<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
INSTITUTIONAL JANUARY 30, 1995
------------------------------------------------------------------
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR MORE INFORMATION ABOUT THE DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
CALL THE DELAWARE GROUP AT 800-828-5052.
This Prospectus describes the Decatur Total Return Fund Institutional
Class (the "Class") of Decatur Total Return Fund series (the "Series") of
Delaware Group Decatur Fund, Inc. (the "Fund"). 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.
Shares of this Class are available for purchase only by certain enumerated
institutions and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge and without a 12b-1 charge. See
Buying Shares.
This Prospectus relates only to the Class 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 number. 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 A Class and the
Decatur Total Return Fund B Class. Shares of the Decatur Total Return Fund A
Class carry a front-end sales charge and are subject to ongoing distribution
expenses. Shares of the Decatur Total Return Fund B Class are subject to
ongoing distribution expenses and a contingent deferred sales charge upon
redemption.
<TABLE>
<S> <C>
TABLE OF CONTENTS
COVER PAGE . . . . . . . . . . . . . . . . . . . . . . 1
SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . 4
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT STRATEGY . . . . . . . . . . . . . . . . . 5
SUITABILITY . . . . . . . . . . . . . . . . . . . . . 8
BUYING SHARES . . . . . . . . . . . . . . . . . . . . . 8
REDEMPTION AND EXCHANGE . . . . . . . . . . . . . . . . 10
DIVIDENDS AND DISTRIBUTIONS . . . . . . . . . . . . . . 12
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 12
CALCULATION OF NET ASSET VALUE PER SHARE . . . . . . . 13
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . 13
</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 the Decatur Total Return Fund Institutional Class, the
Decatur Total Return Fund A Class and the Decatur Total Return Fund B 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. Fifty million shares
of that stock have been allocated to the Decatur Total Return Fund
Institutional Class, one hundred million shares have been allocated to the
Decatur Total Return Fund A Class and fifty million shares have been allocated
to the Decatur Total Return Fund B 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.
PURCHASE PRICE
Shares of the Class offered by this Prospectus are available at net asset
value, without a front-end or contingent deferred sales charge and are not
subject to distribution fees under a Rule 12b-1 distribution plan. See Buying
Shares.
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 a proportionate share of all directors' fees
paid to the unaffiliated directors by the Series. See Management of the Fund.
REDEMPTION AND EXCHANGE
Shares of the Fund are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See
Redemption and Exchange.
2
<PAGE> 4
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . None**
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
- -------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . 0.59%
12b-1 Expenses . . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses . . . . . . . . . . . . . . . . . 0.37%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . 0.96%
=====
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly. *CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire. **Exchanges are subject to the requirements of
each fund and a front-end sales charge may apply. See Decatur Total Return Fund
A Class and Decatur Total Return Fund B Class for expense information about
those classes.
The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$10 $31 $53 $118
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
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>
- -------------------------------------------------------------------------------------------------------------------------
PERIOD
YEAR 7/26/93(3)
ENDED THROUGH
11/30/94 11/30/93 11/30/93(1) 11/30/92(1) 11/30/91(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . $14.40 $14.10 $13.98 $12.73 $11.71
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . 0.43 0.15 0.45 0.47 0.53
Net Gains or Losses on Securities (both realized
and unrealized) . . . . . . . . . . . . . . . . (0.37) 0.25 1.45 1.30 1.07
------ ------ ------ ------ ------
Total From Investment Operations . . . . . . . 0.06 0.40 1.90 1.77 1.60
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . . (0.45) (0.10) (0.45) (0.52) (0.58)
Distributions (from capital gains) . . . . . . . (1.66) none (1.05) none none
Returns of Capital . . . . . . . . . . . . . . . none none none none none
------ ------ ------ ------ ------
Total Distributions . . . . . . . . . . . . . . (2.11) (0.10) (1.50) (0.52) (0.58)
------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . . . . . . $12.35 $14.40 $14.38 $13.98 $12.73
====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . 0.19% 14.89% 14.74%(4) 14.12%(4) 13.94%(4)
- ------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . $1,376 $1,181 $431,638 $408,986 $394,338
Ratio of Expenses to Average Daily Net Assets(5) .96% .92% 1.22% 1.23% 1.23%
Ratio of Net Investment Income to Average
Daily Net Assets(5) . . . . . . . . . . . . . . 3.18% 3.45% 3.15% 3.44% 4.20%
Portfolio Turnover Rate(2) . . . . . . . . . . . 74% 119% 119% 98% 67%
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PERIOD
8/27/86(1)/(2)
YEAR ENDED THROUGH
11/30/90(1) 11/30/89(1) 11/30/88(1) 11/30/87(1) 11/30/86
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . $13.64 $11.47 $ 9.04 $10.29 $ 9.53
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . 0.58 0.54 0.50 0.31 0.04
Net Gains or Losses on Securities (both realized
and unrealized) . . . . . . . . . . . . . . . . (1.44) 2.12 2.30 (1.30) 0.72
------ ------ ------ ------ ------
Total From Investment Operations . . . . . . . (0.86) 2.66 2.80 (0.99) 0.76
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . . (0.60) (0.49) (0.37) (0.26) none
Distributions (from capital gains) . . . . . . . (0.47) none none none none
Returns of Capital . . . . . . . . . . . . . . . none none none none none
------ ------ ------ ------ ------
Total Distributions . . . . . . . . . . . . . . (1.07) (0.49) (0.37) (0.26) none
------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . . . . . . $11.71 $13.64 $11.47 $ 9.04 $10.29
====== ====== ====== ====== ======
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . (6.84%)(4) 23.73%(4) 31.51%(4) (10.08%)(4) 33.87%(2)/(4)
- ------------
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . $357,139 $318,871 $200,085 $146,632 $16,118
Ratio of Expenses to Average Daily Net Assets(5) 1.23% 1.24% 1.28% 1.27%(6) (2)
Ratio of Net Investment Income to Average
Daily Net Assets(5) . . . . . . . . . . . . . . 4.87% 4.60% 4.77% 4.17%(7) (2)
Portfolio Turnover Rate(2) . . . . . . . . . . . 54% 60% 69% 39% (2)
</TABLE>
- ------------------
(1) Data are derived from data of Decatur Total Return Fund A Class (formerly
known as Decatur Fund II class) and reflect the impact of Rule 12b-1
distribution expenses paid by the Decatur Total Return Fund A Class.
Decatur Total Return Fund Institutional Class (formerly known as Decatur
Fund II (Institutional) class) is not subject to Rule 12b-1 distribution
expenses and per share data for periods beginning on and after July 26,
1993 will not reflect the deduction of such expenses.
(2) Date of the initial public offering of the Decatur Total Return Fund A
Class. 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.
(3) Date of initial public offering of Decatur Total Return Fund Institutional
Class (formerly known as Decatur Fund II (Institutional) class); ratios
and total return for this period have been annualized.
(4) Does not reflect any maximum sales charges that are or were in effect.
Total return for 1986 and 1987 reflect expense limitation referenced in
Notes 5, 6 and 7.
(5) 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.
(6) Ratio of expenses to average daily net assets prior to expense limitation
was 1.41%.
(7) Ratio of net investment income to average daily net assets prior to
expense limitation was 4.03%.
4
<PAGE> 6
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.
5
<PAGE> 7
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 contacts. 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.
6
<PAGE> 8
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.
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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 or expiration.
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.
BUYING SHARES
The Distributor serves as the national distributor for the Fund. Shares of
the Class may be purchased directly by contacting the Fund or its agent or
through authorized investment dealers. All purchases are at net asset value.
There is no sales charge.
INVESTMENT INSTRUCTIONS GIVEN ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES CONSIDERING PURCHASING SHARES OF THE CLASS
AS PART OF THEIR RETIREMENT PROGRAM SHOULD CONTACT THEIR EMPLOYER FOR DETAILS.
Shares of the Class are available for purchase 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
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<PAGE> 10
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.
DECATUR TOTAL RETURN FUND A CLASS AND
DECATUR TOTAL RETURN FUND B CLASS
In addition to offering the Decatur Total Return Fund Institutional Class,
the Series also offers the Decatur Total Return Fund A Class and the Decatur
Total Return Fund B Class, which are described in a separate prospectus
relating only to those classes. Shares of Decatur Total Return Fund A Class
and Decatur Total Return Fund B Class may be purchased through authorized
investment dealers or directly by contacting the Fund or its agent. The Decatur
Total Return Fund A Class carries a front-end sales charge and has annual 12b-1
expenses equal to a maximum of .30%. The maximum front-end sales charge as a
percentage of the offering price is 5.75% (6.09% as a percentage of the amount
invested) and is reduced on certain transactions of $100,000 or more. The
Decatur Total Return Fund B Class has no front-end sales charge but is subject
to annual 12b-1 expenses equal to a maximum of 1%. Shares of Decatur Total
Return Fund B Class and certain shares of the Decatur Total Return Fund A Class
may be subject to a contingent deferred sales charge upon redemption. Sales or
service compensation available in respect of such classes, therefore, differs
from that available in respect of the Decatur Total Return Fund Institutional
Class. 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 A Class as a percentage of average
daily net assets for the fiscal year ended November 30, 1994 were 1.26%,
including 12b-1 fees. Based on expenses incurred by the Decatur Total Return A
Class during its fiscal year ended November 30, 1994, the expenses of the
Decatur Total Return B Class are expected to be 1.96%, including 12b-1 fees,
for the fiscal year ending November 30, 1995. See Part B for performance
information about the Decatur Total Return Fund A Class and the Decatur Total
Return Fund B Class. To obtain a prospectus relating to such classes, contact
the Distributor.
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
INVESTING DIRECTLY BY MAIL
1. Initial Purchases--An Investment Application must be completed, signed and
sent with a check payable to Decatur Total Return Fund Institutional Class, 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 Institutional Class. Your
check should be identified with your name(s) and account number.
INVESTING DIRECTLY 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 Client Services
Department at 800-828-5052 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 Institutional Class,
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 must advise your
Client Services Representative by telephone at 800-828-5052 prior to sending
your wire.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group and
you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Class. Shares of the
Decatur Total Return Fund B Class and the Class B Shares of the other funds in
the Delaware Group offering such a class of shares may not be exchanged into
the Class. If you wish to open an account by exchange, call your Client
Services Representative at 800-828-5052 for more information.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of Class shares through most investment dealers
who, as part of the service they provide, must transmit orders promptly. They
may charge for this service.
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PURCHASE PRICE AND EFFECTIVE DATE
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when such exchange is open.
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 share price 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.
REDEMPTION AND EXCHANGE
REDEMPTION AND EXCHANGE REQUESTS MADE ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES SHOULD THEREFORE CONTACT THEIR EMPLOYER FOR
DETAILS.
Your shares will be redeemed or exchanged based on the net asset value
next determined after we receive your request in good order. Redemption and
exchange requests received in good order after the time the net asset value of
shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under Buying Shares. Except as
otherwise noted below, for a redemption request to be in "good order," you must
provide your Class account number, account registration, and the total number
of shares or dollar amount of the transaction. 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 800-828-5052.
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.
Shares of the Class may be exchanged into any other Delaware Group mutual
fund provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such exchange will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares of the funds in the Delaware Group. 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.
Different redemption and exchange methods are outlined below. There is no
fee charged by the Fund or the Distributor for redeeming or exchanging your
shares. 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.
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<PAGE> 12
WRITTEN REDEMPTION AND EXCHANGE
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your Class shares or to request an exchange of any or all
your Class shares into another mutual fund in the Delaware Group, subject to
the same conditions and limitations as other exchanges noted above. 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 may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. 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. Payment is normally mailed the next
business day, but no later than seven days, after receipt of your request. The
Fund does not issue certificates for shares unless you submit a specific
request. If your shares are in certificate form, the certificate must accompany
your request and also be in good order.
Shareholders also may submit their written request for redemption or
exchange by facsimile transmission at the following number: 215-972-8864.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you can only redeem
or exchange by written request and you must return your certificates.
The Telephone Redemption service enabling redemption proceeds to be mailed
to the account 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.
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 Class shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. 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
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.
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 a written authorization and may require that you
have your signature guaranteed. For your protection, your authorization must be
on file. If you request a wire, your funds will normally be sent the next
business day. CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted
from your redemption. If you ask for a check, it will normally be mailed the
next business day, but no later than seven days, after receipt of your request
to your predesignated bank account. There are no fees for this method, but the
mail time may delay getting funds into your bank account. Simply call your
Client Services Representative prior to the time the net asset value is
determined, as noted above.
TELEPHONE EXCHANGE
You or your investment dealer of record can exchange shares into any fund
in the Delaware Group under the same registration. As with the written exchange
service, telephone exchanges are subject to the same conditions and limitations
as other exchanges noted above. Telephone exchanges may be subject to
limitations as to amounts or frequency.
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<PAGE> 13
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 $0.45 per share of the
Class were paid from net investment income and a distribution of $1.66 per
share was paid from realized securities profits. A dividend of $0.14 per share
was paid from net investment income and a capital gain of $0.42 per share was
paid from realized securities profits on January 5, 1995 to shareholders of
record December 27, 1994.
Each class of the Series will share proportionately in the investment
income and expenses of the Series, except that the Class will not incur any
distribution fees under the Series' 12b-1 Plans which apply to the Decatur
Total Return Fund A Class and the Decatur Total Return Fund B Class.
Both dividends and distributions, if any, are automatically reinvested in
your account at net asset value.
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, even
though received 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, received 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.
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, if any, that is derived from
U.S. government securities that are exempt from state income tax. Of course,
shareholders who are not subject to tax on their income would not be required
to pay tax on amounts distributed to them by the 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 contact 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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<PAGE> 14
CALCULATION OF NET ASSET
VALUE PER SHARE
The purchase and redemption price of the Class is the net asset value
("NAV") per share next determined after the order is received. The NAV is
computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when 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 Class will not incur any of the
expenses under the Series' 12b-1 Plans and the Decatur Total Return Fund A and
B Classes alone will bear the 12b-1 Plan fees 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 agreement 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.
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.
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<PAGE> 15
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.
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
Class 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. 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
the Class over additional periods of time.
Because securities prices fluctuate, investment results of the Class will
fluctuate over time and past performance should not be considered as a
representation of future results.
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
your Client Services Representative.
FINANCIAL INFORMATION ABOUT THE FUND
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. The Fund's fiscal year ends on November
30.
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DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Fund under an Amended and Restated Distribution Agreement dated as of
September 6, 1994. It bears all of the costs of promotion and distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Series
under an Agreement dated June 29, 1988. The unaffiliated directors review
service fees paid to the Transfer Agent. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent
may be performed by certain other entities and the Transfer Agent may elect to
enter into an agreement to pay such other entities for those services. In
addition, participant account maintenance fees may be assessed for certain
recordkeeping provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and
the various services selected by the employer. Fees will be quoted upon request
and are subject to change.
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
ratio of expenses to average daily net assets for the Class was 0.96% for the
fiscal year ended November 30, 1994.
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 A Class and the
Decatur Total Return Fund B Class of shares which represent proportionate
interests in the assets of the Series and have the same voting and other rights
and preferences as the Class, except that shares of the Class are not subject
to, and may not vote on matters affecting, the Distribution Plans under Rule
12b-1 relating to the Decatur Total Return Fund A Class and the Decatur Total
Return Fund B 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, it was known as the Decatur Fund II
(Institutional) class. 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, it was known as the Decatur Fund II class.
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For more information contact the Delaware
Group at 800-828-5052.
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-050-1/95-RRD
Printed in the U.S.A.
DECATUR
TOTAL RETURN
FUND
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INSTITUTIONAL
PROSPECTUS
JANUARY 30, 1995
DELAWARE
GROUP
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