<PAGE> 1
SUPPLEMENT DATED APRIL 15, 1995
TO THE CURRENT PROSPECTUSES
OF THE FOLLOWING DELAWARE GROUP FUNDS
DELAWARE GROUP DELAWARE FUND, INC., DELAWARE GROUP TREND FUND, INC.,
DELAWARE GROUP VALUE FUND, INC., DELAWARE GROUP DECATUR FUND, INC.,
DELAWARE GROUP DELCAP FUND, INC., DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC., DELAWARE GROUP GOVERNMENT FUND, INC., DELAWARE GROUP
TAX-FREE FUND, INC., DELAWARE GROUP TREASURY RESERVES, INC., DELAWARE
GROUP TAX-FREE MONEY, INC., DELAWARE GROUP CASH RESERVE, INC.
On March 29, 1995, shareholders of each of the above referenced Funds
or, as relevant, the series thereof, approved a new Investment Management
Agreement with Delaware Management Company, Inc. ("DMC"), an indirect
wholly-owned subsidiary of Delaware Management Holdings, Inc. ("DMH"). The
approval of new Investment Management Agreements was subject to the completion
of the merger (the "Merger") between DMH and a wholly-owned subsidiary of
Lincoln National Corporation ("Lincoln National") which occurred on April 3,
1995. Accordingly, the previous Investment Management Agreements terminated and
the new Investment Management Agreements became effective on that date.
As a result of the Merger, DMC and its two affiliates, Delaware
Service Company, Inc., the Funds' shareholder servicing, dividend disbursing
and transfer agent and Delaware Distributors, L.P., the Funds' national
distributor became indirect wholly-owned subsidiaries of Lincoln National.
Lincoln National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services
industry, including insurance and investment management.
Under the new Investment Management Agreements, DMC will be paid at
the same annual fee rates and on the same terms as it was under the previous
Investment Management Agreements. In addition, the investment approach and
operation of each Fund and, as relevant, each series of a Fund, will remain
substantially unchanged.
PS-OTH-4/95
<PAGE> 2
DECATUR TOTAL RETURN FUND PROSPECTUS
A CLASS SHARES JANUARY 30, 1995
B CLASS SHARES
------------------------------------------------------------------------
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640 PHILADELPHIA 988-1333
INFORMATION ON EXISTING ACCOUNTS: (SHAREHOLDERS ONLY) NATIONWIDE 800-523-1918
PHILADELPHIA 988-1241
DEALER SERVICES: (BROKER/DEALERS ONLY) NATIONWIDE 800-362-7500 PHILADELPHIA
988-1050
This Prospectus describes the Decatur Total Return Fund A Class of shares
(the "Class A Shares") and the Decatur Total Return Fund B Class of shares (the
"Class B Shares") (collectively, the "Classes") of the Decatur Total Return
Fund series (the "Series") of Delaware Group Decatur Fund, Inc. (the "Fund"), a
professionally-managed mutual fund of the series type. The Series' objective is
to achieve long-term growth by investing primarily in securities that provide
the potential for income and capital appreciation without undue risk to
principal.
Class A Shares may be purchased at the public offering price, which is
equal to the next determined net asset value per share, plus a front-end sales
charge, and Class B Shares may be purchased at a price equal to the next
determined net asset value per share. The Class A Shares are subject to a
maximum front-end sales charge of 5.75% and annual 12b-1 Plan expenses. The
Class B Shares are subject to a contingent deferred sales charge ("CDSC") which
may be imposed on redemptions made within six years of purchase and 12b-1 Plan
expenses which are higher than those to which Class A Shares are subject and
are assessed against the Class B Shares for no longer than approximately eight
years after purchase. See Summary of Expenses, and Automatic Conversion of
Class B Shares under Buying Shares. These alternatives permit an investor to
choose the method of purchasing shares that is most beneficial given the amount
of the purchase, the length of time the investor expects to hold the shares and
other circumstances. See Buying Shares.
The minimum initial investment with respect to the Class A Shares is $250
and with respect to the Class B Shares is $1,000. Subsequent investments must
be at least $25 with respect to the Class A Shares and $100 with respect to the
Class B Shares. Class B Shares are also subject to a maximum purchase
limitation of $250,000. The Fund will therefore reject any order for purchase
of more than $250,000 for Class B Shares. See Buying Shares.
This Prospectus relates only to the Classes and sets forth information
that you should read and consider before you invest. Please retain it for
future reference. Part B of the Fund's registration statement, dated January
30, 1995, as it may be amended from time to time, contains additional
information about the Series and has been filed with the Securities and
Exchange Commission. Part B is incorporated by reference into this Prospectus
and is available, without charge, by writing to Delaware Distributors, L.P. at
the above address or by calling the above numbers. The Series' financial
statements appear in its Annual Report, which will accompany any response to
requests for Part B.
The Series also offers the Decatur Total Return Fund Institutional Class.
That class is available for purchase only by certain enumerated institutions,
has no front-end or contingent deferred sales charge and is not subject to
annual 12b-1 Plan expenses.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
COVER PAGE . . . . . . . . . . . . . . . . . . . . . 1
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT STRATEGY . . . . . . . . . . . . . . . . 6
SUITABILITY . . . . . . . . . . . . . . . . . . . . 9
THE DELAWARE DIFFERENCE . . . . . . . . . . . . . . .
PLANS AND SERVICES . . . . . . . . . . . . . . . . 10
RETIREMENT PLANNING . . . . . . . . . . . . . . . . . 11
BUYING SHARES . . . . . . . . . . . . . . . . . . . . 12
REDEMPTION AND EXCHANGE . . . . . . . . . . . . . . . 20
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . 24
TAXES . . . . . . . . . . . . . . . . . . . . . . . . 25
CALCULATION OF OFFERING PRICE AND
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . 26
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . 26
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE SERIES
ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY CREDIT UNION OR ANY
BANK, ARE NOT OBLIGATIONS OF ANY CREDIT UNION OR ANY BANK, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE SERIES
ARE NOT CREDIT UNION OR BANK DEPOSITS.
- -------------------------------------------------------------------------------
1
<PAGE> 3
SYNOPSIS
CAPITALIZATION
The Series offers three classes of shares: the Class A Shares, the Class B
Shares and the Decatur Total Return Fund Institutional Class. The Fund has a
present authorized capitalization of seven hundred fifty million shares of
capital stock with a $1.00 par value per share. One hundred million shares of
that stock have been allocated to the Class A Shares, fifty million shares have
been allocated to the Class B Shares and fifty million shares have been
allocated to the Decatur Total Return Fund Institutional Class. See Shares
under Management of the Fund.
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager or its affiliate, Delaware International
Advisers Ltd., manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual
funds in the Delaware Group. See Management of the Fund.
SALES CHARGE
The price of the Class A Shares includes a maximum front-end sales charge
of 5.75% of the offering price, which is equivalent to 6.09% of the amount
invested, reduced on certain transactions of at least $100,000 but under
$1,000,000. For purchases of $1,000,000 or more, the front-end sales charge is
eliminated. Class A Shares are also subject to annual 12b-1 Plan expenses.
The price of the Class B Shares is equal to the net asset value per share.
Class B Shares are subject to a CDSC of: (i) 4% if shares are redeemed within
two years of purchase; (ii) 3% if shares are redeemed during the third or
fourth year following purchase; (iii) 2% if shares are redeemed during the
fifth year following purchase; and (iv) 1% if shares are redeemed during the
sixth year following purchase. Class B Shares are also subject to annual 12b-1
Plan expenses for no longer than approximately eight years after purchase. See
Buying Shares and Automatic Conversion of Class B Shares thereunder; and
Distribution (12b-1) and Service under Management of the Fund.
MINIMUM INVESTMENT
The minimum initial investment for the Class A Shares is $250 and for the
Class B Shares is $1,000 (see Part B or contact your investment dealer for each
Retirement Plan minimum), and subsequent investments must be at least $25 for
the Class A Shares and $100 for the Class B Shares. Class B Shares are also
subject to a maximum purchase limitation of $250,000. See Buying Shares.
INVESTMENT OBJECTIVE
The objective of the Series is to achieve long-term growth by investing
primarily in securities that provide the potential for income and capital
appreciation without undue risk to principal. See Investment Objective and
Policies.
SPECIAL CONSIDERATIONS
The Series may enter into options and futures transactions for hedging
purposes to counterbalance portfolio volatility. While the Series does not
engage in options and futures for speculative purposes, there are risks which
result from use of these instruments by the Series, and the investor should
review the descriptions of such in this Prospectus. See Futures Contracts and
Options under Investment Objective and Policies.
OPEN-END INVESTMENT COMPANY
The Fund, which was organized as a Maryland corporation in 1983 and was
previously organized as a Delaware corporation in 1956, is an open-end
management investment company and the Series' portfolio of assets is
diversified. See Shares under Management of the Fund.
INVESTMENT MANAGEMENT FEES
The Manager furnishes investment management services to the Fund, subject
to the supervision and direction of the Board of Directors. Under the
Investment Management Agreement, the annual compensation paid to the Manager is
equal to .60% on the first $500 million of the Series' average daily net
assets, .575% on the next $250 million and .55% on the average daily net assets
in excess of $750 million, less all directors' fees paid to the unaffiliated
directors by the Series. See Management of the Fund.
REDEMPTION AND EXCHANGE
The Class A Shares of the Series are redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Fund nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares purchased
at net asset value which may be subject to a contingent deferred sales charge
if such purchases triggered the payment of a dealer's commission. The Class B
Shares are redeemed or exchanged at the net asset value calculated after
receipt of the redemption or exchange request, less, in the case of
redemptions, any applicable CDSC. Neither the Fund nor the Distributor assesses
any additional charges for redemptions or exchanges of the Class B Shares. See
Redemption and Exchange.
2
<PAGE> 4
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . 5.75% None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . None None
Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption
proceeds, whichever is lower) . . . . . . . . . . . . . . . . . . . None* 4.00%*
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . None** None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES CLASS A CLASS B
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS) SHARES SHARES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.59% 0.59%
12b-1 Expenses (including service fees) . . . . . . . . . . . . . . . 0.30%+ 1.00%+
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 0.37% 0.37%++
----- -----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . 1.26% 1.96%
===== =====
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in either of the Classes will bear
directly or indirectly. *With respect to the Class A Shares, purchases of $1
million or more may be made at net asset value; however, if in connection with
any such purchase, certain dealer commissions are paid to financial advisers
through whom such purchases are effected, a contingent deferred sales charge of
1% will be imposed in the event of certain redemptions within 12 months of
purchase ("Limited CDSC"). The Class B Shares are subject to a CDSC of: (i) 4%
if shares are redeemed within two years of purchase; (ii) 3% if shares are
redeemed during the third or fourth year following purchase; (iii) 2% if shares
are redeemed during the fifth year following purchase; (iv) 1% if shares are
redeemed during the sixth year following purchase; and (v) 0% thereafter. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made
at Net Asset Value under Redemption and Exchange, and Deferred Sales Charge
Alternative--Class B Shares under Buying Shares. **CoreStates Bank, N.A.
currently charges $7.50 per redemption for redemptions payable by wire. +Class
A Shares and Class B Shares are subject to separate 12b-1 Plans. Long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales charges permitted by rules of the National Association of Securities
Dealers, Inc. (the "NASD"). See Distribution (12b-1) and Service. ++"Other
Operating Expenses" for Class B Shares are estimates derived from actual
expenses incurred by the Class A Shares for its fiscal year ended November 30,
1994. Also, see Decatur Total Return Fund Institutional Class for expense
information about that class.
The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees with respect to the Class A
Shares and, if shares are redeemed within six years after purchase, the Fund
charges a CDSC with respect to the Class B Shares.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES $70(1) $95 $123 $201 CLASS B SHARES $60 $92 $126 $210(2)
</TABLE>
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of the period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES $70 $95 $123 $201 CLASS B SHARES $20 $62 $106 $210(2)
</TABLE>
(1) Under certain circumstances, a Limited CDSC, which has not been reflected
in this calculation, may be imposed in the event of certain redemptions
within 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under
Redemption and Exchange.
(2) At the end of no more than approximately eight years after purchase, Class
B Shares will be automatically converted into Class A Shares. The example
above assumes conversion of Class B Shares at the end of year eight.
However, the conversion may occur as late as three months after the eighth
anniversary of purchase, during which time the higher 12b-1 Plan fees
payable by Class B Shares will continue to be assessed. See Automatic
Conversion of Class B Shares under Buying Shares for a description of the
automatic conversion feature. Years nine and ten reflect expenses of the
Class A Shares. The conversion will constitute a tax-free exchange for
federal income tax purposes. See Taxes.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
3
<PAGE> 5
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Decatur Fund, Inc.-Decatur Total Return Fund (formerly known as
Decatur Fund II) and have been audited by Ernst & Young LLP, independent
auditors. The data should be read in conjunction with the financial statements,
related notes, and the report of Ernst & Young LLP covering such financial
information and highlights, all of which are incorporated by reference into
Part B. Further information about the Series' performance is contained in its
Annual Report to shareholders. A copy of the Series' Annual Report (including
the report of Ernst & Young LLP) may be obtained from the Fund upon request at
no charge.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CLASS A SHARES
-------------------------------------------------------------
YEAR ENDED
11/30/94 11/30/93 11/30/92 11/30/91 11/30/90 11/30/89
<C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . $14.38 $13.98 $12.73 $11.71 $13.64 $11.47
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . 0.37 0.45 0.47 0.53 0.58 0.54
Net Gains or Losses on Securities
(both realized and unrealized) . . . (0.34) 1.45 1.30 1.07 (1.44) 2.12
------ ------ ------ ------ ------ ------
Total From Investment Operations . . 0.03 1.90 1.77 1.60 (0.86) 2.66
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment
income) . . . . . . . . . . . . . . . (0.43) (0.45) (0.52) (0.58) (0.60) (0.49)
Distributions (from capital gains) . . (1.66) (1.05) none none (0.47) none
Returns of Capital . . . . . . . . . . none none none none none none
------ ------ ------ ------ ------ ------
Total Distributions . . . . . . . . . (2.09) (1.50) (0.52) (0.58) (1.07) (0.49)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . $12.32 $14.38 $13.98 $12.73 $11.71 $13.64
====== ====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . (0.04%) 14.74% 14.12% 13.94% (6.84%) 23.73%
- ------------
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's
omitted) . . . . . . . . . . . . . . $402,849 $431,638 $408,986 $394,338 $357,139 $318,871
Ratio of Expenses to Average Daily
Net Assets(3) . . . . . . . . . . . . 1.26% 1.22% 1.23% 1.23% 1.23% 1.24%
Ratio of Net Investment Income to
Average Daily Net Assets(3) . . . . . 2.88% 3.15% 3.44% 4.20% 4.87% 4.60%
Portfolio Turnover Rate . . . . . . . . 74% 119% 98% 67% 54% 60%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CLASS A SHARES
-------------------------------
PERIOD
8/27/86(1)
YEAR ENDED THROUGH
11/30/88 11/30/87 11/30/86
<C> <C> <C>
Net Asset Value, Beginning of Period . $ 9.04 $10.29 $ 9.53
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . 0.50 0.31 0.04
Net Gains or Losses on Securities
(both realized and unrealized) . . . 2.30 (1.30) 0.72
------- ------ -------
Total From Investment Operations . . 2.80 (0.99) 0.76
------- ------ -------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment
income) . . . . . . . . . . . . . . . (0.37) (0.26) none
Distributions (from capital gains) . . none none none
Returns of Capital . . . . . . . . . . none none none
------ ------ ------
Total Distributions . . . . . . . . . (0.37) (0.26) none
------ ------ ------
Net Asset Value, End of Period . . . . $11.47 $ 9.04 $10.29
====== ====== ======
- ------------------------------------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . 31.51% (10.08%) 33.87%(1)
- ------------
- ---------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's
omitted) . . . . . . . . . . . . . . $200,085 $146,632 $16,118
Ratio of Expenses to Average Daily
Net Assets(3) . . . . . . . . . . . . 1.28% 1.27%(4) (1)
Ratio of Net Investment Income to
Average
Daily Net Assets(3) . . . . . . . . . 4.77% 4.17%(5) (1)
Portfolio Turnover Rate . . . . . . . . 69% 39% (1)
</TABLE>
- ----------------
(1) August 27, 1986 was the date of the initial public offering. Total return
has been annualized. The ratios of expenses and net investment income to
average daily net assets and portfolio turnover have been omitted from
this chart for the period August 27, 1986 through November 30, 1986 as
management believes that such ratios for this relatively short period are
not meaningful.
(2) Does not reflect any maximum sales charges that are or were in effect nor
the 1% Limited CDSC that would apply in the event of certain redemptions
within the 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made At Net Asset Value. Total return
for 1987 and 1986 reflect the expense limitation referenced in Notes 3, 4
and 5.
(3) The Manager undertook to waive its management fee and assume expenses to
the extent necessary to limit the Decatur Total Return Fund's ratio of
annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, to average daily net assets to 1%
for a six-month period after the initial public offering.
(4) Ratio of expenses to average daily net assets prior to expense limitation
was 1.41%.
(5) Ratio of net investment income to average daily net assets prior to
expense limitation was 4.03%.
4
<PAGE> 6
FINANCIAL HIGHLIGHTS
(Continued)
<TABLE>
- ---------------------------------------------------------------------------------------------
<CAPTION>
CLASS B SHARES
--------------
PERIOD
9/6/94(1)
THROUGH
11/30/94
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . . . $13.11
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.12
Net Gains or Losses on Securities (both realized and unrealized) . . . . . (0.82)
------
Total From Investment Operations . . . . . . . . . . . . . . . . . . . . (0.70)
------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . . . . . . . . . . . . . . . (0.10)
Distributions (from capital gains) . . . . . . . . . . . . . . . . . . . . none
Returns of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . none
------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.10)
------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . . . $12.31
======
- ----------------------------------------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.37%)(1)
- ------------
- ----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . . . . . . . . . . . $1,738
Ratio of Expenses to Average Daily Net Assets . . . . . . . . . . . . . . . 1.96%(1)
Ratio of Net Investment Income to Average Daily Net Assets . . . . . . . . 2.18%(1)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 74%(1)
</TABLE>
- ----------------
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Does not include any applicable contingent deferred sales charge.
5
<PAGE> 7
INVESTMENT OBJECTIVE
AND POLICIES
INVESTMENT STRATEGY
The Series generally invests in common stocks and income-producing
securities that are convertible into common stocks. The portfolio manager looks
for securities that have a better dividend yield than the average of the
Standard & Poor's ("S&P") 500 Stock Index, as well as capital gains potential.
All available types of appropriate securities are under continuous study.
The Series may invest in all classes of securities, bonds and preferred and
common stocks in any proportion deemed prudent under existing market and
economic conditions. The Series may also invest in foreign securities.
Income-producing convertible securities include preferred stock and
debentures that pay a stated interest rate or dividend and are convertible into
common stock at an established ratio. These securities, which are usually
priced at a premium to their conversion value, may allow the Series to receive
current income while participating to some extent in any appreciation in the
underlying common stock. The value of a convertible security tends to be
affected by changes in interest rates as well as factors affecting the market
value of the underlying common stock.
The Series may write covered call options on portfolio securities to
reduce the volatility of the portfolio. For the option to be considered
covered, the Series must own the common stock underlying the option or
securities convertible into such common stock. A covered call option obligates
the Series to sell one of its securities for an agreed price up to an agreed
date. The advantage is that the Series receives premium income, which may
offset any decline in the market value of the security. However, if the
Manager's forecast is wrong, the Series may not fully participate in the market
appreciation if the security's price rises. The Series will use only
Exchange-traded options.
It is the Series' policy to purchase and sell securities with a view
toward obtaining long-term rather than short-term capital gains. However, the
Series may hold securities for any period of time.
The Series may invest in repurchase agreements, but will not normally do
so except to invest cash balances.
The Series may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many privately
placed and legally restricted securities to be freely traded among certain
institutional buyers such as the Series. The Series may invest no more than 10%
of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day functions of determining whether or not individual Rule
144A Securities are liquid for purposes of the Series' 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; (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 Series'
holdings of illiquid securities exceed the Series' 10% limit on investment in
such securities, the Manager will determine what action shall be taken to
ensure that the Series continues to adhere to such limitation.
PORTFOLIO LOAN TRANSACTIONS
The Series may loan up to 25% of its assets to qualified broker/dealers or
institutional investors for their use relating to short sales or other security
transactions.
The major risk to which the Series would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, the Series will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to
be received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
6
<PAGE> 8
FUTURES CONTRACTS
The Series may enter into futures contracts on stocks, stock indices,
interest rates and foreign currencies, and purchase or sell options on such
futures contracts. These activities will not be entered into for speculative
purposes, but rather for hedging purposes and to facilitate the ability to
quickly deploy into the stock market the Series' positions in cash, short-term
debt securities and other money market instruments, at times when the Series'
assets are not fully invested in equity securities. Such positions will
generally be eliminated when it becomes possible to invest in securities that
are appropriate for the Series.
A futures contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument, or for the
making and acceptance of a cash settlement, at a stated time in the future for
a fixed price. By its terms, a futures contract provides for a specified
settlement date on which the securities underlying the contract are delivered,
or in the case of securities index futures contracts, the difference between
the price at which the contract was entered into and the contract's closing
value is settled between the purchaser and seller in cash. Futures contracts
differ from options in that they are bilateral agreements, with both the
purchaser and the seller equally obligated to complete the transaction. In
addition, futures contracts call for settlement only on the expiration date,
and cannot be "exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalents, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin" as a good faith deposit. This amount is
generally maintained in a segregated account at the custodian bank. Subsequent
payments to and from the broker, referred to as "variation margin," are made on
a daily basis as the value of the index or instrument underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market."
Purchases or sales of stock or bond index futures contracts are used for
hedging purposes to attempt to protect the Series' current or intended
investments from broad fluctuations in stock or bond prices. For example, the
Series may sell stock or bond index futures contracts in anticipation of or
during a market decline to attempt to offset the decrease in market value of
the Series' securities portfolio that might otherwise result. If such decline
occurs, the loss in value of portfolio securities may be offset, in whole or
part, by gains on the futures position. When the Series is not fully invested
in the securities market and anticipates a significant market advance, it may
purchase stock or bond index futures contracts in order to gain rapid market
exposure that may, in part or entirely, offset increases in the cost of
securities that the Series intends to purchase. As such purchases are made, the
corresponding positions in stock or bond index futures contracts will be closed
out.
Interest rate futures contracts are purchased or sold for hedging purposes
to attempt to protect against the effects of interest rate changes on the
Series' current or intended investments in fixed income securities. For
example, if the Series owned long-term bonds and interest rates were expected
to increase, the Series might sell interest rate futures contracts. Such a sale
would have much the same effect as selling some of the long-term bonds in the
Series' portfolio. However, since the futures market is more liquid than the
cash market, the use of interest rate futures contracts as a hedging technique
allows the Series to hedge its interest rate risk without having to sell its
portfolio securities. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of the Series'
interest rate futures contracts would be expected to increase at approximately
the same rate, thereby keeping the net asset value of the Series from declining
as much as it otherwise would have. On the other hand, if interest rates were
expected to decline, interest rate futures contracts could be purchased to
hedge in anticipation of subsequent purchases of long-term bonds at higher
prices. Because the fluctuations in the value of the interest rate futures
contracts should be similar to those of long-term bonds, the Series could
protect itself against the effects of the anticipated rise in the value of
long-term bonds without actually buying them until the necessary cash became
available or the market had stabilized. At that time, the interest rate futures
contracts could be liquidated and the Series' cash reserve could then be used
to buy long-term bonds on the cash market.
7
<PAGE> 9
The Series may purchase and sell foreign currency futures contracts for
hedging purposes to attempt to protect its current or intended investments
denominated in foreign currencies from fluctuations in currency exchange rates.
Such fluctuations could reduce the dollar value of portfolio securities
denominated in foreign currencies, or increase the cost of foreign-denominated
securities to be acquired, even if the value of such securities in the
currencies in which they are denominated remains constant. The Series may sell
futures contracts on a foreign currency, for example, when it holds securities
denominated in such currency and it anticipates a decline in the value of such
currency relative to the dollar. In the event such decline occurs, the
resulting adverse effect on the value of foreign-denominated securities may be
offset, in whole or in part, by gains on the futures contracts. However, if the
value of the foreign currency increases relative to the dollar, the Series'
loss on the foreign currency futures contract may or may not be offset by an
increase in the value of the securities because a decline in the price of the
security stated in terms of the foreign currency may be greater than the
increase in value as a result of the change in exchange rates.
Conversely, the Series could protect against a rise in the dollar cost of
foreign-denominated securities to be acquired by purchasing futures contracts
on the relevant currency, which could offset, in whole or in part, the
increased cost of such securities resulting from a rise in the dollar value of
the underlying currencies. When the Series purchases futures contracts under
such circumstances, however, and the price of securities to be acquired instead
declines as a result of appreciation of the dollar, the Series will sustain
losses on its futures position which could reduce or eliminate the benefits of
the reduced cost of portfolio securities to be acquired.
The Series may also purchase and write options on the types of futures
contracts in which the Series may invest, and enter into related closing
transactions. Options on futures are similar to options on securities, as
described below, except that options on futures give the purchaser the right,
in return for the premium paid, to assume a position in a futures contract,
rather than to actually purchase or sell the futures contract, at a specified
exercise price at any time during the period of the option. In the event that
an option written by the Series is exercised, the Series will be subject to all
the risks associated with the trading of futures contracts, such as payment of
variation margin deposits. In addition, the writer of an option on a futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
At any time prior to the expiration of a futures contract, a trader may
elect to close out its position by taking an opposite position on the contract
market on which the position was entered into, subject to the availability of a
secondary market, which will operate to terminate the initial position.
Likewise, a position in an option on a futures contract may be terminated by
the purchaser or seller prior to expiration by effecting a closing purchase or
sale transaction, subject to availability of a secondary market, which is the
purchase or sale of an option of the same series (i.e., the same exercise price
and expiration date) as the option previously purchased or sold. The Series may
realize a profit or a loss when closing out a futures contract or an option on
a futures contract.
To the extent that interest or exchange rates or securities prices move in
an unexpected direction, the Series may not achieve the anticipated benefits of
investing in futures contracts and options thereon, or may realize a loss. To
the extent that the Series purchases an option on a futures contract and fails
to exercise the option prior to the exercise date, it will suffer a loss of the
premium paid. Further, the possible lack of a secondary market could prevent
the Series from closing out its positions relating to futures. See Part B for a
further discussion of this investment technique.
OPTIONS
The Series may write covered call options on individual issues as well as
write call options on stock indices. The Series may also purchase put options
on individual issues and on stock indices. The Manager will employ these
techniques in an attempt to protect appreciation attained, to offset capital
losses and to take advantage of the liquidity available in the option markets.
The ability to hedge effectively using options on stock indices will depend, in
part, on the correlation between the composition of the index and the Series'
portfolio as well as the price movement of individual securities. The Series
does not currently intend to write or purchase stock index options.
While there is no limit on the amount of the Series' assets which may be
invested in covered call options, the Series will not invest more than 2% of
its net assets in put options. The Series will only use Exchange-traded
options.
8
<PAGE> 10
CALL OPTIONS
Writing Covered Call Options--A covered call option obligates the Series
to sell one of its securities for an agreed price up to an agreed date. When
the Series writes a call, it receives a premium and agrees to sell the callable
securities to a purchaser of a corresponding call during the call period
(usually not more than nine months) at a fixed exercise price regardless of
market price changes during the call period. The advantage is that the Series
receives premium income for the limited purpose of offsetting the costs of
purchasing put options or offsetting any capital loss or decline in market
value of the security. However, if the Manager's forecast is wrong, the Series
may not fully participate in the market appreciation if the security's price
rises.
Writing a Call Option on Stock Indices--Writing a call option on stock
indices is similar to the writing of a call option on an individual stock.
Stock indices used will include, but not be limited to, the S&P 500, the S&P
100 and the S&P Over-The-Counter ("OTC") 250.
PUT OPTIONS
Purchasing a Put Option--A put option gives the Series the right to sell
one of its securities for an agreed price up to an agreed date. The advantage
is that the Series can be protected should the market value of the security
decline. However, the Series must pay a premium for this right which would be
lost if the option is not exercised.
Purchasing a Put Option on Stock Indices--Purchasing a protective put
option on stock indices is similar to the purchase of protective puts on an
individual stock. Indices used will include, but not be limited to, the S&P
500, the S&P 100 and the S&P OTC 250.
Closing Transactions--Closing transactions essentially let the Series
offset a put option or covered call option prior to its exercise orexpiration.
If the Series cannot effect a closing transaction, it may have to hold a
security it would otherwise sell or deliver a security it might want to hold.
* * *
Although the Series is permitted under certain circumstances to borrow
money, it does not normally do so. The Series will not purchase new securities
while any borrowings are outstanding.
Part B sets forth other more specific investment restrictions.
SUITABILITY
The Series may be suitable for the patient investor interested in
long-term growth. The investor should be willing to accept the risks associated
with investments in common stocks and income-producing securities that are
convertible into common stocks.
The Series is suitable for investors who want a current return with the
possibility of capital appreciation. Naturally, the Series cannot assure a
specific rate of return or that principal will be protected. The value of the
Series' shares can be expected to vary up and down depending upon market
conditions. For this reason, the Series is not appropriate for short-term
investors. However, through the cautious selection and supervision of the
Series' securities, the Series will strive to achieve its objective of
long-term growth through both income and capital appreciation without undue
risk to principal.
Ownership of the Series' shares reduces the bookkeeping and administrative
inconveniences connected with the direct purchase and management of a portfolio
of diversified securities.
An investor should not consider a purchase of Series shares as equivalent
to a complete investment program. The Delaware Group includes a family of
funds, generally available through registered investment dealers, which may be
used in concert to create a more complete investment program.
9
<PAGE> 11
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
INVESTOR INFORMATION CENTER
800-523-4640
(PHILADELPHIA 988-1333)
FUND INFORMATION; LITERATURE;
PRICE, YIELD AND PERFORMANCE FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
(PHILADELPHIA 988-1241)
INFORMATION ON EXISTING REGULAR INVESTMENT
ACCOUNTS AND RETIREMENT PLAN ACCOUNTS;
WIRE INVESTMENTS; WIRE LIQUIDATIONS;
TELEPHONE LIQUIDATIONS; TELEPHONE EXCHANGES
DELAPHONE
800-362-FUND (800-362-3863)
SHAREHOLDER SERVICES
During business hours, you can call the Fund's Shareholder Service Center.
The representatives can answer any of your questions about your account, the
Series, the various service features and other funds in the Delaware Group.
PERFORMANCE INFORMATION
During business hours, you can call the Investor Information Center to get
current performance information.
DELAPHONE SERVICE
Delaphone is an account inquiry service for investors with Touch-Tone(R)
phone service. It enables you to get information on your account faster than
the mailed statements and confirmations seven days a week, 24 hours a day.
STATEMENTS AND CONFIRMATIONS
You will receive quarterly statements of your account as well as
confirmations of all investments and redemptions. You should examine statements
and confirmations immediately and promptly report any discrepancy by calling
the Shareholder Service Center.
DUPLICATE CONFIRMATIONS
If your investment dealer is noted on your investment application, we will
send your dealer a duplicate confirmation. This makes it easier for your
investment dealer to help you manage your investments.
TAX INFORMATION
Each year, the Fund will mail you information on the tax status of your
dividends and distributions.
DIVIDEND REINVESTMENT PLAN
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Also, you may be
permitted to invest your distributions in certain other funds in the Delaware
Group, subject to the exceptions noted below as well as the eligibility and
minimum purchase requirements set forth in each fund's prospectus.
Reinvestments of distributions into Class A Shares of the Series or other
Delaware Group funds may be effected without a front-end sales charge. Class B
Shares of the Series or other Delaware Group funds acquired through
reinvestments of distributions will not be subject to a contingent deferred
sales charge if those shares are later redeemed. See Automatic Conversion of
Class B Shares under Buying Shares for information concerning the automatic
conversion of Class B Shares acquired by reinvesting dividends.
Holders of Class A Shares of the Series may not reinvest their
distributions in the Class B Shares of any fund in the Delaware Group,
including the Series. Holders of Class B Shares of the Series may reinvest
their distributions only in the Class B Shares of the funds in the Delaware
Group which offer that class of shares (the "Class B Funds"). See Class B Funds
under Buying Shares for a list of the funds offering Class B Shares. For more
information about reinvestments, please call the Shareholder Service Center.
10
<PAGE> 12
EXCHANGE PRIVILEGE
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
the exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus. Shareholders of Class B
Shares of the Series are permitted to exchange all or part of their Class B
Shares only into the corresponding class of shares of the Class B Funds,
subject to the minimum purchase and other requirements set forth in each fund's
prospectus. Exchanges are not permitted between Class A Shares and Class B
Shares of any of the funds of the Delaware Group. See Redemption and Exchange.
Except as noted below, permissible exchanges can be made without payment
of a front-end sales charge or the imposition of a contingent deferred sales
charge at the time of the exchange, as applicable. Persons exchanging into the
Class A Shares from a fund in the Delaware Group offered without a front-end
sales charge may be required to pay the applicable front-end sales charge. See
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
See Redemption and Exchange for additional information on exchanges.
WEALTH BUILDER OPTION
You may be permitted to elect to have amounts in your account
automatically invested in shares of other funds in the Delaware Group.
Investments under this feature are exchanges and are therefore subject to the
same conditions and limitations as other exchanges of Class A and Class B
Shares. See Redemption and Exchange.
RIGHT OF ACCUMULATION
With respect to Class A Shares, the Right of Accumulation feature allows
the combining of Class A Shares and Class B Shares of the Series that are
currently owned with the dollar amount of new purchases of Class A Shares for a
reduced front-end sales charge. Under the COMBINED PURCHASES PRIVILEGE, this
includes certain shares owned in other funds in the Delaware Group. See Buying
Shares.
LETTER OF INTENTION
With respect to Class A Shares, the Letter of Intention feature permits
the aggregation of purchases over a 13-month period to obtain a reduced
front-end sales charge. See Part B.
12-MONTH REINVESTMENT PRIVILEGE
The 12-Month Reinvestment Privilege permits shareholders to reinvest
proceeds of Class A Shares redeemed, within one year from the redemption,
without a front-end sales charge. See Part B.
FINANCIAL INFORMATION ABOUT THE SERIES
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Series' investments and performance. The Fund's fiscal year ends on
November 30.
RETIREMENT PLANNING
An investment in the Series may also be suitable for tax-deferred
Retirement Plans. Among the Retirement Plans noted below, Class B Shares are
available for investment only by Individual Retirement Accounts, Simplified
Employee Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans.
Prototype Profit Sharing and Money Purchase Pension Plans are each subject
to a one-time fee of $200 per plan, or $300 for paired plans. No such fee is
charged for owner-only plans. All Prototype Profit Sharing and Money Purchase
Pension Plans are subject to an annual maintenance fee of $30 per participant
account. Each of the other Retirement Plans described below (other than 401(k)
Defined Contribution Plans) is subject to an annual maintenance fee of $15 for
each participant's account, regardless of the number of funds selected. Annual
maintenance fees for 401(k) Defined Contribution Plans are based on the number
of participants in the Plan and the services selected by the employer. Fees are
quoted upon request. All of the fees noted above are subject to change.
Additional information about fees is contained in Part B. The minimum initial
investment in the Classes (as available) for each Plan is $250; subsequent
investments must be at least $25.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to Retirement Plan shareholders. Certain
Retirement Plans may qualify to purchase the Decatur Total Return Fund
Institutional Class. For additional information on any of the Plans and
Delaware's retirement services, call the Shareholder Service Center or see Part
B.
11
<PAGE> 13
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
Individuals, even if they participate in an employer-sponsored retirement
plan, may establish their own retirement program for investments in each of the
Classes. Contributions to an IRA may be tax-deductible and earnings are
tax-deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Offers employers with 25 or fewer eligible employees the ability to
establish a SEP/IRA that permits salary deferral contributions. An employer may
also elect to make additional contributions to this Plan. Class B Shares are
not available for purchase by such Plans.
403(b)(7) DEFERRED COMPENSATION PLAN
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.
457 DEFERRED COMPENSATION PLAN
Permits employees of state and local governments and certain other
entities to enter into a deferred compensation arrangement for the purchase of
shares of each of the Classes.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class
A Shares. Class B Shares are not available for purchase by such Plans.
PROTOTYPE 401(k) DEFINED CONTRIBUTION PLAN
Permits employers to establish a tax-qualified plan based on salary
deferral contributions. An employer may elect to make profit sharing
contributions and/or matching contributions into the Plan. Class B Shares are
not available for purchase by such Plans.
BUYING SHARES
PURCHASE AMOUNTS
The minimum initial purchase with respect to the Class A Shares is $250
and with respect to the Class B Shares is $1,000. Subsequent purchases must be
$25 or more with respect to the Class A Shares and $100 or more with respect to
the Class B Shares. Retirement Plans have other minimums. Refer to Part B or
call the Shareholder Service Center for more information on these Plans. Class
B Shares are also subject to a maximum purchase limitation of $250,000.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased at a price equal to the next determined net asset
value per share, plus a sales charge which may be imposed, at the election of
the purchaser, at the time of the purchase with respect to Class A Shares
("front-end sales charge alternative") or on a contingent deferred basis with
respect to Class B Shares ("deferred sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Although Class A Shares incur a sales
charge when they are purchased, generally they are not subject to any sales
charge when they are redeemed, but are subject to annual 12b-1 Plan expenses of
up to a maximum of .30% of average daily net assets of such shares. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made
at Net Asset Value and Distribution (12b-1) and Service. Certain purchases of
Class A Shares qualify for reduced front-end sales charges. See Front-End Sales
Charge Alternative--Class A Shares, below.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares. Class B Shares do not incur a front-end
sales charge when they are purchased, but they are subject to a sales charge if
they are redeemed within six years of purchase and are subject to annual 12b-1
Plan expenses of up to a maximum of 1% (.25% of which are service fees to be
paid by the Series to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets of
such shares for no longer than approximately eight years after purchase. Class
B Shares permit all of the investor's dollars to work from the time the
investment is made. The higher 12b-1 Plan expenses paid by Class B Shares will
cause such shares to have a higher expense ratio and to pay lower dividends
than those related to the Class A Shares. At the end of no more than
approximately eight years after purchase, the Class B Shares are automatically
converted into Class A Shares. See Automatic Conversion of Class B Shares. Such
conversion will constitute a tax-free exchange for federal income tax purposes.
See Taxes.
12
<PAGE> 14
The alternative purchase arrangements permit investors in the Series to
choose the method of purchasing shares that is most beneficial given the amount
of their purchase, the length of time they expect to hold their shares and
other relevant circumstances. Investors should determine whether under their
particular circumstances it is more advantageous to incur a front-end sales
charge by purchasing Class A Shares or to have the entire initial purchase
price invested in the Series with the investment thereafter being subject to a
CDSC, if shares are redeemed within six years of purchase, by purchasing Class
B Shares.
As an illustration, investors who qualify for significantly reduced
front-end sales charges on purchases of Class A Shares, as described below,
might elect the front-end sales charge alternative because similar sales charge
reductions are not available for purchases under the deferred sales charge
alternative. Moreover, shares acquired under the front-end sales charge
alternative are subject to annual 12b-1 Plan expenses of up to .30%, whereas
shares acquired under the deferred sales charge alternative are subject to
higher annual 12b-1 Plan expenses of 1% for no more than approximately eight
years after purchase. See Automatic Conversion of Class B Shares. However,
because front-end sales charges are deducted at the time of purchase, such
investors would not have all their funds invested initially. Certain other
investors might determine it to be more advantageous to have all their funds
invested initially, although they would be subject to a CDSC for up to six
years after purchase as well as annual 12b-1 Plan expenses of 1% until the
shares are automatically converted into Class A Shares. The 12b-1 Plan
distribution expenses with respect to the Class B Shares will be offset to the
extent any return is realized on the additional funds initially invested under
the deferred sales charge alternative. However, there can be no assurance as to
the return, if any, that will be realized on such additional funds.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Series, the Distributor and others will be paid, in the
case of the Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of the Class B Shares, from the proceeds of
the 12b-1 Plan fees and, if applicable, the CDSC incurred upon redemption
within six years of purchase. Sales personnel may receive different
compensation for selling Class A or Class B Shares. INVESTORS SHOULD UNDERSTAND
THAT THE PURPOSE AND FUNCTION OF THE 12B-1 PLAN AND THE CDSC WITH RESPECT TO
THE CLASS B SHARES ARE THE SAME AS THOSE OF THE 12B-1 PLAN AND THE FRONT-END
SALES CHARGE WITH RESPECT TO THE CLASS A SHARES IN THAT THE FEES AND CHARGES
PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES. SEE
12B-1 DISTRIBUTION PLANS--CLASS A AND CLASS B SHARES.
Dividends paid by the Series with respect to the Class A and Class B
Shares, to the extent any dividends are paid, will be calculated in the same
manner at the same time, on the same day and will be in the same amount, except
that the additional amount of 12b-1 Plan expenses relating to the Class B
Shares will be borne exclusively by such shares. See Calculation of Offering
Price and Net Asset Value Per Share. The shareholders of the Class A and Class
B Shares each have an exchange privilege by which they may exchange their Class
A Shares or Class B Shares for the Class A Shares or Class B Shares,
respectively, of certain other Delaware Group funds. See Exchange Privilege
under The Delaware Difference and Redemption and Exchange.
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 with respect to both Class A and Class B
Shares.
FRONT-END SALES CHARGE ALTERNATIVE--CLASS A SHARES
The Class A Shares may be purchased at the offering price which reflects a
maximum front-end sales charge of 5.75%. See Calculation of Offering Price and
Net Asset Value Per Share. Lower sales charges apply for larger purchases. See
the table below. The Class A Shares represent a proportionate interest in the
Series' assets and are subject to annual 12b-1 Plan expenses. See Distribution
(12b-1) and Service under Management of the Fund.
13
<PAGE> 15
REDUCED FRONT-END SALES CHARGES
Purchases of $100,000 or more at the offering price carry a reduced
front-end sales charge as shown in the following table.
<TABLE>
<CAPTION>
Decatur Total Return Fund A Class
- --------------------------------------------------------------------------------------------
Front-End Sales Dealer's
Charge as % of Concession**
Amount of Purchase Offering Amount as % of
Price Invested Offering Price
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 5.75% 6.09% 5.00%
$100,000 but under $250,000 4.75 4.99 4.00
$250,000 but under $500,000 3.50 3.63 3.00
$500,000 but under $1,000,000* 3.00 3.09 2.60
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more but,
under certain limited circumstances, a 1% Limited CDSC may apply with
respect to Class A Shares.
- ------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify for the
reduced front-end sales charge on the basis of previous purchases and current
purchases. The reduced front-end sales charge will be granted upon confirmation
of the shareholder's holdings by the Fund. Such reduced front-end sales charges
are not retroactive.
From time to time, upon written notice to all of its dealers, the Distributor
may hold special promotions for specified periods during which the Distributor
may reallow dealers up to the full front-end sales charge shown above. In
addition, certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional concession of up to .15% of
the offering price. Dealers who receive 90% or more of the sales charge may be
deemed to be underwriters under the Securities Act of 1933.
** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- ------------------------------------------------------------------------------
For initial purchases of Class A Shares of $1,000,000 or more made on or
after June 1, 1993, a dealer's commission may be paid by the Distributor to
financial advisers through whom such purchases are effected in accordance with
the following schedule:
<TABLE>
<CAPTION>
DEALER'S COMMISSION
-------------------
AMOUNT OF PURCHASE (as a percentage of amount purchased)
- ------------------
<S> <C>
Up to $2 million 1.00%
Next $1 million up to $3 million .75
Next $2 million up to $5 million .50
Amount over $5 million .25
</TABLE>
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of the Series. Financial advisers should contact the Distributor concerning the
applicability and calculation of the dealer's commission in the case of
combined purchases. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of
Intention or pursuant to an investor's Right of Accumulation. The Distributor
also should be consulted concerning the availability of and program for these
payments.
An exchange from other Delaware Group funds will not qualify for payment
of the dealer's commission, unless such exchange is from a Delaware Group fund
with assets as to which a dealer's commission or similar payment has not been
previously paid. The schedule and program for payment of the dealer's
commission are subject to change or termination at any time by the Distributor
in its discretion.
Redemptions of Class A Shares purchased at net asset value may result in
the imposition of a Limited CDSC if the dealer's commission described above was
paid in connection with the purchase of those shares. See Contingent Deferred
Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value
under Redemption and Exchange.
COMBINED PURCHASES PRIVILEGE
By combining your holdings in the Class A Shares with your holdings in the
Class B Shares of the Series and, except as noted below, shares of the other
funds in the Delaware Group, you can reduce the front-end sales charges on any
additional purchases of Class A Shares. Except for shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products, shares of other funds which do not carry a front-end sales
charge or CDSC may not be included unless they were acquired through an
exchange from one of the other Delaware Group funds which carried a front-end
sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
14
<PAGE> 16
It also permits you to use these combinations under a Letter of Intention.
This allows you to make purchases over a 13-month period and qualify the entire
purchase for a reduction in front-end sales charges on Class A Shares.
Combined purchases of $1,000,000 or more, including certain purchases made
pursuant to a Right of Accumulation or under a Letter of Intention, may trigger
the payment of a dealer's commission and the applicability of a Limited CDSC.
Investors should consult their financial advisers or the Transfer Agent about
the operation of these features. See Reduced Front-End Sales Charges under
Buying Shares.
BUYING AT NET ASSET VALUE
Class A Shares may be purchased at net asset value under the Delaware
Group Dividend Reinvestment Plan and, under certain circumstances, the 12-month
Reinvestment Privilege and the Exchange Privilege. (See The Delaware Difference
and Redemption and Exchange for additional information.)
Purchases of Class A Shares may be made at net asset value by officers,
directors and employees (including former officers and directors and former
employees who had been employed for at least ten years) and members of their
immediate families of the Manager, any affiliate, any of the funds in the
Delaware Group, certain of their agents and registered representatives and
employees of authorized investment dealers and by employee benefit plans for
such entities. Individual purchases include retirement accounts and must be for
accounts in the name of the individual or a qualifying family member. Purchases
of Class A Shares may be made by clients of registered representatives of an
authorized investment dealer at net asset value within six months of a change
of the registered representative's employment, if the purchase is funded by
proceeds from an investment where a front-end sales charge has been assessed
and the redemption of the investment did not result in the imposition of a
contingent deferred sales charge or other redemption charge. Purchases of Class
A Shares also may be made at net asset value by bank employees that provide
services in connection with agreements between the bank and unaffiliated
brokers or dealers concerning sales of Class A Shares. Also, officers,
directors and key employees of institutional clients of the Manager or any of
its affiliates may purchase Class A Shares at net asset value. Moreover,
purchases may be effected at net asset value for the benefit of the clients of
brokers, dealers and registered investment advisers affiliated with a broker or
dealer, if such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Class
A Shares in connection with special investment products, such as wrap accounts
or similar fee based programs.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Fund must be notified in advance that an investment qualifies for
purchase of Class A Shares at net asset value.
GROUP INVESTMENT PLANS
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit Sharing,
Pension and 401(k) Defined Contribution Plans) may also benefit from the
reduced front-end sales charges relating to the Class A Shares set forth in the
table on page 14, based on total plan assets. In addition, 403(b)(7) and 457
Retirement Plan Accounts may also benefit from a reduced front-end sales charge
on Class A Shares based on the total amount invested by all participants in the
plan by satisfying the following criteria: (i) the employer for which the plan
was established has 250 or more eligible employees and the plan lists only one
broker of record, or (ii) the plan includes employer contributions and the plan
lists only one broker of record. If a company has more than one plan investing
in the Delaware Group of funds, then the total amount invested in all plans
would be used in determining the applicable sales charge reduction. Employees
participating in such Group Investment Plans may also combine the investments
made in their plan account when determining the front-end sales charge on
purchases to non-retirement Delaware Group investment accounts.
For additional information on these Plans, including Plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other Retirement Plans and special services, see Retirement Planning.
15
<PAGE> 17
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES
Class B Shares may be purchased at net asset value without the imposition
of a front-end sales charge at the time of purchase. The Class B Shares are
being sold without a front-end sales charge so that the Series will invest the
full amount of the investor's purchase payment. The Distributor currently
anticipates compensating dealers or brokers for selling Class B Shares at the
time of purchase from its own funds in an amount equal to no more than 4% of
the dollar amount purchased. As discussed below, however, Class B Shares are
subject to annual 12b-1 Plan expenses and, if shares are redeemed within six
years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for the distribution and related services provided to,
and the related expenses borne on behalf of, the Series for the benefit of the
Class B Shares in connection with the sale of the Class B Shares, including the
compensation paid to dealers or brokers for selling Class B Shares. Payments to
the Distributor and others under the 12b-1 Plan relating to the Class B Shares
may be, annually, in an amount equal to no more than 1%. The combination of the
CDSC and the proceeds of the 12b-1 Plan fees facilitates the ability of the
Series to sell the Class B Shares without a front-end sales charge being
deducted at the time of purchase.
Shareholders of the Class B Shares exercising the exchange privilege
described below will continue to be subject to the CDSC schedule of the Class B
Shares described in this Prospectus. Such schedule may be higher than the CDSC
schedule relating to the Class B Shares acquired as a result of the exchange.
See Redemption and Exchange.
AUTOMATIC CONVERSION OF CLASS B SHARES
Except for shares acquired through a reinvestment of dividends, Class B
Shares held for eight years after purchase are eligible for automatic
conversion into Class A Shares. The Fund will effect conversions of Class B
Shares into Class A Shares only four times in any calendar year, on the last
business day of the second full week of March, June, September and December
(each, a "Conversion Date"). If the eighth anniversary after a purchase of
Class B Shares falls on a Conversion Date, an investor's Class B Shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B Shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth
anniversary falls on the day after a Conversion Date, that shareholder will
have to hold Class B Shares for as long as an additional three months after the
eighth anniversary after purchase before the shares will automatically convert
into Class A Shares.
Class B Shares of a fund acquired through reinvestment of dividends will
convert to the corresponding Class A Shares of that fund (or, in the case of
Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant Class)
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. See Taxes.
CONTINGENT DEFERRED SALES CHARGE
Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, charged as a percentage of the dollar amount
subject thereto. The charge will be assessed on an amount equal to the lesser
of the net asset value at the time of purchase of the shares being redeemed or
the net asset value of the shares at the time of redemption. For purposes of
this formula, the "net asset value at the time of purchase" will be the net
asset value at purchase of the Class B Shares of the Series even if those
shares are later exchanged for Class B Shares of another Delaware Group fund
and, in the event of an exchange of the shares, the "net asset value of such
shares at the time of redemption" will be the net asset value of the shares
into which the shares have been exchanged. Accordingly, no CDSC will be imposed
on increases in net asset value above the initial purchase price. In addition,
no CDSC will be assessed on redemption of shares received upon reinvestment of
dividends or capital gains distributions.
The following table sets forth the rates of the CDSC for the Class B
Shares of the Series:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
YEAR AFTER DOLLAR AMOUNT
PURCHASE MADE SUBJECT TO CHARGE)
------------- ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Series, the Class B Shares will
continue to be subject to annual 12b-1 Plan expenses of 1% of average daily net
assets representing those shares. See Automatic Conversion of Class B Shares
above. Investors are reminded that the Class A Shares into which the Class B
Shares will convert are subject to ongoing annual 12b-1 Plan expenses of up to
a maximum of .30% of average daily net assets representing such shares.
16
<PAGE> 18
In determining whether a CDSC is applicable to a redemption, the
calculation will be determined in a manner that results in the lowest
applicable rate being charged. Therefore, with respect to the Class B Shares,
it will be assumed that the redemption is first for shares held over six years
or shares acquired pursuant to reinvestment of dividends or distributions and
then of shares held longest during the six-year period. The charge will not be
applied to dollar amounts representing an increase in the net asset value since
the time of purchase. All investments made during a calendar month, regardless
of when during the month the investment occurred, will age one month on the
last day of that month and each subsequent month.
The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions effected pursuant to the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the
shares held in the account is less than the then-effective minimum account
size; (ii) returns of excess contributions to an IRA or 403(b)(7) Deferred
Compensation Plan; (iii) required minimum distributions from an IRA, 403(b)(7)
Deferred Compensation Plan, or 457 Deferred Compensation Plan; and (iv)
distributions from an IRA, 403(b)(7) Deferred Compensation Plan or 457 Deferred
Compensation Plan due to death or disability.
12b-1 DISTRIBUTION PLANS--CLASS A AND CLASS B SHARES
Pursuant to the distribution plans adopted by the Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940, the Fund is permitted to pay
the Distributor annual distribution fees payable monthly of .30% of the average
daily net assets of the Class A Shares and 1% of the average daily net assets
of the Class B Shares in order to compensate the Distributor for providing
distribution and related services and bearing certain expenses of each Class.
The Class B Shares' 12b-1 Plan is designed to permit an investor to purchase
Class B Shares through dealers or brokers without the assessment of a front-end
sales charge and at the same time permit the Distributor to compensate dealers
and brokers in connection with the sale of the Class B Shares. In this regard,
the purpose and function of the 12b-1 Plan and the CDSC with respect to the
Class B Shares are the same as those of the front-end sales charge and 12b-1
Plan with respect to the Class A Shares in that the fees and charges provide
for the financing of the distribution of the respective Classes. For more
detailed discussion of the 12b-1 Plans relating to the Class A and Class B
Shares, see Distribution (12b-1) and Service.
OTHER PAYMENTS TO DEALERS--CLASS A AND
CLASS B SHARES
In addition, from time to time at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of the Classes exceed certain
limits as set by the Distributor, may receive from the Distributor an
additional payment of up to .25% of the dollar amount of such sales. The
Distributor may also provide additional promotional incentives or payments to
dealers that sell shares of the Delaware Group of funds. In some instances,
these incentives or payments may be offered only to certain dealers who
maintain, have sold or may sell certain amounts of shares.
In connection with the promotion of Delaware Group fund shares, the
Distributor may, from time to time, pay to participate in dealer-sponsored
seminars and conferences, reimburse dealers for expenses incurred in connection
with preapproved seminars, conferences and advertising and may, from time to
time, pay or allow additional promotional incentives to dealers, which shall
include non-cash concessions, such as certain luxury merchandise or a trip to
or attendance at a business or investment seminar at a luxury resort, as part
of preapproved sales contests. In addition, as noted above, the Distributor may
pay dealers a commission in connection with net asset value purchases.
CLASS B FUNDS
The following funds currently offer Class B Shares: DMC Tax-Free Income
Trust-Pennsylvania, Delaware Group Delchester High-Yield Bond Fund, Inc.,
Delaware Group Government Fund, Inc., Treasury Reserves Intermediate Series of
Delaware Group Treasury Reserves, Inc., Delaware Group Cash Reserve, Inc.,
Tax-Free USA Fund, Tax-Free Insured Fund and Tax-Free USA Intermediate Fund of
Delaware Group Tax-Free Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware
Fund and Dividend Growth Fund of Delaware Group Delaware Fund, Inc., Delaware
Group Value Fund, Inc., Decatur Income Fund of the Fund, Delaware Group Trend
Fund, Inc., International Equity Series, Global Bond Series and Global Assets
Series of Delaware Group Global & International Funds, Inc. and the Series.
17
<PAGE> 19
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
In addition to offering the Class A and Class B Shares, the Series also
offers the Decatur Total Return Fund Institutional Class of shares, which is
described in a separate prospectus relating to that class of shares. That class
may be purchased only by: (a) retirement plans introduced by persons not
associated with brokers or dealers that are primarily engaged in the retail
securities business and rollover individual retirement accounts from such
plans; (b) tax-exempt employee benefit plans of the Manager or its affiliates
and securities dealer firms with a selling agreement with the Distributor; (c)
institutional advisory accounts of the Manager or its affiliates and those
having client relationships with Delaware Investment Advisers, a division of
the Manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts; (d) banks, trust
companies and similar financial institutions investing for their own account or
for the account of their trust customers for whom such financial institution is
exercising investment discretion in purchasing shares of the class; and (e)
registered investment advisers investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least
$1,000,000 entrusted to the adviser for investment purposes, but only if the
adviser is not affiliated or associated with a broker or dealer and derives
compensation for its services exclusively from its clients for such advisory
services. Such Decatur Total Return Fund Institutional Class shares generally
are distributed directly by the Distributor and do not have a front-end or
contingent deferred sales charge or a 12b-1 fee. Sales or service compensation
available in respect of such class, therefore, differs from that available in
respect of the Class A Shares and the Class B Shares. All three classes of
shares have a proportionate interest in the underlying portfolio of securities
of the Series. Total Operating Expenses incurred by the Decatur Total Return
Fund Institutional Class, as a percentage of average daily net assets, for the
fiscal year ended November 30, 1994 were 0.96%. See Part B for performance
information about the Decatur Total Return Fund Institutional Class. To obtain
a prospectus which describes the Decatur Total Return Fund Institutional Class,
contact the Distributor.
DIVIDEND ORDERS
SOME SHAREHOLDERS WANT THE DIVIDENDS EARNED IN ONE FUND AUTOMATICALLY
INVESTED IN ANOTHER DELAWARE GROUP FUND WITH A DIFFERENT INVESTMENT OBJECTIVE.
For more information on the requirements of the other funds, see Dividend
Reinvestment Plan under The Delaware Difference or call the Shareholder Service
Center.
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of shares of the Classes through most investment
dealers who, as part of the service they provide, must transmit orders
promptly. They may charge for this service. If you want a dealer but do not
have one, we can refer you to one.
INVESTING BY MAIL
1. Initial Purchases--An Investment Application must be completed, signed and
sent with a check payable to Decatur Total Return Fund A Class or B Class,
depending upon which Class is being purchased, to 1818 Market Street,
Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Decatur Total Return Fund A Class or B Class,
depending upon which Class is being purchased. Your check should be identified
with your name(s) and account number. An investment slip (similar to a deposit
slip) is provided at the bottom of transaction confirmations and dividend
statements that you will receive from the Fund, and should be used when you are
making additional purchases. You can expedite processing by including an
investment slip with your check when making additional purchases. Your
investment may be delayed if you send additional purchases by certified mail.
INVESTING BY WIRE
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include
your name(s) and your account number for the Class in which you are investing).
1. Initial Purchases--Before you invest, telephone the Fund's Shareholder
Service Center to get an account number. If you do not call first, it may delay
processing your investment. In addition, you must promptly send your Investment
Application to Decatur Total Return Fund A Class or B Class, depending upon
which Class is being purchased, to 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Fund's Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a Retirement Plan Account, call the
Shareholder Service Center for special wiring instructions.
18
<PAGE> 20
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Series. If you wish to open an account by exchange, call the
Shareholder Service Center for more information.
Exchanges will not be permitted between Class A Shares and Class B Shares
of the Fund or between the Class A Shares and Class B Shares of any other funds
in the Delaware Group. Class B Shares of any of the Class B Funds may be
exchanged for Class B Shares of the Series. Class B Shares of the Series
acquired by exchange will continue to carry the contingent deferred sales
charge and the automatic conversion schedules of the fund from which the
exchange is made. The holding period of the Class B Shares of the Series will
be added to that of the exchanged shares for purposes of determining the time
of the automatic conversion into Class A Shares of the Series.
Permissible exchanges into the Classes of the Series will be made without
a front-end sales charge imposed by the Fund or, at the time of the exchange, a
contingent deferred sales charge imposed by the fund from which the exchange is
being made, except for exchanges into Class A Shares from funds not subject to
a front-end sales charge (unless such shares were acquired in an exchange from
a fund subject to such a charge or such shares were acquired through the
reinvestment of dividends).
ADDITIONAL METHODS OF ADDING TO YOUR INVESTMENT
Call the Shareholder Service Center for more information if you wish to use
the following services:
1. Direct Deposit
YOU MAY WISH YOUR EMPLOYER OR BANK TO MAKE REGULAR INVESTMENTS DIRECTLY TO
YOUR ACCOUNT FOR YOU (for example: payroll deduction, pay by phone, annuity
payments). The Series also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and check
clearing holds on payments such as social security, federal salaries, Railroad
Retirement benefits, etc.
2. Automatic Investing Plan
THE AUTOMATIC INVESTING PLAN ENABLES YOU TO MAKE REGULAR MONTHLY
INVESTMENTS WITHOUT WRITING OR MAILING CHECKS. You may authorize the Fund to
transfer a designated amount monthly from your checking account to your Class
account. Many shareholders use this as an automatic savings plan for IRAs and
other purposes. Shareholders should allow a reasonable amount of time for
initial purchases and changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
Should investments by these two methods be reclaimed or returned for some
reason, the Fund has the right to liquidate your shares to reimburse the
government or transmitting bank. If there are insufficient funds in your Class
account, you are obligated to reimburse the Series.
PURCHASE PRICE AND EFFECTIVE DATE
The offering price and net asset value of the Class A and Class B Shares
are determined as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when such exchange is open.
The effective date of a purchase made through an investment dealer is the
date the order is received by the Fund. The effective date of a direct purchase
is the day your wire, electronic transfer or check is received, unless it is
received after the time the offering price or net asset value of shares is
determined, as noted above. Those received after such time will be effective
the next business day.
THE CONDITIONS OF YOUR PURCHASE
The Fund reserves the right to reject any purchase or exchange. If a
purchase is cancelled because your check is returned unpaid, you are
responsible for any loss incurred. The Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Group. The Fund
reserves the right, upon 60 days' written notice, to redeem accounts that
remain under $250 as a result of redemptions. An investor making the minimum
initial investment will be subject to involuntary redemption without the
imposition of a CDSC or Limited CDSC if he or she redeems any portion of his or
her account.
19
<PAGE> 21
REDEMPTION AND EXCHANGE
YOU CAN REDEEM OR EXCHANGE YOUR SHARES IN A NUMBER OF DIFFERENT WAYS. The
exchange service is useful if your investment requirements change and you want
an easy way to invest in other equity funds, tax-advantaged funds, bond funds
or money market funds. This service is also useful if you are anticipating a
major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares from one fund or class to another
pursuant to this privilege constitute taxable events. See Taxes. You may want
to call us for more information or consult your financial adviser or investment
dealer to discuss which funds in the Delaware Group will best meet your
changing objectives and the consequences of any exchange transaction.
Your shares will be redeemed or exchanged based on the net asset value
next determined after we receive your request in good order subject, in the
case of a redemption, to any applicable CDSC or Limited CDSC. Redemption or
exchange requests received in good order after the time the offering price and
net asset value of shares are determined, as noted above, will be processed on
the next business day. See Purchase Price and Effective Date under Buying
Shares. Except as otherwise noted below, for a redemption request to be in
"good order," you must provide your Class account number, account registration,
and the total number of shares or dollar amount of the transaction. If a holder
of Class B Shares submits a redemption request for a specific dollar amount,
the Fund will redeem that number of shares necessary to deduct the applicable
CDSC and tender to the shareholder the requested amount to the extent enough
shares are then held in the shareholder account. With regard to exchanges, you
must also provide the name of the fund you want to receive the proceeds.
Exchange instructions and redemption requests must be signed by the record
owner(s) exactly as the shares are registered. You may request a redemption or
an exchange by calling the Fund at 800-523-1918 (in Philadelphia, 988-1241).
The Fund reserves the right to reject exchange requests at any time. The Fund
may suspend or terminate, or amend the terms of, the exchange privilege upon 60
days' written notice to shareholders.
The Fund will honor written redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied the purchase check has cleared, which may take up to 15
days from the purchase date. The Fund will not honor telephone redemptions for
Class shares recently purchased by check unless it is reasonably satisfied that
the purchase check has cleared. 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.
Class A Shares may be exchanged for certain of the shares of the other
funds in the Delaware Group, including other Class A Shares, subject to the
eligibility and minimum purchase requirements set forth in each fund's
prospectus. All Delaware Group funds offer Class A Shares. Class A Shares may
not be exchanged for Class B Shares of the funds offering such shares. Class B
Shares of the Series may be exchanged only for the Class B Shares of any of the
Class B Funds. See Exchange Privilege under The Delaware Difference. In each
instance, permissible exchanges are subject to the minimum purchase and other
requirements set forth in each prospectus.
Permissible exchanges may be made at net asset value provided: (1) the
investment satisfies the eligibility and minimum purchase requirements set
forth in the prospectus of the fund being acquired; and (2) the shares of the
fund being acquired are in a state where that fund is registered.
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not subject
to a front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
20
<PAGE> 22
Holders of the Class B Shares that exchange their shares ("outstanding
Class B Shares") for the Class B Shares of other Class B Funds ("new Class B
Shares") will not be subject to a CDSC that might otherwise be due upon
redemption of the outstanding Class B Shares. However, such shareholders will
continue to be subject to the CDSC and automatic conversion schedules of the
outstanding Class B Shares described in this Prospectus and any CDSC assessed
upon redemption will be charged by the Fund. The Series' CDSC schedule may be
higher than the CDSC schedule relating to the new Class B Shares acquired as a
result of the exchange. For purposes of computing the CDSC that may be payable
upon a disposition of the new Class B Shares, the holding period for the
outstanding Class B Shares is added to the holding period of the new Class B
Shares. The automatic conversion schedule of the outstanding Class B Shares may
be longer than that of the new Class B Shares. Consequently, an investment in
new Class B Shares by exchange may subject an investor to the higher 12b-1 fees
applicable to Class B Shares for a longer time than if the investment in new
Class B Shares was made directly.
Different redemption and exchange methods are outlined below. Except for
the CDSC with respect to redemption of Class B Shares and the Limited CDSC with
respect to certain redemptions of Class A Shares purchased at net asset value,
there is no fee charged by the Fund or the Distributor for redeeming or
exchanging your shares, but such fees could be charged in the future. You may
also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders with respect to an account,
including selection of any of the features described below, shall continue in
effect until revoked or modified in writing and until such time as such written
revocation or modification has been received by the Fund or its agent.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
WRITTEN REDEMPTION
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your Class A or Class B Shares. The request must be
signed by all owners of the account or your investment dealer of record. For
redemptions of more than $50,000, or when the proceeds are not sent to the
shareholder(s) at the address of record, the Fund requires a signature by all
owners of the account and a signature guarantee for each owner. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
The redemption request is effective at the net asset value next determined
after it is received in good order. Class B Shares may be subject to a CDSC and
Class A Shares may be subject to a Limited CDSC with respect to certain shares
purchased at net asset value. Payment is normally mailed the next business day,
but no later than seven days, after receipt of your request. If your Class A
Shares are in certificate form, the certificate must accompany your request and
also be in good order. The Fund only issues certificates for Class A Shares if
a shareholder submits a specific request. The Fund does not issue certificates
for Class B Shares.
WRITTEN EXCHANGE
You can also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your Class A or Class B Shares
into another mutual fund in the Delaware Group, subject to the same conditions
and limitations as other exchanges noted above.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you can
only redeem or exchange by written request and you must return your
certificates.
The Telephone Redemption service enabling you to have redemption proceeds
mailed to your address of record and the Telephone Exchange service, both of
which are described below, are automatically provided unless the Fund receives
written notice from the shareholder to the contrary. The Fund reserves the
right to modify, terminate or suspend these procedures upon 60 days' written
notice to shareholders. It may be difficult to reach the Fund by telephone
during periods when market or economic conditions lead to an unusually large
volume of telephone requests.
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Neither the Fund nor the Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption
or exchange of Series shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, the shareholder is acknowledging prior receipt
of a prospectus for the fund into which shares are being exchanged.
TELEPHONE REDEMPTION--CHECK TO YOUR ADDRESS OF RECORD
THE TELEPHONE REDEMPTION FEATURE IS A QUICK AND EASY METHOD TO REDEEM
SHARES. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your record address. Checks will be payable to
the shareholder(s) of record. Payment is normally mailed the next business day,
but no more than seven days, after receipt of the request. This service is only
available to individual, joint and individual fiduciary-type accounts.
TELEPHONE REDEMPTION--PROCEEDS TO YOUR BANK
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires an Authorization Form with your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next
business day, but no later than seven days, after receipt of your request to
your predesignated bank account. Except for any CDSC which may be applicable
to the Class B Shares and the Limited CDSC which may be applicable to purchases
made at net asset value with respect to the Class A Shares, there are no fees
for this method, but the mail time may delay getting funds into your bank
account. Simply call the Fund's Shareholder Service Center prior to the time
the offering price and net asset value are determined, as noted above.
If expedited payment by check or wire could adversely affect the Series,
the Fund may take up to seven days to pay.
TELEPHONE EXCHANGE
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange Class A
or Class B Shares into any fund in the Delaware Group under the same
registration, subject to the same conditions and limitations as other exchanges
noted above. As with the written exchange service, telephone exchanges are
subject to the requirements of each fund, as described above. Telephone
exchanges may be subject to limitations as to amounts or frequency.
SYSTEMATIC WITHDRAWAL PLAN FOR CLASS A SHARES
1. Regular Plans
This plan provides holders of the Class A Shares with a consistent monthly
(or quarterly) payment. THIS IS PARTICULARLY USEFUL TO SHAREHOLDERS LIVING ON
FIXED INCOMES, SINCE IT CAN PROVIDE THEM WITH A STABLE SUPPLEMENTAL AMOUNT.
With accounts of at least $5,000, you may elect monthly withdrawals of $25
(quarterly $75) or more. The Fund does not recommend any particular monthly
amount, as each shareholder's situation and needs vary. Payments are normally
made by check. In the alternative, you may elect to have your payments
transferred from your Series account to your predesignated bank account through
the Delaware Group's MoneyLine service. Your funds will normally be credited to
your bank account after two business days. Except with respect to the Limited
CDSC which may be applicable to Class A Shares as noted below, there are no
fees for this method. You can initiate this service by completing an
Authorization Agreement. If the name and address on your bank account are not
identical to the name and address on your Series account, you must have your
signature guaranteed. Call the Shareholder Service Center for additional
information.
2. Retirement Plans
For shareholders eligible under the applicable Retirement Plan to receive
benefits in periodic payments, the Fund's Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for
calculating your withdrawals, depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required.
* * *
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Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares pursuant to a
Systematic Withdrawal Plan may be subject to a Limited CDSC if the original
purchase was made within the 12 months prior to the withdrawal at net asset
value and a dealer's commission has been paid on that purchase. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset
Value. For more information on both of these plans, call the Shareholder
Service Center.
The Systematic Withdrawal Plan is not available with respect to the Class
B Shares.
WEALTH BUILDER OPTION
Shareholders may elect to invest in other mutual funds in the Delaware
Group through our Wealth Builder Option. Under this automatic exchange program,
shareholders can authorize regular monthly amounts (minimum of $100 per fund)
to be liquidated from their Class account and invested automatically into one
or more funds in the Delaware Group. Investments under this option are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A and Class B Shares noted above.
Shareholders can also use the Wealth Builder Option to invest in the
Series through regular liquidations of shares in their accounts in other funds
in the Delaware Group, subject to the same conditions and limitations as other
exchanges noted above. Shareholders can terminate their participation at any
time by written notice to the Fund. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN PURCHASES OF CLASS A SHARES MADE
AT NET ASSET VALUE
For purchases of Class A Shares, a Limited CDSC will be imposed by the
Fund upon certain redemptions of Class A Shares (or shares into which such
Class A Shares are exchanged) made within 12 months of purchase, if such
purchases were made at net asset value and triggered the payment by the
Distributor of the dealer's commission described above. See Buying Shares.
The Limited CDSC will be paid to the Distributor and will be equal to the
lesser of 1% of (1) the net asset value at the time of purchase of the Class A
Shares being redeemed or (2) the net asset value of such Class A Shares at the
time of redemption. For purposes of this formula, the "net asset value at the
time of purchase" will be the net asset value at purchase of the Class A Shares
even if those shares are later exchanged for shares of another Delaware Group
fund and, in the event of an exchange of Class A Shares, the "net asset value
of such shares at the time of redemption" will be the net asset value of the
shares into which the Class A Shares have been exchanged.
Redemptions of such Class A Shares held for more than 12 months will not
be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Fund assesses the Limited CDSC if such 12-month period is not
satisfied irrespective of whether the redemption triggering its payment is of
the Class A Shares of the Series or the Class A Shares into which the Class A
Shares of the Series have been exchanged.
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In determining whether a Limited CDSC is payable, it will be assumed that
shares not subject to the Limited CDSC are the first redeemed followed by other
shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of when during the month the
investment occurred, will age one month on the last day of that month and each
subsequent month.
The Limited CDSC will be waived in the following instances: (i)
redemptions effected pursuant to the Series' 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) distributions to
participants from a retirement plan qualified under section 401(a) or 401(k) of
the Internal Revenue Code of 1986, as amended ("the Code"), or due to death of
a participant in such a plan; (iii) redemptions pursuant to the direction of a
participant or beneficiary of a retirement plan qualified under section 401(a)
or 401(k) of the Code with respect to that retirement plan; (iv) distributions
from a section 403(b)(7) Plan or an IRA due to death, disability, or attainment
of age 591/2; (v) tax-free returns of excess contributions to an IRA; (vi)
distributions by other employee benefit plans to pay benefits; (vii)
distributions described in (ii), (iv), and (vi) above pursuant to a systematic
withdrawal plan; and (viii) redemptions by the classes of shareholders who are
permitted to purchase shares at net asset value, regardless of the size of the
purchase (see Buying at Net Asset Value).
DIVIDENDS AND DISTRIBUTIONS
The Fund will make payments from the Series' net investment income
quarterly. Payments from the Series' net realized securities profits, if any,
will be made during the first quarter of the next fiscal year. During the
fiscal year ended November 30, 1994, dividends totaling $0.43 and $0.10 per
share of the Class A Shares and the Class B Shares, respectively, were paid
from net investment income and a capital gain of $1.66 of the Class A Shares
was paid from realized securities profits. Dividends of $0.10 and $0.09 per
share were paid from the net investment income of the Class A Shares and the
Class B Shares, respectively, and a capital gain of $0.42 per share was paid
from realized securities profits of each Class on January 5, 1995 to
shareholders of record December 27, 1994. Class B Shares of the Series were
first offered to the public on September 6, 1994.
Each of the Classes will share proportionately in the investment income
and expenses of the Series, except that:(i) the per share dividends and
distributions on the Class B Shares will be lower than the per share dividends
and distributions on the Class A Shares as a result of the higher expenses
under the 12b-1 Plan relating to the Class B Shares; and (ii) the per share
dividends and distributions on both the Class A Shares and the Class B Shares
will be lower than the per share dividends and distributions on the Decatur
Total Return Fund Institutional Class as such class will not incur any expenses
under the Rule 12b-1 Plans. See Distribution (12b-1) and Service under
Management of the Fund.
Both dividends and distributions, if any, are automatically reinvested in
your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distri-butions which cannot be delivered by the
Post Office or which remains uncashed for a period of more than one year may be
reinvested in the shareholder's account at the then-current net asset value and
the dividend option may be changed from cash to reinvest. If you elect to take
your dividends and distributions in cash and such dividends and distributions
are in an amount of $25 or more, you may elect the Delaware Group's MoneyLine
service to enable such payments to be transferred from your Series account to
your predesignated bank account. Your funds will normally be credited to your
bank account two business days after the payment date. There are no fees for
this method. See Systematic Withdrawal Plan for Class A Shares under Redemption
and Exchange for information regarding authorization of this service. (See The
Delaware Difference for more information on reinvestment options.)
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TAXES
The Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code"). As such, the Series will not be subject to federal income tax, or
to any excise tax, to the extent its earnings are distributed as provided in
the Code.
The Series intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors, dividends
from net investment income will generally qualify in part for the corporate
dividends-received deduction. The portion of dividends paid by the Series that
so qualifies will be designated each year in a notice from the Fund to the
Series' shareholders. For the fiscal year ended November 30, 1994, 100% of the
Series' dividends from net investment income qualified for the corporate
dividends-received deduction.
Distributions paid by the Series from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who
are subject to income taxes as long-term capital gains, regardless of the
length of time an investor has owned shares in the Series. The Series does not
seek to realize any particular amount of capital gains during a year; rather,
realized gains are a byproduct of Series management activities. Consequently,
capital gains distributions may be expected to vary considerably from year to
year. Also, for those investors subject to tax, if purchases of shares in the
Series are made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November or December to shareholders
of record on a specified date in one of those months, but which, for
operational reasons, may not be paid to the shareholder until the following
January, will be treated for tax purposes as if paid by the Series and received
by the shareholder on December 31 of the year declared.
The sale of shares of the Series is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may
be realized from an ordinary redemption of shares or an exchange of shares
between two mutual funds (or two series or portfolios of a mutual fund). Any
loss incurred on sale or exchange of the Series' shares which had been held
for six months or less will be treated as a long-term capital loss to the
extent of capital gain dividends received with respect to such shares. All or a
portion of the sales charge incurred in purchasing Series shares will be
excluded from the federal tax basis of any of such shares sold or exchanged
within ninety (90) days of their purchase (for purposes of determining gain or
loss upon sale of such shares) if the sale proceeds are reinvested in the
Series or in another fund in the Delaware Group of funds and a sales charge
that would otherwise apply to the reinvestment is reduced or eliminated. Any
portion of such sales charge excluded from the tax basis of the shares sold
will be added to the tax basis of the shares acquired in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the end
of no longer than approximately eight years after purchase will constitute a
tax-free exchange for federal tax purposes. Shareholders should consult their
own tax advisers regarding specific questions as to federal, state, local or
foreign taxes. See Automatic Conversion of Class B Shares under Buying Shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. government securities may be exempt
from state personal income taxes. Shares of the Series are exempt from
Pennsylvania county personal property taxes.
Each year, the Fund will mail you information on the tax status of the
Series' dividends and distributions. Shareholders will also receive each year
information as to the portion of dividend income that is derived from U.S.
government securities that are exempt from state income tax. Of course,
shareholders who are not subject to tax on their income would not be required
to pay tax on amounts distributed to them by the Series.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in the
Series.
See Accounting and Tax Issues and Distributions and Taxes in Part B for
additional information on tax matters relating to the Series and its
shareholders.
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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
Class A Shares are purchased at the offering price and Class B Shares are
purchased at the net asset value ("NAV") per share. The offering price of the
Class A Shares consists of the NAV per share next determined after the order is
received, plus any applicable front-end sales charges. The offering price and
NAV are computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when such exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market
value. Short-term investments having a maturity of less than 60 days are valued
at amortized cost, which approximates market value. All other securities are
valued at their fair value as determined in good faith and in a method approved
by the Fund's Board of Directors.
Each of the Series' three classes will bear, pro-rata, all of the common
expenses of the Series. The net asset values of all outstanding shares of each
class of the Series will be computed on a pro-rata basis for each outstanding
share based on the proportionate participation in the Series represented by the
value of shares of that class. All income earned and expenses incurred by the
Series will be borne on a pro-rata basis by each outstanding share of a class,
based on each class' percentage in the Series represented by the value of
shares of such classes, except that the Decatur Total Return Fund Institutional
Class will not incur any distribution fees under the Series' 12b-1 Plans and
the Class A and Class B 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 net asset value of and
dividends paid to each class of the Series will vary.
MANAGEMENT OF THE FUND
DIRECTORS
The business and affairs of the Fund are managed under the direction of
its Board of Directors. Part B contains additional information regarding the
directors and officers.
INVESTMENT MANAGER
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1994, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $24 billion in assets in the various institutional (approximately
$15,544,258,000) and investment company (approximately $9,237,192,000)
accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). By reason of its percentage ownership of DMH common
stock and through a Voting Trust Agreement with certain other DMH shareholders,
Legend Capital Group, L.P. ("Legend") controls DMH and the Manager. As General
Partners of Legend, Leonard M. Harlan and John K. Castle have the ability to
direct the voting of more than a majority of the shares of DMH common stock and
thereby control the Manager.
On December 12, 1994, DMH entered into a merger agreeement with Lincoln
National Corporation ("Lincoln National") and a newly-formed subsidiary of
Lincoln National. Pursuant to that agreement, the new subsidiary will be merged
with and into DMH. This merger will result in DMH becoming a wholly-owned
subsidiary of Lincoln National. The transaction is expected to close in the
early spring of 1995, subject to the receipt of all regulatory approvals and
satisfaction of conditions precedent to closing, including the approval
described below. 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.
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<PAGE> 28
The Manager manages the Series' portfolio and makes investment decisions
which are implemented by the Fund's Trading Department. The Manager also pays
the salaries of all the directors, officers and employees of the Fund who are
affiliated with the Manager. For these services, the Manager is paid an annual
fee of .60% on the first $500 million of average daily net assets of the
Series, .575% on the next $250 million and .55% of the average daily net assets
in excess of $750 million, less all directors' fees paid to the unaffiliated
directors by the Series. Investment management fees paid by the Series for the
fiscal year ended November 30, 1994 were 0.59% of average daily net assets.
Completion of the above-described merger transaction will result in an
assignment, and consequently a termination, of the existing investment
management agreement between the Manager and the Fund. Subject to approval by
the Fund's Board, Series shareholders will be asked to vote on a new investment
management agreement with the Manager, to become effective at or about the time
the transaction is to be completed. It is not anticipated that there will be
any changes in the compensation or other material terms of the existing
investment management agreement as a result of the transaction. Details of the
transaction will be included in the proxy materials to be furnished to
shareholders in connection with a shareholder meeting expected to be held some
time in early 1995.
John B. Fields has primary responsibility for making day-to-day investment
decisions for the Series. He has been the Senior Portfolio Manager of this
Series since 1992. Mr. Fields, who has 24 years experience in investment
management, earned a bachelor's degree and an MBA from Ohio State University.
Before joining the Delaware Group in 1992, he was Director of Domestic Equity
Risk Management at DuPont. Prior to that, he was Director of Equity Research at
Comerica Bank. Mr. Fields is a member of the Financial Analysts Society of
Wilmington, Delaware.
In making investment decisions for the Series, Mr. Fields works with a
team of 12 portfolio managers and analysts, each of whom specializes in a
different industry sector and makes recommendations accordingly. Mr. Fields
also regularly consults with Wayne A. Stork and Richard G. Unruh, Jr. Mr.
Stork, Chairman of the Board of the Manager and the Fund's Board of Directors,
is a graduate of Brown University and attended New York University's Graduate
School of Business Administration. Mr. Stork joined the Delaware Group in 1962
and has served in various executive capacities at different times within the
Delaware organization. Mr. Unruh is a graduate of Brown University and received
his MBA from the University of Pennsylvania's Wharton School. He joined the
Delaware Group in 1982 after 19 years of investment management experience with
Kidder, Peabody & Co. Inc. Mr. Unruh was named an executive vice president of
the Fund in 1994. He is also a member of the Board of Directors of the Manager
and was named an executive vice president of the Manager in 1994. He is on the
Board of Directors of Keystone Insurance Company and AAA Mid-Atlantic and is a
former president and current member of the Advisory Council of the Bond Club of
Philadelphia. It is not anticipated that there will be any changes in the
personnel responsible for managing the Series as a result of the
above-described merger transaction.
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PORTFOLIO TRADING PRACTICES
The Series normally will not invest for short-term trading purposes.
However, the Series may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Series and may affect taxes payable by the Series' shareholders to
the extent of any net realized capital gains. Given the Series' investment
objective, its annual portfolio turnover rate is not expected to exceed 100%.
During the past two fiscal years, the Series' portfolio turnover rates were
119% for 1993 and 74% for 1994.
The Series uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager
or its advisory clients. These services may be used by the Manager in servicing
any of its accounts. Subject to best price and execution, the Series may
consider a broker/dealer's sales of Series shares in placing portfolio orders
and may place orders with broker/dealers that have agreed to defray certain
Series expenses such as custodian fees.
PERFORMANCE INFORMATION
From time to time, the Fund may quote total return performance of the
Classes in advertising and other types of literature. Total return will be
based on a hypothetical $1,000 investment, reflecting the reinvestment of all
distributions at net asset value and (i) in the case of Class A Shares, the
impact of the maximum front-end sales charge at the beginning of each specified
period and (ii) in the case of Class B Shares, the deduction of any applicable
CDSC at the end of the relevant period. Each presentation will include the
average annual total return for one-, five- and ten-year periods, as relevant.
The Fund may also advertise aggregate and average total return information
concerning a Class over additional periods of time. In addition, the Series
may present total return information that does not reflect the deduction of the
maximum front-end sales charge or any applicable CDSC. In this case, such total
return would be more favorable than total return information which includes
deductions of the maximum front-end sales charge or any applicable CDSC.
Because securities prices fluctuate, investment results of the Classes
will fluctuate over time and past performance should not be considered as a
representation of future results.
DISTRIBUTION (12b-1) AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Series under an Amended and Restated Distribution Agreement dated as of
September 6, 1994.
The Fund has adopted a distribution plan under Rule 12b-1 for the Class A
Shares and a separate distribution plan under Rule 12b-1 for the Class B Shares
(the "Plans"). The Plans permit the Series to pay the Distributor from the
assets of the respective Classes a monthly fee for its services and expenses in
distributing and promoting sales of shares. These expenses include, among other
things, preparing and distributing advertisements, sales literature, and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, holding special promotions for specified periods of time,
and paying distribution and maintenance fees to brokers, dealers and others. In
connection with the promotion of Class A and Class B Shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, and reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising. The Distributor may pay or
allow additional promotional incentives to dealers as part of preapproved sales
contests and/or to dealers who provide extra training and information
concerning a Class and increase sales of the Class. In addition, the Series may
make payments from the assets of the respective Class directly to others, such
as banks, who aid in the distribution of Class shares or provide services in
respect of a Class, pursuant to service agreements with the Fund.
The 12b-1 Plan expenses relating to the Class B Shares are also used to
pay the Distributor for advancing the commission costs to dealers with respect
to the initial sale of such shares.
The aggregate fees paid by the Series from the assets of the respective
Class to the Distributor and others under the Plans may not exceed .30% of the
Class A Shares' average daily net assets in any year, and 1% (.25% of which are
service fees to be paid by the Series to the Distributor, dealers and others,
for providing personal service and/or maintaining shareholder accounts) of the
Class B Shares' average daily net assets in any year. The Class A and Class B
Shares will not incur any distribution expenses beyond these limits, which may
not be increased without shareholder approval. The Distributor may, however,
incur additional expenses and make additional payments to dealers from its own
resources to promote the distribution of shares of the Classes.
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The Fund's Plans do not apply to the Decatur Total Return Fund
Institutional Class of shares. Those shares are not included in calculating the
Plans' fees, and the Plans are not used to assist in the distribution and
marketing of Decatur Total Return Fund Institutional Class shares.
While payments pursuant to the Plans may not exceed .30% annually with
respect to the Class A Shares and 1% annually with respect to the Class B
Shares, the Plans do not limit fees to amounts actually expended by the
Distributor. It is therefore possible that the Distributor may realize a profit
in any particular year. However, the Distributor currently expects that its
distribution expenses will likely equal or exceed payments to it under the
Plans. The monthly fees paid to the Distributor are subject to the review and
approval of the Fund's unaffiliated directors who may reduce the fees or
terminate the Plans at any time.
The staff of the Securities and Exchange Commission ("SEC") has proposed
amendments to Rule 12b-1 and other related regulations that could impact Rule
12b-1 Distribution Plans. The Fund intends to amend the Series' Plans, if
necessary, to comply with any new rules or regulations the SEC may adopt with
respect to Rule 12b-1.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Series
under an Agreement dated June 29, 1988. The unaffiliated directors review
service fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
EXPENSES
The Series is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Amended and Restated Distribution Agreement. The
Class A Shares' ratio of expenses to average daily net assets for the fiscal
year ended November 30, 1994 was 1.26%. Based on expenses incurred by the
Class A Shares during its fiscal year ended November 30, 1994, the expenses of
the Class B Shares are expected to be 1.96% for the fiscal year ending November
30, 1995. The expense ratio of each Class reflects the impact of its respective
12b-1 Plan.
SHARES
The Decatur Total Return Fund is the second series of Delaware Group
Decatur Fund, Inc., which is an open-end management investment company,
commonly known as a mutual fund. The Series' portfolio of assets is
diversified. The Fund was organized as a Maryland corporation on March 4, 1983
and was previously organized as a Delaware corporation in 1956. Prior to May 2,
1994, the Decatur Total Return Fund series was named the Decatur II Series
(which was known and did business as Decatur Fund II).
Series shares have a par value of $1.00, equal voting rights, except as
noted below, and are equal in all other respects. All Fund shares have
noncumulative voting rights which means that the holders of more than 50% of
the Fund's shares voting for the election of directors can elect 100% of the
directors if they choose to do so. Under Maryland law, the Fund is not
required, and does not intend, to hold annual meetings of shareholders unless,
under certain circumstances, it is required to do so under the Investment
Company Act of 1940. Shareholders of 10% or more of the Fund's shares may
request that a special meeting be called to consider the removal of a director.
Shares of each series of the Fund will vote separately on any matter which
affects only that series. Shares of the Series will have a priority over shares
of the Fund's other series in the assets and income of Decatur Total Return
Fund and will vote separately on any matter that affects only Decatur Total
Return Fund.
The Series also offers the Decatur Total Return Fund Institutional Class
of shares as well as the Class A and Class B Shares. Shares of each class
represent proportionate interests in the assets of the Series and have the same
voting and other rights and preferences as the other classes of the Series,
except that shares of the Decatur Total Return Fund Institutional Class are not
subject to, and may not vote on matters affecting, the Distribution Plans under
Rule 12b-1 relating to the Class A and Class B Shares. Similarly, the
shareholders of the Class A Shares may not vote on matters affecting the Fund's
Plan under Rule 12b-1 relating to the Class B Shares, and the shareholders of
the Class B Shares may not vote on matters affecting the Fund's Plan under Rule
12b-1 relating to the Class A Shares.
From May 2, 1994 to September 5, 1994, the Decatur Total Return Fund A
Class was known as the Decatur Total Return Fund class and prior to May 2, 1994
was known as the Decatur Fund II class. From May 2, 1994 to September 5, 1994,
the Decatur Total Return Fund Institutional Class was known as the Decatur
Total Return Fund (Institutional) class and prior to May 2, 1994 was known as
the Decatur Fund II (Institutional) class.
29
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<PAGE> 32
The Delaware Group includes 22 different funds with a wide range of
investment objectives. Stock funds, income funds, tax-free funds, money market
funds and closed-end equity funds give investors the ability to create a
portfolio that fits their personal financial goals. For more information
contact your financial adviser or call the Delaware Group at 800-523-4640, in
Philadelphia 215-988-1333.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
<TABLE>
<S> <C>
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING [PHOTO OF GEORGE WASHINGTON CROSSING THE DELAWARE RIVER]
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
</TABLE>
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
Chemical Bank
450 West 33rd Street
New York, NY 10001
P-018/P-066-1/95-RRD
Printed in the U.S.A.
DECATUR
TOTAL RETURN
FUND
- ------------
A CLASS
B CLASS
PROSPECTUS
JANUARY 30, 1995
DELAWARE
GROUP
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