also Nationally recognized statistical rating organization.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Corporate bond
A debt security issued by a corporation. See Bond.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
<PAGE>
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See Bond.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Liquidity
The ease with which an investment can be converted into cash without a
significant loss of principal. Money market funds are considered to be highly
liquid.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper, preferred
and common stocks and municipal short-term issues, rating the probability that
the issuer of the debt will meet the scheduled interest payments and repay the
principal. Ratings are published by such companies as Moody's Investors Service
(Moody's), Standard & Poor's Corporation (S&P), Duff & Phelps, Inc. (Duff), and
Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
<PAGE>
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as "equities."
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
[end glossary]
<PAGE>
Delaware Cash Reserve
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the report
period. You can find more detailed information about the Fund in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in the Fund, you can write to us at 1818 Market Street, Philadelphia, PA 19103,
or call toll-free 800.523.1918. You may also obtain additional information about
the Fund from your financial adviser.
You can find reports and other information about the Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the Securities and
Exchange Commission's Public Reference Room in Washington, D.C. You can get
information on the public reference room by calling the SEC at 1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone
redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811-2806
Delaware Cash Reserve Symbols
CUSIP NASDAQ
Class A 245910104 DCRXX
Consultant Class 245910203
DELAWARE
INVESTMENTS
Philadelphia * London
P-___ [--] PP 5/99
<PAGE>
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
Delaware Cash Reserve
Class B * Class C
Prospectus
May 30, 1999
Money Market Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
2
<PAGE>
Table of Contents
Fund profile page
Delaware Cash Reserve
How we manage the Fund
Our investment strategies
The securities we typically invest in
The risks of investing in the Fund
Who manages the Fund page
Investment manager
Fund administration (Who's who)
About your account page
Investing in the Fund
How to buy shares
Retirement plans
How to redeem shares
Account minimum
Special services
Dividends, distributions and taxes
Certain management considerations page
Financial highlights page
3
<PAGE>
Profile: Delaware Cash Reserve
What are the Fund's goals?
Delaware Cash Reserve seeks to provide maximum current income, while preserving
principal and maintaining liquidity. Although the Fund will strive to achieve
its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
Delaware Cash Reserve invests in short-term money market securities, including
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities and short-term debt instruments of banks and corporations.
Delaware Cash Reserve is a money market fund. A money market fund is designed
for stability of principal; consequently, the level of income fluctuates.
We maintain an average maturity of 90 days or less. Also, we do not purchase any
instruments with an effective remaining maturity of more than 13 months. We
intend to hold our investments until maturity, but we may sell them prior to
maturity in order to shorten or lengthen the average maturity of the bonds in
the portfolio, increase the yield, maintain the quality of the portfolio or
maintain a stable share value.
What are the main risks of investing in the Fund?
Delaware Cash Reserve will be affected primarily by declines in interest rates
that would reduce the income provided by the Fund. For a more complete
discussion of risk, please turn to "The risks of investing in the Fund."
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
Fund.
Who should invest in the Fund
o Investors with short-term financial goals who seek current income.
o Investors who do not want an investment whose value may fluctuate over the
short term.
o Investors who are looking for a short-term, relatively safe investment to
complement more long-term investments in their portfolio.
o Investors who are using this Fund as a component of an overall investment
plan that includes Class B or Class C shares of other Delaware Investments
funds.
Who should not invest in the Fund
o Investors with long-term financial goals.
o Investors looking for relatively high current income.
o Investors who are not already investing or planning to invest in Class B or
Class C shares of other Delaware Investments funds.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
4
<PAGE>
How has the Fund performed?
This bar chart can help you evaluate the potential risks of investing in the
Fund. We show how returns for the Fund's Class B shares have varied over the
past four calendar years, as well as average annual returns for the one year and
lifetime periods.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS B) ]
Year-by-year total return (Class B)
- ------------------------ -----------------------
1998 3.71%
- ------------------------ -----------------------
1997 3.80%
- ------------------------ -----------------------
1996 3.59%
- ------------------------ -----------------------
1995 4.07%
- ------------------------ -----------------------
As of March 31, 1999, the Fund's Class B had a year-to-date return of 3.57%.
During the periods illustrated in this bar chart, Class B's highest quarterly
return was 1.04% for the quarter ended June 30, 1995 and its lowest quarterly
return was 0.86% for the quarter ended December 31, 1998.
The maximum Class B contingent deferred sales charge of 5%, which is normally
deducted when you redeem shares, is not reflected in the year-by-year total
returns shown opposite. If this fee were included, the returns would be less
than those shown. The average annual returns shown on page 3 do include the
sales charge.
Average annual returns for periods ending 12/31/98
CLASS B (if C (if
redeemed)* redeemed)*
Inception Inception
5/2/94 11/29/95
1 year -1.29% 2.71%
Lifetime 3.26% 3.71%
* If redeemed at end of period shown. If shares were not redeemed, the returns
for Class B would be 3.71% and 3.64% for the one-year and lifetime periods,
respectively. Returns for Class C would be 3.71% and 3.71% for the one-year
and lifetime periods, respectively.
Investors interested in obtaining the 7-day yield for either class can call
800.523.1918.
5
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund. The Fund may waive or reduce sales charges; please see the
Statement of Additional Information for details.
------------------------------------------------------ ---------- ----------
CLASS B C
------------------------------------------------------ ---------- ----------
Maximum sales charge (load) imposed on purchases as none none
a percentage of offering price
------------------------------------------------------ ---------- ----------
Maximum contingent deferred sales charge (load) as a 5%(1) 1%(2)
percentage of original purchase price or redemption
price, whichever is lower
------------------------------------------------------ ---------- ----------
Maximum sales charge (load) imposed on reinvested none none
dividends
------------------------------------------------------ ---------- ----------
Redemption fees none none
------------------------------------------------------ ---------- ----------
Annual fund operating expenses are deducted from the Fund's assets before it
pays dividends and before its net asset value and total return are calculated.
We will not charge you separately for these expenses. These expenses are based
on amounts incurred during the Fund's most recent fiscal year.
------------------------------------------------------ ---------- ----------
Management fees 0.49% 0.49%
------------------------------------------------------ ---------- ----------
Distribution and service (12b-1) fees 1.00% 1.00%
------------------------------------------------------ ---------- ----------
Other expenses 0.41% 0.41%
------------------------------------------------------ ---------- ----------
Total operating expenses 1.90% 1.90%
------------------------------------------------------ ---------- ----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
- ---------------------- ------------------- -------------------- ------------------- --------------------
Class(4) B B (if redeemed) C C (if redeemed)
<S> <C> <C> <C> <C>
- ---------------------- ------------------- -------------------- ------------------- --------------------
1 year $193 $693 $193 $293
- ---------------------- ------------------- -------------------- ------------------- --------------------
3 years $597 $897 $597 $597
- ---------------------- ------------------- -------------------- ------------------- --------------------
5 years $1,026 $1,126 $1,026 $1,026
- ---------------------- ------------------- -------------------- ------------------- --------------------
10 years $2,027 $2,027 $2,222 $2,222
- ---------------------- ------------------- -------------------- ------------------- --------------------
</TABLE>
(1) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(2) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show.
(4) The Class B example reflects the conversion of Class B shares to Consultant
Class shares after approximately eight years. Information for the ninth and
tenth years reflects expenses of the Consultant Class.
6
<PAGE>
How we manage the Fund
Our investment strategies
We invest primarily in short-term money market securities, including securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
and short-term debt instruments of banks and corporations.
We maintain an average maturity of 90 days or less. Also, we do not purchase any
securities with an effective remaining maturity of more than 397 days
(approximately 13 months). We may shorten or lengthen the Fund's average
maturity based on our analysis of interest rate trends.
We intend to hold our investments until maturity, but we may sell them prior to
maturity in order to shorten or lengthen the average maturity of the bonds in
the portfolio, increase the yield, maintain the quality of the portfolio or
maintain a stable share value.
7
<PAGE>
The securities we typically invest in
<TABLE>
<CAPTION>
------------------------------------------------------------- ----------------------------------------------------------
Securities How we use them
<S> <C>
------------------------------------------------------------- ----------------------------------------------------------
Direct U.S. Treasury obligations: Treasury bills, notes and We may invest without limit in U.S. Treasury
bonds of varying maturities. U.S. Treasury securities are securities. We would typically invest in Treasury
backed by the "full faith and credit" of the United States. bills or longer term Treasury securities whose
remaining effective maturity is less than 13 months.
------------------------------------------------------------- ----------------------------------------------------------
Certificates of deposit and obligations of both We may invest in certificates of deposit from banks
U.S. and foreign banks: Debt instruments issued that have assets of at least one billion dollars.
by a bank that pays interest.
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.
------------------------------------------------------------- ----------------------------------------------------------
Corporate commercial paper: Short-term debt obligations with We may invest in commercial paper that is rated P-1 or
maturities ranging from 2 to 270 days, issued by companies. P-2 by Moody's and/or A-1 or A-2 by S&P. The Fund will
not invest more than 5% of its total assets in
securities rated in the second highest category
by a nationally recognized statistical ratings
organization (NRSRO). The Fund may invest in
commercial paper that is not rated if the purchase
is approved or ratified by the Board of Directors.
------------------------------------------------------------- ----------------------------------------------------------
Asset-backed securities: Bonds or notes backed by accounts We may invest without limit in asset-backed securities.
receivables including home equity, automobile or credit We may invest only in securities rated in the highest
loans. rating category by an NRSRO. We currently intend to
invest only in asset-backed securities backed
by credit card receivables, home equity loans,
automobile loans and wholesale dealer floor plans.
------------------------------------------------------------- ----------------------------------------------------------
Repurchase agreements: An agreement between a buyer of We may use repurchase agreements as a short-term
securities such as the Fund and a seller of investment for the Fund's cash position. In order to
securities, in which the seller agrees to buy the enter into these repurchase agreements, the Fund must
securities back within a specified time at the same have collateral of at least 102% of the repurchase
price the buyer paid for them, plus an amount equal to price.
an agreed upon interest rate.
------------------------------------------------------------- ----------------------------------------------------------
Restricted securities: Privately placed securities whose We may invest without limitation in privately placed
resale is restricted under securities law. securities that are eligible for resale only among
certain institutional buyers without registration.
These are commonly known as "Rule 144A Securities."
Other restricted securities which are illiquid must
be limited to 10% of total Fund assets.
------------------------------------------------------------- ----------------------------------------------------------
Illiquid securities: Securities that do not have a ready We may not invest more than 10% of total assets in
market, and cannot be easily sold, if at all, at illiquid securities including repurchase agreements that
approximately the price that the Fund has valued them. mature in more than seven days.
------------------------------------------------------------- ----------------------------------------------------------
</TABLE>
Please see the Statement of Additional Information for additional descriptions
about the securities listed in the table above.
Borrowing from banks
The Fund may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions. To the extent that it does so, the Fund may be unable
to meet its investment objective. The Fund will not borrow money in excess of
one-third of the value of its net assets.
8
<PAGE>
The risks of investing in the Fund
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
money. Before you invest in the Fund you should carefully evaluate the risks.
The following are the chief risks you assume when investing in the Fund. Please
see the Statement of Additional Information for further discussion of these
risks.
<TABLE>
<CAPTION>
- ------------------------------------------------------- ------------------------------------------------------------------
Risks How we strive to manage them
Delaware Cash Reserve
<S> <C>
- ------------------------------------------------------- ------------------------------------------------------------------
Interest rate risk is the risk that securities, Because the Fund invests exclusively in short-term securities,
particularly bonds with longer maturities, interest rate changes are not a major risk to the value of its
will decrease in value if interest rates rise. portfolio. However, a decline in interest rates
would reduce the level of income provided by the Fund.
- ------------------------------------------------------- ------------------------------------------------------------------
Credit risk is the risk that there is the possibility The Fund holds only high quality short-term securities.
that a bond's issuer (or an entity that insures Therefore, it is generally not subject to significant
the bond) will be unable to make timely payments of credit risk.
interest and principal.
We limit our investments to those that the board
of directors considers to be of high quality
with minimal credit risks. All investments
must also meet the maturity, quality and
diversification standards that apply to
taxable money market funds.
If there were a national credit crisis or an
issuer were to become insolvent, the share
value of the Fund could decline.
- ------------------------------------------------------- ------------------------------------------------------------------
Counterparty risk is the risk that the Fund may lose We try to minimize this risk by considering the creditworthiness
money because a party that we contract with to buy or or all parties before we enter into transactions with them.
sell securities fails to fulfill its side of the Where appropriate, we will also hold collateral from the
agreement. counterparties consistent with applicable regulations.
- ------------------------------------------------------- ------------------------------------------------------------------
Inflation risk is the risk that the return from your The Fund is designed for short-term investment goals and
investments will be less than the increase in the therefore may not outpace inflation over longer time periods.
cost of living due to inflation, thus preventing you For this reason, the Fund is not recommended as a primary
from reaching your financial goals. investment for people with long-term goals.
- ------------------------------------------------------- ------------------------------------------------------------------
</TABLE>
9
<PAGE>
Who manages the Fund
Investment Manager
The Fund is managed by Delaware Management Company, a series of Delaware
Management Business Trust, which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Delaware Management Company makes investment
decisions for the Fund, manages the Fund's business affairs and provides daily
administrative services. For its services to the Fund, the manager was paid
0.49% of average daily net assets for the last fiscal year.
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
Board of directors
<TABLE>
<S> <C> <C>
Investment manager The Fund Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Portfolio managers Service agent Distributor
Delaware Service Company, Inc. Delaware Distributors, L.P.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Financial advisers
Shareholders
Board of directors A mutual fund is governed by a board of directors which has
oversight responsibility for the management of the fund's business affairs.
Directors establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the board of directors must be independent of the fund's
investment manager or distributor. These independent fund directors, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Portfolio managers Portfolio managers are employed by the investment manager to
make investment decisions for individual portfolios on a day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and typically place them with a qualified bank custodian who
segregates fund securities from other bank assets.
10
<PAGE>
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to
National Association of Securities Dealers, Inc. (NASD) rules governing mutual
fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Financial advisers Financial advisers provide advice to their clients--analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect directors. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
11
<PAGE>
About your account
Investing in the Fund
You can choose from a number of share classes for the Fund. Because each share
class has a different combination of sales charges, fees, and other features,
you should consult your financial adviser to determine which class best suits
your investment goals and time frame.
Unlike shares of most money market funds, Delaware Cash Reserve B and C Class
shares are subject to a contingent deferred sales charge and relatively high
distribution and service fees. Because of these costs, Class B and C shares are
available only to investors who already have Class B and C shares of other
Delaware Investments funds and want a temporary defensive investment
alternative. They are also available to investors who have chosen the Wealth
Builder Option (see page ___) to exchange their shares of Delaware Cash Reserve
for Class B and C shares of other Delaware Investments funds.
Choosing a share class
Class B
o Class B shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge if you redeem your shares within six years after you
buy them.
o If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during
the third and fourth years, 2% during the fifth year, 1% during the sixth
year, and 0% thereafter.
o Under certain circumstances, the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o For approximately eight years after you buy your Class B shares, they are
subject to annual 12b-1 fees no greater than 1% of average daily net
assets, of which 0.25% are service fees paid to the distributor, dealers or
others for providing services and maintaining accounts.
o Because of the higher 12b-1 fees, Class B shares have higher expenses and
any dividends paid on these shares are lower than dividends on Class A
shares and Consultant Class shares.
o Approximately eight years after you buy them, Class B shares automatically
convert into Consultant Class shares with a 12b-1 fee of no more than 0.30%
(currently no more than 0.25%). Conversion may occur as late as three
months after the eighth anniversary of purchase, during which time Class
B's higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
12
<PAGE>
Class C
o Class C shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge if you redeem your shares within 12 months after you
buy them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o Class C shares are subject to an annual 12b-1 fee which may not be greater
than 1% of average daily net assets, of which 0.25% are service fees paid
to the distributor, dealers or others for providing services and
maintaining shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses and
pay lower dividends than Class A shares and Consultant Class shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o You may purchase any amount less than $1,000,000 of Class C shares at any
one time. The limitation on maximum purchases varies for retirement plans.
Each share class of the Fund has adopted a separate 12b-1 plan that allows it to
pay distribution fees for the sales and distribution of its shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
13
<PAGE>
About your account (continued)
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, P.O. Box
7577, Philadelphia, PA 19101. If you are making an initial purchase by mail, you
must include a completed investment application (or an appropriate retirement
plan application if you are opening a retirement account) with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014 12893 4013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that under most circumstances you are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800.523.1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service, or through our web site, www.delawareinvestments.com. For more
information about how to sign up for these services, call our Shareholder
Service Center at 800.523.1918.
14
<PAGE>
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can generally open an account with
an initial investment of $1,000--and make additional investments at any time for
as little as $100. If you are buying shares in an IRA or Roth IRA, under the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act; or through
an Automatic Investing Plan, the minimum purchase is $250, and you can make
additional investments of only $25. The minimum for an Education IRA is $500.
The minimums vary for retirement plans other than IRAs, Roth IRAs or Education
IRAs.
We determine the Fund's net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
strive to manage the value of the Fund's securities to stabilize the Fund's net
asset value at $1.00 per share. Although we make every effort to maintain a
stable net asset value, there is no assurance that we will always be able to do
so. We calculate net asset value by adding the market value of all the
securities and assets in the Fund's portfolio, deducting all liabilities, and
dividing the resulting number by the number of shares outstanding. The result is
the net asset value per share. We price the portfolio securities of the Fund at
amortized cost.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. Currently the Exchange is closed when the
following holidays are observed: New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. We reserve the right to reject any purchase
order.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in the Fund may be suitable
for group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in the Fund can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
15
<PAGE>
About your account (continued)
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of $50,000 or
more, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, the First Union Bank fee (currently
$7.50) will be deducted from your proceeds. Bank information must be on file
before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services You can redeem shares through Delaphone,
our automated telephone service, or through our web site,
www.delawareinvestments.com. For more information about how to sign up for these
services, call our Shareholder Service Center at 800.523.1918.
16
<PAGE>
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares, you
will receive the net asset value as determined on the business day we receive
your request. We will deduct any applicable contingent deferred sales charges.
You may also have to pay taxes on the proceeds from your sale of shares. We will
send you a check, normally the next business day, but no later than seven days
after we receive your request to sell your shares. If you purchased your shares
by check, we will wait until your check has cleared, which can take up to 15
days, before we send your redemption proceeds.
17
<PAGE>
About your account (continued)
How to redeem shares (continued)
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original
shares, not the exchange price. The redemption price for purposes of this
formula will be the NAV of the shares you are actually redeeming.
Account minimum
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs, Uniform Gift to Minors Act accounts or
accounts with automatic investing plans, $500 for Education IRAs) for three or
more consecutive months, you will have until the end of the current calendar
quarter to raise the balance to the minimum. If your account is not at the
minimum by the required time, you will be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your
account does not reach the minimum balance, the Fund may redeem your account
after 60 days' written notice to you.
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly investments
directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as Social Security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
18
<PAGE>
About your account (continued)
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund without paying a contingent deferred sales
charge at the time of the exchange. However, if you exchange shares from a money
market fund that does not have a sales charge you will pay any applicable sales
charges on your new shares. When exchanging Class B and Class C shares of one
fund for similar shares in other funds, your new shares will be subject to the
same contingent deferred sales charge as the shares you originally purchased.
The holding period for the CDSC will also remain the same, with the amount of
time you held your original shares being credited toward the holding period of
your new shares. You don't pay sales charges on shares that you acquired through
the reinvestment of dividends. You may have to pay taxes on your exchange. When
you exchange shares, you are purchasing shares in another fund so you should be
sure to get a copy of the fund's prospectus and read it carefully before buying
shares through an exchange.
MoneyLineSM On Demand Service
Through our MoneyLineSM On Demand Service, you or your financial adviser may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans, except
for purchases into IRAs. MoneyLine has a minimum transfer of $25 and a maximum
transfer of $50,000.
MoneyLine Direct Deposit Service
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one.
This service is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our MoneyLine Direct Deposit Service.
Dividends, distributions and taxes
Dividends are declared daily and paid monthly. Short-term capital gains may be
paid with the daily dividend or distributed annually. We automatically reinvest
all dividends and capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from the Fund is the same whether you reinvest
your dividends or receive them in cash. Distributions from the Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time the Fund held the assets. In addition, you may be subject to
state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
19
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." The Fund is taking steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use.
However, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the business of the Fund. The Year 2000 Problem may also
adversely affect the issuers of securities in which the Fund invests. The
portfolio manager and investment professionals of the Fund consider Year 2000
compliance in the securities selection and investment process. However, there
can be no guarantee that, even with their due diligence efforts, they will be
able to predict the affect of Year 2000 on any company or the performance of its
securities.
Investments by fund of funds
The Fund accepts investments from the series portfolios of Delaware Group
Foundation Funds, a fund of funds. From time to time, the Fund may experience
large investments or redemptions due to allocations or rebalancings by
Foundation Funds. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management.
For example, the Fund may be required to sell securities or invest cash at times
when it would not otherwise do so. These transactions could also have tax
consequences if sales of securities result in gains, and could also increase
transactions costs or portfolio turnover. The manager will monitor transactions
by Foundation Funds and will attempt to minimize any adverse effects on both the
Fund and Foundation Funds as a result of these transactions.
20
<PAGE>
Financial information
Financial highlights
The financial highlights table is intended to help you understand the Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
<TABLE>
<CAPTION>
- ------------------------------------------------------------ --------------------------------------------------------
Delaware Cash Reserve
B Class
--------------------------------------------------------
Year Ended 3/31/
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Period
5/2/94(1)
through
1999 1998 1997 1996 3/31/95
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Income from investment operations:
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Net investment income 0.035 0.038 0.035 0.039 0.028
----- ----- ----- ----- -----
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Total from investment operations 0.035 0.038 0.035 0.039 0.028
----- ----- ----- ----- -----
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Less dividends:
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Dividends from net investment income (0.035) (0.038) (0.035) (0.039) (0.028)
------- ------- ------- ------- -------
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Total dividends (0.035) (0.038) (0.035) (0.039) (0.028)
------- ------- ------- ------- -------
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ======
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Total return(2) 3.57% 3.84% 3.58% 3.97% 3.10%
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Ratios and supplemental data:
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Net assets, end of period (000 omitted) $19,908 $6,522 $12,988 $8,127 $1,088
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Ratio of expenses to average net assets 1.90% 1.88% 1.88% 1.95% 2.01%
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
Ratio of net investment income to average net assets 3.51% 3.78% 3.52% 3.90% 2.91%
- ------------------------------------------------------------ ----------- ---------- ---------- ---------- -----------
</TABLE>
(1) Date of initial public offering; ratios and total return have been
annualized.
(2) Total investment return assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
21
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ---------------------------------------------
Delaware Cash Reserve
C Class
---------------------------------------------
Year Ended 3/31/
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Period
11/29/95(1)
through
1999 1998 1997 3/31/96
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Income from investment operations:
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Net investment income 0.035 0.038 0.035 0.012
----- ----- ----- -----
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Total from investment operations 0.035 0.038 0.035 0.012
----- ----- ----- -----
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Less dividends:
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Dividends from net investment income (0.035) (0.038) (0.035) (0.012)
------- ------- ------- -------
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Total dividends (0.035) (0.038) (0.035) (0.012)
------- ------- ------- -------
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000
====== ====== ====== ======
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Total return(2) 3.58% 3.84% 3.58% 1.24%
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Ratios and supplemental data:
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Net assets, end of period (000 omitted) $11,134 $3,702 $2,799 $304
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Ratio of expenses to average net assets 1.90% 1.88% 1.88% 1.95%
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
Ratio of net investment income to average net assets 3.51% 3.78% 3.52% 3.90%
- ------------------------------------------------------------ ---------- ---------- ---------- ------------
</TABLE>
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Total investment return assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
22
<PAGE>
How to read the financial highlights
Net investment income
Net investment income includes dividend and interest income earned from the
Fund's securities; it is after expenses have been deducted.
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in the Fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers, exclude contingent deferred sales
charges, and assume the shareholder has reinvested all dividends and realized
gains.
Net assets
Net assets represent the total value of all the assets in the Fund's portfolio,
minus any liabilities, that are attributable to that class of the Fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
23
<PAGE>
[begin glossary]
How to use this glossary
This glossary includes definitions of investment terms used throughout the
Prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Average maturity
An average of when the individual bonds and other debt securities held in a
portfolio will mature.
Bond
A debt security, like an IOU, issued by a company, municipality or government
agency. In return for lending money to the issuer, a bond buyer generally
receives fixed periodic interest payments and repayment of the loan amount on a
specified maturity date. A bond's price changes prior to maturity and is
inversely related to current interest rates. When interest rates rise, bond
prices fall, and when interest rates fall, bond prices rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are considered
investment grade. Bonds rated Ba/BB or lower are commonly known as junk bonds.
See also Nationally recognized statistical rating organization.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Corporate bond
A debt security issued by a corporation. See Bond.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
24
<PAGE>
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See Bond.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Liquidity
The ease with which an investment can be converted into cash without a
significant loss of principal. Money market funds are considered to be highly
liquid.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
National Association of Securities Dealers (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper, preferred
and common stocks and municipal short-term issues, rating the probability that
the issuer of the debt will meet the scheduled interest payments and repay the
principal. Ratings are published by such companies as Moody's Investors Service
(Moody's), Standard & Poor's Corporation (S&P), Duff & Phelps, Inc. (Duff), and
Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
25
<PAGE>
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as "equities."
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments. [end glossary]
26
<PAGE>
[back cover]
Delaware Cash Reserve
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the report
period. You can find more detailed information about the Fund in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in this Fund, you can write to us at 1818 Market Street, Philadelphia, PA 19103,
or call toll-free 800.523.1918. You may also obtain additional information about
the Fund from your financial adviser.
You can find reports and other information about the Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the Securities and
Exchange Commission's Public Reference Room in Washington, D.C. You can get
information on the public reference room by calling the SEC at 1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone
redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811-2806
Delaware Cash Reserve Symbols
CUSIP
Class B 245910302
Class C 245910401
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
P-___ [--] PP 5/99
27
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MAY 30, 1999
DELAWARE GROUP CASH RESERVE, INC.
1818 MARKET STREET
PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE:
NATIONWIDE 800-523-1918
INFORMATION ON EXISTING ACCOUNTS:
(SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES:
(BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
Delaware Group Cash Reserve, Inc. (the "Fund") is a professionally-managed
mutual fund.
The Fund offers Class A Shares, Class B Shares, Class C Shares and
Consultant Class Shares (individually, a "Class" and collectively, the
"Classes").
This Statement of Additional Information ("Part B" of the registration
statement) supplements the information contained in the current Prospectuses for
the Fund dated May 30, 1999, as they may be amended from time to time. Part B
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. A 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"), at the above address or by calling the
above phone numbers. The Fund's financial statements, the notes relating
thereto, the financial highlights and the report of independent auditors are
incorporated by reference from the Annual Report into this Part B. The Annual
Report will accompany any request for Part B. The Annual Report can be obtained,
without charge, by calling 800-523-1918.
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
COVER PAGE
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICY
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
TRADING PRACTICES
- --------------------------------------------------------------------------------
PURCHASING SHARES
- --------------------------------------------------------------------------------
RETIREMENT PLANS
- --------------------------------------------------------------------------------
OFFERING PRICE
- --------------------------------------------------------------------------------
REDEMPTION AND EXCHANGE
- --------------------------------------------------------------------------------
DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AGREEMENT
- --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
APPENDIX A--DESCRIPTION OF RATINGS
- --------------------------------------------------------------------------------
APPENDIX B - INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE
INVESTMENTS FAMILY
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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<PAGE>
INVESTMENT OBJECTIVE AND POLICY
The investment 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.
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 limits its investments to those which the Board of Directors has
determined present minimal credit risks and are of high quality and which are
otherwise in accordance with the maturity, quality and diversification
conditions with which taxable money market funds must comply.
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>
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, at the time of
purchase a bank obligation 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 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 at the time of purchase, such security or, as
relevant, its issuer, is rated in one of the two highest rating categories
(e.g., A-2 or better by S&P and P-2 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.
5. Short-term Corporate Debt--The Fund may invest in corporate notes, bonds
and debentures if at the time of purchase, such security or, as relevant, its
issuer, is 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. The Fund may use repurchase agreements which are at least 102%
collateralized by securities in which the Fund can invest directly. 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 manager believes that, barring extraordinary
circumstances, the Fund will be entitled to sell the
-4-
<PAGE>
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
typically 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 resulting from
ultimate default enhances the likelihood of payments of the obligations on at
least some of the
-5-
<PAGE>
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 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.
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 (the "1933 Act"). 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, including repurchase
agreements maturing in more than seven days.
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.
-6-
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions which cannot be changed
without approval by the holders of a "majority" of the Fund's outstanding
shares, which is a vote by the holders of the lesser of a) 67% or more of the
voting securities present in person or by proxy at a meeting, if the holders of
more than 50% of the outstanding voting securities are present or represented by
proxy; or b) more than 50% of the outstanding voting securities. The percentage
limitations contained in the restrictions and policies set forth herein apply at
the time of purchase of securities.
The Fund shall not:
1. Make investments that will result in the concentration (as that term may
be defined in the 1940 Act, any rule or other thereunder, or U.S. Securities and
Exchange Commission ("SEC") staff interpretation thereof) of its investments in
the securities of issuers primarily engaged in the same industry, provided that
this restriction does not limit the Fund from investing in obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities, or in
certificates of deposit. In addition, the Fund may concentrate its investments
in bankers' acceptances of banks with over one billion dollars in assets or bank
holding companies whose securities are rated A-2 or better by Standard & Poor's
Ratings Group ("S&P") or P-2 or better by Moody's Investors Service, Inc.
("Moody's").
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
3. Underwrite the securities of other issuers, except that the Fund may
engage in transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933.
4. Purchase or sell real estate, unless acquired as a result of ownership
of securities or other instruments and provided that this restriction does not
prevent the Fund from investing in issuers which invest, deal or otherwise
engage in transactions in real estate or interests therein, or investing in
securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent the Fund from engaging in transactions involving futures
contracts and options thereon or investing in securities that are secured by
physical commodities.
6. Make loans, provided that this restriction does not prevent the Fund
from purchasing debt obligations, entering into repurchase agreements, loaning
its assets to broker/dealers or institutional investors and investing in loans,
including assignments and participation interests.
In addition to the fundamental policies and investment restrictions
described above, and the various general investment policies described in the
prospectus, the Fund will be subject to the following investment restrictions,
which are considered non-fundamental and may be changed by the Board of
Directors without shareholder approval.
-7-
<PAGE>
1. The Fund is permitted to invest in other investment companies, including
open-end, closed-end or unregistered investment companies, either within the
percentage limits set forth in the 1940 Act, any rule or order thereunder, or
SEC staff interpretation thereof, or without regard to percentage limits in
connection with a merger, reorganization, consolidation or other similar
transaction. However, the Fund may not operate as a "fund of funds" which
invests primarily in the shares of other investment companies as permitted by
Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
2. The Fund may not invest more than 15% of its net assets in securities
which it cannot sell or dispose of in the ordinary course of business within
seven days at approximately the value at which the Fund has valued the
investment.
CONCENTRATION
In applying the Fund's policy on concentration: (i) utility companies will
be divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (ii)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (iii) asset backed
securities will be classified according to the underlying assets securing such
securities.
Following are additional investment restrictions and policies which are
considered non-fundamental and may be changed by the Board of Directors without
shareholder approval.
1. Invest more than 20% of its assets in securities other than money market
instruments as defined above.
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 (the "SEC") 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 (the "1933 Act"). 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.
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-
<PAGE>
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.
13. 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.
14. 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.
15. Invest in direct interests in oil, gas or other mineral exploration or
development programs.
16. 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.
-9-
<PAGE>
PERFORMANCE INFORMATION
For the seven-day period ended March 31, 1999, the annualized current yield
of Class A Shares, Class B Shares, Class C Shares and Consultant Class Shares
was 4.10%, 3.10%, 3.10% and 3.85%, respectively, and the compounded effective
yield was 4.18%, 3.15%, 3.15% and 3.92%, respectively. These yields will
fluctuate daily as income earned fluctuates. On this date, the weighted average
portfolio maturity was 55 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 up to 0.30% for Consultant
Class Shares and up to 1% for each of the Class B Shares and 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, 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 each Class represents the net change in this
hypothetical account annualized over 365 days. In addition, a shareholder may
achieve a compounding effect through reinvestment of dividends, which is
reflected in the effective yield shown below.
-10-
<PAGE>
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, 1999:
<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............................ $1.00078583 $1.00059406 $1.00059406 $1.00073788
=========== =========== =========== ===========
Net change in account value.................... 0.00078583(1) 0.00059406(1) 0.00059406(1) 0.00073788(1)
Base period return = net change in account
value/beginning account value................ 0.00078583 0.00059406 0.00059406 0.00073788
Current yield [base period return x (365/7)]... 4.10%(2) 3.10%(2) 3.10%(2) 3.85%(2)
==== ==== ==== ====
Effective yield (1 + base period) 365/7 - 1.... 4.18%(3) 3.15%(3) 3.15%(3) 3.92%(3)
==== ==== ==== ====
</TABLE>
Weighted average life to maturity of the portfolio on March 31, 1999 was 55
days.
- -------------------
(1) This represents the net income per share for the seven calendar days ended
March 31, 1999.
(2) This represents the average of annualized net investment income per share
for the seven calendar days ended March 31, 1999.
(3) This represents the current yield for the seven calendar days ended March
31, 1999 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.
-11-
<PAGE>
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. The performance, as shown below, is
the average annual total return quotations for each Class through March 31,
1999, 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 commencement of operations of such
Class is based on the performance of Class A Shares. For periods prior to
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. The average
annual total return for Class B and 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, 1999. The average annual total return for Class B and
Class C Shares (excluding deferred sales charge) assumes the shares were not
redeemed at March 31, 1999 and, therefore, does not reflect the deduction of a
CDSC.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
CLASS A CONSULTANT CLASS B SHARES CLASS B SHARES CLASS C SHARES CLASS C SHARES
SHARES CLASS (INCLUDING (EXCLUDING (INCLUDING (EXCLUDING DEFERRED
(INCEPTION SHARES DEFERRED DEFERRED DEFERRED SALES CHARGE)
6/30/78) (INCEPTION SALES CHARGE) (1) SALES CHARGE) SALES CHARGE) (INCEPTION 11/29/95)
3/10/88) (INCEPTION 5/2/94) (INCEPTION (INCEPTION
5/2/94) 11/29/95)
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
1 year ended 4.61% 4.35% -1.43% 3.57% 2.58% 3.58%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
3 years ended 4.70% 4.44% 2.73% 3.67% 3.67% 3.67%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
5 years ended 4.62% 4.37% N/A N/A N/A N/A
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
10 years ended 4.93% 4.67% N/A N/A N/A N/A
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
15 years ended 5.79% 5.58% N/A N/A N/A N/A
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
Life of Fund 7.51% 7.36% 3.26% 3.62% 3.71% 3.71%
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
</TABLE>
- -------------------
(1) Effective May 30, 1999, the CDSC schedule for Class B Shares is as follows:
(i) 5% if shares are redeemed within one year of purchase (ii) 4% if shares
are redeemed during the second year of purchase; (iii) 3% if shares are
redeemed during the third or fourth year following purchase; (iv) 2% if
shares are redeemed during the fifth year following purchase; (v) 1% if
shares are redeemed during the sixth year following purchase; and (vi) 0%
thereafter. The above performance figures are calculated using the new
applicable CDSC schedule.
-12-
<PAGE>
From time to time, the Fund may quote current yield information of the
Classes 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.
From time to time, the Fund may quote actual total return and/or yield
performance for its Classes in advertising and other types of literature. This
information may be compared to that of other mutual funds with similar
investment objectives and to stock, bond and other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
performance comparisons of the Fund (or Class) 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 may be compared to data
prepared by Lipper Analytical Services, Inc., IBC/Donoghue or the performance of
unmanaged indices compiled or maintained by statistical research firms such as
Lehman Brothers or Salomon Brothers, Inc.
Lipper Analytical Services, Inc. and IBC/Donoghue maintain statistical
performance databases, as reported by a diverse universe of
independently-managed mutual funds. Rankings that compare the Fund's performance
to another fund in appropriate categories over specific time periods also may be
quoted in advertising and other types of literature. The total return
performance reported for these indices will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The indices do
not take into account any fees. A direct investment in an unmanaged index is not
possible.
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. In addition, the performance of multiple
indices compiled and maintained by these firms may be combined to create a
blended performance result for comparative purposes. Generally, the indices
selected will be representative of the types of securities in which the Fund may
invest and the assumptions that were used in calculating the blended performance
will be described.
Comparative information on the Consumer Price Index may also be included in
advertisements or other literature. 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 from an investment.
-13-
<PAGE>
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.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on the Consumer Price Index), and combinations of various
capital markets. The performance of these capital markets is based on the
returns of different indices. The Fund may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the Fund. The
Fund may also compare performance to that of other compilations or indices that
may be developed and made available in the future.
The Fund may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of the Fund (such as value investing, market timing,
dollar cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments), economic and political conditions, the
relationship between sectors of the economy and the economy as a whole, the
effects of inflation and historical performance of various asset classes,
including but not limited to, stocks, bonds and Treasury bills. From time to
time advertisements, sales literature, communications to shareholders or other
materials may summarize the substance of information contained in shareholder
reports (including the investment composition of the Fund), as well as the views
as to current market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related matters
believed to be of relevance to the Fund. In addition, selected indices may be
used to illustrate historic performance of selected asset classes. The Fund may
also include in advertisements, sales literature, communications to shareholders
or other materials, charts, graphs or drawings which illustrate the potential
risks and rewards of investment in various investment vehicles, including but
not limited to, domestic stocks, and/or bonds, treasury bills and shares of the
Fund. In addition, advertisements, sales literature, communications to
shareholders or other materials may include a discussion of certain attributes
or benefits to be derived by an investment in the Fund and/or other mutual
funds, shareholder profiles and hypothetical investor scenarios, timely
information on financial management, tax and retirement planning (such as
information on Roth IRAs and Education IRAs) and investment alternatives to
certificates of deposit and other financial instruments. Such sales literature,
communications to shareholders or other materials may include symbols, headlines
or other material which highlight or summarize the information discussed in more
detail therein.
-14-
<PAGE>
Materials may refer to the CUSIP numbers of the Fund and may illustrate how
to find the listings of the Fund in newspapers and periodicals. Materials may
also include discussions of other funds, products, and services.
The Fund may quote various measures of volatility and benchmark correlation
in advertising. In addition, the Fund may compare these measures to those of
other funds. Measures of volatility seek to compare the historical share price
fluctuations or total returns to those of a benchmark. Measures of benchmark
correlation indicate how valid a comparative benchmark may be. Measures of
volatility and correlation may be calculated using averages of historical data.
The Fund may advertise its current interest rate sensitivity, duration, weighted
average maturity or similar maturity characteristics. Advertisements and sales
materials relating to the Fund may include information regarding the background
and experience of its portfolio managers.
The following tables present examples, for purposes of illustration only,
of cumulative total return performance for the shares of each Class of the Fund
through March 31, 1999. 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 commencement of operations of such Class
is based on the performance of Class A Shares. For periods prior to 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.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
CLASS A CONSULTANT CLASS B SHARES CLASS B SHARES CLASS C SHARES CLASS C SHARES
SHARES CLASS (INCLUDING (EXCLUDING (INCLUDING (EXCLUDING DEFERRED
(INCEPTION SHARES DEFERRED DEFERRED DEFERRED SALES CHARGE)
6/30/78) (INCEPTION SALES CHARGE) (1) SALES CHARGE) SALES CHARGE) (INCEPTION 11/29/95)
3/10/88) (INCEPTION 5/2/94) (INCEPTION (INCEPTION
5/2/94) 11/29/95)
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
3 months ended 1.04% 0.98% -4.21% 0.79% -0.21% 0.79%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
6 months ended 2.16% 2.04% -3.34% 1.66% 0.66% 1.66%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
9 months ended 3.39% 3.20% -2.39% 2.61% 1.62% 2.62%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
1 year ended 4.61% 4.35% -1.43% 3.57% 2.58% 3.58%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
3 years ended 14.78% 13.93% 8.40% 11.40% 11.40% 11.40%
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
5 years ended 25.36% 28.82% N/A N/A N/A N/A
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
10 years ended 61.81% 57.84% N/A N/A N/A N/A
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
15 years ended 132.59% 125.78% N/A N/A N/A N/A
3/31/99
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
Life of Fund 349.44% 336.29% 17.10% 19.10% 12.79% 12.79%
- ------------------- -------------- ---------------- ------------------- ------------------ ------------------- ---------------------
</TABLE>
- -------------------
(1) Effective May 30, 1999, the CDSC schedule for Class B Shares is as follows:
(i) 5% if shares are redeemed within one year of purchase (ii) 4% if shares
are redeemed during the second year of purchase; (iii) 3% if shares are
redeemed during the third or fourth year following purchase; (iv) 2% if
shares are redeemed during the fifth year following purchase; (v) 1% if
shares are redeemed during the sixth year following purchase; and (vi) 0%
thereafter. The above performance figures are calculated using the new
applicable CDSC schedule.
-15-
<PAGE>
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds available from
the Delaware Investments family, 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 (the "Manager") and how that
philosophy impacts the Fund's, and other Delaware Investments 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.
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. You should also consider your financial ability to continue to
purchase shares during low fund share prices. Delaware Investments 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 Purchasing Shares for a complete description of these services, including
restrictions or limitations.
-16-
<PAGE>
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.
PRICE NUMBER OF
INVESTMENT PER SHARES
AMOUNT SHARE PURCHASED
---------- ------ ---------
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
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 or any stock or bond fund in the
Delaware Investments family. Dollar-cost averaging can be appropriate for
investments in shares of funds that tend to fluctuate in value. Please obtain
the prospectus of any fund in the Delaware Investments family in which you plan
to invest 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. The Fund may include illustrations showing the power of
compounding in advertisements and other types of literature.
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.
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 800-523-1918.
-17-
<PAGE>
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 Manager's judgment
of their professional capability to provide the service. The primary
consideration is to have brokers, dealers or banks execute transactions at best
execution. Best 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. When a commission is paid, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of the
Manager's 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. 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.
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 (the "1934 Act") and
the Fund's 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 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
Investments family. 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.
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<PAGE>
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 Fund's
Board of Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Portfolio trading will be undertaken principally to accomplish the Fund's
objective and not for the purpose of realizing capital gains, although capital
gains may be realized on certain portfolio transactions. For example, capital
gains may be realized when a security is sold (i) so that, provided capital is
preserved or enhanced, another security can be purchased to obtain a higher
yield, (ii) to take advantage of what the Manager believes to be a temporary
disparity in the normal yield relationship between the two securities to
increase income or improve the quality of the portfolio, (iii) to purchase a
security which the Manager believes is of higher quality than its rating or
current market value would indicate, or (iv) when the Manager anticipates a
decline in value due to market risk or credit risk. 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 of 1986, as amended (the "Code") and
the 1940 Act, when changes in circumstances or conditions make such a move
desirable in light of the investment objective.
Consistent with the Conduct Rules of the NASD Regulation, Inc. (the
"NASD"), and subject to seeking best execution, the Manager may place orders
with broker/dealers that have agreed to defray certain expenses of the funds in
the Delaware Investments family, such as custodian fees, and may, at the request
of the Distributor, give consideration to sales of shares of the funds in the
Delaware Investments family as a factor in the selection of brokers and dealers
to execute Fund portfolio transactions.
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<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for the Fund's shares
- - Class A Shares, Consultant Class Shares, Class B Shares and Class C Shares and
has agreed to use its best efforts to sell shares of the Fund.
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.
The minimum initial investment is generally $1,000 for each Class.
Subsequent purchases must generally be $100 or more. The initial and subsequent
investment minimums for Class A Shares will be waived for purchases by officers,
directors and employees of any fund in the Delaware Investments family, 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 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.
Selling dealers are responsible for transmitting orders promptly. 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. 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 Investments family. 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, as a result of redemption,
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 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 CDSC
will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under 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.
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<PAGE>
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 or in the case of any retirement plan account including
self-directed IRAs. However, purchases not involving the issuance of
certificates 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
full share denominations purchased by sending a letter signed by each owner of
the account to the Transfer Agent requesting the certificate. No charge is
assessed by the Fund for any certificate issued. A shareholder may be subject to
fees for replacement of a lost or stolen certificate under certain conditions,
including the cost of obtaining a bond covering the lost or stolen certificate.
Please contact the Fund for further information. Investors who hold certificates
representing any of their shares may only redeem those shares by written
request. The investor's certificate(s) must accompany such request.
Shares of each Class 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. 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.
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 of 0.30% of the average daily net assets of such shares.
Class B Shares are purchased at net asset value and are subject to a CDSC
of: (i) 5% if shares are redeemed within one year of purchase; (ii) 4% if shares
are redeemed during the second year of purchase; (iii) 3% if shares are redeemed
during the third or fourth year following purchase; (iv) 2% if shares are
redeemed during the fifth year following purchase; and (v) 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 higher than those to which
Consultant Class Shares are subject and are assessed against Class B Shares for
approximately eight years after purchase.
Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within 12 months following purchase. Class C Shares
are also subject to annual 12b-1 Plan expenses for the life of the investment
which are equal to those to which Class B Shares are subject.
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 for Class B Shares and Class C Shares for a list of
the 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
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<PAGE>
Consultant Class Shares of the Fund. See Automatic Conversion of Class B Shares,
below. Such conversion will constitute a tax-free exchange for federal income
tax purposes.
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. Prospective investors should consider the availability
of Class A Shares and Consultant Class Shares or whether, given their particular
circumstances, it is more advantageous to purchase Class B Shares or Class C
Shares. Shareholders purchasing Class B Shares will 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. Shareholders purchasing
Class C Shares will 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 addition, investors should consider the level of annual
12b-1 Plan expenses applicable to Class B, C and Consultant Class Shares. 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.
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, Class C and Consultant Class Shares.
Dividends, if any, will be calculated in the same manner, at the same
time, on the same day and will be in the same amount, except that the additional
amount of 12b-1 Plan expenses relating to Consultant Class Shares, Class B
Shares and Class C Shares will be borne exclusively by such shares.
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 currently compensates
dealers or brokers for selling Class B Shares at the time of purchase from its
own assets. In addition, from time to time, upon written notice to all of its
dealers, the Distributor may hold special promotions for specified period during
which the Distributor may pay additional compensation to dealers or brokers for
selling Class B Shares at the time of purchase. 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, if any, 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.
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<PAGE>
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class B Shares
described in this Part B, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for 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
18th day (or next business day 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, Consultant Class Shares) pro-rata with Class B Shares of that fund
not acquired through dividend reinvestment.
All such automatic conversions of Class B Shares will constitute tax-free
exchanges for federal income tax purposes.
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 full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently 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 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 Class C Shares as
described in this Part B. See Redemption and Exchange.
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, payable to the specific Class selected,
to Delaware Investments at P.O. Box 7577, 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
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<PAGE>
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
First Union Bank, ABA #031201467, account number 2014128934013, (include the
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 Delaware Investments at P.O. Box
7577, Philadelphia, PA 19101.
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. 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--Shareholders may make regular automatic
investments by authorizing, in advance, monthly payments directly from their
checking account for deposit into their Fund account. This type of investment
will be handled in either of the following 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 the shareholder's
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.
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<PAGE>
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) 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. An investor wishing to take advantage
of either service must complete an authorization form. Either service 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.
DIRECT DEPOSIT PURCHASES BY MAIL
Shareholders may authorize a third party, such as a bank or employer, to
make investments directly to their Fund account. 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.
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 or certain other authorized persons (see
Distribution and Service under Investment Management Agreement) only if the Fund
has received payment in Federal Funds by wire. Dividends begin to accrue on the
next business day. Thus, investments effective the day before a weekend or
holiday will not accrue 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.
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<PAGE>
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.
PLANS UNDER RULE 12B-1 FOR CONSULTANT CLASS SHARES, CLASS B SHARES AND CLASS C
SHARES
Pursuant to Rule 12b-1 under the 1940 Act, 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 and promotional expenses related to
marketing shares of only the Class to which the Plan applies.
The Plans do not apply to the Fund's Class A Shares. Such shares are not
included in calculating the Plans' fees, 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,
a monthly fee to the Distributor for its services and expenses in distributing
and promoting sales of the shares of such Class. 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 funds in the Delaware Investments family having a 12b-1 Plan, are paid
a continuing trail fee of 0.25% of the average daily net assets of 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 up to 0.30% of the
Consultant Class Shares' average daily net assets for the year, and up to 1%
(0.25% of which are service fees to be paid by the Fund to the Distributor,
dealers or 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 for the year. The Fund's Board of Directors may reduce these amounts
at any time. The Fund's Board of Directors has set the current fee for
Consultant Class Shares at 0.25% 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,
such as broker/dealers, 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.
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<PAGE>
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, 1999, payments from Class B Shares,
Class C Shares and Consultant Class Shares amounted to $144,040, $65,172 and
$102,596, respectively. Such amounts were used for the following purposes:
<TABLE>
<CAPTION>
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Class B Class C Consultant Class
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising $154 --- $606
- -----------------------------------------------------------------------------------------------------------------------------
Annual/Semi-Annual Reports $2,356 --- $605
- -----------------------------------------------------------------------------------------------------------------------------
Broker Trails $35,920 $20,920 $100,400
- -----------------------------------------------------------------------------------------------------------------------------
Broker Sales Charges $73,271 $22,229 ---
- -----------------------------------------------------------------------------------------------------------------------------
Dealer Service Expenses --- $260 ---
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest on Broker Sales Charges $27,556 $807 ---
- -----------------------------------------------------------------------------------------------------------------------------
Commissions to Wholesalers $4,084 $11,010 ---
- -----------------------------------------------------------------------------------------------------------------------------
Promotional-Broker Meetings --- $322 $493
- -----------------------------------------------------------------------------------------------------------------------------
Promotional-Other --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------
Prospectus Printing $699 --- $492
- -----------------------------------------------------------------------------------------------------------------------------
Telephone --- $64 ---
- -----------------------------------------------------------------------------------------------------------------------------
Wholesaler Expenses --- $9,560 ---
- -----------------------------------------------------------------------------------------------------------------------------
Other --- --- ---
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
REINVESTMENT OF DIVIDENDS IN OTHER DELAWARE INVESTMENTS FUNDS
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, shareholders may automatically
reinvest dividends and/or distributions in any of the mutual funds in the
Delaware Investments family, including the Fund, in states where its shares may
be sold. Such investments will be at net asset value at the close of business on
the reinvestment date without any front-end sales charge or service 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 intended to be made before
investing or sending money. The prospectus contains more complete information
about the fund, including charges and expenses.
Dividends on Class A Shares and Consultant Class Shares may be
reinvested in shares of any other mutual fund in the Delaware Investments
family, other than Class B Shares and Class C Shares of the funds in the
Delaware Investments family that offer such classes of shares. Dividends on
Class B Shares may only be invested in Class B Shares of another fund in the
Delaware Investments family 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 Investments family that offers such a class of shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
MONEYLINE (SM) ON DEMAND
You or your investment dealer may request purchases of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize the Fund to accept such
requests from you or your investment dealer, funds will be withdrawn from (for
share purchases) your predesignated bank account. Your request will be processed
the same day if you call prior to 4 p.m., Eastern time. There is a $25 minimum
and $50,000 maximum limit for MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account Services form.
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If your name and address are not identical to the name and address on your Fund
account, you must have your signature guaranteed. The Fund does not charge a fee
for this service; however, your bank may charge a fee.
WEALTH BUILDER OPTION
Shareholders can use the Wealth Builder Option to invest in the Classes
through regular liquidations of shares in their accounts in other mutual funds
available from the Delaware Investments family. Shareholders of the Fund may
elect to invest in one or more of the other mutual funds available from the
Delaware Investments family through the 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 other mutual funds available from
the Delaware Investments family, subject to the conditions and limitations set
forth 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 terminate their participation in Wealth Builder at
any time by giving written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
ACCOUNT STATEMENTS
You will receive quarterly statements of your account 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.
Simple IRA participants will receive quarterly conformations of all
such transactions that have taken place in the previous three-month period on
their quarterly participant statement. Participants will still receive immediate
confirmation when they invest in a fund for the first time or when they
establish a new account. Participants may request confirmations of specific
transactions prior to the end of the quarter by calling 800-523-1918.
ASSET PLANNER
To invest in the funds in the Delaware Investments family using the
Asset Planner asset allocation service, you should complete a Asset Planner
Account Registration Form, which is available only from a financial adviser or
investment dealer. Effective September 1, 1997, the Asset Planner Service is
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<PAGE>
only available to financial advisers or investment dealers who have previously
used this service. The Asset Planner service offers a choice of four predesigned
asset allocation strategies (each with a different risk/reward profile) in
predetermined percentages in Delaware Investments funds. With the help of a
financial adviser, you may also 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
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
Prospectus and the prospectus of each fund in the Delaware Investments family.
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 Shares, Class B Shares, Class C Shares
and Consultant Class Shares are available through the Asset Planner service.
Generally, only shares within the same class may be used within the same
Strategy. However, Class A Shares of the Fund and of other funds available from
Delaware Investments may be used in the same Strategy with the Fund's Consultant
Class Shares and consultant class shares that are offered by certain other funds
in the Delaware Investments family.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year. 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 30.
However, effective November 1, 1996, the annual maintenance fee is waived until
further notice. Investors who utilize the Asset Planner for an IRA will continue
to pay an annual IRA fee of $15 per Social Security number. Investors will
receive a customized quarterly Strategy Report summarizing all 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.
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<PAGE>
RETIREMENT PLANS
An investment in the Fund may be suitable for tax-deferred retirement
plans. Delaware Investments offers a full spectrum of retirement plans,
including the 401(k) Defined Contribution Plan, Individual Retirement Account
("IRA") and the new Roth IRA and Education IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs, Roth
IRAs, Education IRAs, Simplified Employee Pension Plans, Salary Reduction
Simplified Employee Pension Plans, and 403(b)(7) and 457 Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange for a list of the instances in
which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases 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, 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. 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, corporations and other eligible forms of organizations. These
plans can be maintained as Section 401(k), profit sharing or money purchase
pension plans. Contributions may be invested only in Class A Shares, Consultant
Class Shares and Class C Shares.
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<PAGE>
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A document is available for an individual who wants to establish an IRA
and make 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; however, participation
may be restricted based on certain income limits.
IRA DISCLOSURES
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that can be
utilized depending on the individual's circumstances. A new Roth IRA and
Education IRA are available in addition to the existing deductible IRA and
non-deductible IRA.
DEDUCTIBLE AND NON-DEDUCTIBLE IRAS
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active participant
in an employer sponsored retirement plan. Even if a taxpayer is an active
participant in an employer sponsored retirement plan, the full $2,000 is still
available if the taxpayer's AGI is below $30,000 ($50,000 for taxpayers filing
joint returns) for years beginning after December 31, 1997. A partial deduction
is allowed for married couples with income between $50,000 and $60,000, and for
single individuals with incomes between $30,000 and $40,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available for
contributions to IRAs by taxpayers whose AGI after IRA deductions exceeds the
maximum income limit established for each year and who are active participants
in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each working
spouse and defer taxes on interest or other earnings from the IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI is
below $150,000. The maximum deductible IRA contribution for a married individual
who is not an active participant, but whose spouse is, is phased out for
combined AGI between $150,000 and $160,000.
CONDUIT (ROLLOVER) IRAS
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or another IRA
may rollover the distribution tax-free to a Conduit IRA. The rollover of the
eligible distribution must be completed by the 60th day after receipt of the
distribution; however, if the rollover is in the form of a direct
trustee-to-trustee transfer without going through the distributee's hand, the
60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and does
not constitute one of the following:
(1) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(2) Substantially equal installment payments for a period certain of 10
or more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
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<PAGE>
(4) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee; and
(5) A distribution of after-tax contributions which is not includable
in income.
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<PAGE>
ROTH IRAS
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act"), the $2,000 annual limit will not be reduced by any contributions to
a deductible or nondeductible IRA for the same year. The maximum contribution
that can be made to a Roth IRA is phased out for single filers with AGI between
$95,000 and $110,000, and for couples filing jointly with AGI between $150,000
and $160,000. Qualified distributions from a Roth IRA would be exempt from
federal taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which a
contribution was made to a Roth IRA and (2) that are (a) made on or after the
date on which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time homebuyer
expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the conversion
is done prior to January 1, 1999, then the income from the conversion can be
included in income ratably over a four-year period beginning with the year of
conversion.
EDUCATION IRAS
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to $500
per year per beneficiary. The $500 annual limit is in addition to the $2,000
annual contribution limit applicable to IRAs and Roth IRAs. Eligible
contributions must be in cash and made prior to the date the beneficiary reaches
age 18. Similar to the Roth IRA, earnings would accumulate tax-free. There is no
requirement that the contributor be related to the beneficiary, and there is no
limit on the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a single
beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and $110,000,
and for couples filing jointly with modified AGI of between $150,000 and
$160,000. Individuals with modified AGI above the phase-out range are not
allowed to make contributions to an Education IRA established on behalf of any
other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher education
expenses incurred by the beneficiary during the year the distribution is made
regardless of whether the beneficiary is enrolled at an eligible educational
institution on a full-time, half-time, or less than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such a
distribution will be includible in gross income of the beneficiary and subject
to an additional 10% penalty tax if the distribution is not for qualified higher
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<PAGE>
educations expenses. Tax-free (and penalty-free) transfers and rollovers of
account balances from one Education IRA benefiting one beneficiary to another
Education IRA benefiting a different beneficiary (as well as redesignations of
the named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or rollover is
made before the time the old beneficiary reaches age 30 and the new beneficiary
reaches age 18.
A company or association may establish a Group IRA or Group Roth 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.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks. In addition, effective January 1, 1998, the new law allows for premature
distribution without a 10% penalty if (i) the amounts are used to pay qualified
higher education expenses (including graduate level courses) of the taxpayer,
the taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer, taxpayer's
spouse or any child or grandchild of the taxpayer or the taxpayer's spouse. A
qualified first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution for
first-time home purchases cannot exceed a lifetime cap of $10,000.
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")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to such
existing plans.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
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<PAGE>
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to 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 Investments family.
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 the Fund. Although investors may use their
own plan, there is available a Delaware Investments 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis. A SIMPLE IRA is available only to plan sponsors with 100 or
fewer employees.
SIMPLE 401(K)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory plan
sponsor contributions, discrimination testing is no longer required. Class B
Shares are not available for purchase by such plans.
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<PAGE>
OFFERING PRICE
The offering price of shares 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, Martin Luther King, Jr.'s Birthday, 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 SEC 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 Fund's 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. In determining the Fund's total net assets, portfolio securities are
valued 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 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.
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REDEMPTION AND EXCHANGE
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. 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.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC. For example,
redemption or exchange requests received in good order after the time the
offering price of shares are determined will be processed on the next business
day. A shareholder submitting a redemption request 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 in the case of Class B Shares and Class C Shares, 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. Redemption proceeds will be
distributed promptly, as described below, but not later than seven days after
receipt of a redemption request.
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 in which you want to invest 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 Shareholder Service Center at 800-523-1918. The Fund
may suspend, terminate, or amend the terms of the exchange privilege upon 60
days' written notice to shareholders.
In addition to redemption of Fund shares, the Distributor, acting as
agent of the Fund, offers to repurchase Fund shares from broker/dealers acting
on behalf of shareholders. The redemption or repurchase price, which may be more
or less than the shareholder's cost, is the net asset value per share next
determined after receipt of the request in good order by the Fund, its agent, or
certain authorized persons, subject to applicable CDSC. This is computed and
effective at the time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Fund and the Distributor end
their business days at 5 p.m., Eastern time. This offer is discretionary and may
be completely withdrawn without further notice by the Distributor.
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Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC), if the
repurchase order was received by the broker/dealer from the shareholder prior to
the time the offering price and net asset value are determined on such day. The
selling dealer has the responsibility of transmitting orders to the Distributor
promptly. Such repurchase is then settled as an ordinary transaction with the
broker/dealer (who may make a charge to the shareholder for this service)
delivering the shares repurchased.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order by the Fund or certain other authorized persons (see Distribution
and Service under Investment Management Agreement); provided, however, that each
commitment to mail or wire redemption proceeds by a certain time, as described
below, is modified by the qualifications described in the next paragraph.
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 or wire the proceeds until
it is reasonably satisfied that the purchase 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.
Dividends will continue to be earned until the redemption is processed. This
potential delay can be avoided by making investments by wiring Federal Funds. 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. Except with respect to the expedited payment by wire,
for which there is currently a $7.50 bank wiring cost, there is no fee charged
for redemptions, but such fees could be charged at any time in the future.
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.
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 SEC has provided for such suspension for the
protection of shareholders, the Fund may postpone payment or suspend the right
of redemption or repurchase. 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.
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Class B Shares are subject to a CDSC of: (i) 5% if shares are redeemed
within one year after purchase; (ii) 4% if shares are redeemed during the second
year of purchase; (iii) 3% if shares are redeemed during the third or fourth
year following purchase; (iv) 2% if shares are redeemed during the fifth year
following purchase; and (v) 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 Purchasing Shares. Except for
the applicable 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.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Investments (in
each case, "New Shares") in a permitted exchange, will not be subject to a CDSC
that might otherwise be due upon redemption of the 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 Part B and any CDSC assessed upon redemption will be charged
by the fund from which the Original Shares were exchanged. In an exchange of
Class B Shares from the Fund, 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.
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 Prospectuses, 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 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 redemptions
described in this paragraph of Class B Shares and Class C Shares described
above.
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 First Union Bank. 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 Class B Shares or Class C Shares of the Fund.
(1) These redemption checks must be made payable in an amount of $500
OR MORE.
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(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 not honor the redemption request unless it is reasonably satisfied of
the collection of the investment check. A 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.
(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's bank may charge a fee.
(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 First Union's rules and regulations
governing similar accounts. This service may be terminated or suspended at any
time by First Union, the Fund or the Fund's 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 canceled.
The Fund will use its best efforts to effect stop-payment instructions, but does
not promise or guarantee that such instructions will be effective.
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 at 800-523-1918.
* * *
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.
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. A signature guarantee can be obtained from a
commercial bank, a trust company or a member of a Securities Transfer
Association Medallion Program ("STAMP"). 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.
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Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares and Consultant Class Shares only if a
shareholder submits a specific request. Certificates are not issued for Class B
Shares or Class C Shares.
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 Delaware Investments, 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 Class A Shares in certificate form, you may
redeem or exchange only 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 which you have your account
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 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 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 after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary-type accounts.
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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. 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. First Union Bank's fee (currently
$7.50) will be deducted from redemption proceeds. If you ask for a check, it
will normally be mailed the next business day after receipt of your redemption
request to your predesignated bank account. There are no separate 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.
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 other funds in Delaware Investments 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 the Fund as described above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
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 Investments family. 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.
MONEYLINE(SM) ON DEMAND
You or your investment dealer may request redemptions of Fund shares by
phone using MoneyLine(SM) On Demand. When you authorize the Fund to accept such
requests from you or your investment dealer, funds will be deposited to (for
share redemptions) your predesignated bank account. Your request will be
processed the same day if you call prior to 4 p.m., Eastern time. There is a $25
minimum and $50,000 maximum limit for MoneyLine(SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account Services form.
If your name and address are not identical to the name and address on your Fund
account, you must have your signature guaranteed. The Fund does not charge a fee
for this service; however, your bank may charge a fee.
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
Investments 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.
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RESTRICTIONS ON TIMED EXCHANGES
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds: (1)
Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware Balanced Fund,
(4) Limited-Term Government Fund, (5) USA Fund, (6) the Fund, (7) Delchester
Fund and (8) Tax-Free Pennsylvania Fund. No other Delaware Investments funds are
available for timed exchanges. Assets redeemed or exchanged out of Timing
Accounts in Delaware Investments 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.
SYSTEMATIC WITHDRAWAL PLANS
Shareholders of Class A Shares, Class B Shares and Class C Shares and
Consultant Class 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.
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 Shares and Class C Shares, below.
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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.
Systematic Withdrawal Plan 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 (SM) Direct
Deposit Service. Your funds will normally be credited to your bank account up to
four business days after the payment date. There are no separate fees for this
redemption method. It may take up to four business days for the transactions to
be completed. You can initiate this service by completing an Account Services
form. If your name and address are not identical to the name and address on your
Fund account, you must have your signature guaranteed. The Fund does not charge
a fee for any this service; however, your bank may charge a fee. This service is
not available for retirement plans.
Shareholders should consult with their financial advisers to determine
whether a Systematic Withdrawal Plan would be suitable for them.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
The CDSC is waived on certain redemptions of Class B Shares 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, SIMPLE IRA,
SEP/IRA or 403(b)(7) or 457 Deferred Compensation Plans; (iii) periodic
distributions from an IRA, SIMPLE IRA, SAR/SEP, SEP/IRA, 403(b)(7) or 457
Deferred Compensation Plans due to death, disability and attainment of age 59
1/2, and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code of 1986, as amended (the "Code"); 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 Code) of all registered owners occurring after the
purchase of the shares being redeemed.
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The CDSC on 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, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan, or 401(k)
Defined Contribution Plan; (iii) periodic distributions from a 403(b)(7) or 457
Deferred Compensation Plan upon attainment of age 59 1/2, Profit Sharing Plan,
Money Purchase Pension Plan, 401(k) Defined Contribution Plans upon attainment
of age 70 1/2, and IRA distributions qualifying under Section 72(t) of the Code;
(iv) distributions from a 403(b)(7) or 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) or 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) periodic distributions from an IRA or SIMPLE
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 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 Code) of all registered owners occurring after the
purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B Shares 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.
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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 Class of Fund 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 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 Class of shares of the Fund 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 under Purchasing 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. 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.
Payment by check of cash dividends will ordinarily be mailed within three
business days after the payable date. 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.
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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.
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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
choose the MoneyLine(SM) Direct Deposit Service and have such payments
transferred from your Fund account to your predesignated bank account. This
service is not available for certain retirement plans. It may take up to four
business days for the transactions to be completed. You can initiate this
service by completing an Account Services form. If your name and address are not
identical to the name and address on your Fund account, you must have your
signature guaranteed. The Fund does not charge a fee for this service; however,
your bank may charge a fee.
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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.
Under the 1997 Act, as revised by the 1998 Act and the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, the Fund is required
to track its sales of portfolio securities and to report any capital gain
distributions to you according to the following categories of holding periods:
"MID-TERM CAPITAL GAINS" OR "28 PERCENT RATE GAIN": securities sold by
the Fund after July 28, 1997 that were held more than one year but not
more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%. This category of gains applied only
to gains and distributions in 1997.
"1997 ACT LONG-TERM CAPITAL GAINS" OR "20 PERCENT RATE GAIN":
securities sold between May 7, 1997 and July 28, 1997 that were held
for more than 12 months, and securities sold by the Fund after July 28,
1997 that were held for more than 18 months. As revised by the 1998
Act, this rate applies to securities held for more than 12 months and
sold in tax years beginning after December 1, 1997. These gains will be
taxable to individual investors at a maximum rate of 20% for investors
in the 28% or higher federal income tax brackets, and at a maximum rate
of 10% for investors in the 15% federal income tax bracket. The Omnibus
Consolidated and Emergency Supplemental Appropriations Act passed in
October of 1998 included technical corrections to the 1998 Act. The
effect of this correction is that essentially all capital gain
distributions paid to shareholders during 1998 will be taxed at a
maximum rate of 20%.
"QUALIFIED 5-YEAR GAINS": For individuals in the 15% bracket, qualified
five-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individual who are subject
to tax at higher rate brackets, qualified five-year gains are net gains
on securities which are purchased after December 31, 2000 and are held
for more than five years. Taxpayers subject to tax at a higher rate
brackets may also make an election for shares held on January 1, 2001
to recognize gain on their shares in order to qualify such shares as
qualified five-year property. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the five-year
holding period.
-53-
<PAGE>
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 Investments family since 1938. On March 31, 1999, the Manager and its
affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than $45 billion in assets in
the various institutional or separately managed (approximately $26,135,090,000)
and investment company (approximately $18,850,090,000) accounts.
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 Fund's Investment Management Agreement is dated April 1, 1999 and
was approved by shareholders on March 17, 1999. 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 Board of
Directors or by vote of a majority of the outstanding voting securities of the
Fund, and only if the terms of 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 0.45% on the first $500 million of average daily net assets
of the Fund, 0.40% on the next $500 million, 0.35% on the next $1,500 million,
0.30% on assets in excess of $2.5 billion. 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.
On March 31, 1999, the total net assets of the Fund were $662,022,859.
Investment management fees paid by the Fund were $2,898,736 for the fiscal year
ended March 31, 1997, $2,904,636 for the fiscal year ended March 31, 1998 and
$3,028,442 for the fiscal year ended March 31, 1999.
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,
accounting services 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
-54-
<PAGE>
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P., located at 1818 Market
Street, Philadelphia, PA 19103, serves as the national distributor of Fund
shares 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. Delaware Distributors, L.P. is an indirect, wholly owned
subsidiary 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 also provides accounting services to the Fund pursuant to the
terms of a separate Fund Accounting Agreement. The Transfer Agent is also an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such brokers
are authorized to designate other intermediaries to accept purchase and
redemption orders on the behalf of the Fund. For purposes of pricing, the Fund
will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Investors may be charged a fee when effecting transactions through a
broker or agent.
-55-
<PAGE>
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 Investments family. On April 30, 1999,
the Fund's officers and directors owned less than 1% of the outstanding shares
of each Class.
As of April 30, 1999, the Fund believes the following accounts held 5%
or more of record of a Class. The Fund has no knowledge of beneficial ownership.
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------- ----------
<S> <C> <C> <C>
Class C Shares Prudential Securities Inc 1,246,335.280 13.41%
For The Benefit of
American National Bank and Trust Co.
As TTEE For Lincoln Group LP
Partnership under TR #36307007
DTD 4-18-96
Northbrook, IL 60062
RS DMTC 401(k) Plan 705,887.550 7.59%
Whitestone Logging Inc.
Attn: Retirement Department
1818 Market St.
Philadelphia, PA 19103-3638
Prudential Securities Inc 609,030.090 6.55%
For The Benefit of
Mr. Sherwin B. Kite TTEE
Sherwin B. Kite Defined Benefit
Pension Trust dated 1/1/85
3545 Lake ST. Suite 200
Wilmette, IL 60091-1058
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Consultant Class Shares Citicorp USA, Inc. 2,480,866.360 7.08%
Cust. Marlboro Equity
Partnership LP
c/o Citicorp North America Inc.
One Sansome St. 24th Floor
San Francisco, CA 94104-4448
Enele Co. for the benefit of 1,840,723.530 5.25%
Tharco
1211 SW 5th Avenue, Suite 1900
Portland, OR 97204-3719
</TABLE>
-57-
<PAGE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Management Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), 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 Retirement
Financial 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. DMH and the Manager are now indirect, 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.
Certain officers and directors of the Fund hold identical positions in
each of the other funds in the Delaware Investments family. 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.
-58-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
*JEFFREY J. NICK (45) Chairman of the Board, President, Chief Executive Officer and Director
and/or Trustee of the Fund and each of the other 33 investment
companies in the Delaware Investments family.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National
UK plc and from 1989 to 1992, he was Senior Vice President responsible
for corporate planning and development for Lincoln National
Corporation. From 1996 to 1999, Mr. Nick served in various other
executive capacities within Delaware Investments.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
*Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.
-59-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
*WAYNE A. STORK (61) Director and/or Trustee of the Fund and each of the other 33 investment
companies in the Delaware Investments family.
Chairman and Director of Delaware Management Holdings, Inc.
Prior to January 1, 1999, Mr. Stork was Chairman and Director and/or
Trustee of Equity Funds II, Inc. and each of the other 33 investment
companies in the Delaware Investments family and Delaware Capital
Management, Inc.; Chairman, President, Chief Executive Officer and
Director of DMH Corp., Delaware Distributors, Inc. and Founders
Holdings, Inc.; Chairman, President, Chief Executive Officer, Chief
Investment Officer and Director/Trustee of Delaware Management Company,
Inc. and Delaware Management Business Trust; Chairman, President, Chief
Executive Officer and Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Chairman,
Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust);
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd., Delaware International Holdings Ltd. and
Delaware Management Holdings, Inc.; President and Chief Executive
Officer of Delvoy, Inc.; Chairman of Delaware Distributors, L.P.;
Director of Delaware Service Company, Inc. and Retirement Financial
Services, Inc.
In addition, during the five years prior to January 1, 1999, Mr. Stork
has served in various executive capacities at different times within
Delaware Investments.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
*Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.
-60-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
RICHARD G. UNRUH, JR. (59) Executive Vice President and Chief Investment Officer, Equities of the Fund,
each of the other 33 investment companies in the Delaware Investments family
and Delaware Management Company (a series of Delaware Management Business
Trust)
Executive Vice President of Delaware Management Holdings, Inc. and Delaware
Capital Management, Inc. and Delaware Management Business Trust
Executive Vice President/Chief Investment Officer, Equities and Director of
Delaware Management Company, Inc.
Chief Executive Officer/Chief Investment Officer, Equities of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within Delaware Investments.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
DAVID K. DOWNES (59) Executive Vice President, Chief Operating Officer and Chief Financial
Officer of the Fund and each of the other 33 investment companies in the
Delaware Investments family, Delaware Management Holdings, Inc., Founders
CBO Corporation, Delaware Capital Management, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors, L.P.
Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of Delaware Management Company, Inc., DMH Corp, Delaware
Distributors, Inc., Founders Holdings, Inc. and Delvoy, Inc.; Executive Vice
President, Chief Financial Officer, Chief Administrative Officer and Trustee
of Delaware Management Business Trust
President, Chief Executive Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Retirement Financial
Services, Inc.
Chairman and Director of Delaware Management Trust Company
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Downes has served in various executive
capacities at different times within Delaware Investments.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
RICHARD J. FLANNERY (41) Executive Vice President of the Fund and each of the other 33
investment companies in the Delaware Investments family
Executive Vice President and General Counsel of Delaware Management
Holdings, Inc., Delaware Distributors, L.P., Delaware Management Trust
Company, Delaware Capital Management, Inc., Delaware Service Company,
Inc., Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Founders CBO Corporation
Executive Vice President/General Counsel and Director of DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors, Inc.,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delvoy,
Inc. and Retirement Financial Services, Inc.
Director of Delaware International Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
During the past five years, Mr. Flannery has served in various
executive capacities at different times within Delaware Investments
organization.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-62-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
WALTER P. BABICH (71) Director and/or Trustee of the Fund and each of the other 33 investment
companies in the Delaware Investments family
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.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
JOHN H. DURHAM (61) Director and/or Trustee of the Fund and 18 other investment companies
in the Delaware Investments family.
Partner, Complete Care Services.
Mr. Durham served as Chairman of the Board of each fund in the Delaware
Investments family from 1986 to 1991; President of each fund from 1977
to 1990; and Chief Executive Officer of each fund from 1984 to 1990.
Prior to 1992, with respect to Delaware Management Holdings, Inc.,
Delaware Management Company, Delaware Distributors, Inc. and Delaware
Service Company, Inc., Mr. Durham served as a director and in various
executive capacities at different times.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
ANTHONY D. KNERR (60) Director and/or Trustee of the Fund and each of the 33 other investment
companies in the Delaware Investments family
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.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-63-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
ANN R. LEVEN (58) Director and/or Trustee of the Fund and each of the other 33 other
investment companies in the Delaware Investments family
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.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
THOMAS F. MADISON (62) Director and/or Trustee of the Fund and each of the other 33 investment
companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996. From February to September 1994, Mr.
Madison served as Vice Chairman--Office of the CEO of The Minnesota
Mutual Life Insurance Company and from 1988 to 1993, he was President
of U.S. WEST Communications--Markets.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
CHARLES E. PECK (73) Director and/or Trustee of the Fund and each of the other 33 investment
companies in the Delaware Investments family
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.
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
JAN L. YEOMANS (50) Director and/or Trustee of the Fund and 25 other investment companies
in the Delaware Investments family
Building 220-13W-37, St. Paul, MN 55144
Vice President and Treasurer, 3M Corporation. From 1987-1994, Ms.
Yeomans was Director of Benefit Funds and Financial Markets for the 3M
Corporation; Manager of Benefit Fund Investments for the 3M
Corporation, 1985-1987; Manager of Pension Funds for the 3M
Corporation, 1983-1985; Consultant -- Investment Technology Group of
Chase Econometrics, 1982-1983; Consultant for Data Resources,
1980-1982; Programmer for the Federal Reserve Bank of Chicago,
1970-1974.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-64-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
GEORGE M. Senior Vice President, Secretary and General Counsel of the Fund and
CHAMBERLAIN, JR. (51) each of the other 33 investment companies in the Delaware Investments
family
Senior Vice President and Secretary of Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust), Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Retirement Financial Services, Inc.,
Delaware Capital Management, Inc., Delvoy, Inc. and Delaware Management
Business Trust
Senior Vice President, Secretary and Director of Founders Holdings, Inc.
Executive Vice President, Secretary and Director of Delaware Management
Trust Company
Senior Vice President of Delaware International Holdings Ltd.
During the past five years, Mr. Chamberlain has served in various
executive capacities at different times within Delaware Investments.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
JOSEPH H. HASTINGS (49) Senior Vice President/Corporate Controller of the Fund and each of the
other 33 investment companies in the Delaware Investments family and
Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Capital Management,
Inc., Delaware International Holdings Ltd., Delvoy, Inc. and Delaware
Management Business Trust.
Chief Financial Officer/Treasurer of Retirement Financial Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
During the past five years, Mr. Hastings has served in various
executive capacities at different times within the Delaware
organization.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-65-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
MICHAEL P. BISHOF (36) Senior Vice President and Treasurer of the Fund and each of the other
33 investment companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust) and Delaware Service Company, Inc.
Senior Vice President and Treasurer/Manager, Investment Accounting of
Delaware Distributors, L.P. and Delaware Investment Advisers (a series
of Delaware Management Business Trust)
Senior Vice President and Assistant Treasurer of Founders CBO
Corporation
Senior Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Before joining Delaware Investments 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.
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
CYNTHIA I. ISOM (44) Vice President/Portfolio Manager of the Fund, 33 other investment
companies in the Delaware Investments family, Delaware Management
Company, Inc. and Delaware Management Company (a series of Delaware
Management Business Trust)
During the past five years, Ms. Isom has served as a trader for money
markets, high grade corporates and treasury securities.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-66-
<PAGE>
The following is a compensation table listing for each director/trustee
entitled to receive compensation, the aggregate compensation received from the
Fund and the total compensation received from all investment companies in the
Delaware Investments family for which he or she serves as a director or trustee
for the fiscal year ended March 31, 1999 and an estimate of annual benefits to
be received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of March 31, 1999. Only the independent directors/trustees
of the Fund receive compensation from the Fund.
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
RETIREMENT ESTIMATED FROM THE
BENEFITS ANNUAL INVESTMENT
AGGREGATE ACCRUED AS BENEFITS COMPANIES IN
COMPENSATION PART OF FUND UPON DELAWARE
NAME FROM THE FUND EXPENSES RETIREMENT(1) INVESTMENTS(2)
<S> <C> <C> <C>
Ann R. Leven $2,224 None $38,500 $66,378
Walter P. Babich $2,176 None $38,500 $64,961
Anthony D. Knerr $2,189 None $38,500 $65,378
Charles E. Peck $2,015 None $38,500 $60,377
Thomas F. Madison $2,159 None $38,500 $64,545
John H. Durham (3) $1,927 None $31,180 $50,076
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee 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 investment company in the Delaware Investments
family for which he or she serves as a director or trustee for a period
equal to the lesser of the number of years that such person served as a
director or trustee 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/trustees of each investment
company at the time of such person's retirement. If an eligible
director/trustee retired as of March 31, 1999, he or she would be entitled
to annual payments totaling the amount noted above, in the aggregate, from
all of the investment companies in the Delaware Investments family for
which he or she served as director or trustee, based on the number of
investment companies in the Delaware Investments family as of that date.
(2) Each independent director/trustee (other than John H. Durham) currently
receives a total annual retainer fee of $38,000 for serving as a director
or trustee for all 34 investment companies in Delaware Investments, plus
$3,145 for each Board Meeting attended. John H. Durham currently receives
a total annual retainer fee of $32,180 for serving as a director or
trustee for 25 investment companies in Delaware Investments, plus $1,810
for each Board Meeting attended. Ann R. Leven, Thomas F. Madison, and
Anthony D. Knerr serve on the Fund's audit committee; Ms. Leven is the
chairperson. Members of the audit committee currently receive additional
annual compensation of $5,000 from all investment companies, in the
aggregate, with the exception of the chairperson, who receives $6,000.
(3) John H. Durham joined the Board of Directors of the Fund and 24 other
investment companies in Delaware Investments on April 16, 1998.
-77-
<PAGE>
GENERAL INFORMATION
The Fund is an open-end management investment company. The Fund's
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act") and Rule 2a-7 under the 1940 Act. The Fund was created in
1977, organized as a Pennsylvania business trust in 1983 and reorganized as a
Maryland corporation in 1990.
The Manager is the investment manager of the Fund. The Manager also
provides investment management services to certain of the other funds available
from the Delaware Investments family. 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.
The Manager and its affiliate Delaware International Advisers Ltd. also
manage the investment options for Delaware-Lincoln Choice Plus and Delaware
Medallion (SM) III Variable Annuities. Choice Plus is issued and distributed by
Lincoln National Life Insurance Company. choice Plus offers a variety of
different investment styles managed by leading money managers. Medallion is
issued by Allmerica Financial Life Insurance and Annuity Company (First
Allmerica Financial Life Insurance Company in New York and Hawaii). Delaware
Medallion offers various investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds. Each
investment series available through Choice Plus and Medallion utilizes an
investment strategy and discipline the same as or similar to one of the Delaware
Investments mutual funds available outside the annuity. See Delaware Group
Premium Fund, Inc., in Appendix B.
Access persons and advisory persons of the funds in the Delaware
Investments family, 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 Investments family.
For the fiscal years ended March 31, 1997, 1998 and 1999, the Distributor
received CDSC payments in the amount of $42,420, $61,531 and $86,668.28,
respectively, with respect to Class B Shares.
For the fiscal years ended March 31, 1997, 1998 and 1999, the Distributor
received CDSC payments in the amount of $484, $1,187 and $5,426.29,
respectively, with respect to Class C Shares.
-78-
<PAGE>
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 Investments family. 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 Transfer
Agent also provides accounting services to the Fund. Those services include
performing all functions related to calculating the Fund's net asset value and
providing all financial reporting services, regulatory compliance testing and
the related accounting services. For its services, the Transfer Agent is paid a
fee based on total assets of all funds in the Delaware Investments family for
which it provides such accounting services. Such fee is equal to 0.25%
multiplied by the total amount of assets in the complex for which the Transfer
Agent furnishes accounting services, where such aggregate complex assets are $10
billion or less, and 0.20% of assets if such aggregate complex assets exceed $10
billion. The fees are charged to each fund, including the Fund, on an aggregate
pro-rata basis. The asset-based fee payable to the Transfer Agent is subject to
a minimum fee calculated by determining the total number of investment
portfolios and associated classes.
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.
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn, NY
11245 is custodian of the Fund's securities and cash. As custodian for the Fund,
Chase maintains a separate account or accounts for the Fund; receives, holds and
releases portfolio securities on account of the Fund; receives and disburses
money on behalf of the Fund; and collects and receives income and other payments
and distributions on account of the Fund's portfolio securities.
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 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 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 Delaware Cash Reserve B Class) and Cash
Reserve C Class (which is known as 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.
Shares have no preemptive rights, are fully transferable and, when issued,
are fully paid and nonassessable.
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<PAGE>
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.
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 SEC.
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<PAGE>
APPENDIX A--DESCRIPTION OF RATINGS
BONDS
MOODY'S INVESTORS SERVICE, INC.
AAA Highest quality; smallest degree of investment risk.
AA High quality; together with Aaa bonds, they compose the high-grade bond
group.
STANDARD & POOR'S RATINGS GROUP
AAA Highest rating; extremely strong capacity to pay principal and
interest.
AA High quality; very strong capacity to pay principal and interest.
FITCH IBCA, INC.
AAA Highest quality; exceptionally strong ability to pay principal and
interest.
AA Very high quality; very strong ability to pay principal and interest.
COMMERCIAL PAPER
MOODY'S INVESTORS SERVICE, INC. STANDARD & POOR'S RATINGS GROUP
P-1 Superior quality A-1+ Extremely strong quality
P-2 Strong quality A-1 Strong quality
A-2 Satisfactory quality
DUFF AND PHELPS, INC. FITCH IBCA, INC.
DUFF 1-PLUS Highest quality F-1+ Exceptionally strong quality.
DUFF 1 Very high quality F-1 Very strong quality
DUFF 1-MINUS High quality F-2 Good credit quality
DUFF 2 Good quality.
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<PAGE>
APPENDIX B--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE INVESTMENTS
FAMILY
Following is a summary of the investment objectives of the other funds
in the Delaware Investments family:
DELAWARE BALANCED 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.
SMALL CAP 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 EQUITY 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. GROWTH AND INCOME FUND
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.
BLUE CHIP FUND seeks to achieve long-term capital appreciation. Current income
is a secondary objective. It seeks to achieve these objectives by investing
primarily in equity securities and any securities that are convertible into
equity securities. SOCIAL AWARENESS FUND seeks to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of medium- to large-sized companies expected to grow over time
that meet the Fund's "Social Criteria" strategy.
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. STRATEGIC INCOME FUND seeks to
provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities. HIGH-YIELD OPPORTUNITIES FUND seeks to provide
investors with total return and, as a secondary objective, high current income.
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.
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<PAGE>
REIT FUND seeks to achieve maximum long-term total return with capital
appreciation as a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry.
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 NEW JERSEY FUND seeks a high level of current interest income
exempt from federal income tax and New Jersey state and local taxes, consistent
with preservation of capital. TAX-FREE OHIO FUND seeks a high level of current
interest income exempt from federal income tax and Ohio state and local taxes,
consistent with preservation of capital. TAX-FREE PENNSYLVANIA FUND seeks a high
level of current interest income exempt from federal income tax and Pennsylvania
state and local taxes, consistent with the preservation of capital.
FOUNDATION FUNDS are "fund of funds" which invest in other funds in the
Delaware Investments family (referred to as "Underlying Funds"). FOUNDATION
FUNDS INCOME PORTFOLIO seeks a combination of current income and preservation of
capital with capital appreciation by investing in primarily a mix of fixed
income and domestic equity securities, including fixed income and domestic
equity Underlying Funds. FOUNDATION FUNDS BALANCED PORTFOLIO seeks capital
appreciation with current income as a secondary objective by investing primarily
in domestic equity and fixed income securities, including domestic equity and
fixed income Underlying Funds. FOUNDATION FUNDS GROWTH PORTFOLIO seeks long term
capital growth by investing primarily in equity securities, including equity
Underlying Funds, and, to a lesser extent, in fixed income securities, including
fixed-income Underlying Funds.
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 EQUITY 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.
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. OVERSEAS EQUITY
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.
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<PAGE>
DELAWARE GROUP PREMIUM FUND, INC. offers various funds available
exclusively as funding vehicles for certain insurance company separate accounts.
GROWTH AND 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. DELCHESTER 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. CASH RESERVE SERIES seeks the highest level of income consistent
with preservation of capital and liquidity through investments in short-term
money market instruments. DELCAP SERIES seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities exhibiting the
potential for significant growth. DELAWARE BALANCED 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. SMALL CAP VALUE
SERIES seeks capital appreciation by investing primarily in small-cap common
stocks whose market values appear 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. TREND 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. STRATEGIC INCOME SERIES seeks
high current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities.
DEVON SERIES seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks that
the investment manager believes have the potential for above-average dividend
increases over time. EMERGING MARKETS SERIES seeks to achieve long-term capital
appreciation by investing primarily in equity securities of issuers located or
operating in emerging countries. CONVERTIBLE SECURITIES SERIES seeks a high
level of total return on its assets through a combination of capital
appreciation and current income by investing primarily in convertible
securities. SOCIAL AWARENESS SERIES seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy. REIT SERIES seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in securities
of companies primarily engaged in the real estate industry.
AGGRESSIVE GROWTH SERIES seeks long-term capital appreciation. The Series
attempts to achieve its investment objective by investing primarily in equity
securities of companies which the manager believes have the potential for high
earnings growth.
DELAWARE-VOYAGEUR US GOVERNMENT SECURITIES FUND seeks to provide a high
level of current income consistent with the prudent investment risk by investing
in U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.
DELAWARE-VOYAGEUR TAX-FREE ARIZONA INSURED FUND seeks to provide a high
level of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. DELAWARE-VOYAGEUR
MINNESOTA INSURED FUND seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax, consistent with
the preservation of capital.
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<PAGE>
DELAWARE-VOYAGEUR TAX-FREE MINNESOTA INTERMEDIATE FUND seeks to provide a
high level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to ten
years.
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA INSURED FUND seeks to provide a high
level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
DELAWARE-VOYAGEUR TAX-FREE FLORIDA INSURED FUND seeks to provide a high level of
current income exempt from federal income tax, consistent with the preservation
of capital. The Fund will seek to select investments that will enable its shares
to be exempt from the Florida intangible personal property tax.
DELAWARE-VOYAGEUR TAX-FREE FLORIDA FUND seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. The Fund will seek to select investments that will enable its shares to
be exempt from the Florida intangible personal property tax. DELAWARE-VOYAGEUR
TAX-FREE KANSAS FUND seeks to provide a high level of current income exempt from
federal income tax, the Kansas personal income tax and the Kansas intangible
personal property tax, consistent with the preservation of capital.
DELAWARE-VOYAGEUR TAX-FREE MISSOURI INSURED FUND seeks to provide a high level
of current income exempt from federal income tax and the Missouri personal
income tax, consistent with the preservation of capital. DELAWARE-VOYAGEUR
TAX-FREE NEW MEXICO FUND seeks to provide a high level of current income exempt
from federal income tax and the New Mexico personal income tax, consistent with
the preservation of capital. DELAWARE-VOYAGEUR TAX-FREE OREGON INSURED FUND
seeks to provide a high level of current income exempt from federal income tax
and the Oregon personal income tax, consistent with the preservation of capital.
DELAWARE-VOYAGEUR TAX-FREE UTAH FUND seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. DELAWARE-VOYAGEUR TAX-FREE WASHINGTON INSURED FUND seeks to provide a
high level of current income exempt from federal income tax, consistent with the
preservation of capital.
DELAWARE-VOYAGEUR TAX-FREE ARIZONA FUND seeks to provide a high level of
current income exempt from federal income tax and the Arizona personal income
tax, consistent with the preservation of capital. DELAWARE-VOYAGEUR TAX-FREE
CALIFORNIA FUND seeks to provide a high level of current income exempt from
federal income tax and the California personal income tax, consistent with the
preservation of capital. DELAWARE-VOYAGEUR TAX-FREE IOWA Fund seeks to provide a
high level of current income exempt from federal income tax and the Iowa
personal income tax, consistent with the preservation of capital.
DELAWARE-VOYAGEUR TAX-FREE IDAHO FUND seeks to provide a high level of current
income exempt from federal income tax and the Idaho personal income tax,
consistent with the preservation of capital. DELAWARE-VOYAGEUR MINNESOTA HIGH
YIELD MUNICIPAL BOND FUND seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax primarily through
investment in medium and lower grade municipal obligations. NATIONAL HIGH YIELD
MUNICIPAL FUND seeks to provide a high level of income exempt from federal
income tax, primarily through investment in medium and lower grade municipal
obligations. DELAWARE-VOYAGEUR TAX-FREE NEW YORK FUND seeks to provide a high
level of current income exempt from federal income tax and the personal income
tax of the state of New York and the city of New York, consistent with the
preservation of capital. DELAWARE-VOYAGEUR TAX-FREE WISCONSIN FUND seeks to
provide a high level of current income exempt from federal income tax and the
Wisconsin personal income tax, consistent with the preservation of capital.
DELAWARE-VOYAGEUR TAX-FREE COLORADO FUND seeks to provide a high level of
current income exempt from federal income tax and the Colorado personal income
tax, consistent with the preservation of capital.
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<PAGE>
AGGRESSIVE GROWTH FUND seeks long-term capital appreciation, which the
Fund attempts to achieve by investing primarily in equity securities believed to
have the potential for high earnings growth. Although the Fund, in seeking its
objective, may receive current income from dividends and interest, income is
only an incidental consideration in the selection of the Fund's investments.
GROWTH STOCK FUND has an objective of long-term capital appreciation. The Fund
seeks to achieve its objective from equity securities diversified among
individual companies and industries. TAX-EFFICIENT EQUITY FUND seeks to obtain
for taxable investors a high total return on an after-tax basis. The Fund will
attempt to achieve this objective by seeking to provide a high long-term
after-tax total return through managing its portfolio in a manner that will
defer the realization of accrued capital gains and minimize dividend income.
DELAWARE-VOYAGEUR TAX-FREE MINNESOTA FUND seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax, consistent with the preservation of capital. DELAWARE-VOYAGEUR TAX-FREE
NORTH DAKOTA FUND seeks to provide a high level of current income exempt from
federal income tax and the North Dakota personal income tax, consistent with the
preservation of capital.
For more complete information about any of the funds in the Delaware
Investments family, 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).
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<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Delaware Group
Cash Reserve, Inc. and, in its capacity as such, audits the annual financial
statements contained in the Fund's Annual Report. The Fund's Statement of Net
Assets, Statement of Operations, Statements of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, as well as the report of Ernst &
Young LLP, independent auditors, for the fiscal year ended March 31, 1999, are
included in the Fund's Annual Report to shareholders. The financial statements
and financial highlights, 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.
<PAGE>
(DCR-SAI/PART B)
Delaware Investments includes funds with a wide range of investment
objectives. Stock funds, income funds, national and state-specific tax-exempt
funds, money market funds, global and international funds and closed-end 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 Investments at 800-523-1918.
INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
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
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
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, 1999
- -------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
DELAWARE INVESTMENTS
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
PART C
------
Other Information
-----------------
Item 23. Exhibits
(a) Articles of Incorporation.
(1) 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.
(2) Executed Articles Supplementary (November 28, 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 42 filed May 29, 1998.
(b) By-Laws. By-Laws, as amended through May 30, 1995,
incorporated by reference to Post-Effective Amendment No. 38
filed May 30, 1995.
(c) Copies of All Instruments Defining the Rights of Holders.
(1) Articles of Incorporation and Articles Supplementary.
(i) 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.
(ii) Executed Articles Supplementary (November
28, 1995) incorporated into this filing by
reference to Post-Effective Amendment No. 42
filed May 29, 1998.
(2) 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.
(d) Investment Management Agreement. Form of Investment
Management Agreement (April 1999) between Delaware Management
Company, Inc. and the Registrant attached as Exhibit.
(e) (1) Distribution Agreement.
(i) Distribution Agreement between Delaware
Distributors, L.P. and the Registrant dated
April 3, 1995 attached as Exhibit.
<PAGE>
PART C - Other Information
(Continued)
(ii) Amendment No. 1 to Distribution Agreement
between Delaware Distributors, L.P. and the
Registrant dated November 29, 1995 attached
as Exhibit.
(2) 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.
(3) 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.
(4) Mutual Fund Agreement. Mutual Fund Agreement for the
Delaware Group of Funds (as amended November 1995)
(Module) incorporated into this filing by reference
to Post-Effective Amendment No. 40 filed May 30,
1996.
(f) Bonus, Profit Sharing, Pension Contracts.
(1) 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.
(2) Amendment to Profit Sharing Plan (December 21, 1995)
(Module) incorporated into this filing by reference
to Post-Effective Amendment No. 40 filed May 30,
1996.
(g) Custodian Agreements.
(1) Custodian Agreement with The Chase Manhattan Bank
included as a module and attached as Exhibit.
(2) Amendment to Custodian Agreement attached as Exhibit.
(3) Form of Letter adding Delaware Group Cash Reserve,
Inc. to the Custodian Agreement attached as Exhibit.
(h) Other Material Contracts.
(1) Shareholders Services Agreement between Delaware
Service Company and the Registrant on behalf of the
Fund incorporated into this filing by reference to
Post-Effective Amendment No. 33 filed May 30, 1991.
(2) Executed Fund Accounting Agreement (August 19, 1996)
between Delaware Service Company, Inc. and the
Registrant on behalf of each Fund incorporated into
this filing by reference to Post-Effective Amendment
No. 41 filed May 29, 1997, Post-Effective Amendment
No. 42 filed May 29, 1998 and Post-Effective
Amendment No. 43 filed March 26, 1999.
<PAGE>
PART C - Other Information
(Continued)
(i) Opinion of Counsel. Attached as Exhibit.
(j) Consent of Auditors. Attached as Exhibit.
(k) Inapplicable.
(l) Initial Capital. Incorporated into this filing by reference to
Post-Effective Amendment No. 15 filed May 16, 1983.
(m)** Plans under Rule 12b-1.
(1) Plan under Rule 12b-1 for Class B (November 29, 1995)
attached as Exhibit.
(2) Plan under Rule 12b-1 for Class C (November 29, 1995)
attached as Exhibit.
(3) Plan under Rule 12b-1 for Consultant Class (November
29, 1995) attached as Exhibit.
** Relates to Registrant's Delaware Cash Reserve B Class, Delaware Cash
Reserve C Class and Delaware Cash Reserve Consultant Class only.
<PAGE>
PART C - Other Information
(Continued)
(n) Financial Data Schedules. Attached as Exhibit.
(o) Inapplicable.
(p) Other: Directors' Power of Attorney.
(1) Incorporated into this filing by reference to
Post-Effective Amendment No. 42 filed May 29, 1998.
(2) Power of Attorney for Jan L. Yeomans attached as
Exhibit.
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
Item 25. 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 26. Business and Other Connections of Investment Adviser.
(a) Delaware Management Company, a series of Delaware Management Business
Trust, (the "Manager") serves as investment manager to the Registrant and also
serves as investment manager or sub-adviser to certain of the other funds in the
Delaware Investments family (Delaware Group Equity Funds I, Inc., Delaware Group
Equity Funds II, Inc., Delaware Group Equity Funds III, Inc., Delaware Group
Equity Funds IV, Inc., Delaware Group Equity Funds V, Inc., Delaware Group
Government Fund, Inc., Delaware Group Income Funds, Inc., Delaware Group
Limited-Term Government Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware
Group Tax-Free Fund, Inc., Delaware Group State Tax-Free Income Trust, Delaware
Group Tax-Free Money Fund, Inc., Delaware Group Premium Fund, Inc., Delaware
Group Global & International Funds, Inc., Delaware Pooled Trust, Inc., Delaware
Group Adviser Funds, Inc., Delaware Group Dividend and Income Fund, Inc.,
Delaware Group Global Dividend and Income Fund, Inc., Delaware Group Foundation
Funds, Voyageur Intermediate Tax-Free Funds, Inc., Voyageur Tax-Free Funds,
Inc., Voyageur Funds, Inc., Voyageur Insured Funds, Inc., Voyageur Investment
Trust, Voyageur Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur
Mutual Funds II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Arizona
Municipal Income Fund, Inc., Voyageur Colorado Insured Municipal Income Fund,
Inc., Voyageur Florida Insured Municipal Income Fund, Voyageur Minnesota
Municipal Fund, Inc., Voyageur Minnesota Municipal Fund II, Inc. and Voyageur
Minnesota Municipal Fund III, Inc.). In addition, certain officers of the
Manager also serve as directors/trustees of the other funds in the Delaware
Investments family, and certain officers are also officers of these other funds.
A company indirectly owned by the Manager's indirect parent company acts as
principal underwriter to the mutual funds in the Delaware Investments family
(see Item 29 below) and another such company acts as the shareholder services,
dividend disbursing, accounting servicing and transfer agent for all of the
mutual funds in the Delaware Investments family.
<PAGE>
PART C - Other Information
(Continued)
The following persons serving as officers of the Manager have held the
following positions during the past two years:
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Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
David K. Downes President of Delaware Management Company (a series of Delaware
Management Business Trust); Executive Vice President, Chief
Operating Officer and Chief Financial Officer of Delaware
Management Holdings, Inc.; Executive Vice President, Chief
Operating Officer, Chief Financial Officer and Director of DMH
Corp.; Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of Delvoy, Inc.;
President and Director of Delaware Management Company, Inc.;
Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Trustee of Delaware Management Business
Trust; Executive Vice President, Chief Operating Officer and
Chief Financial Officer of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Chairman,
President, Chief Executive Officer and Director of Delaware
Service Company, Inc.; President, Chief Executive Officer and
Director of Delaware Capital Management, Inc.; Chairman and
Director of Retirement Financial Services, Inc.; Chairman and
Director of Delaware Management Trust Company; Executive Vice
President, Chief Operating Officer, Chief Financial Officer
and Director of Delaware Distributors, Inc.; Executive Vice
President, Chief Operating Officer and Chief Financial Officer
of Delaware Distributors, L.P.; President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Director of Delaware
International Advisers Ltd.; Executive Vice President, Chief
Operating Officer, Chief Financial Officer and Director of
Founders Holdings, Inc.; Executive Vice President, Chief
Operating Officer and Chief Financial Officer of Founders CBO
Corporation; Executive Vice President, Chief Operating Officer
and Chief Financial Officer of each fund in the Delaware
Investments family.
Chief Executive Officer and Director of Forewarn, Inc. since
1993, 8 Clayton Place, Newtown Square, PA
- --------------------------------------------------------------------------------
Richard J. Executive Vice President and General Counsel of Delaware
Flannery Management Company (a series of Delaware Management Business
Trust); Executive Vice President and General Counsel of
Delaware Management Holdings, Inc.; Executive Vice President,
General Counsel and Director of DMH Corp.; Executive Vice
President, General Counsel and Director of Delvoy, Inc.;
Executive Vice President, General Counsel and Director of
Delaware Management Company, Inc.; Executive Vice President,
General Counsel and Trustee of Delaware Management Business
Trust; Executive Vice President and General Counsel of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Executive Vice President, General Counsel and
Director of Delaware Service Company, Inc.; Executive Vice
President, General Counsel and Director of Delaware Capital
Management, Inc.; Executive Vice President, General Counsel
and Director of Retirement Financial Services, Inc.; Executive
Vice President, General Counsel and Director of Delaware
Management Trust Company; Executive Vice President, General
Counsel and Director of Delaware Distributors, Inc.; Executive
Vice President and General Counsel of Delaware Distributors,
L.P.; Executive Vice President, General Counsel and Director
of Delaware International Holdings Ltd.; Director of Delaware
International Advisers Ltd.; Executive Vice President, General
Counsel and Director of Founders Holdings, Inc.; Executive
Vice President and General Counsel of Founders CBO
Corporation; Executive Vice President of each fund in the
Delaware Investments family.
Director, HYPPCO Finance Company 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
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Richard G. Unruh Executive Vice President, Chief Investment Officer/ DMC Equity
of Delaware Management Company (a series of Delaware
Management Business Trust); Executive Vice President of
Delaware Management Holdings, Inc.; Executive Vice President
and Trustee of Delaware Management Business Trust; Chief
Executive Office, Chief Investment Officer/DIA Equity of
Delaware Investment Advisers (a series of Delaware Management
Business Trust; Executive Vice President of Delaware Capital
Management, Inc.; Director of Delaware Investment Advisers
Ltd.; Executive Vice President, Chief Investment
Officer/Equity of each fund in the Delaware Investments
family.
Board of Directors, Chairman of Finance Committee, Keystone
Insurance Company since 1989, 2040 Market Street,
Philadelphia, PA; Board of Directors, Chairman of Finance
Committee, AAA Mid Atlantic, Inc. since 1989, 2040 Market
Street, Philadelphia, PA; Board of Directors, Metron, Inc.
since 1995, 11911 Freedom Drive, Reston, VA
- --------------------------------------------------------------------------------
Douglas L Senior Vice President/Operations of Delaware Management
Anderson Company (a series of Delaware Management Business Trust;
Senior Vice President/Operations of Delaware Service Company,
Inc.; Senior Vice President/Operations of Retirement Financial
Services, Inc.; Senior Vice President/Operations of Delaware
Management Trust Company.
- --------------------------------------------------------------------------------
Michael P. Senior Vice President, Treasurer/Investment Accounting of
Bishof Delaware Management Company (a series of Delaware Management
Business Trust); Senior Vice President, Treasurer/Investment
Accounting of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Senior Vice
President/Investment Accounting of Delaware Service Company,
Inc.; Senior Vice President/Investment Accounting of Delaware
Capital Management, Inc.; Senior Vice President,
Treasurer/Investment Accounting of Delaware Distributors,
L.P.; Senior Vice President, Manager of Investment Accounting
of Delaware International Holdings Ltd.; Senior Vice
President, Treasurer/Investment Accounting of Founders
Holdings, Inc.; Senior Vice President and Assistant Treasurer
of Founders CBO Corporation; Senior Vice President and
Treasurer of each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
George M. Senior Vice President and Secretary of Delaware Management
Chamberlain, Jr. Company (a series of Delaware Management Business Trust);
Senior Vice President and Secretary of Delaware Management
Holdings, Inc.; Senior Vice President and Secretary of DMH
Corp.; Senior Vice President and Secretary of Delvoy, Inc.;
Senior Vice President and Secretary of Delaware Management
Company, Inc.; Senior Vice President and Secretary of Delaware
Management Business Trust; Senior Vice President and Secretary
of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President and
Secretary of Delaware Service Company, Inc.; Senior Vice
President and Secretary of Delaware Capital Management, Inc.;
Senior Vice President and Secretary of Retirement Financial
Services, Inc.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company; Senior Vice
President and Secretary of Delaware Distributors, Inc.; Senior
Vice President and Secretary of Delaware Distributors, L.P.;
Senior Vice President of Delaware International Holdings Ltd;
Senior Vice President, Secretary and Director of Founders
Holdings, Inc.; Senior Vice President, Corporate Secretary and
General Counsel of each fund in the Delaware Investments
family.
- --------------------------------------------------------------------------------
Robert J. Senior Vice President/Head of Equity Trading of Delaware
DiBraccio Management Company (a series of Delaware Management Business
Trust); Senior Vice President/Head of Equity Trading of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President/Head of Equity Trading
of Delaware Capital Management, Inc.
- --------------------------------------------------------------------------------
John B. Fields Senior Vice President/Senior Portfolio Manager of Delaware
Management Company (a series of Delaware Management Business
Trust); Trustee of Delaware Management Business Trust; Senior
Vice President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Senior Vice President/Senior Portfolio Manager of Delaware
Capital Management, Inc.; Senior Vice President/Senior
Portfolio Manager of each fund in the Delaware Investments
family.
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Susan L. Hanson Senior Vice President/Global Marketing and Client Services of
Delaware Management Company (a series of Delaware Management
Business Trust); Senior Vice President/Global Marketing and
Client Services of Delaware Investment Advisers (a series of
Delaware Management Business Trust)
- --------------------------------------------------------------------------------
Joseph H. Senior Vice President/Treasurer/Corporate Controller of
Hastings Delaware Management Company (a series of Delaware Management
Business Trust); Senior Vice President/Treasurer/Corporate
Controller of Delaware Management Holdings, Inc.; Senior Vice
President/Treasurer/Corporate Controller of DMH Corp; Senior
Vice President/Treasurer/Corporate Controller of Delvoy, Inc.;
Senior Vice President/Treasurer/Corporate Controller of
Delaware Management Company, Inc.; Senior Vice
President/Treasurer/Corporate Controller of Delaware
Management Business Trust; Senior Vice
President/Treasurer/Corporate Controller of Delaware Service
Company, Inc.; Senior Vice President/Treasurer/Corporate
Controller of Delaware Capital Management, Inc.; Senior Vice
President/Treasurer/Corporate Controller of Retirement
Financial Services, Inc.; Executive Vice President/Corporate
Controller/Treasurer of Delaware Management Trust Company;
Senior Vice President/Treasurer/Corporate Controller of
Delaware Distributors, L.P.; Senior Vice
President/Treasurer/Corporate Controller of Delaware
International Holdings; Senior Vice
President/Treasurer/Corporate Controller of Founders Holdings,
Inc.; Senior Vice President/ Assistant Treasurer Founders CBO
Corporation; Senior Vice President/Corporate Controller of
each fund in the Delaware Investments family
- --------------------------------------------------------------------------------
Joanne O. Senior Vice President/Human Resources of Delaware Management
Hutcheson Company (a series of Delaware Management Business Trust);
Senior Vice President/Human Resources of Delaware Management
Holdings, Inc.; Senior Vice President/Human Resources of DMH
Corp.; Senior Vice President/Human Resources of Delvoy, Inc.;
Senior Vice President/Human Resources of Delaware Management
Company, Inc.; Senior Vice President/Human Resources of
Delaware Management Business Trust; Senior Vice
President/Human Resources of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Senior Vice
President/Human Resources of Delaware Service Company, Inc.;
Senior Vice President/Human Resources of Delaware Capital
Management, Inc.; Senior Vice President/Human Resources of
Delaware Retirement Financial Services, Inc.; Senior Vice
President/Human Resources of Delaware Management Trust
Company; Senior Vice President/Human Resources of Delaware
Distributors, Inc.; Senior Vice President/Human Resources of
Delaware Distributors, L.P.; Senior Vice President/Human
Resources of each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Richelle S. Senior Vice President, Assistant Secretary and Deputy General
Maestro Counsel of Delaware Management Company (a series of Delaware
Management Business Trust); Senior Vice President, Assistant
Secretary and Deputy General Counsel of Delaware Management
Holdings, Inc.; Senior Vice President, Assistant Secretary and
Deputy General Counsel of DMH Corp.; Senior Vice President,
Assistant Secretary and Deputy General Counsel of Delvoy,
Inc.; Senior Vice President, Assistant Secretary and Deputy
General Counsel of Delaware Management Company, Inc.; Senior
Vice President, Assistant Secretary and Deputy General Counsel
of Delaware Management Business Trust; Senior Vice President,
Assistant Secretary and Deputy General Counsel of Delaware
Investment Advisers (a series of Delaware Management Business
Trust); Senior Vice President, Assistant Secretary and Deputy
General Counsel of Delaware Service Company, Inc.; Senior Vice
President, Assistant Secretary and Deputy General Counsel of
Delaware Capital Management, Inc.; Senior Vice President,
Assistant Secretary and Deputy General Counsel of Retirement
Financial Services, Inc.; Senior Vice President, Assistant
Secretary and Deputy General Counsel of Delaware Distributors,
Inc.; Senior Vice President, Assistant Secretary and Deputy
General Counsel of Delaware Distributors, L.P.; Senior Vice
President, Secretary and Deputy General Counsel of Delaware
International Holdings Ltd.; Senior Vice President, Assistant
Secretary and Deputy General Counsel of Founders Holdings,
Inc.; Secretary of Founders CBO Corporation; Senior Vice
President, Assistant Secretary and Deputy General Counsel of
each fund in the Delaware Investments family.
General Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA.
- --------------------------------------------------------------------------------
Eric E. Miller Senior Vice President, Assistant Secretary and Deputy General
Counsel of Delaware Management Company (a series of Delaware
Management Business Trust); Senior Vice President, Assistant
Secretary and Deputy General Counsel of Delaware Management
Holdings, Inc.; Senior Vice President, Assistant Secretary and
Deputy General Counsel of DMH Corp.; Senior Vice President,
Assistant Secretary and Deputy General Counsel of Delvoy,
Inc.; Senior Vice President, Assistant Secretary and Deputy
General Counsel of Delaware Management Company, Inc.; Senior
Vice President, Assistant Secretary and Deputy General Counsel
of Delaware Management Business Trust; Senior Vice President,
Assistant Secretary and Deputy General Counsel of Delaware
Investment Advisers (a series of Delaware Management Business
Trust); Senior Vice President, Assistant Secretary and Deputy
General Counsel of Delaware Service Company, Inc.; Senior Vice
President, Assistant Secretary and Deputy General Counsel of
Delaware Capital Management, Inc.; Senior Vice President,
Assistant Secretary and Deputy General Counsel of Retirement
Financial Services, Inc.; Senior Vice President, Assistant
Secretary and Deputy General Counsel of Delaware Distributors,
Inc.; Senior Vice President, Assistant Secretary and Deputy
General Counsel of Delaware Distributors, L.P.; Senior Vice
President, Assistant Secretary and Deputy General Counsel of
Founders Holdings, Inc.; Senior Vice President, Assistant
Secretary and Deputy General Counsel of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
James L. Shields Senior Vice President, Chief Information Officer of Delaware
Management Company (a series of Delaware Management Business
Trust); Senior Vice President, Chief Information Officer of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President, Chief Information
Officer of Delaware Service Company, Inc.; Senior Vice
President, Chief Information Officer of Delaware Capital
Management Company, Inc.; Senior Vice President, Chief
Information Officer of Retirement Financial Services, Inc.;
Senior Vice President, Chief Information Officer of Delaware
Distributors, L.P.
- --------------------------------------------------------------------------------
Christopher S. Vice President/Business Manager, Equity of Delaware Management
Adams Company (a series of Delaware Management Business Trust); Vice
President/Business Manager, Equity of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Robert L. Arnold Vice President/Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Capital Management,
Inc., Vice President/Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Marshall Vice President/Portfolio Manager of Delaware Management
T. Bassett(1) Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Christopher S. Vice President/Senior Portfolio Manager of Delaware Management
Beck(2) Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
Trustee of New Castle County Pension Board since October 1992,
Wilmington DE.
- --------------------------------------------------------------------------------
Richard E. Vice President/Trading Operations of Delaware Management
Beister Company (a series of Delaware Management Business Trust)
- --------------------------------------------------------------------------------
Lisa O. Brinkley Vice President/Compliance Director of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Compliance Director of Delaware Management Holdings,
Inc.;Vice President/Compliance Director of DMH Corp.;Vice
President/Compliance Director of Delvoy, Inc.;Vice
President/Compliance Director of Delaware Management Company,
Inc.;Vice President/Compliance Director of Delaware Management
Business Trust; Vice President/Compliance Director of Delaware
Investment Advisers (a series of Delaware Management Business
Trust);Vice President/Compliance Director of Delaware Service
Company, Inc.;Vice President/Compliance Director of Delaware
Capital Management, Inc.;Vice President/Compliance Director of
Retirement Financial Services, Inc.; Vice President/Compliance
Director/Assistant Secretary of Delaware Management Business
Trust; Vice President/Compliance Director of Delaware
Distributors, Inc.;Vice President/Compliance Director of
Delaware Distributors, L.P.;Vice President/Compliance Director
of each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
MaryEllen M. Vice President/Client Services of Delaware Management Company
Carrozza (a series of Delaware Management Business Trust);Vice
President/Client Services of Delaware Investment Advisers (a
series of Delaware Management Business Trust);Vice
President/Client Services of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Stephen R. Cianci Vice President/Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Mitchell L. Vice President/Senior Portfolio Manager of Delaware Management
Conery(3) Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Timothy G. Vice President/Senior Portfolio Manager of Delaware Management
Connors Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust).
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of Delaware Capital
Management, Inc.; Vice President/Senior Portfolio Manager of
each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Nancy M. Crouse Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
George E. Deming Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
James P. Dokas(4) Vice President/Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice President/
Portfolio Manager of each fund in the Delaware Investments
family.
- --------------------------------------------------------------------------------
Michael J. Dugan Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Joel A. Vice President/Taxation of Delaware Management Company (a
Ettinger(5) series of Delaware Management Business Trust);Vice
President/Taxation of Delaware Management Holdings, Inc.;Vice
President/Taxation of DMH Corp.;Vice President/Taxation of
Delvoy, Inc.; Vice President/Taxation of Delaware Management
Company, Inc.;Vice President/Taxation of Delaware Management
Business Trust; Vice President/Taxation of Delaware Investment
Advisers (a series of Delaware Management Business Trust);Vice
President/Taxation of Delaware Service Company, Inc.;Vice
President/Taxation of Delaware Capital Management, Inc.;Vice
President/Taxation of Retirement Financial Services, Inc.;Vice
President/Taxation of Delaware Distributors, Inc.;Vice
President/Taxation of Delaware Distributors, L.P.;Vice
President/Taxation of Founders Holdings, Inc.; Vice
President/Taxation of Founders CBO Corporation; Vice
President/Taxation of each fund in the Delaware Investments
family.
- --------------------------------------------------------------------------------
Gerald S. Frey Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
James A. Furgele Vice President/Investment Accounting of Delaware Management
Company (a series of Delaware Management Business Trust);Vice
President/Investment Accounting of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Investment Accounting of Delaware Service
Company, Inc.;Vice President/Investment Accounting of each
fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Stuart M. George Vice President/Equity Trading of Delaware Management Company
(a series of Delaware Management Business Trust);Vice
President/Equity Trading of Delaware Investment Advisers (a
series of Delaware Management Business Trust).
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Paul Grillo Vice President/Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Brian T. Hannon Vice President of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Portfolio Manager of
each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
John A. Vice President/Portfolio Manager of Delaware Management
Heffern(6) Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Elizabeth H. Vice President/Senior Portfolio Manager of Delaware Management
Howell(7) Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Jeffrey Hynoski Vice President/Analyst of Delaware Management Company (a
series of Delaware Management Business Trust);Vice
President/Analyst of Delaware Investment Advisers (a series of
Delaware Management Business Trust);Vice President/Analyst of
each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Cynthia Isom Vice President/Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Karina J. Ivstan Vice President/Strategic Planning of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Strategic Planning of Delaware Management Holdings,
Inc.;Vice President/Strategic Planning of Delaware Management
Business Trust; Senior Vice President, Assistant Secretary and
Deputy General Counsel of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Strategic Planning of Delaware Service Company,
Inc.;Vice President/Strategic Planning of Delaware Capital
Management, Inc.; Vice President/Strategic Planning of
Retirement Financial Services, Inc.; Vice President/Strategic
Planning of Delaware Management Trust Company; Vice
President/Strategic of Delaware Distributors, L.P.; Vice
President/Strategic Planning of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
Audrey E. Kohart Vice President/Assistant Controller/Corporate Accounting of
Delaware Management Company (a series of Delaware Management
Business Trust)
- --------------------------------------------------------------------------------
Steven T. Lampe Vice President/Research Analyst of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family.
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
Philip Y. Lin Vice President, Assistant Secretary and Associate General
Counsel of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President, Assistant
Secretary and Associate General Counsel of Delaware Investment
Advisers (a series of Delaware Management Business Trust);Vice
President, Assistant Secretary and Associate General Counsel
of Delaware Service Company, Inc.;Vice President, Assistant
Secretary and Associate General Counsel of Delaware Capital
Management, Inc.;Vice President, Assistant Secretary and
Associate General Counsel of Retirement Financial Services,
Inc.; Vice President, Assistant Secretary and Associate
General Counsel of Delaware Management Trust Company; Vice
President, Assistant Secretary and Associate General Counsel
of Delaware Distributors, L.P.;Vice President, Assistant
Secretary and Associate General Counsel of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Michael D. Mabry Vice President, Assistant Secretary and Associate General
Counsel of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President, Assistant
Secretary and Associate General Counsel of Delaware Investment
Advisers (a series of Delaware Management Business Trust);Vice
President, Assistant Secretary and Associate General Counsel
of Delaware Service Company, Inc.;Vice President, Assistant
Secretary and Associate General Counsel of Delaware Capital
Management, Inc.;Vice President, Assistant Secretary and
Associate General Counsel of Retirement Financial Services,
Inc.; Vice President, Assistant Secretary and Associate
General Counsel of Delaware Distributors, L.P.; Vice
President, Assistant Secretary and Associate General Counsel
of each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of Founders Holdings,
Inc., President and Director of Founders CBO Corporation; Vice
President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Andrew M. Vice President/Senior Portfolio Manager of Delaware Management
McCullagh, Jr(8) Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Francis X Morris Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of Founders Holdings,
Inc., Treasurer, Assistant Secretary and Director of Founders
CBO Corporation; Vice President/Senior Portfolio Manager of
each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Robert A Norton, Vice President/Research Analyst of Delaware Management Company
Jr. (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust).
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
- --------------------------------------------------------------------------------
Name and Positions and Offices with Delaware Management Company and its
Principal affiliates and other Positions and Offices Held
Business Address
- --------------------------------------------------------------------------------
David P. Vice President, Assistant Secretary and Associate General
O'Connor Counsel of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President, Assistant
Secretary and Associate General Counsel of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President, Assistant Secretary and Associate General
Counsel of Delaware Service Company, Inc.; Vice President,
Assistant Secretary and Associate General Counsel of Delaware
Capital Management, Inc.;Vice President, Assistant Secretary
and Associate General Counsel of Retirement Financial
Services, Inc.; Vice President, Assistant Secretary and
Associate General Counsel of Delaware Distributors, L.P.; Vice
President, Assistant Secretary and Associate General Counsel
of each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family.
- --------------------------------------------------------------------------------
Richard Salus Vice President/Assistant Controller of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Vice President/Assistant Controller of Delaware Management
Trust Company; Vice President/Assistant Controller of Delaware
International Holdings Ltd.
- --------------------------------------------------------------------------------
Richard D. Vice President/Assistant Controller/Manager Payroll of
Siedel Delaware Management Company (a series of Delaware Management
Business Trust).
- --------------------------------------------------------------------------------
Michael T. Vice President/Facilities and Administration Services of
Taggart Delaware Management Company (a series of Delaware Management
Business Trust); Vice President/Facilities and Administration
Services of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Facilities and
Administration Services of Delaware Service Company, Inc.;
Vice President/Facilities and Administration Services of
Delaware Distributors, L.P.
- --------------------------------------------------------------------------------
Thomas J. Vice President/Senior Corporate Bond Analyst of Delaware
Trottman Management Company (a series of Delaware Management Business
Trust); Vice President/Senior Corporate Bond Analyst of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Corporate Bond Analyst
of each fund in the Delaware Investments family.
- --------------------------------------------------------------------------------
Bruce A. Ulmer Vice President/Year 2000 of Delaware Management Company (a
series of Delaware Management Business Trust); Vice
President/Year 2000 of Delaware Management Holdings, Inc.;
Vice President/Year 2000 of Delvoy, Inc.; Vice President/Year
2000 of Delaware Management Business Trust; Vice
President/Year 2000 of Delaware Investment Advisers (a series
of Delaware Management Business Trust); Vice President/Year
2000 of Delaware Capital Management, Inc.; Vice President/Year
2000 of Retirement Financial Services, Inc.; Vice
President/Year 2000 of Delaware Management Trust Company; Vice
President/Year 2000 of each fund in the Delaware Investments
family.
- --------------------------------------------------------------------------------
Lori P. Wachs Vice President/Assistant Portfolio Manager of Delaware
Management Company (a series of Delaware Management Business
Trust);Vice President/Assistant Portfolio Manager of Delaware
Investment Advisers (a series of Delaware Management Business
Trust);Vice President/Assistant Portfolio Manager of each fund
in the Delaware Investments family.
- --------------------------------------------------------------------------------
<PAGE>
PART C - Other Information
(Continued)
1 VICE PRESIDENT, Morgan Stanley Asset Management prior to March 1997.
2 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
3 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
4 DIRECTOR OF TRUST INVESTMENTS, Bell Atlantic Corporation prior to
February 1997.
5 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
6 SENIOR VICE PRESIDENT, EQUITY RESEARCH, NatWest Securities Corporation
prior to March 1997.
7 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to
May 1997.
8 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
<PAGE>
PART C - Other Information
(Continued)
Item 27. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the
Delaware Investments family.
(b) Information with respect to each director,
officer or partner of principal underwriter:
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
ADDRESS* UNDERWRITER REGISTRANT
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Distributors, Inc. General Partner None
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Investment Advisers Limited Partner None
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Capital Management, Inc. Limited Partner None
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce D. Barton President and Chief Executive Officer None
- ------------------------------------------------------------------------------------------------------------------------------------
David K. Downes Executive Vice President/Chief Operating Executive Vice President/Chief Operating
Officer/Chief Financial Officer Officer/Chief Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery Executive Vice President/General Counsel Executive Vice President/General Counsel
- ------------------------------------------------------------------------------------------------------------------------------------
Diane M. Anderson Senior Vice President/Retirement None
Operations
- ------------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof Senior Vice President/Treasurer/Investment Senior Vice President/Treasurer
Accounting
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel J. Brooks III Senior Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
George M. Chamberlain, Jr. Senior Vice President/Secretary Senior Vice President/Secretary/General
Counsel
- ------------------------------------------------------------------------------------------------------------------------------------
Terrence P. Cunningham Senior Vice President/National Sales None
Director, Financial Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen J. Deangelis Senior Vice President/National Sales, None
Managed Account Services
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph H. Hastings Senior Vice President/Treasurer/Corporate Senior Vice President/Corporate Controller
Controller
- ------------------------------------------------------------------------------------------------------------------------------------
Joanne O. Hutcheson Senior Vice President/Human Resources Senior Vice President/Human Resources
- ------------------------------------------------------------------------------------------------------------------------------------
William M. Kimbrough Senior Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Bradley L. Kolstoe Senior Vice President/Western Division None
Sales, IPI Channel
- ------------------------------------------------------------------------------------------------------------------------------------
Richelle S. Maestro Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Mac Macaulliffe Senior Vice President/Divisional Sales None
Manager
- ------------------------------------------------------------------------------------------------------------------------------------
J Chris Meyer Senior Vice President/Director, Product None
Management
- ------------------------------------------------------------------------------------------------------------------------------------
Eric E. Miller Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen C. Nell Senior Vice President/National Retirement None
Sales
- ------------------------------------------------------------------------------------------------------------------------------------
Henry W. Orvin Senior Vice President/Eastern Division None
Sales
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
ADDRESS* UNDERWRITER REGISTRANT
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher H. Price Senior Vice President/Channel Manager None
-----------------------------------------------------------------------------------------------------------------------------------
Thomas E. Sawyer Senior Vice President/Director, National None
Sales
- ------------------------------------------------------------------------------------------------------------------------------------
James L. Shields Senior Vice President/Chief Information None
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Richard P. Allen Vice President/Wholesaler, Midwest None
- ------------------------------------------------------------------------------------------------------------------------------------
David P. Anderson, Jr. Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey H. Arcy Vice President/Wholesaler, South East None
Region
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick A. Bearss Vice President/Wholesaler - Midwest None
- ------------------------------------------------------------------------------------------------------------------------------------
Gabriella Bercze Vice President/Wholesaler, Financial None
Institution
- ------------------------------------------------------------------------------------------------------------------------------------
Denise D. Bradley Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Bridwell Vice President/Financial Institutions None
Wholesaler
- ------------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley Vice President/Compliance Director Vice President/Compliance Director
- ------------------------------------------------------------------------------------------------------------------------------------
Terrance L. Bussard Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel H. Carlson Vice President/Marketing Services None
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Carr Vice President/VA Sales Manager None
- ------------------------------------------------------------------------------------------------------------------------------------
William S. Carroll Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Chadie Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Matthew Coldren Vice President/National Accounts None
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick A Connelly Vice President/RIA Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
Jessie V. Emery Vice President/Marketing Communications None
- ------------------------------------------------------------------------------------------------------------------------------------
Joel A. Ettinger Vice President/Taxation Vice President/Taxation
- ------------------------------------------------------------------------------------------------------------------------------------
Susan T. Friestedt Vice President/Retirement Services None
- ------------------------------------------------------------------------------------------------------------------------------------
Douglan R. Glennon Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Darryl S. Grayson Vice President/Director, Internal Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
Rhonda J. Guido Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Haimowitz Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Edward J. Hecker Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Herron Vice President/VA Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Dinah J. Huntoon Vice President/Product Manager, Equities None
- ------------------------------------------------------------------------------------------------------------------------------------
Karina J. Istvan Vice President/Strategic Planning None
- ------------------------------------------------------------------------------------------------------------------------------------
Chirstopher L. Johnston Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Jordan Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
ADDRESS* UNDERWRITER REGISTRANT
- ------------------------------------------------------------------------------------------------------------------------------------
Carolyn Kelly Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Richard M. Koerner Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Ellen M. Krott Vice President/Marketing None
- ------------------------------------------------------------------------------------------------------------------------------------
John Leboeuf Vice President/VA Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
SooHee Lee Vice President/Fixed Income & None
International Product Management
- ------------------------------------------------------------------------------------------------------------------------------------
Philip Y. Lin Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Logan Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Michael D. Mabry Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Thoedore T. Malone Vice President/IPI Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Debbie Marler Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Gregory J. McMillan Vice President/National Accounts None
- ------------------------------------------------------------------------------------------------------------------------------------
Nathan W. Medin Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Scott L. Metzger Vice President/Business Development None
- ------------------------------------------------------------------------------------------------------------------------------------
Roger J. Miller Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher W. Moore Vice President/VA Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew F. Morris Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick L. Murphy Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Scott E. Naughton Vice President/IPI Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Julie Nusbaum Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Julie A. Nye Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel J. O'Brien Vice President/Insurance Products None
- ------------------------------------------------------------------------------------------------------------------------------------
David P. O'Connor Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph T. Owczarek Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Otis S. Page Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Mark A. Pletts Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Philip G. Rickards Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Laura E. Roman Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Rovert A. Rosso Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Linda D. Shulz Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Gordan E. Searles Vice President/Client Services None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
ADDRESS* UNDERWRITER REGISTRANT
- ------------------------------------------------------------------------------------------------------------------------------------
James R. Searles Vice President/VA Sales Manager None
- ------------------------------------------------------------------------------------------------------------------------------------
Catherine A. Seklecki Vice President/Retirement Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
John C. Shalloe Vice President/Wrap Fee Wholesaler, None
Western Region
- ------------------------------------------------------------------------------------------------------------------------------------
Edward B. Sheridan Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Robert E. Stansbury Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Taggart Vice President/Facilities and None
Administration Services
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce A. Ulmer Vice President/Year 2000 Vice President/Year 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Julia R. Vander-Els Vice President/Retirement Plan None
Communications
- ------------------------------------------------------------------------------------------------------------------------------------
Wayne W. Wagner Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
John A. Wells Vice President/Marketing Technology None
- ------------------------------------------------------------------------------------------------------------------------------------
Courtney S. West Vice President/Institutional Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew J. Wittaker Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Theordore V. Wood Vice President/Technical Systems Officer None
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Woods Vice President/National Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Inapplicable.
Item 28. 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 29. Management Services. None.
Item 30. 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.
<PAGE>
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 15th day of May, 1999.
DELAWARE GROUP CASH RESERVE, INC.
By /s/ Jeffrey J. Nick
---------------------------
Jeffrey J. Nick
Chairman
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>
<S> <C> <C> <C>
Signature Title Date
- --------------------------------------- ------------------------------------------ ------------------
/s/Jeffrey J. Nick President/Chief Executive Officer/ May 15, 1999
- --------------------------------------- Chairman of the Board and Director
Jeffrey J. Nick
Executive Vice President/Chief Operating
Officer/Chief Financial Officer
(Principal Financial Officer and Principal
/s/ David K. Downes Accounting Officer) May 15, 1999
- ---------------------------------------
David K. Downes
/s/Wayne A. Stork * Director May 15, 1999
- ---------------------------------------
Wayne A. Stork
/s/Walter P. Babich * Director May 15, 1999
- ---------------------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director May 15, 1999
- ---------------------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director May 15, 1999
- ---------------------------------------
Ann R. Leven
/s/Thomas F. Madison * Director May 15, 1999
- ---------------------------------------
Thomas F. Madison
/s/John H. Durham * Director May 15, 1999
- ---------------------------------------
John H. Durham
/s/Charles E. Peck * Director May 15, 1999
- ---------------------------------------
Charles E. Peck
/s/Jan L. Yeomans * Director May 15, 1999
- ---------------------------------------
Jan L. Yeomans
</TABLE>
*By /s/Jeffrey J. Nick
--------------------
Jeffrey J. Nick
as Attorney-in-Fact for
each of the persons indicated
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
<TABLE>
<CAPTION>
<S> <C>
EX-99(d) Form of Investment Management Agreement
EX-99(e)(1)(i) Distribution Agreement
EX-99(e)(1)(ii) Amendment No. 1 to Distribution Agreement
EX-99(g)(1) Custodian Agreement
EX-99(g)(2) Amendment to Custodian Agreement
EX-99(g)(3) Form of Letter to Custodian
EX-99(i) Opinion of Counsel
EX-99(j) Consent and Report of Independent Auditors
EX-99(m)(1) Plan under Rule 12b-1 for Class B of Delaware Group Cash Reserve, Inc.
EX-99(m)(2) Plan under Rule 12b-1 for Class C of Delaware Group Cash Reserve, Inc.
EX-99(m)(3) Plan under Rule 12b-1 for Consultant Class of Delaware Group Cash Reserve, Inc.
EX-27 Financial Data Schedules for Class A
EX-27 Financial Data Schedules for Class B
EX-27 Financial Data Schedules for Class C
EX-27 Financial Data Schedules for Consultant Class
EX-99(p)(2) Power of Attorney for Jan L. Yeomans
</TABLE>
<PAGE>
[REGISTRANT NAME]
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between [REGISTRANT], a Maryland
corporation ("Fund") on behalf of the [SERIES] ("Series"), and DELAWARE
MANAGEMENT COMPANY, a series of Delaware Management Business Trust, a Delaware
business trust ("Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an
investment company registered under the Investment Company Act of 1940 and is
currently comprised of [x] series, including the Series; as a separate series of
the Fund, each series engages in the business of investing and reinvesting its
assets in securities, and
WHEREAS, the Investment Manager is a registered investment
adviser under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and
WHEREAS, in connection with the changes in investment manager,
the Fund on behalf of the Series and the Investment Manager desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and each of the parties hereto intending to be legally bound,
it is agreed as follows:
<PAGE>
1. The Fund hereby employs the Investment Manager to manage
the investment and reinvestment of the Series' assets and to administer its
affairs, subject to the direction of the Fund's Board of Directors and officers
of the Fund for the period and on the terms hereinafter set forth. The
Investment Manager hereby accepts such employment and agrees during such period
to render the services and assume the obligations herein set forth for the
compensation herein provided. The Investment Manager shall for all purposes
herein be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities and other
instruments to purchase and sell on behalf of the Series and shall effect the
purchase and sale of such investments in furtherance of the Series' objectives
and policies and shall furnish the Board of Directors of the Fund with such
information and reports regarding the Series' investments as the Investment
Manager deems appropriate or as the Directors of the Fund may reasonably
request.
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: the maintenance
of its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes; and federal and
state registration fees. Directors, officers and employees of the Investment
Manager may be directors, officers and employees of any of the funds (including
the Fund) of which Delaware Management Company is investment manager. Directors,
officers and employees of the Investment Manager who are directors, officers
and/or employees of these funds shall not receive any compensation from the
funds for acting in such dual capacity.
-2-
<PAGE>
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) Subject to the primary objective of obtaining the best
available prices and execution, the Investment Manager will place orders for the
purchase and sale of portfolio securities and other instruments with such
broker/dealers selected who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, to any
Sub-Adviser, as defined in Paragraph 5 hereof, or to any other fund for which
the Investment Manager or any such Sub-Adviser provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Manager or any such
Sub-Adviser provides investment advisory services. Broker/dealers who sell
shares of the funds of which Delaware Management Company is investment manager,
shall only receive orders for the purchase or sale of portfolio securities to
the extent that the placing of such orders is in compliance with the Rules of
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a)
above and subject to such policies and procedures as may be adopted by the Board
of Directors and officers of the Fund, the Investment Manager may ask the Fund
and the Fund may agree to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, in such instances where the Fund and the
Investment Manager have determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds and other advisory accounts for which the
Investment Manager or any Sub-Adviser, as defined in Paragraph 5 hereof,
exercises investment discretion.
-3-
<PAGE>
4. As compensation for the services to be rendered to the Fund
by the Investment Manager under the provisions of this Agreement, the Fund shall
pay to the Investment Manager monthly from the Series' assets, a fee on the
average daily net assets of the Series during the month. Such fee shall be
calculated in accordance with the following schedule:
Monthly Annual Rate Average Daily Net Assets
------- ----------- ------------------------
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days, during which the Agreement is in effect, bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
-4-
<PAGE>
5. The Investment Manager may, at its expense, select and
contract with one or more investment advisers registered under the Investment
Advisers Act of 1940 (the "Sub-Adviser") to perform some or all of the services
for the Series for which it is responsible under this Agreement. The Investment
Manager will compensate any Sub-Adviser for its services to the Series. The
Investment Manager may terminate the services of any Sub-Adviser at any time in
its sole discretion, and shall at such time assume the responsibilities of such
Sub-Adviser unless and until a successor Sub-Adviser is selected and the
requisite approval of the Series' shareholders is obtained. The Investment
Manager will continue to have responsibility for all advisory services furnished
by any Sub-Adviser.
6. The services to be rendered by the Investment Manager to
the Fund under the provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
7. The Investment Manager, its directors, officers, employees,
agents and shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
-5-
<PAGE>
8. The Investment Manager or its affiliates are permitted to
use the identifying names "Delaware," "Delaware Investments," or "Delaware
Group" when sponsoring Funds (or their series or classes), whether already
existing or to be created in the future. The Investment Manager hereby consents
to the Fund's use of the identifying words "Delaware," "Delaware Investments,"
or "Delaware Group" in the name of the Fund, or any series or class of shares of
the Fund. In the event that the Investment Manager ceases to be the Fund's
investment manager, or otherwise determines that the Fund should no longer
utilize such names for any reason, the Investment Manager may revoke its consent
in writing and the Fund will promptly cease using such names for the Fund, its
series or classes, and will take all necessary steps to amend the Fund's
Articles of Incorporation and Bylaws to reflect a name change.
9. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of its duties as the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
10. This Agreement shall be executed and become effective as
of the date written below if approved by the vote of a majority of the
outstanding voting securities of the Series. It shall continue in effect for a
period of two years and may be renewed thereafter only so long as such renewal
and continuance is specifically approved at least annually by the Board of
Directors or by the vote of a majority of the outstanding voting securities of
the Series and only if the terms and the renewal hereof have been approved by
the vote of a majority of the Directors of the Fund who are not parties hereto
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Fund at any time, without the payment of a
penalty, on sixty days' written notice to the Investment Manager of the Fund's
intention to do so, pursuant to action by the Board of Directors of the Fund or
pursuant to the vote of a majority of the outstanding voting securities of the
Series. The Investment Manager may terminate this Agreement at any time, without
the payment of a penalty, on sixty days' written notice to the Fund of its
intention to do so. Upon termination of this Agreement, the obligations of all
the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this Agreement
committed prior to such termination, and except for the obligation of the Fund
to pay to the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
-6-
<PAGE>
11. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
12. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the Investment Company Act of
1940.
IN WITNESS WHEREOF, the parties hereto have caused their
corporate seals to be affixed and duly attested and their presents to be signed
by their duly authorized officers as of the _____ day of _________, _ _ _ _.
-7-
<PAGE>
[REGISTRANT NAME].
for the [SERIES NAME]
By:
Name:
Title:
Attest:
Name:
Title:
DELAWARE MANAGEMENT COMPANY, a
series of DELAWARE MANAGEMENT BUSINESS TRUST
By:
Name:
Title:
Attest:
Name:
Title:
-8-
<PAGE>
DELAWARE GROUP CASH RESERVE, INC.
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 3rd
day of April, 1995 by and between DELAWARE GROUP CASH RESERVE, INC., a Maryland
corporation (the "Fund"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a
Delaware limited partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund and the Distributor (or its predecessor)
were the parties to a contract under which the Distributor acted as the national
distributor of the shares of the Fund, which contract was amended and restated
as of the 2nd day of May, 1994 and subsequently readopted as of January 3, 1995
(the "Prior Distribution Agreement"), and
<PAGE>
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"), the
indirect parent company of the Distributor completed on the date of this
Agreement a merger transaction with a newly-formed subsidiary of Lincoln
National Corporation, pursuant to which Holdings became a wholly-owned
subsidiary of Lincoln National Corporation, and
WHEREAS, the merger transaction resulted in a change of
control of the Distributor and an automatic termination of the Prior
Distribution Agreement, and
WHEREAS, the Board of Directors of the Fund has determined to
enter into a new agreement with the Distributor as of the date hereof, pursuant
to which the Distributor shall continue to be the national distributor of the
Fund's Original Class (now doing business as Delaware Cash Reserve A Class and
hereinafter referred to as the "Class A Shares"), the Cash Reserve B Class (now
doing business as Delaware Cash Reserve B Class and hereinafter referred to as
the "Class B Shares"), and the Consultant Class (now doing business as Delaware
Cash Reserve Consultant Class and hereinafter referred to as the "Consultant
Class Shares"), which classes may do business under these or such other names as
the Board of Directors may designate from time to time, on the amended and
restated terms and conditions set forth below,
NOW, THEREFORE, the parties agree that the terms set forth
below shall constitute the complete agreement between said parties and shall
amend and restate in its entirety the prior contract between said parties:
1. The Fund hereby engages the Distributor to promote the distribution of
the Fund's shares and, in connection therewith and as agent for the
Fund and not as principal, to advertise, promote, offer and sell the
shares to the public.
-2-
<PAGE>
2. (a) The Distributor agrees to serve as distributor of the
Fund's shares and, as agent for the Fund and not as principal,
to advertise, promote and use its best efforts to sell the
Fund's shares wherever their sale is legal, either through
dealers or otherwise, in such places and in such manner, not
inconsistent with the law and the provisions of this Agreement
and the Fund's Registration Statement under the Securities Act
of 1933, including the Prospectuses contained therein and the
Statement of Additional Information contained therein as may
be mutually determined by the Fund and the Distributor from
time to time.
(b) For the Class A Shares, the Distributor will bear all costs of
financing any activity which is primarily intended to result
in the sale of that class of shares, including, but not
necessarily limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and
mailing of sales literature and distribution of that class of
shares.
(c) For its services as agent for the Class B Shares, the
Distributor shall be entitled to compensation on each
redemption of shares equal to any deferred sales charge
described in the Prospectus for the Class B Shares from time
to time.
-3-
<PAGE>
(d) For the Class B Shares and the Consultant Class Shares, the
Fund shall, in addition, compensate the Distributor for its
services as provided in the Distribution Plan as adopted on
behalf of the Class B Shares and the Consultant Class Shares,
respectively, pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Plans"), copies of which as
presently in force are attached hereto as respectively,
Exhibit "A" and Exhibit "B".
3. (a) The Fund agrees to make available for sale by the Fund through
the Distributor all or such part of the authorized but
unissued shares as the Distributor shall require from time to
time, and except as provided in Paragraph 3(b) hereof, the
Fund will not sell shares other than through the efforts of
the Distributor.
(b) The Fund reserves the right from time to time (1) to sell and
issue shares other than for cash; (2) to issue shares in
exchange for substantially all of the assets of any
corporation or trust, or in exchange of shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to
time in cash, or to split up or combine its outstanding shares
of common stock; (4) to offer shares for cash to its
stockholders as a whole, by the use of transferable rights or
otherwise, and to sell and issue shares pursuant to such
offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.
-4-
<PAGE>
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all shares which it will sell through the
Distributor are, or will be, properly registered with the
Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy of
the Registration Statement, all amendments thereto, all
exhibits, and each Prospectus and Statement of Additional
Information.
(b) The Fund will register or qualify the shares for sale in such
states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be required
by the SEC or the proper public bodies of the states
in which the shares may be qualified;
(2) from time to time, will furnish the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;
-5-
<PAGE>
(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectuses or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;
(5) will from time to time, use its best efforts to keep
a sufficient supply of shares authorized, any
increases being subject to the approval of
shareholders as may be required;
(6) before filing any further amendment to the
Registration Statement or to any Prospectus, will
furnish the Distributor copies of the proposed
amendment and will not, at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to any Prospectus of which
the Distributor shall not previously have been
advised or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;
(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price
of its shares, advise the Distributor within one hour
after the close of the New York Stock Exchange (or as
soon as practicable thereafter) on each business day
upon which the New York Stock Exchange may be open of
the net asset value per share of the shares of common
stock outstanding, determined in accordance with any
applicable provisions of law and the provisions of
the Articles of Incorporation, as amended, of the
Fund as of the close of business on such business
day. In the event that prices are to be calculated
more than once daily, the Fund will promptly advise
the Distributor of the time of each calculation and
the price computed at each such time.
-6-
<PAGE>
6. The Distributor agrees to submit to the Fund, prior to its use, the
form of all sales literature proposed to be generally disseminated by
or for the Distributor, all advertisements proposed to be used by the
Distributor, all sales literature or advertisements prepared by or for
the Distributor for such dissemination or for use by others in
connection with the sale of the shares, and the form of dealers' sales
contract the Distributor intends to use in connection with sales of the
Fund's shares. The Distributor also agrees that the Distributor will
submit such sales literature and advertisements to the NASD, SEC or
other regulatory agency as from time to time may be appropriate,
considering practices then current in the industry. The Distributor
agrees not to use such form of dealers' sales contract or to use or to
permit others to use such sales literature or advertisements without
the written consent of the Fund if any regulatory agency expresses
objection thereto or if the Fund delivers to the Distributor a written
objection thereto.
7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectuses, as amended from time to time,
determined in accordance with any applicable provision of law, the
provisions of its Articles of Incorporation and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
-7-
<PAGE>
8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of shares. The Distributor shall undertake to
promote such sales solely as agent of the Fund, and shall not purchase
or sell such shares as principal. Orders for shares and payment for
such orders shall be directed to the Fund's agent, Delaware Service
Company, Inc. for acceptance on behalf of the Fund. The Distributor is
not empowered to approve orders for sales of shares or accept payment
for such orders. Sales of Fund shares shall be deemed to be made when
and where accepted by Delaware Service Company, Inc. on behalf of the
Fund.
9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following
will apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectuses, the Statement of
Additional Information, and all amendments, supplements and
replacements thereto. The Fund will pay all costs incurred in
the preparation of the Fund's Registration Statement,
including typesetting, the costs incurred in printing and
mailing Prospectuses and Annual, Semi-Annual and other
financial reports to its own shareholders and fees and
expenses of counsel and accountants.
-8-
<PAGE>
(b) The Distributor will pay the costs incurred in printing and
mailing copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses,
including the costs of printing and mailing literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in registering
or qualifying the shares with the various states and with the
SEC.
(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.
-9-
<PAGE>
11. The Fund agrees to indemnify, defend and hold harmless the Distributor
and each person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act of 1933, from and against
any and all losses, damages, or liabilities to which, jointly or
severally, the Distributor or such controlling person may become
subject, insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder except that the Fund shall not be
liable for indemnification of the Distributor or any controlling person
thereof for any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of their duties under
this Agreement.
12. Copies of financial reports, Registration Statements and Prospectuses,
as well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for
either party to deliver or furnish to the other will be duly delivered
or furnished, if delivered to such party at its address shown below
during regular business hours, or if sent to that party by registered
mail or by prepaid telegram filed with an office or with an agent of
Western Union or another nationally recognized telegraph service, in
all cases within the time or times herein prescribed, addressed to the
recipient at 1818 Market Street, Philadelphia, Pennsylvania 19103, or
at such other address as the Fund or the Distributor may designate in
writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the
Distributor. This Agreement shall not be assigned by the Fund without
the written consent of the Distributor signed by its duly authorized
officers and delivered to the Fund. Except as specifically provided in
the indemnification provision contained in Paragraph 11 herein, this
Agreement and all conditions and provisions hereof are for the sole and
exclusive benefit of the parties hereto and their legal successors and
no express or implied provision of this Agreement is intended or shall
be construed to give any person other than the parties hereto and their
legal successors any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provisions herein contained.
-10-
<PAGE>
14. (a) This Agreement shall remain in force for a period of two years
from the date hereof and from year to year thereafter, but
only so long as such continuance is specifically approved at
least annually by the Board of 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 hereto or interested persons of any such
party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) The Distributor may terminate this Agreement on written notice
to the Fund at any time in case the effectiveness of the
Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the SEC in respect of the
Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also
terminate this Agreement at any time by giving the Fund
written notice of its intention to terminate the Agreement at
the expiration of three months from the date of delivery of
such written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at least
thirty days prior written notice to the Distributor (1) if
proceedings are commenced by the Distributor or any of its
partners for the Distributor's liquidation or dissolution or
the winding up of the Distributor's affairs; (2) if a receiver
or trustee of the Distributor or any of its property is
appointed and such appointment is not vacated within thirty
days thereafter; (3) if, due to any action by or before any
court or any federal or state commission, regulatory body, or
administrative agency or other governmental body, the
Distributor shall be prevented from selling securities in the
United States or because of any action or conduct on the
Distributor's part, sales of the shares are not qualified for
sale. The Fund may also terminate this Agreement at any time
upon prior written notice to the Distributor of its intention
to so terminate at the expiration of three months from the
date of the delivery of such written notice to the
Distributor.
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<PAGE>
15. The validity, interpretation and construction of this Agreement, and of
each part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.
16. In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of
the Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.
Attest: General Partner
/s/ Eric E. Miller By: /s/ David K. Downes
- ------------------------------- -----------------------------------
Name: Eric E. Miller Name: David K. Downes
Title: Vice President Title: Senior Vice President/
Assistant Secretary Chief Administrative Officer
DELAWARE GROUP CASH RESERVE, INC.
Attest:
/s/ Eric E. Miller By: /s/ Wayne A. Stork
- ----------------------------- -----------------------------
Name: Eric E. Miller Name: Wayne A. Stork
Title: Vice President Title: Chairman
Assistant Secretary
-12-
<PAGE>
DELAWARE GROUP CASH RESERVE, INC.
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the 29th day of November, 1995, by and between DELAWARE GROUP CASH
RESERVE, INC. (the "Fund"), and DELAWARE DISTRIBUTORS, L.P. (the "Distributor").
WITNESSETH
WHEREAS, the Fund and the Distributor are parties to that certain
Distribution Agreement made as of the 3rd day of April, 1995 (the "Distribution
Agreement"); and
WHEREAS, the Board of Directors of the Fund has established the Cash
Reserve C Class (the "Class C Shares") as an additional class of shares of the
Fund and the Fund and the Distributor desire to amend the Distribution Agreement
to provide that the Distributor shall act as the national distributor of the
Class C Shares pursuant thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Class C Shares are hereby included among the shares to which the
Distribution Agreement relates and the Distributor shall act as distributor for
the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.
2. Hereafter, each reference to "Class B Shares" in Section 2 (c) and
"Class B Shares and the Consultant Class Shares" in Section 2(d) of the
Distribution Agreement shall be deemed to include the Class C Shares, provided
that the Distribution Plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 for the Class C Shares and presently in force is attached
hereto as Exhibit "A."
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:
/s/Eric E. Miller By: /s/David K. Downes
- -------------------------- ----------------------------
Name: Eric E. Miller Name: David K. Downes
Title: Vice President Title: Senior Vice President
Assistant Secretary Chief Administrative Officer
DELAWARE GROUP CASH RESERVE, INC.
ATTEST:
/s/Eric E. Miller By: /s/Wayne A. Stork
- -------------------------- ----------------------------
Name: Eric E. Miller Name: Wayne A. Stork
Title: Vice President Title: Chairman
Assistant Secretary
CHASE
GLOBAL CUSTODY AGREEMENT
AGREEMENT, effective May 1, 1996, between THE CHASE MANHATTAN BANK, N.A.
(the "Bank") and those registered investment companies listed on Schedule A
hereto (each a Customer ) on behalf of certain of their respective series,
as listed on Schedule A (individually and collectively the Series ).
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer on behalf of each
Series ("Custody Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of money, bullion, coin
and any certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by the Bank or its
Subcustodian (as defined in Section 3) for the account of the Customer
("Securities"); and
(b) A deposit account in the name of the Customer on behalf of each
Series ("Deposit Account") for any and all cash in any currency received by
the Bank or its Subcustodian for the account of the Customer, which cash
shall not be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. Such Instructions shall
specifically indicate to which Series such Assets belong or, if such Assets
belong to more than one Series, shall allocate such Assets to the appropriate
Series. The Bank may deliver securities of the same class in place of those
deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
To the extent available and permissible under applicable law and
regulation, Cash held pursuant to Instructions shall be held in interest
bearing accounts. If interest bearing accounts are not available, such cash
may be held in non-interest bearing accounts. The Bank is authorized to
maintain cash balances on deposit for the Customer with itself or one of its
affiliates. Interest bearing accounts shall bear interest at such reasonable
rates of interest as may from time to time be paid on such accounts by the
Bank or its affiliates.
(iii) For each Series that is exclusively a domestic Series, the following
additional provisions shall apply:
(x) In the event that during a given calendar month a Series has maintained
an average daily cash balance greater than zero, the Bank shall provide an
earnings credit against custody fees otherwise owing hereunder by such Series
during such calendar month in an amount equal to the product of (A) 75% of
the 90 day U.S. government Treasury bill rate as quoted in the Wall Street
Journal for the last Business Day (being a day on which the Bank is open
for the transaction of all its ordinary business) of such calendar month, (B)
the average daily cash balance for such month, and (C) the number of days in
such calendar month divided by 365.
(y) In the event that during a given calendar month a Series has maintained
an average daily cash balance less than or equal to zero, the Bank shall be
paid interest on such amount by such Series in an amount equal to the product
of (A) the Overnight Fed Funds Rate (as defined below) plus 25 basis points
for the last Business Day of such calendar month, (B) the average daily cash
balance for such month, and (C) the number of days in such calendar month
divided by 365.
(z) For purposes of (y) above, the term Overnight Fed Funds Rate shall mean
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers,
as published by the Federal Reserve Bank of New York (with the rate for the
last Business Day of a given calendar month being the rate so published on
the Business Day immediately following such Day), or, if such rate is note so
published, the average quotations, for the last Business Day of a given
calendar month, of such transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section
3 (or their securities depositories), such arrangement must be authorized by
a written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank
to hold Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and
Subcustodians are authorized to hold any of the Securities in their account
with any securities depository in which they participate.
The Bank reserves the right to add new, replace or remove Subcustodians.
The Customer will be given reasonable notice by the Bank of any amendment to
Schedule B. Upon request by the Customer, the Bank will identify the name,
address and principal place of business of any Subcustodian of the Customer's
Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
Upon receipt of Instructions, the Bank shall cease using any
Subcustodian with respect to the customer, and arrange for delivery of
Securities held with such Subcustodian to another entity as designated by the
Customer; provided that, the Bank shall have no responsibility for the
performance of such other entity.
4. Use of Subcustodian.
(a) The Bank will identify the Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of
the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only
to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that: (i) such assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of such Subcustodian except for safe custody or administration, (ii) the
beneficial ownership of such assets will be freely transferable without the
payment of money or value other than for safe custody or administration;
(iii) adequate records will be maintained identifying the assets held
pursuant to such agreement as belonging to the customers of the Bank; (iv)
subject to applicable law, Subcustodian shall permit independent public
accountants for Bank and customers of the Bank reasonable access to
Subcustodian s books and records as they pertain to the subcustody account in
connection with such accountants' examination of the books and records of
such account; and (v) the Bank will receive periodic reports with respect to
the safekeeping of assets in the subcustody account, including advices and/or
notifications of any transfers to or from such subcustody account. The
foregoing shall not apply to the extent of any special agreement or
arrangement made by the Customer with any particular Subcustodian.
(e) Upon request of the Customer, the Bank shall deliver to the Customer
annually a report stating: (i) the identity of each Subcustodian then acting
on behalf of the Bank and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such Subcustodian;
(ii) the countries in which each Subcustodian is located; and (iii) as long
as Securities and Exchange Commission ("SEC") Rule 17f-5 under the Investment
Company Act of 1940, as amended ("1940 Act"), requires the Customer s Board
of Directors/Trustees directly to approve its foreign custody arrangements,
such other information relating to such Subcustodians as may reasonably be
requested by the Customer to ensure compliance with Rule 17f-5. As long as
Rule 17f-5 requires the Customer s Board of Directors/Trustees directly to
approve its foreign custody arrangements, the Bank shall also furnish
annually to the Customer information concerning such Subcustodians similar in
kind and scope as that furnished to the Customer in connection with the
initial approval hereof. The Bank shall timely advise the Customer of any
material adverse change in the facts or circumstances upon which such
information is based where such changes would affect the eligibility of the
Subcustodian under Rule 17f-5 as soon as practicable after it becomes aware
of any such material adverse change in the normal course of its custodial
activities.
5. Deposit Account Transactions
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required
by the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed
a loan payable on demand, bearing interest at the rate customarily charged by
the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount due, the
Customer will promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to
reverse such credit by debiting the Deposit Account for the amount previously
credited. The Bank or its Subcustodian shall have no duty or obligation to
institute legal proceedings, file a claim or a proof of claim in any
insolvency proceeding or take any other action with respect to the collection
of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include
all information required by the Bank. Settlement and payment for Securities
received for, and delivery of Securities out of, the Custody Account may be
made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Delivery of
Securities out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to the Bank.
(b) The Bank shall credit or debit the Accounts on a contractual
settlement date with cash or Securities with respect to any sale, exchange or
purchase of Securities in those countries set forth in Appendix A hereto;
provided that, the Bank may amend Appendix A from time to time in its sole
discretion and shall advise the Customer of such amendments. Otherwise,
transactions will be credited or debited to the Accounts on the date cash or
Securities are actually received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided that, the Bank shall
give Customer prior notification of any such reversal. Where the foregoing
notification is oral, the Bank shall promptly provide written confirmation of
the same (which confirmation may be electronic).
(ii) If any Securities delivered pursuant to this Section 6 are returned
by the recipient thereof, the Bank may reverse the credits and debits of the
particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian, subject to applicable SEC rules and regulations under the Act.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer advises the Bank orally and then promptly sends
the Bank a written exception or objection to any Bank statement within 180
days of receipt, the Customer shall be deemed to have approved such
statement.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. Subject to the standard of care in Section 12 hereof, the Bank shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Bank or by its Subcustodians of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect of which
the Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies; Tax Reclaims.
a. Corporate Actions. Whenever the Bank receives information
concerning the Securities which requires discretionary action by the
beneficial owner of the Securities (other than a proxy), such as subscription
rights, bonus issues, stock repurchase plans and rights offerings, or legal
notices or other material intended to be transmitted to securities holders
("Corporate Actions"), the Bank will give the Customer written notice (which
may be electronic) of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person (as defined in Section
10 hereof), but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too
late to seek Instructions, the Bank is authorized to sell such rights
entitlement or fractional interest and to credit the Deposit Account with the
proceeds or take any other action it deems, in good faith, to be appropriate
in which case it shall be held harmless for any such action.
b. Proxy Voting. With respect to domestic U.S. and Canadian Securities
(the latter if held in DTC), the Bank will send to the Customer or the
Authorized Person (as defined in Section 10) for a Custody Account, such proxies
(signed in blank, if issued in the name of the Bank's nominee or the nominee
of a central depository) and communications with respect to Securities in the
Custody Account as call for voting or relate to legal proceedings within a
reasonable time after sufficient copies are received by the Bank for
forwarding to its customers. In addition, the Bank will follow coupon
payments, redemptions, exchanges or similar matters with respect to
Securities in the Custody Account and advise the Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of which
the Bank has received notice from the issuer of the Securities, or as to
which notice is published in publications routinely utilized by the Bank for
this purpose.
With respect to Securities other than the foregoing, proxy voting
services shall be provided in accordance with separate proxy voting agreement
annexed hereto a Appendix B.
The foregoing proxy voting services may be provided by Bank, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third parties to the same extent as the Bank would
have been if it performed such services itself..
c. Tax Reclaims. (i) Subject to the provisions hereof, the Bank will
apply for a reduction of withholding tax and any refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer which the Bank
believes may be available to such Customer. Where such reports are available,
the Bank shall periodically report to Customer concerning the making of
applications for a reduction of withholding tax and refund of any tax paid or
tax credits which apply in each applicable market in respect of income
payments on Securities for the benefit of the Customer.
(ii) The provision of tax reclaim services by the Bank is conditional
upon the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The
Bank shall use reasonable means to advise the Customer of the declarations,
documentation and information which the Customer is to provide to the Bank in
order for the Bank to provide the tax reclaim services described herein. The
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside the
United Kingdom and that U.S. non-resident alien tax or U.S. backup
withholding tax will be deducted from U.S. source income. The Customer shall
provide to the Bank such documentation and information as it may require in
connection with taxation, and warrants that, when given, this information
shall be true and correct in every respect, not misleading in any way, and
contain all material information. The Customer undertakes to notify the Bank
immediately if any such information requires updating or amendment.
(iii) Subject to subsection (vii) hereof, the Bank shall not be liable
to the Customer or any third party for any tax, fines or penalties payable by
the Bank or the Customer, and shall be indemnified accordingly, whether these
result from the inaccurate completion of documents by the Customer or any
third party, or as a result of the provision to the Bank or any third party
of inaccurate or misleading information or the withholding of material
information by the Customer or any other third party, or as a result of any
delay of any revenue authority or any other matter beyond the control of the
Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from
any cash received or credited to the Cash Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at
its absolute discretion, supplement or amend the markets in which the tax
reclaim services are offered. Other than as expressly provided in this sub-
clause, the Bank shall have no responsibility with regard to the Customer's
tax position or status in any jurisdiction. Except as provided in Section
8(c)(ii) and pursuant to Instructions, the Bank shall take no action in the
servicing of the Customer s Securities which, in and of itself, creates a
taxable nexus for the Customer in any jurisdiction other than with respect to
interest, dividends and capital gains that may otherwise be subject to tax by
such jurisdiction with respect to a foreign investor not otherwise engaged in
a trade or business in such jurisdiction in a given taxable year. Bank shall
not be liable for any tax liability caused, directly or indirectly, by
Customer's actions or status in any jurisdiction.
(vi) In connection with obtaining tax relief, the Customer confirms
that the Bank is authorized to disclose any information requested by any
revenue authority or any governmental body in relation to the Customer or the
Securities and/or Cash held for the Customer. This provision does not
authorize any other voluntary disclosure to any revenue authority or any
governmental body without the prior written consent of Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities
depository, as the case may be. The Bank may without notice to the Customer
cause any such Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Customer. In the event that
any Securities registered in a nominee name are called for partial redemption
by the issuer, the Bank may allot the called portion to the respective
beneficial holders of such class of security in any manner the Bank deems to
be fair and equitable. The Customer agrees to hold the Bank, Subcustodians,
and their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Securities in the
Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer
or its designated agent that any such employee or agent is no longer an
Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information
system acceptable to the Bank which the Bank reasonably believes in good
faith to have been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions which the
Bank may specify. Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until canceled or superseded. For
purposes hereof, reasonableness shall mean compliance with applicable
procedures.
Any Instructions delivered to the Bank by telephone (including cash
transfer instructions as described below) shall promptly thereafter be
confirmed in writing by any two Authorized Persons (which confirmation may
bear the facsimile signature of such Persons), but the Customer will hold the
Bank harmless for the failure of such Authorized Persons to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or the Bank's failure to produce such
confirmation at any subsequent time; provided that, where the Bank receives
a telephone Instruction from an Authorized Person requiring the transfer of
cash, prior to executing such Instruction the Bank will, to confirm such
Instruction, call back any one of the individuals on a list of persons
authorized to confirm such oral transfer Instructions (which Person shall be
a person other than the initiator of the transfer Instruction) and the Bank
shall not execute the Instruction until it has received such confirmation.
Either party may electronically record any Instructions given by telephone,
and any other telephone discussions with respect to the Custody Account. The
Customer shall be responsible for safeguarding any testkeys, identification
codes or other security devices which the Bank shall make available to the
Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable
to the Customer for any loss which shall occur as the result of the failure
of a Subcustodian to exercise reasonable care with respect to the safekeeping
of such Assets to the same extent that the Bank would be liable to the
Customer if the Bank were holding such Assets in New York. In the event that
Securities are lost by reason of the failure of the Bank or its Subcustodian
to use reasonable care, the Bank shall be liable to the Customer based on the
market value of the property which is the subject of the loss on the date it
is replaced by the Bank and without reference to any special conditions or
circumstances, it being understood that for purposes of measuring damages
hereunder, the value of Securities which are sold by the Customer prior to
the replacement thereof shall be equal to the sale price thereof less the
expenses of such sale incurred by the Customer. The Bank shall act with
reasonable promptness in making such replacements. In no event shall the
Bank be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Bank
has been advised of the likelihood of such loss or damage and regardless of
the form of action. Subject to the Bank's obligations pursuant to Section 4(e)
hereof, the Bank will not be responsible for the insolvency of any
Subcustodian which is not a branch or affiliate of Bank.
(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints
unless such appointment was made negligently or in bad faith.
(iii) (a) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise pursuant to this Agreement if such act or omission
was in good faith, without negligence. In performing its obligations under
this Agreement, the Bank may rely on the genuineness of any Customer document
which it reasonably believes in good faith to have been validly executed.
(b) The Bank shall hold Customer harmless from, and shall indemnify Customer
for, any loss, liability, claim or expense incurred by Customer (including,
but not limited to, Customer's reasonable legal fees) to the extent that such
loss, liability, claim or expense arises from the negligence or willful mis-
conduct on the part of the Bank or a Subcustodian; provided that, in no event
shall the Bank be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
even if the Bank has been advised of the likelihood of such loss or damage
and regardless of the form of action. Subject to the Bank's obligations
pursuant to Section 4(e) hereof, the Bank will not be responsible for the
insolvency of any Subcustodian which is not a branch or affiliate of Bank.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income
from or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
(vii) Without limiting the foregoing, the Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities transactions or affect the
value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty
or responsibility to:
(i) question Instructions or make any suggestions to the Customer or an
Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other than a
Security.
(iv) except as may be otherwise provided in any securities lending
agreement between the Customer and the Bank, evaluate or report to the
Customer or an Authorized Person regarding the financial condition of any
broker, agent or other party to which Securities are delivered or payments
are made pursuant to this Agreement;
(v) except for trades settled at DTC where the broker provides to the
Bank the trade confirmation and the Customer provides for the Bank to receive
the trade instruction, review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such
confirmations against Instructions issued to and statements issued by the
Bank.
(c) The Customer authorizes the Bank to act, hereunder, in its capacity
as a custodian notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or circumstances
are such that the Bank may have a potential conflict of duty or interest
including the fact that the Bank or any of its affiliates may provide
brokerage services to other customers, act as financial advisor to the issuer
of Securities, act as a lender to the issuer of Securities, act in the same
transaction as agent for more than one customer, have a material interest in
the issue of Securities, or earn profits from any of the activities listed
herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing ("Fee Schedule"),
together with the Bank's reasonable out-of-pocket or incidental expenses (as
further defined in the Fee Schedule), including, but not limited to, legal
fees. The Bank shall have a lien on and is authorized to charge any Accounts
of the Customer for any amount owing to the Bank under any provision of this
Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to such contracts
but the Bank may establish rules or limitations concerning any foreign
exchange facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange
contract related to Accounts, the terms and conditions of the then current
foreign exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply
to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes
in residency. The Bank may rely upon this certification or the certification
of such other facts as may be required to administer the Bank's obligations
under this Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or indirectly from any
such certifications.
(c) Access to Records. Applicable accounts, books and records of the
Bank shall be open to inspection and audit at all reasonable times during
normal business hours upon reasonable advance notice by Customer s
independent public accountants and by employees of Customer designated to the
Bank. All such materials shall, to the extent applicable, be maintained and
preserved in conformity with the Act and the rules and regulations
thereunder, including without limitation, SEC Rules 31a-1 and 31a-2. Subject
to restrictions under applicable law, the Bank shall also obtain an
undertaking to permit the Customer's independent public accountants
reasonable access to the records of any Subcustodian which has physical
possession of any Assets as may be required in connection with the
examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are Mutual Fund assets subject to certain
Securities and Exchange Commission ("SEC") rules and regulations.
This Agreement consists exclusively of this document together with
Schedules A and B, Appendices 1 and 2, Exhibits I - _______ and the following
Rider(s) [Check applicable rider(s)]:
X MUTUAL FUND
----
X SPECIAL TERMS AND CONDITIONS
----
There are no other provisions of this Agreement, and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the
basis of any particular circumstances or in any jurisdiction, the validity,
legality and enforceability of such provision or provisions under other
circumstances or in other jurisdictions and of the remaining provisions will
not in any way be affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under
this Agreement operates as a waiver, nor does any single or partial exercise
of any power or right preclude any other or further exercise, or the exercise
of any other power or right. No waiver by a party of any provision of this
Agreement, or waiver of any breach or default, is effective unless in writing
and signed by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses
or such other addresses as may subsequently be given to the other party in
writing:
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
-------------------------------------
Customer: Delaware Group of Funds
1818 Market St.
Philadelphia, PA 19103
att: Messrs. Bishof and O Conner
or telex:
--------------------------------------
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the
Bank shall deliver the Assets in the Accounts. If notice of termination is
given by the Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names
of the persons to whom the Bank shall deliver the Assets. In either case the
Bank will deliver the Assets to the persons so specified, after deducting any
amounts which the Bank determines in good faith to be owed to it under
Section 13. If within sixty (60) days following receipt of a notice of
termination by the Bank, the Bank does not receive Instructions from the
Customer specifying the names of the persons to whom the Bank shall deliver
the Assets, the Bank, at its election, may deliver the Assets to a bank or
trust company doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized Persons, or
may continue to hold the Assets until Instructions are provided to the Bank;
provided that, where the Bank is the terminating party and the Bank had not
notified the Customer that termination was for breach of this Agreement by
the Customer, such 60 day period shall be extended for an additional period
as requested by Customer of up to 120 days.
Termination as to One or More Series. This Agreement may be terminated
as to one or more Series (but less than all the Series) by delivery of an
amended Schedule A deleting such Series, in which case termination as to the
deleted Series shall take effect sixty (60) days after the date of such
delivery. The execution and delivery of an amended Schedule A which deletes
one or more Series, shall constitute a termination hereof only with respect
to such deleted Series, shall be governed by the preceding provisions of
Section 14 as to the identification of a successor custodian and the delivery
of the Assets of the Series so deleted to such successor custodian, and shall
not affect the obligations of the Bank and the Customer hereunder with
respect to the other Series set forth in Schedule A, as amended from time to
time.
(j) Several Obligations of the Series. With respect to any obligations
of the Customer on behalf of the Series and their related Accounts arising
hereunder, the Custodian shall look for payment or satisfaction of any such
obligation solely to the assets and property of the Series and such Accounts
to which such obligation relates as though the Customer had separately
contracted with the Custodian by separate written instrument with respect to
each Series and its Accounts.
CUSTOMER
By: /s/ Michael P. Bishof
---------------------
Title Vice President and Treasurer
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Rosemary M. Stidmon
-----------------------
Title Vice President
STATE OF Pennsylvania)
: ss.
COUNTY OF Philadelphia)
On this 9th day of July, 1996, before me personally came Michael P. Bishof,
to me known, who being by me duly sworn, did depose and say that he resides
in Blue Bell, PA at 110 Spyglass Drive; that he is Vice President/Treasurer
of Delaware Group of Funds, the entity described in and which executed the
foregoing instrument; that he knows the seal of said entity, that the seal
affixed to said instrument is such seal, that it was so affixed by order of
said entity, and that he signed his name thereto by like order.
/s/ Maritza H. Cruzado
-----------------------
Maritza H. Cruzado
Notary
Sworn to before me this 9th
day of July, 1996.
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this 24th day of May, 1996, before me personally came Rosemary
Stidmon, to me known, who being by me duly sworn, did depose and say that she
resides in New Providence, NJ at 31 Sagamore Drive; that she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the
Board of Directors of said corporation, and that she signed her name thereto
by like order.
Sworn to before me this 24th
day of May, 1996.
/s/ Laiyee Ng
- -------------
Laiyee Ng
Notary
Schedule A
Delaware Pooled Trust, Inc. - Global Fixed Income Portfolio
Delaware Pooled Trust, Inc. - International Equity Portfolio
Delaware Pooled Trust, Inc. - Labor Select International Equity Portfolio
Delaware Pooled Trust, Inc. - Real Estate Investment Trust Portfolio
Delaware Pooled Trust, Inc. - High Yield Portfolio
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Delaware Pooled Trust, Inc. - Defensive Equity Utility Portfolio
Delaware Group Global & International Funds, Inc. - International Equity Fund
Delaware Group Global & International Funds, Inc. - Global Assets Fund
Delaware Group Global & International Funds, Inc. - Global Bond Fund
Delaware Group Global & International Funds, Inc. - Emerging Markets Fund
Delaware Group Premium Fund, Inc. - International Equity Series
Delaware Group Premium Fund, Inc. - Equity Income Series
Delaware Group Premium Fund, Inc. - High Yield Series
Delaware Group Premium Fund, Inc. - Capital Reserves Series
Delaware Group Premium Fund, Inc. - Money Market Series
Delaware Group Premium Fund, Inc. - Growth Series
Delaware Group Premium Fund, Inc. - Multiple Strategy Series
Delaware Group Premium Fund, Inc. - Value Series
Delaware Group Premium Fund, Inc. - Emerging Growth Series
Delaware Group Premium Fund, Inc. - Global Bond Series
Delaware Group Delchester High-Yield Bond Fund, Inc.
Delaware Group Delaware Fund, Inc. - Delaware Fund
Delaware Group Delaware Fund, Inc. - Devon Fund
Delaware Group Value Fund, Inc.
Delaware Group DelCap Fund, Inc.
Delaware Group Dividend & Income Fund, Inc.
Delaware Group Advisor Funds, Inc. - Enterprise Fund
Delaware Group Advisor Funds, Inc. - U.S. Growth Fund
Delaware Group Advisor Funds, Inc. - World Growth Fund
Delaware Group Advisor Funds, Inc. - New Pacific Fund
Delaware Group Advisor Funds, Inc. - Federal Bond Fund
Delaware Group Advisor Funds, Inc. - Corporate Income Fund
March, 1996 Schedule B
SUB-CUSTODIANS EMPLOYED BY
THE CHASE MANHATTAN BANK, N.A. LONDON, GLOBAL CUSTODY
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY SUB-CUSTODIAN CORRESPONDENT BANK
ARGENTINA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Arenales 707, 5th Floor Buenos Aires
De Mayo 130/140
1061Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan Bank
Australia Limited Australia Limited
36th Floor Sydney
World Trade Centre
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais
Schottengasse 6 Vienna
A - 1011, Vienna
AUSTRIA
BANGLADESH Standard Chartered Bank Standard Chartered Bank
18-20 Motijheel C.A. Dhaka
Box 536,
Dhaka-1000
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Limited Barclays Bank of Botswana
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA
BRAZIL Banco Chase Manhattan, S.A. Banco Chase Manhattan S.A.
Chase Manhattan Center Sao Paulo
Rua Verbo Divino, 1400
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada Royal Bank of Canada
Royal Bank Plaza Toronto
Toronto
Ontario M5J 2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J 2T2
CANADA
CHILE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Agustinas 1235 Santiago
Casilla 9192
Santiago
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CZECH REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Komercni Banka, A.S.,
Na Prikope 14 Praha
115 20 Praha 1
CZECH REPUBLIC
DENMARK Den Danske Bank Den Danske Bank
2 Holmens Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
EGYPT National Bank of Egypt National Bank of Egypt
24 Sherif Street Cairo
Cairo
EGYPT
EUROBONDS Cedel S.A. ECU:Lloyds Bank PLC
67 Boulevard Grande Duchesse Charlotte International Banking Division
LUXEMBOURG London
A/c The Chase Manhattan Bank, N.A. For all other currencies: see
London relevant country
A/c No. 17817
EURO CDS First Chicago Clearing Centre ECU:Lloyds Bank PLC
27 Leadenhall Street Banking Division London
London EC3A 1AA For all other currencies: see
UNITED KINGDOM relevant country
FINLAND Merita Bank KOP Merita Bank KOP
Aleksis Kiven 3-5 Helsinki
00500 Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
GERMANY Chase Bank A.G. Chase Bank A.G.
Alexanderstrasse 59 Frankfurt
Postfach 90 01 09
60441 Frankfurt/Main
GERMANY
GHANA Barclays Bank of Ghana Barclays Bank
Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece S.A.
1 Kolokotroni Street Athens
10562 Athens A/c Chase Manhattan Bank, N.A.,
GREECE London
A/c No. 040/7/921578-68
HONG KONG The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
40/F One Exchange Square Hong Kong
8, Connaught Place
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.
Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
52/60 Mahatma Gandhi Road Bombay
Bombay 400 001
INDIA
Deutsche Bank AG, Bombay Branch Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
INDONESIA The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
Banking Corporation Limited Jakarta
World Trade Center
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
IRELAND Bank of Ireland Allied Irish Bank
International Financial Services Centre Dublin
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel B.M.
19 Herzl Street Tel Aviv
61000 Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Piazza Meda 1 Milan
20121 Milan
ITALY
JAPAN The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1-3 Marunouchi 1-Chome Tokyo
Chiyoda-Ku
Tokyo 100
JAPAN
JORDAN Arab Bank Limited Arab Bank Limited
P O Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
Third Floor Nairobi
Queensway House
Nairobi
Kenya
LUXEMBOURG
Banque Generale du Luxembourg S.A. Banque Generale du Luxembourg
50 Avenue J.F. Kennedy S.A.
L-2951 LUXEMBOURG Luxembourg
MALAYSIA The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Pernas International Kuala Lumpur
Jalan Sultan Ismail
50250, Kuala Lumpur
MALAYSIA
MAURITIUS Hongkong and Shanghai Banking The Hongkong and Shanghai Banking
Corporation Ltd Corporation Ltd.
Curepipe Road Curepipe
Curepipe
MAURITIUS
MEXICO The Chase Manhattan Bank, S.A. No correspondent Bank
(Equities)Montes Urales no. 470, 4th Floor
Col. Lomas de Chapultepec
11000 Mexico D.F.
(Government Banco Nacional de Mexico, No correspondent Bank
Bonds) Avenida Juarez No. 104 - 11 Piso
06040 Mexico D.F.
MEXICO
MOROCCO Banque Commerciale du Maroc Banque Commerciale du Maroc
2 Boulevard Moulay Youssef Casablanca
Casablanca 20000
MOROCCO
NETHERLANDS
ABN AMRO N.V. Generale Bank
Securities Centre Nederland N.V.
P O Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW ZEALAND
National Nominees Limited National Bank of New Zealand
Level 2 BNZ Tower Wellington
125 Queen Street
Auckland
NEW ZEALAND
NORWAY Den Norske Bank Den Norske Bank
Kirkegaten 21 Oslo
Oslo 1
NORWAY
PAKISTAN Citibank N.A. Citibank N.A.
I.I. Chundrigar Road Karachi
AWT Plaza
Karachi
PAKISTAN
Deutsche Bank Deutsche Bank
Unitowers Karachi
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank, N.A. Citibank N.A.
Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES
The Hongkong and Shanghai The Hongkong and Shanghai
Banking Corporation Limited Banking Corporation Limited
Hong Kong Bank Centre 3/F Manila
San Miguel Avenue
Ortigas Commercial Centre
Pasig Metro Manila
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki S.A.
Curtis Plaza Warsaw
Woloska 18
02-675 Warsaw
POLAND
For Mutual Funds:
Bank Handlowy W. Warsawie. S.A. Bank Polska Kasa Opieki S.A.
Custody Dept. Warsaw
Capital Markets Centre
Ul, Nowy Swiat 6/12
00-920 Warsaw
POLAND
PORTUGAL Banco Espirito Santo & Comercial Banco Nacional Ultra Marino
de Lisboa Lisbon
Servico de Gestaode Titulos
R. Mouzinho da Silveira, 36 r/c
1200 Lisbon
PORTUGAL
SHANGHAI The Hongkong and Shanghai Citibank
(CHINA) Banking Corporation Limited New York
Shanghai Branch
Corporate Banking Centre
Unit 504, 5/F Shanghai Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC OF CHINA
SHENZHEN The Hongkong and Shanghai The Chase Manhattan Bank, N.A.
(CHINA) Banking Corporation Limited Hong Kong
1st Floor
Central Plaza Hotel
No.1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC OF CHINA
SINGAPORE The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Shell Tower Singapore
50 Raffles Place
Singapore 0104
SINGAPORE
SLOVAK REPUBLIC
Ceskoslovenska Obchodni Banka, A.S. Ceskoslovenska Obchodni Banka
Michalska 18 Slovak Republic
815 63 Bratislava
SLOVAK REPUBLIC
SOUTH AFRICA
Standard Bank of South Africa Standard Bank of South Africa
Standard Bank Chambers South Africa
46 Marshall Street
Johannesburg 2001
SOUTH AFRICA
SOUTH KOREA
The Hongkong & Shanghai The Hongkong & Shanghai
Banking Corporation Limited Banking Corporation Limited
6/F Kyobo Building Seoul
#1 Chongro, 1-ka Chongro-Ku,
Seoul
SOUTH KOREA
SPAIN The Chase Manhattan Bank, N.A. Banco Bilbao Vizcaya,
Calle Peonias 2 Madrid
7th Floor
La Piovera
28042 Madrid
SPAIN
SRI LANKA The Hongkong & Shanghai The Hongkong & Shangai
Banking Corporation Limited Banking Corporation Limited
Unit #02-02 West Block, Colombo
World Trade Center
Colombo 1,
SRI LANKA
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken
Kungstradgardsgatan 8 Stockholm
Stockholm S-106 40
SWEDEN
SWITZERLAND
Union Bank of Switzerland Union Bank of Switzerland
45 Bahnhofstrasse Zurich
8021 Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, N.A. No correspondent Bank
115 Min Sheng East Road - Sec 3,
9th Floor
Taipei
TAIWAN
Republic of China
THAILAND The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Bubhajit Building Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
TUNISIA Banque Internationale Arabe de Tunisie Banque Internationale Arabe de
70-72 Avenue Habib Bourguiba Tunisie, Tunisia
P.O. Box 520
1080 Tunis Cedex
Tunisia
TURKEY The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Emirhan Cad. No: 145 Istanbul
Atakule, A Blok Kat:11
80700-Dikilitas/Besiktas
Istanbul
Turkey
U.K. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Woolgate House London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of Boston The First National Bank of Boston
Zabala 1463 Montevideo
Montevideo
URUGUAY
U.S.A. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza New York
New York
NY 10081
U.S.A.
VENEZUELA Citibank N.A. Citibank N.A.
Carmelitas a Altagracia Caracas
Edificio Citibank
Caracas 1010
VENEZUELA
ZAMBIA Barclays Bank of Zambia Barclays Bank of Zambia
Kafue House Lusaka
Cairo Road
P.O.Box 31936
Lusaka
ZAMBIA
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of Zimbabwe
Ground Floor Harare
Tanganyika House
Corner of 3rd Street & Union Avenue
Harare
ZIMBABWE
</TABLE>
<PAGE>
AMENDMENT, dated November 20, 1997 to the May 1, 1996 custody agreement
("Agreement"), between those registered investment companies listed on Schedule
A to the Agreement (each a "Customer"), having a place of business at 1818
Market Street, Philadelphia, PA 19103 and The Chase Manhattan Bank ("Bank"),
having a place of business at 270 Park Ave., New York, N.Y.
10017-2070.
It is hereby agreed as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
Section 2. The Agreement is amended by deleting the mutual fund rider
thereto and inserting, in lieu thereof, the following mutual fund rider:
1. Add a new Section 15 to the Agreement as follows:
15. COMPLIANCE WITH SEC RULE 17F-5 ("RULE 17F-5").
(a) Customer's board of directors (or equivalent body) (hereinafter
"Board") hereby delegates to Bank, and Bank hereby accepts the delegation to it,
of the obligation to perform as Customer's "Foreign Custody Manager" (as that
term is defined in Rule 17f-5(a)(2)) adopted under the Investment Company Act of
1940 ("Act"), as amended ("1940 Act"), the following responsibilities in a
manner consistent with Rule 17f-5, to: (i) select Eligible Foreign Custodians
(as that term is defined in Rule 17f-5(a)(1), and as the same may be amended
from time to time, or that have otherwise been made exempt pursuant to an SEC
exemptive order); (ii) enter into written contracts with such Eligible Foreign
Custodians that are banks or trust companies and with Eligible Foreign
Custodians that are "Securities Depositories" (as defined in Rule 17f-5(a)(6))
and that are not Compulsory Depositories (as defined below) where the Depository
has such a contract; and (iii) to monitor the appropriateness of maintaining
Assets of the series of the Customer with such Eligible Foreign Custodians;
provided that, Bank shall not be responsible for these duties with respect to
any compulsory Securities Depository ("Compulsory Depository"). A Compulsory
Depository shall mean a Securities Depository or clearing agency the use of
which is compulsory because: (1) its use is required by law or regulation or (2)
maintaining securities outside the depository is not consistent with prevailing
custodial practices in the country which the Depository serves. Compulsory
Depositories used by Chase as of the date hereof are set forth in Appendix 1-A
hereto. Appendix 1-A may be amended on notice to
<PAGE>
Customer from time to time. In that connection, Bank shall notify Customer
promptly of pending changes to Appendix 1-A.
(b) In connection with the foregoing, Bank shall:
(i) provide written reports to Customer's Board upon the placement of
Assets with a particular Eligible Foreign Custodian and of any Material
Change (as defined below) in the arrangements with such Eligible Foreign
Custodians, with such reports to be provided to Customer's Board at such
times as the Board deems reasonable and appropriate based on the
circumstances of Customer's foreign custody arrangements (and until further
notice from Customer such reports shall be provided within 30 days after
Bank becomes aware of any such Material Change. For purposes of the
foregoing, a Material Change shall include, but shall not be limited to,
Bank's decision to remove Customer's Assets from a particular Eligible
Foreign Custodian, an event that has a material adverse affect on an
Eligible Foreign Custodian's financial or operational strength, any
non-compliance by an Eligible Foreign Custodian with a "Material Term" of
Bank's subcustodian agreement with such Eligible Foreign Custodian (as
defined below) or any failure by an Eligible Foreign Custodian to meet the
requirements for its status as such under Rule 17f-5. A Material Term shall
mean a term which provides that (a) the Customer will be adequately
indemnified or its Assets adequately insured, or an adequate combination
thereof, in the event of loss; (b) the Assets of the Series will not be
subject to any right, charge, security interest, lien or claim of any kind
in favor of an Eligible Foreign Custodian or such Eligible Foreign
Custodian's creditors, except a claim of payment for their safe custody or
administration, or in the case of cash deposits, liens or rights in favor
of creditors of the Eligible Foreign Custodian arising under bankruptcy,
insolvency or similar laws; (c) beneficial ownership for the Assets of the
Series will be freely transferable without the payment of money or value
other than for safe custody or administration of the Assets of the Series;
(d) adequate records will be maintained identifying the Assets as belonging
to the Customer or the Series or as being held by a third party for the
benefit of the Customer or the Series; (e) the independent auditors for the
Customer will be given access to those records or confirmation of the
contents of those records; and (f) the Customer will receive periodic
reports with respect to the safekeeping of the Series' Assets, including,
but not necessarily limited to, notification of any transfer to or from the
Customer's account or a third party account containing Assets held for the
benefit of the Customer. In addition, in the event that a contract with an
Eligible Foreign Custodian does not include any or all of the terms
described in (a) through (f) of this paragraph 15(b)(i), a Material Term
shall mean a term which, in the Bank's judgment, if not complied with,
would cause the contract not to provide the same or greater level of care
and protection for Customer's Assets than if the contract contained the
provisions described in (a) through (f) of this paragraph 15(b)(i).
<PAGE>
(ii) exercise such reasonable care, prudence and diligence in performing as
Customer's Foreign Custody Manager as a person having responsibility for
the safekeeping of Assets would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have determined
that Assets placed and maintained in the safekeeping of such Eligible
Foreign Custodian shall be subject to reasonable care, based on the
standards applicable to custodians in the relevant market, after having
considered all factors relevant to the safekeeping of such Assets,
including, without limitation, those factors set forth in Rule
17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign
Custodian (or, in the case of an Eligible Foreign Custodian that is a
Securities Depository or clearing agency, such contract, the rules or
established practices or procedures of the depository, or any combination
of the foregoing) requires that the Eligible Foreign Custodian will provide
reasonable care for Assets based on the standards applicable to custodians
in the relevant market.
(v) have established a system to monitor the continued appropriateness of
maintaining Assets with particular Eligible Foreign Custodians based on the
standards set forth herein and of the governing contractual arrangements
based on the standards set forth in Rule 17f-5(c)(2), as it may be amended
from time to time.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Assets on behalf of Customer with Eligible Foreign Custodians pursuant to a
written contract which either contains the terms described in Rule
17f-5(c)(2)(i) or which, in lieu of any or all of the terms described in Rule
17f-5(c)(2)(i), contains such other provisions which the Bank determines will
provide in their entirety, the same or a greater level of care and protection
for the Customer's Assets as the provisions of Rule 17f-5(c)(2)(i) in their
entirety. The written contract shall be in such form as deemed appropriate by
Bank. In addition, with respect to Eligible Foreign Custodians that are
non-compulsory Securities Depositories, reliance may be had on such a contract,
the rules or established practices and procedures of such Depository or any
combination thereof.
(c) Except as expressly provided herein, Customer shall be solely
responsible to assure that the maintenance of Assets hereunder complies with the
rules, regulations, interpretations and exemptive orders promulgated by or under
the authority of the
<PAGE>
SEC which are applicable to Fund's business or which have been granted to Fund.
Bank shall advise Customer of any exemptive orders which it obtains which may
have an impact on Bank's relationship with Customer.
(d) Bank represents to Customer that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Customer represents to Bank that: (1) the Assets being placed and
maintained in Bank's custody are subject to the 1940 Act, as the same may be
amended from time to time; (2) its Board has determined that it is reasonable to
rely on Bank to perform as Customer's Foreign Custody Manager. Nothing contained
herein shall require Bank, on Customer's behalf, to make any selection regarding
countries in which Customer invests or to engage in any monitoring of Customer's
decision to invest in any particular country in which Bank selects , contracts
and monitors Eligible Foreign Custodians, as Customer's Foreign Custody Manager
pursuant to the Agreement.
(e) Bank shall provide to Customer such information as is specified in
Appendix 1-B hereto. Customer hereby acknowledges that: (i) such information is
solely designed to inform Customer of market conditions and procedures, but is
not intended to influence Customer's investment decisions; and (ii) Bank has
gathered the information from sources it considers reliable, but that Bank shall
have no responsibility for inaccuracies or incomplete information except to the
extent that Bank was negligent in selecting the sources of such information.
2. Add the following after the first sentence of Section 3 of the
Agreement:
At the request of Customer, Bank may, but need not, add to Schedule A an
Eligible Foreign Custodian that is either a bank or a non-Compulsory
Depository where Bank has not acted as Foreign Custody Manager with respect
to the selection thereof. Bank shall notify Customer in the event that it
elects not to add any such entity.
3. Add the following language to the end of Section 3 of the Agreement:
The term Subcustodian as used herein shall mean the following:
(a) a "U.S. Bank," which shall mean a U.S. bank as defined in Rule
17f-5(a)(7); and (b) with respect to Securities for which the primary
market is outside the U.S. an "Eligible Foreign Custodian," shall mean (i)
a banking institution or trust company, incorporated or organized under the
laws of a country other than the United States, that is regulated as such
by that country's government or an agency thereof, (ii) a majority-owned
direct or indirect subsidiary of a U.S. Bank or bank
<PAGE>
holding company which subsidiary is incorporated or organized under the
laws of a country other than the United States; (iii) a Securities
Depository or clearing agency (other than a Compulsory Depository),
incorporated or organized under the laws of a country other than the United
States, that acts as a system for the central handling of securities or
equivalent book-entries in that country and that is regulated by a foreign
financial regulatory autho rity as defined under section 2(a)(50) of the
1940 Act, (iv) a Securities Depository or clearing agency organized under
the laws of a country other than the United States that acts as a
transnational system ("Transnational Depository") for the central handling
of securities or equivalent book-entries, and (v) any other entity that
shall have been so qualified by exemptive order, rule or other appropriate
action of the SEC.
The term Subcustodian as used in Section 12(a)(i) (except the last sentence
thereof) shall not include any Eligible Foreign Custodians as to which Bank
has not acted as Foreign Custody Manager, any Compulsory Depository and any
Transnational Depository.
4. Add the following after the word "administration" at the end of
Subsection 4(d)(i): "or, in the case of cash deposits, liens or rights in favor
of creditors of Subcustodian arising under bankruptcy, insolvency, or similar
laws".
5. Delete all of Subsection 4(e) after the word "located" in (ii) thereof
and add the word "and" between "Subcustodian" and "(ii)".
*********************
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
Customer THE CHASE MANHATTAN BANK
By: /s/ Michael P. Bishof By: /s/ Rosemary M. Stidmon
Name: Michael P. Bishof Name: Rosemary M. Stidmon
Title: Senior Vice President/ Title: Vice President
Treasurer
Date: Nov. 20, 1997 Date: Nov. 20, 1997
<PAGE>
APPENDIX A
Delaware Group Adviser Funds, Inc.
U.S. Growth Fund
Overseas Equity Fund
New Pacific Fund
Delaware Group Equity Funds I, Inc.
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Quantum Fund
Delaware Group Equity Funds IV, Inc.
DelCap Fund
Capital Appreciation Fund
Delaware Group Equity Funds V, Inc.
Retirement Income Fund
Small Cap Value Fund
Delaware Pooled Trust, Inc.
The International Equity Portfolio
The International Fixed Income Portfolio
The Global Equity Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Real Estate Investment Trust Portfolio II
The Emerging Markets Portfolio
Delaware Group Global & International Funds, Inc.
Emerging Markets Series
Global Assets Series
Global Bond Series
Global Equity Series
International Equity Series
International Small Cap Series
Delaware Group Premium Fund, Inc.
Convertible Securities Series
Devon Series
Emerging Markets Series
Quantum Series
Strategic Income Series
Global Bond Series
DelCap Series
International Equity Series
Delaware Series
Value Series
Voyageur Mutual Funds III, Inc.
Tax-Efficient Equity Fund
Dated: November 20, 1997
<PAGE>
Appendix 1-A
COMPULSORY DEPOSITORIES
Argentina Caja de Valores Equity, Corporate &
Government Debt
Australia Austraclear Ltd. Corporate Debt, Money
Market & Semi-Government Debt
CHESS Equity
(Clearing House Electronic Sub-
register System)
RITS Government Debt
(Reserve Bank Information and
Transfer System)
Austria Oesterreichische Kontrolbank AG Equity, Corporate +
Government Debt
Belgium CIK Equity + Corporate
(Caisse Interprofessionnelle de Debt
Depots et de Virements de Titres)
Banque Nationale de Belgique Treasury Bills +
Government Debt
<PAGE>
Brazil BOVESPA Equity
(Bolsa de Valores de Sao Paolo)
BVRJ Equity
(Bolsa de Valores de Rio de
Janeiro)
Canada CDS Equity, Corporate +
(Canadian Depository for Government Debt
Securities)
China, SSCCRC Equity
Shanghai (Shanghai Securities Central
Clearing and Registration Corp.)
China, SSCC Equity
Shenzhen (Shenzhen Securities
Registration Co., Ltd.)
Czech SCP Equity + Long-Term
Republic (Securities Center) Government Debt
TKD Treasury Bills +
(Trh Kratkododich Dlluhopisu or Money Market
Short-Term Bond Market)
Denmark VP Equity, Corporate +
(Vaerdipapircentralen) Government Debt
Egypt Misr Clearing & Sec. Dep. Equity
Estonia EVK Equity
(Estonian Central Depository for
Securities Ltd.)
Euromarket Cedel & Euroclear Euro-Debt
Finland CSR Equity + Government
(Central Share Registry Finland) Debt
Helsinki Money Market Center Money Market
Ltd.
France SICOVAM Equity + Corporate
(Banque de France) Debt.
France SATURNE Government Debt.
(Banque de France)
Germany DKV Equity, Corporate +
(Deutscher Kassenverein) Government Debt
Greece Apothetirio Titlon A.E. Equity
Bank of Greece Government Debt
<PAGE>
Hong Kong CCASS Equity
(Central Clearing and
Settlement System)
CMU Corporate +
(Central Moneymarkets Unit) Government Debt
Hungary Keler Ltd. Equity + Government
Debt
Ireland CREST Equity
GSO Government Debt
(Gilt Settlement Office)
Israel TASE Clearing House Equity, Corporate +
(Tel Aviv Stock Exchange Government Debt
Clearing House)
Italy Monte Titoli Equity + Corporate Debt
Bank of Italy Government Debt
Japan Bank of Japan Registered Government
Debt
Latvia LCD Equity + Government
(Latvian Central Depository) Debt
Lebanon Midclear Equity
(Custodian and Clearing Center
of Lebanon and the Middle East)
Luxembourg Cedel Equity
Malaysia MCD Equity
(Malaysian Central Depository
Snd Bhd)
Mauritius CDS Equity
(Central Depository System)
Mexico Indeval Equity, Corporate +
(Institucion para el Deposito Government Debt.
de Valores)
Morocco Maroclear Equity + Corporate Debt
Bank Al'Maghrib Government Debt
Netherlands NECIGEF/KAS Associate NV Equity, Corp. + Govt. D
De Nederlandsche Bank N.V. Money Market
<PAGE>
Netherlands NIEC Premium Bonds
(Nederlands Interpforessioneel
Effectencentrum B.V.)
New Zealand Austraclear New Zealand Equity, Corporate +
Government Debt
Norway VPS Equity, Corporate +
(Verdipapirsentralen) Government Debt
Oman NONE
Pakistan CDC Equity
(Central Depository Company of
Pakistan Ltd.)
Peru CAVALI Equity
(Caja de Valores)
Philippines PCD Equity
(Philippine Central Depository)
Poland NDS Equity, Long-Term
(National Securities Government Debt +
Depository) Vouchers
CRT Treasury-Bills
(Central Registry of Treasury-
Bills)
Portugal Interbolsa Equity, Corporate +
Government Debt
Romania SNCDD - RASDAQ Equity
(National Company for Clearing,
Settlement and Depository for
Securities)
Budapest Stock Exchange Equity
Registry
National Bank of Romania Treasury-Bills
Russia MICEX GKO's
(Moscow Interbank Currency (Gosudarstvennye
Exchange) Kratkosrochnye
Obyazatelstva [T-
Bills])
OFZ's
(Obligatsyi
Federalnogo Zaima
[Federal Loan Bonds])s
<PAGE>
Singapore CDP Equity + Corporate
(Central Depository Pte. Ltd.) Debt and Malaysian
equities traded on CLOB
Monetary Authority of Singapore Government Debt
Slovak SCP Equity + Government
Republic (Stredisko Cennych Papiru) Debt
National Bank of Slovakia Treasury-Bills
So. Africa CD Corporate + Government
(Central Depository) Debt
So. Korea KSD Equity, Corporate +
Government Debt
Spain SCLV Equity + Corporate
(Servicio de Compensacion y Debt.
Liquidacion de Valores)
CBEO Government Debt
(Central Book Entry Office)
Sri Lanka CDS Equity
(Central Depository System
(Private) Ltd.)
Sweden VPC Equity, Corporate +
(Vardepapperscentralen AB) Government Debt
Switzerland SEGA Equity, Corporate +
(Schweizerische Effekten-Giro Government Debt
AG)
Taiwan TSCD Equity + Government
(Taiwan Securities Central Debt
Depository Co., Ltd.)
Thailand TSDC Equity, Corporate +
(Thailand Securities Depository Government Debt
Company Ltd.)
Tunisia STICODEVAM Equity
(Societe Tunisienne
Interprofessionnelle pour la
Compensation et le Depot des
Valeurs Mobilieres)
Ministry of Finance Government Debt
tradable on the stock
exchange (BTNBs)
Central Bank of Tunisia Government Debt not
tradable on the stock
exchange (BTCs)
<PAGE>
Turkey Takas Bank Equity + Corporate
Debt
Central Bank of Turkey Government Debt
United CREST Equity + Corp. Debt
Kingdom
CMO Sterling CDs & CP
(Central Moneymarket Office)
CGO Gilts
(Central Gilts Office)
United DTC Equity + Corporate
States (Depository Trust Company) Debt
PTC Mortgage Back Debt
(Participants Trust Company)
Fed Book-Entry Government Debt.
Zambia LuSE Equity + Government
(LuSE Central Shares Depository Debt
Ltd.)
Appendix 1-B
Information Regarding Country Risk
1. To aid Customer's board in its determinations regarding Country Risk,
Bank shall furnish board annually and upon the initial placing of Assets into a
country the following information (check items applicable):
A Opinions of local counsel concerning:
___ i. Whether applicable foreign law would restrict the access afforded
Customer's independent public accountants to books and records kept by
an eligible foreign custodian located in that country.
___ ii. Whether applicable foreign law would restrict the Customer's
ability to recover its assets in the event of the bankruptcy of an
Eligible Foreign Custodian located in that country.
___ iii. Whether applicable foreign law would restrict the Customer's
ability to recover assets that are lost while under the control of an
Eligible Foreign Custodian located in the country.
<PAGE>
B. Written information concerning:
___ i. The likelihood of expropriation,
nationalization, freezes, or confiscation of
Customer's assets.
___ ii. Whether difficulties in converting Customer's
cash and cash equivalents to U.S. dollars are
reasonably foreseeable.]
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership restrictions,
(iii) foreign exchange, (iv) securities settlement and registration, (v)
taxation, and (vi) compulsory depositories (including depository
evaluation).
2. To aid Customer's board in monitoring Country Risk, Bank shall furnish
board the following additional information:
Market flashes, including with respect to changes in the information in
market reports.
<PAGE>
As of
VIA UPS OVERNIGHT
The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, New York 11245
Attention: Global Custody Division
Re: Global Custody Agreement, Effective May 1, 1996, as amended November 20,
1997 between The Chase Manhattan Bank and those registered investment
companies (and on behalf of certain series thereof), listed on Schedule A
attached thereto ("Agreement")
--------------------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to the provisions of Section 1 of the Agreement, the undersigned, on
behalf of Delaware Group Cash Reserve, Inc. (the "Fund") hereby appoints The
Chase Manhattan Bank to provide custodial services for the Fund under and in
accordance with the terms of the Agreement and accordingly, requests that the
Fund be added to Schedule A to the Agreement effective September , 1998. Kindly
acknowledge your agreement to provide such services and to add the Fund to
Schedule A by signing in the space provided below.
DELAWARE GROUP CASH RESERVE, INC.
By:_________________________________
David K. Downes
Its: Executive Vice President
Chief Operating Officer
Chief Financial Officer
AGREED:
THE CHASE MANHATTAN BANK
By:__________________________
Its:_________________________
<PAGE>
Law Offices
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8115
May 29, 1999
Delaware Group Cash Reserve, Inc.
1818 Market Street
Philadelphia, PA 19103
Re: Legal Opinion-Securities Act of 1933
------------------------------------
Ladies and Gentlemen:
We have examined the Articles of Incorporation, as amended and supplemented
(the "Articles") of Delaware Group Cash Reserve, Inc. (the "Fund"), a series
corporation organized under Maryland law, the By-Laws of the Fund, and its
proposed form of Share Certificates (if any), all as amended to date, and the
various pertinent corporate proceedings we deem material. We have also examined
the Notification of Registration and the Registration Statements filed under the
Investment Company Act of 1940 (the "Investment Company Act") and the Securities
Act of 1933 (the "Securities Act"), all as amended to date, as well as other
items we deem material to this opinion.
The Fund is authorized by the Articles to issue ten billion (10,000,000,000)
shares of common stock at a par value of $.001 and currently issues four classes
of shares of a single series designated the Cash Reserve Series. The Articles
also empower the Board to designate any additional series or classes and
allocate shares to such series or classes.
The Fund has filed with the U.S. Securities and Exchange Commission, a
registration statement under the Securities Act, which registration statement is
deemed to register an indefinite number of shares of the Fund pursuant to the
provisions of Section 24(f) of the Investment Company Act. You have further
advised us that the Fund has filed, and each year hereafter will timely file, a
Notice pursuant to Rule 24f-2 under the Investment Company Act perfecting the
registration of the shares sold by the Fund during each fiscal year during which
such registration of an indefinite number of shares remains in effect.
You have also informed us that the shares of the Fund have been, and will
continue to be, sold in accordance with the Fund's usual method of distributing
its registered shares, under which prospectuses are made available for delivery
to offerees and purchasers of such shares in accordance with Section 5(b) of the
Securities Act.
<PAGE>
Based upon the foregoing information and examination, so long as the Fund
remains a valid and subsisting entity under the laws of its state of
organization, and the registration of an indefinite number of shares of the Fund
remains effective, the authorized shares of the Fund when issued for the
consideration set by the Board of Directors pursuant to the Articles, and
subject to compliance with Rule 24f-2, will be legally outstanding, fully-paid,
and non-assessable shares, and the holders of such shares will have all the
rights provided for with respect to such holding by the Articles and the laws of
the State of Maryland.
We hereby consent to the use of this opinion, in lieu of any other, as an
exhibit to the Registration Statement of the Fund, along with any amendments
thereto, covering the registration of the shares of the Fund under the
Securities Act and the applications, registration statements or notice filings,
and amendments thereto, filed in accordance with the securities laws of the
several states in which shares of the Fund are offered, and we further consent
to reference in the registration statement of the Fund to the fact that this
opinion concerning the legality of the issue has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /s/Bruce G. Leto
-----------------
Bruce G. Leto
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 44 to the Registration Statement (Form N-1A) (No.
2-60770) of Delaware Group Cash Reserve, Inc. of our report dated May 3, 1999,
included in the 1999 Annual Report to shareholders.
/s/Ernst & Young LLP
--------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
May 24, 1999
<PAGE>
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. (the "Fund") as of March 31, 1999, 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 periods indicated therein. 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 and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1999, 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 31,1999, 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 its financial highlights for the
periods indicated therein, in conformity with generally accepted accounting
principles.
/s/Ernst & Young LLP
--------------------
Ernst & Young, LLP
Philadelphia, Pennsylvania
May 3, 1999
<PAGE>
DISTRIBUTION PLAN
CLASS B
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Cash Reserve, Inc. (the "Fund") on behalf of the Cash Reserve B Class (now
doing business as Delaware Cash Reserve B Class and hereinafter referred to as
the "Class"), which Fund and Class may do business under these or such other
names as the Board of Directors of the Fund may designate from time to time. The
Plan has been approved by a majority of the Board of Directors, including a
majority of the Directors who are not interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related thereto ("non-interested Directors"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Directors included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. The Plan
has been approved by a vote of the holders of a majority of the outstanding
voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Fund's average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 thereof without
approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
<PAGE>
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Cash Reserve, Inc. (the "Fund") on behalf of the Cash Reserve C Class (the
"Class"), which Fund and Class may do business under these or such other names
as the Board of Directors of the Fund may designate from time to time. The Plan
has been approved by a majority of the Board of Directors, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested Directors"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval by the
Directors included a determination that in the exercise of reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. The Plan
has been approved by a vote of the holders of a majority of the outstanding
voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
<PAGE>
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Fund's average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
<PAGE>
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
<PAGE>
DISTRIBUTION PLAN
CONSULTANT CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Cash Reserve, Inc. (the "Fund") on behalf of the Consultant Class (now
doing buiness as the Delaware Cash Reserve Consultant Class (hereinafter
referred to as the "Class"), which Fund and Class may do business under these or
such other names as the Board of Directors of the Fund may designate from time
to time. The Plan has been approved by a majority of the Board of Directors,
including a majority of the Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested Directors"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the Directors included a determination that in the exercise of reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Class and its shareholders. If the
Plan has not yet been approved by a majority of the outstanding voting
securities as required in the Act, the Plan will be presented to the public
shareholders at the next regular annual or special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Fund's investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
<PAGE>
The Plan provides that:
1. The Fund shall pay to the Distributor a monthly fee not to exceed
0.3% (3/10 of 1%) per annum of the Fund's average daily net assets represented
by shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of Directors from time to time. Such monthly fee shall be reduced by the
aggregate sums paid by the Fund to persons other than broker-dealers (the
"Service Providers") who may, pursuant to servicing agreements, provide the Fund
services in the Fund's marketing of shares of the Class.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1 above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreement and the Plan; both the Distributor and the
Service Providers shall furnish the Board of Directors of the Fund with such
other information as the Board may reasonably request in connection with the
payments made under the Plan and the use thereof by the Distributor and the
Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the
non-interested Directors, cast in person at a meeting called for the purpose of
voting on such Plan.
<PAGE>
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> DELAWARE GROUP CASH RESERVE, INC.
<SERIES>
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<S> <C>
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<PERIOD-END> MAR-31-1999
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<INVESTMENTS-AT-VALUE> 636,606,188
<RECEIVABLES> 34,187,148
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<EXPENSES-NET> 5,872,264
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<NET-CHANGE-FROM-OPS> 27,425,226
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<DISTRIBUTIONS-OF-INCOME> 24,857,705
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<NUMBER-OF-SHARES-SOLD> 1,978,969,758
<NUMBER-OF-SHARES-REDEEMED> 1,936,369,808
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<NET-CHANGE-IN-ASSETS> 87,284,984
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,028,442
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,872,264
<AVERAGE-NET-ASSETS> 550,792,032
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.045
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<PER-SHARE-DIVIDEND> 0.045
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[AVG-DEBT-PER-SHARE] 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<SERIES>
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<S> <C>
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<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 636,606,188
<INVESTMENTS-AT-VALUE> 636,606,188
<RECEIVABLES> 34,187,148
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<OTHER-ITEMS-ASSETS> 18,448
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<SHARES-COMMON-PRIOR> 6,522,397
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<OVERDISTRIBUTION-GAINS> 0
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<INTEREST-INCOME> 33,297,490
<OTHER-INCOME> 0
<EXPENSES-NET> 5,872,264
<NET-INVESTMENT-INCOME> 27,425,226
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 27,425,226
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 542,381
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 117,999,348
<NUMBER-OF-SHARES-REDEEMED> 105,025,829
<SHARES-REINVESTED> 412,827
<NET-CHANGE-IN-ASSETS> 87,284,984
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,028,442
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,872,264
<AVERAGE-NET-ASSETS> 15,622,332
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.035
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.035
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.90
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<SHARES-COMMON-PRIOR> 3,701,731
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> 5,872,264
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 27,425,226
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 242,117
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 155,854,545
<NUMBER-OF-SHARES-REDEEMED> 148,625,680
<SHARES-REINVESTED> 202,957
<NET-CHANGE-IN-ASSETS> 87,284,984
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,028,442
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,872,264
<AVERAGE-NET-ASSETS> 6,964,368
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.035
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.035
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.90
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<INVESTMENTS-AT-COST> 636,606,188
<INVESTMENTS-AT-VALUE> 636,606,188
<RECEIVABLES> 34,187,148
<ASSETS-OTHER> 158,092
<OTHER-ITEMS-ASSETS> 18,448
<TOTAL-ASSETS> 670,969,876
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,947,017
<TOTAL-LIABILITIES> 8,947,017
<SENIOR-EQUITY> 662,023
<PAID-IN-CAPITAL-COMMON> 661,360,836
<SHARES-COMMON-STOCK> 42,731,764
<SHARES-COMMON-PRIOR> 40,036,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 42,731,764
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 33,297,490
<OTHER-INCOME> 0
<EXPENSES-NET> 5,872,264
<NET-INVESTMENT-INCOME> 27,425,226
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 27,425,226
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,783,023
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 485,552,242
<NUMBER-OF-SHARES-REDEEMED> 484,286,277
<SHARES-REINVESTED> 1,429,128
<NET-CHANGE-IN-ASSETS> 87,284,984
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,028,442
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,872,264
<AVERAGE-NET-ASSETS> 41,727,814
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.043
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.043
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.15
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
POWER OF ATTORNEY
The undersigned, a member of the Boards of Directors/Trustees of the
Delaware Investments Family of Funds listed on Exhibit A to this Power of
Attorney, hereby constitutes and appoints on behalf of each of the Funds listed
on Exhibit A, Jeffrey J. Nick, Wayne A. Stork and Walter P. Babich and any one
of them acting singly, her true and lawful attorneys-in-fact, in her name,
place, and stead, to execute and cause to be filed with the Securities and
Exchange Commission and other federal or state government agency or body, such
registration statements, and any and all amendments thereto as either of such
designees may deem to be appropriate under the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and all other
applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
this 15th day of April, 1999.
/s/ Jan L. Yeomans
- ----------------------
Jan L. Yeomans
<PAGE>
POWER OF ATTORNEY
EXHIBIT A
DELAWARE INVESTMENTS FAMILY OF FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS III, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP FOUNDATION FUNDS
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
