<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 2-13017
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ______ [ _ ]
Post-Effective Amendment No. 104 [ X ]
-------
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 104
-------
DELAWARE GROUP DECATUR FUND, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 751-2923
--------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: November 29,1995
----------------
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
X on November 29, 1995 pursuant to paragraph (b)
-----
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on (date) pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year was filed on January 26, 1995.
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
--- C O N T E N T S ---
This Post-Effective Amendment No. 104 to Registration File No. 2-13017 includes
the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses and Supplement*
5. Part B - Statements of Additional Information
6. Part C - Other Information
7. Signatures
* The Decatur Income Fund Institutional Class Prospectus and the Decatur Total
Return Fund Institutional Class Prospectus, each dated January 30, 1995, are
incorporated into this filing by reference to the electronic filings of those
Prospectuses made pursuant to Rule 497(e) on April 24, 1995. The Supplement
for each Prospectus dated April 15, 1995 that was also filed on April 24, 1995
is not incorporated by reference. That Supplement will be superceded by the
---
Supplement included with this filing as of the effective date of this filing.
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS-REFERENCE SHEET*
---------------------
PART A**
------
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
<S> <C> <C>
Decatur Decatur
Income Fund Income Fund
A Class/ Institutional
B Class/ Class
C Class
1 Cover Page................................ Cover Cover
2 Synopsis.................................. Synopsis, Synopsis,
Summary of Summary of
Expenses Expenses
3 Condensed Financial Information........... Financial Financial
Highlights Highlights
4 General Description of Registrant......... Investment Investment
Objectives and Objectives and
Policies, Policies,
Shares Shares
5 Management of the Fund.................... Management of Management of
the Fund the Fund
6 Capital Stock and Other Securities........ Delaware Dividends and
Difference, Distributions,
Dividends and Taxes,
Distributions, Shares
Taxes, Shares
7 Purchase of Securities Being Offered...... Cover, Cover,
Buying Shares, Buying Shares,
Calculation of Calculation of
Offering Price Net Asset
and Net Asset Value Per Share,
Value Per Share, Management of
Management of the Fund
the Fund
8 Redemption or Repurchase.................. Buying Shares, Buying Shares,
Redemption and Redemption and
Exchange Exchange
9 Pending Legal Proceedings................ None None
</TABLE>
* Delaware Group Decatur Fund, Inc. offers two series of shares: Decatur
Income Fund and Decatur Total Return Fund. Decatur Income Fund consists
of Decatur Income Fund A Class, Decatur Income Fund B Class, Decatur
Income Fund C Class and Decatur Income Fund Institutional Class. Decatur
Total Return Fund consists of Decatur Total Return Fund A Class, Decatur
Total Return Fund B Class, Decatur Total Return Fund C Class and Decatur
Total Return Fund Institutional Class. Class A, B and C Shares of each
respective Series are combined in one prospectus and the Institutional
Class of each respective Series has its own prospectus. Each Series has
its own Part B but they share a common Part C.
** The Decatur Income Fund Institutional Class Prospectus and the Decatur
Total Return Fund Institutional Class Prospectus, each dated January 30,
1995, are incorporated into this filing by reference to the electronic
filings of those Prospectuses made pursuant to Rule 497(e) on April 24,
1995. The Supplement for each Prospectus dated April 15, 1995 that was
also filed on April 24, 1995 is not incorporated by reference. That
---
Supplement will be superceded by the Supplement included with this filing
as of the effective date of this filing.
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS-REFERENCE SHEET
---------------------
PART A**
------
(Continued)
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
<S> <C> <C>
Decatur Total Decatur Total
Return Fund Return Fund
A Class/ Institutional
B Class/ Class
C Class
1 Cover Page................................ Cover Cover
2 Synopsis.................................. Synopsis, Synopsis,
Summary of Summary of
Expenses Expenses
3 Condensed Financial Information........... Financial Financial
Highlights Highlights
4 General Description of Registrant......... Investment Investment
Objectives and Objectives and
Policies, Policies,
Shares Shares
5 Management of the Fund.................... Management of Management of
the Fund the Fund
6 Capital Stock and Other Securities........ Delaware Dividends and
Difference, Distributions,
Dividends and Taxes,
Distributions, Shares
Taxes, Shares
7 Purchase of Securities Being Offered...... Cover, Cover,
Buying Shares, Buying Shares,
Calculation of Calculation of
Offering Price Net Asset
and Net Asset Value Per Share,
Value Per Share, Management of
Management of the Fund
the Fund
8 Redemption or Repurchase.................. Buying Shares, Buying Shares,
Redemption and Redemption and
Exchange Exchange
9 Pending Legal Proceedings................. None None
</TABLE>
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS REFERENCE SHEET
---------------------
PART B
------
<TABLE>
<CAPTION>
Location in Statements
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
Decatur Income Decatur Total
Fund Return Fund
10 Cover Page........................................... Cover Cover
11 Table of Contents.................................... Table of Contents Table of Contents
12 General Information and History...................... General General
Information Information
13 Investment Objectives and Policies................... Investment Investment
Policies and Policies and
Portfolio Portfolio
Techniques Techniques
14 Management of the Registrant......................... Officers and Officers and
Directors Directors
15 Control Persons and Principal Holders
of Securities........................................ Officers and Officers and
Directors Directors
16 Investment Advisory and Other Services............... Plans Under Plans Under
Rule 12b-1 Rule 12b-1
for the Fund for the Fund
Classes (under Classes (under
Purchasing Purchasing
Shares), Shares),
Investment Investment
Management Management
Agreement, Agreement,
Officers and Officers and
Directors, Directors,
General General
Information, Information,
Financial Financial
Statements Statements
</TABLE>
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS REFERENCE SHEET
---------------------
PART B
------
(Continued)
<TABLE>
<CAPTION>
Location in Statements
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
Decatur Income Decatur Total
Fund Return Fund
17 Brokerage Allocation................................... Trading Practices Trading Practices
and Brokerage and Brokerage
18 Capital Stock and Other Securities..................... Capitalization Capitalization
and and
Noncumulative Noncumulative
Voting (under Voting (under
General General
Information) Information)
19 Purchase, Redemption and Pricing of Securities
Being Offered.......................................... Purchasing Purchasing
Shares, Shares,
Determining Determining
Offering Price Offering Price
and Net and Net
Asset Value, Asset Value,
Redemption Redemption
and Repurchase, and Repurchase,
Exchange Exchange
Privilege Privilege
20 Tax Status............................................. Accounting and Accounting and
Tax Issues, Tax Issues,
Distributions Distributions
and Taxes and Taxes
21 Underwriters........................................... Purchasing Purchasing
Shares Shares
22 Calculation of Performance Data........................ Performance Performance
Information Information
23 Financial Statements................................... Financial Financial
Statements Statements
</TABLE>
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS REFERENCE SHEET
---------------------
PART C
------
<TABLE>
<CAPTION>
Location in
Item No. Description Part C
- -------- ----------- -----------
<S> <C> <C>
24 Financial Statements and Exhibits.............. Item 24
25 Persons Controlled by or under Common
Control with Registrant...................... Item 25
26 Number of Holders of Securities................ Item 26
27 Indemnification................................ Item 27
28 Business and Other Connections of
Investment Adviser............................. Item 28
29 Principal Underwriters......................... Item 29
30 Location of Accounts and Records............... Item 30
31 Management Services............................ Item 31
32 Undertakings................................... Item 32
</TABLE>
<PAGE>
DECATUR INCOME FUND
A CLASS SHARES PROSPECTUS
B CLASS SHARES November 29, 1995
C CLASS SHARES
----------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance: Nationwide 800-523-4640,
Philadelphia 215-988-1333
Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918, Philadelphia 215-988-1241
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500, Philadelphia 215-988-1050
This Prospectus describes the Decatur Income Fund A Class of shares (the
"Class A Shares"), the Decatur Income Fund B Class of shares (the "Class B
Shares") and the Decatur Income Fund C Class of Shares (collectively, the
"Classes") of the Decatur Income 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 the highest possible current
income by investing primarily in common stocks that provide the potential for
income and capital appreciation without undue risk to principal.
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. Class B Shares and Class C Shares may be purchased at a price equal to
the next determined net asset value per share. Class A Shares are subject to a
maximum front-end sales charge of 4.75% and annual 12b-1 Plan expenses of up to
0.30%. Class B Shares are subject to a contingent deferred sales charge
("CDSC") which may be imposed on redemptions made within six years of purchase
and annual 12b-1 Plan expenses of 1.00%, which are assessed against the Class B
Shares for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Buying Shares. Class C Shares are subject to a CDSC
which may be imposed on redemptions made within twelve months of purchase and
annual 12b-1 Plan expenses of 1.00%, which are assessed against the Class C
Shares for the life of the investment. See Summary of Expenses. These
alternatives permit an investor to choose the method of purchasing shares that
is most suitable for his or her needs. In choosing the most suitable class, an
investor should consider the differences among the Classes, including the effect
of sales charges and 12b-1 Plan expenses, given the amount of the purchase, the
length of time the investor expects to hold the shares and other circumstances.
See Buying Shares.
This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. Part B of the Fund's registration statement, dated
November 29, 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 for the fiscal year ended November 30, 1994 and its
Semi-Annual Report for the six months ended May 31, 1995, which will accompany
any response to requests for Part B.
The Series also offers the Decatur Income Fund Institutional Class. That
class is available for purchase only by certain investors. A prospectus for the
Decatur Income Fund Institutional Class can be obtained by writing to Delaware
Distributors, L.P. at the above address or by calling the above number.
-1-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Cover Page Retirement Planning
Synopsis Buying Shares
Summary of Expenses Redemption and Exchange
Financial Highlights Dividends and Distributions
Investment Objective and Policies Taxes
Investment Strategy Calculation of Offering Price and
Suitability Net Asset Value Per Share
The Delaware Difference Management of the Fund
Plans and Services Appendix A - Investment Illustrations
Appendix B - Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
Capitalization
The Series offers four classes of shares: Class A Shares, Class B Shares,
Class C Shares and the Decatur Income Fund Institutional Class of shares. The
Fund has a present authorized capitalization of seven hundred fifty million
shares of capital stock with a $1.00 par value per share. Three hundred fifty
million shares of that stock have been allocated to the Class A Shares, fifty
million shares have been allocated to the Class B Shares, fifty million shares
to the Class C Shares and fifty million shares to the Decatur Income 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., also manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Management of the Fund.
Sales Charges
The price of the Class A Shares includes a maximum front-end sales charge
of 4.75% of the offering price, which, based on the net asset value per share of
the Class A Shares as of the end of the Fund's most recent fiscal year, is
equivalent to 5.01% of the amount invested. The sales charge is 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 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 subject to annual 12b-1 Plan expenses
for approximately eight years after purchase. See Automatic Conversion of Class
B Shares under Buying Shares.
The price of the Class C Shares is equal to the net asset value per share.
Class C Shares are subject to a CDSC of 1% if shares are redeemed within twelve
months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses
for the life of the investment.
See Buying Shares and Distribution (12b-1) and Service under Management of
the Fund.
Purchase Amounts
Generally, the minimum initial investment is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent investments in any Class
generally must be at least $100. Each purchase of Class B Shares is subject to
a maximum purchase limitation of $250,000. For Class C Shares, each purchase
must be in an amount that is less than $1,000,000. An investor may exceed the
maximum purchase limitations for Class B Shares and Class C Shares by making
cumulative purchases over a period of time. An investor should keep in mind,
however, that reduced front-end sales charges apply to investments of $100,000
or more of Class A Shares, which are subject to lower annual 12b-1 Plan expenses
than Class B Shares and Class C Shares and generally are not subject to a CDSC.
The minimum and maximum purchase amounts for retirement plans may vary. See
Buying Shares.
Investment Objective
The objective of the Series is to achieve the highest possible current
income by investing primarily in common stocks that provide the potential for
income and capital appreciation without undue risk to principal. For further
details, see Investment Objective and Policies.
-3-
<PAGE>
Risk Factors and Special Considerations
1. The Series may invest up to 15% of its net assets in high-yield
securities (junk bonds), and, consequently, greater risks may be involved with
an investment in the Series. See High Yield, High Risk Securities under
Investment Objective and Policies.
2. 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 that
result from use of these instruments by the Series, and the investor should
review the descriptions of these risks 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. The Series' portfolio of assets is diversified
as defined by the Investment Company Act of 1940 (the "1940 Act"). 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 $100 million of the Series' average daily net assets,
.525% on the next $150 million, .50% on the next $250 million and .475% on the
average daily net assets in excess of $500 million, less all directors' fees
paid to the unaffiliated directors by the Series. See Management of the Fund.
Redemption and Exchange
Class A Shares of the Series may be 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 CDSC if such purchases triggered the payment of
a dealer's commission. See Front-End Sales Charge Alternative - Class A Shares
under Buying Shares. Class B and Class C Shares may be redeemed or exchanged at
the net asset value calculated after receipt of the redemption or exchange
request subject, in the case of redemptions, to any applicable CDSC. Neither
the Fund nor the Distributor assesses any charges other than the CDSC for
redemptions or exchanges of Class B or Class C Shares. There are certain
limitations on an investor's ability to exchange shares between the various
class of shares that are offered. See Redemption and Exchange.
-4-
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to the Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
Annual Operating Expenses
Class A Class B Class C (as a percentage of average Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares daily net assets) Shares Shares Shares
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Management Fees............ 0.49% 0.49% 0.49%
Purchases (as a percentage of 12b-1 Expenses (including
offering price)....................... 4.75% None None service fees)............ 0.11%*** +1.00%+ 1.00%+
Maximum Sales Charge Imposed on Other Operating Expenses... 0.21% 0.21%++ 0.21%++
Reinvested Dividends (as a ----- ------ -----
percentage of offering price)......... None None None Total Operating Expenses... 0.81% 1.70% 1.70%
===== ====== =====
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower)......... None* 4.00%* 1.00%*
Redemption Fees......................... None** None** None**
</TABLE>
The purpose of this table is to assist the investor in understanding
the various costs and expenses that an investor in any of the Classes will bear
directly or indirectly.
*With respect to 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 the financial adviser through whom such
purchase is effected, a CDSC of 1% will be imposed on certain redemptions within
twelve months of purchase ("Limited CDSC"). Class B Shares are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; (iv) 1% if
shares are redeemed during the sixth year following purchase; and (v) 0%
thereafter. Class C Shares are subject to a CDSC of 1% if the shares are
redeemed within twelve months of purchase. See Contingent Deferred Sales Charge
for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption
and Exchange; Deferred Sales Charge Alternative - Class B Shares and Level Sales
Charge Alternative - Class C Shares under Buying Shares.
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
***The actual 12b-1 Plan expenses to be paid and, consequently, the
"Total Operating Expenses" of the Class A Shares, may be somewhat more (but the
12b-1 Plan expenses may be no more than .30%) or somewhat less (but the 12b-1
Plan expenses may be no less than .10%) because of the formula adopted by the
Board of Directors for use in calculating the 12b-1 Plan expenses beginning May
2, 1994. See Distribution (12b-1) and Service under Management of the Fund.
+Class A Shares, Class B Shares and Class C Shares are subject to
separate 12b-1 Plans. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by rules of the
National Association of Securities Dealers, Inc. (the "NASD").
++"Other Operating Expenses" for Class B Shares and Class C Shares are
estimates derived from actual expenses incurred by the Class A Shares for the
fiscal year ended November 30, 1994. See Decatur Income Fund Institutional
Class under Buying Shares for expense information for that class.
-5-
<PAGE>
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, (2) redemption at the end of each time period and (3) with
respect to Class B Shares and Class C Shares, payment of a CDSC at the time of
redemption, if applicable.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $55(1) $72 $90 $143
Class B Shares $57 $84 $112 $177(2)
Class C Shares $27 $54 $92 $201
</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
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $55 $72 $90 $143
Class B Shares $17 $54 $92 $177(2)
Class C Shares $17 $54 $92 $201
</TABLE>
(1) Generally, the Fund does not assess a redemption charge upon redemption of
Class A Shares. Under certain circumstances, however, a Limited CDSC,
which has not been reflected in this calculation, may be imposed on certain
redemptions within twelve 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 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 the eighth year. However, the
conversion may occur as late as three months after the eighth anniversary
of purchase, during which time the higher 12b-1 Plan fees payable by Class
B Shares will continue to be assessed. Information for the ninth and tenth
years reflects expenses of the Class A Shares. See Automatic Conversion of
Class B Shares under Buying Shares for a description of the automatic
conversion feature.
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.
-6-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights from November 30, 1985 through November 30,
1994 for the Class A Shares and September 6, 1994 through November 30, 1994 for
the Class B Shares are derived from the financial statements of Delaware Group
Decatur Fund, Inc. - Decatur Income Fund (formerly known as Decatur Fund I) 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. Unaudited financial
highlights for the six months ended May 31, 1995 are also provided below for the
Class A Shares and Class B Shares. The data should be read in conjunction with
the financial statements and related notes for the six months ended May 31,
1995, all of which are incorporated by reference into Part B. Further
information about the Series' performance is contained in its Annual Report to
shareholders for the fiscal year ended November 30, 1994, and its Semi-Annual
Report to shareholders for the six months ended May 31, 1995. A copy of the
Series' Annual Report (including the report of Ernst & Young LLP) and its Semi-
Annual Report may be obtained from the Fund upon request at no charge.
Information regarding Class C Shares has not been included in the tables because
such shares were not offered to the public prior to the date of this Prospectus.
- --------------------------------------------------------------------------------
-7-
<PAGE>
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------------------------
Period
12/1/94
through
5/31/95(2) Year Ended
(Unaudited) 11/30/94 11/30/93(1) 11/30/92(1) 11/30/91(1) 11/30/90(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period..................... $15.57 $18.24 $17.20 $15.76 $14.53 $19.07
Income From Investment Operations
- ---------------------------------
Net Investment Income.......... 0.34 0.67 0.78 0.78 0.83 0.93
Net Gains (Losses) on Securities
(both realized and
unrealized)................. 2.26 (0.73) 1.79 1.47 1.37 (2.93)
------ ------ ------ ------ ------ ------
Total From Investment
Operations.................. 2.60 (0.06) 2.57 2.25 2.20 (2.00)
------ ------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends from Net
Investment Income............. (0.35) (0.86) (0.68) (0.81) (0.97) (1.05)
Distributions from Capital
Gains......................... (0.42) (1.75) (0.85) none none (1.49)
Returns of Capital............. none none none none none none
------ ------ ------ ------ ------ ------
Total Distributions.......... (0.77) (2.61) (1.53) (0.81) (0.97) (2.54)
------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period........................ $17.40 $15.57 $18.24 $17.20 $15.76 $14.53
====== ====== ====== ====== ====== ======
- ------------------------------
Total Return(3)................ 17.34% (0.57%) 15.85% 14.55% 15.46% (12.04%)
- ------------
- ------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted)............... $1,290,594 $1,153,884 $1,512,194 $1,508,206 $1,579,521 $1,560,641
Ratio of Expenses to
Average Daily Net Assets...... 0.88% 0.81% 0.71% 0.72% 0.70% 0.70%
Ratio of Net Investment
Income to Average Daily
Net Assets.................... 4.25% 3.92% 4.34% 4.55% 5.18% 5.78%
Portfolio Turnover Rate........ 65% 92% 80% 79% 78% 44%
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
11/30/89(1) 11/30/88(1) 11/30/87(1) 11/30/86(1) 11/30/85(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period..................... $16.89 $15.86 $19.32 $17.20 $15.41
Income From Investment Operations
- ---------------------------------
Net Investment Income.......... 1.00 0.76 0.77 0.79 0.94
Net Gains (Losses) on
Securities
(both realized and
unrealized)................. 2.25 2.75 (1.43) 3.69 2.76
------ ------ ------ ------ ------
Total From Investment
Operations.................. 3.25 3.51 (0.66) 4.48 3.70
------ ------ ------ ------ ------
Less Distributions
- ------------------
Dividends from Net
Investment Income............. (0.81) (0.73) (0.80) (0.80) (0.91)
Distributions from Capital
Gains......................... (0.26) (1.75) (2.00) (1.56) (1.00)
Returns of Capital............. none none none none none
------ ------ ------ ------ ------
Total Distributions.......... (1.07) (2.48) (2.80) (2.36) (1.91)
------ ------ ------ ------ ------
Net Asset Value, End of
Period........................ $19.07 $16.89 $15.86 $19.32 $17.20
====== ====== ====== ====== ======
- -------------------------------
Total Return(3)................ 19.84% 25.20% (4.48%) 29.27% 26.20%
- ------------
- ------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(000's omitted)............... $1,848,129 $1,517,445 $1,346,411 $1,228,952 $850,393
Ratio of Expenses to
Average Daily Net Assets...... 0.67% 0.73% 0.69% 0.63% 0.65%
Ratio of Net Investment
Income to Average Daily
Net Assets.................... 5.48% 4.80% 4.37% 4.84% 6.21%
Portfolio Turnover Rate........ 38% 39% 56% 72% 75%
</TABLE>
- --------------------
(1) The data appearing above do not reflect 12b-1 distribution expenses which
apply on and after May 2, 1994.
(2) Ratios have been annualized but total return has not been annualized.
(3) Does not reflect maximum sales charge that is or was in effect nor the 1%
Limited CDSC that would apply in the event of certain redemptions within
twelve months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made At Net Asset Value.
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
-----------------------
Period
12/1/94 Period
through 9/6/94(1)
5/31/95(2) through
(Unaudited) 11/30/94
<S> <C> <C>
Net Asset Value, Beginning of Period............. $15.55 $16.59
Income From Investment Operations
- ---------------------------------
Net Investment Income............................ 0.28 0.15
Net Gains (Losses) on Securities
(both realized and unrealized)................. 2.25 (1.02)
------ ------
Total From Investment Operations............... 2.53 (0.87)
------ ------
Less Distributions
- ------------------
Dividends from Net Investment Income............. (0.28) (0.17)
Distributions from Capital Gains................. (0.42) none
Returns of Capital............................... none none
------ ------
Total Distributions............................ (0.70) (0.17)
------ ------
Net Asset Value, End of Period................... $17.38 $15.55
====== ======
- --------------------------------------------
Total Return(3).................................. 16.84% (5.27%)
- --------------
- --------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)........ $9,242 $2,765
Ratio of Expenses to Average Daily Net Assets.... 1.75% 1.70%
Ratio of Net Investment Income to Average Daily
Net Assets...................................... 3.38% 3.03%
Portfolio Turnover Rate.......................... 65% 92%
</TABLE>
- -------------------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) Ratios have been annualized but total return has not been annualized.
(3) Does not include any applicable CDSC which varies from 1%-4% depending
upon the holding period.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT STRATEGY
The objective of the Series is to earn the highest possible current income
by investing primarily in common stocks that provide the potential for income
and capital appreciation without undue risk to principal. This is a
fundamental policy and cannot be changed without shareholder approval. The
Series primarily aims to earn and pay its shareholders dependable current
income. It seeks to accomplish this objective while attempting to limit risk
to principal through prudent investing. Although it is not a fundamental
policy, the Series will invest at least 65% of its total assets in income-
producing securities.
The Manager carefully selects the Series' diversified group of securities
for their high yields relative to risk involved.
The Series generally invests in common stocks which it believes have better
potential for income and appreciation than fixed income securities. It may,
however, invest its assets in all classes of securities, bonds, preferred
stocks and common stocks in any proportions deemed prudent for defensive
purposes under existing market and economic conditions. All available types
of securities, including foreign securities (which may include American or
European Depository Receipts), are under continuous study, and the management
regularly transfers investments between securities or types of securities in
carrying out its investment policy. It is the Series' policy not to purchase
and sell securities with a view toward obtaining short-term profits. 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 excess cash balances.
Since common stocks tend to fluctuate more than fixed income securities,
the value of the Series' shares will accordingly vary. Consequently,
appreciation may be obtained in periods of generally rising markets; while in
declining markets, the value of its shares may, of course, decline.
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 function 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; and (iv) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics
of transfer).
If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Series'
holdings of illiquid securities exceed the Series' 10% limit on investment in
such securities, the Manager will determine what action to take to ensure
that the Series continues to adhere to such limitation.
-10-
<PAGE>
High Yield, High Risk Securities
The Series may invest up to 15% of its net assets in high risk, high yield
fixed income securities. These securities are rated lower than BBB by Standard &
Poor's Corporation ("S&P") and Baa by Moody's Investors Service, Inc.
("Moody's") or, if unrated, are considered by the Manager to be of equivalent
quality. The Series will not invest in securities which are rated lower than C
by S&P or Ca by Moody's or, if unrated, are considered by the Manager to be of a
quality that is lower than such ratings. See Appendix B to this Prospectus for
more rating information. Fixed income securities of this type are considered to
be of poor standing and predominantly speculative. Such securities are subject
to a substantial degree of credit risk.
In the past, in the opinion of the Manager, the high yields from these
bonds have more than compensated for their higher default rates. There can be no
assurance, however, that yields will continue to offset default rates on these
bonds in the future. The Manager intends to maintain an adequately diversified
portfolio of these bonds. While diversification can help to reduce the effect of
an individual default on the Series, there can be no assurance that
diversification will protect the Series from widespread bond defaults brought
about by a sustained economic downturn.
Medium and low-grade bonds held by the Series may be issued as a
consequence of corporate restructurings, such as leveraged buy-outs, mergers,
acquisitions, debt recapitalizations or similar events. Also these bonds are
often issued by smaller, less creditworthy companies or by highly leveraged
(indebted) firms, which are generally less able than more financially stable
firms to make scheduled payments of interest and principal. The risks posed by
bonds issued under such circumstances are substantial.
The economy and interest rates may affect these high yield, high risk
securities differently from other securities. Prices have been found to be less
sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic changes or individual corporate developments.
Also, during an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
adversely affect their ability to service principal and interest payment
obligations, to meet projected business goals and to obtain additonal financing.
Changes by recognized rating agencies in their rating of any security and in the
ability of an issuer to make payments of interest and principal will also
ordinarily have a more dramatic effect on the values of these investments than
on the values of higher-rated securities. Such changes in value will not affect
cash income derived from these securities, unless the issuers fail to pay
interest or dividends when due. Such changes will however, affect the Series'
net asset value per share.
Portfolio Loan Transactions
The Series may loan up to up to 25% of its assets to 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.
Future Contracts
The Series may enter into futures contracts on stocks, interest rates and
and foreign currencies, and purchase or sell
-11-
<PAGE>
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
-12-
<PAGE>
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.
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
-13-
<PAGE>
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 options on stock indices.
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.
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
-14-
<PAGE>
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.
* * *
While the Series is permitted under certain circumstances to borrow money,
it does not normally do so. The Series will not purchase investment securities
while it has an outstanding borrowing.
Part B sets forth other more specific investment restrictions, some of
which limit the percentage of assets which may be invested in certain types of
securities.
SUITABILITY
The Series may be suitable for investors who want a current return with the
potential for capital appreciation. The investor should be willing to accept the
risks associated with investments in common stocks and other income-producing
securities, including high yield, high risk fixed income securities.
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
fluctuate depending upon market conditions. For this reason, the Series is not
appropriate for short-term investors. However, through the cautious selection
and supervision of its portfolio, the Series will strive to achieve its
objective of current income without undue risk to principal.
Ownership of the Series' shares reduces the bookkeeping and administrative
inconveniences that would be involved with direct purchases of the Fund's
portfolio securities.
Investors 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
together to create a more complete investment program.
-15-
<PAGE>
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 215-988-1333)
Fund Information
Literature
Price, Yield and
Performance Figures
Shareholder Service Center
800-523-1918
(Philadelphia 215-988-1241)
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.
Our representatives can answer any 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. Delaphone is available seven days a week,
24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions. 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 to 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 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 of
other Delaware Group funds are made without a front-end sales
-16-
<PAGE>
charge. Reinvestments of distributions into Class B Shares of the Series or of
other Delaware Group funds or into Class C Shares of the Series or of other
Delaware Group Funds are also made without any sales charge and will not be
subject to a CDSC if 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 into Class B or Class C Shares of any fund in the Delaware Group,
including the Series. Holders of Class B Shares of the Series may reinvest their
distributions only into Class B Shares of the funds in the Delaware Group which
offer that class of shares (the "Class B Funds"). Similarly, holders of Class C
Shares of the Series may reinvest their distributions only into Class C Shares
of the funds in the Delaware Group which offer that class of shares (the "Class
C Funds"). See Class B Funds and Class C Funds under Buying Shares for a list of
the funds offering those classes of shares. For more information about
reinvestments, call the Shareholder Service Center.
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
Wealth Builder Option
You may elect to have amounts in your account automatically invested in
shares of other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A, Class B and Class C Shares. See Redemption and
Exchange.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature allows
you to combine the value of your current holdings of Class A Shares, Class B
Shares and Class C Shares of the Series with the dollar amount of new purchases
of Class A Shares to qualify for a reduced front-end sales charge. Under the
Combined Purchases Privilege, you may also include certain shares that you own
in other funds in the Delaware Group. See Buying Shares.
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced front-end
sales charge on purchases of Class A Shares by aggregating certain of your
purchases of Delaware Group fund shares over a 13-month period. See Buying
Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds of
Class A Shares, within one year of the date of redemption, without a front-end
sales charge. See Part B.
Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned Allocation Strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor a
Strategy that meets their personal needs and goals. See How to Buy Shares under
Buying Shares.
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.
-17-
<PAGE>
RETIREMENT PLANNING
An investment in the Series may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request. Certain shareholder investment services available to
non-retirement plan shareholders may not be available to retirement plan
shareholders. Certain retirement plans may qualify to purchase the Decatur
Income 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.
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.
-18-
<PAGE>
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 or Class C Shares. Class B Shares are not available for purchase by such
plans.
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions in Class A Shares or Class C Shares. Class B Shares are
not available for purchase by such plans.
Allied Plans
Class A Shares are available for purchase by participants in 401(k) Defined
Contribution Plans ("Allied Plans") which are made available under a joint
venture agreement between the Distributor and another institution through which
mutual funds are marketed and which allow investments in Class A Shares of
designated Delaware Group funds ("eligible Delaware Group fund shares"), as well
as shares of designated classes of non-Delaware Group funds ("eligible non-
Delaware Group fund shares"). Class B Shares and Class C Shares are not eligible
for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the value
of eligible Delaware Group and eligible non-Delaware Group fund shares held by a
participant under the Allied Plan may be combined with the dollar amount of new
purchases by that participant to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Group fund shares. See Front-End Sales
Charge Alternative - Class A Shares under Buying Shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange.
The Limited CDSC is applicable to redemptions of net asset value purchases
from an Allied Plan on which a dealer's commission has been paid. Waivers of the
Limited CDSC, as described below under Waiver of Limited CDSC-Class A Shares,
apply to redemptions by participants in Allied Plans, except in the case of
exchanges between eligible Delaware Group and non-Delaware Group fund shares.
When eligible Delaware Group fund shares are exchanged into eligible non-
Delaware Group fund shares, the Limited CDSC will be imposed at the time of the
exchange, unless the joint venture agreement specifies that the amount of the
CDSC will be paid by the financial adviser or selling dealer. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset
Value under Redemption and Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Buying Shares.
-19-
<PAGE>
BUYING SHARES
Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A Shares, Class
B Shares and Class C Shares. Subsequent purchases of shares of any Class
generally must be $100 or more. Class A Shares purchased under the Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act are subject to a minimum
initial purchase of $250 and a minimum subsequent purchase of $25. In addition,
there is a maximum purchase limitation of $250,000 on each purchase of Class B
Shares; for Class C Shares, each purchase must be in an amount that is less than
$1,000,000. An investor may exceed these maximum purchase limitations by making
cumulative purchases over a period of time. In doing so, an investor should keep
in mind that reduced front-end sales charges are available on investments of
$100,000 or more in Class A Shares, and that Class A Shares (i) are subject to
lower annual 12b-1 Plan expenses than Class B Shares and Class C Shares and (ii)
generally are not subject to a CDSC.
For retirement plans, the maximum purchase limitations apply only to the
initial purchase of Class B Shares or Class C Shares by the plan. Minimum
purchase requirements do not apply to retirement plans other than IRAs for which
there is a minimum initial purchase of $250, and a minimum subsequent purchase
of $25, regardless of which class is selected.
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net asset
value per share, subject to a sales charge which may be imposed, 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") or Class C
Shares ("level sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares incur a sales charge when
they are purchased but generally are not subject to any sales charge when they
are redeemed. Class A Shares 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 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 to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of such shares for
approximately eight years after purchase. Class B Shares permit all of the
investor's dollars to work from the time the investment is made. 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 approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares. See Automatic
Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge alternative
acquires Class C Shares. Class C Shares do not incur a front-end sales charge
when they are purchased, but are subject to a sales charge if they are redeemed
within twelve months 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 to the
Distributor, dealers or others for providing personal service and/or maintaining
shareholder accounts) of average daily net assets of such shares for the life of
the investment. The higher 12b-1 Plan expenses paid by Class C Shares will cause
such shares to have a higher expense ratio and to pay lower dividends than those
related to the Class A Shares. Unlike Class B Shares, Class C Shares do not
convert to another class.
The alternative purchase arrangements described above permit investors in
the Series to choose the method of purchasing shares that is most suitable given
the amount of their purchase, the length of time they
-20-
<PAGE>
expect to hold their shares and other relevant circumstances. Investors should
determine whether, given their parti cular circumstances, it is more
advantageous to purchase Class A Shares and incur a front-end sales charge,
purchase Class B Shares and have the entire initial purchase amount invested in
the Series with their investment being subject to a CDSC if they redeem shares
within six years of purchase, or purchase Class C Shares and have the entire
initial purchase amount invested in the Series with their investment being
subject to a CDSC if they redeem shares within twelve months of purchase. In
addition, investors should consider the level of annual 12b-1 Plan expenses to
which each of the Classes is subject and, in comparing Class B Shares to Class C
Shares, the desirability of an automatic conversion feature, which is available
only for 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 under either the deferred sales charge alternative
or the level 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 Class B shares acquired under the deferred sales charge
alternative are subject to annual 12b-1 Plan expenses of up to 1% for
approximately eight years after purchase (see Automatic Conversion of Class B
Shares) and Class C Shares acquired under the level sales charge alternative are
subject to annual 12b-1 Plan expenses of up to 1% for the life of the
investment. However, because front-end sales charges are deducted from the
purchase amount at the time of purchase, investors who buy Class A Shares will
not have their full purchase amount invested in the Series.
Certain other investors might determine it to be more advantageous to
purchase Class B Shares and 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 up to 1% until the shares are automatically
converted into Class A Shares. Still other investors might determine it to be
more advantageous to purchase Class C Shares and have all of their funds
invested initially, recognizing that they would be subject to a CDSC for just
twelve months after purchase but that Class C Shares do not offer a conversion
feature, so their shares would be subject to annual 12b-1 Plan expenses of up to
1% for the life of the investment. The higher 12b-1 Plan expenses on Class B
Shares and Class C Shares will be offset to the extent a return is realized on
the additional money initially invested under the deferred sales charge
alternative or the level sales charge alternative. However, there can be no
assurance as to the return, if any, that will be realized on such additional
money.
Prospective investors should refer to Appendix A to this Prospectus for
an illustration of the potential impact on a long-term shareholder's investment
in the Fund under each of the purchase options.
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 and the Class C Shares,
from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred
upon redemption. Sales personnel may receive different compensation for selling
Class A, Class B and Class C Shares. INVESTORS SHOULD UNDERSTAND THAT THE
PURPOSE AND FUNCTION OF THE RESPECTIVE 12b-1 PLANS AND THE CDSCs WITH RESPECT TO
THE CLASS B AND CLASS C SHARES ARE THE SAME AS THOSE OF THE 12b-1 PLAN AND THE
FRONT-END SALES CHARGE APPLICABLE TO CLASS A SHARES IN THAT SUCH FEES AND
CHARGES PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES.
See 12b-1 Distribution Plans - Class A, Class B and Class C Shares.
Dividends paid by the Series with respect to the Class A, Class B and Class
C Shares, to the extent any dividends are paid, will be calculated in the same
manner, at the same time, on the same day and will be in the same amount, except
that the additional amount of 12b-1 Plan expenses relating to the Class B and
Class C Shares will be borne exclusively by such shares. See Calculation of
Offering Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. The Fund and the Distributor intend to operate in compliance with these
rules.
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<PAGE>
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 4.75%. See Calculation of Offering Price and
Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge as
shown in the following table.
<TABLE>
<CAPTION>
Decatur Income Fund A Class
- --------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Concession***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 5.01% 4.00%
$100,000 but under $250,000 3.75 3.92 3.00
$250,000 but under $500,000 2.50 2.57 2.00
$500,000 but under $1,000,000* 2.00 2.06 1.60
</TABLE>
* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.
** Based on the net asset value of the Class A Shares as of the end of the
Fund's most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
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 or 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 to dealers up to the full amount of the 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.
-22-
<PAGE>
For initial purchases of Class A Shares of $1,000,000 or more, a dealer's
commission may be paid by the Distributor to financial advisers through whom
such purchases are made, in accordance with the following schedule:
<TABLE>
<CAPTION>
Dealer's Commission
-------------------
(as a percentage of
Amount of Purchase 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 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. Financial advisors should
contact the Distributor concerning the applicability of the dealer's commission
in the case of combined purchases.
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 of Class A Shares with your holdings of Class B
Shares and/or Class C Shares of the Series and shares of the other funds in the
Delaware Group, except those noted below, you can reduce the front-end sales
charges on any additional purchases of Class A Shares. Shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products may be combined with other Delaware Group fund holdings.
Shares of other funds that do not carry a front-end sales charge or CDSC may not
be included unless they were acquired through an exchange from a Delaware Group
fund that does carry 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 twenty-one years of age, and any
trust, fiduciary or retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of Intention.
A Letter of Intention 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
at net asset value 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 Shareholder Service Center about the operation of these
features. See Reduced Front-End Sales Charge Alternative - Class A Shares under
Buying Shares.
Buying at Net Asset Value
Class A Shares may be purchased at net asset value under the Delaware Group
Dividend
-23-
<PAGE>
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 current and
former officers, directors and employees (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 CDSC or other
redemption charge. Purchases of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. 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 benefit from the reduced
front-end sales charges relating to the Class A Shares set forth in the table on
page 6, based on total plan assets. In addition, 403(b)(7) and 457 Retirement
Plan Accounts may 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 will
be aggregated to determine the applicable sales charge reduction on each
purchase, both initial and subsequent, if, at the time of each such purchase,
the Company notifies the Fund that it qualifies for the reduction. Employees
participating in such Group Investment Plans may also combine the investments
held in their plan account to determine the front-end sales charge applicable to
purchases in non-retirement Delaware Group investment accounts if, at the time
of each such purchase, they notify the Series that they are eligible to combine
purchase amounts held in their plan account.
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.
-24-
<PAGE>
For other retirement plans and special services, see Retirement Planning.
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 and, as a result, 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 assets 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 redeemed within six years of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees facilitates the ability of the Series to
sell the Class B Shares without deducting a front-end sales charge at the time
of purchase.
Shareholders of the Series' Class B Shares exercising the exchange
privilege described below will continue to be subject to the CDSC schedule for
the Series' Class B Shares described in this Prospectus, even after the
exchange. Such CDSC 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 three additional 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.
Level Sales Charge Alternative-Class C Shares
Class C Shares may be purchased at net asset value without the imposition
of a front-end sales charge and, as a result, the Fund will invest the full
amount of the investor's purchase payment. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the dollar
amount purchased. As discussed below, however, Class C Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within twelve months of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Shareholders of the Series' Class C Shares who exercise the exchange
privilege described below will continue to be subject to the CDSC schedule for
the Series' Class C Shares described in this Prospectus. See Redemption and
Exchange.
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<PAGE>
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, and Class C Shares redeemed within twelve
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be assessed
on an amount equal to the lesser of the net asset value at the time of purchase
of the shares being redeemed or the net asset value of those shares at the time
of redemption. No CDSC will be imposed on increases in net asset value above the
initial purchase price. In addition, no CDSC will be assessed on redemptions of
shares received through reinvestments of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of either the Class B Shares
or the Class C Shares of the Series, even if those shares are later exchanged
for shares of another Delaware Group fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares that were acquired in the exchange.
The 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
Dollar Amount
Year After Purchase Made Subject to Charge)
- ------------------------ ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Series, the Class B Shares will still
be subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of 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.
In determining whether a CDSC is applicable to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally shares held longest during the six-year period. With
respect to the Class C Shares, it will be assumed that shares held for more than
twelve months are redeemed first, followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for
twelve months or less. All investments made during a calendar month, regardless
of what day of the month the investment occurred, will age one month on the last
day of that month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of CDSC - Class B and Class C Shares under Redemption and
Exchange.
12b-1 Distribution Plans--Class A, Class B and Class C Shares
Under the distribution plans adopted by the Fund in accordance with Rule
12b-1 under the 1940 Act, the Series is permitted to pay the
-26-
<PAGE>
Distributor annual distribution fees of up to .30% of the average daily net
assets of the Class A Shares, 1% of the average daily net assets of the Class B
Shares and 1% of the average daily net assets of the Class C Shares. These fees,
which are payable monthly, compensate the Distributor for providing distribution
and related services and bearing certain expenses of each Class. The 12b-1 Plans
applicable to the Class B Shares and Class C Shares are designed to permit an
investor to purchase Class B Shares or Class C Shares through dealers or brokers
without the assessment of a front-end sales charge while enabling the
Distributor to compensate dealers and brokers for the sale of such shares. For a
more detailed discussion of the 12b-1 Plans relating to the Class A, Class B and
Class C Shares, see Distribution (12b-1) and Service under Management of the
Fund.
Other Payments to Dealers -- Class A, Class B and Class C 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.
Subject to pending amendments to the NASD's Rules of Fair Practice, 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. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended. In addition, as noted
above, the Distributor may pay dealers a commission in connection with net asset
value purchases.
Class B Funds and Class C Funds
The following funds currently offer Class B Shares and Class C Shares:
Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group Government
Fund, Inc., Limited-Term Government Fund of Delaware Group Limited-Term
Government Funds, 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 Devon Fund
of Delaware Group Delaware Fund, Inc., Delaware Group Value Fund, Inc., Decatur
Total Return 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., DMC Tax-Free Income Trust-Pennsylvania and
the Series.
Decatur Income Fund Institutional Class
In addition to offering the Class A, Class B and Class C Shares, the Series
also offers the Decatur Income Fund Institutional Class of shares, which is
described in a separate prospectus relating to that class of shares and is
available for purchase only by certain investors. Decatur Income Fund
Institutional Class shares generally are distributed directly by the Distributor
and do not have a front-end sales charge, a CDSC or a Limited CDSC, and are not
subject to 12b-1 Plan distribution expenses. To obtain a prospectus which
describes the Decatur Income Fund Institutional Class, contact the Distributor
by writing to the address or by calling the telephone number listed on the cover
of this Prospectus.
Dividend Orders
You may have the dividends earned in one fund automatically invested in
another
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Delaware Group fund with a different investment objective. For more information,
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 or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to Decatur Income Fund A Class,
Decatur Income Fund B Class or Decatur Income Fund C Class at 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to Decatur Income Fund A Class, Decatur Income Fund B
Class or Decatur Income Fund C Class. Your check should be identified with your
name(s) and account number. An investment slip (similar to a deposit slip) is
provided at the bottom of transaction confirmations and dividend statements that
you will receive from the Fund. Use of this investment slip can help expedite
processing of your check when making additional purchases. Your investment may
be delayed if you send additional purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include your
name(s) and 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, processing of
your investment may be delayed. In addition, you must promptly send your
Investment Application or, in the case of a retirement account, an appropriate
retirement plan application, to Decatur Income Fund A Class, Decatur Income Fund
B Class or Decatur Income Fund C Class at 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.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Asset Planner service, you
should complete a Delaware Group Asset Planner Account Registration Form, which
is available only from a financial adviser. The sales charge on the investment
is determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. The minimum initial investment
per Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available for use inside the Asset
Planner service; however, only "like" class shares may be used within the same
Strategy.
An annual maintenance fee, currently $35 per Strategy, is due at the time
of initial investment and by September 30th of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner
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service will be deducted automatically from one of your Fund accounts if not
paid by September 30th. See the Statement of Additional of Information.
Investors will receive a customized quarterly Strategy Report summarizing
all Delaware Group Asset Planner investment performance and account activity
during the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the Asset
Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group, you
may write and authorize an exchange of part or all of your investment into
shares of the Series. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus.
Shareholders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their shares for Class B Shares or Class C
Shares of the Series or for Class B Shares or Class C Shares of any other fund
in the Delaware Group. 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. Similarly, shareholders of
Class C Shares of the Series are permitted to exchange all or part of their
Class C Shares only into the corresponding class of shares of the Class C Funds.
Class B Shares of the Series and Class C Shares of the Series acquired by
exchange will continue to carry the CDSC and, in the case of Class B Shares, the
automatic conversion schedule of the fund from which the exchange is made. The
holding period of the Class B Shares of the Series acquired by exchange will be
added to that of the shares that were exchanged for purposes of determining the
time of the automatic conversion into Class A Shares of the Series.
Permissible exchanges into Class A Shares of the Series will be made
without a front-end sales charge imposed by the Series, except for exchanges
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). Permissible exchanges into
Class B Shares or Class C Shares of the Series will be made without the
imposition of a CDSC by the fund from which the exchange is being made at the
time of the exchange.
See Allied Plans under Retirement Planning for information on exchanges by
participants in an Allied Plan.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to use
the following services:
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1. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The 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 Series
account. Many shareholders use this as an automatic savings plan. Shareholders
should allow a reasonable amount of time for initial purchases and changes to
these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
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
account, you are obligated to reimburse the Series.
Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and Class C
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 the 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. Purchase orders 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 order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any loss
incurred. The Fund can redeem shares from your account(s) to reimburse itself
for any loss, and you may be restricted from making future purchases in any of
the funds in the Delaware Group. The Fund reserves the right to reject purchase
orders paid by third-party checks or checks that are not drawn on a domestic
branch of a United States financial institution. If a check drawn on a foreign
financial institution is accepted, you may be subject to additional bank charges
for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account balance
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for that
quarter and each subsequent calendar quarter until the account is brought up to
the minimum balance. The service fee will be deducted from the account during
the first week of each calendar quarter for the previous quarter, and will be
used to help defray the cost of maintaining low-balance accounts. No fees will
be charged without proper notice, and no CDSC will apply to such assessments.
The Fund also reserves the right, upon sixty days' written notice, to
redeem accounts that remain under a Class' minimum initial purchase amount as a
result of redemptions. An investor making the minimum initial investment may be
subject to involuntary redemption without the imposition of a CDSC or Limited
CDSC if he or she redeems any portion of his or her account.
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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 constitute taxable
events. See Taxes. Further, in order for an exchange to be processed, shares of
the fund being acquired must be registered in the state where the acquiring
shareholder resides. You may want to consult your financial adviser or
investment dealer to discuss which funds in the Delaware Group will best meet
your changing objectives and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.
Your shares will be redeemed or exchanged at a price 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. A shareholder submitting a redemption may indicate that he or she wishes
to receive redemption proceeds of a specific dollar amount. In the case of such
a request, and in the case of certain redemptions from retirement plan accounts,
the Series will redeem the number of shares necessary to deduct the applicable
CDSC in the case of Class B or Class C Shares or, if applicable, the Limited
CDSC in the case of Class A Shares and tender to the shareholder the requested
amount, assuming the shareholder holds enough shares in his or her account for
the redemption to be processed in this manner. Otherwise, the amount tendered to
the shareholder upon redemption will be reduced by the amount of the applicable
CDSC or Limited CDSC.
Except as noted below, for a redemption request to be in "good order," you
must provide your account number, account registration, and the total number of
shares or dollar amount of the transaction. For exchange requests, you must also
provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Fund at 800-523-1918 (in Philadelphia, 215-988-1241).
The Fund may suspend, terminate, or amend the terms of the exchange privilege
upon sixty 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 that the purchase check has cleared, which may take up to
fifteen days from the purchase date. The Fund will not honor telephone
redemptions for 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 telephone redemption request or delay payment of telephone
redemption proceeds if there has been a recent change to the shareholder's
address of record.
There is no front-end sales charge or fee for exchanges made between shares
of funds which both carry a front-end sales charge. Any applicable front-end
sales charge will apply to exchanges from shares of funds not subject to a
front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
Holders of Class B or Class C Shares that exchange their shares ("Original
Shares") for Class B Shares of other Class B Funds or Class C Shares of other
Class C Funds, as applicable (in each case, "New Shares"), will not be subject
to a CDSC that might otherwise be due upon redemption of the Original Shares.
However, such shareholders will continue to be subject to the CDSC and, in the
case of Class B Shares, the automatic conversion schedule of the Original Shares
as described in this Prospectus and any CDSC assessed upon redemption will be
charged by the Series. In an exchange of Class B Shares, the Series' CDSC
schedule may be higher than the CDSC schedule relating to the New Shares
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acquired as a result of the exchange. For purposes of computing the CDSC that
may be payable upon a disposition of the New Shares, the period of time that an
investor held the Original Shares is added to the period of time that an
investor held the New Shares. With respect to Class B Shares, the automatic
conversion schedule of the Original Shares may be longer than that of the New
Shares. Consequently, an investment in the New Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares for a longer
period of time than if the investment in the New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for the
CDSC applicable to certain redemptions of Class B Shares and Class C Shares and
the Limited CDSC applicable 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 have your investment dealer arrange to have your shares redeemed
or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of the
features described below, shall continue in effect until such time as a written
revocation or modification has been received by the Fund or its agent.
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 shares. The request must be signed by all owners of
the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. If your Class A Shares are in
certificate form, the certificate must accompany your request and also be in
good order. The Fund issues certificates for Class A Shares only if a
shareholder submits a specific request. The Fund does not issue certificates for
Class B or Class C Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in 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 may only
redeem or exchange by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are automatically
provided unless you notify the Fund in writing that you do not wish to have such
service available with respect to your account. The Fund reserves the right to
modify, terminate or suspend these procedures upon sixty 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 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
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genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later than seven days, after receipt of the request. This service is
only available to individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, 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 Class B and Class C Shares and the
Limited CDSC which may be applicable to certain Class A Shares, there are no
fees for this redemption 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 your
shares into any fund in the Delaware Group under the same registration, subject
to the same conditions and limitations as other exchanges noted above. As with
the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more.
The Fund does not recommend any particular monthly amount, as each shareholder's
situation and needs vary. Payments are normally made by check. 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 two business days after the payment
date. Except for the Limited CDSC which may be applicable to Class A Shares and
the CDSC which may be applicable to Class B and Class C Shares as noted below,
there are no fees for this redemption method. You can initiate the MoneyLine
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 Fund
account, you must have your signature guaranteed. Please call the Shareholder
Service Center for additional information.
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to receive
benefits in
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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. The MoneyLine service is not available for retirement plans.
* * *
Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares via a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the original purchase was
made at net asset value within the twelve months prior to the withdrawal 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,
below
With respect to Class B Shares and Class C Shares redeemed via a Systematic
Withdrawal Plan, any applicable CDSC will be waived if, on the date that the
Plan is established, the annual amount selected to be withdrawn is less than 12%
of the account balance. If the annual amount selected to be withdrawn exceeds
12% of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual limit will be
reset on the date that any Systematic Withdrawal Plan is modified (for example,
a change in the amount selected to be withdrawn or the frequency or date of
withdrawals), based on the balance in the account on that date. See Waiver of
CDSC - Class B and Class C Shares, below.
For more information on Systematic Withdrawal Plans, call the Shareholder
Service Center.
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 Series account and invested automatically into an
account in one or more funds in the Delaware Group. If, in connection with the
Wealth Builder Option, a shareholder wishes to open a new account in such other
fund or funds to receive the automatic investment, such new account must meet
such other fund's minimum initial purchase requirement. Investments under this
option are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above.
Shareholders can 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
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 twelve 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
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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 acquired in the exchange.
Redemptions of such Class A Shares held for more than twelve 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 acquired in the exchange.
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 what day of the month the investment occurred,
will age one month on the last day of that month and each subsequent month.
Waiver of Limited CDSC--Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has been
paid will be waived in the following instances: (i) redemptions that result from
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 59 1/2; (v)
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
under Buying Shares).
Waiver of CDSC--Class B and Class C Shares
The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than the then-effective minimum account size; (ii)
returns of excess contributions to an IRA or 403(b)(7) Deferred Compensation
Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, or 457 Deferred Compensation Plan; and (iv) distributions
from an account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the Uniform
Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts, the
waiver applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed.
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan;
(iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan, or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) Deferred Compensation
Plan, 457 Deferred Compensation Plan, Profit Sharing
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<PAGE>
Plan, Money Purchase Pension Plan or a 401(k) Defined Contribution Plan upon
attainment of normal retirement age under the plan or upon separation from
service; (vi) distributions from an IRA on or after attainment of age 59 1/2;
and (vii) distributions from an account if the redemption results from the death
of all registered owners of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares redeemed
in accordance with a Systematic Withdrawal Plan if the annual amount selected to
be withdrawn under the Plan does not exceed 12% of the value of the account on
the date that the Systematic Withdrawal Plan was established or modified.
DIVIDENDS AND DISTRIBUTIONS
The Fund currently intends to make monthly payments from the Series' net
investment income. 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 $0.86 and $0.17 per
share of the Class A Shares and the Class B Shares, respectively, were paid from
net investment income and a capital gain of $1.75 per share of the Class A
Shares was paid from realized securities profits. During the six months ended
May 31, 1995, the Class A Shares and Class B Shares paid dividends of $0.35 and
$0.28 per share from net investment income, respectively, and the Class A Shares
and Class B Shares each paid a capital gain of $0.42 per share from realized
securities profits. Class B Shares of the Series were first offered to the
public on September 6, 1994. Class C Shares were not offered prior to the date
of this Prospectus.
Each of the Classes will share proportionately in the investment income and
expenses of the Series, except that the per share dividends from net investment
income on the Class A Shares, the Class B Shares, and the Class C Shares will
vary due to the expenses under the 12b-1 Plan applicable to each Class.
Generally, the dividends per share on Class B Shares and Class C Shares can be
expected to be lower than the dividends per share on Class A Shares because the
expenses under the 12b-1 Plans relating to Class B and Class C Shares will be
higher than the expenses under the 12b-1 Plan relating to Class A Shares. 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 distributions which cannot be delivered by the United
States Post Office or which remains uncashed for a period of more than one year
may be reinvested in the shareholder's account at the then-current net asset
value and the dividend option may be changed from cash to reinvest. If you elect
to take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the Delaware
Group's MoneyLine service and have such payments 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 the MoneyLine service. See Systematic Withdrawal Plan for Class A Shares,
Class B Shares and Class C Shares under Redemption and Exchange for information
regarding authorization of this service. This service is not available for
retirement plans. (See The Delaware Difference for more information on
reinvestment options.)
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<PAGE>
TAXES
The Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of 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 acquiring Series shares will be excluded from the
federal tax basis of any of such shares sold or exchanged within ninety 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 approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Buying Shares.
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<PAGE>
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 to 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. 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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<PAGE>
CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
Class A Shares are purchased at the offering price per share, while Class B
Shares and Class C Shares are purchased at the net asset value ("NAV") per
share. The offering price per share of Class A Shares consists of the NAV per
share next computed 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 the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
Short-term investments having a maturity of less than sixty 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' four 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 Income Fund Institutional Class will
not incur any distribution fees under the 12b-1 Plans and the Class A, Class B
and Class C Shares alone will bear the 12b-1 Plan expenses payable under their
respective 12b-1 Plans. Due to the specific distribution expenses and other
costs that will be allocable to each class, the net asset value of each class of
the Series will vary.
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<PAGE>
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"). On April 3, 1995, a merger between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now wholly-owned subsidiaries, and subject to
the ultimate control, of Lincoln National. Lincoln National, with headquarters
in Fort Wayne, Indiana, is a diversified organization with operations in many
aspects of the financial services industry, including insurance and investment
management. In connection with the merger, a new Investment Management Agreement
between the Fund on behalf of the Series and the Manager was executed following
shareholder approval.
The Manager manages the Series' portfolio and makes investment decisions
which are implemented by the Fund's Trading Department. The Manager also
administers the Fund's affairs and 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 $100
million of average daily net assets of the Series, .525% on the next $150
million, .50% on the next $250 million and .475% on the average daily net assets
in excess of $500 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 0.49% of average daily net assets.
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 1993. Mr. Fields, who has twenty-four 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 twelve 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 positions 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 nineteen years of
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<PAGE>
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.
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 that net capital gains are realized. 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 80%
for 1993 and 92% 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 Series 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 and Class C 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 Series 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 Class 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 a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995.
The Fund has adopted a separate distribution plan under Rule 12b-1 for each
of the Class A Shares, Class B Shares and the Class C 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
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<PAGE>
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, Class B and Class C Shares, the
Distributor may, from time to time, pay to participate in dealer-sponsored
seminars and conferences, and reimburse dealers for expenses incurred in
connection with preapproved seminars, conferences and advertising. The
Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning 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 each of the Class B Shares and Class C
Shares are also used to pay the Distributor for advancing the commission costs
to dealers with respect to the initial sale of such shares.
The aggregate fees paid by the Series from the assets of the respective
Classes 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 each
of the Class B Shares' and the Class C Shares' average daily net assets in any
year. The Class A, Class B and Class C 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.
Although the maximum fee payable under the Plan relating to the Class A
Shares is .30% of average daily net assets, the Board of Directors has
determined that the annual fee payable on a monthly basis, under such Plan, will
be equal to the sum of: (i) the amount obtained by multiplying .30% by the
average daily net assets represented by the Class A Shares that are acquired by
shareholders on or after May 2, 1994, and (ii) the amount obtained by
multiplying .10% by the average daily net assets represented by the Class A
Shares that were acquired before May 2, 1994. While this is the method to be
used to calculate the 12b-1 expenses to be paid by the Class A Shares under its
Plan, the fee is a Class A Shares' expense so that all shareholders, regardless
of when they purchased their shares will bear 12b-1 expenses at the same per
share rate. As Class A Shares are sold on or after May 2, 1994, the initial rate
of at least .10% will increase over time. Thus, as the proportion of Class A
Shares purchased on or after May 2, 1994, to outstanding Class A Shares,
increases, the expenses attributable to payments under the Plan will also
increase (but will not exceed .30% of average daily net assets). While this
describes the current formula for calculating the fees which will be payable
under such Plan, the Plan permits the Series to pay a maximum of .30% on all
assets at any time following Board approval. The Class will not incur any
distribution expenses beyond the .30% limit, which may not be increased without
shareholder approval.
The Fund's Plans do not apply to the Decatur Income 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 the
Decatur Income Fund Institutional Class.
While payments pursuant to the Plans may not exceed .30% annually with
respect to the Class A Shares and 1% annually with respect to each of the Class
B Shares and the Class C Shares, the Plans do not limit fees to amounts actually
expended by the Distributor. It
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<PAGE>
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 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 directors annually review service
fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
Expenses
The 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 Distribution Agreement. The Class A Shares' ratio
of expenses to average daily net assets for the fiscal year ended November 30,
1994 was 0.81%. 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 1.70% for the fiscal year ending November 30, 1995. The Series
anticipates that the expense ratio for Class C Shares will be identical to the
expense ratio for Class B Shares. The ratio of each Class reflects the impact of
its Plan.
Shares
The Decatur Income Fund is the original series of Delaware Group Decatur
Fund, Inc., which is an open-end management investment company. The Series'
portfolio of assets is diversified as defined by the 1940 Act. Commonly known as
a mutual fund, the Fund was organized as a Maryland corporation on March 4,
1983. The Fund was previously organized as a Delaware corporation in 1956. Prior
to May 2, 1994, the Decatur Income Fund series was named the Decatur I Series
(which was known and did business as Decatur Fund I).
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 1940 Act. Shareholders
of 10% or more of the Fund's shares may request that a special meeting be called
to consider the removal of a director. 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 the Series and will vote separately on any matter that affects
only the Series.
In addition to Class A Shares, Class B Shares and Class C Shares, the
Series also offers the Decatur Income Fund Institutional Class of shares. Shares
of each class represent a proportionate interest 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 Income Fund Institutional Class
are not subject to, and may not vote on matters affecting, the Plans.
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<PAGE>
Similarly, as a general matter, shareholders of Class A Shares, Class B Shares
and Class C Shares may vote only on matters affecting the Plan that relates to
the class of shares that they hold. However, the Class B Shares may vote on a
proposal to increase materially the fees to be paid by the Series under the Plan
relating to the Class A Shares.
From May 2, 1994 to September 5, 1994, the Decatur Income Fund A Class was
known as the Decatur Income Fund class and prior to May 2, 1994 was known as
Decatur Fund I class. From May 2, 1994 to September 5, 1994, the Decatur Income
Fund Institutional Class was known as the Decatur Income Fund (Institutional)
class and prior to May 2, 1994 was known as Decatur Fund I (Institutional)
class.
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APPENDIX A
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
- ----------------------------------- ------------------------- ------------------------- -------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ------ ------- --------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+ 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 13,058 13,058 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272 13,946 14,272 14,272
5 15,340 15,599 15,599 15,340 15,399 15,599+
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418 20,369 20,369
9 22,459 22,405*+ 22,263
10 24,705 24,646* 24,333
</TABLE>
*This assumes that Class B Shares were converted to Class A shares at
the end of the eighth year.
$250,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
- ---------------------------------- -------------------------- -------------------------- --------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ------ ------- -------- ------- ------- ------- -------- ------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+ 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 326,438 326,438 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874 356,797 356,797 356,874 356,797 356,797
5 392,562 389,979 389,979 392,562+ 384,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
</TABLE>
*This assumes that Class B Shares were converted to Class A shares at
the end of the eighth year.
Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% for years 1-8 and 10% for years 9-10, and a hypothetical
return for Class C of 9.3% per year. Hypothetical returns vary due to the
different expense structures for each Class and do not represent actual
performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in
years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which class offers the greater return potential
based on investment amount and holding period.
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<PAGE>
APPENDIX B--RATINGS
The Series has the ability to invest up to 15% of its net assets in high
risk, high yield fixed income securities. The table set forth below shows asset
composition, based on rating categories, of such securities held by the Series.
Certain securities may not be rated because the rating agencies were either not
asked to provide ratings (e.g., many issuers of privately placed bonds do not
seek ratings) or because the rating agencies declined to provide a rating for
some reason, such as insufficient data. The table below shows the percentage of
the Series' high risk, high yield securities which are not rated. The
information contained in the table was prepared based on a dollar weighted
average of the Series' portfolio composition based on month end data for the
fiscal year ended November 30, 1994. The paragraphs following the table contain
excerpts from Moody's and S&P's rating descriptions. These credit ratings
evaluate only the safety of principal and interest and do not consider the
market value risk associated with high yield securities.
<TABLE>
<CAPTION>
Rating Moody's Average Weighted
and/or Percentage of
S&P Portfolio
- -------------- ----------------
<S> <C>
Ba/BB 1.05%
B/B 8.74%
Caa/CCC 0.34%
Not Rated/Other 0.23%
</TABLE>
General Rating Information
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be
the best quality. They carry the smallest degree of investment risk; Aa--judged
to be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
-46-
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, contact your financial adviser or call Delaware Group at
800-523-4640, in Philadelphia call 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
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
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
- ---------------------------------------
DECATUR INCOME FUND
- ---------------------------------------
A CLASS
- ---------------------------------------
B CLASS
- ---------------------------------------
C CLASS
- ---------------------------------------
P R O S P E C T U S
- ----------------------------------------
November 29, 1995
DELAWARE
GROUP
--------
<PAGE>
DECATUR TOTAL RETURN FUND
A CLASS SHARES PROSPECTUS
B CLASS SHARES November 29, 1995
C CLASS SHARES
-------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance: Nationwide 800-523-4640,
Philadelphia 215-988-1333
Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918, Philadelphia 215-988-1241
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500, Philadelphia 215-988-1050
This Prospectus describes the Decatur Total Return Fund A Class of shares
(the "Class A Shares"), the Decatur Total Return Fund B Class of shares (the
"Class B Shares") and the Decatur Total Return Fund C Class of shares (the
"Class C 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. Class B Shares and Class C Shares may be purchased at a price equal to
the next determined net asset value per share. Class A Shares are subject to a
maximum front-end sales charge of 4.75% and annual 12b-1 Plan expenses of up to
0.30%. Class B Shares are subject to a contingent deferred sales charge
("CDSC") which may be imposed on redemptions made within six years of purchase
and annual 12b-1 Plan expenses of 1.00%, which are assessed against the Class B
Shares for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Buying Shares. Class C Shares are subject to a CDSC
which may be imposed on redemptions made within twelve months of purchase and
annual 12b-1 Plan expenses of 1.00%, which are assessed against the Class C
Shares for the life of the investment. See Summary of Expenses. These
alternatives permit an investor to choose the method of purchasing shares that
is most suitable for his or her needs. In choosing the most suitable class, an
investor should consider the differences among the Classes, including the
effects of sales charges and 12b-1 Plan expenses given the amount of the
purchase, the length of time the investor expects to hold the shares and other
circumstances. See Buying Shares.
This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. Part B of the Fund's registration statement, dated
November 29, 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 for the fiscal year ended November 30, 1994, and its
Semi Annual Report for the six months ended May 31, 1995, 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 investors. A prospectus
for the Decatur Total Return Fund Institutional Class can be obtained by writing
to Delaware Distributors, L.P. at the above address or by calling the above
number.
-1-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Cover Page Retirement Planning
Synopsis Buying Shares
Summary of Expenses Redemption and Exchange
Financial Highlights Dividends and Distributions
Investment Objective and Policies Taxes
Investment Strategy Calculation of Offering Price and
Suitability Net Asset Value Per Share
The Delaware Difference Management of the Fund
Plans and Services Appendix A - Investment Illustrations
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
Capitalization
The Series offers four classes of shares: Class A Shares, Class B Shares,
Class C Shares and the Decatur Total Return Fund Institutional Class of shares.
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 to the Class B Shares, fifty million shares to the Class C Shares and
fifty million shares 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., also manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Management of the Fund.
Sales Charges
The price of the Class A Shares includes a maximum front-end sales charge
of 4.75% of the offering price, which, based on the net asset value per share of
the Class A Shares as of the end of the Fund's most recent fiscal year, is
equivalent to 4.95% of the amount invested. The sales charge is 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 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 subject to annual 12b-1 Plan expenses
for approximately eight years after purchase. See Automatic Conversion of Class
B Shares under Buying Shares.
The price of the Class C Shares is equal to the net asset value per share.
Class C Shares are subject to a CDSC of 1% if shares are redeemed within twelve
months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses
for the life of the investment.
See Buying Shares and Distribution (12b-1) and Service under Management of
the Fund.
Purchase Amounts
Generally, the minimum initial investment is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent investments in any Class
generally must be at least $100. Each purchase of Class B Shares is subject to
a maximum purchase limitation of $250,000. For Class C Shares, each purchase
must be in an amount that is less than $1,000,000. An investor may exceed the
maximum purchase limitations for Class B Shares and Class C Shares by making
cumulative purchases over a period of time. An investor should keep in mind,
however, that reduced front-end sales charges apply to investments of $100,000
or more of Class A Shares, which are subject to lower annual 12b-1 Plan expenses
than Class B Shares and Class C Shares and generally are not subject to a CDSC.
The minimum and maximum purchase amounts for retirement plans may vary. 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. For further details, see
Investment Objective and Policies.
-3-
<PAGE>
Risk Factors and 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 that
result from use of these instruments by the Series, and the investor should
review the descriptions of these risks 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. The Series' portfolio of assets is diversified
for purposes of the Investment Company Act of 1940 (the "1940 Act"). 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
Class A Shares of the Series may be 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 CDSC if such purchases triggered the payment of
a dealer's commission. See Front-End Sales Charge Alternative - Class A Shares
under Buying Shares. Class B and Class C Shares may be redeemed or exchanged at
the net asset value calculated after receipt of the redemption or exchange
request subject, in the case of redemptions, to any applicable CDSC. Neither
the Fund nor the Distributor assesses any charges other than the CDSC for
redemptions or exchanges of Class B or Class C Shares. There are certain
limitations on an investor's ability to exchange shares between the various
classes of shares that are offered. See Redemption and Exchange.
-4-
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to the Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as
a percentage of offering price)................. 4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)... None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original
purchase price or redemption
proceeds, whichever is lower)................... None* 4.00%* 1.00%*
Redemption Fees................................. None** None** None**
</TABLE>
<TABLE>
<CAPTION>
Annual Operating Expenses
(as a percentage of average Class A Class B Class C
daily net assets) Shares Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees................................. 0.59% 0.59% 0.59%
12b-1 Expenses (including
service fees)................................... 0.30%+ 1.00%+ 1.00%+
Other Operating Expenses........................ 0.37% 0.37%++ 0.37%++
----- ------- -------
Total Operating Expenses........................
1.26% 1.96% 1.96%
----- ----- -----
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in any of the Classes will bear
directly or indirectly.
*With respect to 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 the financial adviser through whom such
purchase is effected, a CDSC of 1% will be imposed on certain redemptions within
twelve months of purchase ("Limited CDSC"). Class B Shares are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; (iv) 1% if
shares are redeemed during the sixth year following purchase; and (v) 0%
thereafter. Class C Shares are subject to a CDSC of 1% if the shares are
redeemed within twelve months of purchase. See Contingent Deferred Sales Charge
for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption
and Exchange; Deferred Sales Charge Alternative - Class B Shares and Level Sales
Charge Alternative - Class C Shares under Buying Shares.
-5-
<PAGE>
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
+Class A Shares, Class B Shares and Class C Shares are subject to separate
12b-1 Plans. Long-term shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted by rules of the National
Association of Securities Dealers, Inc. (the "NASD"). See Distribution (12b-1)
and Service under Management of the Fund.
++"Other Operating Expenses" for Class B and Class C Shares are estimates
based on actual expenses incurred by the Class A Shares for the fiscal year
ended November 30, 1994. See Decatur Total Return Fund Institutional Class
under Buying Shares for expense information for that class.
-6-
<PAGE>
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, (2) redemption at the end of each time period and (3) with respect to
Class B Shares and Class C shares, payment of a CDSC at the time of redemption,
if applicable.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares.. $60(1) $86 $113 $193
Class B Shares.. $60 $92 $126 $210(2)
Class C Shares.. $30 $62 $106 $229
</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
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares.. $60 $86 $113 $193
Class B Shares.. $20 $62 $106 $210(2)
Class C Shares.. $20 $62 $106 $229
</TABLE>
(1) Generally, the Fund does not assess a redemption charge upon
redemption of Class A shares. Under certain circumstances, however, a
Limited CDSC, which has not been reflected in this calculation, may be
imposed on certain redemptions within twelve 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 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 the eighth
year. However, the conversion may occur as late as three months after
the eighth anniversary of purchase, during which time the higher 12b-1
Plan fees payable by Class B Shares will continue to be assessed.
Information for the ninth and tenth years reflects expenses of the
Class A Shares. See Automatic Conversion of Class B Shares under
Buying Shares for a description of the automatic conversion feature.
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.
-7-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights from August 27, 1986 through November 30,
1994 for the Class A Shares and September 6, 1994 through November 30, 1994 for
the Class B Shares 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. Unaudited
financial highlights for the six months ended May 31, 1995 are also provided
below for the Class A Shares and Class B Shares. The data should be read in
conjunction with the financial statements and related notes for the six months
ended May 31, 1995, all of which are incorporated by reference into Part B.
Further information about the Series' performance is contained in its Annual
Report to shareholders for the fiscal year ended November 30, 1994 and its Semi-
Annual Report to shareholders for the six months ended May 31, 1995. A copy of
the Series' Annual Report (including the report of Ernst & Young LLP) and its
Semi-Annual Report may be obtained from the Fund upon request at no charge.
Information regarding Class C Shares has not been included in these tables
because such shares were not offered to the public prior to the date of this
Prospectus.
- --------------------------------------------------------------------------------
-8-
<PAGE>
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------
Period
12/1/94
through
5/31/95(2) Year Ended
(Unaudited) 11/30/94 11/30/93 11/30/92 11/30/91
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............................. $ 12.32 $ 14.38 $ 13.98 $ 12.73 $ 11.71
Income From Investment Operations
- ---------------------------------
Net Investment Income............................................. 0.18 0.37 0.45 0.47 0.53
Net Gains (Losses) on Securities
(both realized and unrealized)........................ 2.00 (0.34) 1.45 1.30 1.07
---- ------ ---- ---- ----
Total From Investment Operations................................ 2.18 0.03 1.90 1.77 1.60
---- ---- ---- ---- ----
Less Distributions
- ------------------
Dividends from Net Investment Income.............................. (0.20) (0.43) (0.45) (0.52) (0.58)
Distributions from Capital Gains.................................. (0.42) (1.66) (1.05) none none
Returns of Capital................................................ none none none none none
---- ---- ---- ---- ----
Total Distributions............................................. (0.62) (2.09) (1.50) (0.52) (0.58)
------ ------ ------ ------ ------
Net Asset Value, End of Period.................................... $13.88 $12.32 $14.38 $13.98 $12.73
====== ====== ====== ====== ======
- ---------------------------------------
Total Return(3)................................................... 18.45% (0.04%) 14.74% 14.12% 13.94%
- ---------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)......................... $478,814 $ 402,849 $ 431,638 $ 408,986 $ 394,338
Ratio of Expenses to Average Daily Net Assets(4).................. 1.23% 1.26% 1.22% 1.23% 1.23%
Ratio of Net Investment Income to Average Daily Net Assets(4)..... 2.87% 2.88% 3.15% 3.44% 4.20%
Portfolio Turnover Rate........................................... 70% 74% 119% 98% 67%
</TABLE>
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------
Period
8/27/86(1)
Year Ended through
11/30/90 11/30/89 11/30/88 11/30/87 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 (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(3)................................................... (6.84%) 23.73% 31.51% (10.08%) 33.87%(1)
- ---------------------------------------
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(4).................. 1.23% 1.24% 1.28% 1.27%(5) (1)
Ratio of Net Investment Income to Average Daily Net Assets(4)..... 4.87% 4.60% 4.77% 4.17%(6) (1)
Portfolio Turnover Rate........................................... 54% 60% 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) Ratios have been annualized but total return has not been annualized.
(3) Does not reflect any maximum sales charge that is or was in effect nor the
1% Limited CDSC that would apply in the event of certain redemptions within
twelve 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 4, 5 and 6.
(4) 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.
(5) Ratio of expenses to average daily net assets prior to expense limitation
was 1.41%.
(6) Ratio of net investment income to average daily net assets prior to
expense limitation was 4.03%.
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
---------------------------
Period
12/1/94 Period
through 9/6/94(1)
5/31/95(2) through
(Unaudited) 11/30/94
<S> <C> <C>
Net Asset Value, Beginning of Period.............................. $ 12.31 $ 13.11
Income From Investment Operations
- ---------------------------------
Net Investment Income............................................. 0.14 0.12
Net Gains (Losses) on Securities
(both realized and unrealized)........................ 1.99 (0.82)
---- ------
Total From Investment Operations................................ 2.13 (0.70)
---- ------
Less Distributions
- ------------------
Dividends from Net Investment Income.............................. (0.18) (0.10)
Distributions from Capital Gains.................................. (0.42) none
Returns of Capital................................................ none none
---- ----
Total Distributions............................................. (0.60) (0.10)
------ ------
Net Asset Value, End of Period.................................... $13.84 $12.31
====== ======
- ---------------------------------------
Total Return(3)................................................... 18.02% (5.37%)
- ---------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)......................... $5,840 $1,738
Ratio of Expenses to Average Daily Net Assets..................... 1.93% 1.96%
Ratio of Net Investment Income to Average Daily Net Assets........ 2.17% 2.18%
Portfolio Turnover Rate........................................... 70% 74%
</TABLE>
- -------------------------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) Ratios have been annualized but total return has not been annualized.
(3) Does not include any applicable CDSC.
<PAGE>
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.
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 function 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; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Series'
holdings of illiquid securities exceed the
-11-
<PAGE>
Series' 10% limit on investment in such securities, the Manager will determine
what action to take to ensure that the Series continues to adhere to such
limitation.
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.
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.
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.
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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 as a 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.
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.
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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 options on stock indices.
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.
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
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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. Investors 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 that would be involved with direct purchases of the Fund's
portfolio securities.
Investors 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
together to create a more complete investment program.
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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 215-988-1333)
Fund Information
Literature
Price, Yield and
Performance Figures
Shareholder Service Center
800-523-1918
(Philadelphia 215-988-1241)
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.
Our representatives can answer any 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. Delaphone is available seven days a week,
24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions. 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 to 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 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 of
other Delaware Group funds are made without a front-end sales
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charge. Reinvestments of distributions into Class B Shares of the Series or of
other Delaware Group funds or into Class C Shares of the Series or of other
Delaware Group Funds are also made without any sales charge and will not be
subject to a CDSC if 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 into Class B Shares or Class C Shares of any fund in the Delaware
Group, including the Series. Holders of Class B Shares of the Series may
reinvest their distributions only into Class B Shares of the funds in the
Delaware Group which offer that class of shares (the "Class B Funds").
Similarly, holders of Class C Shares of the Fund may reinvest their
distributions only into Class C Shares of the funds in the Delaware Group which
offer that class of shares (the"Class C Funds"). See Class B Funds and Class C
Funds under Buying Shares for a list of the funds offering those classes of
shares. For more information about reinvestments, call the Shareholder Service
Center.
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
Wealth Builder Option
You may elect to have amounts in your account automatically invested in
shares of other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A, Class B and Class C Shares. See Redemption and
Exchange.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature allows
you to combine the value of your current holdings of Class A Shares, Class B
Shares and Class C Shares of the Series with the dollar amount of new purchases
of Class A Shares to qualify for a reduced front-end sales charge. Under the
Combined Purchases Privilege, you may also include certain shares that you own
in other funds in the Delaware Group. See Buying Shares.
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced front-end
sales charge on purchases of Class A Shares by aggregating certain of your
purchases of Delaware Group fund shares over a 13-month period. See Buying
Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds of
Class A Shares within one year of the date of redemption, without a front-end
sales charge. See Part B.
Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four pre-
designed Allocation Strategies (each with a different risk/reward profile) made
up of separate investments in predetermined percentages of Delaware Group funds.
With the guidance of a financial adviser, investors may also tailor a Strategy
that meets their personal needs and goals. See How to Buy Shares under Buying
Shares.
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.
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RETIREMENT PLANNING
An investment in the Series may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to retirement plan shareholders. 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.
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.
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<PAGE>
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 or Class C Shares. Class B Shares are not available for purchase by such
plans.
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions in Class A Shares or Class C Shares. Class B Shares are
not available for purchase by such plans.
Allied Plans
Class A Shares are available for purchase by participants in 401(k) Defined
Contribution Plans ("Allied Plans") which are made available under a joint
venture agreement between the Distributor and another institution through which
mutual funds are marketed and which allow investments in Class A Shares of
designated Delaware Group funds ("eligible Delaware Group fund shares"), as well
as shares of designated classes of non-Delaware Group funds ("eligible non-
Delaware Group fund shares"). Class B Shares and Class C Shares are not eligible
for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the value
of eligible Delaware Group and eligible non-Delaware Group fund shares held by a
participant under the Allied Plan may be combined with the dollar amount of new
purchases by that participant to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Group fund shares. See Front-End Sales
Charge Alternative -Class A Shares under Buying Shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange.
The Limited CDSC is applicable to redemptions of net asset value purchases
from an Allied Plan on which a dealer's commission has been paid. Waivers of the
Limited CDSC, as described below under Waiver of Limited CDSC -Class A Shares,
apply to redemptions by participants in Allied Plans, except in the case of
exchanges between eligible Delaware Group and non-Delaware Group fund shares.
When eligible Delaware Group fund shares are exchanged into eligible non-
Delaware Group fund shares, the Limited CDSC will be imposed at the time of the
exchange, unless the joint venture agreement specifies that the amount of the
CDSC will be paid by the financial adviser or selling dealer. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset
Value under Redemption and Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Buying Shares.
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<PAGE>
BUYING SHARES
Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A Shares, Class
B Shares and Class C Shares. Subsequent purchases of shares of any Class
generally must be $100 or more. Class A Shares purchased under the Uniform Gifts
to Minors Act or Uniform Transfers to Minors Act are subject to a minimum
initial purchase of $250 and a minimum subsequent purchase of $25. In addition,
there is a maximum purchase limitation of $250,000 on each purchase of Class B
Shares; for Class C Shares, each purchase must be in an amount that is less than
$1,000,000. An investor may exceed these maximum purchase limitations by making
cumulative purchases over a period of time. In doing so, an investor should keep
in mind that reduced front-end sales charges are available on investments of
$100,000 or more in Class A Shares, and that Class A Shares (i) are subject to
lower annual 12b-1 Plan expenses than Class B Shares and Class C Shares and (ii)
generally are not subject to a CDSC.
For retirement plans, the maximum purchase limitations apply only to the
initial purchase of Class B Shares or Class C Shares by the plan. Minimum
purchase requirements do not apply to retirement plans other than IRAs for which
there is a minimum initial purchase of $250, and a minimum subsequent purchase
of $25, regardless of which class is selected.
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net asset
value per share, subject to a sales charge which may be imposed, 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") or Class C
Shares ("level sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares incur a sales charge when
they are purchased but generally are not subject to any sales charge when they
are redeemed. Class A Shares 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 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 to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of such shares for
approximately eight years after purchase. Class B Shares permit all of the
investor's dollars to work from the time the investment is made. 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 approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares. See Automatic
Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge alternative
acquires Class C Shares. Class C Shares do not incur a front-end sales charge
when they are purchased, but are subject to a sales charge if they are redeemed
within twelve months 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 to the
Distributor, dealers or others for providing personal service and/or maintaining
shareholder accounts) of average daily net assets of such shares for the life of
the investment. The higher 12b-1 Plan expenses paid by Class C Shares will cause
such shares to have a higher expense ratio and to pay lower dividends than those
related to the Class A Shares. Unlike Class B Shares, Class C Shares do not
convert to another class.
The alternative purchase arrangements described above permit investors in
the Series to choose the method of purchasing shares that is most suitable given
the amount of their purchase, the length of time they expect to hold their
shares and other relevant circumstances. Investors should determine whether,
given
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their particular circumstances, it is more advantageous to purchase Class A
Shares and incur a front-end sales charge, purchase Class B Shares and have the
entire initial purchase amount invested in the Series with their investment
being subject to a CDSC if they redeem shares within six years of purchase, or
purchase Class C Shares and have the entire initial purchase amount invested in
the Series with their investment being subject to a CDSC if they redeem shares
within twelve months of purchase. In addition, investors should consider the
level of annual 12b-1 Plan expenses to which each of the Classes is subject and,
in comparing Class B Shares to Class C Shares, the desirability of an automatic
conversion feature, which is available only for 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 under either the deferred sales charge alternative
or the level 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 Class B Shares acquired under the deferred sales charge
alternative are subject to annual 12b-1 Plan expenses of up to 1% for
approximately eight years after purchase (see Automatic Conversion of Class B
Shares) and Class C Shares acquired under the level sales charge alternative are
subject to annual 12b-1 Plan expenses of up to 1% for the life of the
investment. However, because front-end sales charges are deducted from the
purchase amount at the time of purchase, investors who buy Class A Shares will
not have their full purchase amount invested in the Series.
Certain other investors might determine it to be more advantageous to
purchase Class B Shares and have all their money 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 up to 1% until the shares are automatically
converted into Class A Shares. Still other investors might determine it to be
more advantageous to purchase Class C Shares and have all of their funds
invested initially, recognizing that they would be subject to a CDSC for just
twelve months after purchase but that Class C Shares do not offer a conversion
feature, so their shares would be subject to annual 12b-1 Plan expenses of up to
1% for the life of the investment. The higher 12b-1 Plan expenses on Class B
Shares and Class C Shares will be offset to the extent a return is realized on
the additional money initially invested under the deferred sales charge
alternative or the level sales charge alternative. However, there can be no
assurance as to the return, if any, that will be realized on such additional
money.
Prospective investors should refer to Appendix A to this Prospectus for an
illustration of the potential impact on a long-term shareholder's investment in
the Fund under each of the purchase options.
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 and the Class C Shares,
from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred
upon redemption. Sales personnel may receive different compensation for selling
Class A, Class B and Class C Shares. INVESTORS SHOULD UNDERSTAND THAT THE
PURPOSE AND FUNCTION OF THE RESPECTIVE 12b-1 PLANS AND THE CDSCs WITH RESPECT TO
THE CLASS B AND CLASS C SHARES ARE THE SAME AS THOSE OF THE 12b-1 PLAN AND THE
FRONT-END SALES CHARGE APPLICABLE TO CLASS A SHARES IN THAT SUCH FEES AND
CHARGES PROVIDE FOR THE FINANCING OF THE DISTRIBUTION OF THE RESPECTIVE CLASSES.
See 12b-1 Distribution Plans - Class A, Class B and Class C Shares.
Dividends paid by the Series with respect to the Class A, Class B and Class
C Shares, to the extent any dividends are paid, will be calculated in the same
manner, at the same time, on the same day and will be in the same amount, except
that the additional amount of 12b-1 Plan expenses relating to the Class B and
Class C Shares will be borne exclusively by such shares. See Calculation of
Offering Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. The Fund and the Distributor intend to operate in compliance with these
rules.
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<PAGE>
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 4.75%. See Calculation of Offering Price and
Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge as
shown in the following table.
<TABLE>
<CAPTION>
Decatur Total Return Fund A Class
- --------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Concession***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.95% 4.00%
$100,000 but under $250,000 3.75 3.90 3.00
$250,000 but under $500,000 2.50 2.60 2.00
$500,000 but under $1,000,000* 2.00 2.03 1.60
</TABLE>
* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited CDSC
may apply upon redemption of such shares.
** Based on the net asset value per share of the Class A Shares as of the end
of the Fund's most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
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 or 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 to dealers up to the full amount of the 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.
-22-
<PAGE>
For initial purchases of Class A Shares of $1,000,000 or more, a dealer's
commission may be paid by the Distributor to financial advisers through whom
such purchases are made, in accordance with the following schedule:
<TABLE>
<CAPTION>
Dealer's
Commission
----------
(as a percent-
Amount of Purchase age 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 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. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
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 of Class A Shares with your holdings of Class B
Shares and/or Class C Shares of the Series and shares of the other funds in the
Delaware Group, except those noted below, you can reduce the front-end sales
charges on any additional purchases of Class A Shares. Shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products may be combined with other Delaware Group fund holdings.
Shares of other funds that do not carry a front-end sales charge or CDSC may not
be included unless they were acquired through an exchange from a Delaware Group
fund that does carry 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 twenty-one years of age and any trust,
fiduciary or retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of Intention.
A Letter of Intention 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
at net asset value 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 Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares under Buying
Shares.
-23-
<PAGE>
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 current and
former officers, directors and employees (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 CDSC or other
redemption charge. Purchases of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. 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 benefit from the reduced
front-end sales charges relating to the Class A Shares set forth in the table on
page 5, based on total plan assets. In addition, 403(b)(7) and 457 Retirement
Plan Accounts may 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 will
be aggregated to determine the applicable sales charge reduction on each
purchase, both initial and subsequent, if, at the time of each such purchase,
the company notifies the Fund that it qualifies for the reduction. Employees
participating in such Group Investment Plans may also combine the investments
held in their plan account to determine the front-end sales charge applicable to
purchases in non-retirement Delaware Group investment accounts if, at the time
of each such purchase, they notify the Fund that they are eligible to combine
purchase amounts held in their plan account.
For additional information on these plans, including plan forms,
applications, minimum investments and any applicable account
-24-
<PAGE>
maintenance fees, contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement Planning.
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 and, as a result, 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 assets 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 redeemed within six years of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees facilitates the ability of the Series to
sell the Class B Shares without deducting a front-end sales charge at the time
of purchase.
Shareholders of the Series' Class B Shares exercising the exchange
privilege described below will continue to be subject to the CDSC schedule for
the Series' Class B Shares described in this Prospectus, even after the
exchange. Such CDSC 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 three additional 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.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without the imposition
of a front-end sales charge and, as a result, the Series will invest the full
amount of the investor's purchase payment. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the dollar
amount purchased. As discussed below, however, Class C Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within twelve months of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Shareholders of the Series' Class C Shares who exercise the exchange
privilege described below will continue to be subject to the CDSC schedule for
the Series' Class C Shares described
-25-
<PAGE>
in this Prospectus. See Redemption and Exchange.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, and Class C Shares redeemed within twelve
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be assessed
on an amount equal to the lesser of the net asset value at the time of purchase
of the shares being redeemed or the net asset value of those shares at the time
of redemption. No CDSC will be imposed on increases in net asset value above the
initial purchase price. In addition, no CDSC will be assessed on redemptions of
shares received through reinvestments of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of either the Class B Shares
or the Class C Shares of the Series, even if those shares are later exchanged
for shares of another Delaware Group fund. In the event of an exchange of the
shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares that were acquired in the exchange.
The 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
Dollar Amount
Year After Purchase Made Subject to Charge)
- ------------------------ ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Series, the Class B Shares will still
be subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of 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.
In determining whether a CDSC is applicable to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to the Class C Shares, it will be assumed that shares held for more
than twelve months are redeemed first, followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for
twelve months or less. All investments made during a calendar month, regardless
of what day of the month the investment occurred, will age one month on the last
day of that month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of CDSC - Class B and Class C Shares under Redemption and
Exchange.
12b-1 Distribution Plans -- Class A, Class B and Class C Shares
Under the distribution plans adopted by the Fund in accordance with Rule
12b-1 under the 1940 Act, the Fund is permitted to pay the Distributor annual
distribution fees of up to .30% of the average daily net assets of the Class A
Shares, 1% of the average daily net assets of the Class B Shares and 1% of the
average daily net assets of the Class C Shares. These fees, which are payable
monthly, compensate the Distributor for providing distribution and related
services and bearing certain expenses of each Class. The 12b-1 Plans applicable
to the Class B Shares and the Class C Shares are designed to permit an investor
to purchase Class B Shares or Class C Shares through dealers or brokers without
the assessment of a front-end sales charge while enabling the Distributor to
compensate dealers and brokers for the sale of such shares. For a more detailed
discussion of the 12b-1 Plans relating to the Class A, Class B, and Class C
Shares, see Distribution (12b-1) and Service under Management of the Fund.
-26-
<PAGE>
Other Payments to Dealers -- Class A, Class B and Class C 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.
Subject to pending amendments to the NASD's Rules of Fair Practice, 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. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended. In addition, as noted
above, the Distributor may pay dealers a commission in connection with net asset
value purchases.
Class B Funds and Class C Funds
The following funds currently offer Class B and Class C Shares: Delaware
Group Delchester High-Yield Bond Fund, Inc., Delaware Group Government Fund,
Inc., Limited-Term Government Fund of Delaware Group Limited-Term Government
Funds, 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 Devon 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., DMC Tax-Free Income Trust - Pennsylvania and the
Series.
Decatur Total Return Fund Institutional Class
In addition to offering the Class A, Class B and Class C 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 and is
available for purchase only by certain investors. Decatur Total Return Fund
Institutional Class shares generally are distributed directly by the Distributor
and do not have a front-end sales charge, a CDSC or a Limited CDSC, and are not
subject to 12b-1 plan distribution expenses. To obtain a prospectus which
describes the Decatur Total Return Fund Institutional Class, contact the
Distributor by writing to the address or by calling the telephone number listed
on the cover of this Prospectus.
Dividend Orders
You may have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective.
For more information, 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.
-27-
<PAGE>
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
account, an appropriate retirement plan application, must be completed, signed
and sent with a check payable to Decatur Total Return Fund A Class, Decatur
Total Return Fund B Class or Decatur Total Return Fund C Class at 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, Decatur Total
Return Fund B Class or Decatur Total Return Fund C Class. Your check should be
identified with your name(s) and account number. An investment slip (similar to
a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from the Fund. Use of this investment
slip can help expedite processing of your check when making additional
purchases. Your investment may be delayed if you send additional purchases by
certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include your
name(s) and 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, processing
of your investment may be delayed. In addition, you must promptly send your
Investment Application or, in the case of a retirement account, an appropriate
retirement plan application, to Decatur Total Return Fund A Class, Decatur Total
Return Fund B Class or Decatur Total Return Fund C Class at 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.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Asset Planner service, you
should complete a Delaware Group Asset Planner Account Registration Form, which
is available only from a financial adviser. The sales charge on the investment
is determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. The minimum initial investment
per Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available for use inside the Asset
Planner service; however, only "like" class shares may be used within the same
Strategy.
An annual maintenance fee, currently $35 per Strategy, is due at the time
of initial investment and by September 30th of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from one
of your Fund accounts if not paid by September 30th. See the Statement of
Additional Information.
Investors will receive a customized quarterly Strategy Report summarizing
all Delaware Group Asset Planner investment performance and account activity
during the prior period. Confirmation statements will be sent following all
transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the Asset
Planner service, due to its special design. These include Delaphone,
Checkwriting Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group, you
may write and authorize an exchange of part or all of your investment into
shares of the Series. If you wish to open an account by exchange, call the
-28-
<PAGE>
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus.
Shareholders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their shares for Class B Shares or Class C
Shares of the Series or for Class B or Class C Shares of any other fund in the
Delaware Group. 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. Similarly, shareholders of Class C Shares of
the Series are permitted to exchange all or part of their Class C Shares only
into the corresponding class of shares of the Class C Funds. Class B Shares of
the Series and Class C Shares of the Series acquired by exchange will continue
to carry the CDSC and, in the case of Class B Shares, the automatic conversion
schedule of the fund from which the exchange is made. The holding period of the
Class B Shares of the Series acquired by exchange will be added to that of the
shares that were exchanged for purposes of determining the time of the automatic
conversion into Class A Shares of the Series.
Permissible exchanges into Class A Shares of the Series will be made
without a front-end sales charge imposed by the Series except for exchanges 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). Permissible exchanges into Class B
Shares or Class C Shares of the Series will be made without the imposition of a
CDSC by the fund from which the exchange is being made at the time of the
exchange.
See Allied Plans under Retirement Planning for information on exchanges by
participants in an Allied Plan.
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 have your employer or bank 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 Series
account. Many shareholders use this as an automatic savings plan. Shareholders
should allow a reasonable amount of time for initial purchases and changes to
these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
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
account, you are obligated to reimburse the Series.
Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and Class C
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 the 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
-29-
<PAGE>
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. Purchase
orders 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 order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any loss
incurred. The Fund can redeem shares from your account(s) to reimburse itself
for any loss, and you may be restricted from making future purchases in any of
the funds in the Delaware Group. The Fund reserves the right to reject purchase
orders paid by third-party checks or checks that are not drawn on a domestic
branch of a United States financial institution. If a check drawn on a foreign
financial institution is accepted, you may be subject to additional bank charges
for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account balance
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for that
quarter and each subsequent calendar quarter until the account is brought up to
the minimum balance. The service fee will be deducted from the account during
the first week of each calendar quarter for the previous quarter, and will be
used to help defray the cost of maintaining low-balance accounts. No fees will
be charged without proper notice, and no CDSC will apply to such assessments.
The Fund also reserves the right, upon sixty days' written notice, to
redeem accounts that remain under a Class' minimum initial purchase amount as a
result of redemptions. An investor making the minimum initial investment may be
subject to involuntary redemption without the imposition of a CDSC or Limited
CDSC if he or she redeems any portion of his or her account.
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 constitute taxable
events. See Taxes. Further, in order for an exchange to be processed, shares of
the fund being acquired must be registered in the state where the acquiring
shareholder resides. You may want to consult your financial adviser or
investment dealer to discuss which funds in the Delaware Group will best meet
your changing objectives and the consequences of any exchange transaction. You
may also call the Delaware Group directly for fund information.
Your shares will be redeemed or exchanged at a price 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. A shareholder submitting a redemption may indicate that he or she
wishes to receive redemption proceeds of a specific dollar amount. In the case
of such a request, and in the case of certain redemptions from retirement plan
accounts, the Series will redeem the number of shares necessary to deduct the
applicable CDSC in the case of Class B or Class C Shares, or, if applicable, the
Limited CDSC in the case of Class A Shares and tender to the shareholder the
requested amount, assuming the shareholder holds enough shares in his or her
account for the redemption to be processed in this manner. Otherwise, the
amount tendered to the shareholder upon redemption will be reduced by the amount
of the applicable CDSC or Limited CDSC.
Except as noted below, for a redemption request to be in "good order," you
must provide your account number, account registration, and the total number of
shares or dollar amount of the
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transaction. For exchange requests, you must also provide the name of the fund
you want to receive the proceeds. Exchange instructions and redemption requests
must be signed by the record owner(s) exactly as the shares are registered. You
may request a redemption or an exchange by calling the Fund at 800-523-1918 (in
Philadelphia, 215-988-1241). The Fund may suspend, terminate, or amend the
terms of the exchange privilege upon sixty 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 that the purchase check has cleared, which may take up to
fifteen days from the purchase date. The Fund will not honor telephone
redemptions for 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.
There is no front-end sales charge or fee for exchanges made between shares
of funds which both carry a front-end sales charge. Any applicable front-end
sales charge will apply to exchanges from shares of funds not subject to a
front-end sales charge, except for transfers involving assets that were
previously invested in a fund with a front-end sales charge and/or transfers
involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for Class B Shares of other Class B Funds or Class C Shares
of other Class C Funds, as applicable (in each case, "New Shares"), will not be
subject to a CDSC that might otherwise be due upon redemption of the Original
Shares. However, such shareholders will continue to be subject to the CDSC and,
in the case of Class B Shares, the automatic conversion schedule of the Original
Shares as described in this Prospectus and any CDSC assessed upon redemption
will be charged by the Series. In an exchange of Class B Shares, the Series'
CDSC schedule may be higher than the CDSC schedule relating to the New Shares
acquired as a result of the exchange. For purposes of computing the CDSC that
may be payable upon a disposition of the New Shares, the period of time that an
investor held the Original Shares is added to the period of time that an
investor held the New Shares. With respect to Class B Shares, the automatic
conversion schedule of the Original Shares may be longer than that of the New
Shares. Consequently, an investment in the New Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares for a longer
period of time than if the investment in the New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for the
CDSC applicable to certain redemptions of Class B Shares and Class C Shares and
the Limited CDSC applicable 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 have your investment dealer arrange to have your shares
redeemed or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of the
features described below, shall continue in effect until such time as a written
revocation or modification has been received by the Fund or its agent.
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 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
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documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
Payment is normally mailed the next business day, but no later than seven
days, after receipt of your redemption request. If your Class A Shares are in
certificate form, the certificate must accompany your request and also be in
good order. The Fund issues certificates for Class A Shares only if a
shareholder submits a specific request. The Fund does not issue certificates
for Class B or Class C Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in 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 may only
redeem or exchange by written request and you must return your certificates.
The Telephone Redemption-Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are automatically
provided unless you notify the Fund in writing that you do not wish to have such
service available with respect to your account. The Fund reserves the right to
modify, terminate or suspend these procedures upon sixty 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 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, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later than seven days, after receipt of the request. This service is
only available to individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, 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 Class B and Class C Shares and the
Limited CDSC which may be applicable to certain Class A Shares, there are no
fees for this redemption 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.
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Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into any fund in the Delaware Group under the same registration, subject
to the same conditions and limitations as other exchanges noted above. As with
the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount. With accounts of
at least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or
more. The Fund does not recommend any particular monthly amount, as each
shareholder's situation and needs vary. Payments are normally made by check.
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 two business days after the
payment date. Except for the Limited CDSC which may be applicable to Class A
Shares and the CDSC which may be applicable to Class B and Class C Shares as
noted below, there are no fees for this redemption method. You can initiate the
MoneyLine 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
Fund account, you must have your signature guaranteed. Please 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. The MoneyLine service described above is not available for
retirement plans.
* * *
Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares via a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the original purchase was
made at net asset value within the twelve months prior to the withdrawal 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,
below.
With respect to Class B Shares and Class C Shares redeemed via a Systematic
Withdrawal Plan, any applicable CDSC will be waived if, on the date that the
Plan is established, the annual amount selected to be withdrawn is less than 12%
of the account balance. If the annual amount selected to be withdrawn exceeds
12% of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual limit will be
reset on the date that any Systematic Withdrawal Plan is modified (for example,
a change in the amount selected to be withdrawn or the frequency or date of
withdrawals), based on the balance in the account on that date. See Waiver of
CDSC -Class B and Class C Shares, below.
For more information on Systematic Withdrawal Plans, call the Shareholder
Service Center.
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
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fund) to be liquidated from their Series account and invested automatically into
an account in one or more funds in the Delaware Group. If, in connection with
the Wealth Builder Option, a shareholder wishes to open a new account in such
other fund or funds to receive the automatic investment, such new account must
meet such other fund's minimum initial purchase requirements. Investments under
this option are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above.
Shareholders can 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
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 twelve 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
acquired in the exchange.
Redemptions of such Class A Shares held for more than twelve 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 acquired in the exchange.
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 what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
Waiver of Limited CDSC--Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has been
paid will be waived in the following instances: (i) redemptions that result
from 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 59 1/2; (v)
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
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who are permitted to purchase shares at net asset value, regardless of the size
of the purchase (see Buying at Net Asset Value, under Buying Shares).
Waiver of CDSC--Class B and Class C Shares
The CDSC is waived on redemptions of Class B Shares in connection with the
following redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than the then-effective minimum account size; (ii)
returns of excess contributions to an IRA or 403(b)(7) Deferred Compensation
Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, or 457 Deferred Compensation Plan; and (iv) distributions
from an account if the redemption results from the death of all registered
owners of the account (in the case of accounts established under the Uniform
Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts, the
waiver applies upon the death of all beneficial owners) or a total and permanent
disability (as defined in Section 72 of the Code) of all registered owners
occurring after the purchase of the shares being redeemed.
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan;
(iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan, or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) Deferred Compensation
Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase
Pension Plan or a 401(k) Defined Contribution Plan upon attainment of normal
retirement age under the plan or upon separation from service; (vi)
distributions from an IRA on or after attainment of age 59 1/2; and (vii)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares redeemed
in accordance with a Systematic Withdrawal Plan if the annual amount selected to
be withdrawn under the Plan does not exceed 12% of the value of the account on
the date that the Systematic Withdrawal Plan was established or modified.
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 per share of the Class A Shares
was paid from realized securities profits. During the six months ended May 31,
1995, the Class A Shares and the Class B Shares paid dividends of $0.20 and
$0.18 per share from net investment income, respectively, and each Class paid a
capital gain of $0.42 per share from realized securities profits. Class C Shares
were not offered prior to the date of this Prospectus.
Each of the Classes will share proportionately in the investment income and
expenses of the Series, except that the per share dividends from net investment
income on the Class A Shares, the Class B Shares and the Class C Shares will
vary due to the expenses under the 12b-1 Plan applicable to each Class.
Generally, the dividends per share on Class B Shares and Class C Shares can be
expected to be lower than the dividends per share on Class A Shares because the
expenses under the 12b-1 Plans relating to Class B and Class C Shares will be
higher than the expenses under the 12b-1 Plan
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relating to Class A Shares. 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 distributions which cannot be delivered by the United
States Post Office or which remains uncashed for a period of more than one year
may be reinvested in the shareholder's account at the then-current net asset
value, and the dividend option may be changed from cash to reinvest. If you
elect to take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the Delaware
Group's MoneyLine service and have such payments 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 the MoneyLine service. See Systematic Withdrawal Plan for Class A Shares,
Class B Shares and Class C Shares under Redemption and Exchange for information
regarding authorization of this service. This service is not available for
retirement plans. (See The Delaware Difference for more information on
reinvestment options.)
TAXES
The Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of 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.
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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 acquiring Series shares will be excluded from
the federal tax basis of any of such shares sold or exchanged within ninety 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 approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Buying Shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. Government securities may be exempt from
state personal income taxes. Shares of the Series are exempt from Pennsylvania
county personal property taxes.
Each year, the Fund will mail to 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. 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 per share, while Class B
Shares and Class C Shares are purchased at the net asset value ("NAV") per
share. The offering price per share of Class A Shares consists of the NAV per
share next computed 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 the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
Short-term investments having a maturity of less than sixty 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' four 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, Class B and Class C Shares alone will bear the 12b-1 Plan expenses payable
under their respective 12b-1 Plans. Due to the specific distribution expenses
and other costs that will be allocable to each class, the net asset value of
each class of the Series will vary.
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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"). On April 3, 1995, a merger between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now wholly-owned subsidiaries, and subject to
the ultimate control, of Lincoln National. Lincoln National, with headquarters
in Fort Wayne, Indiana, is a diversified organization with operations in many
aspects of the financial services industry, including insurance and investment
management. In connection with the merger, a new Investment Management Agreement
between the Fund on behalf of the Series and the Manager was executed following
shareholder approval.
The Manager manages the Series' portfolio and makes investment decisions
which are implemented by the Fund's Trading Department. The Manager also
administers the Fund's affairs and 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.
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 twenty-four 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 twelve 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 nineteen years of investment management experience with
Kidder,
-39-
<PAGE>
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.
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 that net capital gains are realized. 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 and Class C 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 information 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 a Distribution Agreement dated April 3, 1995, as amended on
November 29, 1995.
The Fund has adopted a separate distribution plan under Rule 12b-1 for each
of the Class A Shares, the Class B Shares and the Class C 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,
-40-
<PAGE>
dealers and others. In connection with the promotion of Class A, Class B and
Class C Shares, the Distributor may, from time to time, pay to participate in
dealer-sponsored seminars and conferences, and reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences and advertising.
The Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning 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 each of the Class B Shares and Class C
Shares are also used to pay the Distributor for advancing the commission costs
to dealers with respect to the initial sale of such shares.
The aggregate fees paid by the Series from the assets of the respective
Classes 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 each
of the Class B Shares' and the Class C Shares' average daily net assets in any
year. The Class A, Class B and Class C 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.
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 each of the Class
B Shares, and the Class C 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 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 directors annually review service
fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
Expenses
The 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 Distribution Agreement. The Class A Shares' ratio
of expenses to average daily net assets for the fiscal year ended November 30,
1994 was
-41-
<PAGE>
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 Series anticipates that
the expense ratio for Class C Shares will be identical to the expense ratio for
Class B Shares. The expense ratio of each Class reflects the impact of its 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 as
defined by the 1940 Act. 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 1940 Act. Shareholders
of 10% or more of the Fund's shares may request that a special meeting be called
to consider the removal of a director. 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.
In addition to Class A Shares, Class B Shares and Class C Shares, the
Series also offers the Decatur Total Return Fund Institutional Class of 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 Plans. Similarly, as a general matter, shareholders of Class A Shares, Class
B Shares and Class C Shares may vote only on matters affecting the Plan that
relates to the class of shares that they hold. However, the Class B Shares may
vote on a proposal to increase materially the fees to be paid by the Series
under the Plan 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.
-42-
<PAGE>
APPENDIX A
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
--------------------------- ------------------------- ------------------------- -------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
---- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+ 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 13,058 13,058 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272 13,946 14,272 14,272
5 15,340 15,599 15,599 15,340 15,399 15,599+
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418 20,369 20,369
9 22,459 22,405*+ 22,263
10 24,705 24,646* 24,333
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
$250,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
-------------------------- -------------------------- -------------------------- ---------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
---- ------- ------- -------- ------- ------- -------- ------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+ 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 326,438 326,438 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874 356,797 356,797 356,874 356,797 356,797
5 392,562 389,979 389,979 392,562+ 384,979 389,979+
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% for years 1-8 and 10% for years 9-10, and a hypothetical
return for Class C of 9.3% per year.
Hypothetical returns vary due to the different expense structures for each Class
and do not represent actual performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1% in
years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which class offers the greater return potential
based on investment amount and holding period.
-43-
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, contact your financial adviser or call Delaware Group at 800-523-
4640, in Philadelphia call 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
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
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
- ---------------------------------
DECATUR TOTAL RETURN FUND
- ---------------------------------
A CLASS
- ---------------------------------
B CLASS
- ---------------------------------
C CLASS
- ---------------------------------
P R O S P E C T U S
- ---------------------------------
November 29, 1995
DELAWARE
GROUP
-----------
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
The Decatur Income Fund Institutional Class Prospectus and the Decatur Total
Return Fund Institutional Class Prospectus, each dated January 30, 1995, are
incorporated into this filing by reference to the electronic filings of those
Prospectuses made pursuant to Rule 497(e) on April 24, 1995. The Supplement for
each Prospectus dated April 15, 1995 that was also filed on April 24, 1995 is
not incorporated by reference. That Supplement will be superceded by the
- ---
Supplement included with this filing as of the effective date of this filing.
<PAGE>
November 29, 1995
DELAWARE GROUP DECATUR FUND, INC.
Decatur Income Fund Institutional Class
Supplement to Prospectus dated January 30, 1995
ADDITIONAL CLASSES
In addition to the Institutional Class, the Decatur Income Fund (the
"Series") offers the Decatur Income Fund A Class, the Decatur Income Fund B
Class and the Decatur Income Fund C Class of shares (together, the "Fund
Classes"), which are described in a separate prospectus relating to the Fund
Classes. The Fund Classes have sales charges and other expenses that are
different from the Institutional Class and that may affect the performance of
the Fund Classes. For a prospectus relating to the Fund Classes, write to
Delaware Distributors, L.P. at 1818 Market Street, Philadelphia, PA 19103, or
call at the following telephone number: 800-523-4640.
FINANCIAL HIGHLIGHTS
The following unaudited financial highlights for the Decatur Income
Fund Institutional Class (the "Institutional Class") are derived from the
unaudited financial statements of Delaware Group Decatur Fund, Inc. for the six-
month period ended May 31, 1995. The data should be read in conjunction with
the financial statements and related notes which are incorporated into Part B by
reference to the Series' Semi-Annual Report for the six months ended May 31,
1995.
<TABLE>
<CAPTION>
Decatur Income Fund Institutional Class
-------------------------------------------
Six Months Ended May 31, 1995
(Unaudited)(1)
<S> <C>
Net Asset Value, Beginning of Period............... $15.59
Income From Investment Operations
- ---------------------------------
Net Investment Income.............................. 0.35
Net Gains or Losses on Securities
(both realized and unrealized).................... 2.26
------
Total From Investment Operations.................. 2.61
------
Less Distributions
- ------------------
Dividends (from net investment income)............. (0.38)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Distributions (from capital gains)................. (0.42)
Returns of Capital................................. none
----
Total Distributions.............................. (0.80)
------
Net Asset Value, End of Period..................... $17.40
======
- ----------------------------------------------
Total Return....................................... 17.38%
- ------------
- ---------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted).......... $186,980
Ratio of Expenses to Average Daily Net Assets...... 0.75%
Ratio of Net Investment Income to Average Daily
Net Assets....................................... 4.38%
Portfolio Turnover Rate............................ 65%
</TABLE>
- --------------------------
(1) Ratios have been annualized, but total return has not been annualized.
MANAGEMENT OF THE FUND
The following supplements the investment manager information under
Management of the Fund:
On March 29, 1995, shareholders of the Series 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 the new Investment Management Agreement 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 Agreement
terminated, and the new Investment Management Agreement became effective on that
date.
DMC and its two affiliates, Delaware Service Company, Inc., the Fund's
shareholder servicing, dividend disbursing and transfer agent, and Delaware
Distributors, L.P., the Fund's national distributor, are now 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.
-2-
<PAGE>
Under the new Investment Management Agreement, DMC will be paid at the same
annual fee rates and on the same terms as it was under the previous Investment
Management Agreement. In addition, the investment approach and operation of the
Fund will remain substantially unchanged.
-3-
<PAGE>
November 29, 1995
DELAWARE GROUP DECATUR FUND, INC.
Decatur Total Return Fund Institutional Class
Supplement to Prospectus dated January 30, 1995
ADDITIONAL CLASSES
In addition to the Institutional Class, the Decatur Total Return Fund
(the "Series") offers the Decatur Total Return Fund A Class, the Decatur Total
Return Fund B Class and the Decatur Total Return Fund C Class of shares
(together, the "Fund Classes"), which are described in a separate prospectus
relating to the Fund Classes. The Fund Classes have sales charges and other
expenses that are different from the Institutional Class and that may affect the
performance of the Fund Classes. For a prospectus relating to the Fund Classes,
write to Delaware Distributors, L.P. at 1818 Market Street, Philadelphia, PA
19103, or call at the following telephone number: 800-523-4640.
FINANCIAL HIGHLIGHTS
The following unaudited financial highlights for the Decatur Total
Return Fund Institutional Class (the "Institutional Class") are derived from the
unaudited financial statements of Delaware Group Decatur Fund, Inc. for the six-
month period ended May 31, 1995. The data should be read in conjunction with
the financial statements and related notes which are incorporated into Part B by
reference to the Series' Semi-Annual Report for the six months ended May 31,
1995.
<TABLE>
<CAPTION>
Decatur Total Return Fund Institutional Class
--------------------------------------------------
Six Months Ended May 31, 1995
(Unaudited)(1)
<S> <C>
Net Asset Value, Beginning of Period............... $12.35
Income From Investment Operations
- ---------------------------------
Net Investment Income.............................. 0.20
Net Gains or Losses on Securities
(both realized and unrealized).................... 2.00
------
Total From Investment Operations.................. 2.20
------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Less Distributions
- ------------------
Dividends (from net investment income)............... (0.24)
Distributions (from capital gains)................... (0.42)
Returns of Capital................................... none
----
Total Distributions................................. (0.66)
------
Net Asset Value, End of Period....................... $13.89
======
- ----------------------------------------------
Total Return......................................... 18.63%
- ------------
- -----------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)............ $8,773
Ratio of Expenses to Average Daily Net Assets........ 0.93%
Ratio of Net Investment Income to Average Daily
Net Assets.......................................... 3.17%
Portfolio Turnover Rate.............................. 70%
</TABLE>
- ---------------------------
(1) Ratios have been annualized, but total return has not been annualized.
MANAGEMENT OF THE FUND
The following supplements the investment manager information under
Management of the Fund:
On March 29, 1995, shareholders of the Series 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 the new Investment Management Agreement 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 Agreement
terminated, and the new Investment Management Agreement became effective on that
date.
DMC and its two affiliates, Delaware Service Company, Inc., the Fund's
shareholder servicing, dividend disbursing and transfer agent, and Delaware
Distributors, L.P., the Fund's national distributor, are now 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.
-2-
<PAGE>
Under the new Investment Management Agreement, DMC will be paid at the same
annual fee rates and on the same terms as it was under the previous Investment
Management Agreement. In addition, the investment approach and operation of the
Fund will remain substantially unchanged.
-3-
<PAGE>
________________________________________________________________________________
PART B--STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 29, 1995
________________________________________________________________________________
DELAWARE GROUP DECATUR FUND, INC.
_______________________________________________________________________________
DECATUR INCOME FUND
_______________________________________________________________________________
1818 MARKET STREET
PHILADELPHIA, PA 19103
_______________________________________________________________________________
FOR MORE INFORMATION ABOUT THE
DECATUR INCOME FUND INSTITUTIONAL CLASS:
800-828-5052
FOR PROSPECTUS AND PERFORMANCE OF
THE DECATUR INCOME FUND A CLASS, THE
DECATUR INCOME FUND B CLASS AND THE
DECATUR INCOME FUND C CLASS:
NATIONWIDE 800-523-4640
PHILADELPHIA 215-988-1333
INFORMATION ON EXISTING ACCOUNTS OF
THE DECATUR INCOME FUND A CLASS, THE
DECATUR INCOME FUND B CLASS AND THE
DECATUR INCOME FUND C CLASS:
(SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
PHILADELPHIA 215-988-1241
DEALER SERVICES:
(BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
PHILADELPHIA 215-988-1050
_______________________________________________________________________________
TABLE OF CONTENTS
_______________________________________________________________________________
COVER PAGE
_______________________________________________________________________________
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
_______________________________________________________________________________
ACCOUNTING AND TAX ISSUES
_______________________________________________________________________________
PERFORMANCE INFORMATION
_______________________________________________________________________________
TRADING PRACTICES AND BROKERAGE
_______________________________________________________________________________
PURCHASING SHARES
_______________________________________________________________________________
INVESTMENT PLANS
_______________________________________________________________________________
DETERMINING OFFERING PRICE
AND NET ASSET VALUE
_______________________________________________________________________________
REDEMPTION AND REPURCHASE
_______________________________________________________________________________
DISTRIBUTIONS AND TAXES
_______________________________________________________________________________
INVESTMENT MANAGEMENT AGREEMENT
_______________________________________________________________________________
OFFICERS AND DIRECTORS
_______________________________________________________________________________
EXCHANGE PRIVILEGE
_______________________________________________________________________________
GENERAL INFORMATION
_______________________________________________________________________________
APPENDIX A -- IRA INFORMATION
_______________________________________________________________________________
APPENDIX B
_______________________________________________________________________________
APPENDIX C
_______________________________________________________________________________
FINANCIAL STATEMENTS
_______________________________________________________________________________
-1-
<PAGE>
Delaware Group Decatur Fund, Inc. (the "Fund") is a professionally-managed
mutual fund of the series type. This Statement of Additional Information ("Part
B" of the registration statement) describes the Decatur Income Fund series (the
"Series") of the Fund. The Series offers four classes (individually, a "Class"
and collectively, the "Classes") of shares - Decatur Income Fund A Class (the
"Class A Shares"), Decatur Income Fund B Class (the "Class B Shares") and
Decatur Income Fund C Class (the "Class C Shares") (together, the "Fund
Classes") and Decatur Income Fund Institutional Class (the "Institutional
Class"). Class B Shares, Class C Shares and Institutional Class shares may be
purchased at a price equal to the next determined net asset value per share.
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.
Class A Shares are subject to a maximum front-end sales charge of 4.75% and
annual 12b-1 Plan expenses of up to 0.30%. Class B Shares are subject to a
contingent deferred sales charge ("CDSC") which may be imposed on redemptions
made within six years of purchase and annual 12b-1 Plan expenses of up to 1%
which are assessed against Class B Shares for approximately eight years after
purchase. See Automatic Conversion of Class B Shares under Buying Shares in the
Fund Classes' Prospectus. Class C Shares are subject to a CDSC which may be
imposed on redemptions made within twelve months of purchase and annual 12b-1
Plan expenses of up to 1%, which are assessed against the Class C Shares for the
life of the investment. All references to "shares" in this Part B refer to all
Classes of shares of the Series, except where noted.
This Part B supplements the information contained in the current Prospectus
for the Fund Classes dated November 29, 1995 and the current Prospectus for the
Institutional Class dated January 30, 1995 and the supplement thereto dated
November 29, 1995, as they may be amended from time to time. It should be read
in conjunction with the respective Class' Prospectus. Part B is not itself a
prospectus but is, in its entirety, incorporated by reference into each Class'
Prospectus. A Prospectus relating to the Fund Classes and a Prospectus relating
to the Institutional Class may be obtained by writing or calling your investment
dealer or by contacting the Fund's national distributor, Delaware Distributors,
L.P. (the "Distributor"), 1818 Market Street, Philadelphia, PA 19103.
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<PAGE>
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
INVESTMENT RESTRICTIONS--The Fund has adopted the following restrictions
for the Series which, along with its investment objective, cannot be changed
without approval by the holders of a "majority" of the Series' outstanding
shares, which is a vote by the holders of the lesser of a) 67% or more of the
voting securities present in person or by proxy at a meeting, if the holders of
more than 50% of the outstanding voting securities are present or represented by
proxy; or b) more than 50% of the outstanding voting securities. The percentage
limitations contained in the restrictions and policies set forth herein apply at
the time of purchase of securities.
1. Not to invest more than 5% of the value of its assets in securities of
any one company (except U.S. Government bonds) or purchase more than 10% of the
voting or nonvoting securities of any one company.
2. Not to acquire control of any company. (The Fund's Certificate of
Incorporation permits control of companies to protect investments already made,
but its policy is not to acquire control.)
3. Not to purchase or retain securities of a company which has an officer
or director who is an officer or director of the Fund, or an officer, director
or partner of its investment manager if, to the knowledge of the Fund, one or
more of such persons own beneficially more than 1/2 of 1% of the shares of the
company, and in the aggregate more than 5% thereof.
4. No long or short positions on shares of the Series may be taken by the
Fund's officers, directors or any of its affiliated persons. Such persons may
buy shares of the Series for investment purposes, however.
5. Not to purchase any security issued by any other investment company if
after such purchase it would: (a) own more than 3% of the voting stock of such
company, (b) own securities of such company having a value in excess of 5% of
the Series' assets or (c) own securities of investment companies having an
aggregate value in excess of 10% of the Series' assets.
6. Not to invest more than 10% of the value of its total assets in
illiquid assets.
7. Not to invest in securities of other investment companies except at
customary brokerage commission rates or in connection with mergers,
consolidations or offers of exchange.
8. Not to make any investment in real estate unless necessary for office
space or the protection of investments already made. (This restriction does not
preclude the Series' purchase of securities issued by real estate investment
trusts.)
9. Not to sell short any security or property.
10. Not to deal in commodities, except that the Series may invest in
financial futures, including futures contracts on stocks and stock indices,
interest rates and foreign currencies and other types of financial futures that
may be developed in the future, and may purchase or sell options on such
futures, and enter into closing transactions with respect to those activities.
11. Not to borrow, except as a temporary measure for extraordinary or
emergency purposes, and then not in excess of 10% of gross assets taken at cost
or market, whichever is lower, and not to pledge more than 15% of gross assets
taken at cost. Any borrowing will be done from a bank, and to the extent that
such borrowing exceeds 5% of the value of the Series' assets, asset coverage of
at least 300% is required. In the event that such asset coverage shall at any
time fall below 300%, the Series shall, within three days thereafter (not
including Sunday and holidays) or such longer period as the Securities and
Exchange Commission (the "SEC") may prescribe by rules and regulations, reduce
the amount of its borrowings to an extent that the asset coverage of such
borrowings shall be at least 300%. The Series shall not issue senior
securities as defined in the Investment Company Act of 1940, except for notes
to banks.
12. Not to make loans. However, the purchase of a portion of an issue of
publicly distributed bonds, debentures, or other securities, whether or not the
purchase was made upon the original issuance of the securities, and the entry
into "repurchase agreements" are not to be considered the making of a loan by
the Series and 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 transactions.
13. Not to invest more than 5% of the value of its total assets in
securities of companies less than three years old. Such three-year period
-3-
<PAGE>
shall include the operation of any predecessor company or companies.
14. The Series may act as an underwriter of securities of other issuers,
but its present policy is not to do so.
Notwithstanding restrictions 6 and 13 above and although not a matter of
fundamental policy, the Fund has made a commitment that the Series will not
invest more than 10% of its total assets in a combination of illiquid securities
and securities of companies less than three years old, such three-year old
period to include the operation of any predecessor company or companies. In
addition, notwithstanding restriction 8 above and although not a matter of
fundamental policy, the Fund has made a commitment that the Series' investments
in securities issued by real estate investment trusts will not exceed 10% of its
total assets.
Although it is not a matter of fundamental policy, the Fund has also made a
commitment that the Series will not invest in warrants valued at lower of cost
or market exceeding 5% of the Series' net assets. Included within that amount,
but not to exceed 2% of the Series' net assets, may be warrants not listed on
the New York Stock Exchange or American Stock Exchange. In addition, the Series
may not concentrate investments in any particular industry, which means not
investing more than 25% of its assets in any industry.
Although it is not a matter of fundamental policy, the Fund may invest not
more than 5% of its assets in foreign securities (other than securities of
Canadian issuers registered under the Securities Exchange Act of 1934 or
American Depository Receipts, on which there are no such limits). Foreign
markets may be more volatile than U.S. markets. Such investments involve
sovereign risk in addition to the normal risks associated with American
securities. These risks include political risks, foreign taxes and exchange
controls and currency fluctuations. For example, foreign portfolio investments
may fluctuate in value due to changes in currency rates (i.e., the value of
foreign investments would increase with a fall in the value of the dollar, and
decrease with a rise in the value of the dollar) and control regulations apart
from market fluctuations. The Fund may also experience delays in foreign
securities settlement.
Although not a fundamental investment restriction, the Series currently
does not invest its assets in real estate limited partnerships or oil, gas and
other mineral leases.
OPTIONS--The Series may write call options and purchase put options on a
covered basis only, and will not engage in option writing strategies for
speculative purposes.
A. COVERED CALL WRITING--The Series may write covered call options from
time to time on such portion of its portfolio, without limit, as Delaware
Management Company, Inc. (the "Manager") determines is appropriate in seeking to
obtain the Series' investment objective. A call option gives the purchaser of
such option the right to buy, and the writer, in this case the Series, has the
obligation to sell the underlying security at the exercise price during the
option period. The advantage to the Series of writing covered calls is that the
Series receives additional income, in the form of a premium, which may offset
any capital loss or decline in market value of the security. However, if the
security rises in value, the Series may not fully participate in the market
appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to both options on actual portfolio securities owned by the
Series and options on stock indices, the Series may enter into closing purchase
transactions. A closing purchase transaction is one in which the Series, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Series to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Series may realize a
net gain or loss from a closing purchase transaction depending upon whether the
net amount of the original premium received on the call
-4-
<PAGE>
option is more or less than the cost of effecting the closing purchase
transaction. Any loss incurred in a closing purchase transaction may be
partially or entirely offset by the premium received from a sale of a different
call option on the same underlying security. Such a loss may also be wholly or
partially offset by unrealized appreciation in the market value of the
underlying security. Conversely, a gain resulting from a closing purchase
transaction could be offset in whole or in part by a decline in the market value
of the underlying security.
If a call option expires unexercised, the Series will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value
of the underlying security during the option period. If a call option is
exercised, the Series will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the underlying
security, and the proceeds of the sale of the security plus the amount of the
premium on the option, less the commission paid.
The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.
The Series will write call options only on a covered basis, which means
that the Series will own the underlying security subject to a call option at all
times during the option period. Unless a closing purchase transaction is
effected, the Series would be required to continue to hold a security which it
might otherwise wish to sell, or deliver a security it would want to hold.
Options written by the Series will normally have expiration dates between one
and nine months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
B. PURCHASING PUT OPTIONS--The Series may invest up to 2% of its total
assets in the purchase of put options. The Series will, at all times during
which it holds a put option, own the security covered by such option.
The Series intends to purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ("protective puts"). The ability to
purchase put options will allow the Series to protect an unrealized gain in an
appreciated security in its portfolio without actually selling the security. If
the security does not drop in value, the Series will lose the value of the
premium paid. The Series may sell a put option which it has previously
purchased prior to the sale of the securities underlying such option. Such
sales will result in a net gain or loss depending on whether the amount received
on the sale is more or less than the premium and other transaction costs paid on
the put option which is sold.
The Series may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, the Series may enter into closing
sale transactions. A closing sale transaction is one in which the Series, when
it is the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
OPTIONS ON STOCK INDICES
A stock index assigns relative values to the common stocks included in the
index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or
make delivery of the underlying stock at a specified price. A stock index
option gives the holder the right to receive a cash "exercise settlement amount"
equal to (i) the amount by which the fixed exercise price of the option exceeds
(in the case of a put) or is less than (in the case of a call) the closing value
of the underlying index on the date of exercise, multiplied by (ii) a fixed
"index multiplier." Receipt of this cash amount will depend upon the closing
level of the stock index upon which the option is based being greater than (in
the case of a call) or less than (in the case of a put) the exercise price of
the option. The amount of cash received will be equal to such difference
between the closing price of the index and exercise price of the option
expressed in dollars times a specified multiple. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
Gain or loss to the Series on transactions in stock index options will depend on
price movements in the stock market generally (or in a particular industry or
segment of
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<PAGE>
the market) rather than price movements of individual securities.
As with stock options, the Series may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the stock so
included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on the following Exchanges among others: The Chicago Board Options
Exchange, New York Stock Exchange and American Stock Exchange.
The effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the Series'
portfolio correlate with price movements of the stock index selected. Because
the value of an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether the Series will realize a
gain or loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or, in the
case of certain indices, in an industry or market segment, rather than movements
in the price of a particular stock. Since the Series' portfolio will not
duplicate the components of an index, the correlation will not be exact.
Consequently, the Series bears the risk that the prices of the securities being
hedged will not move in the same amount as the hedging instrument. It is also
possible that there may be a negative correlation between the index or other
securities underlying the hedging instrument and the hedged securities which
would result in a loss on both such securities and the hedging instrument.
Accordingly, successful use by the Series of options on stock indices will be
subject to the Manager's ability to predict correctly movements in the direction
of the stock market generally or of a particular industry. This requires
different skills and techniques than predicting changes in the price of
individual stocks.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on the Series' ability to effectively
hedge its securities. The Series will enter into an option position only if
there appears to be a liquid secondary market for such options.
The Series will not engage in transactions in options on stock indices for
speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--As noted in the
Prospectuses, the Series may enter into futures contracts relating to
securities, securities indices, interest rates or foreign currencies. (Unless
otherwise specified, interest rate futures contracts, securities and securities
index futures contracts and foreign currency futures contracts are collectively
referred to as "futures contracts.") Such investment strategies will be used as
a hedge and not for speculation.
As noted in the Prospectuses, the Series may purchase and write options on
the types of futures contracts, as further described in the Prospectuses.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities in the Series' portfolio. If
the futures price at expiration of the option is below the exercise price, the
Series will retain the full amount of the option premium, which provides a
partial hedge against any decline that may have occurred in the Series'
portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the securities or other
instruments required to be delivered under the terms of the futures contract.
If the futures price at expiration of the put option is higher than the exercise
price, the Series will retain the full amount of the option premium, which
provides a partial hedge against any increase in the price of securities which
the Series intends to purchase. If a put or call option the Series has written
is exercised, the Series will incur a loss
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<PAGE>
which will be reduced by the amount of the premium it receives. Depending on the
degree of correlation between changes in the value of its portfolio securities
and changes in the value of its options on futures positions, the Series' losses
from exercised options on futures may to some extent be reduced or increased by
changes in the value of portfolio securities.
The Series may purchase options on futures contracts for hedging purposes
instead of purchasing or selling the underlying futures contracts. For example,
where a decrease in the value of portfolio securities is anticipated as a result
of a projected market-wide decline or changes in interest or exchange rates, the
Series could, in lieu of selling futures contracts, purchase put options
thereon. In the event that such decrease occurs, it may be offset, in whole or
part, by a profit on the option. If the market decline does not occur, the
Series will suffer a loss equal to the price of the put. Where it is projected
that the value of securities to be acquired by the Series will increase prior to
acquisition, due to a market advance or changes in interest or exchange rates,
the Series could purchase call options on futures contracts, rather than
purchasing the underlying futures contracts. If the market advances, the
increased cost of securities to be purchased may be offset by a profit on the
call. However, if the market declines, the Series will suffer a loss equal to
the price of the call, but the securities which the Series intends to purchase
may be less expensive.
REPURCHASE AGREEMENTS--In order to invest its cash reserves or when in a
temporary defensive posture, the Series may enter into repurchase agreements
with banks or broker/dealers deemed to be creditworthy by the Manager under
guidelines approved by the Board of Directors. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Series) acquires
ownership of a debt security and the seller agrees to repurchase the obligation
at a future time and set price, thereby determining the yield during the
purchaser's holding period. Generally, repurchase agreements are of short
duration, often less than one week, but on occasion for longer periods. Not more
than 10% of the Series' assets may be invested in repurchase agreements of over
seven days' maturity or other illiquid assets. Should an issuer of a repurchase
agreement fail to repurchase the underlying security, the loss to the Series, if
any, would be the difference between the repurchase price and the market value
of the security. The Series will limit its investments in repurchase agreements
to those which the Manager, under the guidelines of the Board of Directors,
determines to present minimal credit risks and which are of high quality. In
addition, the Series must have collateral of at least 100% of the repurchase
price, including the portion representing the Series' yield under such
agreements, which is monitored on a daily basis. Such collateral is held by the
Custodian in book entry form. Such agreements may be considered loans under the
Investment Company Act of 1940, but the Series considers repurchase agreements
contracts for the purchase and sale of securities, and it seeks to perfect a
security interest in the collateral securities so that it has the right to keep
and dispose of the underlying collateral in the event of a default.
The funds in the Delaware Group have obtained an exemption from the joint-
transaction prohibitions of Section 17(d) of the Investment Company Act of 1940
to allow the Delaware Group funds jointly to invest cash balances. Each Series
of the Fund may invest cash balances in a joint repurchase agreement in
accordance with the terms of the Order and subject generally to the conditions
described above.
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.
It is the understanding of the Manager that the staff of the SEC permits
portfolio lending by registered investment companies if certain conditions are
met. These conditions are as follows: 1) each transaction must have 100%
collateral in the form of cash, short-term U.S. Government securities, or
irrevocable letters of credit payable by banks acceptable to the Fund from the
borrower; 2) this collateral must be valued daily and should the market value of
the loaned securities increase, the borrower must furnish additional collateral
to the Series; 3) the Fund must be able to terminate the loan after notice, at
any time; 4) the Series must receive reasonable interest on any loan, and
any
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<PAGE>
dividends, interest or other distributions on the lent securities, and any
increase in the market value of such securities; 5) the Series may pay
reasonable custodian fees in connection with the loan; and 6) the voting rights
on the lent securities may pass to the borrower; however, if the directors of
the Fund know that a material event will occur affecting an investment loan,
they must either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the directors to vote the
proxy.
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, under the supervision of
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.
* * *
The Series may invest in restricted securities, including unregistered
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the Securities Act of 1933. Rule 144A Securities may be
freely traded among qualified institutional investors without registration under
the 1933 Act.
Investing in Rule 144A Securities could have the effect of increasing the
level of the Series' illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. After
the purchase of a Rule 144A Security, however, the Board of Directors and the
Manager will continue to monitor the liquidity of that security to ensure that
the Series has no more than 10% of its net assets in illiquid securities.
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<PAGE>
ACCOUNTING AND TAX ISSUES
When the Series writes a call option, an amount equal to the premium
received by it is included in the section of the Series' assets and liabilities
as an asset and as an equivalent liability. The amount of the liability is
subsequently "marked to market" to reflect the current market value of the
option written. The current market value of a written option is the last sale
price on the principal Exchange on which such option is traded or, in the
absence of a sale, the mean between the last bid and asked prices. If an option
which the Series has written expires on its stipulated expiration date, the
Series reports a realized gain. If the Series enters into a closing purchase
transaction with respect to an option which the Series has written, the Series
realizes a gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. Any such gain or loss is a short-term capital gain or loss for
federal income tax purposes. If a call option which the Series has written is
exercised, the Series realizes a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received.
OTHER TAX REQUIREMENTS--The Series has qualified, and intends to continue
to qualify, as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Series must meet several
requirements to maintain its status as a regulated investment company. Among
these requirements are that at least 90% of its investment company taxable
income be derived from dividends, interest, payment with respect to securities
loans and gains from the sale or disposition of securities; that at the close of
each quarter of its taxable year at least 50% of the value of its assets
consists of cash and cash items, government securities, securities of other
regulated investment companies and, subject to certain diversification
requirements, other securities; and that less than 30% of its gross income be
derived from sales of securities held for less than three months.
The requirement that not more than 30% of the Fund's gross income be
derived from gains from the sale or other disposition of securities held for
less than three months may restrict the Series in its ability to write covered
call options on securities which it has held less than three months, to write
options which expire in less than three months, to sell securities which have
been held less than three months and to effect closing purchase transactions
with respect to options which have been written less than three months prior to
such transactions. Consequently, in order to avoid realizing a gain within the
three-month period, the Series may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the following year, subject to the same limitation.
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PERFORMANCE INFORMATION*
From time to time, the Fund may state each Class' total return in
advertisements and other types of literature. Any statements of total return
performance data for a Class will be accompanied by information on the average
annual compounded rate of return for that Class over, as relevant, the most
recent one-, five- and ten-year (or life of fund, if applicable) periods. The
Fund may also advertise aggregate and average compounded return information of
each Class over additional periods of time. The net asset value of a Class
fluctuates so shares, when redeemed, may be worth more or less than the original
investment, and a Class' results should not be considered as representative of
future performance.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial
purchase order of $1,000 from which,
in the case of only Class A Shares,
the maximum front-end sales charge is
deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the
hypothetical $1,000 purchase at the
end of the period after the deduction
of the applicable CDSC, if any, with
respect to Class B Shares and Class C
Shares.
* In the case of Class A Shares, the Limited CDSC applicable to only
certain redemptions of those shares will not be deducted from any computation of
total return. See the Prospectus for the Fund Classes for a description of the
Limited CDSC and the limited instances in which it applies. All references to
contingent deferred sales charges or a CDSC in this Performance Information
section will apply to Class B Shares or Class C Shares.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares and that all distributions
are reinvested at net asset value, and, with respect to Class B Shares and Class
C Shares, reflects the deduction of the CDSC that would be applicable upon
complete redemption of such shares. 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.
The performance of Class A Shares and the Institutional Class, as shown
below, is the average annual total return quotations for the one-, three-,
five-, ten- and fifteen-year periods ended May 31, 1995, and for the life of
these Classes, computed as described above. The average annual total return
for Class A Shares at offer reflects the maximum front-end sales charges paid
on the purchase of shares. The average annual total return for Class A Shares
at net asset value (NAV) does not reflect the payment of the maximum front-end
sales charge of 4.75%. Securities prices fluctuated during the periods covered
and past results should not be considered as representative of future
performance.
Pursuant to applicable regulation, total return shown for the Institutional
Class for the periods prior to the commencement of operations of such Class, as
noted below, is calculated by taking the performance of Class A Shares and
adjusting it to reflect the elimination of all front-end sales charges.
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AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A CLASS A INSTITU-
SHARES(1) SHARES TIONAL
(AT OFFER) (AT NAV) CLASS(2)
<S> <C> <C> <C>
1 year ended
5/31/95 9.94% 15.41% 15.60%
3 years ended
5/31/95 10.03% 11.83% 11.89%
5 years ended
5/31/95 8.23% 9.29% 9.33%
10 years ended
5/31/95 11.49% 12.04% 12.06%
15 years ended
5/31/95 13.92% 14.28% 14.30%
3/18/57(3)
through
5/31/95 11.73% 11.87% 11.88%
</TABLE>
(1) On May 2, 1994, the maximum front-end sales charge was reduced from 8.50% to
5.75%. Effective November 29, 1995, the maximum front-end sales charge was
again reduced to 4.75%. The above performance figures are calculated using
4.75% as the applicable sales charge for all time periods, and are more
favorable than they would have been had they been calculated using the
former front-end sales charges. Also, performance figures for periods after
May 1, 1994 reflect applicable Rule 12b-1 distribution expenses. Future
performance will be affected by such expenses.
(2) Date of initial public offering was January 13, 1994.
(3) Date of initial public offering of Class A Shares.
The performance of Class B Shares, as shown below, is the aggregate total
return quotation for the period September 6, 1994 (date of initial public
offering) through May 31, 1995. The aggregate total return for Class B Shares
including deferred sales charge reflects the deduction of the applicable CDSC
that would be paid if the shares were redeemed at May 31, 1995. The aggregate
total return for Class B Shares excluding deferred sales charge assumes the
shares were not redeemed at May 31, 1995 and therefore does not reflect the
deduction of a CDSC.
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<TABLE>
<CAPTION>
AGGREGATE TOTAL RETURN
CLASS B SHARES CLASS B SHARES
(INCLUDING (EXCLUDING
DEFERRED SALES DEFERRED SALES
CHARGE) CHARGE)
<S> <C> <C>
Period 9/6/94(1)
through 5/31/95 6.67% 10.67%
</TABLE>
(1) Date of initial public offering of Class B Shares; total return for this
short of a time period may not be representative of longer-term results.
Information regarding the performance of Class C Shares is not shown because
such shares were not offered to the public prior to the date of this Part B.
Decatur's investment strategy relies on the consistency, reliability and
predictability of corporate dividends. Dividends tend to rise over time,
despite market conditions, and keep pace with rising prices; they are paid out
in "current" dollars. And, just as important, current dividend income can help
lessen the effects of adverse market conditions. Decatur's dividend discipline,
coupled with the potential for capital gains, seeks to provide investors with a
consistently higher total-rate-of-return over time.
In 1972, Delaware Investment Advisers, a division of the Manager, offered
Decatur's time-proven investment style to the institutional investing community.
Currently, Delaware Investment Advisers manages approximately $13 billion in
institutional assets under management in that style.
From time to time, the Fund may also quote each Class' actual total return
performance, dividend results and other performance information in advertising
and other types of literature and may compare that information to, or may
separately illustrate similar information reported by, the Standard & Poor's 500
Stock Index and the Dow Jones Industrial Average and other unmanaged indices.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average
are industry-accepted unmanaged indices of stocks which are representative of
and used to measure broad stock market performance. The total return performance
reported for these indices will reflect the reinvestment of all distributions on
a quarterly basis and market price fluctuations. The indices do not take into
account any sales charge or other fees.
The total return performance for each Class will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will not reflect any income taxes payable by
shareholders on the reinvested distributions included in the calculation.
Because securities prices fluctuate, past performance should not be considered
as a representation of the results which may be realized from an investment in
the Series in the future.
The Series may also state the total return performance for each Class in
the form of an average annual return. This average annual return figure will be
computed by taking the sum of a Class' annual returns, then dividing that figure
by the number of years in the overall period indicated. The computation will
reflect the impact of the maximum front-end or contingent deferred sales charge,
if any, paid on the illustrated investment amount against the first year's
return.
From time to time, the Series may also quote actual total return
performance for each class in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include the
average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts as monitored by Bank Rate
Monitor, and those of generally-accepted corporate bond and government security
price indices of various durations prepared by Lehman Brothers and Salomon
Brothers, Inc. These indices are not managed for any investment goal.
Comparative information on the Consumer Price Index may also be included.
The Consumer Price Index, as prepared by the U.S. Bureau of Labor Statistics, is
the most commonly used
-12-
<PAGE>
measure of inflation. It indicates the cost fluctuations of a representative
group of consumer goods. It does not represent a return from an investment.
Statistical and performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Series activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these organizations,
may also be used in the promotion of sales of the Series. Any indices used are
not managed for any investment goal.
CDA Technologies, Inc., Lipper Analytical Services, Inc. and Morningstar,
Inc. are performance evaluation services that maintain statistical
performance databases, as reported by a diverse universe of independently-
managed mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income on
the stock market as well as other investment asset classes, and inflation.
With their permission, this information will be used primarily for
comparative purposes and to illustrate general financial planning
principles.
Interactive Data Corporation is a statistical access service that maintains
a database of various international industry indicators, such as historical
and current price/earning information, individual equity and fixed income
price and return information.
Compustat Industrial Databases, a service of Standard & Poor's, may also be
used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide financial,
statistical and market information covering more than 7,000 industrial and
non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations.
The following tables are examples, for purposes of illustration only, of
cumulative total return performance for (a) Class A Shares and the
Institutional Class for the three-, six- and nine-month periods ended May
31, 1995, for the one-, three-, five-, ten- and fifteen-year periods ended
May 31, 1995 and for the life of these Classes and (b) Class B
-13-
<PAGE>
Shares for the three- and six-month periods ended May 31, 1995 and for the
life of the Class. For these purposes, the calculations assume the
reinvestment of any realized securities profits distributions and income
dividends paid during the indicated periods. Comparative information on the
Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average is
also included. Pursuant to applicable regulation, total return shown for
the Institutional Class for the periods prior to the commencement of
operations of such Class is calculated by taking the performance of the
Class A Shares and adjusting it to reflect the elimination of all sales
charges. Information regarding the past performance of Class C Shares is
not shown because such shares were not offered to the public prior to the
date of this Part B.
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A INSTITU- STANDARD DOW
SHARES(1) TIONAL & POOR'S JONES
(AT OFFER) CLASS(2) 500(3) INDUSTRIAL(3)
<S> <C> <C> <C> <C>
3 months
ended
5/31/95 3.38% 8.62% 10.19% 12.07%
6 months
ended
5/31/95 11.74% 17.38% 19.16% 21.05%
9 months
ended
5/31/95 5.45% 10.81% 14.50% 16.48%
1 year
ended
5/31/95 9.94% 15.60% 20.16% 22.17%
3 years
ended
5/31/95 33.21% 40.09% 39.78% 43.22%
5 years
ended
5/31/95 48.54% 56.19% 71.69% 80.86%
10 years
ended
5/31/95 196.85% 212.22% 289.54% 378.81%
15 years
ended
5/31/95 605.87% 642.04% 750.36% 874.57%
3/18/57(4)
through
5/31/95 6,819.21% 7,176.20% N/A N/A
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS B
SHARES SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED STANDARD DOW
SALES SALES & POOR'S JONES
CHARGE) CHARGE) 500(3) INDUSTRIAL(3)
<S> <C> <C> <C> <C>
3 months
ended
5/31/95 4.34% 8.34% 10.19% 12.07%
6 months
ended
5/31/95 12.84% 16.84% 19.16% 21.05%
Period
9/6/94(5)
through
5/31/95 6.67% 10.67% 14.50% 16.48%
</TABLE>
(1) On May 2, 1994, the maximum front-end sales charge was reduced from 8.50% to
5.75%. Effective November 29, 1995, the maximum front-end sales charge was
again reduced to 4.75%. The above performance figures are calculated using
4.75% as the applicable sales charge for all periods, and are more favorable
than they would have been had they been calculated using the former sales
charges. Also, performance figures for periods after May 1, 1994 reflect
applicable Rule 12b-1 distribution expenses. Future performance will be
affected by such expenses.
(2) Date of initial public offering was January 13, 1994.
(3) Source: Interactive Data Corp.
(4) Date of initial public offering of Class A Shares.
(5) Date of initial public offering of Class B Shares; total return for this
short of a time period may not be representative of longer-term results.
See Appendix B for additional performance information.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's overriding investment
philosophy and how that philosophy impacts the Series', and other Delaware Group
funds', investment disciplines employed in seeking their objectives. The
Distributor may also from time to time cite general or specific information
about the institutional clients of the Manager, including the number of such
clients serviced by the Manager.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Series shares,
your investment is given yet another opportunity to grow. It's called the Power
of Compounding and the following chart illustrates just how powerful it can be.
-15-
<PAGE>
COMPOUNDED RETURNS
Results at various assumed fixed rates of return on a $10,000 investment
compounded monthly for 10 years:
<TABLE>
<CAPTION>
9% Rate 11% Rate 13% Rate
of Return of Return of Return
<S> <C> <C> <C>
12-'85 $10,938 $11,157 $11,380
12-'86 $11,964 $12,448 $12,951
12-'87 $13,086 $13,889 $14,739
12-'88 $14,314 $15,496 $16,773
12-'89 $15,657 $17,289 $19,089
12-'90 $17,126 $19,290 $21,723
12-'91 $18,732 $21,522 $24,722
12-'92 $20,489 $24,013 $28,134
12-'93 $22,411 $26,791 $32,018
12-'94 $24,514 $29,892 $36,437
</TABLE>
These figures are calculated assuming a fixed constant investment return
and assume no fluctuation in the value of principal. These figures, which do not
reflect payment of applicable taxes, are not intended to be a projection of
investment results and do not reflect the actual performance results of any of
the Classes.
TRADING PRACTICES AND BROKERAGE
The Fund selects brokers or dealers to execute transactions on behalf of
the Series for the purchase or sale of portfolio securities on the basis of its
judgment of their professional capability to provide the service. The primary
consideration is to have brokers or dealers execute transactions at best price
and execution. Best price and execution refers to many factors, including the
price paid or received for a security, the commission charged, the promptness
and reliability of execution, the confidentiality and placement accorded the
order and other factors affecting the overall benefit obtained by the account on
the transaction. Some trades are made on a net basis where the Fund either buys
securities directly from the dealer or sells them to the dealer. In these
instances, there is no direct commission charged but there is a spread (the
difference between the buy and sell price) which is the equivalent of a
commission. When a commission is paid, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty.
During the fiscal years ended November 30, 1992, 1993 and 1994, the
aggregate dollar amounts of brokerage commissions paid by the Series were
$2,553,674, $3,497,612 and $3,843,614, respectively.
The Manager may allocate out of all commission business generated by all of
the funds and accounts under its management, brokerage business to brokers or
dealers who provide brokerage and research services. These services include
advice, either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities,
furnishing of analyses and reports concerning issuers, securities or industries;
providing
-16-
<PAGE>
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software and hardware used in security analyses;
and providing portfolio performance evaluation and technical market analyses.
Such services are used by the Manager in connection with its investment
decision-making process with respect to one or more funds and accounts managed
by it, and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
During the fiscal year ended November 30, 1994, portfolio transactions of
the Series in the amount of $1,163,364,208, resulting in brokerage commissions
of $1,945,804, were directed to brokers for brokerage and research services
provided.
As provided in the Securities Exchange Act of 1934 and the Series'
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to the Fund and to other funds in the Delaware
Group. Subject to best price and execution, commissions allocated to brokers
providing such pricing services may or may not be generated by the funds
receiving the pricing service.
The Manager may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and the Fund's
Board of Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Fund may place orders with broker/dealers that have agreed to
defray certain Series expenses such as custodian fees, and may, at the request
of the Distributor, give consideration to sales of shares of the Series as a
factor in the selection of brokers and dealers to execute Series portfolio
transactions.
PORTFOLIO TURNOVER
Portfolio trading will be undertaken principally to accomplish the Series'
objective in relation to anticipated movements in the general level of interest
rates. The Series is free to dispose of portfolio securities at any time,
subject to complying with the Code and the Investment Company Act of 1940, when
changes in circumstances or conditions make such a move desirable in light of
the investment objective. The Fund will not attempt to achieve or be limited to
a predetermined rate of portfolio turnover for the Series, such a turnover
always being incidental to transactions undertaken with a view to achieving the
Series' investment objective.
-17-
<PAGE>
The degree of portfolio activity may affect brokerage costs of the Series
and taxes payable by the Series' shareholders to the extent of any net realized
capital gains. The Series' portfolio turnover rate is not expected to exceed
100%; however, under certain market conditions, the Series may experience a high
rate of portfolio turnover which could exceed 100%. The Series' portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of
portfolio securities for the particular fiscal year by the monthly average of
the value of the portfolio securities owned by the Series during the particular
fiscal year, exclusive of securities whose maturities at the time of acquisition
are one year or less. A turnover rate of 100% would occur, for example, if all
the investments in the Series' portfolio at the beginning of the year were
replaced by the end of the year.
During the past two fiscal years, the Series' portfolio turnover rates were
80% for 1993 and 92% for 1994.
PURCHASING SHARES
The Distributor serves as the national distributor for the Series' four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
the Fund. See the Prospectuses for additional information on how to invest.
Shares of the Series are offered on a continuous basis, and may be purchased
through authorized investment dealers or directly by contacting the Fund or its
agent.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares, and Class C Shares. Subsequent purchases generally must be at
least $100 for Class A Shares, Class B Shares and Class C Shares. The minimum
initial and subsequent investment for Class A Shares will be waived for
purchases by officers, directors and employees of any Delaware Group fund, the
Manager or any of the Manager's affiliates if the purchases are made pursuant to
a payroll deduction program. Class A shares purchased pursuant to the Uniform
Gifts to Minors Act or the Uniform Transfers to Minors Act and Class A Shares
purchased in connection with an Automatic Investing Plan are subject to a
minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Delaware Group Asset Planner service are subject to a
minimum initial investment of $2,000 per Asset Planner strategy selected. There
are no minimum purchase requirements for the Institutional Class, but certain
eligibility requirements must be satisfied.
There is a maximum purchase limitation of $250,000 with respect to each
purchase of Class B Shares; for Class C Shares, each purchase must be in an
amount that is less than $1,000,000. (See Investment Plans for purchase
limitations applicable to each of the Fund's master retirement plans.) The Fund
will reject any order for purchase of more than $250,000 of Class B Shares and
$1,000,000 or more for Class C Shares. An investor may exceed these limitations
by making cumulative purchases over a period of time. An investor should keep in
mind, however, that reduced front-end sales charges apply to
-18-
<PAGE>
investments of $100,000 or more in Class A Shares, which are subject to a lower
annual 12b-1 Plan expense charge than Class B Shares and Class C Shares and
generally are not subject to a CDSC.
Selling dealers have the responsibility of transmitting orders promptly.
The Fund reserves the right to reject any order for the purchase of its shares
if in the opinion of management such rejection is in the Series' best interest.
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.
Class A Shares are purchased at the offering price which reflects a maximum
front-end sales charge of 4.75%; however, lower front-end sales charges apply
for larger purchases. See the table below. Class A Shares are also subject to
annual 12b-1 Plan expenses.
Class B Shares are purchased at net asset value and are subject to a CDSC
of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares
are also subject to annual 12b-1 Plan expenses which are higher than those to
which Class A Shares are subject and are assessed against Class B Shares for
approximately eight years after purchase. See Automatic Conversion of Class B
Shares in the Fund Classes' Prospectus.
Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within twelve months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
Institutional Class shares are purchased at the net asset value per share
without the imposition of a front-end or contingent deferred sales charge or
12b-1 Plan expenses. See Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.
Institutional Class shares, Class A Shares, Class B Shares and Class C
Shares represent a proportionate interest in the Series' assets and will receive
a proportionate interest in the Series' income, before application, as to the
Class A, Class B and Class C Shares, of any expenses under the Series' 12b-1
Plans.
** 1 Certificates representing shares purchased are not ordinarily issued
unless a shareholder submits a specific request. Certificates are not issued in
the case of Class B Shares. However, purchases not involving the issuance of
certificates are confirmed to the investor and credited to the shareholder's
account on the books maintained by Delaware Service Company, Inc. (the "Transfer
Agent"). The investor will have the same rights of ownership with respect to
such shares as if certificates had been issued. An investor that is permitted to
obtain a certificate may receive a certificate representing shares purchased by
sending a letter to the Transfer Agent requesting the certificate. No charge is
made for any certificate issued. Investors who hold certificates representing
any of their shares may only redeem those shares by written request. The
investor's certificate(s) must accompany such request.
ALTERNATIVE PURCHASE ARRANGEMENTS
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for his or her needs 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 purchase Class A Shares and incur a front-end sales charge
and annual 12b-1 Plan expenses of up to a maximum of .30% of the average daily
net assets of the Class A Shares or to purchase either Class B or Class C Shares
and have the entire initial purchase amount invested in the Series with the
investment thereafter subject to a CDSC and annual 12b-1 Plan expenses. Class B
Shares are subject to a CDSC if the Shares are redeemed within six years of
purchase, and Class C Shares are subject to a CDSC if the shares are redeemed
within twelve months of purchase. Class B and Class C Shares are each 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 Fund to the Distributor, dealers or others for providing
personal service and/or maintaining shareholder
-19-
<PAGE>
accounts) of average daily net assets of the respective Class. Class B Shares
will automatically convert to Class A Shares at the end of approximately eight
years after purchase, and thereafter, be subject to annual 12b-1 Plan expenses
of up to a maximum of .30% of average daily net assets of such shares. Unlike
Class B Shares, Class C Shares do not convert to another class.
CLASS A SHARES
Purchases of $100,000 or more of Class A Shares at the offering price carry
reduced front-end sales charges as shown in the accompanying table, and may
include a series of purchases over a 13-month period under a Letter of Intention
signed by the purchaser. See Special Purchase Features - Class A Shares, below
for more information on ways in which investors can avail themselves of reduced
front-end sales charges and other purchase features.
<TABLE>
<CAPTION>
Class A Shares
- --------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Concession**
Amount of Purchase Offering Amount as % of
Price Invested Offering Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 5.01% 4.00%
$100,000 but under $250,000 3.75 3.92 3.00
$250,000 but under $500,000 2.50 2.57 2.00
$500,000 but under $1,000,000* 2.00 2.06 1.60
- --------------------------------------------------------------------------------
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more of Class
A Shares but, under certain limited circumstances, a 1% contingent deferred
sales charge may apply upon redemption of such shares. The contingent deferred
sales charge ("Limited CDSC") that may be applicable arises only in the case
of certain net asset value purchases which have triggered the payment of a
dealer's commission.
**Based upon the net asset value per share of Class A Shares as of the end of
the Fund's most recent fiscal year.
***Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
-20-
<PAGE>
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 or 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 to dealers up to the full amount of the front-end sales charge
shown above. Dealers who receive 90% or more of the sales charge may be deemed
to be underwriters under the Securities Act of 1933.
-21-
<PAGE>
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 in connection with sales of Class A Shares. Such dealers must
meet certain requirements in terms of organization and distribution capabilities
and their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and circumstances
upon which the additional concession will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.
DEALER'S COMMISSION
For initial purchases of Class A Shares of $1,000,000 or more, 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
----------
(as a percent-
age of amount
AMOUNT OF PURCHASE 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 (see Redemption and Repurchase) may be aggregated
with those of Class A Shares of the Series. 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.
Financial advisers should contact the Distributor concerning the applicability
and calculation of the dealer's commission in the case of combined purchases.
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.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B and Class C Shares are purchased without the imposition of a front-
end sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth below, and Class C Shares redeemed
within twelve months of purchase may be subject to a CDSC of 1%. CDSC fees are
charged as a percentage of the dollar amount subject to the CDSC. The charge
will be assessed on an amount equal to the lesser of the net asset value at the
time of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no CDSC will be
assessed on redemption of shares received through the reinvestment of dividends
or capital gains distributions. See the Prospectus for the Fund Classes under
Redemption and Exchange - Waiver of CDSC - Class B and Class C Shares for a list
of the instances in which the CDSC is waived.
The following table sets forth the rates of the CDSC for Class B Shares of
the Series:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE (AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR AFTER PURCHASE MADE SUBJECT TO CHARGE)
- ------------------------ ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
-22-
<PAGE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Series, Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of those shares. At the end of approximately eight years after purchase,
the investor's Class B Shares will be automatically converted into Class A
Shares of the Series. See Automatic Conversion of Class B Shares under Buying
Shares in the Fund Classes' Prospectus. Such conversion will constitute a tax-
free exchange for federal income tax purposes. See Taxes in the Prospectus for
the Fund Classes.
PLANS UNDER RULE 12B-1 FOR THE FUND CLASSES
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
has adopted a separate plan for each of the Class A Shares, the Class B Shares
and the Class C Shares of the Series (the "Plans"). Each Plan permits the Series
to pay for certain distribution, promotional and related expenses involved in
the marketing of only the Class to which the Plan applies. The Plans do not
apply to the Institutional Class of shares. Such shares are not included in
calculating the Plans' fees, and the Plans are not used to assist in the
distribution and marketing of the Institutional Class shares. Shareholders of
the Institutional Class may not vote on matters affecting the Plans.
The Plans permit the Series, pursuant to the Distribution Agreement, to pay
out of the assets of the Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to the Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.
In addition, the Series may make payments out of the assets of the Class A
Shares, Class B Shares and Class C Shares directly to other unaffiliated
parties, such as banks, who either aid in the distribution of shares of, or
provide services to, such classes.
The maximum aggregate fee payable by the Series under the Plans, and the
Series' Distribution Agreement, is on an annual basis, .30% of the Class A
Shares' average daily net assets for the year, and 1% (.25% of which are service
fees to be paid to the Distributor, dealers and others for providing personal
service and/or maintaining shareholder accounts) of each of the Class B Shares'
and the Class C Shares' average daily net assets for the year. The Fund's Board
of Directors may reduce these amounts at any time.
The Board of Directors has determined that the annual fee, payable on a
monthly basis, under the Plan for the Class A Shares, will be equal to the sum
of: (i) the amount obtained by multiplying .30% by the average daily net assets
represented by the Class A Shares that were acquired by shareholders on or after
May 2, 1994, and (ii) the amount obtained by multiplying .10% by the average
daily net assets represented by the Class A Shares that were acquired before May
2, 1994. While this is the method for calculating the 12b-1 fees to be paid by
the Class A Shares, the fee is a Class expense so that all shareholders,
regardless of when they purchased their shares will bear 12b-1 expenses at the
same per share rate. As Class A Shares are sold on or after May 2, 1994, the
initial rate of at least .10% will increase over time. Thus, as the proportion
of Class A Shares purchased on or after May 2, 1994 to outstanding Class A
Shares increases, the expenses attributable to payments under the Plan will also
increase (but will not exceed .30% of average daily net assets). While this
describes the current formula for calculating the fees which will be payable
under the Plan, the Plan permits the Series to pay a full .30% on all Class A
Shares assets at any time.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid on behalf of Class A, Class
B and Class C Shares would be borne by such persons without any reimbursement
from such classes. Subject to seeking best price and execution, the Series may,
from time to time, buy or sell
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portfolio securities from or to firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have all been
approved by the Board of Directors of the Fund, including a majority of the
directors who are not "interested persons" (as defined in the Investment Company
Act of 1940) of the Fund and who have no direct or indirect financial interest
in the Plans, by vote cast in person at a meeting duly called for the purpose of
voting on the Plans and such Agreement. Continuation of the Plans and the
Distribution Agreement, as amended, must be approved annually by the Board of
Directors in the same manner as specified above.
Each year, the directors must determine whether continuation of the Plans
is in the best interest of shareholders of, respectively, Class A Shares, Class
B Shares and Class C Shares and that there is a reasonable likelihood of the
Plan relating to a Fund Class providing a benefit to that Class. The Plans and
the Distribution Agreement, as amended, may be terminated with respect to a
Class at any time without penalty by a majority of those directors who are not
"interested persons" or by a majority vote of the outstanding voting securities
of the relevant Fund Class. Any amendment materially increasing the percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Fund Class, as well as by a
majority vote of those directors who are not "interested persons." With respect
to the Class A Shares' Plan, any material increase in the maximum percentage
payable thereunder must also be approved by a majority of the outstanding Class
B Shares. Also, any other material amendment to the Plans must be approved by a
majority vote of the directors including a majority of the noninterested
directors of the Fund having no interest in the Plans. In addition, in order for
the Plans to remain effective, the selection and nomination of directors who are
not "interested persons" of the Fund must be effected by the directors who
themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plans. Persons authorized to make payments under the
Plans must provide written reports at least quarterly to the Board of Directors
for their review.
For the period May 2, 1994 to November 30, 1994, payments from the Class A
Shares pursuant to its Plan amount to $769,060 and such amount was used for the
following purposes: $4,043 -Advertising; $1,801 - Annual/Semi-Annual Reports;
$669,105 - Broker Trails; $60,989 - Commissions to Wholesalers; $23,526 -
Promotional-Other; and $9,596 - Promotional-Broker Meetings.
For the period September 6, 1994 (date of initial public offering) through
November 30, 1994, payments from the Class B Shares pursuant to its Plan
amounted to $2,282 and such amount was used for the following purposes: $760 -
Broker Sales Charges; $557 - Broker Trails; $128 - Commission to Wholesalers;
and $837 - Interest on Broker Sales Charges.
The staff of the SEC has proposed amendments to Rule 12b-1 and other
related regulations that could impact Rule 12b-1 Distribution Plans. The Fund
intends to amend the Plans, if necessary, to comply with any new rules or
regulations the SEC may adopt with respect to Rule 12b-1.
OTHER PAYMENTS TO DEALERS - CLASS A, CLASS B AND CLASS C SHARES
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund 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.
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Payments to dealers made in connection with seminars, conferences or
contests relating to the promotion of fund shares may be in an amount up to 100%
of the expenses incurred or awards made. The Distributor may also pay a portion
of the expense of preapproved dealer advertisements promoting the sale of
Delaware Group fund shares.
SPECIAL PURCHASE FEATURES - CLASS A SHARES
BUYING AT NET ASSET VALUE
Class A Shares may be reinvested without a front-end sales charge under the
Dividend Reinvestment Plan and, under certain circumstances, the 12-Month
Reinvestment Privilege and the Exchange Privilege.
Current and former officers, directors and employees of the Fund, any other
fund in the Delaware Group, the Manager or any of the Manager's current
affiliates and those that may in the future be created, legal counsel to the
funds, and registered representatives and employees of broker/dealers who have
entered into Dealer's Agreements with the Distributor may purchase Class A
Shares and any such class of shares of any of the funds in the Delaware Group,
including any fund that may be created, at the net asset value per share.
Spouses, parents, brothers, sisters and children (regardless of age) of such
persons at their direction, and any employee benefit plan established by any of
the foregoing funds, corporations, counsel or broker/dealers may also purchase
shares at net asset value. Purchases of Class A Shares may also 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 charges. Purchase of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. 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. Such purchasers are required to
sign a letter stating that the purchase is for investment only and that the
securities may not be resold except to the issuer. Such purchasers may also be
required to sign or deliver such other documents as the Fund may reasonably
require to establish eligibility for purchase at net asset value. The Fund must
be notified in advance that the trade qualifies for purchase at net asset
value.
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.
LETTER OF INTENTION
The reduced front-end sales charges described above with respect to Class A
Shares are also applicable to the aggregate amount of purchases made by any such
purchaser previously enumerated within a 13-month period pursuant to a written
Letter of Intention provided by the Distributor and signed by the purchaser, and
not legally binding on the signer or the Fund, which provides for the holding in
escrow by the Transfer Agent, of 5% of the total amount of Class A Shares
intended to be purchased until such purchase is completed within the 13-month
period. A Letter of
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Intention may be dated to include shares purchased up to ninety days prior to
the date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as noted
below, the purchaser will be asked to pay an amount equal to the difference
between the front-end sales charge on the Class A Shares purchased at the
reduced rate and the front-end sales charge otherwise applicable to the total
shares purchased. If such payment is not made within twenty days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to realize the
difference. Such purchasers may include the value (at offering price at the
level designated in their Letter of Intention) of all their shares of the Fund
and of any class of any of the other mutual funds in the Delaware Group (except
shares of any Delaware Group fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention toward the
completion of such Letter. For purposes of satisfying an investor's obligation
under a Letter of Intention, Class B and Class C Shares of the Series and the
corresponding classes of shares of other Delaware Group funds which offer such
shares may be aggregated with Class A Shares of the Series and the corresponding
class of shares of the other Delaware Group funds.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments in
Class A Shares made by the plan. The aggregate investment level of the Letter of
Intention will be determined and accepted by the Transfer Agent at the point of
plan establishment. The level and any reduction in front-end sales charge will
be based on actual plan participation and the projected investments in Delaware
Group funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust the
signed Letter of Intention based on this acceptance criteria. The 13-month
period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and equal an
amount that would qualify the plan for further discounts, any front-end sales
charges will be automatically adjusted. In the event this Letter of Intention is
not fulfilled within the 13-month period, the plan level will be adjusted
(without completing another Letter of Intention) and the employer will be billed
for the difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at offering
price at the level designated in their Letter of Intention) of all their shares
intended for purchase that are offered with a front-end sales charge, CDSC or
Limited CDSC of any class. Class B Shares and Class C Shares of the Series and
other Delaware Group funds which offer corresponding classes of shares may also
be aggregated for this purpose.
COMBINED PURCHASES PRIVILEGE
In determining the availability of the reduced front-end sales charge
previously set forth with respect to the Class A Shares, purchasers may combine
the total amount of any combination of the Class B Shares and/or Class C Shares
of the Series, as well as shares of any other class of any of the other Delaware
Group funds (except shares of any Delaware Group fund which do not carry a
front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC).
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
twenty-one years of age; or a trustee or other fiduciary of trust estates or
fiduciary accounts for the benefit of such family members (including certain
employee benefit programs).
RIGHT OF ACCUMULATION
In determining the availability of the reduced front-end sales charge with
respect to Class A
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Shares, purchasers may also combine any subsequent purchases of Class A Shares,
Class B Shares and Class C Shares of the Series, as well as shares of any other
class of any of the other Delaware Group funds which offer such classes (except
shares of any Delaware Group fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from shares from a
Delaware Group Fund which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and still
holds Class A Shares and/or shares of any other of the classes described in the
previous sentence with a value of $40,000 and subsequently purchases $60,000 at
offering price of additional shares of Class A Shares, the charge applicable to
the $60,000 purchase would currently be 3.75%. For the purpose of this
calculation, the shares presently held shall be valued at the public offering
price that would have been in effect were the shares purchased simultaneously
with the current purchase. Investors should refer to the table of sales charges
for Class A Shares to determine the applicability of the Right of Accumulation
to their particular circumstances.
12-MONTH REINVESTMENT PRIVILEGE
Holders of the Class A Shares (and of the Institutional Class holding
shares which were acquired through an exchange of one of the other mutual funds
in the Delaware Group offered with a front-end sales charge) who redeem such
shares of the Series have one year from the date of redemption to reinvest all
or part of their redemption proceeds in Class A Shares of the Series or in Class
A Shares of any of the other funds in the Delaware Group, subject to applicable
eligibility and minimum purchase requirements, in states where shares of such
other funds may be sold, at net asset value without the payment of a front-end
sales charge. This privilege does not extend to Class A Shares where the
redemption of the shares triggered the payment of a Limited CDSC. Persons
investing redemption proceeds from direct investments in mutual funds in the
Delaware Group offered without a front-end sales charge will be required to pay
the applicable sales charge when purchasing Class A Shares. The reinvestment
privilege does not extend to a redemption of either Class B or Class C
Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is proposed to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.
Investors should consult their financial advisers or the Transfer Agent,
which also serves as the Fund's shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and
Exchange in the Fund Classes' Prospectus) in connection with the features
described above.
GROUP INVESTMENT PLANS
Group Investment Plans that are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 5, based
on total plan assets. 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 front-end sales charge reduction upon each
purchase, both initial and subsequent, upon notification to the Fund at the time
of each such purchase. Employees participating in such Group Investment Plans
may also combine the investments made in their plan account when determining the
applicable front-end sales charge on purchases to non-retirement Delaware Group
investment accounts if they so notify the Fund in connection with each purchase.
For other Retirement Plans and special services, see Retirement Plans for the
Fund Classes under Investment Plans.
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DECATUR INCOME FUND INSTITUTIONAL CLASS
The Institutional Class is 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 well as subsidiaries and related employee benefit plans
and rollover individual retirement account 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.
Shares of the Institutional Class are available for purchase at net asset
value, without the imposition of a front-end or contingent deferred sales charge
and are not subject to Rule 12b-1 expenses.
INVESTMENT PLANS
REINVESTMENT PLAN/OPEN ACCOUNT
Unless otherwise designated by shareholders in writing, dividends from net
investment income and distributions from realized securities profits, if any,
will be automatically reinvested in additional shares of the respective Fund
Class in which an investor has an account (based on the net asset value in
effect on the reinvestment date) and will be credited to the shareholder's
account on that date. All dividends and distributions of the Institutional Class
are reinvested in the account of the holders of such shares (based on the net
asset value of the Fund in effect on the reinvestment date). A confirmation of
each dividend payment from net investment income and of any distributions from
realized securities profits will be mailed to shareholders in the first quarter
of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and add
full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the Fund. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectus and this Part B, are made for Class A Shares at the
public offering price and, for Class B Shares, Class C Shares and the
Institutional Class at the net asset value, at the end of the day of receipt. A
reinvestment plan may be terminated at any time. This plan does not assure a
profit nor protect against depreciation in a declining market.
REINVESTMENT OF DIVIDENDS IN OTHER DELAWARE GROUP FUNDS
Subject to applicable eligibility and minimum initial purchase
requirements, and the limitations set forth below, holders of Class A Shares,
Class B, and Class C Shares may automatically reinvest dividends and/or
distributions from the Series in any of the other mutual funds in the Delaware
Group, including the Series, in states where their shares may be sold. Such
investments will be at net asset value at the close of business on the
reinvestment date without any front-end sales charge or service fee. Nor will
such investments be subject to a CDSC or Limited CDSC. The shareholder must
notify the Transfer Agent in writing and must have established an account in the
fund into which the dividends and/or distributions are to be invested. Any
reinvestment directed to a fund in which the investor does not then have an
account will be treated like all other initial purchases of a fund's shares.
Consequently, an investor should obtain and read carefully the prospectus for
the fund in which the investment is proposed to be made before investing or
sending money. The prospectus contains more complete information about the fund,
including charges and expenses. See also Dividend Reinvestment Plan in the
Prospectus for the Fund Classes.
Subject to the following limitations, dividends and/or distributions from
other funds in the Delaware Group may be invested in shares of the Fund,
provided an account has been established.
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Dividends from Class A Shares may not be directed to Class B or Class C Shares
of another fund in the Delaware Group. Dividends from Class B Shares may only be
directed to Class B Shares of another fund in the Delaware Group that offers
such class of shares. Dividends from Class C Shares may only be directed to
Class C Shares of another fund in the Delaware Group that offers such class of
shares. See Class B Funds and Class C Funds under Buying Shares in the Fund
Classes' Prospectus for the funds in the Delaware Group that are eligible for
investment by holders of Series shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
INVESTING BY ELECTRONIC FUND TRANSFER
Direct Deposit Purchase Plan--Investors may arrange for the Series to
accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
Automatic Investing Plan--Shareholders of the Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Series
account. This type of investment will be handled in either of the two ways noted
below. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
Investments under the Direct Deposit Purchase Plan and the Automatic
Investing Plan must be for $25 or more for Class A Shares and $100 or more for
Class B or Class C Shares. An investor wishing to take advantage of either
service must complete an authorization form. Either service can be discontinued
by the shareholder at any time without penalty by giving written notice.
Payments to the Series from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the Series may liquidate sufficient shares from a shareholder's account to
reimburse the government or the private source. In the event there are
insufficient shares in the shareholder's account, the shareholder is expected to
reimburse the Series.
DIRECT DEPOSIT PURCHASES BY MAIL
Shareholders may authorize a third party, such as a bank or employer, to
make investments directly to their Series accounts. The Series will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers or
financial institutions who in turn should contact the Fund for proper
instructions.
RETIREMENT PLANS FOR THE FUND CLASSES
An investment in the Series may be suitable for tax-deferred retirement
plans. Among the retirement
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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. The CDSC may be
waived on certain redemptions of Class B and Class C Shares. See the Prospectus
for the Fund Classes under Redemption and Exchange - Waiver of CDSC - Class B
and Class C Shares for a list of the instances in which the CDSC is waived.
Each purchase of Class B Shares is subject to a maximum purchase limitation
of $250,000 for retirement plans. Each purchase of Class C Shares must be in an
amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement
plan.
Minimum investment limitations generally applicable to other investors do
not apply to retirement plans, other than Individual Retirement Accounts
("IRAs") for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which Class is selected. Retirement
plans may be subject to plan establishment fees, annual maintenance fees and/or
other administrative or trustee fees. Fees are based upon the number of
participants in the plan as well as the services selected. Additional
information about fees is included in retirement plan materials. Fees are quoted
upon request. Annual maintenance fees may be shared by Delaware Management Trust
Company, the Transfer Agent, other affiliates of the Manager and others that
provide services to such plans.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class. See
Decatur Income Fund Institutional Class above. For additional information on any
of the plans and Delaware's retirement services, call the Shareholder Service
Center telephone number.
IT IS ADVISABLE FOR AN INVESTOR CONSIDERING ANY ONE OF THE RETIREMENT PLANS
DESCRIBED BELOW TO CONSULT WITH AN ATTORNEY, ACCOUNTANT OR A QUALIFIED
RETIREMENT PLAN CONSULTANT. FOR FURTHER DETAILS, INCLUDING APPLICATIONS FOR ANY
OF THESE PLANS, CONTACT YOUR INVESTMENT DEALER OR THE DISTRIBUTOR.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the special
application forms required for the plans described below.
PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLANS
Prototype plans are available for self-employed individuals, partnerships
and corporations which replace the former Keogh and corporate retirement plans.
These plans contain profit sharing or money purchase pension plan provisions.
Contributions for plans of this type may be invested only in Class A and Class C
Shares.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A document is available for an individual who wants to establish an IRA by
making contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored
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retirement plan. Even if contributions are not deductible for tax purposes, as
indicated below, earnings will be tax-deferred. In addition, an individual may
make contributions on behalf of a spouse who has no compensation for the year or
elects to be treated as having no compensation for the year. Investments in each
of the Fund Classes are permissible.
The Tax Reform Act of 1986 (the "Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the full
deduction for IRAs ($2,000 for each working spouse and $2,250 for one-income
couples) was retained for all taxpayers who are not covered by an employer-
sponsored retirement plan. Even if a taxpayer (or his or her spouse) is covered
by an employer-sponsored retirement plan, the full deduction is still available
if the taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers
filing joint returns). A partial deduction is allowed for married couples with
incomes between $40,000 and $50,000, and for single individuals with incomes
between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active participants
in an employer-sponsored retirement plan. Taxpayers who are not allowed
deductions on IRA contributions still can make nondeductible IRA contributions
of as much as $2,000 for each working spouse ($2,250 for one-income couples),
and defer taxes on interest or other earnings from the IRAs. Special rules apply
for determining the deductibility of contributions made by married individuals
filing separate returns.
A company or association may establish a Group IRA for employees or members
who want to purchase shares of the Series. Purchases of $1 million or more of
the Class A Shares qualify for purchase at net asset value but may, under
certain circumstances, be subject to a Limited CDSC. See Purchasing Shares
concerning reduced front-end sales charges applicable to Class A Shares.
Investments generally must be held in the IRA until age 59 1/2 in order to
avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Class B Shares and Class C Shares under Alternative Purchase
Arrangements, Contingent Deferred Sales Charge - Class B Shares and Class C
Shares, and Waiver of CDSC - Class B and Class C Shares in the Fund Classes'
Prospectus concerning the applicability of a CDSC upon redemption.
See Appendix A for additional IRA information.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a tax-
sheltered retirement program by making contributions on behalf of all eligible
employees. Each of the Fund Classes is available for investment by a
SEP/IRA.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan which
permits employer contributions and salary deferral contributions in Class A
Shares and Class C Shares only.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Section 401(k) of the Code permits employers to establish qualified plans
based on salary deferral contributions. Plan documents are available to enable
employers to establish a plan. An employer may also elect to make profit sharing
contributions and/or matching contributions with investments in
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only Class A Shares and Class C Shares or certain other funds in the Delaware
Group. Purchases under the plan may be combined for purposes of computing the
reduced front-end sales charge applicable to Class A Shares as set forth in the
table on page 6.
DEFERRED COMPENSATION PLAN FOR PUBLIC SCHOOLS AND NON-PROFIT ORGANIZATIONS
("403(B)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page 6.
DEFERRED COMPENSATION PLAN FOR STATE AND LOCAL GOVERNMENT EMPLOYEES ("457")
Section 457 of the Code permits state and local governments, their agencies
and certain other entities to establish a deferred compensation plan for their
employees who wish to participate. This enables employees to defer a portion of
their salaries and any federal (and possibly state) taxes thereon. Such plans
may invest in shares of any of the Fund Classes. Although investors may use
their own plan, there is available a Delaware Group 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Applicable front-end sales charges for
such purchases of Class A Shares are set forth in the table on page 6.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated by the Fund after receipt of the order by the Fund or its agent.
Orders for purchases of Class B Shares, Class C Shares and the Institutional
Class are effected at the net asset value per share next calculated after
receipt of the order by the Fund or its agent. Selling dealers have the
responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value per
share plus any applicable front-end sales charges. Offering price and net asset
value are computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except for New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the
New York Stock Exchange is closed, the Fund will generally be closed, pricing
calculations will not be made and purchase and redemption orders will not be
processed.
An example showing how to calculate the net asset value per share and, in
the case of Class A Shares, the offering price per share, is included in the
Series' financial statements which are incorporated by reference into this Part
B.
The Series' net asset value per share is computed by adding the value of
all the Series' securities and other assets, deducting any liabilities of the
Series, and dividing by the number of Series shares outstanding. Expenses and
fees are accrued daily. Portfolio securities, except for bonds, which are
primarily traded on a national or foreign securities exchange are valued at the
last sale price on that exchange. Options are valued at the last reported sales
price or, if no sales are reported, at the mean between bid and asked prices.
Securities not traded on a particular day, over-the-counter securities and
government and agency securities are valued at the mean value between bid and
asked prices. Money market instruments having a maturity of less than sixty days
are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities. Use
of a pricing service has been approved by the Board of Directors. Subject to the
foregoing, securities for which market quotations are not readily available and
other assets are valued at fair value as determined in good faith and in a
method approved by the Board of Directors.
Each Class of the Series 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
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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 Institutional Class will not incur any of the expenses
under the Series' 12b-1 Plans and Class A, Class B and Class C Shares alone will
bear the 12b-1 Plan expenses payable under their respective Plans. Due to the
specific distribution expenses and other costs that will be allocable to each
Class, the net asset value of each Class of the Series will vary.
REDEMPTION AND REPURCHASE
Any shareholder may require the Fund to redeem Series shares by sending a
WRITTEN REQUEST, signed by the record owner or owners exactly as the shares are
registered, to the Fund, 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. The Fund does not issue
certificates for Class A Shares, Class C Shares or Institutional Class shares,
unless a shareholder specifically requests them. The Fund does not issue
certificates for Class B Shares or Class C Shares. If stock certificates have
been issued for shares being redeemed, they must accompany the written request.
For redemptions of $50,000 or less paid to the shareholder at the address of
record, the Fund requires a request signed by all owners of the shares or the
investment dealer of record, but does not require signature guarantees. When the
redemption is for more than $50,000, or if payment is made to someone else or to
another address, signatures of all record owners are required and a signature
guarantee may be required. Each signature guarantee must be supplied by an
eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may request further documentation from corporations,
retirement plans, executors, administrators, trustees or guardians.
In addition to redemption of Series shares by the Fund, the Distributor,
acting as agent of the Fund, offers to repurchase Series shares from
broker/dealers acting on behalf of shareholders. The redemption or repurchase
price, which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order by
the Fund or its agent, subject to any applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset value are
determined. See Determining Offering Price and Net Asset Value. The Fund and the
Distributor end their business day at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Series shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption
and Exchange in the Series' Prospectus for the Fund Classes. Class B Shares are
subject to a CDSC of: (i) 4% if shares are redeemed within two years of
purchase; (ii) 3% if shares are redeemed during the third or fourth year
following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within twelve months following purchase. See Contingent Deferred Sales
Charge under Buying Shares in the Series' Prospectus for the Fund Classes.
Except for the applicable CDSC or Limited CDSC and, with respect to the
expedited payment by wire described below, for which there is currently a $7.50
bank wiring cost, neither the Fund nor the Distributor charges a fee for
redemptions or repurchases, but such fees could be charged at any time in the
future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later
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than seven days, after receipt of a redemption request in good order.
If a shareholder who recently purchased shares by check seeks to redeem all
or a portion of those shares in a written request, the Fund will honor the
redemption request but will not mail the proceeds until it is reasonably
satisfied of the collection of the investment check. This potential delay can be
avoided by making investments by wiring Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund will automatically redeem from the shareholder's account the Series shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Series or to the Distributor.
In case of a suspension of the determination of the net asset value because
the New York Stock Exchange is closed for other than weekends or holidays, or
trading thereon is restricted or an emergency exists as a result of which
disposal by the Series of securities owned by it is not reasonably practical, or
it is not reasonably practical for the Series fairly to value its assets, or in
the event that the SEC has provided for such suspension for the protection of
shareholders, the Series may postpone payment or suspend the right of redemption
or repurchase. In such case, the shareholder may withdraw the request for
redemption or leave it standing as a request for redemption at the net asset
value next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash or
kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, the Fund has
elected to be governed by Rule 18f-1 under the Investment Company Act of 1940
pursuant to which the Fund is obligated to redeem Series shares solely in cash
up to the lesser of $250,000 or 1% of the net asset value of the Series during
any 90-day period for any one shareholder.
The value of the Series' investments is subject to changing market prices.
Thus, a shareholder reselling shares to the Series may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
SMALL ACCOUNTS
Before the Fund involuntarily redeems shares from an account that, under
the circumstances listed in the relevant Prospectus, has remained below the
minimum amounts required by the Series' Prospectuses and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than the minimum required and will be allowed
sixty days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under Buying Shares in the
Series' Prospectuses. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption. No CDSC or Limited CDSC
will apply to the redemptions described in this paragraph.
Effective November 29, 1995, the minimum initial investment in Class A
Shares was increased from $250 to $1,000. Class A accounts that were established
before November 29, 1995 and maintain a balance in excess of $250 will not
presently be subject to the $9 quarterly service fee that may be assessed on
accounts with balances below the stated minimum, nor subject to involuntary
redemption.
* * *
The Fund has available certain redemption privileges, as described below.
The Fund reserves the right to suspend or terminate these expedited payment
procedures upon sixty days' written notice to shareholders.
EXPEDITED TELEPHONE REDEMPTIONS
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Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of shares of $50,000 or less for which certificates
have not been issued may call the Fund at 800-523-1918 (in Philadelphia,
215-988-1241) or, in the case of shareholders of the Institutional Class, their
Client Services Representative at 800-828-5052 prior to the time the offering
price and net asset value are determined, as noted above, and have the proceeds
mailed to them at the record address. Checks payable to the shareholder(s) of
record will normally be mailed the next business day, but no later than seven
days, after the receipt of the redemption request. This option is only available
to individual, joint and individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred to
your predesignated bank account by wire or by check by calling the Fund, as
described above. An authorization form must have been completed by the
shareholder and filed with the Fund before the request is received. Payment will
be made by wire or check to the bank account designated on the authorization
form as follows:
1. PAYMENT BY WIRE: Request that Federal Funds be wired to the bank account
designated on the authorization form. Redemption proceeds will normally be wired
on the next business day following receipt of the redemption request. There is a
$7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A. which will
be deducted from the withdrawal proceeds each time the shareholder requests a
redemption. If the proceeds are wired to the shareholder's account at a bank
which is not a member of the Federal Reserve System, there could be a delay in
the crediting of the funds to the shareholder's bank account.
2. PAYMENT BY CHECK: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
REDEMPTION REQUIREMENTS: In order to change the name of the bank and the
account number it will be necessary to send a written request to the Fund and a
signature guarantee may be required. Each signature guarantee must be supplied
by an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
The Fund will not honor telephone redemptions for Series shares recently
purchased by check unless it is reasonably satisfied that the purchase check has
cleared.
If expedited payment under these procedures could adversely affect the
Series, the Fund may take up to seven days to pay the shareholder.
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. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders of the Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Series does not recommend any
specific amount of withdrawal. This $5,000 minimum does not apply for the
Series' prototype retirement plans. Shares purchased with the initial investment
and through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.
Checks are dated either the 1st or 15th of the month, as selected by the
shareholder,
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(unless such date falls on a holiday or a weekend) and are normally
mailed within two business days. Both ordinary income dividends and realized
securities profits distributions will be automatically reinvested in additional
shares of the Class at net asset value. This plan is not recommended for all
investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event and
a shareholder may incur a capital gain or loss for federal income tax purposes.
This gain or loss may be long-term or short-term depending on the holding period
for the specific shares liquidated. Premature withdrawals from retirement plans
may have adverse tax consequences.
Withdrawals under this plan by the holders of Class A Shares or any similar
plan of any other investment company charging a front-end sales charge made
concurrently with the purchases of the Class A Shares of this or the shares of
any other investment company will ordinarily be disadvantageous to the
shareholder because of the payment of duplicative sales charges. Shareholders
should not purchase Class A Shares while participating in a Systematic
Withdrawal Plan and a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan can take effect,
except if the shareholder is a participant in one of our retirement plans or is
investing in Delaware Group funds which do not carry a sales charge. Also,
redemptions of Class A Shares pursuant to a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the purchase was made at net asset value and a
dealer's commission has been paid on that purchase. Redemptions of Class B
Shares or Class C Shares pursuant to a Systematic Withdrawal Plan may be subject
to a CDSC unless the annual amount selected to be withdrawn is less than 12% of
the account balance on the date that the Systematic Withdrawal Plan was
established. See Waiver of CDSC - Class B and Class C Shares and Waiver of
Limited CDSC Class A Shares under Redemption and Exchange in the Prospectus for
the Fund Classes.
An investor wishing to start a Systematic Withdrawal Plan must complete an
authorization form. If the recipient of Systematic Withdrawal Plan payments is
other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice. The Systematic Withdrawal Plan is
not available with respect to the Institutional Class.
WEALTH BUILDER OPTION
Shareholders of the Fund Classes may elect to invest in one or more of the
other mutual funds in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from their
account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectus. See Wealth Builder Option and Redemption and Exchange in the
Prospectus for the Fund Classes.
The investment will be made on the 20th day of each month (or, if the fund
selected is not open that day, the next business day) at the public offering
price or net asset value, as applicable, of the fund selected on the date of
investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the
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program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges.
Shareholders can also use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Group, subject to the conditions and limitations described
in the Fund Classes' Prospectus. Shareholders can terminate their participation
at any time by written notice to the Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans. This option also is not available to shareholders
of the Institutional Class.
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DISTRIBUTIONS AND TAXES
The Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, the Fund
will not be subject to federal income tax on net investment income and net
realized capital gains which are distributed to shareholders.
Each Class of shares of the Series will share proportionately in the
investment income and expenses of the Series, except that the Class A Shares,
Class B Shares and Class C Shares alone will incur distribution fees under their
respective 12b-1 Plans.
The Series intends to pay dividends from net investment income on a monthly
basis. Distributions of net capital gains, if any, realized on sales of
investments will be distributed annually during the quarter following the close
of the fiscal year. All dividends and any capital gains distributions will be
automatically credited to the shareholder's account in additional Series shares
of the same Class of the Series unless, in the case of shareholders in the Fund
Classes, the shareholder requests in writing that such dividends and/or
distributions be paid in cash. Dividend payments of $1.00 or less will be
automatically reinvested, notwithstanding a shareholder's election to receive
dividends in cash. If such a shareholder's dividends increase to greater than
$1.00, the shareholder would have to file a new election in order to begin
receiving dividends in cash again.
Any check in payment of dividends or other distributions which cannot be
delivered by the U.S. Post Office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's account at the then-
current net asset value and the dividend option may be changed from cash to
reinvest. The Series may deduct from a shareholder's account the costs of the
Series' effort to locate a shareholder if a shareholder's mail is returned by
the U.S. Post Office or the Series is otherwise unable to locate the shareholder
or verify the shareholder's mailing address. These costs may include a
percentage of the account when a search company charges a percentage fee in
exchange for their location services. During the fiscal year ended November 30,
1994, dividends totaling $0.86, $0.17 and $0.62 per share of the Class A Shares,
the Class B Shares and the Institutional Class, respectively, were paid from net
investment income and a long-term capital gain of $0.952 and short-term capital
gain of $0.798 per share of the Class A Shares was paid from realized securities
profits. In addition to dividend payments from net investment income, a capital
gain of $0.42 per share of each Class was paid from realized securities profits
on January 5, 1995 to shareholders of record December 27, 1994. Class B Shares
were first offered to the public on September 6, 1994 and the Institutional
Class was first offered to the public on January 13, 1994.
Persons not subject to tax will not be required to pay taxes on
distributions.
Dividends from investment income and short-term capital gains distributions
are treated by shareholders as ordinary income for federal income tax purposes,
whether received in cash or in additional shares. Distributions of long-term
capital gains, if any, are taxable to shareholders as long-term capital gains,
regardless of the length of time an investor has held such shares, and these
gains are currently taxed at long-term capital gain rates.
Under the Tax Reform Act of 1986, each Series of the Fund is treated as a
single tax entity and capital gains and losses for each Series are calculated
separately.
A portion of the Series' dividends may qualify for the dividends-received
deduction for corporations provided in the federal income tax law. The portion
of dividends paid by the Series that so qualifies will be designated each year
in a notice mailed to the Series' shareholders, and cannot exceed the gross
amount of dividends received by the Series from domestic (U.S.) corporations
that would have qualified for the dividends-received deduction in the hands of
the Series if the Series was a regular corporation. The availability of the
dividends-received deduction is subject to certain holding period and debt
financing restrictions imposed under the Code on the corporation claiming the
deduction. For the fiscal year ended November 30, 1994, 100% of the Series'
dividends from net investment income was eligible for this deduction.
Shareholders will be notified annually by the Fund as to the federal income
tax status of dividends and distributions paid by the Series.
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INVESTMENT MANAGEMENT AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to tthe series to the supervision and
direction of the Fund's Board of Directors.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on November 30,
1994 were approximately $9,237,192,000. Investment advisory services are also
provided to institutional accounts with assets on November 30, 1994 of
approximately $15,544,258,000.
The Investment Management Agreement for the Series is dated April 3, 1995
and was approved by shareholders on March 29, 1995.
The Agreement has an initial term of two years and may be renewed each
year only so long as such renewal and continuance are specifically approved at
least annually by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Series, and only if the terms and the
renewal thereof have been approved by the vote of a majority of the directors of
the Fund who are not parties thereto or interested persons of any such party,
cast in person at a voting on such approval. The Agreement is terminable without
penalty on sixty days' notice by the directors of the Fund or by the Manager.
The Agreement will terminate automatically in the event of its assignment.
The Investment Management Agreement provides that the Series shall pay the
Manager a management fee payable monthly and computed on the net asset value of
the Series as of each day at the annual rate of .6% on the first $100 million of
average daily net assets of the Series, .525% on the next $150 million, .5% on
the next $250 million and .475% on the average daily net assets in excess of
$500 million, less all directors' fees paid to the unaffiliated directors by the
Series.
On November 30, 1994, the total net assets of the Series were
$1,338,753,689. Investment management fees paid by the Series during the past
three fiscal years were $7,657,581 for 1992, $7,496,533 for 1993 and $7,128,034
for 1994.
Under the general supervision of the Board of Directors, the Manager makes
all investment decisions which are implemented by the Fund. The Manager pays the
salaries of all directors, officers and employees of the Fund who are affiliated
with the Manager. The Series pays all of its other expenses, including its
proportionate share of rent and certain other administrative expenses.
The ratio of expenses to average daily net assets for the Decatur Income
Fund A Class for the fiscal year ended November 30, 1994 was 0.81%. The ratio of
expenses to average daily net assets for the Decatur Income Fund Institutional
Class for the period January 13, 1994 (date of initial public offering) to
November 30, 1994 was 0.70%, annualized. 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 1.70% for the fiscal year ending November 30,
1995. The ratios for the Class A Shares and the Class B Shares reflect the
impact of their respective 12b-1 Plan. The Series anticipates that the ratio of
expenses to average daily net assets of Class C Shares will be identical to that
of the Class B Shares.
By California regulation, the Manager is required to waive certain fees and
reimburse the Series for certain expenses to the extent that the Series' annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed 2 1/2% of the first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2% of
any additional average daily net assets. For the fiscal year ended November 30,
1994, no such reimbursement was necessary or paid.
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<PAGE>
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of Series shares
under a Distribution Agreement dated April 3, 1995, as amended on November 29,
1995. The Distributor is an affiliate of the Manager and bears all of the costs
of promotion and distribution, except for payments by the Series on behalf of
Class A Shares, Class B Shares and Class C Shares under their respective 12b-1
Plans. Prior to January 3, 1995, Delaware Distributors, Inc. ("DDI") served as
the national distributor of the Series' shares. On that date Delaware
Distributors, L.P., a newly formed limited partnership, succeeded to the
business of DDI. All officers and employees of DDI became officers and employees
of Delaware Distributors, L.P. DDI is the corporate general partner of Delaware
Distributors, L.P. and both DDI and Delaware Distributors, L.P. are indirect,
wholly-owned subsidiaries of Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate of
the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as the
Series' shareholder servicing, dividend disbursing and transfer agent pursuant
to a Shareholders Services Agreement dated June 29, 1988. The Transfer Agent is
also an indirect, wholly-owned subsidiary of Delaware Management Holdings, Inc.
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<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction of its
Board of Directors.
Certain officers and directors of the Fund hold identical positions in each
of the other funds in the Delaware Group. On September 15, 1995, the Fund's
officers and directors owned less than 1% of the outstanding shares of,
respectively, the Class A Shares, the Class B Shares and the Institutional
Class.
As of October 31, 1995, the Fund believes the following shareholders held
5% or more of the outstanding shares of, respectively, the Institutional Class
and Class B Shares:
The Northern Trust Company, Cust. J. Paul Getty Trust, 26-00813/2-255243,
P.O. Box 92956, Chicago, IL 60690 held 1,973,880 shares (19.06%); Price
Waterhouse, LLP, 401(k) Savings Plan, National Administrative Center, P.O. Box
30004, Tampa, FL 33630 held 1,859,887 shares (17.96%); Patterson & Co., PNB
Personal Trust Accounting, P.O. Box 7829, Philadelphia, PA 19101 held 1,039,076
shares (10.03%); Brigham Young University, R L Ball & Associates, C-242 ASB,
Provo, UT 84602 held 971,663 shares (9.38%); and Grace S & W Linton Nelson
Foundation Incorporated 7/5/89, c/o Fred C. Aldridge, Jr., 940 West Valley Road,
Suite 1601, Wayne, PA 19087 held 746,759 shares (7.21%) of the outstanding
shares of the Institutional Class. Merrill, Lynch, Pierce, Fenner & Smith Inc.,
Mutual Fund Operations, Attention Book Entry, 4800 Deer Lake Drive East 3rd Fl.,
Jacksonville, FL 32246 held of record for the benefit of others 77,760 (8.45%)
of the outstanding shares of the Class B Shares.
DMH Corp., Delaware Management Company, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware International Holdings Ltd., Founders Holdings, Inc.,
Delaware International Advisers Ltd. and Delaware Investment Counselors, Inc.
are direct or indirect, wholly-owned subsidiaries of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. In connection with the merger, a new Investment Management Agreement
between the Fund, on behalf of the Series, and the Manager was executed
following shareholder approval. DMH and the Manager are now wholly-owned
subsidiaries, and subject to the ultimate control, of Lincoln National. Lincoln
National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management.
Directors and principal officers of the Fund are noted below along with
their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.
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<PAGE>
*WAYNE A. STORK (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
the Fund, 15 other funds in the Delaware Group (which excludes Delaware Pooled
Trust, Inc.), and Delaware Management Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc. and Delaware
Investment Counselors, Inc.
Chairman, Chief Executive Officer, Chief Investment Officer and Director of
Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of DMH Corp.,
Delaware International Advisers Ltd., Delaware International Holdings Ltd.
and Founders Holdings, Inc.
Director of Delaware Distributors, Inc. and Delaware Service Company,
Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
WINTHROP S. JESSUP (50)
Executive Vice President of the Fund, 15 other funds in the Delaware Group
(which excludes Delaware Pooled Trust, Inc.) and Delaware Management Holdings,
Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Investment Counselors, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc. Delaware International Holdings Ltd. and Founders Holdings,
Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P..
Director of Delaware Management Trust Company, Delaware Service Company,
Inc. and Delaware International Advisers Ltd. During the past five years, Mr.
Jessup has served in various executive capacities at different times within the
Delaware organization.
-42-
<PAGE>
RICHARD G. UNRUH, JR. (56)
Executive Vice President of the Fund and each of the other 16 funds in
the Delaware Group.
Executive Vice President and Director of Delaware Management
Company,Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
WALTER P. BABICH (68)
Director and/or Trustee of the Fund and each of the other 16 funds in
the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.
________________________
*Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the Investment Company Act of 1940.
-43-
<PAGE>
ANTHONY D. KNERR (56)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group. 500 Fifth Avenue, New York, NY 10110.
-44-
<PAGE>
Consultant, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia **8 University, New York. From 1987 to 1989, he
was also a lecturer in English at the University. In addition, Mr.
Knerr was Chairman of The Publishing Group, Inc., New York, from 1988
to 1990. Mr. Knerr founded The Publishing Group, Inc. in 1988.
ANN R. LEVEN (55)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group. 785 Park Avenue, New York, NY 10021. Treasurer, National
Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian **10 Institution, Washington, D C, and from 1975
to 1994, she was Adjunct Professor of Columbia Business School.
W. THACHER LONGSTRETH (75)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
1617 John F. Kennedy Boulevard, Philadelphia, PA 19103.
Vice Chairman, Packquisition Corp., a financial printing, commercial
printing and information
processing firm.
Philadalphia City Councilman.
President, MLW, Associates.
Director, Tasty Baking Company.
Director, Healthcare Services Group.
CHARLES E. PECK (69)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
-45-
<PAGE>
P.O. Box 1102, Columbia, MD 21044.
Secretary, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of The
Ryland Group,
Inc., Columbia, MD.
DAVID K. DOWNES (55)
Senior Vice President/Chief Administrative Officer/Chief Financial Officer
of the Fund, each of the other 16 funds in the Delaware Group and
Delaware Management Company, Inc. Chairman and Director of Delaware
Management Trust Company.
Senior Vice President/Chief Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director of DMH
Corp.
Senior Vice President/Chief Administrative Officer/Chief Financial Officer
and Director of Delaware Service Company, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, Inc .
Chief Financial Officer and Director of Delaware International Holdings
Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Investment Counselors, Inc.
Senior Vice President and Director of Founders Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer of
Equitable Capital Management Corporation, New York, from December 1985
through August 1992, Executive Vice President from December 1985 through
March 1992, and Vice Chairman from March 1992 through August 1992.
-46-
<PAGE>
GEORGE M. CHAMBERLAIN, JR. (48)
Senior Vice President and Secretary of the Fund, each of the other 16 funds
in the Delaware Group, Delaware Management Holdings, Inc., Delaware
Distributors, L.P. and Delaware Investment Counselors, Inc.
Executive Vice President and Secretary of Delaware Management Trust
Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc. and Delaware
Service Company, Inc.
Corporate Vice President, Secretary and Director of Founders Holdings,
Inc.Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in
various capacities at different times within the Delaware
organization.
JOHN B. FIELDS (50)
Vice President/Senior Portfolio Manager of the Fund, of seven other equity
funds in the Delaware Group and of Delaware Management Company, Inc.
Before joining the Delaware Group in 1992, Mr. Fields served as a
director of domestic equity risk management for DuPont, Wilmington, DE.
JOSEPH H. HASTINGS (45)
Vice President/Corporate Controller of the Fund, each of the other 16 funds
in the Delaware Group, Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Investment
Counselors, Inc. and Founders Holdings, Inc.
Executive Vice President/Treasurer/Chief Financial Officer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief Financial
Officer for Prudential Residential Services, L.P., New York, NY from
1989 to 1992. Prior to that, Mr. Hastings served as Controller and
Treasurer for Fine Homes International, L.P., Stamford, CT from 1987 to
1989.
MICHAEL P. BISHOF (33)
Vice President/Treasurer of the Fund, each of the other 16 funds in the
Delaware Group, Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc. and Founders CBO Corporation.
Prior to joining the Delaware Group in 1995, Mr. Bishof was a vice president
for Bankers Trust, New York, NY from 1994 to 1995, a vice president for
CS First Boston Investment Management, New York, NY from 1993 to 1994
and an assistant vice president for Equitable Capital Management
Corporation, New York, NY from 1987 to 1993.
-47-
<PAGE>
The following is a compensation table listing for each director entitled to
receive compensation, the aggregate compensation received from the Fund and the
total compensation received from all Delaware Group funds for the fiscal year
ended November 30, 1994 and an estimate of annual benefits to be received upon
retirement under the Delaware Group Retirement Plan for Directors/Trustees as of
November 30, 1994.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
AGGREGATE ACCRUED BENEFITS FROM ALL 17
COMPENSATION AS PART OF UPON DELAWARE
NAME FROM FUND FUND EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>
W. Thacher Longstreth $5,401.00 None $18,100 $39,619.35
Ann R. Leven $6,253.86 None $18,100 $44,590.02
Walter P. Babich $6,083.32 None $18,100 $43,595.90
John J. Connolly, Ed.D. $5,401.00 None $18,100 $39,619.35
Anthony D. Knerr $6,166.48 None $18,100 $43,962.29
Charles E. Peck $5,058.00 None $18,100 $36,483.40
John H. Durham $4,715.00 None $18,100 $33,813.40
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for Directors/Trustees,
each disinterested director who, at the time of his or her retirement from
the Board, has attained the age of 70 and served on the Board for at least
five continuous years, is entitled to receive payments from each fund in the
Delaware Group for a period equal to the lesser of the number of years that
such person served as a director or the remainder of such person's life. The
amount of such payments will be equal, on an annual basis, to the amount of
the annual retainer that is paid to directors of each fund at the time of
such person's retirement. If an eligible director retired as of November 30,
1994, he or she would be entitled to annual payments totaling $18,100, in the
aggregate, from all of the funds in the Delaware Group, based on the number
of funds in the Delaware Group as of that date.
-48-
<PAGE>
EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes and for
shareholders of classes of other funds in the Delaware Group are set forth in
the relevant prospectuses for such classes. The following supplements that
information. The Fund may modify, terminate or suspend the exchange privilege
upon sixty days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current
prospectus and an authorization form for any of the other mutual funds in the
Delaware Group. Exchange instructions must be signed by the record owner(s)
exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or series
and the purchase of another. The sale may involve either a capital gain or loss
to the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Group on behalf of their clients by telephone or other
expedited means. This service may be discontinued or revised at any time by the
Transfer Agent. Such exchange requests may be rejected if it is determined that
a particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.
TELEPHONE EXCHANGE PRIVILEGE
Shareholders owning shares for which certificates have not been issued or
their investment dealers of record may exchange shares by telephone for shares
in other mutual funds in the Delaware Group. This service is automatically
provided unless the Fund receives written notice from the shareholder to the
contrary.
Shareholders or their investment dealers of record may contact the Transfer
Agent at 800-523-1918 (in Philadelphia, 215-988-1241) or, in the case of
shareholders of the Institutional Class, their Client Services Representative at
800-828-5052, to effect an exchange. The shareholder's current Series account
number must be identified, as well as the registration of the account, the share
or dollar amount to be exchanged and the fund into which the exchange is to be
made. Requests received on any day after the time the offering price and net
asset value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for retirement plans.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Group. Telephone exchanges may be subject to limitations
as to amounts or frequency. The Transfer Agent and the Fund reserve the right to
record exchange instructions received by telephone and to reject exchange
requests at any time in the future.
As described in the Fund's Prospectuses, 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.
RIGHT TO REFUSE TIMING ACCOUNTS
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Series reserves the right to refuse
any new Timing Arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Group funds from Timing Firms. The Fund reserves the
right to temporarily or permanently terminate the exchange privilege or reject
any specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of the Fund within two
weeks or an earlier exchange request out of the Fund, or (ii) makes more than
two exchanges out of
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<PAGE>
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1/4 of 1% of the Fund's net assets. Accounts
under common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market indicators,
will be aggregated for purposes of the exchange limits.
RESTRICTIONS ON TIMED EXCHANGES
Timing Accounts operating under existing Timing Agreements may only execute
exchanges between the following eight Delaware Group funds: (1) Decatur Income
Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund, and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds will be available for Timed Exchanges. Assets redeemed or exchanged out
of Timing Accounts in Delaware Group funds not listed above may not be
reinvested back into that Timing Account. The Fund reserves the right to apply
these same restrictions to the account(s) of any person whose transactions seem
to follow a timing pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an exchange
request by any Timing Account, person, or group if, in the Manager's judgment,
the Fund would be unable to invest effectively in accordance with its investment
objectives and policies, or would otherwise potentially be adversely affected.
A shareholder's purchase exchanges may be restricted or refused if the Fund
receives or anticipates simultaneous orders affecting significant portions of
the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the Fund and therefore may be
refused.
The Series will terminate, except as noted above, all exchange privileges,
including telephone and written redemption privileges, previously made available
to Timing Firms. At such time, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
Following is a summary of the investment objectives of the other Delaware
Group funds:
DELAWARE FUND seeks long-term growth by a balance of capital appreciation,
income and preservation of capital. It uses a dividend-oriented valuation
strategy to select securities issued by established companies that are believed
to demonstrate potential for income and capital growth. DEVON FUND seeks current
income and capital appreciation by investing primarily in income-producing
common stocks, with a focus on common stocks the Manager believes have the
potential for above average dividend increases over time.
TREND FUND seeks long-term growth by investing in common stock issued by
emerging growth companies exhibiting strong capital appreciation potential.
VALUE FUND seeks capital appreciation by investing primarily in common
stocks whose market values appear low relative to their underlying value or
future potential.
DELCAP FUND seeks long-term capital growth by investing in common stocks
and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
DECATUR TOTAL RETURN FUND seeks long-term growth by investing primarily in
securities that provide the potential for income and capital appreciation
without undue risk to principal.
DELCHESTER FUND seeks as high a current income as possible by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper.
U.S. GOVERNMENT FUND seeks high current income by investing primarily in
long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
LIMITED-TERM GOVERNMENT FUND seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
instruments secured by such securities. U.S. GOVERNMENT MONEY FUND seeks maximum
current income with preservation of principal and maintenance of liquidity by
investing only in short-term securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or
-50-
<PAGE>
instrumentalities and repurchase agreements collateralized by such securities,
while maintaining a stable net asset value.
DELAWARE CASH RESERVE seeks the highest level of income consistent with the
preservation of capital and liquidity through investments in short-term money
market instruments, while maintaining a stable net asset value.
TAX-FREE USA FUND seeks high current income exempt from federal income tax
by investing in municipal bonds of geographically-diverse issuers. TAX-FREE
INSURED FUND invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. TAX-FREE USA INTERMEDIATE FUND seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.
TAX-FREE MONEY FUND seeks high current income, exempt from federal income
tax, by investing in short-term municipal obligations, while maintaining a
stable net asset value.
TAX-FREE PENNSYLVANIA FUND seeks a high level of current interest income
exempt from federal and, to the extent possible, certain Pennsylvania state and
local taxes, consistent with the preservation of capital.
INTERNATIONAL EQUITY FUND seeks to achieve long-term growth without undue
risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. GLOBAL BOND FUND
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed income securities that may also provide the
potential for capital appreciation. GLOBAL ASSETS FUND seeks to achieve long-
term total return by investing in global securities which will provide higher
current income than a portfolio comprised exclusively of equity securities,
along with the potential for capital growth.
DELAWARE GROUP PREMIUM FUND offers nine series available exclusively as
funding vehicles for certain insurance company separate accounts. EQUITY/INCOME
SERIES seeks the highest possible total rate of return by selecting issues that
exhibit the potential for capital appreciation while providing higher than
average dividend income. HIGH YIELD SERIES seeks as high a current income as
possible by investing in rated and unrated corporate bonds, U.S. Government
securities and commercial paper. CAPITAL RESERVES SERIES seeks a high stable
level of current income while minimizing fluctuations in principal by investing
in a diversified portfolio of short- and intermediate-term securities. MONEY
MARKET SERIES seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. GROWTH SERIES seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. Multiple Strategy Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. INTERNATIONAL
EQUITY SERIES seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. VALUE SERIES seeks capital
appreciation by investing in small- to mid-cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
EMERGING GROWTH SERIES seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging and
other growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective.
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus from the Distributor. Read it
carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the information
contained in each fund's prospectus(es).
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<PAGE>
GENERAL INFORMATION
The Manager is the investment manager of the Series. The Manager or its
affiliate, Delaware International Advisers Ltd., also manages the other funds in
the Delaware Group. The Manager, through a separate division, also manages
private investment accounts. While investment decisions for the Series are made
independently from those of the other funds and accounts, they may make
investment decisions at the same time.
Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in Rule 17j-1 under the Investment Company Act of 1940,
who provide services to the Manager, Delaware International Advisers Ltd. or
their affiliates, are permitted to engage in personal securities transactions
subject to the exceptions set forth in Rule 17j-1 and the following general
restrictions and procedures: (1) certain blackout periods apply to personal
securities transactions of those persons; (2) transactions must receive advance
clearance and must be completed on the same day as the clearance is received;
(3) certain persons are prohibited from investing in initial public offerings of
securities and other restrictions apply to investments in private placements of
securities; (4) opening positions may only be closed-out at a profit after a 60-
day holding period has elapsed; and (5) the Compliance Officer must be informed
periodically of all securities transactions and duplicate copies of brokerage
confirmations and account statements must be supplied to the Compliance
Officer.
The Distributor acts as national distributor for the Fund and for the other
mutual funds in the Delaware Group. As previously described, prior to January
3, 1995, DDI served as the national distributor for the Fund. In its capacity
as such, DDI received net commissions from the Fund on behalf of the Class A
Shares of the Series after reallowances to dealers, as follows:
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT AMOUNTS NET
YEAR OF UNDERWRITING REALLOWED COMMISSION
ENDING COMMISSION TO DEALERS TO DDI
- ---------- --------------- ---------- ----------
<S> <C> <C> <C>
11/30/94 $2,113,539 $1,761,778 $351,761
11/30/93 2,354,791 1,898,608 456,183
11/30/92 3,077,967 2,484,505 593,462
</TABLE>
For the period September 6, 1994 (date of initial public offering) through
November 30, 1994, in its capacity as the Fund's national distributor,
DDI received CDSC payments in the amount of $10 with respect to the Class B
Shares.
Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Group. The Transfer Agent is paid a fee by the
Series for providing these services consisting of an annual per account charge
of $5.50 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the unaffiliated directors.
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of the Fund's advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause the Fund to delete the
words "Delaware Group" from the Fund's name.
Chemical Bank, 450 West 33rd Street, New York, NY 10001, is custodian of
the Series' securities and cash. As custodian for the Series, Chemical Bank
maintains a separate account or accounts for the Series; receives, holds and
releases portfolio securities on account of the Series; receives and disburses
money on behalf of the Series; and collects and receives income and other
payments and distributions on account of the Series' portfolio securities.
The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the Investment Company Act of 1940, has been passed
upon for the Fund by Stradley, Ronon, Stevens & Young, Philadelphia,
Pennsylvania.
CAPITALIZATION
The Fund has a present authorized capitalization of seven hundred fifty
million shares of capital stock with a $1.00 par value per share. Prior to
January 13, 1994, the Series offered only one class of shares, the class
currently designated the Class A Shares. Beginning January 13, 1994, the Series
began offering the Institutional Class, beginning September 6, 1994, the Series
began offering the Class B Shares, and beginning as of
-52-
<PAGE>
the date of this Part B, the Fund began offering the Class C Shares. Each
Class represents a proportionate interest in the assets of the Series, and each
has the same voting and other rights and preferences as the other classes of the
Series, except that shares of the Institutional Class may not vote on any matter
affecting the Fund Classes' Plans under Rule 12b-1. Similarly, as a general
matter, shareholders of the Class A Shares, Class B Shares and Class C Shares
may vote only on matters affecting the 12b-1 Plan that relates to the Class of
Shares that they hold. However, Class B Shares may vote on a proposal to
increase materially the fees to be paid by the Series under the Plan relating to
Class A Shares. General expenses of the Series will be allocated on a pro-rata
basis to the classes according to asset size, except that expenses of the Plans
of the Class A, Class B and Class C Shares will be allocated solely to those
classes. While all shares have equal voting rights on matters affecting the
entire Fund, the Series would vote separately on any matter which affects only
this Series, such as any change in its own investment objective and policies or
action to dissolve the Series and as otherwise prescribed by the Investment
Company Act of 1940. Shares of the Series have a priority in the Series' assets,
and in gains on and income from the portfolio of the Series. The Board of
Directors has allocated three hundred fifty million shares to the Class A
Shares, fifty million shares to the Class B Shares, fifty million shares to the
Class C Shares and fifty million shares to the Institutional Class.
Shares have no preemptive rights, are fully transferable and, when issued,
are fully paid and nonassessable.
Prior to May 2, 1994, the Decatur Income Fund series was named the Decatur
I Series (which was known and does business as Decatur Fund I). From May 2,
1994 to September 5, 1994, the Decatur Income Fund A Class was known as the
Decatur Income Fund class and prior to May 2, 1994, it was known as the Decatur
Fund I class. From May 2, 1994 to September 5, 1994, the Decatur Income Fund
Institutional Class was known as the Decatur Income Fund (Institutional) class
and prior to May 2, 1994, it was known as the Decatur Fund I (Institutional)
class.
NONCUMULATIVE VOTING
THESE SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE HOLDERS
OF MORE THAN 50% OF THE SHARES OF THE FUND VOTING FOR THE ELECTION OF DIRECTORS
CAN ELECT ALL THE DIRECTORS IF THEY CHOOSE TO DO SO, AND, IN SUCH EVENT, THE
HOLDERS OF THE REMAINING SHARES WILL NOT BE ABLE TO ELECT ANY DIRECTORS.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
-53-
<PAGE>
APPENDIX A--IRA INFORMATION
The Tax Reform Act of 1986 restructured, and in some cases eliminated, the tax
deductibility of IRA contributions. Under the Act, the full deduction for IRAs
($2,000 for each working spouse and $2,250 for one-income couples) was retained
for all taxpayers who are not covered by an employer-sponsored retirement plan.
Even if a taxpayer (or his or her spouse) is covered by an employer-sponsored
retirement plan, the full deduction is still available if the taxpayer's
adjusted gross income is below $25,000 ($40,000 for taxpayers filing joint
returns). A partial deduction is allowed for married couples with incomes
between $40,000 and $50,000, and for single individuals with incomes between
$25,000 and $35,000. The Act does not permit deductions for contributions to
IRAs by taxpayers whose adjusted gross income before IRA deductions exceeds
$50,000 ($35,000 for singles) and who are active participants in an employer-
sponsored retirement plan. Taxpayers who were not allowed deductions on IRA
contributions still can make nondeductible IRA contributions of as much as
$2,000 for each working spouse ($2,250 for one-income couples), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for
determining the deductibility of contributions made by married individuals
filing separate returns.
As illustrated in the following tables, maintaining an Individual Retirement
Account remains a valuable opportunity.
For many, an IRA will continue to offer both an up-front tax break with its tax
deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long-term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.
-54-
<PAGE>
Even if your IRA contribution is no longer deductible, the benefits of saving on
a tax-deferred basis can be substantial. The following tables illustrate the
benefits of tax-deferred versus taxable compounding. Each reflects a constant
10% rate of return, compounded annually, with the reinvestment of all proceeds.
The tables do not take into account any sales charges or fees. Of course,
earnings accumulated in your IRA will be subject to tax upon withdrawal. If you
choose a mutual fund with a fluctuating net asset value, like the Series, your
bottom line at retirement could be lower--it could also be much higher.
$2,000 INVESTED ANNUALLY ASSUMING A 10% ANNUALIZED RETURN
<TABLE>
<CAPTION>
<S> <C> <C> <C>
15% Tax Bracket Single - $0-$22,750
- ----------------
Joint - $0-$38,000
HOW MUCH YOU
END OF CUMULATIVE HOW MUCH YOU HAVE WITH FULL
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA IRA DEDUCTION
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]
28% Tax Bracket Single - $22,751-$55,100
- ----------------
Joint - $38,001-$91,850
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 10%]
-55-
<PAGE>
<TABLE>
<CAPTION>
31% Tax Bracket Single - $55,101-$115,000
- -----------------
Joint - $91,851-$140,000
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]
<TABLE>
<CAPTION>
36% Tax Bracket* Single - $115,001-$250,000
- ---------------
Joint - $140,001-$250,000
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 10%]
-56-
<PAGE>
<TABLE>
<CAPTION>
39.6% Tax Bracket* Single - over $250,000
- -----------------
Joint - over $250,000
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 10%]
*For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate. In
addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-57-
<PAGE>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED QUARTERLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,642 $ 3,774 $ 3,964 $ 4,083 $ 4,638 $ 5,370
15 4,915 5,184 5,581 5,833 7,062 8,800
20 6,633 7,121 7,857 8,334 10,755 14,419
30 12,081 13,436 15,572 17,012 24,939 38,716
40 22,001 25,352 30,865 34,728 57,831 103,956
</TABLE>
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED QUARTERLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 28,226 $ 28,833 $ 29,702 $ 30,239 $ 32,699 $ 35,834
15 50,104 51,753 54,152 55,654 62,755 72,298
20 79,629 83,239 88,573 91,966 108,525 132,049
30 173,245 185,894 205,256 217,971 284,358 390,394
40 343,737 379,596 436,523 475,187 692,097 1,084,066
</TABLE>
*For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate. In
addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-58-
<PAGE>
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing $2,000
each January--the earliest opportunity--compared to contributing on April 15th
of the following year--the latest, for each tax year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295
</TABLE>
Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.
And it pays to shop around. If you get just 2% more per year, it can make
a big difference when you retire. A constant 8% versus 10% return, both
compounded quarterly, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
8% RETURN 10% RETURN
10 YEARS $ 31,726 $ 35,834
30 YEARS $256,456 $390,394
The statistical exhibits above are for illustration purposes only and do
not reflect the actual performance for the Series either in the past or in the
future.
-59-
<PAGE>
SAI-DIF-CHT
APPENDIX B
DECATUR INCOME FUND PERFORMANCE OVERVIEW
The following table illustrates the total return on one share invested in
Decatur Income Fund A Class(1) during the 10-year period ended May 31, 1995.
The results reflect the reinvestment of all dividends and realized securities
profits distributions at the net asset value reported at the time of
distribution. No adjustment has been made for any income taxes payable by
shareholders on income dividends or realized securities profits distributions
accepted in shares.
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
----------------------------------------
Cumula-
tive net
asset
Net Asset Value Distributions value at Decatur Income Fund
year-end -----------------------------------
Maximum From with
offering From realized all Maximum offering to
Year price at Begin- invest- securi- distribu- Net Asset Value
Ended beginning ning of End of ment ties tions rein-
May 31 of year/2/ Year Year income profits vested Annual Cumulative/3/
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1986 17.40 16.57 18.14 0.91 1.56 21.07 21.1% 21.1%
1987 19.04 18.14 19.37 0.80 2.00 26.17 18.3% 50.4%
1988 20.34 19.37 15.98 0.73 1.75 25.31 -7.9% 45.5%
1989 16.78 15.98 18.88 0.81 0.26 31.87 19.9% 83.2%
1990 19.82 18.88 17.08 1.05 1.49 33.13 -1.0% 90.4%
1991 17.93 17.08 16.44 0.97 0.00 33.96 -2.4% 95.2%
1992 17.26 16.44 17.02 0.81 0.00 36.93 3.6% 112.3%
1993 17.87 17.02 17.72 0.74 0.85 42.21 8.9% 142.6%
1994 18.60 17.72 16.28 0.75 1.75 44.76 1.0% 157.3%
1995 17.09 16.28 17.40 0.81 0.42 51.65 9.9% 196.9%
------------------------------
Total Distributions 8.38 10.08
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value Net Standard & Poor's Dow Jones Consumer Price
to asset Value 500/5/ Industrial/5/ Index/6/
Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<C> <C> <C> <C> <C> <C> <C> <C>
27.2% 27.2% 35.7% 35.7% 48.9% 48.9% 1.6% 1.6%
24.2% 57.9% 21.2% 64.4% 26.4% 88.1% 3.8% 5.4%
- -3.3% 52.7% -6.5% 53.7% -8.3% 72.5% 3.9% 9.6%
25.9% 92.3% 26.8% 94.8% 27.1% 119.3% 5.4% 15.4%
- -3.9% 99.9% 16.6% 127.1% 20.7% 164.6% 4.4% 20.5%
2.5% 104.9% 11.8% 153.8% 9.2% 188.9% 5.0% 26.4%
8.8% 122.9% 9.8% 178.7% 15.7% 234.1% 3.0% 30.2%
14.3% 154.7% 11.6% 211.0% 7.1% 257.7% 3.2% 34.4%
6.0% 170.1% 4.3% 224.2% 9.5% 291.7% 2.3% 37.5%
15.4% 211.7% 20.2% 289.6% 22.2% 378.5% 3.2% 41.9%
</TABLE>
(1) The Decatur Income Fund A Class began paying 12b-1 payments on May 2, 1994
and performance prior to that date does not reflect such payments.
(2) Reflects a maximum sales charge of 4.75% of total investment. There are
reduced sales charges for investments of $100,000 or more.
(3) Reflects an offering price of $17.40 on May 31, 1985.
(4) Reflects a net asset value of $16.57 on May 31, 1985.
(5) Source: Interactive Data Corp.
(6) Source: John Russell Company.
This period was one of generally rising common stock prices but also covers
several years of declining prices. The results illustrated should not be
considered as representative of dividend income or capital gain or loss which
may be realized from an investment in the Series today.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average
are industry-accepted indices of unmanaged securities used for measuring general
market performance. The performance illustrated for these indices reflects the
reinvestment of all distributions on a quarterly basis and market price
fluctuations. The indices do not take into account any sales charges or other
fees. In seeking a particular investment objective, the Series' portfolio
primarily includes common stocks, which may differ from those in the indices,
and also include investments in preferred and fixed income securities.
-60-
<PAGE>
The Consumer Price Index, as prepared by the U.S. Bureau of Labor Statistics,
is the most commonly used measure of inflation. It indicates the cost
fluctuations of a representative group of consumer goods. It does not represent
a return from an investment.
-61-
<PAGE>
SAI-DIF-CHT
APPENDIX B
DECATUR INCOME FUND PERFORMANCE OVERVIEW
The following table illustrates the total return on one share invested in the
Decatur Income Fund B Class during the period September 6, 1994 (date of intial
public offering) through May 31, 1995. The results reflect the reinvestment of
all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
DECATUR INCOME FUND B CLASS
<TABLE>
<CAPTION>
Cumula- -----------------------------
tive net
asset
Net Asset Value Distributions value at Decatur Income Fund
-----------------------------
year-end
Maximum From with
offering From realized all Returns Including
Year price at Begin- invest- securi- distribu- CDSC/(1)/
ended beginning ning of End of ment ties tions rein-
May 31 of year year year income profits vested Annual Cumulative/(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 16.59 16.59 17.38 0.45 0.42 18.36 N/A 6.7%
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------
Returns Excluding Standard & Poor's Dow Jones Consumer Price
CDSC/(1)/ 500/(3)/ Industrial/(3)/ Index/(4)/
Annual Cumulative/(2)/ Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C>
N/A 10.7% 14.6% 14.6% 16.5% 16.5% 2.2% 2.2%
</TABLE>
(1) Total return provided below is on an aggregate basis. Total return for
this short of a time period may not be representative of longer-term
results.
(2) Reflects a net asset value of $16.59 on September 2, 1994.
(3) Source: Interactive Data Corp.
(4) Source: John Russell Company.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average
are industry-accepted unmanaged indices of generally conservative securities
used for measuring general market performance. The performance illustrated for
these indices reflects the reinvestment of all distributions on a quarterly
basis and market price fluctuations. The indices do not take into account any
sales charges or other fees. In seeking a particular investment objective, the
Fund's portfolio primarily includes common stocks, which may differ from those
in the indices, and may also include investments in fixed income securities.
-62-
<PAGE>
SAI-DIF-CHT
APPENDIX B
DECATUR INCOME FUND PERFORMANCE OVERVIEW
The following table illustrates the total return on one share invested in
Decatur Income Fund Institutional Class(1) during the 10-year period ended May
31, 1995. The results reflect the reinvestment of all dividends and realized
securities profits distributions at the net asset value reported at the time of
distribution. No adjustment has been made for any income taxes payable by
shareholders on income dividends or realized securities profits distributions
accepted in shares.
<TABLE>
<CAPTION>
Cumula- ----------------------------------
tive net
asset
Net Asset Value Distributions value at
year-end
From with Decatur Income Fund
From realized all Net Asset Value Net
Year Beginning invest- securi- distribu- To Asset Value
Ended of End of ment ties tions rein-
May 31 Year Year income profits vested Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C>
1986 16.57 18.14 0.91 1.56 21.07 27.2% 27.2%
1987 18.14 19.37 0.80 2.00 26.17 24.2% 57.9%
1988 19.37 15.98 0.73 1.75 25.31 -3.3% 52.7%
1989 15.98 18.88 0.81 0.26 31.87 25.9% 92.3%
1990 18.88 17.08 1.05 1.49 33.13 3.9% 99.9%
1991 17.08 16.44 0.97 0.00 33.96 2.5% 104.9%
1992 16.44 17.02 0.81 0.00 36.93 8.8% 122.9%
1993 17.02 17.72 0.74 0.85 42.21 14.3% 154.7%
1994 17.72 16.28 0.75 1.75 44.76 6.0% 170.1%
1995 16.28 17.40 0.83 0.42 51.74 15.6% 212.2%
----- -----
Total Distribution 8.40 10.08
<CAPTION>
PERCENTAGE CHANGE DURING YEAR
- -----------------------------------------------------------------------------------------
Standard & Poor's Consumer Price
Year 500 Dow Jones Industrial Index
Ended
May 31 Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C>
1986 35.7% 35.7% 48.9% 48.9% 1.6% 1.6%
1987 21.2% 64.4% 26.4% 88.1% 3.8% 5.4%
1988 -6.5% 53.7% -8.3% 72.5% 3.9% 9.6%
1989 26.8% 94.8% 27.1% 119.3% 5.4% 15.4%
1990 16.6% 127.1% 20.7% 164.6% 4.4% 20.5%
1991 11.8% 153.8% 9.2% 188.9% 5.0% 26.4%
1992 9.8% 178.7% 15.7% 234.1% 3.0% 30.2%
1993 11.6% 211.0% 7.1% 257.7% 3.2% 34.4%
1994 4.3% 224.2% 9.5% 291.7% 2.3% 37.5%
1995 20.2% 289.6% 22.2% 378.5% 3.2% 41.9%
</TABLE>
(1) Performance for Decatur Income Fund Institutional Class for periods prior
to January 13, 1994 (date of initial public offering) is calculated by
taking the performance of the Decatur Income Fund A Class and adjusting it
to reflect the elimination of all sales charges.
(2) Reflects a net asset value of $16.57 on May 31, 1985.
(3) Source: Interactive Data Corp.
(4) Source: John Russell Company.
This period was one of generally rising common stock prices but also covers
several years of declining prices. The results illustrated should not be
considered as representative of dividend income or capital gain or loss which
may be realized from an investment in the Fund today.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average
are industry-accepted unmanaged indices of generally-conservative securities
used for measuring general market performance. The performance illustrated for
these indices reflects the reinvestment of all distributions on a quarterly
basis and market price fluctuations. The indices do not take into account any
sales charges or other fees. In seeking a particular investment objective, the
Series' portfolio primarily includes common stocks, which may differ from those
in the indices, and may also include investments in fixed income securities.
-63-
<PAGE>
The Consumer Price Index, as prepared by the U.S. Bureau of Labor
Statistics, is the most commonly used measure of inflation. It indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return from an investment.
-64-
<PAGE>
APPENDIX C
THE COMPANY LIFE CYCLE
Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.
1. EMERGING GROWTH--a period of experimentation in which the company
builds awareness of a new product or firm.
2. ACCELERATED DEVELOPMENT--a period of rapid growth with potentially
high profitability and acceptance of the product.
3. MATURING PHASE--a period of diminished real growth due to dependence
on replacement or sustained product demand.
4. CYCLICAL STAGE--a period in which a company faces a potential
saturation of demand for its product. At this point, a firm either diversifies
or becomes obsolete.
HYPOTHETICAL CORPORATE LIFE CYCLE
[chart appears here]
Hypothetical Corporate Life Cycle Chart shows in a line illustration, the stages
that a typical company would go through, beginning with the emerging state where
sales growth continues at a steep pace to the mature phase where growth levels
off to the cyclical state where sales show more definitive highs and lows.
The above chart illustrates the path traditionally followed by companies
that successfully survive the growth sequence.
-65-
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for the Fund and, in
its capacity as such, audits the financial statements contained in the Series'
Annual Report. The Delaware Group Decatur Fund, Inc.-Decatur Income Fund's
Statement of Net Assets, Statement of Operations, Statement of Changes in Net
Assets, and Notes to Financial Statements, as well as the report of Ernst &
Young LLP, independent auditors, for the fiscal year ended November 30, 1994,
are included in the Series' Annual Report to shareholders. The Series was
formerly known as Decatur Fund I. The financial statements, the notes relating
thereto and the report of Ernst & Young LLP, listed above are incorporated by
reference from the Annual Report into this Part B. Unaudited financial
statements and the notes relating thereto for the six-month period ended May 31,
1995 also are incorporated by reference from the Series' Semi-Annual Report into
this Part B.
-66-
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, shareholders of the Fund Classes should contact their financial
adviser or call Delaware Group at 800-523-4640, in Philadelphia call 215-988-
1333 and shareholders of the Institutional Class should contact 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
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
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
DECATUR INCOME FUND
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A CLASS
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B CLASS
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C CLASS
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INSTITUTIONAL CLASS
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CLASSES OF DELAWARE GROUP
DECATUR FUND, INC.
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PART B
STATEMENT OF
ADDITIONAL INFORMATION
_______________________________________________________
November 29, 1995
DELAWARE GROUP
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PART B--STATEMENT OF ADDITIONAL INFORMATION
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NOVEMBER 29, 1995
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DELAWARE GROUP DECATUR FUND, INC.
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DECATUR TOTAL RETURN FUND
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1818 MARKET STREET
PHILADELPHIA, PA 19103
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FOR MORE INFORMATION ABOUT THE
DECATUR TOTAL RETURN FUND
INSTITUTIONAL CLASS:
800-828-5052
FOR PROSPECTUS AND PERFORMANCE OF
THE DECATUR TOTAL RETURN FUND A CLASS,
THE DECATUR TOTAL RETURN FUND B CLASS
AND THE DECATUR TOTAL RETURN FUND C CLASS:
NATIONWIDE 800-523-4640
PHILADELPHIA 215-988-1333
INFORMATION ON EXISTING ACCOUNTS OF
THE DECATUR TOTAL RETURN FUND A CLASS,
THE DECATUR TOTAL RETURN FUND B CLASS
AND THE DECATUR TOTAL RETURN FUND C CLASS:
(SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
PHILADELPHIA 215-988-1241
DEALER SERVICES:
(BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
PHILADELPHIA 215-988-1050
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TABLE OF CONTENTS
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COVER PAGE
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INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
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ACCOUNTING AND TAX ISSUES
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PERFORMANCE INFORMATION
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TRADING PRACTICES AND BROKERAGE
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PURCHASING SHARES
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INVESTMENT PLANS
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DETERMINING OFFERING PRICE
AND NET ASSET VALUE
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REDEMPTION AND REPURCHASE
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DISTRIBUTIONS AND TAXES
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INVESTMENT MANAGEMENT AGREEMENT
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OFFICERS AND DIRECTORS
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EXCHANGE PRIVILEGE
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GENERAL INFORMATION
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APPENDIX A -- IRA INFORMATION
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APPENDIX B
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FINANCIAL STATEMENTS
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Delaware Group Decatur Fund, Inc. (the "Fund") is a professionally-managed
mutual fund of the series type. This Statement of Additional Information ("Part
B" of the registration statement) describes the Decatur Total Return Fund series
(the "Series") of the Fund. The Series offers four classes (individually, a
"Class" and collectively, the "Classes") of shares - Decatur Total Return Fund A
Class (the "Class A Shares"), Decatur Total Return Fund B Class (the "Class B
Shares") and Decatur Total Return Fund C Class (the "Class C Shares") together,
the "Fund Classes") and Decatur Total Return Fund Institutional Class (the
"Institutional Class"). Class B Shares, Class C Shares and Institutional Class
shares may be purchased at a price equal to the next determined net asset value
per share. 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. Class A Shares are subject to a maximum front-end sales charge of
4.75% and annual 12b-1 Plan expenses of up to 0.30%. Class B Shares are subject
to a contingent deferred sales charge ("CDSC") which may be imposed on
redemptions made within six years of purchase and annual 12b-1 Plan expenses of
up to 1% which are assessed against Class B Shares for approximately eight years
after purchase. See Automatic Conversion of Class B Shares under Buying Shares
in the Fund Classes' Prospectus. Class C Shares are subject to a CDSC which may
be imposed on redemptions made within twelve months of purchase and annual 12b-1
Plan expenses of up to 1% which are assessed against the Class C Shares for the
life of the investment. All references to "shares" in this Part B refer to all
Classes of shares of the Series, except where noted.
This Part B supplements the information contained in the current Prospectus
for the Fund Classes dated, November 29, 1995 and the current Prospectus for the
Institutional Class dated January 30, 1995 and the supplement thereto dated
November 29, 1995, as they may be amended from time to time. It should be read
in conjunction with the respective Class' Prospectus. Part B is not itself a
prospectus but is, in its entirety, incorporated by reference into each Class'
Prospectus. A Prospectus relating to the Fund Classes and a Prospectus relating
to the Institutional Class may be obtained by writing or calling your investment
dealer or by contacting the Fund's national distributor, Delaware Distributors,
L.P. (the "Distributor"), 1818 Market Street, Philadelphia, PA 19103.
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INVESTMENT POLICIES AND PORTFOLIO
TECHNIQUES
INVESTMENT RESTRICTIONS--The Fund has adopted the following restrictions
for the Series which, along with its investment objective, cannot be changed
without approval by the holders of a "majority" of the Series' outstanding
shares, which is a vote by the holders of the lesser of a) 67% or more of the
voting securities present in person or by proxy at a meeting, if the holders of
more than 50% of the outstanding voting securities are present or represented by
proxy; or b) more than 50% of the outstanding voting securities. The percentage
limitations contained in the restrictions and policies set forth herein apply at
the time of purchase of securities.
The Series shall not:
1. Invest more than 5% of the market or other fair value of its assets
in the securities of any one issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies or instrumentalities).
2. Invest in securities of other investment companies except as part of
a merger, consolidation or other acquisition.
3. Make loans. However, (i) the purchase of a portion of an issue of
publicly distributed bonds, debentures or other securities, or of other
securities authorized to be purchased by the Series' investment policies,
whether or not the purchase was made upon the original issuance of the
securities, and the entry into "repurchase agreements" are not to be considered
the making of a loan by the Series; and (ii) 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.
4. Purchase or sell real estate but this shall not prevent the Series
from investing in companies which own real estate or in securities secured by
real estate or interests therein.
5. Purchase more than 10% of the outstanding voting or nonvoting
securities of any issuer, or invest in companies for the purpose of exercising
control or management.
6. Act as an underwriter of securities of other issuers, except that the
Series may acquire restricted or not readily marketable securities under
circumstances where, if such securities are sold, the Series might be deemed to
be an underwriter for the purposes of the Securities Act of 1933.
7. Make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of issuers
all of which conduct their principal business activities in the same industry.
This restriction does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
8. Deal in commodities, except that the Series may invest in financial
futures, including futures contracts on stocks and stock indices, interest rates
and foreign currencies and other types of financial futures that may be
developed in the future, and may purchase or sell options on such futures, and
enter into closing transactions with respect to those activities.
9. Purchase securities on margin, make short sales of securities or
maintain a net short position.
10. Invest more than 5% of the value of its total assets in securities of
companies less than three years old. Such three-year period shall include the
operation of any predecessor company or companies.
11. Invest in warrants valued at lower of cost or market exceeding 5% of
the Series' net assets. Included in that amount, but not to exceed 2% of the
Series' net assets, may be warrants not listed on the New York Stock Exchange or
American Stock Exchange.
12. Purchase or retain the securities of any issuer which has an officer,
director or security holder who is a director or officer of the Fund or of its
investment manager if or so long as the directors and officers of the Fund and
of its investment
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manager together own beneficially more than 5% of any class of securities of
such issuer.
13. Invest in interests in oil, gas or other mineral exploration or
development programs.
14. Invest more than 10% of the value of the Series' net assets in
repurchase agreements maturing in more than seven days and in other illiquid
assets.
15. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. The Series has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of the Series' net assets, asset coverage of
at least 300% is required. In the event that such asset coverage shall at any
time fall below 300%, the Series shall, within three days thereafter (not
including Sunday or holidays) or such longer period as the Securities and
Exchange Commission (the "SEC") may prescribe by rules and regulations, reduce
the amount of its borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Series will not pledge more than 10% of
its net assets. The Series will not issue senior securities as defined in the
Investment Company Act of 1940, except for notes to banks.
Although not a fundamental investemnt restriction, the Series currently
does not invest its assets in real estate limited partnerships.
The application of the Series' investment policy will be dependent upon the
judgment of Delaware management Company, Inc. (the "Manager"). In accordance
with the judgement of the Manager, the proportions of the Series' assets
invested in particular industries will vary from time to time. The securities in
which the Series invest may or may not be listed on a national stock exchange,
but if they are not so listed will generally have an established over-the-
counter market. While management believes that the investement objective can be
achieved by investing in common stock, the portfolio may be invested in other
securities including, but not limited to, convertible securities, preferred
stocks, bonds, warrants and foreign securities. in periods during which the
Manager feels that market conditions warrant a more defensive portfolio
positioning, the Series may also invest temporarily in various types of fixed
income obligations.
Securities will not normally be purchased while the Series has an
outstanding borrowing.
Although it is not a matter of fundamental policy, the Fund may invest not
more than 5% of its assets in foreign securities (other than securities of
Canadian issuers registered under the Securities Exchange Act of 1934 or
American Depository Receipts,on which there are no such limits). Foreign
marketss may be more votatile than U.S. markets. Such investments involve
sovereign risk the normal risks associated with American securities. These risks
include political risks, foreign taxes and exchange controls and currency
fluctuations. For example, foreign portfolio investemnts would increase with a
fall in the value of the dollar) and control regulations apart from market
fluctuations. The Fund may also experience delays in foreign securities
settlement.
In addition, from time to time, the series may also engage in the following
investemnt techniques:
A. OPTIONS--The Series may write call options and purchase put options on a
covered basis only, and will not engage in option writing strategies for
speculative purposes.
COVERED CALL WRITING
The Series may write covered call options from time to time on such portion
of its portfolio, without limit, as the Manager determines is appropriate in
seeking to obtain the Series' investment objective. A call option gives the
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purchaser of such option the right to buy, and the writer, in this case the
Series, has the obligation to sell the underlying security at the exercise price
during the option period. The advantage to the Series of writing covered calls
is that the Series receives additional income, in the form of a premium, which
may offset any capital loss or decline in market value of the security. However,
if the security rises in value, the Series may not fully participate in the
market appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to both options on actual portfolio securities owned by the
Series and options on stock indices, the Series may enter into closing purchase
transactions. A closing purchase transaction is one in which the Series, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Series to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Series may realize a
net gain or loss from a closing purchase transaction depending upon whether the
net amount of the original premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. Any loss incurred
in a closing purchase transaction may be partially or entirely offset by the
premium received from a sale of a different call option on the same underlying
security. Such a loss may also be wholly or partially offset by unrealized
appreciation in the market value of the underlying security. Conversely, a gain
resulting from a closing purchase transaction could be offset in whole or in
part by a decline in the market value of the underlying security.
If a call option expires unexercised, the Series will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
the Series will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security, and the
proceeds of the sale of the security plus the amount of the premium on the
option, less the commission paid.
The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.
The Series will write call options only on a covered basis, which means
that the Series will own the underlying security subject to a call option at all
times during the option period. Unless a closing purchase transaction is
effected, the Series would be required to continue to hold a security which it
might otherwise wish to sell, or deliver a security it would want to hold.
Options written by the Series will normally have expiration dates between one
and nine months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
PURCHASING PUT OPTIONS
The Series may invest up to 2% of its total assets in the purchase of put
options. The Series
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will, at all times during which it holds a put option, own the security
covered by such option.
The Series intends to purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ("protective puts"). The ability to
purchase put options will allow the Series to protect an unrealized gain in an
appreciated security in its portfolio without actually selling the security. If
the security does not drop in value, the Series will lose the value of the
premium paid. The Series may sell a put option which it has previously purchased
prior to the sale of the securities underlying such option. Such sales will
result in a net gain or loss depending on whether the amount received on the
sale is more or less than the premium and other transaction costs paid on the
put option which is sold.
The Series may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, the Series may enter into closing
sale transactions. A closing sale transaction is one in which the Series, when
it is the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
OPTIONS ON STOCK INDICES
A stock index assigns relative values to the common stocks included in the
index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to the Series on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, the Series may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the stock so
included. Some stock index options are based on a broad market index such as the
Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indices are also based
on an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indices are currently
traded on the following Exchanges among others: The Chicago Board Options
Exchange, New York Stock Exchange and American Stock Exchange.
The effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the Series'
portfolio correlate with price movements of the stock index selected. Because
the value of an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether the Series will realize a
gain or loss from the purchase or writing
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of options on an index depends upon movements in the level of stock prices in
the stock market generally or, in the case of certain indices, in an industry or
market segment, rather than movements in the price of a particular stock. Since
the Series' portfolio will not duplicate the components of an index, the
correlation will not be exact. Consequently, the Series bears the risk that the
prices of the securities being hedged will not move in the same amount as the
hedging instrument. It is also possible that there may be a negative correlation
between the index or other securities underlying the hedging instrument and the
hedged securities which would result in a loss on both such securities and the
hedging instrument. Accordingly, successful use by the Series of options on
stock indices will be subject to the Manager's ability to predict correctly
movements in the direction of the stock market generally or of a particular
industry. This requires different skills and techniques than predicting changes
in the price of individual stocks.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on the Series' ability to effectively
hedge its securities. The Series will enter into an option position only if
there appears to be a liquid secondary market for such options.
The Series will not engage in transactions in options on stock indices for
speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.
B. FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--As noted in the
Prospectus, the Series may enter into futures contracts relating to securities,
securities indices, interest rates or foreign currencies. (Unless otherwise
specified, interest rate futures contracts, securities and securities index
futures contracts and foreign currency futures contracts are collectively
referred to as "futures contracts.") Such investment strategies will be used as
a hedge and not for speculation.
As noted in the Prospectus, the Series may purchase and write options on
the types of futures contracts, as further described in the Prospectus.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities in the Series' portfolio. If
the futures price at expiration of the option is below the exercise price, the
Series will retain the full amount of the option premium, which provides a
partial hedge against any decline that may have occurred in the Series'
portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the securities or other
instruments required to be delivered under the terms of the futures contract. If
the futures price at expiration of the put option is higher than the exercise
price, the Series will retain the full amount of the option premium, which
provides a partial hedge against any increase in the price of securities which
the Series intends to purchase. If a put or call option the Series has written
is exercised, the Series will incur a loss which will be reduced by the amount
of the premium it receives. Depending on the degree of correlation between
changes in the value of its portfolio securities and changes in the value of its
options on futures positions, the Series' losses from exercised options on
futures may to some extent be reduced or increased by changes in the value of
portfolio securities.
The Series may purchase options on futures contracts for hedging purposes
instead of purchasing or selling the underlying futures contracts. For example,
where a decrease in the value of portfolio securities is anticipated as a result
of a projected market-wide decline or changes in interest or exchange rates, the
Series could, in lieu of selling futures contracts, purchase put options
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thereon. In the event that such decrease occurs, it may be offset, in whole or
part, by a profit on the option. If the market decline does not occur, the
Series will suffer a loss equal to the price of the put. Where it is projected
that the value of securities to be acquired by the Series will increase prior to
acquisition, due to a market advance or changes in interest or exchange rates,
the Series could purchase call options on futures contracts, rather than
purchasing the underlying futures contracts. If the market advances, the
increased cost of securities to be purchased may be offset by a profit on the
call. However, if the market declines, the Series will suffer a loss equal to
the price of the call, but the securities which the Series intends to purchase
may be less expensive.
C. REPURCHASE AGREEMENTS--In order to invest its cash reserves or when
in a temporary defensive posture, the Series may enter into repurchase
agreements with banks or broker/dealers deemed to be creditworthy by the
Manager, under guidelines approved by the Board of Directors. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Series)
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, thereby determining the yield during
the purchaser's holding period. Generally, repurchase agreements are of short
duration, often less than one week, but on occasion for longer periods. Not more
than 10% of the Series' assets may be invested in repurchase agreements of over
seven-days' maturity or other illiquid assets. Should an issuer of a repurchase
agreement fail to repurchase the underlying security, the loss to the Series, if
any, would be the difference between the repurchase price and the market value
of the security. The Series will limit its investments in repurchase agreements,
to those which the Manager, under the guidelines of the Board of Directors,
determines to present minimal credit risks and which are of high quality. In
addition, the Series must have collateral of at least 100% of the repurchase
price, including the portion representing the Series' yield under such
agreements, which is monitored on a daily basis. Such collateral is held by the
Custodian in book entry form. Such agreements may be considered loans under the
Investment Company Act of 1940, but the Series considers repurchase agreements
contracts for the purchase and sale of securities, and it seeks to perfect a
security interest in the collateral securities so that it has the right to keep
and dispose of the underlying collateral in the event of default.
The funds in the Delaware Group have obtained exemption from the joint-
transaction prohibitions of Section 17(d) of the Investment Company Act of 1940
to allow the Delaware Group funds jointly to invest cash balances. Each Series
of the Fund may invest cash balances in a joint repurchase agreement in
accordance with the terms of the Order and subject generally to the conditions
described above.
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.
It is the understanding of the Manager that the staff of the SEC permits
portfolio lending by registered investment companies if certain conditions are
met. These conditions are as follows: 1) each transaction must have 100%
collateral in the form of cash, short-term U.S. Government securities, or
irrevocable letters of credit payable by banks acceptable to the Fund from the
borrower; 2) this collateral must be valued daily and should the market value of
the loaned securities increase, the borrower must furnish additional collateral
to the Series; 3) the Fund must be able to terminate the loan after notice, at
any time; 4) the Series must receive reasonable interest on any loan, and any
dividends, interest or other distributions on the lent securities, and any
increase in the market value of such securities; 5) the Series may pay
reasonable
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custodian fees in connection with the loan; and 6) the voting rights on the lent
securities may pass to the borrower; however, if the directors of the Fund know
that a material event will occur affecting an investment loan, they must either
terminate the loan in order to vote the proxy or enter into an alternative
arrangement with the borrower to enable the directors to vote the proxy.
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, under the supervision of
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.
* * *
The Series may invest in restricted securities, including unregistered
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the Securities Act of 1933 ("1933 Act"). Rule 144A
Securities may be freely traded among qualified institutional investors without
registration under the 1933 Act.
Investing in Rule 144A Securities could have the effect of increasing the
level of the Series' illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. After
the purchase of a Rule 144A Security, however, the Board of Directors and the
Manager will continue to monitor the liquidity of that security to ensure that
the Series has no more than 10% of its net assets in illiquid securities.
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ACCOUNTING AND TAX ISSUES
When the Series writes a call option, an amount equal to the premium
received by it is included in the section of the Series' assets and liabilities
as an asset and as an equivalent liability. The amount of the liability is
subsequently "marked to market" to reflect the current market value of the
option written. The current market value of a written option is the last sale
price on the principal Exchange on which such option is traded or, in the
absence of a sale, the mean between the last bid and asked prices. If an option
which the Series has written expires on its stipulated expiration date, the
Series reports a realized gain. If the Series enters into a closing purchase
transaction with respect to an option which the Series has written, the Series
realizes a gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. Any such gain or loss is a short-term capital gain or loss for
federal income tax purposes. If a call option which the Series has written is
exercised, the Series realizes a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received.
OTHER TAX REQUIREMENTS--The Series has qualified, and intends to continue
to qualify, as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Series must meet several
requirements to maintain its status as a regulated investment company. Among
these requirements are that at least 90% of its investment company taxable
income be derived from dividends, interest, payment with respect to securities
loans and gains from the sale or disposition of securities; that at the close of
each quarter of its taxable year at least 50% of the value of its assets consist
of cash and cash items, government securities, securities of other regulated
investment companies and, subject to certain diversification requirements, other
securities; and that less than 30% of its gross income be derived from sales of
securities held for less than three months.
The requirement that not more than 30% of the Fund's gross income be
derived from gains from the sale or other disposition of securities held for
less than three months may restrict the Series in its ability to write covered
call options on securities which it has held less than three months, to write
options which expire in less than three months, to sell securities which have
been held less than three months and to effect closing purchase transactions
with respect to options which have been written less than three months prior to
such transactions. Consequently, in order to avoid realizing a gain within the
three-month period, the Series may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the following year, subject to the same limitation.
-10-
<PAGE>
PERFORMANCE INFORMATION*
From time to time, the Fund may state each Class' total return in
advertisements and other types of literature. Any statements of total return
performance data for a Class will be accompanied by information on the average
annual compounded rate of return for that Class over, as relevant, the most
recent one-, five- and ten-year periods. The Fund may also advertise aggregate
and average total return information of each Class over additional periods of
time. The net asset value of a Class fluctuates so shares, when redeemed, may be
worth more or less than the original investment, and a Class' results should not
be considered as representative of future performance.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order
of $1,000 from which, in the case
only of Class A Shares, the
maximum front-end sales charge,
if any, is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the
hypothetical $1,000 purchase at the
end of the period after
the deduction of the applicable CDSC,
if any, with respect to Class B
Shares and Class C Shares.
* In the case of Class A Shares, the Limited CDSC applicable to only
certain redemptions of those shares will not be deducted from any computation of
total return. See the Prospectus for the Fund Classes for a description of the
Limited CDSC and the limited instances in which it applies. All references to
contingent deferred sales charges or a CDSC in this Performance Information
section will apply to Class B Shares or Class C Shares.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares and that all distributions
are reinvested at net asset value, and, with respect to Class B Shares and Class
C Shares reflects the deduction of the CDSC that would be applicable upon
complete redemption of such shares. 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.
The performance of Class A Shares and the Institutional Class, as shown
below, is the average annual total return quotations for the one-, three- and
five-year periods ended May 31, 1995 and for the life of these Classes, computed
as described above. The average annual total return for Class A Shares at offer
reflects the maximum front-end sales charges paid on the purchase of shares. The
average annual total return for the Class A Shares at net asset value (NAV) does
not reflect the payment of the maximum front-end sales charge of 4.75%. Stock
prices fluctuated during the periods covered and past results should not be
considered as representative of future performance.
Pursuant to applicable regulation, total return shown for the Institutional
Class for the periods prior to the commencement of operations of such Class is
calculated by taking the performance of Class A Shares and adjusting it to
reflect the elimination of all sales charges. However, for those periods, no
adjustment has been made to eliminate the impact of 12b-1 payments, and
performance would have been affected had such an adjustment been made.
In the case of Class A Shares, the Limited CDSC, applicable only to certain
redemptions of those shares, will not be deducted from any computation of total
return. See the Prospectus for the Fund Classes for a description of the Limited
CDSC and the limited instances in which it applies. All references to a CDSC
will apply to Class B Shares or Class C Shares.
-11-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A CLASS A INSTITU-
SHARES SHARES TIONAL
(AT OFFER)(2) (AT NAV) CLASS(3)
<S> <C> <C> <C>
1 year ended
5/31/95 10.71% 16.27% 16.63%
3 years ended
5/31/95 10.05% 11.86% 12.05%
5 years ended
5/31/95 9.30% 10.37% 10.48%
Period 8/27/86(1)
through 5/31/95 10.90% 11.52% 11.59%
</TABLE>
(1) Date of initial public offering of Class A Shares.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was reduced
to 4.75% and the above performance numbers are calculated using 4.75% as the
applicable sales charge for all time periods, and are more favorable than
they would have been had they been calculated using the former front-end
sales charges.
(3) Date of initial public offering was July 26, 1993.
The performance of Class B Shares, as shown below, is the aggregate
total return quotation for the period September 6, 1994 (date of initial public
offering) through May 31, 1995. The aggregate total return for Class B Shares
including deferred sales charge reflects the deduction of the applicable CDSC
that would be paid if the shares were redeemed at May 31, 1995. The aggregate
total return for Class B Shares excluding deferred sales charge assumes the
shares were not redeemed at May 31, 1995 and therefore does not reflect the
deduction of a CDSC.
AGGREGATE TOTAL RETURN
CLASS B SHARES CLASS B SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED
SALES CHARGE) SALES CHARGE)
Period
9/6/94(1)
through
5/31/95 7.68% 11.68%
-12-
<PAGE>
(1) Date of initial public offering of Class B Shares; total return for this
short of a time period may not be representative of longer-term results.
Information regarding the performance of Class C Shares is not shown
because such shares were not offered to the public prior to the date of this
Part B.
Decatur's investment strategy relies on the consistency, reliability and
predictability of corporate dividends. Dividends tend to rise over time, despite
market conditions, and keep pace with rising prices; they are paid out in
"current" dollars. And, just as important, current dividend income can help
lessen the effects of adverse market conditions. Decatur's dividend discipline,
coupled with the potential for capital gains, seeks to provide investors with a
consistently higher total-rate-of-return over time.
In 1972, Delaware Investment Advisers, a division of the Manager, offered
Decatur's time-proven investment style to the institutional investing community.
Currently, Delaware Investment Advisers manages approximately $13 billion in
institutional assets under management in that style.
From time to time, the Series may also quote each Class' actual total
return performance, dividend results and other performance information in
advertising and other types of literature and may compare that information to,
or may separately illustrate similar information reported by, the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average and other unmanaged
indices.
The Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average
are industry-accepted unmanaged indices of generally-conservative securities
used for measuring general market performance. The total return performance for
these indices reported will reflect the reinvestment of all distributions on a
quarterly basis and market price fluctuations. The indices do not take into
account any sales charge or other fees. In seeking a particular investment
objective, the Series' portfolio primarily includes common stocks considered by
the Manager to be more aggressive than those tracked by these indices.
The total return performance for each Class will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will not reflect any income taxes payable by
shareholders on the reinvested distributions included in the calculation.
Because securities prices fluctuate, past performance should not be considered
as a representation of the results which may be realized from an investment in
the Series in the future.
The Series may also state the total return performance for each Class in
the form of an average annual return. This average annual return figure will be
computed by taking the sum of a Class' annual returns, then dividing that figure
by the number of years in the overall period indicated. The computation will
reflect the impact of the maximum front-end or contingent deferred sales charge,
if any, paid on the illustrated investment amount against the first year's
return.
From time to time, the Series may also quote actual total return
performance for each Class in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include the
average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts as monitored by Bank Rate
Monitor, and those of generally-accepted corporate bond and government security
price indices of various durations prepared by Lehman Brothers and Salomon
Brothers, Inc. These indices are not managed for any investment goal.
Comparative information on the Consumer Price Index may also be included.
The Consumer Price Index, as prepared by the U.S. Bureau of Labor Statistics, is
the most commonly used measure of inflation. It indicates the cost fluctuations
of a representative group of consumer goods. It does not represent a return
from an investment.
Statistical and performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Series activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these organizations,
may also be used in the
-13-
<PAGE>
promotion of sales of the Series. Any indices used are not managed for any
investment goal.
CDA Technologies, Inc., Lipper Analytical Services, Inc. and Morningstar,
Inc. are performance evaluation services that maintain statistical
performance databases, as reported by a diverse universe of independently-
managed mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income on
the stock market as well as other investment asset classes, and inflation.
With their permission, this information will be used primarily for
comparative purposes and to illustrate general financial planning
principles.
Interactive Data Corporation is a statistical access service that maintains
a database of various international industry indicators, such as historical
and current price/earning information, individual equity and fixed income
price and return information.
Compustat Industrial Databases, a service of Standard & Poor's, may also be
used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations.
The following tables are examples, for purposes of illustration only, of
cumulative total return performance for the Class A Shares and the Institutional
Class for the three-, six- and nine-month periods ended May 31, 1995, for the
one-, three- and five-year periods ended May 31, 1995 and for the life of these
Classes. Pursuant to applicable regulation, total return shown for the
Institutional Class for the periods prior to the commencement of operations of
such Class is calculated by taking the performance of the Class A Shares and
adjusting it to reflect the elimination of all sales charges. However, for
those periods no adjustment has been made to eliminate the impact of 12b-1
payments, and performance would have been affected had such an adjustment been
made. Cumulative total return for the Class B Shares for the three- and six-
month periods ended May 31, 1995 and for the life of this Class is also provided
below. For these purposes, the calculations assume the reinvestment of any
realized securities profits distributions and income dividends
-14-
<PAGE>
paid during the indicated periods. Comparative information on the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average is also included.
Information regarding the performance of Class C Shares is not shown because
such Shares were not offered to the public prior to the date of this Part B.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
INSTITU- STANDARD DOW
CLASS A TIONAL & POOR'S JONES
SHARES CLASS(3) INDUSTRIAL
(AT OFFER)
<S> <C> <C> <C> <C>
3 months
ended
5/31/95 3.90% 9.08% 10.19% 12.07%
6 months
ended
5/31/95 12.86% 18.63% 19.16% 21.05%
9 months
ended
5/31/95 6.26% 11.85% 14.50% 16.48%
1 year
ended
5/31/95 10.71% 16.63% 20.16% 22.17%
3 years
ended
5/31/95 33.27% 40.69% 39.78% 43.22%
5 years
ended
5/31/95 55.97% 64.60% 71.69% 80.86%
Period
8/27/86(1)
through
5/31/95 147.50% 161.34% 178.05% 214.02%
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS B
SHARES SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED STANDARD DOW
SALES SALES & POOR'S JONES
CHARGE) CHARGE) 500 INDUSTRIAL
<S> <C> <C> <C> <C>
3 months
ended
5/31/95 4.87% 8.87% 10.19% 12.07%
6 months
ended
5/31/95 14.02% 18.02% 19.16% 21.05%
Period
9/6/94(4)
through
5/31/95 7.68% 11.68% 14.50% 16.48%
</TABLE>
(1) Date of initial public offering of Class A Shares.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was reduced
to 4.75% and the above performance numbers are calculated using 4.75% as the
applicable sales charge for all periods, and are more favorable than they
would have been had they been calculated using the former sales charges.
(3) Date of initial public offering was July 26, 1993.
(4) Date of initial public offering of Class B Shares; total return for this
short of a time period may not be representative of longer-term
results.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's overriding investment
philosophy and how that philosophy impacts the Series', and other Delaware Group
funds', investment disciplines employed in seeking their objectives. The
Distributor may also from time to time cite general or specific information
about the institutional clients of the Manager, including the number of such
clients serviced by the Manager.
-16-
<PAGE>
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Series shares,
your investment is given yet another opportunity to grow. It's called the Power
of Compounding and the following chart illustrates just how powerful it can be.
COMPOUNDED RETURNS
Results at various assumed fixed rates of return on a $10,000 investment
compounded quarterly for 10 years:
<TABLE>
<CAPTION>
8% Rate 10% Rate 12% Rate 14% Rate
of Return of Return of Return of Return
<S> <C> <C> <C> <C>
12-'85 $10,824 $11,038 $11,255 $11,475
12-'86 $11,717 $12,184 $12,668 $13,168
12-'87 $12,682 $13,449 $14,258 $15,111
12-'88 $13,728 $14,845 $16,047 $17,340
12-'89 $14,859 $16,386 $18,061 $19,898
12-'90 $16,084 $18,087 $20,328 $22,833
12-'91 $17,410 $19,965 $22,879 $26,202
12-'92 $18,845 $22,038 $25,751 $30,067
12-'93 $20,399 $24,325 $28,983 $34,503
12-'94 $22,080 $26,851 $32,620 $39,593
</TABLE>
These figures are calculated assuming a fixed constant investment return
and assume no fluctuation in the value of principal. These figures do not
reflect payment of applicable taxes, are not intended to be a projection of
investment results and do not reflect the actual performance results of any of
the Classes.
-17-
<PAGE>
TRADING PRACTICES AND BROKERAGE
The Fund selects brokers or dealers to execute transactions on behalf of
the Series for the purchase or sale of portfolio securities on the basis of its
judgment of their professional capability to provide the service. The primary
consideration is to have brokers or dealers execute transactions at best price
and execution. Best price and execution refers to many factors, including the
price paid or received for a security, the commission charged, the promptness
and reliability of execution, the confidentiality and placement accorded the
order and other factors affecting the overall benefit obtained by the account on
the transaction. Some trades are made on a net basis where the Fund either buys
securities directly from the dealer or sells them to the dealer. In these
instances, there is no direct commission charged but there is a spread (the
difference between the buy and sell price) which is the equivalent of a
commission. When a commission is paid, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty.
During the fiscal years ended November 30, 1992, 1993 and 1994, the
aggregate dollar amounts of brokerage commissions paid by the Series were
$1,072,626, $1,600,528 and $895,815, respectively.
The Manager may allocate out of all commission business generated by all of
the funds and accounts under its management, brokerage business to brokers or
dealers who provide brokerage and research services. These services include
advice, either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchases or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or industries;
providing information on economic factors and trends; assisting in determining
portfolio strategy; providing computer software and hardware used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Manager in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used, or used exclusively, with respect
to the fund or account generating the brokerage.
During the fiscal year ended November 30, 1994, portfolio transactions of
the Series in the amount of $266,710,679 resulting in brokerage commissions of
$390,266 were directed to brokers for brokerage and research services provided.
As provided in the Securities Exchange Act of 1934 and the Series'
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions
<PAGE>
not related to its investment decision-making process. In addition, so long as
no fund is disadvantaged, portfolio transactions which generate commissions or
their equivalent are allocated to broker/dealers who provide daily portfolio
pricing services to the Fund and to other funds in the Delaware Group. Subject
to best price and execution, commissions allocated to brokers providing such
pricing services may or may not be generated by the funds receiving the pricing
service.
The Manager may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and the Fund's
Board of Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Fund may place orders with broker/dealers that have agreed to
defray certain Series expenses such as custodian fees, and may, at the request
of the Distributor, give consideration to sales of shares of the Series as a
factor in the selection of brokers and dealers to execute Series portfolio
transactions.
PORTFOLIO TURNOVER
Portfolio trading will be undertaken principally to accomplish the Series'
objective in relation to anticipated movements in the general level of interest
rates. The Series is free to dispose of portfolio securities at any time,
subject to complying with the Code and the Investment Company Act of 1940, when
changes in circumstances or conditions make such a move to one or more funds and
desirable in light of the investment objective. The Series will not attempt to
achieve or be limited to a predetermined rate of portfolio turnover for the
Series, such a turnover always being incidental to transactions undertaken with
a view to achieving the Series' investment objective.
The degree of portfolio activity may affect brokerage costs of the Series
and taxes payable by the Series' shareholders to the extent of any net realized
capital gains. The Series' portfolio turnover rate is not expected to exceed
100%; however, under certain market conditions the Series may experience a high
rate of portfolio turnover which could exceed 100%. The Series' portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of
portfolio securities for the particular fiscal year by the monthly average of
the value of the portfolio securities owned by the Series during the particular
fiscal year, exclusive of securities whose maturities at the time of acquisition
are one year or less. A turnover rate of 100% would occur, for example, if all
the investments in the Series' portfolio at the beginning of the year were
replaced by the end of the year.
During the fiscal years ended November 30, 1993 and 1994, the Series'
portfolio turnover rates were 119% and 74%, respectively.
In investing for capital appreciation, the Series may hold securities for
any period of time. Portfolio turnover will be increased if the Series writes a
large number of call options which are subsequently exercised. The portfolio
turnover rate also may be affected by cash requirements from redemptions and
repurchases of Series shares. Total brokerage costs generally increase with
higher portfolio turnover rates.
-19-
<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for the Series' four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
the Fund. See the Prospectuses for additional information on how to invest.
Shares of the Series are offered on a continuous basis, and may be purchased
through authorized investment dealers or directly by contacting the Fund or its
agent.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares, and Class C Shares. Subsequent purchases generally must be at
least $100 for Class A Shares, Class B Shares and Class C Shares. The minimum
initial and subsequent investment for Class A Shares will be waived for
purchases by officers, directors and employees of any Delaware Group fund, the
Manager or any of the Manager's affiliates if the purchases are made pursuant to
a payroll deduction program. Class A shares purchased pursuant to the Uniform
Gifts to Minors Act or the Uniform Transfers to Minors Act and Class A Shares
purchased in connection with an Automatic Investing Plan are subject to a
minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Delaware Group Asset Planner service are subject to a
minimum initial investment of $2,000 per Asset Planner strategy selected. There
are no minimum purchase requirements for the Institutional Class, but certain
eligibility requirements must be satisfied.
There is a maximum purchase limitation of $250,000 with respect to each
purchase of Class B Shares; for Class C Shares, each purchase must be in an
amount that is less than $1,000,000. (See Investment Plans for purchase
limitations applicable to each of the Fund's master retirement plans.) The Fund
will reject any order for purchase of more than $250,000 of Class B Shares and
$1,000,000 or more for Class C Shares. An investor may exceed these limitations
by making cumulative purchases over a period of time. An investor should keep
in mind, however, that reduced front-end sales charges apply to investments of
$100,000 or more in Class A Shares, which are subject to a lower annual 12b-1
Plan expense charge than Class B Shares and Class C Shares and generally are not
subject to a CDSC.
Selling dealers have the responsibility of transmitting orders promptly.
The Fund reserves the right to reject any order for the purchase of its shares
if in the opinion of management such rejection is in the Series' best interest.
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.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales charges
apply for larger purchases. See the table below. Class A Shares are also
subject to annual 12b-1 Plan expenses.
Class B Shares are purchased at net asset value and are subject to a CDSC
of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares
are also subject to annual 12b-1 Plan expenses which are higher than those to
which Class A Shares are subject and are assessed against Class B Shares for
approximately eight years after purchase. See Automatic Conversion of Class B
Shares in the Fund Classes' Prospectus.
Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within twelve months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
-20-
<PAGE>
Institutional Class shares are purchased at the net asset value per share
without the imposition of a front-end or contingent deferred sales charge or
12b-1 Plan expenses. See Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.
Institutional Class shares, Class A Shares, Class B Shares and Class C
Shares represent a proportionate interest in the Series' assets and will receive
a proportionate interest in the Series' income, before application, as to the
Class A, Class B and Class C Shares, of any expenses under the Series' 12b-1
Plans.
Certificates representing shares purchased are not ordinarily issued
unless a shareholder submits a specific request. Certificates are not issued in
the case of Class B Shares. However, purchases not involving the issuance of
certificates are confirmed to the investor and credited to the shareholder's
account on the books maintained by Delaware Service Company, Inc. (the "Transfer
Agent"). The investor will have the same rights of ownership with respect to
such shares as if certificates had been issued. An investor that is permitted to
obtain a certificate may receive a certificate representing shares purchased by
sending a letter to the Transfer Agent requesting the certificate. No charge is
made for any certificate issued. Investors who hold certificates representing
any of their shares may only redeem those shares by written request. The
investor's certificate(s) must accompany such request.
ALTERNATIVE PURCHASE ARRANGEMENTS
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for his or her needs 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 purchase Class A Shares and incur a front-end sales charge
and annual 12b-1 Plan expenses of up to a maximum of .30% of the average daily
net assets of the Class A Shares or to purchase either Class B or Class C Shares
and have the entire initial purchase amount invested in the Series with the
investment thereafter subject to a CDSC and annual 12b-1 Plan expenses. Class B
Shares are subject to a CDSC if the Shares are redeemed within six years of
purchase, and Class C Shares are subject to a CDSC if the shares are redeemed
within twelve months of purchase. Class B and Class C Shares are each 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 Fund to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of the respective Class. Class B Shares will automatically
convert to Class A Shares at the end of approximately eight years after
purchase, and thereafter, be subject to annual 12b-1 Plan expenses of up to a
maximum of .30% of average daily net assets of such shares. Unlike Class B
Shares, Class C Shares do not convert to another class.
CLASS A SHARES
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
<TABLE>
<CAPTION>
Class A Shares
_______________________________________________________________________________
Dealer's
Front-End Sales Charge as % of Concession**
Amount of Purchase Offering Amount as % of
Price Invested Offering Price
_______________________________________________________________________________
<S> <C> <C> <C>
Less than $100,000 4.75% 4.95% 4.00%
$100,000 but under $250,000 3.75 3.90 3.00
$250,000 but under $500,000 2.50 2.60 2.00
$500,000 but under $1,000,000* 2.00 2.03 1.60
</TABLE>
-21-
<PAGE>
- --------------------------------------------------------------------------------
* There is no front-end sales charge on purchases of $1 million or more of
Class A Shares but, under certain limited circumstances, a 1% contingent
deferred sales charge may apply upon redemption of such shares. The
contingent deferred sales charge ("Limited CDSC") that may be applicable
arises only in the case of certain net asset value purchases which have
triggered the payment of a dealer's commission.
** Based upon the net asset value per share of Class A Shares as of the end of
the Fund's most recent fiscal year.
***Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
-22-
<PAGE>
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 or 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 to dealers up to the full amount of the front-end sales charge
shown above. Dealers who receive 90% or more of the sales charge may be deemed
to be underwriters under the Securities Act of 1933.
-23-
<PAGE>
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 in connection with sales of Class A Shares. Such dealers must
meet certain requirements in terms of organization and distribution capabilities
and their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and circumstances
upon which the additional concession will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.
DEALER'S COMMISSION
For initial purchases of Class A Shares of $1,000,000 or more, 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
----------
(as a percent-
age of amount
AMOUNT OF PURCHASE 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 (see Redemption and Repurchase) may be aggregated
with those of Class A Shares of the Series. 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.
Financial advisers should contact the Distributor concerning the applicability
and calculation of the dealer's commission in the case of combined purchases.
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.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B and Class C Shares are purchased without the imposition of a front-
end sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth below, and Class C Shares redeemed
within twelve months of purchase may be subject to a CDSC of 1%. CDSC fees are
charged as a percentage of the dollar amount subject to the CDSC. The charge
will be assessed on an amount equal to the lesser of the net asset value at the
time of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no CDSC will be
assessed on redemption of shares received through the reinvestment of dividends
or capital gains distributions. See the Prospectus for the Fund Classes under
Redemption and Exchange - Waiver of CDSC - Class B and Class C Shares for a list
of the instances in which the CDSC is waived.
The following table sets forth the rates of the CDSC for Class B Shares of
the Series:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE (AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR AFTER PURCHASE MADE SUBJECT TO CHARGE)
- ------------------------ ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
-24-
<PAGE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of the Series, Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of those shares. At the end of approximately eight years after purchase,
the investor's Class B Shares will be automatically converted into Class A
Shares of the Series. See Automatic Conversion of Class B Shares under Buying
Shares in the Fund Classes' Prospectus. Such conversion will constitute a tax-
free exchange for federal income tax purposes. See Taxes in the Prospectus for
the Fund Classes.
PLANS UNDER RULE 12B-1 FOR THE FUND CLASSES
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund has
adopted a separate plan for each of the Class A Shares, the Class B Shares and
the Class C Shares of the Series (the "Plans"). Each Plan permits the Series to
pay for certain distribution, promotional and related expenses involved in the
marketing of only the Class to which the Plan applies. The Plans do not apply
to the Institutional Class of shares. Such shares are not included in
calculating the Plans' fees, and the Plans are not used to assist in the
distribution and marketing of the Institutional Class shares. Shareholders of
the Institutional Class may not vote on matters affecting the Plans.
The Plans permit the Series, pursuant to the Distribution Agreement, to pay
out of the assets of the Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to the Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.
In addition, the Series may make payments out of the assets of the Class A
Shares, Class B Shares and Class C Shares directly to other unaffiliated
parties, such as banks, who either aid in the distribution of shares of, or
provide services to, such classes.
The maximum aggregate fee payable by the Series under the Plans, and the
Series' Distribution Agreement, is on an annual basis, .30% of the Class A
Shares' average daily net assets for the year, and 1% (.25% of which are service
fees to be paid to the Distributor, dealers and others for providing personal
service and/or maintaining shareholder accounts) of each of the Class B Shares'
and the Class C Shares' average daily net assets for the year. The Fund's Board
of Directors may reduce these amounts at any time.
The Board of Directors has determined that the annual fee, payable on a
monthly basis, under the Plan for the Class A Shares, will be equal to the sum
of: (i) the amount obtained by multiplying .30% by the average daily net assets
represented by the Class A Shares that were acquired by shareholders on or after
May 2, 1994, and (ii) the amount obtained by multiplying .10% by the average
daily net assets represented by the Class A Shares that were acquired before May
2, 1994. While this is the method for calculating the 12b-1 fees to be paid by
the Class A Shares, the fee is a Class expense so that all shareholders,
regardless of when they purchased their shares will bear 12b-1 expenses at the
same per share rate. As Class A Shares are sold on or after May 2, 1994, the
initial rate of at least .10% will increase over time. Thus, as the proportion
of Class A Shares purchased on or after May 2, 1994 to outstanding Class A
Shares increases, the expenses attributable to payments under the Plan will also
increase (but will not exceed .30% of average daily net assets). While this
describes the current formula for calculating the fees which will be payable
under the Plan, the Plan permits the Series to pay a full .30% on all Class A
Shares assets at any time.
All of the distribution expenses incurred by the Distributor and others, such
as broker/dealers, in excess of the amount paid on behalf of Class A, Class B
and Class C Shares would be borne by such persons without any reimbursement from
such classes. Subject to seeking best price and execution, the Series may, from
time to time, buy or
-25-
<PAGE>
sell portfolio securities from or to firms which receive payments under the
Plans.
From time to time, the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have all been approved
by the Board of Directors of the Fund, including a majority of the directors who
are not "interested persons" (as defined in the Investment Company Act of 1940)
of the Fund and who have no direct or indirect financial interest in the Plans,
by vote cast in person at a meeting duly called for the purpose of voting on the
Plans and such Agreement. Continuation of the Plans and the Distribution
Agreement and the form of dealer's and, as amended, must be approved annually by
the Board of Directors in the same manner as specified above.
Each year, the directors must determine whether continuation of the Plans is
in the best interest of shareholders of, respectively, the Class A Shares, Class
B Shares and Class C Shares and that there is a reasonable likelihood of the
Plan relating to a Fund Class providing a benefit to that Class. The Plans and
the Distribution Agreement, as amended, may be terminated with respect to a
Class at any time without penalty by a majority of those directors who are not
"interested persons" or by a majority vote of the outstanding voting securities
of the relevant Fund Class. Any amendment materially increasing the percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Fund Class, as well as by a
majority vote of those directors who are not "interested persons." With respect
to the Class A Shares' Plan, any material increase in the maximum percentage
payable thereunder must also be approved by a majority of the outstanding Class
B Shares. Also, any other material amendment to the Plans must be approved by a
majority vote of the directors including a majority of the noninterested
directors of the Fund having no interest in the Plans. In addition, in order for
the Plans to remain effective, the selection and nomination of directors who are
not "interested persons" of the Fund must be effected by the directors who
themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plans. Persons authorized to make payments under the
Plans must provide written reports at least quarterly to the Board of Directors
for their review.
For the fiscal year ended November 30, 1994, payments from the Class A Shares
pursuant to its Plan amounted to $1,278,668 and such amount was used for the
following purposes: $31,877 -Advertising; $37,614 - Annual/Semi-Annual Reports;
$777,288 - Broker Trails; $66,730 -Commissions to Wholesalers; $36,738 - Dealer
Service Expenses; $214,035 - Promotional-Other; $16,688 - Promotional-Broker
Meetings; $25,900 -Prospectus Printing; $5,611 - Telephone; and $66,187 -
Wholesaler Expenses. For the period September 6, 1994 (date of initial public
offering) though November 30, 1994, payments from the Class B Shares pursuant to
its Plan amounted to $1,564 and such amount was used for the following purposes:
$538 - Broker Sales Charges; $376 -Broker Trails; $90 - Commission to
Wholesalers; and $560 - Interest on Broker Sales Charges.
The Staff of the SEC has proposed amendments to Rule 12b-1 and other
related regulations that could impact Rule 12b-1 Distribution Plans. The Fund
intends to amend the Plans, if necessary, to comply with any new rules or
regulations the SEC may adopt with respect to Rule 12b-1.
OTHER PAYMENTS TO DEALERS - CLASS A, CLASS B AND CLASS C SHARES
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund 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.
-26-
<PAGE>
Payments to dealers made in connection with seminars, conferences or contests
relating to the promotion of fund shares may be in an amount up to 100% of the
expenses incurred or awards made. The Distributor may also pay a portion of the
expense of preapproved dealer advertisements promoting the sale of Delaware
Group fund shares.
SPECIAL PURCHASE FEATURES - CLASS A SHARES
BUYING AT NET ASSET VALUE
Class A Shares may be reinvested without a front-end sales charge under the
Dividend Reinvestment Plan and, under certain circumstances, the 12-Month
Reinvestment Privilege and the Exchange Privilege.
Current and former officers, directors and employees of the Fund, any other
fund in the Delaware Group, the Manager or any of the Manager's current
affiliates and those that may in the future be created, legal counsel to the
funds, and registered representatives and employees of broker/dealers who have
entered into Dealer's Agreements with the Distributor may purchase Class A
Shares and any such class of shares of any of the funds in the Delaware Group,
including any fund that may be created, at the net asset value per share.
Spouses, parents, brothers, sisters and children (regardless of age) of such
persons at their direction, and any employee benefit plan established by any of
the foregoing funds, corporations, counsel or broker/dealers may also purchase
shares at net asset value. Purchases of Class A Shares may also 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 charges. Purchase of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. 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. Such purchasers are required to
sign a letter stating that the purchase is for investment only and that the
securities may not be resold except to the issuer. Such purchasers may also be
required to sign or deliver such other documents as the Fund may reasonably
require to establish eligibility for purchase at net asset value. The Fund must
be notified in advance that the trade qualifies for purchase at net asset value.
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.
LETTER OF INTENTION
The reduced front-end sales charges described above with respect to Class A
Shares are also applicable to the aggregate amount of purchases made by any such
purchaser previously enumerated within a 13-month period pursuant to a written
Letter of Intention provided by the Distributor and signed by the purchaser, and
not legally binding on the signer or the Fund, which provides for the holding in
escrow by the Transfer
-27-
<PAGE>
Agent, of 5% of the total amount of Class A Shares intended to be purchased
until such purchase is completed within the 13-month period. A Letter of
Intention may be dated to include shares purchased up to ninety days prior to
the date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as noted
below, the purchaser will be asked to pay an amount equal to the difference
between the front-end sales charge on the Class A Shares purchased at the
reduced rate and the front-end sales charge otherwise applicable to the total
shares purchased. If such payment is not made within twenty days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to realize the
difference. Such purchasers may include the value (at offering price at the
level designated in their Letter of Intention) of all their shares of the Fund
and of any class of any of the other mutual funds in the Delaware Group (except
shares of any Delaware Group fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention toward the
completion of such Letter. For purposes of satisfying an investor's obligation
under a Letter of Intention, Class B and Class C Shares of the Series and the
corresponding classes of shares of other Delaware Group funds which offer such
shares may be aggregated with Class A Shares of the Series and the corresponding
class of shares of the other Delaware Group funds.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments in
Class A Shares made by the plan. The aggregate investment level of the Letter
of Intention will be determined and accepted by the Transfer Agent at the point
of plan establishment. The level and any reduction in front-end sales charge
will be based on actual plan participation and the projected investments in
Delaware Group funds that are offered with a front-end sales charge, CDSC or
Limited CDSC for a 13-month period. The Transfer Agent reserves the right to
adjust the signed Letter of Intention based on this acceptance criteria. The 13-
month period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and equal an
amount that would qualify the plan for further discounts, any front-end sales
charges will be automatically adjusted. In the event this Letter of Intention is
not fulfilled within the 13-month period, the plan level will be adjusted
(without completing another Letter of Intention) and the employer will be billed
for the difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at offering
price at the level designated in their Letter of Intention) of all their shares
intended for purchase that are offered with a front-end sales charge, CDSC or
Limited CDSC of any class. Class B Shares and Class C Shares of the Series and
other Delaware Group funds which offer corresponding classes of shares may also
be aggregated for this purpose.
COMBINED PURCHASES PRIVILEGE
In determining the availability of the reduced front-end sales charge
previously set forth with respect to the Class A Shares, purchasers may combine
the total amount of any combination of the Class B Shares and/or Class C Shares
of the Series, as well as shares of any other class of any of the other Delaware
Group funds (except shares of any Delaware Group fund which do not carry a
front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC).
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under
twenty-one years of age; or a trustee or other fiduciary of trust estates or
fiduciary accounts for the benefit of such family members (including certain
employee benefit programs).
-28-
<PAGE>
RIGHT OF ACCUMULATION
In determining the availability of the reduced front-end sales charge with
respect to Class A Shares, purchasers may also combine any subsequent purchases
of Class A Shares, Class B Shares and Class C Shares of the Series, as well as
shares of any other class of any of the other Delaware Group funds which offer
such classes (except shares of any Delaware Group fund which do not carry a
front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
shares from a Delaware Group Fund which carried a front-end sales charge, CDSC
or Limited CDSC). If, for example, any such purchaser has previously purchased
and still holds Class A Shares and/or shares of any other of the classes
described in the previous sentence with a value of $40,000 and subsequently
purchases $60,000 at offering price of additional shares of Class A Shares, the
charge applicable to the $60,000 purchase would currently be 3.75%. For the
purpose of this calculation, the shares presently held shall be valued at the
public offering price that would have been in effect were the shares purchased
simultaneously with the current purchase. Investors should refer to the table of
sales charges for Class A Shares to determine the applicability of the Right of
Accumulation to their particular circumstances.
12-MONTH REINVESTMENT PRIVILEGE
Holders of the Class A Shares (and of the Institutional Class holding shares
which were acquired through an exchange of one of the other mutual funds in the
Delaware Group offered with a front-end sales charge) who redeem such shares of
the Series have one year from the date of redemption to reinvest all or part of
their redemption proceeds in Class A Shares of the Series or in Class A Shares
of any of the other funds in the Delaware Group, subject to applicable
eligibility and minimum purchase requirements, in states where shares of such
other funds may be sold, at net asset value without the payment of a front-end
sales charge. This privilege does not extend to Class A Shares where the
redemption of the shares triggered the payment of a Limited CDSC. Persons
investing redemption proceeds from direct investments in mutual funds in the
Delaware Group offered without a front-end sales charge will be required to pay
the applicable sales charge when purchasing Class A Shares. The reinvestment
privilege does not extend to a redemption of either Class B or Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any amount
necessary to purchase a full share). The reinvestment will be made at the net
asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is proposed to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.
Investors should consult their financial advisers or the Transfer Agent,
which also serves as the Fund's shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and
Exchange in the Fund Classes' Prospectus) in connection with the features
described above.
GROUP INVESTMENT PLANS
Group Investment Plans that are not eligible to purchase shares of the
Institutional Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page _______, based
on total plan assets. 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 front-end sales charge reduction upon each
purchase, both initial and subsequent, upon notification to the Fund at the time
of each such purchase. Employees participating in such Group Investment Plans
may also combine the investments made in their plan account when determining the
applicable front-end sales charge on purchases to non-retirement Delaware Group
investment accounts if they so notify the Fund in connection with each purchase.
-29-
<PAGE>
For other retirement plans and special services, see Retirement Plans for the
Fund Classes under Investment Plans.
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
The Institutional Class is 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 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.
Shares of the Institutional Class are available for purchase at net asset
value, without the imposition of a front-end or contingent deferred sales charge
and are not subject to Rule 12b-1 expenses.
INVESTMENT PLANS
REINVESTMENT PLAN/OPEN ACCOUNT
Unless otherwise designated by shareholders in writing, dividends from net
investment income and distributions from realized securities profits, if any,
will be automatically reinvested in additional shares of the respective Fund
Class in which an investor has an account (based on the net asset value in
effect on the reinvestment date) and will be credited to the shareholder's
account on that date. All dividends and distributions of the Institutional
Class are reinvested in the account of the holders of such shares (based on the
net asset value of the Fund in effect on the reinvestment date). A confirmation
of each dividend payment from net investment income and of any distributions
from realized securities profits will be mailed to shareholders in the first
quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and add
full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the Fund. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectus and this Part B, are made for Class A Shares at the
public offering price and, for Class B Shares, Class C Shares and the
Institutional Class at the net asset value, at the end of the day of receipt. A
reinvestment plan may be terminated at any time. This plan does not assure a
profit nor protect against depreciation in a declining market.
REINVESTMENT OF DIVIDENDS IN OTHER DELAWARE GROUP FUNDS
Subject to applicable eligibility and minimum initial purchase requirements,
and the limitations set forth below, holders of Class A Shares, Class B, and
Class C Shares may automatically reinvest dividends and/or distributions from
the Series in any of the other mutual funds in the Delaware Group, including the
Series, in states where their shares may be sold. Such investments will be at
net asset value at the close of business on the reinvestment date without any
front-end sales charge or service fee. Nor will such investments be subject to
a CDSC or Limited CDSC. The
-30-
<PAGE>
shareholder must notify the Transfer Agent in writing and must have established
an account in the fund into which the dividends and/or distributions are to be
invested. Any reinvestment directed to a fund in which the investor does not
then have an account will be treated like all other initial purchases of a
fund's shares. Consequently, an investor should obtain and read carefully the
prospectus for the fund in which the investment is proposed to be made before
investing or sending money. The prospectus contains more complete information
about the fund, including charges and expenses. See also Dividend Reinvestment
Plan in the Prospectus for the Fund Classes.
Subject to the following limitations, dividends and/or distributions from
other funds in the Delaware Group may be invested in shares of the Fund,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B or Class C Shares of another fund in the Delaware Group.
Dividends from Class B Shares may only be directed to Class B Shares of another
fund in the Delaware Group that offers such class of shares. Dividends from
Class C Shares may only be directed to Class C Shares of another fund in the
Delaware Group that offers such class of shares. See Class B Funds and Class C
Funds under Buying Shares in the Fund Classes' Prospectus for the funds in the
Delaware Group that are eligible for investment by holders of Series shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
INVESTING BY ELECTRONIC FUND TRANSFER
Direct Deposit Purchase Plan--Investors may arrange for the Series to accept
for investment in Class A, Class B or Class C Shares, through an agent bank,
preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and
delayed checks.
Automatic Investing Plan--Shareholders of the Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Series
account. This type of investment will be handled in either of the two ways
noted below. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
Investments under the Direct Deposit Purchase Plan and the Automatic
Investing Plan must be for $25 or more for Class A Shares and $100 or more for
Class B or Class C Shares. An investor wishing to take advantage of either
service must complete an authorization form. Either service can be discontinued
by the shareholder at any time without penalty by giving written notice.
Payments to the Series from the federal government or its agencies on behalf
of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the Series may liquidate sufficient shares from a shareholder's account to
reimburse the government or the private source. In the event there are
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insufficient shares in the shareholder's account, the shareholder is expected to
reimburse the Series.
DIRECT DEPOSIT PURCHASES BY MAIL
Shareholders may authorize a third party, such as a bank or employer, to make
investments directly to their Series accounts. The Series will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers or
financial institutions who in turn should contact the Fund for proper
instructions.
RETIREMENT PLANS FOR THE FUND CLASSES
An investment in the Series may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B and Class C
Shares. See the Prospectus for the Fund Classes under Redemption and Exchange -
Waiver of CDSC - Class B and Class C Shares for a list of the instances in which
the CDSC is waived.
Each purchase of Class B Shares is subject to a maximum purchase limitation
of $250,000 for retirement plans. Each purchase of Class C Shares must be in an
amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors do not
apply to retirement plans, other than Individual Retirement Accounts ("IRAs")
for which there is a minimum initial purchase of $250, and a minimum subsequent
purchase of $25, regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such plans.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class. See
Decatur Total Return Fund Institutional Class above. For additional information
on any of the plans and Delaware's retirement services, call the Shareholder
Service Center telephone number.
IT IS ADVISABLE FOR AN INVESTOR CONSIDERING ANY ONE OF THE RETIREMENT PLANS
DESCRIBED BELOW TO CONSULT WITH AN ATTORNEY, ACCOUNTANT OR A QUALIFIED
RETIREMENT PLAN CONSULTANT. FOR FURTHER DETAILS, INCLUDING APPLICATIONS FOR ANY
OF THESE PLANS, CONTACT YOUR INVESTMENT DEALER OR THE DISTRIBUTOR.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the special
application forms required for the plans described below.
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PROTOTYPE PROFIT SHARING OR MONEY PURCHASE PENSION PLANS
Prototype plans are available for self-employed individuals, partnerships and
corporations which replace the former Keogh and corporate retirement plans.
These plans contain profit sharing or money purchase pension plan provisions.
Contributions for plans of this type may be invested only in Class A and Class C
Shares.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A document is available for an individual who wants to establish an IRA by
making contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year or elects to be treated
as having no compensation for the year. Investments in each of the Fund Classes
are permissible.
The Tax Reform Act of 1986 (the "Act") restructured, and in some cases
eliminated, the tax deductibility of IRA contributions. Under the Act, the full
deduction for IRAs ($2,000 for each working spouse and $2,250 for one-income
couples) was retained for all taxpayers who are not covered by an employer-
sponsored retirement plan. Even if a taxpayer (or his or her spouse) is covered
by an employer-sponsored retirement plan, the full deduction is still available
if the taxpayer's adjusted gross income is below $25,000 ($40,000 for taxpayers
filing joint returns). A partial deduction is allowed for married couples with
incomes between $40,000 and $50,000, and for single individuals with incomes
between $25,000 and $35,000. The Act does not permit deductions for
contributions to IRAs by taxpayers whose adjusted gross income before IRA
deductions exceeds $50,000 ($35,000 for singles) and who are active participants
in an employer-sponsored retirement plan. Taxpayers who are not allowed
deductions on IRA contributions still can make nondeductible IRA contributions
of as much as $2,000 for each working spouse ($2,250 for one-income couples),
and defer taxes on interest or other earnings from the IRAs. Special rules apply
for determining the deductibility of contributions made by married individuals
filing separate returns.
A company or association may establish a Group IRA for employees or members
who want to purchase shares of the Series. Purchases of $1 million or more of
the Class A Shares qualify for purchase at net asset value but may, under
certain circumstances, be subject to a Limited CDSC. See Purchasing Shares
concerning reduced front-end sales charges applicable to Class A Shares.
Investments generally must be held in the IRA until age 59 1/2 in order to
avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Class B Shares and Class C Shares under Alternative Purchase
Arrangements, Contingent Deferred Sales Charge - Class B Shares and Class C
Shares, and Waiver of CDSC - Class B and Class C Shares in the Fund Classes'
Prospectus concerning the applicability of a CDSC upon redemption.
See Appendix A for additional IRA information.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a tax-
sheltered retirement program by making contributions on behalf of all eligible
employees. Each of the Fund Classes is available for investment by a SEP/IRA.
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SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan which
permits employer contributions and salary deferral contributions in Class A
Shares and Class C Shares only.
PROTOTYPE 401(K) DEFINED CONTRIBUTION PLAN
Section 401(k) of the Code permits employers to establish qualified plans
based on salary deferral contributions. Plan documents are available to enable
employers to establish a plan. An employer may also elect to make profit
sharing contributions and/or matching contributions with investments in only
Class A Shares and Class C Shares or certain other funds in the Delaware Group.
Purchases under the plan may be combined for purposes of computing the reduced
front-end sales charge applicable to Class A Shares as set forth in the table on
page _____.
DEFERRED COMPENSATION PLAN FOR PUBLIC SCHOOLS AND NON-PROFIT ORGANIZATIONS
("403(B)(7)")
Section 403(b)(7) of the Code permits public school systems and certain non-
profit organizations to use mutual fund shares held in a custodial account to
fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page _____.
DEFERRED COMPENSATION PLAN FOR STATE AND LOCAL GOVERNMENT EMPLOYEES ("457")
Section 457 of the Code permits state and local governments, their agencies
and certain other entities to establish a deferred compensation plan for their
employees who wish to participate. This enables employees to defer a portion of
their salaries and any federal (and possibly state) taxes thereon. Such plans
may invest in shares of any of the Fund Classes. Although investors may use
their own plan, there is available a Delaware Group 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Applicable front-end sales charges for
such purchases of Class A Shares are set forth in the table on page _____.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated by the Fund after receipt of the order by the Fund or its agent.
Orders for purchases of Class B Shares, Class C Shares and the Institutional
Class are effected at the net asset value per share next calculated after
receipt of the order by the Fund or its agent. Selling dealers have the
responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value per
share plus any applicable front-end sales charges. Offering price and net asset
value are computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
The New York Stock Exchange is scheduled to be open Monday through Friday
throughout the year except for New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the
New York Stock Exchange is closed, the Fund will generally be closed, pricing
calculations will not be made and purchase and redemption orders will not be
processed.
An example showing how to calculate the net asset value per share and, in the
case of Class A Shares, the offering price per share, is included in the Series'
financial statements which are incorporated by reference into this Part B.
The Series' net asset value per share is computed by adding the value of all
the Series' securities and other assets, deducting any liabilities of the
Series, and dividing by the number of Series shares outstanding. Expenses and
fees are accrued daily. Portfolio securities, except for bonds, which are
primarily traded on a national or foreign securities exchange are valued at the
last sale price on that exchange. Options are valued at the last reported sales
price or, if no sales are reported, at the mean between bid and asked prices.
Securities not traded on a particular day, over-the-counter securities and
government and agency securities are valued at the mean value between bid and
asked prices. Money market instruments having a maturity of less than sixty days
are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are
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believed to reflect the fair value of such securities. Use of a pricing service
has been approved by the Board of Directors. Subject to the foregoing,
securities for which market quotations are not readily available and other
assets are valued at fair value as determined in good faith and in a method
approved by the Board of Directors.
Each Class of the Series 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 Institutional Class will not incur any of the expenses
under the Series' 12b-1 Plans and Class A, Class B and Class C Shares alone will
bear the 12b-1 Plan expenses payable under their respective Plans. Due to the
specific distribution expenses and other costs that will be allocable to each
Class, the net asset value of each Class of the Series will vary.
REDEMPTION AND REPURCHASE
Any shareholder may require the Fund to redeem Series shares by sending a
WRITTEN REQUEST, signed by the record owner or owners exactly as the shares are
registered, to the Fund, 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. The Fund does not issue
certificates for Class A Shares, Class C Shares or Institutional Class shares,
unless a shareholder specifically requests them. The Fund does not issue
certificates for Class B Shares or Class C Shares. If stock certificates have
been issued for shares being redeemed, they must accompany the written request.
For redemptions of $50,000 or less paid to the shareholder at the address of
record, the Fund requires a request signed by all owners of the shares or the
investment dealer of record, but does not require signature guarantees. When the
redemption is for more than $50,000, or if payment is made to someone else or to
another address, signatures of all record owners are required and a signature
guarantee may be required. Each signature guarantee must be supplied by an
eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may request further documentation from corporations,
retirement plans, executors, administrators, trustees or guardians.
In addition to redemption of Series shares by the Fund, the Distributor,
acting as agent of the Fund, offers to repurchase Series shares from
broker/dealers acting on behalf of shareholders. The redemption or repurchase
price, which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order by
the Fund or its agent, subject to any applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset value are
determined. See Determining Offering Price and Net Asset Value. The Fund and
the Distributor end their business day at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Series shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to any applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then
settled as an ordinary transaction with the broker/dealer (who may make a charge
to the shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may result
in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and
Exchange in the Series' Prospectus for the Fund Classes. 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
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are redeemed within twelve months following purchase. See Contingent Deferred
Sales Charge under Buying Shares in the Series' Prospectus for the Fund Classes.
Except for the applicable CDSC or Limited CDSC and, with respect to the
expedited payment by wire described below, for which there is currently a $7.50
bank wiring cost, neither the Fund nor the Distributor charges a fee for
redemptions or repurchases, but such fees could be charged at any time in the
future.
Payment for shares redeemed will ordinarily be mailed the next business day,
but in no case later than seven days, after receipt of a redemption request in
good order.
If a shareholder who recently purchased shares by check seeks to redeem all
or a portion of those shares in a written request, the Fund will honor the
redemption request but will not mail the proceeds until it is reasonably
satisfied of the collection of the investment check. This potential delay can
be avoided by making investments by wiring Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund will automatically redeem from the shareholder's account the Series shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Series or to the Distributor.
In case of a suspension of the determination of the net asset value because
the New York Stock Exchange is closed for other than weekends or holidays, or
trading thereon is restricted or an emergency exists as a result of which
disposal by the Series of securities owned by it is not reasonably practical, or
it is not reasonably practical for the Series fairly to value its assets, or in
the event that the SEC has provided for such suspension for the protection of
shareholders, the Series may postpone payment or suspend the right of redemption
or repurchase. In such case, the shareholder may withdraw the request for
redemption or leave it standing as a request for redemption at the net asset
value next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash or
kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, the Fund
has elected to be governed by Rule 18f-1 under the Investment Company Act of
1940 pursuant to which the Fund is obligated to redeem Series shares solely in
cash up to the lesser of $250,000 or 1% of the net asset value of the Series
during any 90-day period for any one shareholder.
The value of the Series' investments is subject to changing market prices.
Thus, a shareholder reselling shares to the Series may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
SMALL ACCOUNTS
Before the Fund involuntarily redeems shares from an account that, under the
circumstances listed in the relevant Prospectus, has remained below the minimum
amounts required by the Series' Prospectuses and sends the proceeds to the
shareholder, the shareholder will be notified in writing that the value of the
shares in the account is less than the minimum required and will be allowed
sixty days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under Buying Shares in
the Series' Prospectuses. Any redemption in an inactive account established
with a minimum investment may trigger mandatory redemption. No CDSC or Limited
CDSC will apply to the redemptions described in this paragraph.
Effective November 29, 1995, the minimum initial investment in Class A Shares
was increased from $250 to $1,000. Class A accounts that were established
before November 29, 1995 and maintain a balance in excess of $250 will not
presently be subject to the $9 quarterly service
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fee that may be assessed on accounts with balances below the stated minimum, nor
subject to involuntary redemption.
* * *
The Fund has available certain redemption privileges, as described below.
The Fund reserves the right to suspend or terminate these expedited payment
procedures upon sixty days' written notice to shareholders.
EXPEDITED TELEPHONE REDEMPTIONS
Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of shares of $50,000 or less for which certificates
have not been issued may call the Fund at 800-523-1918 (in Philadelphia, 215-
988-1241) or, in the case of shareholders of the Institutional Class, their
Client Services Representative at 800-828-5052 prior to the time the offering
price and net asset value are determined, as noted above, and have the proceeds
mailed to them at the record address. Checks payable to the shareholder(s) of
record will normally be mailed the next business day, but no later than seven
days, after the receipt of the redemption request. This option is only
available to individual, joint and individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check by calling the Fund, as described
above. An authorization form must have been completed by the shareholder and
filed with the Fund before the request is received. Payment will be made by
wire or check to the bank account designated on the authorization form as
follows:
1. PAYMENT BY WIRE: Request that Federal Funds be wired to the bank account
designated on the authorization form. Redemption proceeds will normally be
wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption. If the proceeds are wired to the shareholder's account
at a bank which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.
2. PAYMENT BY CHECK: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
REDEMPTION REQUIREMENTS: In order to change the name of the bank and the
account number it will be necessary to send a written request to the Fund and a
signature guarantee may be required. Each signature guarantee must be supplied
by an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the telephone
redemption procedure, payment will be made only to the bank account designated
on the authorization form.
The Fund will not honor telephone redemptions for Series shares recently
purchased by check unless it is reasonably satisfied that the purchase check has
cleared.
If expedited payment under these procedures could adversely affect the
Series, the Fund may take up to seven days to pay the shareholder.
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. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders of the Class A Shares, Class B Shares and Class C Shares who own
or purchase $5,000 or more of shares at the offering price, or net asset value,
as applicable, for which certificates have not been issued may establish a
Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or quarterly
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withdrawals of $75 or more, although the Series does not recommend any specific
amount of withdrawal. This $5,000 minimum does not apply for the Series'
prototype retirement plans. Shares purchased with the initial investment and
through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.
Checks are dated either the 1st or 15th of the month, as selected by the
shareholder, (unless such date falls on a holiday or a weekend) and are normally
mailed within two business days. Both ordinary income dividends and realized
securities profits distributions will be automatically reinvested in additional
shares of the Class at net asset value. This plan is not recommended for all
investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event and a
shareholder may incur a capital gain or loss for federal income tax purposes.
This gain or loss may be long-term or short-term depending on the holding period
for the specific shares liquidated. Premature withdrawals from retirement plans
may have adverse tax consequences.
Withdrawals under this plan by the holders of Class A Shares or any similar
plan of any other investment company charging a front-end sales charge made
concurrently with the purchases of the Class A Shares of this or the shares of
any other investment company will ordinarily be disadvantageous to the
shareholder because of the payment of duplicative sales charges. Shareholders
should not purchase Class A Shares while participating in a Systematic
Withdrawal Plan and a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan can take effect,
except if the shareholder is a participant in one of our retirement plans or is
investing in Delaware Group funds which do not carry a sales charge. Also,
redemptions of Class A Shares pursuant to a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the purchase was made at net asset value and a
dealer's commission has been paid on that purchase. Redemptions of Class B
Shares or Class C Shares pursuant to a Systematic Withdrawal Plan may be subject
to a CDSC unless the annual amount selected to be withdrawn is less than 12% of
the account balance on the date that the Systematic Withdrawal Plan was
established. See Waiver of CDSC - Class B and Class C Shares and Waiver of
Limited CDSC Class A Shares under Redemption and Exchange in the Prospectus for
the Fund Classes.
An investor wishing to start a Systematic Withdrawal Plan must complete an
authorization form. If the recipient of Systematic Withdrawal Plan payments is
other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the
Transfer Agent at any time by giving written notice. The Systematic Withdrawal
Plan is not available with respect to the Institutional Class.
WEALTH BUILDER OPTION
Shareholders of the Fund Classes may elect to invest in one or more of the
other mutual funds in the Delaware Group through our Wealth Builder Option.
Under this automatic exchange program, shareholders can authorize regular
monthly investments (minimum of $100 per fund) to be liquidated from their
account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectus. See Wealth Builder Option and Redemption and Exchange in the
Prospectus for the Fund Classes.
The investment will be made on the 20th day of each month (or, if the fund
selected is not open that day, the next business day) at the public
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offering price or net asset value, as applicable, of the fund selected on the
date of investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure profits
or protect against losses in a declining market. The price of the fund into
which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges.
Shareholders can also use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Group, subject to the conditions and limitations described
in the Fund Classes' Prospectus. Shareholders can terminate their participation
at any time by written notice to the Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans. This option also is not available to shareholders
of the Institutional Class.
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DISTRIBUTIONS AND TAXES
The Series, and intends to continue to qualify, has qualified as a regulated
investment company under Subchapter M of the Code. As such, the Series will not
be subject to federal income tax on net investment income and net realized
capital gains which are distributed to shareholders.
Each Class of shares of the Series will share proportionately in the
investment income and expenses of the Series, except that Class A Shares, Class
B Shares and Class C Shares alone will incur distribution fees under their
respective 12b-1 Plans.
The Series intends to pay out all of its net investment income on a
quarterly basis. Distributions of net capital gains, if any, realized on sales
of investments will be distributed annually during the quarter following the
close of the fiscal year.
All dividends and any capital gains distributions will be automatically
credited to the shareholder's account in additional shares of the same Class
unless, in the case of shareholders in the Fund Classes, the shareholder
requests in writing that such dividends and/or distributions be paid in cash.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If such a
shareholder's dividends increase to greater than $1.00, the shareholder would
have to file a new election in order to begin receiving dividends in cash again.
Any check in payment of dividends or other distributions which cannot be
delivered by the U.S. Post Office or which remains uncashed for a period of
more than one year may be reinvested in the shareholder's account at the then-
current net asset value and the dividend option may be changed from cash to
reinvest. The Series may deduct from a shareholder's account the costs of the
Series' effort to locate a shareholder if a shareholder's mail is returned by
the U.S. Post Office or the Series is otherwise unable to locate the shareholder
or verify the shareholder's mailing address. These costs may include a
percentage of the account when a search company charges a percentage fee in
exchange for their location services. See also Other Tax Requirements under
Accounting and Tax Issues.
During the fiscal year ended November 30, 1994, dividends totaling $0.43,
$0.10 and $0.45 per share of the Class A Shares, the Class B Shares and the
Institutional Class, respectively, were paid from net investment income. The
Class A Shares and the Institutional Class also paid a capital gain of $1.66 per
share from realized securities profits during the fiscal year ended November 30,
1994. Dividends of $0.10, $0.09 and $0.14 per share of the Class A Shares, the
Class B Shares and the Institutional Class, respectively, were paid from net
investment income and a capital gain of $0.42 per share of each Class was paid
from realized securities profits on January 5, 1995 to shareholders of record
December 27, 1994.
Persons not subject to tax will not be required to pay taxes on
distributions. Dividends from investment income and short-term capital gains
distributions are treated by shareholders as ordinary income for federal income
tax purposes, whether received in cash or in additional shares. Distributions of
long-term capital gains, if any, are taxable to shareholders as long-term
capital gains, regardless of the length of time an investor has held such
shares, and these gains are currently taxed at long-term capital gain rates.
Under the Tax Reform Act of 1986, each Series of the Fund is treated as a single
tax entity and capital gains and losses for each Series are calculated
separately.
A portion of the Series' dividends may qualify for the dividends-received
deduction for corporations provided in the federal income tax law. The portion
of dividends paid by the Series that so qualifies will be designated each year
in a notice mailed to the Series' shareholders, and cannot exceed the gross
amount of dividends received by the Series from domestic (U.S.)
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<PAGE>
corporations that would have qualified for the dividends-received deduction in
the hands of the Series if the Series was a regular corporation. The
availability of the dividends-received deduction is subject to certain holding
period and debt financing restrictions imposed under the Code on the corporation
claiming the deduction. For the fiscal year ended November 30, 1994, 100% of the
dividends from net investment income of the Series was eligible for this
deduction.
Shareholders will be notified annually by the Fund as to the federal income
tax status of dividends and distributions paid by the Series.
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<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Series, subject to the
supervision and direction of the Fund's Board of Directors.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on November 30,
1994 were approximately $9,237,192,000. Investment advisory services are also
provided to institutional accounts with assets on November 30, 1994 of
approximately $15,544,258,000.
The Investment Management Agreement for the Series is dated April 3, 1995
and was approved by shareholders on March 29, 1995.
The Agreement has an initial term of two years and may be renewed each year
only so long as such renewal and continuance are specifically approved at least
annually by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Series, and only if the terms and the renewal thereof
have been approved by the vote of a majority of the directors of the Fund who
are not parties thereto or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. The Agreement is
terminable without penalty on sixty days' notice by the directors of the Fund
or by the Manager. The Agreement will terminate automatically in the event of
its assignment.
The annual compensation paid by the Series for investment management
services 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.
On November 30, 1994, the total net assets of the Series were $405,963,326.
Investment management fees paid by the Series during the past three fiscal years
were $2,425,145 for 1992, $2,567,182 for 1993 and $2,542,011 for 1994.
Under the general supervision of the Board of Directors, the Manager makes
all investment decisions which are implemented by the Fund. The Manager pays the
salaries of all directors, officers and employees of the Fund who are affiliated
with the Manager. The Series pays all of its other expenses, including its
proportionate share of rent and certain other administrative expenses.
The ratio of expenses to average daily net assets for the Decatur Total
Return Fund A Class and for the Decatur Total Return Fund Institutional Class
for the fiscal year ended November 30, 1994 was 1.26% and 0.96%, respectively.
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 for the Class A
Shares and the Class B Shares reflects the impact of its respective 12b-1 Plan.
The Series anticipates that the ratio of expenses to average daily net assets of
Class C Shares will be identical to that of Class B Shares.
By California regulation, the Manager is required to waive certain fees and
reimburse the Series for certain expenses to the extent that the Series' annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed 2 1/2% of the first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2% of
any additional average daily net assets. For the fiscal year ended November 30,
1994, no such reimbursement was necessary or paid.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of Series shares
under a Distribution Agreement dated April 3, 1995, as amended on November 29,
1995. The Distributor is an affiliate of the Manager and bears all of the
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costs of promotion and distribution, except for payments by the Series on behalf
of the Class A, Class B and Class C Shares of the Series under their respective
12b-1 Plans. Prior to January 3, 1995, Delaware Distributors, Inc. ("DDI")
served as the national distributor of the Series' shares. On that date, Delaware
Distributors, L.P., a newly formed limited partnership, succeeded to the
business of DDI. All officers and employees of DDI became officers and employees
of Delaware Distributors, L.P. DDI is the corporate general partner of Delaware
Distributors, L.P. and both DDI and Delaware Distributors, L.P. are indirect,
wholly-owned subsidiaries of Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate of
the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as the
Series' shareholder servicing, dividend disbursing and transfer agent pursuant
to a Shareholders Services Agreement dated June 29, 1988. The Transfer Agent is
also an indirect, wholly-owned subsidiary of Delaware Management Holdings,
Inc.
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OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction of its
Board of Directors. Certain officers and directors of the Fund hold identical
positions in each of the other funds in the Delaware Group. On September 15,
1995, the Fund's officers and directors owned less than 1% of the outstanding
shares of the Class A Shares and the Class B Shares and approximately 2.84% of
the Institutional Class.
As of October 31, 1995, the Fund believes the following shareholders held
5% or more of the outstanding shares of, respectively, the Institutional Class
and Class B Shares:
First Trust NA, Trst Northern States Power Employee Retirement Saving Plan,
Mutual Funds A/C 21736111, P.O. Box 64482, St. Paul MN 55164 held 506,436 shares
(68.77%); Delaware Management Company, Inc., Employee Profit Sharing Trust, 1818
Market Street, Philadelphia, PA 19103 held 82,844 shares (11.24%); and Castle
Harlan, Inc., 401(k) Plan, 150 East 58th Street, New York, NY 10155 held 49,293
shares (6.77%) of the outstanding shares of the Institutional Class. Shares held
by Delaware Management Company, Inc., Employee Profit Sharing Trust and Castle
Harlan, Inc., 401(k) Plan are beneficially owned by the participants in those
plans. Merrill, Lynch, Pierce, Fenner & Smith Inc., Mutual Fund Operations,
Attention Book Entry, 4800 Deer Lake Drive East, 3rd Fl., Jacksonville, FL 32246
held of record for the benefit of others 80,072 shares (9.85%) of the
outstanding shares of the Class B Shares.
DMH Corp., Delaware Management Company, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware International Holdings Ltd., Founders Holdings, Inc.,
Delaware International Advisers Ltd. and Delaware Investment Counselors, Inc.
are direct or indirect, wholly-owned subsidiaries of Delaware Management
Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. In connection with the merger, a new Investment Management Agreement
between the Fund on behalf of the Series and the Manager was executed following
shareholder approval. DMH and the Manager are now wholly-owned subsidiaries,
and subject to the ultimate control, of Lincoln National. Lincoln National,
with headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
Directors and principal officers of the Fund are noted below along with
their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.
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<PAGE>
*WAYNE A. STORK (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
the Fund, 15 other funds in the Delaware Group (which excludes Delaware
Pooled Trust, Inc.), and Delaware Management Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc. and Delaware
Investment Counselors, Inc. Chairman, Chief Executive Officer, Chief
Investment Officer and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of DMH Corp.,
Delaware International Advisers Ltd., Delaware International Holdings
Ltd. and Founders Holdings, Inc.
Director of Delaware Distributors, Inc. and Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
WINTHROP S. JESSUP (50)
Executive Vice President of the Fund, 15 other funds in the Delaware Group
(which excludes Delaware Pooled Trust, Inc.) and Delaware Management
Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Investment Counselors, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc.
Delaware International Holdings Ltd. and Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Management Trust Company, Delaware Service Company,
Inc. and Delaware International Advisers Ltd.
During the past five years, Mr. Jessup has served in various executive
capacities at different times within the Delaware organization.
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<PAGE>
RICHARD G. UNRUH, JR. (56)
Executive Vice President of the Fund and each of the other 16 funds in
the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times
within the Delaware organization.
WALTER P. BABICH (68)
Director and/or Trustee of the Fund and each of the other 16 funds in
the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he
was a partner of I&L Investors.
- -----------------------------
*Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the Investment Company Act of 1940.
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<PAGE>
ANTHONY D. KNERR (56)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
500 Fifth Avenue, New York, NY 10110.
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<PAGE>
Consultant, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
8Treasurer of Columbia
**8 University, New York. From 1987 to 1989, he was also a lecturer in
English at the University. In addition, Mr. Knerr was Chairman of The
Publishing Group, Inc., New York, from 1988 to 1990. Mr. Knerr founded
The Publishing Group, Inc. in 1988.
ANN R. LEVEN (55)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of
the Smithsonian
Institution, Washington, DC, and from 1975 to 1994, she was Adjunct
Professor of Columbia Business School.
W. THACHER LONGSTRETH (75)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
1617 John F. Kennedy Boulevard, Philadelphia, PA 19103.
Vice Chairman, Packquisition Corp., a financial printing, commercial printing
and information
processing firm.
Philadelphia City Councilman.
President, MLW, Associates.
Director, Tasty Baking Company.
Director, Healthcare Services Group.
CHARLES E. PECK (69)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group.
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<PAGE>
P.O. Box 1102, Columbia, MD 21044.
Secretary, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of The
Ryland Group,
Inc., Columbia, MD.
DAVID K. DOWNES (55)
Senior Vice President/Chief Administrative Officer/Chief Financial Officer of
the Fund, each of the other 16 funds in the Delaware Group and Delaware
Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director of DMH
Corp.
Senior Vice President/Chief Administrative Officer/Chief Financial Officer
and Director of Delaware Service Company, Inc.
Senior Vice President/Chief Administrative Officer of Delaware Distributors,
L.P.
Senior Vice President/Chief Administrative Officer of Delaware Distributors,
Inc.
Chief Financial Officer and Director of Delaware International Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Investment Counselors, Inc.
Senior Vice President and Director of Founders Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer of Equitable
Capital Management Corporation, New York, from December 1985 through
August 1992, Executive Vice President from December 1985 through March
1992, and Vice Chairman from March 1992 through August 1992.
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<PAGE>
GEORGE M. CHAMBERLAIN, JR. (48)
Senior Vice President and Secretary of the Fund, each of the other 16 funds
in the Delaware Group, Delaware Management Holdings, Inc., Delaware
Distributors, L.P. and Delaware Investment Counselors, Inc.
Executive Vice President and Secretary of Delaware Management Trust Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc.,
Delaware Distributors, Inc. and Delaware Service Company, Inc.
Corporate Vice President, Secretary and Director of Founders Holdings, Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various capacities
at different times within the Delaware organization.
JOHN B. FIELDS (50)
Vice President/Senior Portfolio Manager of the Fund, of seven other equity
funds in the Delaware Group and of Delaware Management Company, Inc.
Before joining the Delaware Group in 1992, Mr. Fields served as a director
of domestic equity risk management for DuPont, Wilmington, DE.
JOSEPH H. HASTINGS (45)
Vice President/Corporate Controller of the Fund, each of the other 16 funds
in the Delaware Group, Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Investment
Counselors, Inc. and Founders Holdings, Inc.
Executive Vice President/Treasurer/Chief Financial Officer of Delaware
Management Trust Company. Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief Financial
Officer for Prudential Residential Services, L.P., New York, NY from 1989
to 1992. Prior to that, Mr. Hastings served as Controller and Treasurer
for Fine Homes International, L.P., Stamford, CT from 1987 to 1989.
MICHAEL P. BISHOF (33)
Vice President/Treasurer of the Fund, each of the other 16 funds in the
Delaware Group, Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Founders Holdings, Inc. and Founders CBO Corporation.
Prior to joining the Delaware Group in 1995, Mr. Bishof was a vice president
for Bankers Trust, New York, NY from 1994 to 1995, a vice president for CS
First Boston Investment Management, New York, NY from 1993 to 1994 and an
assistant vice president for Equitable Capital Management Corporation, New
York, NY from 1987 to 1993.
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The following is a compensation table listing for each director entitled to
receive compensation, the aggregate compensation received from the Fund and the
total compensation received from all Delaware Group funds for the fiscal year
ended November 30, 1994 and an estimate of annual benefits to be received upon
retirement under the Delaware Group Retirement Plan for Directors/Trustees as of
November 30, 1994.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
AGGREGATE ACCRUED BENEFITS FROM ALL 17
COMPENSATION AS PART OF UPON DELAWARE
NAME FROM FUND FUND EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>
W. Thacher Longstreth $5,401.00 None $18,100 $39,619.35
Ann R. Leven $6,253.86 None $18,100 $44,590.02
Walter P. Babich $6,083.32 None $18,100 $43,595.90
John J. Connolly, Ed.D. $5,401.00 None $18,100 $39,619.35
Anthony D. Knerr $6,166.48 None $18,100 $43,962.29
Charles E. Peck $5,058.00 None $18,100 $36,483.40
John H. Durham $4,715.00 None $18,100 $33,813.40
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for Directors/Trustees,
each disinterested director who, at the time of his or her retirement from
the Board, has attained the age of 70 and served on the Board for at least
five continuous years, is entitled to receive payments from each fund in the
Delaware Group for a period equal to the lesser of the number of years that
such person served as a director or the remainder of such person's life. The
amount of such payments will be equal, on an annual basis, to the amount of
the annual retainer that is paid to directors of each fund at the time of
such person's retirement. If an eligible director retired as of November 30,
1994, he or she would be entitled to annual payments totaling $18,100, in the
aggregate, from all of the funds in the Delaware Group, based on the number
of funds in the Delaware Group as of that date.
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EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes and for
shareholders of classes of other funds in the Delaware Group are set forth in
the relevant prospectuses for such classes. The following supplements that
information. The Fund may modify, terminate or suspend the exchange privilege
upon sixty days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current
prospectus and an authorization form for any of the other mutual funds in the
Delaware Group. Exchange instructions must be signed by the record owner(s)
exactly as the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or series and
the purchase of another. The sale may involve either a capital gain or loss to
the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between funds
in the Delaware Group on behalf of their clients by telephone or other expedited
means. This service may be discontinued or revised at any time by the Transfer
Agent. Such exchange requests may be rejected if it is determined that a
particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.
TELEPHONE EXCHANGE PRIVILEGE
Shareholders owning shares for which certificates have not been issued or
their investment dealers of record may exchange shares by telephone for shares
in other mutual funds in the Delaware Group. This service is automatically
provided unless the Fund receives written notice from the shareholder to the
contrary.
Shareholders or their investment dealers of record may contact the Transfer
Agent at 800-523-1918 (in Philadelphia, 215-988-1241) or, in the case of
shareholders of the Institutional Class, their Client Services Representative at
800-828-5052, to effect an exchange. The shareholder's current Series account
number must be identified, as well as the registration of the account, the share
or dollar amount to be exchanged and the fund into which the exchange is to be
made. Requests received on any day after the time the offering price and net
asset value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for retirement plans.
The telephone exchange privilege is intended as a convenience to shareholders
and is not intended to be a vehicle to speculate on short-term swings in the
securities market through frequent transactions in and out of the funds in the
Delaware Group. Telephone exchanges may be subject to limitations as to amounts
or frequency. The Transfer Agent and the Fund reserve the right to record
exchange instructions received by telephone and to reject exchange requests at
any time in the future.
As described in the Fund's Prospectuses, 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.
RIGHT TO REFUSE TIMING ACCOUNTS
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Series reserves the right to refuse
any new Timing Arrangements, as well as any new purchases (as opposed to
exchanges) in Delaware Group funds from Timing Firms. The Fund reserves the
right to temporarily or permanently terminate the exchange privilege or reject
any specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of
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the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1/4 of 1% of the Fund's net assets. Accounts
under common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market indicators,
will be aggregated for purposes of the exchange limits.
RESTRICTIONS ON TIMED EXCHANGES
Timing Accounts operating under existing Timing Agreements may only execute
exchanges between the following eight Delaware Group funds: (1) Decatur Income
Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund, and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds will be available for Timed Exchanges. Assets redeemed or exchanged out
of Timing Accounts in Delaware Group funds not listed above may not be
reinvested back into that Timing Account. The Fund reserves the right to apply
these same restrictions to the account(s) of any person whose transactions seem
to follow a timing pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an exchange
request by any Timing Account, person, or group if, in the Manager's judgment,
the Fund would be unable to invest effectively in accordance with its investment
objectives and policies, or would otherwise potentially be adversely affected.
A shareholder's purchase exchanges may be restricted or refused if the Fund
receives or anticipates simultaneous orders affecting significant portions of
the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the Fund and therefore may be
refused.
The Series will terminate, except as noted above, all exchange privileges,
including telephone and written redemption privileges, previously made available
to Timing Firms. At such time, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
Following is a summary of the investment objectives of the other Delaware
Group funds:
DELAWARE FUND seeks long-term growth by a balance of capital appreciation,
income and preservation of capital. It uses a dividend-oriented valuation
strategy to select securities issued by established companies that are believed
to demonstrate potential for income and capital growth. DEVON FUND seeks current
income and capital appreciation by investing primarily in income-producing
common stocks, with a focus on common stocks the Manager believes have the
potential for above average dividend increases over time.
TREND FUND seeks long-term growth by investing in common stock issued by
emerging growth companies exhibiting strong capital appreciation potential.
VALUE FUND seeks capital appreciation by investing primarily in common stocks
whose market values appear low relative to their underlying value or future
potential.
DELCAP FUND seeks long-term capital growth by investing in common stocks and
securities convertible into common stocks of companies that have a demonstrated
history of growth and have the potential to support continued growth.
DECATUR INCOME FUND seeks the highest possible current income by investing
primarily in common stocks that provide the potential for income and capital
appreciation without undue risk to principal.
DELCHESTER FUND seeks as high a current income as possible by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper.
U.S. GOVERNMENT FUND seeks high current income by investing primarily in
long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
LIMITED-TERM GOVERNMENT FUND seeks high, stable income by investing primarily
in a portfolio of short- and intermediate-term securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and instruments
secured by such securities. U.S. GOVERNMENT MONEY FUND seeks maximum current
income with preservation of principal and maintenance of liquidity by investing
only in short-term securities issued or guaranteed as to principal and interest
by
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the U.S. Government, its agencies or instrumentalities, and repurchase
agreements collateralized by such securities, while maintaining a stable net
asset value.
DELAWARE CASH RESERVE seeks the highest level of income consistent with the
preservation of capital and liquidity through investments in short-term money
market instruments, while maintaining a stable net asset value.
TAX-FREE USA FUND seeks high current income exempt from federal income tax by
investing in municipal bonds of geographically-diverse issuers. TAX-FREE
INSURED FUND invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. TAX-FREE USA INTERMEDIATE FUND seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.
TAX-FREE MONEY FUND seeks high current income, exempt from federal income
tax, by investing in short-term municipal obligations, while maintaining a
stable net asset value.
TAX-FREE PENNSYLVANIA FUND seeks a high level of current interest income
exempt from federal and, to the extent possible, certain Pennsylvania state and
local taxes, consistent with the preservation of capital.
INTERNATIONAL EQUITY FUND seeks to achieve long-term growth without undue
risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. GLOBAL BOND FUND
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed income securities that may also provide the
potential for capital appreciation. GLOBAL ASSETS FUND seeks to achieve long-
term total return by investing in global securities which will provide higher
current income than a portfolio comprised exclusively of equity securities,
along with the potential for capital growth.
DELAWARE GROUP PREMIUM FUND offers nine series available exclusively as
funding vehicles for certain insurance company separate accounts. EQUITY/INCOME
SERIES seeks the highest possible total rate of return by selecting issues that
exhibit the potential for capital appreciation while providing higher than
average dividend income. HIGH YIELD SERIES seeks as high a current income as
possible by investing in rated and unrated corporate bonds, U.S. Government
securities and commercial paper. CAPITAL RESERVES SERIES seeks a high stable
level of current income while minimizing fluctuations in principal by investing
in a diversified portfolio of short- and intermediate-term securities. MONEY
MARKET SERIES seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. GROWTH SERIES seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. MULTIPLE STRATEGY SERIES seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. INTERNATIONAL
EQUITY SERIES seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. VALUE SERIES seeks capital
appreciation by investing in small- to mid-cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
EMERGING GROWTH SERIES seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging and
other growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective.
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus from the Distributor. Read it carefully
before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the information
contained in each fund's prospectus(es).
-54-
<PAGE>
GENERAL INFORMATION
The Manager is the investment manager of the Series. The Manager or its
affiliate, Delaware International Advisers Ltd., also manages the other funds in
the Delaware Group. The Manager, through a separate division, also manages
private investment accounts. While investment decisions for the Series are made
independently from those of the other funds and accounts, they may make
investment decisions at the same time.
Access persons and advisory persons of the Delaware Group of funds, as those
terms are defined in SEC Rule 17j-1 under the Investment Company Act of 1940,
who provide services to the Manager, Delaware International Advisers Ltd. or
their affiliates, are permitted to engage in personal securities transactions
subject to the exceptions set forth in Rule 17j-1 and the following general
restrictions and procedures: (1) certain blackout periods apply to personal
securities transactions of those persons; (2) transactions must receive advance
clearance and must be completed on the same day as the clearance is received;
(3) certain persons are prohibited from investing in initial public offerings of
securities and other restrictions apply to investments in private placements of
securities; (4) opening positions may only be closed-out at a profit after a 60-
day holding period has elapsed; and (5) the Compliance Officer must be informed
periodically of all securities transactions and duplicate copies of brokerage
confirmations and account statements must be supplied to the Compliance
Officer.
The Distributor acts as national distributor for the Fund and for the other
mutual funds in the Delaware Group. As previously described, prior to January
3, 1995, DDI served as the national distributor for the Fund. In its capacity
as such, DDI received net commissions from the Series on behalf of the Class A
Shares, after reallowances to dealers, as follows:
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT AMOUNTS NET
YEAR OF UNDERWRITING REALLOWED COMMISSION
ENDING COMMISSION TO DEALERS TO DDI
- ------ --------------- ---------- ----------
<S> <C> <C> <C>
11/30/94 $1,406,240 $1,218,424 $187,816
11/30/93 1,771,659 1,533,223 238,436
11/30/92 1,948,084 1,732,709 215,375
</TABLE>
Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Group. The Transfer Agent is paid a fee by the
Series for providing these services consisting of an annual per account charge
of $5.50 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the unaffiliated directors.
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of the Fund's advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause the Fund to delete the
words "Delaware Group" from the Fund's name.
Chemical Bank, 450 West 33rd Street, New York, NY 10001, is custodian of
the Series, securities and cash. As custodian for the Series, Chemical Bank
maintains a separate account or accounts for the Series; receives, holds and
releases portfolio securities on account of the Series; receives and disburses
money on behalf of the Series; and collects and receives income and other
payments and distributions on account of the Series' portfolio securities.
The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the Investment Company Act of 1940 has been
passed upon for the Fund by Stradley, Ronon, Stevens & Young, Philadelphia,
Pennsylvania.
-55-
<PAGE>
CAPITALIZATION
The Fund has a present authorized capitalization of seven hundred fifty
million shares of capital stock with a $1.00 par value per share. Two hundred
million shares are allocated to the Series. Prior to July 26, 1993, the Series
offered only one class of shares, the class currently designated the Class A
Shares. The Series currently offers four classes of shares, each representing a
proportionate interest in the assets of the Series, and each having the same
voting and other rights and preferences as the other classes of the Series,
except that shares of the Institutional Class may not vote on any matter
affecting the Fund Classes' Plans under Rule 12b-1. Similarly, as a general
matter, shareholders of the Class A Shares, Class B Shares and Class C Shares
may vote only on matters affecting the 12b-1 Plan that relates to the Class of
Shares that they hold. However, Class B Shares may vote on a proposal to
increase materially the fees to be paid by the Series under the Plan relating to
Class A Shares. General expenses of the Series will be allocated on a pro-rata
basis to the classes according to asset size, except that expenses of the Plans
of the Class A, Class B and Class C Shares will be allocated solely to those
classes. The Board of Directors has allocated one hundred million shares to the
Class A Shares, fifty million shares to the Class B Shares and fifty million
shares to the Institutional Class. While all shares have equal voting rights on
matters affecting the entire Fund, the Series would vote separately on any
matter which affects only this Series, such as any change in its own investment
objective and policy or action to dissolve the Series and as otherwise
prescribed by the Investment Company Act of 1940. Shares of the Series have a
priority in the Series' assets, and in gains on and income from the portfolio
of the Series.
Shares have no preemptive rights, are fully transferable and, when issued,
are fully paid and nonassessable.
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. 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.
NONCUMULATIVE VOTING
THESE SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE HOLDERS
OF MORE THAN 50% OF THE SHARES OF THE FUND VOTING FOR THE ELECTION OF DIRECTORS
CAN ELECT ALL THE DIRECTORS IF THEY CHOOSE TO DO SO, AND, IN SUCH EVENT, THE
HOLDERS OF THE REMAINING SHARES WILL NOT BE ABLE TO ELECT ANY DIRECTORS.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
-56-
<PAGE>
APPENDIX A--IRA INFORMATION
The Tax Reform Act of 1986 restructured, and in some cases eliminated, the tax
deductibility of IRA contributions. Under the Act, the full deduction for IRAs
($2,000 for each working spouse and $2,250 for one-income couples) was retained
for all taxpayers who are not covered by an employer-sponsored retirement plan.
Even if a taxpayer (or his or her spouse) is covered by an employer-sponsored
retirement plan, the full deduction is still available if the taxpayer's
adjusted gross income is below $25,000 ($40,000 for taxpayers filing joint
returns). A partial deduction is allowed for married couples with incomes
between $40,000 and $50,000, and for single individuals with incomes between
$25,000 and $35,000. The Act does not permit deductions for contributions to
IRAs by taxpayers whose adjusted gross income before IRA deductions exceeds
$50,000 ($35,000 for singles) and who are active participants in an employer-
sponsored retirement plan. Taxpayers who were not allowed deductions on IRA
contributions still can make nondeductible IRA contributions of as much as
$2,000 for each working spouse ($2,250 for one-income couples), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for
determining the deductibility of contributions made by married individuals
filing separate returns.
As illustrated in the following tables, maintaining an Individual Retirement
Account remains a valuable opportunity.
For many, an IRA will continue to offer both an up-front tax break with its tax
deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long-term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.
-57-
<PAGE>
Even if your IRA contribution is no longer deductible, the benefits of saving on
a tax-deferred basis can be substantial. The following tables illustrate the
benefits of tax-deferred versus taxable compounding. Each reflects a constant
10% rate of return, compounded annually, with the reinvestment of all proceeds.
The tables do not take into account any sales charges or fees. Of course,
earnings accumulated in your IRA will be subject to tax upon withdrawal. If you
choose a mutual fund with a fluctuating net asset value, like the Series, your
bottom line at retirement could be lower--it could also be much higher.
$2,000 INVESTED ANNUALLY ASSUMING A 10% ANNUALIZED RETURN
15% Tax Bracket Single - $0-$22,750
---------------
Joint - $0-$38,000
<TABLE>
<CAPTION>
HOW MUCH YOU
END OF CUMULATIVE HOW MUCH YOU HAVE WITH FULL
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA IRA DEDUCTION
<S> <C> <C> <C>
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
</TABLE>
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]
28% Tax Bracket Single - $22,751-$55,100
---------------
Joint - $38,001-$91,850
<TABLE>
<CAPTION>
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning 10%]
-58-
<PAGE>
<TABLE>
<CAPTION>
31% Tax Bracket Single - $55,101-$115,000
- -----------------
Joint - $91,851-$140,000
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning 10%]
<TABLE>
<CAPTION>
36% Tax Bracket* Single - $115,001-$250,000
- ------------------
Joint - $140,001-$250,000
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning 10%]
-59-
<PAGE>
<TABLE>
<CAPTION>
39.6% Tax Bracket* Single - over $250,000
- ------------------
Joint - over $250,000
END OF CUMULATIVE HOW MUCH YOU HOW MUCH YOU HAVE WITH FULL IRA
YEAR INVESTMENT AMOUNT HAVE WITHOUT IRA NO DEDUCTION DEDUCTION
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%) earning 10%]
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate. In
addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-60-
<PAGE>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED QUARTERLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,642 $ 3,774 $ 3,964 $ 4,083 $ 4,638 $ 5,370
15 4,915 5,184 5,581 5,833 7,062 8,800
20 6,633 7,121 7,857 8,334 10,755 14,419
30 12,081 13,436 15,572 17,012 24,939 38,716
40 22,001 25,352 30,865 34,728 57,831 103,956
</TABLE>
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED QUARTERLY
<TABLE>
<CAPTION>
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 28,226 $ 28,833 $ 29,702 $ 30,239 $ 32,699 $ 35,834
15 50,104 51,753 54,152 55,654 62,755 72,298
20 79,629 83,239 88,573 91,966 108,525 132,049
30 173,245 185,894 205,256 217,971 284,358 390,394
40 343,773 379,596 436,523 475,187 692,097 1,084,066
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate. In
addition, a 10% surtax (not applicable to capital gains) applies to certain
high-income taxpayers. It is computed by applying a 39.6% rate to taxable
income in excess of $250,000. The above tables do not reflect the personal
exemption phaseout nor the limitations of itemized deductions that may apply.
-61-
<PAGE>
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing $2,000
each January--the earliest opportunity--compared to contributing on April 15th
of the following year--the latest, for each tax year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
After 5 years $ 3,528 more
10 years $ 6,113
20 years $17,228
30 years $47,295
</TABLE>
Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.
And it pays to shop around. If you get just 2% more per year, it can make
a big difference when you retire. A constant 8% versus 10% return, both
compounded quarterly, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
<TABLE>
<CAPTION>
8% Return 10% Return
--------- ----------
<S> <C> <C>
10 Years $ 31,726 $ 35,834
30 Years $256,465 $390,394
</TABLE>
The statistical exhibits above are for illustration purposes only and do
not reflect the actual performance for the Series either in the past or in the
future.
-62-
<PAGE>
APPENDIX B
THE COMPANY LIFE CYCLE
Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.
1. EMERGING GROWTH--a period of experimentation in which the company builds
awareness of a new product or firm.
2. ACCELERATED DEVELOPMENT--a period of rapid growth with potentially high
profitability and acceptance of the product.
3. MATURING PHASE--a period of diminished real growth due to dependence on
replacement or sustained product demand.
4. CYCLICAL STAGE--a period in which a company faces a potential saturation
of demand for its product. At this point, a firm either diversifies or becomes
obsolete.
HYPOTHETICAL CORPORATE LIFE CYCLE
[Chart Appears Here]
Hypothetical Corporate Life Cycle Chart shows in a line illustration, the
stages that a typical company would go through, beginning with the emerging
state where sales growth continues at a steep pace to the mature phase where
growth levels off to the cyclical state where sales show more definitive highs
and lows.
The above chart illustrates the path traditionally followed by companies
that successfully survive the growth sequence.
-63-
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for the Fund and, in
its capacity as such, audits the financial statements contained in the Series'
Annual Report. The Delaware Group Decatur Fund, Inc. - Decatur Total Return
Fund's Statement of Net Assets, Statement of Operations, Statement of Changes in
Net Assets, and Notes to Financial Statements, as well as the report of Ernst &
Young LLP, independent auditors, for the fiscal year ended November 30, 1994 are
included in the Series' Annual Report to shareholders. The Series was formerly
known as Decatur Fund II. The financial statements, the notes relating thereto
and the report of Ernst & Young LLP, listed above are incorporated by reference
from the Annual Report into this Part B. In addition, unaudited financial
statements and the notes relating thereto for the six-month period ended May 31,
1995 are incorporated by reference from the Series' Semi-Annual Report into this
Part B.
-64-
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, shareholders of the Fund Classes should contact their financial
adviser or call Delaware Group at 800-523-4640, in Philadelphia call 215-988-
1333 and shareholders of the Institutional Class should contact 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
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
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
DECATUR TOTAL RETURN FUND
- ------------------------------
A CLASS
- ------------------------------
B CLASS
- ------------------------------
C CLASS
- ------------------------------
INSTITUTIONAL CLASS
- ------------------------------
CLASSES OF DELAWARE GROUP
DECATUR FUND, INC.
- ------------------------------
PART B
STATEMENT OF
ADDITIONAL INFORMATION
- ------------------------------
November 29, 1995
DELAWARE
GROUP
- ------------------------------
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
PART C
------
Other Information
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Part A - Financial Highlights
*Part B - Statements of Net Assets
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Accountant's Reports
* The financial statements and Accountant's Reports listed above for
each Series are incorporated by reference into Part B from the
Registrant's Annual Reports for the fiscal year ended November 30,
1994 which are included herein as an Exhibit. In addition, the
unaudited financial statements for each Series for the six-month
period ended May 31, 1995 are incorporated by reference into Part B
from the Registrant's Semi-Annual Reports. The Registrant's Semi-
Annual Reports were electronically filed with the Commission on
August 4, 1995.
(b) Exhibits:
(1) Articles of Incorporation.
-------------------------
(a) Articles of Incorporation, as amended and
supplemented to date, attached as Exhibit.
(b) Form of Articles Supplementary (November 1995)
attached as Exhibit.
(2) By-Laws. By-Laws, as amended to date, attached as
-------
Exhibit.
(3) Voting Trust Agreement. Inapplicable.
----------------------
i
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
(4) Copies of All Instruments Defining the Rights of Holders.
--------------------------------------------------------
(a) Articles of Incorporation, Articles of Amendment and
----------------------------------------------------
Articles Supplementary. Article Second of Articles
----------------------
Supplementary (June 30, 1993, April 27, 1994 and
September 2, 1994), Article Fifth of the Articles of
Incorporation (March 4, 1983) and Article Eleventh of
Articles of Amendment (May 2, 1985) attached as
Exhibit 24(b)(1)(a) and Form of Articles
Supplementary (November 1995) attached as Exhibit
24(b)(1)(b).
(b) By-Laws. Article II, Article III, as amended, and
-------
Article XIII, which was subsequently redesignated as
Article XIV, attached as Exhibit 24(b)(2).
(5) Investment Management Agreements. Investment Management
--------------------------------
Agreements between Delaware Management Company, Inc. and
the Registrant on behalf of each Series dated April 3,
1995 attached as Exhibit.
(6) (a) Distribution Agreements.
-----------------------
(i) Form of Distribution Agreements (April 1995)
included as Module.
(ii) Form of Amendment No. 1 to Distribution
Agreement (November 1995) included as Module.
(b) Administration and Service Agreement. Form of
------------------------------------
Administration and Service Agreement (as amended
November 1995) included as Module.
(c) Dealer's Agreement. Form of Dealer's Agreement (as
------------------
amended November 1995) included as Module.
(d) Form of Mutual Fund Agreement for the Delaware Group
of Funds incorporated into this filing by reference
to Post-Effective Amendment No. 102 filed January 30,
1995.
(7) Bonus, Profit Sharing, Pension Contracts. Amended and
----------------------------------------
Restated Profit Sharing Plan included as Module.
(8) Custodian Agreements. Incorporated into this filing by
--------------------
reference to Post-Effective Amendment No. 83 filed January
30, 1989, Post-Effective Amendment No. 84 filed January
30, 1989, Post-Effective Amendment No. 90 filed January
28, 1992 and Post-Effective Amendment No. 91 filed January
28, 1992.
ii
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
(9) Other Material Contracts. Shareholders Services Agreements
------------------------
incorporated into this filing by reference to Post-
Effective Amendment No. 81 filed November 30, 1988 and
Post-Effective Amendment No. 82 filed November 30, 1988.
(10) Opinion of Counsel. Filed with letter relating to Rule
------------------
24f-2 on January 26, 1995.
(11) Consents of Auditors. Attached as Exhibit.
--------------------
(12-13) Inapplicable.
(14) Model Plans. Incorporated into this filing by reference to
-----------
Post-Effective Amendment No. 93 filed February 1, 1993 and
Post-Effective Amendment No. 95 filed May 27, 1993.
Amended Model Plans included as Module.
**(15) Plans under Rule 12b-1.
----------------------
(a) Form of Plan under Rule 12b-1 for Class A (November
1995) included as Module.
(b) Form of Plan under Rule 12b-1 for Class B (November
1995) included as Module.
(c) Form of Plan under Rule 12b-1 for Class C (November
1995) included as Module.
(16) Schedules of Computation for each Performance Quotation.
-------------------------------------------------------
Attached as Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
------------------------
(18) Plan under Rule 18f-3. Form of Plan under Rule 18f-3
---------------------
included as Module.
(19) Other: Directors' Power of Attorney. Attached as Exhibit.
----------------------------
(20) Other: Financial Statements. The Registrant's Annual
--------------------
Reports for the fiscal year ended November 30,
1994 attached as Exhibit.
** Relates to Decatur Income Fund's and Decatur Total Return Fund's retail
classes only.
Item 25. Persons Controlled by or under Common Control with Registrant. None.
-------------------------------------------------------------
iii
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
Item 26. Number of Holders of Securities.
-------------------------------
<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders*
-------------- --------------
<S> <C>
Delaware Group Decatur Fund, Inc.'s
Decatur Income Fund series:
Decatur Income Fund A Class
Common Stock Par Value 78,583 Accounts as of
$1.00 Per Share October 31, 1995
Decatur Income Fund B Class
Common Stock Par Value 1,009 Accounts as of
$1.00 Per Share October 31, 1995
Decatur Income Fund C Class
Common Stock Par Value 0 Accounts as of
$1.00 Per Share October 31, 1995
Decatur Income Fund Institutional Class
Common Stock Par Value 97 Accounts as of
$1.00 Per Share October 31, 1995
Delaware Group Decatur Fund, Inc.'s
Decatur Total Return Fund series:
Decatur Total Return Fund A Class
Common Stock Par Value 36,478 Accounts as of
$1.00 Per Share October 31, 1995
Decatur Total Return Fund B Class
Common Stock Par Value 993 Accounts as of
$1.00 Per Share October 31, 1995
Decatur Total Return Fund C Class
Common Stock Par Value 0 Accounts as of
$1.00 Per Share October 31, 1995
</TABLE>
* Class C Shares were not offered prior to the effective date of this
Registration Statement.
iv
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Decatur Total Return Fund Institutional Class
Common Stock Par Value 11 Accounts as of
$1.00 Per Share October 31, 1995
</TABLE>
Item 27. Indemnification. Incorporated into this filing by reference to
---------------
Post-Effective Amendment No. 75 filed May 23, 1986 and Article VII of
the By-Laws, as amended, attached as Exhibit 24(b)(2).
Item 28. Business and Other Connections of Investment Adviser.
----------------------------------------------------
Delaware Management Company, Inc. (the "Manager") or its affiliate,
Delaware International Advisers Ltd., also serves as investment manager to the
other funds in the Delaware Group (Delaware Group Delaware Fund, Inc., Delaware
Group Trend Fund, Inc., Delaware Group Value Fund, Inc., Delaware Group DelCap
Fund, Inc., Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group
Government Fund, Inc., Delaware Group Limited-Term Government Funds, Inc.,
Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free Fund, Inc., DMC Tax-
Free Income Trust-Pennsylvania, Delaware Group Tax-Free Money Fund, Inc.,
Delaware Group Premium Fund, Inc., Delaware Group Global & International Funds,
Inc., Delaware Pooled Trust, Inc., Delaware Group Dividend and Income Fund, Inc.
and Delaware Group Global Dividend and Income Fund, Inc.) and provides
investment advisory services to institutional accounts, primarily retirement
plans and endowment funds. In addition, certain directors of the Manager also
serve as directors/trustees of the other Delaware Group funds, and certain
officers are also officers of these other funds. A company owned by the
Manager's parent company acts as principal underwriter to the mutual funds in
the Delaware Group (see Item 29 below) and another such company acts as the
shareholder servicing, dividend disbursing and transfer agent for all of the
mutual funds in the Delaware Group.
The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:
v
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ----------------------------------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, Chief Executive Officer, Chief Investment
Officer and Director of Delaware Management Company, Inc.; President,
Chief Executive Officer, Chairman of the Board and Director of the
Registrant, and with the exception of Delaware Pooled Trust, Inc.,
each of the other funds in the Delaware Group and Delaware Management
Holdings, Inc.; Chairman of the Board and Director of Delaware Pooled
Trust, Inc. and Delaware Investment Counselors, Inc.; Chairman, Chief
Executive Officer and Director of DMH Corp., Delaware International
Advisers Ltd., Delaware International Holdings Ltd. and Founders
Holdings, Inc.; and Director of Delaware Distributors, Inc. and
Delaware Service Company, Inc.
Winthrop S. Jessup Executive Vice President and Director of Delaware Management Company,
Inc., DMH Corp., Delaware International Holdings Ltd. and Founders
Holdings, Inc.; Executive Vice President of the Registrant and, with
the exception of Delaware Pooled Trust, Inc., each of the other funds
in the Delaware Group and Delaware Management Holdings, Inc.;
President and Chief Executive Officer of Delaware Pooled Trust, Inc.;
Vice Chairman of Delaware Distributors, L.P.; Vice Chairman and
Director of Delaware Distributors, Inc.; Director of Delaware Service
Company, Inc., Delaware Management Trust Company and Delaware
International Advisers Ltd.; and President and Director of Delaware
Investment Counselors, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company,
Inc.; Executive Vice President of the Registrant and each of the other
funds in the Delaware Group; Senior Vice President of Delaware
Management Holdings, Inc.; and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance Committee, Keystone Insurance
Company since 1989, 2040 Market Street, Philadelphia, PA; Board of
Directors, Chairman of Finance Committee, Mid Atlantic, Inc., since
1989, 2040 Market Street, Philadelphia, PA
Paul E. Suckow Senior Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Company, Inc., the Registrant, each of the other
funds in the Delaware Group and Delaware Management Holdings, Inc.;
Senior Vice President and Director of Founders Holdings, Inc.; and
Director of Founders CBO Corporation
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vi
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ----------------------------------------------------------------------
<S> <C>
David K. Downes Senior Vice President, Chief Administrative Officer and Chief
Financial Officer of Delaware Management Company, Inc., the Registrant
and each of the other funds in the Delaware Group; Chairman and
Director of Delaware Management Trust Company; Senior Vice President,
Chief Administrative Officer, Chief Financial Officer and Treasurer of
Delaware Management Holdings, Inc.; Senior Vice President, Chief
Financial Officer, Treasurer and Director of DMH Corp.; Senior Vice
President, Chief Administrative Officer and Director of Delaware
Distributors, Inc.; Senior Vice President and Chief Administrative
Officer of Delaware Distributors, L.P.; Senior Vice President, Chief
Administrative Officer, Chief Financial Officer and Director of
Delaware Service Company, Inc.; Chief Financial Officer and Director
of Delaware International Holdings Ltd.; Senior Vice President, Chief
Financial Officer and Treasurer of Delaware Investment Counselors,
Inc.; Senior Vice President and Director of Founders Holdings, Inc.;
and Director of Delaware International Advisers Ltd.
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors, Inc. and Delaware
Service Company, Inc.; Senior Vice President and Secretary of the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Investment Counselors, Inc. and Delaware
Management Holdings, Inc.; Executive Vice President, Secretary and
Director of Delaware Management Trust Company; Corporate Vice
President, Secretary and Director of Founders Holdings, Inc.;
Secretary and Director of Delaware International Holdings Ltd.; and
Director of Delaware International Advisers Ltd.
Director of ICI Mutual Insurance Co. since 1992, P.O. Box 730,
Burlington, VT
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vii
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ----------------------------------------------------------------------
<S> <C>
Richard J. Flannery Managing Director/Corporate Tax & Affairs of Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Management Trust Company, Delaware
International Holdings Ltd., Delaware Investment Counselors, Inc. and
Founders CBO Corporation; Vice President of the Registrant and each of
the other funds in the Delaware Group; Managing Director/Corporate Tax
& Affairs and Director of Founders Holdings, Inc.; and Director of
Delaware International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd.,
Elverton, PA; Director and Member of Executive Committee of Stonewall
Links, Inc. since 1991, Bulltown Rd., Elverton, PA
Michael P. Bishof/1/ Vice President and Treasurer of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Founders
Holdings, Inc. and Founders CBO Corporation
Eric E. Miller Vice President and Assistant Secretary of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware Distributors,
L.P., Delaware Distributors Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders Holdings, Inc. and
Delaware Investment Counselors, Inc.
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., DMH
Corp., Delaware Management Trust Company, Delaware Investment
Counselors, Inc. and Founders Holdings, Inc.; and Assistant Secretary
of Founders CBO Corporation
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln.,
Philadelphia, PA
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
viii
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ----------------------------------------------------------------------
<S> <C>
Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Investment Counselors, Inc. and Founders Holdings, Inc.;
Executive Vice President, Chief Financial Officer and Treasurer of
Delaware Management Trust Company; and Assistant Treasurer of Founders
CBO Corporation
Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management
Company, Inc., the Registrant, each of the other funds in the Delaware
Group, Delaware Management Holdings, Inc., DMH Corp. and Delaware
Management Trust Company
Lisa O. Brinkley/2/ Vice President/Compliance of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Management Trust Company and Delaware
Investment Counselors, Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P. and Delaware Distributors, Inc.
Douglas L. Anderson/3/ Vice President/Operations of Delaware Management Company, Inc. and
Delaware Service Company, Inc.; and Vice President/Operations and
Director of Delaware Management Trust Company
Michael T. Taggart/4/ Vice President/Facilities Management and Administrative Services of
Delaware Management Company, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds, the fixed income funds
and the closed-end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Treasurer and Director of Founders CBO
Corporation
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
ix
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ----------------------------------------------------------------------
<S> <C>
J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds and the fixed income funds
in the Delaware Group
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds and the fixed income funds
in the Delaware Group and Delaware Investment Counselors, Inc.
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds, the fixed income funds
and the closed-end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Secretary and Director of Founders CBO
Corporation
James R. Raith, Jr. Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds, the fixed income funds
and the closed-end funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and President and Director of Founders CBO
Corporation
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds and the fixed income funds
in the Delaware Group
Roger A. Early/5/ Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., each of the tax-exempt funds and the fixed income funds
in the Delaware Group
Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in
the Delaware Group
George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in
the Delaware Group
John B. Fields Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant, each of the other equity funds in the
Delaware Group and Delaware Investment Counselors, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
x
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------------- ----------------------------------------------------------------------
<S> <C>
Edward A. Trumpbour Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in
the Delaware Group
David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management
Company, Inc., the Registrant and each of the other equity funds in
the Delaware Group
</TABLE>
/1/ VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust
and VICE PRESIDENT, CS First Boston Investment Management prior to June
1995.
/2/ VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities Corporation
prior to June 1994 and ASSISTANT VICE PRESIDENT AND COMPLIANCE OFFICER,
Aetna Life and Casualty prior to March 1993.
/3/ VICE PRESIDENT OF OPERATIONS, Supervised Service Company prior to
March 1994.
/4/ ASSISTANT VICE PRESIDENT/ADMINISTRATIVE SERVICES, United Pacific Life
Insurance prior to January 1994.
/5/ SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors prior
to July 1994.
Item 29. Principal Underwriters.
----------------------
(a) Delaware Distributors, L.P. serves as principal underwriter for
all the mutual funds in the Delaware Group.
(b) Information with respect to each director, officer or partner of
principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ---------------------------- --------------------- ------------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management
Company, Inc. Limited Partner Investment Manager
Delaware Investment
Counselors, Inc. Limited Partner None
Winthrop S. Jessup Vice Chairman Executive Vice President
Keith E. Mitchell President and Chief None
Executive Officer
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- -------------------------- ---------------------------- ----------------------------
<S> <C> <C>
David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary
J. Lee Cook Senior Vice President/ None
National Sales Manager
Stephen H. Slack Senior Vice President/ None
Wholesaler
William F. Hostler Senior Vice President/ None
Marketing Services
Minette van Noppen Senior Vice President/ None
Retirement Services
Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs
Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Rosemary E. Milner Vice President/Legal Vice President/Legal
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xii
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- --------------------------- --------------------- ---------------------
<S> <C> <C>
Diane M. Anderson Vice President/ None
Retirement Services
Denise F. Guerriere Vice President/Client Services None
Julia R. Vander Els Vice President/ None
Retirement Services
Jerome J. Alrutz Vice President/ None
Retirement Services
Martin J. Cole Vice President/ None
Retirement Services
Joanne A. Mettenheimer Vice President/ None
National Accounts
Christopher H. Price Vice President/Annuity None
Marketing & Administration
Thomas S. Butler Vice President/ None
DDI Administration
Frank Albanese Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William S. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Robert M. Frank Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
Alan D. Kessler Vice President/Wholesaler None
William M. Kimbrough Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiii
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------------- ------------------------- ---------------------
<S> <C> <C>
Mac McAuliffe Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Dion D. Rooney Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Thomas E. Sawyer Vice President/Wholesaler None
Sanford G. Simmons, Jr. Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
--------------------------------
All accounts and records are maintained in Philadelphia at 1818 Market
Street, Philadelphia, PA 19103 or One Commerce Square, Philadelphia,
PA 19103.
Item 31. Management Services. None.
-------------------
Item 32. Undertakings.
------------
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
xiv
<PAGE>
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
(d) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of
removal of any director when requested in writing to do so by the
record holders of not less than 10% of the outstanding shares.
xv
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 21st day of November, 1995.
DELAWARE GROUP DECATUR FUND, INC.
By /s/Wayne A. Stork
----------------------------
Wayne A. Stork
Chairman of the Board, President,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------- ------------------------------------------ ----------------------
<S> <C> <C>
Chairman of the Board, President,
/s/Wayne A. Stork Chief Executive Officer and Director November 21, 1995
- --------------------------------------------------
Wayne A. Stork
Senior Vice President/Chief Administrative
Officer/Chief Financial Officer (Principal
Financial Officer and Principal Accounting
/s/David K. Downes Officer) November 21, 1995
- --------------------------------------------------
David K. Downes
/s/Walter P. Babich * Director November 21, 1995
- --------------------------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director November 21, 1995
- --------------------------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director November 21, 1995
- --------------------------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director November 21, 1995
- --------------------------------------------
W. Thacher Longstreth
/s/Charles E. Peck * Director November 21, 1995
- --------------------------------------------
Charles E. Peck
</TABLE>
*By/s/Wayne A. Stork
--------------------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
----------- -------
EX-99.B1A Articles of Incorporation, as amended and supplemented to
date
EX-99.B1B Form of Articles Supplementary (November 1995)
EX-99.B2 By-Laws, as amended to date
EX-99.B5 Investment Management Agreements (April 3, 1995)
. EX-99.B6AI Form of Distribution Agreement (April 1995)
(Module Name
DIS_AGR_NON_MON)
. EX-99.B6AII Form of Amendment No. 1 to Distribution Agreement
(Module Name (November 1995)
AMD_DIS_AGR_NON)
. EX-99.B6B Form of Administration and Service Agreement (as amended
(Module Name November 1995)
ADMIN_SER_AGREE)
. EX-99.B6C Form of Dealer's Agreement (as amended November 1995)
(Module Name
DEALERS_AGREE)
EX-99.B7 Amended and Restated Profit Sharing Plan
. (Module Name
PROF_SHARE_PLAN)
. EX-99.B11 Consents of Auditors
EX-99.B14 Amended Model Plans
. (Module Name
MODEL_PLANS)
EX-99.B15A Form of Plan under Rule 12b-1 for Class A (November 1995)
. (Module Name
CL_A_SHARE_NON)
EX-99.B15B Form of Plan under Rule 12b-1 for Class B (November 1995)
. (Module Name
CL_B_SHARE_ALL)
EX-99.B15C Form of Plan under Rule 12b-1 for Class C (November 1995)
. (Module Name
CL_C_SHARE_ALL)
EX-99.B16 Schedules of Computation for each Performance Quotation
EX-27 Financial Data Schedules
EX-99.B18 Form of Plan under Rule 18f-3
. (Module Name
PLAN)
EX-99.B19 Directors' Power of Attorney
EX-99.B20 Financial Statements: Annual Reports for the fiscal year
ended November 30, 1994
<PAGE>
EX-99.B1A
Articles of Incorporation
DELAWARE GROUP DECATUR FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Decatur Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 of the Maryland General Corporation Law, to
the State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation has adopted resolutions
taking the following actions:
1. classifying a third class of shares of the Decatur Income Fund Series
of Common Stock of the Corporation as the Decatur Income Fund B Class and
reclassifying and allocating 50,000,000 shares of authorized and unissued
Common Stock, par value $1.00 per share, previously classified and allocated
to the Decatur Income Fund class, to the Decatur Income Fund B Class;
2. classifying a third class of shares of the Decatur Total Return Fund
Series of Common Stock of the Corporation as the Decatur Total Return B Class
and reclassifying and allocating 50,000,000 shares of authorized and unissued
Common Stock of the Corporation, par value $1.00 per share, previously
classified and allocated to the Decatur Total Return Fund class, to the
Decatur Total Return B Class; and
SECOND: The shares of the Decatur Income Fund B Class and the Decatur
Total Return B Class (each referred to herein as a "B Class") shall represent
proportionate interests in the same portfolio of investments as the shares of
the existing classes of Common Stock of the Decatur Income Fund
(Institutional) class and the Decatur Income Fund class of the Corporation,
and the Decatur Total Return Fund (Institutional) class and the Decatur Total
Return Fund class of the Corporation, respectively. The shares of a B Class
shall h ave the same preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption as the shares of the Decatur Income Fund
(Institutional) class and the Decatur Income Fund class, and the Decatur Total
Return Fund (Institutional) class and the Decatur Total Return Fund
<PAGE>
class, respectively, all as set forth in the Articles of Incorporation of the
Corporation, except for the differences hereafter set forth:
1. The dividends and distributions of investment income and capital gains
with respect to a B Class of shares of Common Stock of a Series shall be in
such amounts as may be declared from time to time by the Board of Directors,
and such dividends and distributions may vary with respect to such class from
the dividends and distributions of investment income and capital gains with
respect to other classes of Common Stock of that Series to reflect differing
allocations of the expenses of the Corporation among the classes and any
resultant difference among the net asset values per share of the classes, to
such extent and for such purposes as the Board of Directors may deem
appropriate. The allocation of investment income and capital gains and
expenses and liabilities of each Series among its three classes of Common
Stock shall be determined by the Board of Directors in a manner that is
consistent with the order, as applicable, dated November 9, 1992 (Investment
Company Act of 1940 Release No. 19086) issued by the Securities and Exchange
Commission, and any future order or any rule or interpretation under the
Investment Company Act of 1940, as amended, that modifies or supersedes such
order;
2. Except as may otherwise be required by law pursuant to any applicable
order, rule or interpretation issued by the Securities and Exchange
Commission, or otherwise, the holders of B Class shares shall have (i)
exclusive voting rights with respect to any matter submitted to a vote of
stockholders that affects only holders of B Class shares, including without
limitation, the provisions of any Distribution Plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, (a "Distribution
Plan") applicable to that B Class and (ii) no voting rights with respect to
the provisions of any Distribution Plan applicable to the existing classes of
a series or with regard to any other matter submitted to a vote of
stockholders which does not affect holders of the B Class shares.
3. (a) Other than shares described in paragraph (3) (b) herein, each
share of the Decatur Income Fund B Class and the Decatur Total Return B Class
shall be converted automatically, and without any action or choice on the part
of the holder thereof, into shares of, respectively, the Decatur Income Fund
class and the Decatur Total Return Fund class on the Conversion Date. The
term "Conversion Date" when used herein shall mean a date set forth in the
prospectus of the B Class, as such prospectus may be amended from time to
time, that is no later than three months after either (i) the date on which
the eighth anniversary of the date of issuance of the share occurs, or (ii)
any such other anniversary date as may be determined by the Board of
<PAGE>
Directors and set forth in the prospectus of the B Class, as such prospectus
may be amended from time to time; provided that any such other anniversary
date determined by the Board of Directors shall be a date that will occur
prior to the anniversary date set forth in clause (i) and any such other date
theretofore determined by the Board of Directors pursuant to this clause (ii);
but further provided that, subject to the provisions of the next sentence, for
any shares of a B Class acquired through an exchange, or through a series of
exchanges, as permitted by the Corporation as provided in the prospectus of
the B Class, as such prospectus may be amended from time to time, from another
investment company or another series of the Corporation (an "eligible
investment company"), the Conversion Date shall be the conversion date
applicable to the shares of stock of the eligible investment company
originally subscribed for in lieu of the Conversion Date of any stock acquired
through exchange if such eligible investment company issuing the stock
originally subscribed or had a conversion feature, but not later than the
Conversion Date determined under (i) or (ii) above. For the purpose of
calculating the holding period required for conversion, the date of issuance
of a share of a B Class shall mean (i) in the case of a share of a B class
obtained by the holder thereof through an original subscription to the
Corporation, the date of the issuance of such share of a B Class, or (ii) in
the case of a share of a B Class obtained by the holder thereof through an
exchange, or through a series of exchanges, from an eligible investment
company to which the holder originally subscribed.
(b) Each share of a B Class (i) purchased through the automatic
reinvestment of a dividend or distribution with respect to that B Class or the
corresponding B Class of any other investment company or any other series of
the Corporation issuing such class of shares or (ii) issued pursuant to an
exchange privilege granted by the Corporation in an exchange or series of
exchanges for shares originally purchased through the automatic reinvestment
of a dividend or distribution with respect to shares of capital stock of an
eligible investment company shall be segregated in a separate sub-account on
the stock records of the Corporation for each of the holders of record
thereof. On any Conversion Date, a number of the shares held in the separate
sub-account of the holder of record of the share or shares being converted,
calculated in accordance with the next following sentence, shall be converted
automatically, and without any action or choice on the part of the holder,
into shares of the Decatur Income Fund class in the case of shares of the
Decatur Income Fund B Class or the Decatur Total Return Fund class in the case
of shares of the Decatur Total Return B Class. The number of shares in the
holder's separate sub-account so converted shall (i) bear the same ratio to
the total number of shares maintained in the separate sub-account on the
Conversion Date (immediately prior to conversion) as the
<PAGE>
number of shares of the holder converted on the Conversion Date pursuant to
paragraph (3)(a) hereof bears to the total number of B Class shares of the
holder on the Conversion Date (immediately prior to conversion) after
subtracting the shares then maintained in the holder's separate sub-account,
or (ii) be such other number as may be calculated in such other manner as may
be determined by the Board of Directors and set forth in the prospectus of the
B Class, as such prospectus may be amended from time to time.
(c) The number of shares of the Decatur Income Fund class or the Decatur
Total Return Fund class, as the case may be, into which a share of a B Class
is converted pursuant to paragraphs 3(a) and 3(b) hereof shall equal the
number (including for this purpose fractions of a share) obtained by dividing
the net asset value per share of such B Class for purposes of sales and
redemption thereof on the Conversion Date by the net asset value per share of
the Decatur Income Fund class or the Decatur Total Return Fund class, as the
case may be, for purposes of sales and redemption thereof on the Conversion
Date.
(d) On the Conversion Date, the shares of a B Class converted into shares
of Decatur Income Fund class or the Decatur Total Return Fund class, as the
case may be, will no longer be deemed outstanding and the rights of the
holders thereof (except the right to receive (i) the number of shares of the
Decatur Income Fund class or the Decatur Total Return Fund class into which
the shares of the B Class have been converted and (ii) declared but unpaid
dividends to the Conversion Date or such other date set forth in the
prospectus of the B Class, as such prospectus may be amended from time to time
and (iii) the right to vote converting shares of the B Class held as of any
record date occurring on or before the Conversion Date and theretofore set
with respect to any meeting held after the Conversion Date) will cease.
Certificates representing shares of the Decatur Income Fund class or the
Decatur Total Return Fund class resulting from the conversion need not be
issued until certificates representing shares of the relevant B Class
converted, if issued, have been received by the Corporation or its agent duly
endorsed for transfer.
(e) The automatic conversion of a B Class into the Decatur Income Fund
class, or the Decatur Total Return Fund class, as the case may be, as set
forth in paragraphs 3(a) and 3(b) of this Article SECOND shall be suspended at
any time that the Board of Directors determines (i) that there is not
available a reasonably satisfactory opinion of counsel to the effect that (x)
the assessment of the higher fee under the Distribution Plan with respect to
the B Class does not result in the Corporation's dividends or distributions
constituting a "preferential dividend" under the Internal Revenue Code of
1986, as amended, and (y) the conversion of
<PAGE>
the B Class does not constitute a taxable event under federal income tax law,
or (ii) any other condition to conversion set forth in the prospectus of the B
Class, as such prospectus may be amended from time to time, is not satisfied.
(f) The automatic conversion of a B Class into the Decatur Income Fund
class, or the Decatur Total Return Fund class, as the case may be, as set
forth in paragraphs 3(a) and 3(b) hereof may also be suspended by action of
the Board of Directors at any time that the Board of Directors determines such
suspension to be appropriate in order to comply with, or satisfy the
requirements of the Investment Company Act of 1940, as amended, and in effect
from time to time, or any rule, regulation or order issued thereunder relating
to voting by the holders of the B Class on any Distribution Plan with respect
to the Decatur Income Fund class, or the Decatur Total Return Fund class, and
in effect from time to time, and in connection with, or in lieu of, any such
suspension, the Board of Directors may provide holders of the B Class with
alternative conversion or exchange rights into other classes of stock of the
Corporation in a manner consistent with the law, rule, regulation or order
giving rise to the possible suspension of the conversion right.
THIRD: The shares of the Decatur Income Fund B Class and the Decatur
Total Return B Class have been classified by the Board of Directors pursuant
to authority contained in the Articles of Incorporation of the Corporation.
IN WITNESS WHEREOF, Delaware Group Decatur Fund, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf this 2nd day
of September, 1994.
DELAWARE GROUP DECATUR FUND, INC.
By:/s/George M. Chamberlain, Jr.
--------------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/Eric E. Miller
-----------------
Eric E. Miller
Assistant Secretary
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DECATUR FUND,
INC., who executed on behalf of the said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges,
in the name of and on behalf of said Corporation, said Articles
<PAGE>
Supplementary to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
DELAWARE GROUP DECATUR FUND, INC., a Maryland corporation having its
principal office in Baltimore City (hereinafter called the "Corporation"),
certifies that:
FIRST: The Articles of Incorporation of the Corporation are hereby
amended by deleting the ninth paragraph of Article FIFTH in its entirety and
inserting the following paragraph in lieu thereof:
Subject to the aforesaid power of the Board of Directors, and giving
effect to earlier supplements to these Articles of Incorporation to the
extent that their provisions are not inconsistent with this paragraph,
two series of shares are hereby designated and classified as: the
Decatur Income Fund series and Five Hundred Fifty Million (550,000,000)
shares of Common Stock (par value $1.00 per share) are hereby initially
classified and allocated to such series; and the Decatur Total Return
Fund series and Two Hundred Million (200,000,000) shares of Common Stock
(par value $1.00 per share) are hereby initially classified and allocated
to such series. Two sub-series of the Decatur Income Fund series are
hereby designated and classified as: the Decatur Income Fund class, and
Five Hundred Million (500,000,000) shares of Common Stock (par value
$1.00 per share) are classified and allocated to such sub-series; and the
Decatur Income Fund (Institutional) class, and Fifty Million (50,000,000)
shares of Common Stock (par value $1.00 per share) are classified and
allocated to such sub-series. Two sub-series of the Decatur Total Return
Fund series are hereby designated and classified as: the Decatur Total
Return Fund class, and One Hundred Fifty Million (150,000,000) shares of
Common Stock (par value $1.00 per share) are classified and allocated to
such sub-series; and the Decatur Total Return Fund (Institutional) class,
and Fifty Million (50,000,000) shares of Common Stock (par value $1.00
per share) are classified and allocated to such sub-series.
SECOND: (a) The total number of shares of stock which the Corporation was
authorized to issue prior to the amendment was Seven Hundred Fifty Million
(750,000,000) shares, with a par value of One Dollar ($1.00) per share and
with an aggregate par value of Seven Hundred Fifty Million Dollars
($750,000,000). One series of shares was initially designated as the Decatur
I Series and Five Hundred Fifty Million (550,000,000) shares of Common Stock
(par value $1.00
<PAGE>
per share) were initially classified and allocated to such Series, with an
aggregate par value of Five Hundred Fifty Million Dollars ($550,000,000). Two
classes of the Decatur I Series were classified and designated or identified
as (i) the Decatur Fund I class of the Series, and Five Hundred Million
(500,000,000) shares (par value $1.00 per share) of the Decatur I Series were
classified and allocated to such class, with an aggregate par value of Five
Hundred Million Dollars ($500,000,000) and (ii) the Decatur Fund I
(Institutional) class, and Fifty Million (50,000,000) shares (par value $1.00
per share) of the Decatur I Series were classified and allocated to such
class, with an aggregate par value of Fifty Million Dollars ($50,000,000). A
second series of shares was initially designated as the Decatur II Series and
Two Hundred Million (200,000,000) shares of Common Stock (par value $1.00 per
share) were initially classified and allocated to such Series, with an
aggregate par value of Two Hundred Million Dollars ($200,000,000). Two
classes of the Decatur II Series were classified and designated or identified
as (i) the Decatur Fund II class of the Series, and One Hundred Fifty Million
(150,000,000) shares (par value $1.00 per share) of the Decatur II Series were
classified and allocated to such class, with an aggregate par value of One
Hundred Fifty Million Dollars ($150,000,000) and (ii) the Decatur Fund II
(Institutional) class, and Fifty Million (50,000,000) shares (par value $1.00
per share) of the Decatur II Series were classified and allocated to such
class, with an aggregate par value of Fifty Million Dollars ($50,000,000).
(b) The total number of shares of stock which the Corporation is
authorized to issue, following the aforesaid amendment, is Seven Hundred Fifty
Million (750,000,000) shares, with a par value of One Dollar ($1.00) per
share, with an aggregate par value of Seven Hundred Fifty Million Dollars
($750,000,000). One series of shares is designated as the Decatur Income Fund
series and Five Hundred Fifty Million (550,000,000) shares of Common Stock
(par value $1.00 per share) are classified and allocated to such series, with
an aggregate par value of Five Hundred Fifty Million Dollars ($550,000,000).
Two classes of the Decatur Income Fund Series have been designated as: (i)
the Decatur Income Fund class, and Five Hundred (500,000,000) shares of the
Common Stock (par value $1.00 per share) of the Decatur Income Fund series
have been classified and allocated to the Decatur Income Fund class, with an
aggregate par value of Five Hundred Million Dollars ($500,000,000); and (ii)
the Decatur Income Fund (Institutional) class, and Fifty Million (50,000,000)
shares of Common Stock (par value $1.00 per share) of the Decatur Income Fund
series have been classified and allocated to the Decatur Income Fund
(Institutional) class, with an aggregate par value of Fifty Million Dollars
($50,000,000). A second series of shares is designated as the Decatur Total
Return Fund series and Two Hundred Million
<PAGE>
(200,000,000) shares of Common Stock (par value $1.00 per share) are
classified and allocated to such series, with an aggregate par value of Two
Hundred Million Dollars ($200,000.000). Two classes of the Decatur Total
Return Fund series have been designated as: (i) the Decatur Total Return Fund
class, and One Hundred Fifty Million (150,000,000) shares of Common Stock (par
value $1.00 per share) of the Decatur Total Return Fund series have been
classified and allocated to such class, with an aggregate par value of One
Hundred Fifty Million Dollars ($150,000,000), and (ii) the Decatur Total
Return Fund (Institutional) class, and Fifty Million (50,000,000) shares of
Common Stock (par value $1.00 per share) of the Decatur Total Return Fund
series have been classified and allocated to such class, with an aggregate par
value of Fifty Million Dollars ($50,000,000).
(c) The total number of shares of all classes and series of stock and the
individual and aggregate par value of such shares have not been changed by
this amendment.
THIRD: The amendment was advised by the Board of Directors and approved
by the stockholders.
FOURTH: The Articles of Amendment shall become effective at 5:00 P.M. on
April 29, 1994.
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DECATUR FUND,
INC., who executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles of
Amendment to be the corporate act of said Corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Decatur Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 of the Maryland General Corporation Law, to
the State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation has adopted resolutions
classifying and designating a second class of shares of Common Stock of the
Decatur I Series of the Corporation as the Decatur Fund I (Institutional)
class (as distinguished from the existing class of Common Stock of the Decatur
I Series, which shall herein be identified as the Decatur Fund I class) and
reclassifying and reallocating Fifty Million (50,000,000) shares of authorized
and unissued Common Stock, par value of One Dollar ($1.00) per share,
previously allocated to the Decatur Fund I class, to the Decatur Fund I
(Institutional) class.
SECOND: The shares of the Decatur Fund I (Institutional) class shall
represent proportionate interests in the same portfolio of investments as the
shares of the Decatur Fund I class of the Decatur I Series of the Corporation.
The shares of the Decatur Fund I (Institutional) class shall have the same
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption as the shares of the Decatur Fund I class, all as set forth in the
Articles of Incorporation of the Corporation, except for the differences
hereafter set forth:
1. The dividends and distributions of investment income and capital gains
with respect to the Decatur Fund I (Institutional) class of shares of the
Decatur I Series shall be in such amounts as may be declared from time to time
by the Board of Directors, and such dividends and distributions may vary with
respect to such class from the dividends and distributions of investment
income and capital gains with respect to the other class of the Decatur I
Series of the Corporation to reflect differing allocations of the expenses of
the Corporation between the classes and any resultant difference among the net
asset values per share of the classes, to such extent and for such purposes as
the Board of Directors may deem appropriate. The allocation of investment
income and capital gains and expenses and liabilities of the Corporation among
the two classes of the Decatur I Series of the Corporation shall be determined
by the Board of Directors
<PAGE>
in a manner that is consistent with the orders, as applicable, dated April 10,
1987 and November 9, 1992 (Investment Company Act of 1940 Release Nos. 15675
and 19086) issued by the Securities and Exchange Commission, and any existing
or future amendment to such orders or any rule or interpretation under the
Investment Company Act of 1940, as amended, that modifies or supersedes such
orders;
2. Except as may otherwise be required by law pursuant to any applicable
order, rule or interpretation issued by the Securities and Exchange
Commission, or otherwise, the holders of the Decatur Fund I (Institutional)
class shares shall have (i) exclusive voting rights with respect to any matter
submitted to a vote of stockholders that affects only holders of the B Class
shares and (ii) no voting rights with respect to the provisions of any
Distributions Plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended, applicable to the existing class of the Decatur I
Series or with regard to any other matter submitted to a vote of stockholders
which does not affect holders of the Decatur Fund I (Institutional) class
shares.
THIRD: The shares of the Decatur Fund I (Institutional) class have been
designated and the shares of the Decatur Fund I class of the Decatur I Series
of the Corporation have been reclassified by the Board of Directors pursuant
to authority contained in the Articles of Incorporation of the Corporation.
IN WITNESS WHEREOF, Delaware Group Decatur Fund, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf this 26th
day of April, 1994.
DELAWARE GROUP DECATUR FUND, INC.
By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/Andrew L. Gangolf, III
-------------------------
Andrew L. Gangolf, III
Assistant Secretary
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DECATUR FUND,
INC., who executed on behalf of the said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges,
in the
<PAGE>
name of and on behalf of said Corporation, said Articles Supplementary to be
the corporate act of said Corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects, under the penalties of perjury.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Decatur Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 of the Maryland General Corporation Law, to
the State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation has adopted resolutions
designating a second class of shares of Common Stock of the Decatur II Series
of the Corporation as the Decatur Fund II (Institutional) class (as
distinguished from the existing class of common stock of the Decatur II
Series, which shall henceforth be identified as the Decatur Fund II class),
reclassifying and allocating Fifty Million (50,000,000) shares of authorized
and unissued Common Stock, par value of One Dollar ($1.00) per share,
previously allocated to the Decatur I Series, to the Decatur Fund II
(Institutional) class and reclassifying and allocating One Hundred Million
(100,000,000) shares of authorized and unissued Common Stock, par value of One
Dollar ($1.00) per share, previously allocated to the Decatur I Series, to the
Decatur Fund II class.
SECOND: The shares of the Decatur Fund II (Institutional) class and the
Decatur Fund II class shall represent proportionate interests in the same
portfolio of investments of the Decatur II Series. The shares of the Decatur
Fund II (Institutional) class shall have the same rights and privileges, and
shall be subject to the same limitations and priorities as the shares of the
Decatur Fund II class, all as set forth in the Articles of Incorporation of
the Corporation, provided that dividends paid on the shares of the Decatur
Fund II (Institutional) class shall not reflect any reduction for payment of
fees under the Distribution Plan of the Decatur Fund II class adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended, and
provided further, that the shares of the Decatur Fund II (Institutional) class
shall not vote upon or with respect to any matter relating to or arising from
any such Distribution Plan.
THIRD: The shares of the Decatur Fund II (Institutional) class have been
designated and the shares of the Decatur I Series of the Corporation have been
reclassified by the Board of Directors pursuant to authority contained in the
Articles of Incorporation of the Corporation.
<PAGE>
IN WITNESS WHEREOF, Delaware Group Decatur Fund, Inc. has caused these
Articles Supplementary to be signed in its name on its behalf this 28th day of
June 1993.
DELAWARE GROUP DECATUR FUND, INC.
By:/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Vice President
ATTEST:
/s/Andrew L. Gangolf, III
-------------------------
Andrew L. Gangolf, III
Assistant Secretary
THE UNDERSIGNED, Vice President of DELAWARE GROUP DECATUR FUND, INC., who
executed on behalf of the said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges,
in the name of and on behalf of said Corporation, said Articles Supplementary
to be the corporate act of said Corporation and further certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DECATUR FUND, INC.
DECATUR FUND, INC., a Maryland corporation having its principal office in
Baltimore City, Maryland (the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland, that:
ONE: ARTICLE SECOND of the Articles of Incorporation is hereby amended in
its entirety to read as follows:
SECOND: The name of the corporation is Delaware Group Decatur Fund, Inc.
------
The Corporation expressly agrees and acknowledges that the name "Delaware
Group" is the sole property of Delaware Management Company, Inc. ("DMC"),
that similar names are used by affiliated funds in the investment
business with the permission of DMC, and that the Corporation's use of
such name is with the permission of DMC. The Corporation further
expressly agrees and acknowledges that its use of "Delaware Group" in its
name may be terminated by DMC if the Corporation ceases to use Delaware
Management Company, Inc. as its investment adviser or Delaware
Distributors, Inc. ("DDI") as its principal underwriter (or to use
affiliates of DMC and DDI for such purposes). The Corporation further
expressly agrees and acknowledges that in such event DMC may require the
Corporation to present to its shareholders, at the next annual or special
meeting of the Corporation held after such request, a proposal to change
the name of the Corporation to delete reference to the name "Delaware
Group." The Corporation further expressly agrees and acknowledges in
such event to use its best efforts to promptly comply with such request
to change its name and that the Board of Directors of the Corporation
shall recommend such a proposal to it shareholders. The Corporation
further expressly acknowledges and agrees, upon shareholder approval of
such a proposal, to make and cause to be made such filings to effect the
change of name as may be necessary with the State of Maryland, the United
States Securities and Exchange Commission, or other regulatory
authorities.
TWO: Pursuant to Section 2-604(b) of the Maryland General Corporation
Law, the board of directors of the Corporation on April 7, 1988 duly adopted a
resolution setting forth the foregoing amendment to the Articles of
Incorporation, declaring said amendment to the Articles of
<PAGE>
Incorporation advisable and directing that it be submitted for consideration
by the shareholders of the Corporation at the annual meeting to be held on
June 14, 1988.
THIRD: Notice setting forth said amendment to the Articles of
Incorporation and stating that a purpose of the meeting of the shareholders
would be to take action thereon was given, as required by law, to all
shareholders entitled to vote thereon. The amendment to the Articles of
Incorporation was approved by the shareholders of the Corporation at said
meeting by the affirmative vote of a majority of all the votes entitled to be
cast thereon. (Approval by a majority of all the votes entitled to be cast on
the matter is authorized pursuant to the Articles of Incorporation of the
Corporation.)
FOURTH: The amendment to the Articles of Incorporation as hereinabove set
forth has been duly advised by the board of directors and approved by the
shareholders of the Corporation.
FIFTH: The amendment to the Articles of Incorporation as hereinabove set
forth shall be duly filed with Maryland Department of Assessments and Taxation
on June 15, 1988, the effective time being 5:00 p.m. on that date.
IN WITNESS WHEREOF, Decatur Fund, Inc., has caused these Articles of
Amendment to be signed by its President and attested by its Secretary on June
14, 1988.
Attest: Decatur Fund, Inc.
/s/George M. Chamberlain, Jr. /s/John H. Durham
----------------------------- ----------------------
George M. Chamberlain, Jr. John H. Durham
Secretary President
THE UNDERSIGNED, President of Decatur Fund, Inc., who executed on behalf
of said Corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Articles of Amendment to be the corporate act
of said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect
to the approval thereof are true in all material respects, under the penalties
of perjury.
/s/John H. Durham
----------------------
John H. Durham
President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DECATUR FUND, INC.
DECATUR FUND, INC., a Maryland corporation having its principal office in
Baltimore City, Maryland (The "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland, that:
ONE: The first paragraph of ARTICLE FIFTH of the Articles of
Incorporation is hereby amended in its entirety to read as follows:
FIFTH: The total number of shares which the Corporation shall have
-----
authority to issue is Seven Hundred Fifty Million (750,000,000) shares of
stock, with a par value of One Dollar ($1.00) per share, to be known and
designated as Common Stock, such shares of Common Stock having an
aggregate par value of Seven Hundred Fifty Million Dollars
($750,000,000).
TWO: The board of directors of the Corporation on December 18, 1986 duly
adopted a resolution setting forth the foregoing amendment to the Articles of
Incorporation, declaring said amendment of the Articles of Incorporation
advisable and directing that it be submitted for consideration by the
stockholders of the Corporation at the annual meeting to be held on April 21,
1987.
THREE: Notice setting forth said amendment to the Articles of
Incorporation and stating that a purpose of the meeting of the stockholders
would be to take action thereon, was given, as required by law, to all
stockholders entitled to vote thereon. The amendment to the Articles of
Incorporation was approved by the stockholders of the Corporation at said
meeting by the affirmative vote of a majority of all the votes entitled to be
cast thereon. (Approval by a majority of all the votes entitled to be cast on
the matter is authorized pursuant to the Articles of Incorporation of the
Corporation.)
FOUR: The amendment to the Articles of Incorporation as hereinabove set
forth has been duly advised by the board of directors and approved by the
stockholders of the Corporation.
FIVE: (a) The total number of shares of stock which the Corporation was
heretofore authorized to issue is Two Hundred Million (200,000,000) shares,
with a par value of One Dollar ($1.00) per share, known and designated as
Common Stock, with an aggregate par value of Two Hundred Million Dollars
<PAGE>
($200,000,000).
(b) The total number of shares of stock which the Corporation is
authorized to issue is increased by this amendment to Seven Hundred Fifty
Million (750,000,000) shares, with a par value of One Dollar ($1.00) per
share, and of the aggregate par value of Seven Hundred Fifty Million Dollars
($750,000,000).
IN WITNESS WHEREOF, Decatur Fund, Inc. has caused these Articles of
Amendment to be signed by its President or Vice President and attested by its
Secretary or Assistant Secretary on May 21, 1987.
Attest: DECATUR FUND, INC.
/s/George M. Chamberlain, Jr. /s/William P. Brady
----------------------------- -------------------------
George M. Chamberlain, Jr. William P. Brady
Secretary Executive Vice President
THE UNDERSIGNED, Executive Vice President of DECATUR FUND, INC., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the mattes and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/William P. Brady
---------------------
William P. Brady
<PAGE>
DECATUR FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
DECATUR FUND, INC., a Maryland corporation having its principal office in
Baltimore, Maryland (the "Corporation"), hereby certifies, in accordance with
Section 2-208 of the Maryland General Corporation Law, to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting held on
April 17, 1986, adopted a resolution designating a second series of common
stock of the Corporation as the Decatur II Series (as distinguished from the
first series of common stock of the Corporation henceforth identified as the
Decatur I Series) and classified and allocated Fifty Million (50,000,000)
shares of unissued common stock, with a par value of One Dollar ($1.00) per
share, to the Decatur II Series.
SECOND: The shares of Decatur I Series and the shares of Decatur II
Series shall each have the rights and privileges, and shall be subject to the
limitations and priorities, set forth in the Articles of Incorporation of the
Corporation.
THIRD: The shares of said Decatur II Series have been classified by the
Board of Directors pursuant to authority contained in the Articles of
Incorporation of the Corporation.
IN WITNESS WHEREOF, DECATUR FUND, INC. has caused these Articles
Supplementary to be signed in its name and on its behalf this 29th day of
April, 1986.
ATTEST: DECATUR FUND, INC.
/s/George M. Chamberlain, Jr. By:/s/John H. Durham
----------------------------- --------------------
George M. Chamberlain, Jr. Its: John H. Durham
Secretary President
THE UNDERSIGNED, President of DECATUR FUND, INC. who executed on behalf
of said Corporation the foregoing Articles Supplementary, of which this
instrument is made a part, hereby acknowledges, in the name and on behalf of
said corporation, said Articles Supplementary to be the corporate act of said
Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters
<PAGE>
and facts set forth therein with respect to the approval thereof and true in
all material respects, under the penalties of perjury.
/s/John H. Durham
-----------------
John H. Durham
President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DECATUR INCOME FUND, INC.
DECATUR INCOME FUND, INC., a Maryland corporation having its principal
office in Baltimore, Maryland (the "Corporation"), hereby certifies to the
State Department of Assessments and Taxation of Maryland, that:
ONE: ARTICLE SECOND of the Articles of Incorporation is hereby amended in
its entirety to read as follows:
SECOND: The name of the Corporation is Decatur Fund, Inc.
TWO: The first paragraph of ARTICLE FIFTH of the Articles of
Incorporation is hereby amended in its entirety to read as follows:
FIFTH: The total number of shares which the Corporation shall have
authority to issue is Two Hundred Million (200,000,000) shares of stock, with
a par value of One Dollar ($1.00) per share, to be known and designated as
Common Stock, such shares of Common Stock having an aggregate par value of Two
Hundred Million Dollars ($200,000,000).
<PAGE>
THREE: The Board of Directors of the Corporation on January 16, 1986 duly
adopted resolutions setting forth the foregoing amendments to ARTICLE SECOND
and ARTICLE FIFTH of the Articles of Incorporation, declaring said amendments
of the Articles of Incorporation advisable and directing that they be
submitted for consideration by the stockholders of the Corporation at the
annual meeting to be held on April 15, 1986.
FOUR: Notice setting forth a summary of the changes to be effected by
said amendments to ARTICLE SECOND and ARTICLE FIFTH and stating that a purpose
of the annual meeting of the stockholders would be to take action on said
amendments was given, as required by law, to all stockholders entitled to vote
thereon. The amendments to the Articles of Incorporation were approved by the
stockholders of the Corporation at said meeting by the affirmative vote of a
majority of all the votes entitled to be cast thereon. (Approval by a
majority of all the votes entitled to be cast on said matter is authorized
pursuant to the Articles of Incorporation of the Corporation.)
FIVE: Each of said amendments to the Articles of Incorporation as
hereinabove set forth has been declared advisable by the Board of Directors
and approved by the stockholders of the Corporation.
SIX: (a) The total number of shares of stock which the Corporation was
heretofore authorized to issue is One Hundred Million (100,000,000) shares,
with a par value of One Dollar ($1.00) per share, known and designated as
Common Stock, with an aggregate par value of One Hundred Million Dollars
($100,000,000).
(b) The total number of shares of stock which the Corporation is
authorized to issue is increased by this amendment to Two Hundred Million
(200,000,000) shares, with a par value of One Dollar ($1.00) per share, and of
the aggregate par value of Two Hundred Million Dollars ($200,000,000).
IN WITNESS WHEREOF, DECATUR INCOME FUND, INC. has caused these Articles
of Amendment to be signed by its president or vice president and attested to
by its secretary or assistant secretary on April 28, 1986.
DECATUR INCOME FUND, INC.
By:/s/John H. Durham
----------------------
John H. Durham
President
<PAGE>
ATTEST:
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Secretary
THE UNDERSIGNED, President of DECATUR INCOME FUND, INC. who executed on
behalf of said Corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Articles of Amendment to be the corporate act
of said Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect
to the approval thereof are true in all material respects, under the penalties
of perjury.
/s/John H. Durham
-----------------------------
John H. Durham
President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DECATUR INCOME FUND, INC.
DECATUR INCOME FUND, INC., a Maryland corporation having its principal
office in Baltimore City, Maryland (the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland, that:
ONE: ARTICLE ELEVENTH of the Articles of Incorporation is hereby amended
in its entirety to read as follows:
ELEVENTH: Subject to the Investment Company Act of 1940, as amended, each
of the following actions, to the extent required to be approved by the
shareholders under the Maryland General Corporation Law, shall be
approved by a majority of all votes entitled to be cast on the matter:
(i) Amendment or amendment and restatement of the Articles;
(ii) Reduction of stated capital;
(iii) Consolidation, merger, share exchange or transfer of assets;
(iv) Distribution in partial liquidation; or
(v) Voluntary dissolution.
TWO: The board of directors of the Corporation on February 21, 1985 duly
adopted a resolution setting forth the foregoing amendment to the Articles of
Incorporation, declaring said amendment of the Articles of Incorporation
advisable and directing that it be submitted for consideration by the
stockholders of the Corporation at the annual meeting to be held on April 16,
1985.
THIRD: Notice setting forth said amendment to the Articles of
Incorporation and stating that a purpose of the meeting of the stockholders
would be to take action thereon, was given, as required by law, to all
stockholders entitled to vote thereon. The amendment to the Articles of
Incorporation was approved by the stockholders of the Corporation at said
meeting by the affirmative vote of a majority of all the votes entitled to be
cast thereon. (Approval by a majority of all of the votes entitled to be cast
on the matter is authorized pursuant to the Articles of Incorporation of the
Corporation.)
FOURTH: The amendment to the Articles of Incorporation
<PAGE>
hereinabove set forth has been duly advised by the board of directors and
approved by stockholders of the Corporation.
IN WITNESS WHEREOF, Decatur Income Fund, Inc. has caused these Articles
of Amendment to be signed by its President or Vice President and attested by
its Secretary or Assistant Secretary on April 26, 1985.
Attest: DECATUR INCOME FUND, INC.
/s/Donald M. Allen By:/s/William P. Brady
-------------------- ------------------------
Donald M. Allen William P. Brady
Secretary Executive Vice President
THE UNDERSIGNED, Executive Vice President of DECATUR INCOME FUND, INC.,
who executed on behalf of said corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said corporation, the foregoing Articles of
Amendment to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
/s/William P. Brady
------------------------------
William P. Brady
<PAGE>
AGREEMENT AND ARTICLES OF MERGER
--------------------------------
AGREEMENT AND ARTICLES OF MERGER, dated as of the 4th day of March, 1983
(hereinafter referred to as the "Agreement"), by and between DECATUR INCOME
FUND, INC., a Maryland Corporation (hereinafter referred to as "Maryland
Corporation" or the "Surviving Corporation"), and DECATUR INCOME FIND, INC., a
Delaware Corporation (hereinafter referred to as "Delaware Corporation"), said
corporations being hereinafter sometimes collectively referred to as the
"Constituent Corporations."
BACKGROUND
----------
Maryland Corporation is a corporation duly organized and existing under
the laws of the State of Maryland, having been incorporated on March 4, 1983
under the General Corporation Law of the state of Maryland, and has authorized
capital stock consisting of 100,000,000 common shares, par value $1.00 per
share, with an aggregate par value of $100,000,000.
Delaware Corporation is a corporation duly organized and existing under
the laws of the State of Delaware, having been incorporated on March 6, 1956
under the General Corporation Law of the State of Delaware, and has
authorized capital stock consisting of 100,000,000 shares of common stock, par
value $1.00 per share, with an aggregate par value of $100,000,000.
The principal office of Maryland Corporation in the State of Maryland is
located in Baltimore City. Delaware Corporation has no principal office in
the State of Maryland and is not registered or qualified to do business in the
State of Maryland. Delaware Corporation does not possess any interest in real
property situated in the state of Maryland, the title to which could be
affected by recording an instrument in the Maryland land records.
The Boards of Directors of each of the Constituent Corporations have
adopted this Agreement as a Plan of Reorganization intended to qualify as such
under the provisions of Section 368(a)(1)(F) of the Internal Revenue Code of
1954, as amended.
The Board of Directors of Maryland Corporation and the Board of Directors
of Delaware Corporation have, by resolutions duly adopted, approved this
Agreement and merger of the Delaware Corporation into Maryland Corporation as
being advisable and in the best interests of their respective corporations and
stockholders, and have directed the submission of this Agreement to their
respective stockholders.
<PAGE>
NOW THEREFORE, in consideration of the premises and mutual covenants and
conditions hereinafter contained, and intending to be legally bound, the
parties hereto agree as follows:
ARTICLE I
---------
1.1 Delaware Corporation and Maryland Corporation agree that Delaware
Corporation shall be merged into Maryland Corporation (hereinafter the
"Merger"). Maryland Corporation shall be the Surviving Corporation and shall
be governed by the laws of the State of Maryland. The terms and conditions of
the Merger and the mode of carrying the same into effect are as herein set
forth in this Agreement.
1.2 The Articles of Incorporation of Maryland Corporation as they shall
exist on the Effective Date of the Merger (as hereinafter defined) shall
constitute the Articles of Incorporation of the Surviving Corporation.
1.3 The By-laws of Maryland Corporation as they exist on the Effective
Date of the Merger shall constitute the By-laws of the Surviving Corporation.
1.4 The Directors of Delaware Corporation on the Effective Date of the
Merger shall constitute the Board of Directors of the Surviving Corporation
and shall hold office until their terms expire at the annual meeting of
stockholders of the Surviving Corporation in 1984, and until their successors
are elected and shall qualify.
1.5 Arthur Young & Company shall continue as auditors to report upon the
financial condition of the Surviving Corporation for the fiscal year ending
November 30, 1983 provided the appointment of Arthur Young & Company for the
Delaware Corporation is approved by the stockholders of Delaware Corporation.
ARTICLE II
----------
2.1 The manner and basis of converting the issued and outstanding shares
of the common stock of Delaware Corporation into the shares of common stock of
the Maryland Corporation shall be as follows:
Each share or fraction thereof of common stock of Delaware Corporation
issued and outstanding on the Effective Date of the Merger (excluding any
Treasury shares of Delaware Corporation which shares shall cease to exist)
shall thereupon be converted into an equal number of whole and fractional
shares of common stock of Maryland Corporation and each certificate
representing shares of Delaware Corporation shall represent the same number
of shares of Maryland Corporation. Each holder of a Delaware Corporation
stock
<PAGE>
certificate representing shares of Maryland Corporation shall at any time
thereafter have the right to surrender the same to Maryland Corporation and to
receive in exchange a certificate representing equal number of shares of
common stock of Maryland Corporation.
2.2 Each of the shares of Maryland Corporation common stock outstanding
on the Effective Date of the Merger shall be retired and restored to the
status of authorized but unissued.
ARTICLE III
-----------
3.1 The Merger shall become effective when, subject to the terms and
conditions hereof, the following actions shall have in all respects been
completed:
(i) this Agreement shall have been adopted by the stockholders of
Maryland Corporation and Delaware Corporation in accordance with the
requirements of the laws of the States of Maryland and Delaware, respectively,
which adoption shall have been certified hereon by the Secretary or an
Assistant Secretary of Delaware Corporation, and
(ii) this Agreement, certified as aforesaid, shall have been executed,
acknowledged and filed in accordance with the requirements of the laws of the
States of Maryland and Delaware.
The date and time when the Merger shall become effective as aforesaid is
herein referred to as the "Effective Date of the Merger." As soon as
practicable after the Effective Date of the Merger, the Surviving Corporation
shall, pursuant to section 103(c)(5) of the General Corporation Law of the
State of Delaware, cause a copy of this Agreement, certified by the Secretary
of State of the State of Delaware, to be recorded in the Office of the
Recorder of the County of New Castle, Delaware.
3.2 On the Effective Date of the Merger, the separate existence of
Delaware Corporation shall cease, except to the extent, if any, continued by
statute. All the assets, rights, privileges, powers and franchises of
Delaware Corporation and all debts due on whatever account to it, shall be
taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and all such assets, rights, privileges, powers
and franchises, and all and every other interest of Delaware Corporation shall
be thereafter as effectually the property of the Surviving Corporation as they
were of Delaware Corporation; and the title to and interest in any real estate
vested by deed, lease or otherwise, unto either of the Constituent
Corporations, shall not revert or be in any way impaired. The Surviving
Corporation shall be responsible for all the
<PAGE>
liabilities and obligations of Delaware Corporation, but the liabilities of
the Constituent Corporations or of their stockholders, directors, or officers
shall not be affected by the Merger, nor shall the right of the creditors
thereof or any persons dealing with such corporations, or any liens upon the
property of such corporations, be impaired by the Merger, and any claim
existing or action or proceeding pending by or against either of such
corporations may be prosecuted to judgment as if the Merger had not taken
place, or the Surviving Corporation may be proceeded against or substituted in
place of Delaware Corporation. Except as otherwise specifically set forth in
this Agreement, the identity, existence, purposes, powers, franchise, rights,
immunities and liabilities of Maryland Corporation shall continue unaffected
and unimpaired by the Merger.
3.3 All corporate acts, plans, policies, resolutions, approvals, and
authorizations of the stockholders, Board of Directors, committees of the
Board of Directors and agents of Delaware Corporation, which were effective
immediately prior to the Effective Date of the Merger shall be taken for all
purposes as the acts, plans, policies, resolutions, approvals and
authorizations of the Surviving Corporation and shall be as effective and
binding thereon as the same were with respect to Delaware Corporation.
3.4 Prior to the Effective Date of the Merger the Constituent
Corporations shall take such action as shall be necessary or appropriate in
order to effect the Merger. In case at any time after the Effective Date of
the Merger the Surviving Corporation shall determine that any further
conveyance, assignment or other documents or any further action is necessary
or desirable to vest in or confirm to the Surviving Corporation full title to
all the properties, assets, rights, privileges, and franchises of the
Constituent Corporations, the officers and directors of the Constituent
Corporations, at the expense of the Surviving Corporation, shall execute and
deliver all such instruments and take all such action as the Surviving
Corporation may determine to be necessary or desirable in order to vest in and
confirm to the Surviving Corporation title to and possession of all such cash
and securities and other properties, assets, rights, privileges and
franchises, and otherwise to carry out the purpose of this Agreement.
3.5 The Surviving Corporation hereby (1) agrees that it may be served
with process in the State of Delaware in any proceeding for the enforcement of
any obligation of Delaware Corporation as well as for the enforcement of any
obligation of the Surviving Corporation arising from the Merger, including any
suit or other proceeding to enforce the right of any stockholder as determined
in appraisal proceedings pursuant to the provisions of Section 262 of the
General Corporation Law of the State of Delaware, (2) irrevocably
<PAGE>
appoints the Secretary of State of the State of Delaware as its agent to
accept service of process in any such suit or other proceedings, and (3)
specifies the following as the address to which a copy of such process shall
be mailed by the Secretary of State of the State of Delaware: Donald M.
Allen, Corporate Vice President and Secretary, Decatur Income Fund, Inc., Ten
Penn Center Plaza, Philadelphia, PA 19103.
ARTICLE IV
----------
4.1 Each of the Constituent Corporations represents and warrants to the
other that:
(a) Such corporation is duly organized and existing in good standing
under the laws of its jurisdiction of incorporation.
(b) It has full power and authority to carry on its business as it is
presently being conducted and to enter into the Merger.
(c) There is no suit, action or legal or administrative proceeding
pending, or to its knowledge threatened, against it which, if adversely
determined, might materially and adversely affect its financial condition or
the conduct of its business.
(d) At the Effective Date of the Merger, consummation of the transactions
contemplated hereby will not result in the breach of or constitute a default
under any agreement or instrument by which it is bound.
(e) All of its presently outstanding shares are validly issued, fully
paid and non-assessable.
(f) Immediately prior to the Effective Date of the Merger such
corporation will have valid and unencumbered title to its cash, securities,
and other assets, if any.
ARTICLE V
---------
5.1 The obligations of each of the Constituent Corporations to consummate
the Merger shall be subject to the following conditions:
(a) The representations and warranties of the other corporation contained
herein shall be true as of and at the Effective Date of the Merger with the
same effect as though made at such date and such other Constituent Corporation
shall have performed all obligations required by this Agreement to be
performed by it prior to the Effective Date;
(b) Such authority and orders from the Securities and
<PAGE>
Exchange Commission (the "Commission") and state securities commissions as may
be necessary to permit the parties to carry out the transactions contemplated
by this Agreement shall have been received;
(c) One or more post-effective amendments to the Delaware Corporation's
Registration Statement on Form N-1 under the Securities Act of 1933 and the
Investment Company Act of 1940, containing (i) such amendments to such
Registration Statement as are determined by the Maryland Corporation to be
necessary and appropriate as a result of the Merger, and (ii) the adoption by
the Maryland Corporation as its own of such Registration Statement, as so
amended, shall have been filed with the Commission, and such post-effective
amendment or amendments to the Registration Statement shall have become
effective, and no stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall
have been initiated or threatened by the Commission (other than any such stop-
order, proceeding or threatened proceeding which shall have been withdrawn or
terminated);
(d) Confirmation shall have been received from the Commission or the
staff thereof that the Maryland Corporation shall, effective upon or before
the Effective Date of the Merger, be duly registered as a diversified, open-
end management investment company under the Investment Company Act of 1940, as
amended;
(e) Each party shall have received an opinion of Stradley, Ronon, Stevens
& Young, Philadelphia, Pennsylvania, to the effect that the Merger
contemplated by this Agreement qualifies as a "reorganization" under Section
368(a)(1)(F) of the Internal Revenue Code of 1954, as amended, and as such no
gain or loss will be recognized by either Constituent Corporation or to the
stockholders thereof;
(f) Each party shall have received an opinion from Stradley, Ronon,
Stevens & Young in form and substance satisfactory to it, relating to its
authority to engage in the transactions contemplated hereby and to the effect
(i) that this Agreement has been duly authorized, executed and delivered by
the Constituent Corporations and constitutes a legal, valid and binding
agreement of each such party in accordance with its terms; (ii) the shares of
common stock of the Maryland Corporation to be issued pursuant to the terms of
this Agreement, have been duly authorized and, when issued and delivered as
provided in this Agreement, will have been validly issued and fully paid and
will be nonassessable; (iii) the Maryland Corporation is duly organized and
validly existing under the laws of the State of Maryland.
(g) The shares of common stock of the Maryland Corporation shall have
been duly qualified for offering to
<PAGE>
the public in those states of the United States and jurisdictions in which
they are presently qualified, so as to permit the transfers contemplated by
this Agreement to be consummated;
(h) The holders of at least a majority of the outstanding shares of
common stock of Delaware Corporation and of Maryland Corporation shall have
each voted in favor of the adoption of this Agreement and the Merger at an
annual or special meeting or any adjournment thereof.
ARTICLE VI
----------
Each of the Constituent Corporations agree that each shall bear such
expenses as have been incurred by it in connection with the Merger.
ARTICLE VII
-----------
7.1 Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated and the Merger abandoned at any time (whether
before or after adoption hereof by the stockholders of the Constituent
Corporations) prior to the Effective Date of the Merger:
(a) by mutual consent of the Constituent Corporations;
or
(b) by either of the Constituent Corporations if any condition set forth
in Article V hereof has not been fulfilled or waived by it.
7.2 An election by a Constituent Corporation to terminate this Agreement
and abandon the Merger shall be exercised by its Board of Directors.
7.3 At any time prior to the filing of this Agreement, any of the terms
or conditions of this Agreement may be waived by the Constituent Corporation
entitled to the benefit thereof by action taken by its Board of Directors or
its President if, in the judgment of the Board of Directors or President
taking such action, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the stockholders of the Constituent
Corporation on behalf of which such action is taken.
ARTICLE VIII
------------
The respective representations and warranties of the Constituent
Corporations contained in Article IV hereof shall expire with, and be
terminated by, the Merger and neither the respective Constituent Corporations
nor any of their directors or officers shall be under any liability with
<PAGE>
respect to any such representations or warranties after the Effective Date of
the Merger. This provision shall not protect any director or officer of
either of the Constituent Corporations against any liability to such
corporation or to its stockholders to which he would otherwise be subject.
ARTICLE IX
----------
9.1 This Agreement constitutes the entire agreement between the parties
and there are no agreements, understandings, restrictions or warranties
between the parties other than those set forth herein or herein provided for.
9.2 This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original but all of such counterparts together
shall constitute but one instrument.
IN WITNESS WHEREOF, each of the Constituent Corporations has caused this
Agreement and Articles of Merger to be executed on its behalf by its President
and its corporate seal to be affixed thereto and attested by its Secretary all
as of the day and year first above written.
Attest: DECATUR INCOME FUND,INC.,
a Maryland Corporation
/s/Donald M. Allen By:/s/John H. Durham
------------------ -----------------
Donald M. Allen John H. Durham
Secretary President
Attest: DECATUR INCOME FUND,INC.,
a Delaware Corporation
/s/Donald M. Allen By:/s/John H.Durham
------------------ ----------------
Donald M. Allen John H. Durham
Secretary President
<PAGE>
CERTIFICATION OF ADOPTION
OF
AGREEMENT AND ARTICLES OF MERGER
--------------------------------
The undersigned hereby certify that the terms and conditions of the
merger as set forth in the foregoing Agreement and Articles of Merger were
advised, authorized and approved by each of the constituent corporations in
the manner and by the vote required by its charter and the laws of the state
where it is organized, to wit, by the Board of Directors and stockholders of
Delaware Corporation and Maryland Corporation.
Attest: DECATUR INCOME FUND,INC.,
a Maryland Corporation
/s/Donald M. Allen By:/s/John H. Durham
------------------ -----------------
Donald M. Allen John H. Durham
Secretary President
Attest: DECATUR INCOME FUND,INC.,
a Delaware Corporation
/s/Donald M. Allen By:/s/John H. Durham
------------------ -----------------
Donald M. Allen John H. Durham
Secretary President
THE UNDERSIGNED, President of DECATUR INCOME FUND, INC., a Maryland
corporation, who executed on behalf of said corporation the foregoing
Agreement and Articles of Merger and the Certification of Adoption of
Agreement and Articles of Merger, hereby acknowledges, in the name and on
behalf of said corporation, the foregoing Agreement and Articles of Merger and
Certificate of Adoption of Agreement and Articles of Merger to be the
corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
are true in all material respects, under the penalties of perjury.
/s/John H. Durham
-----------------
John H. Durham
<PAGE>
THE UNDERSIGNED, President of DECATUR INCOME FUND, INC., a Delaware
corporation, who executed on behalf of said corporation the foregoing
Agreement and Articles of Merger and the Certification of Adoption of
Agreement and Articles of Merger, hereby acknowledges, in the name and on
behalf of said corporation, the foregoing Agreement and Articles of Merger and
Certificate of Adoption of Agreement and Articles of Merger to be the
corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/John H. Durham
-----------------
John H. Durham
I, DONALD M. ALLEN, Secretary of DECATUR INCOME FUND, INC., a Delaware
corporation, hereby certify that a majority of the outstanding shares of
capital stock of said corporation entitled to vote hereon voted for the
adoption of this Agreement and Articles of Merger.
/s/Donald M. Allen
------------------
Donald M. Allen
<PAGE>
ARTICLES OF MERGER
MERGING
DECATUR INCOME FUND, INC. (DEL.CORP)
INTO
DECATUR INCOME FUND, INC. (MD. CORP)
Survivor approved and received for record by the State Department of
Assessment and Taxation of Maryland April 29, 1983 at 4:30 o'clock P.M.. as in
conformity with law and ordered recorded.
________________
Recorded in Liber /s/ 2589, folio /s/ 02558, one of the Charter Records
of the State Department of Assessments and Taxation of Maryland.
________________
Bonus tax paid $_____ Recording fee paid $ 32.00 Special Fee paid $___
-----
________________
To the clerk of the Circuit Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument, together will all
indorsements thereon, has been received, approved and recorded by the State
Department of Assessments and taxation of Maryland.
AS WITNESS my hand and seal of the said Department of Baltimore.
______________________________
<PAGE>
ARTICLES OF INCORPORATION
OF
DECATUR INCOME FUND, INC.
FIRST: The undersigned, George M. Chamberlain, Jr. whose post office
-----
address is Ten Penn Center Plaza, Philadelphia, Pennsylvania 19103, and being
at least eighteen years of age, does hereby cause to be filed these Articles
of Incorporation for the purpose of forming a corporation under the General
Corporation Law of the State of Maryland.
SECOND: The name of the corporation is Decatur Income Fund, Inc.
------
THIRD: The nature of the business, objects and purposes proposed to be
-----
transacted, promoted and carried on by the corporation is to do any and all of
the things herein set forth, as fully and to the same extent as natural
persons might or could do, and in part of the world, viz:
1. To purchase, become interested in, receive, own, hold, invest and
reinvest in, sell, negotiate, exchange, transfer, assign, mortgage, pledge,
turn to account, realize upon, and otherwise acquire and dispose of securities
of every kind, character and description, issued or created by, or secured
upon the property, income or revenues of individuals, associations, public and
private corporations, the United States of America, its agencies and
instrumentalities, or any territory, state, county, city, town, district or
other political sub-division, or any foreign government or any political sub-
division thereof; and to acquire or become interested in any such securities
by original subscription, underwriting, participation in syndicates, purchase,
exchange, or otherwise. The term "securities", whenever used herein, shall,
consistent with the context, and without limiting the generality of the
foregoing, include shares of stock (preferred, common and debenture), scrip,
purchase or subscription warrants or other rights, voting trust certificates,
certificates of interest or participation in any profit sharing agreement,
pre-organization certificates or subscriptions, fractional or undivided
interests in oil, gas or other mineral rights, investment contracts, evidences
or interest, ownership, or indebtedness, call or time loans, notes,
acceptances, bills of exchange, commercial paper, choses in action; bonds,
debentures, mortgages, collateral trust certificates, and in general any
interests or instruments commonly known as securities, or any certificate of
interest or participation in, any temporary or interim certificate for, or
receipt for, any of the foregoing, and any securities, negotiable or non-
negotiable, secured unsecured, and however described.
<PAGE>
2. To exercise all rights, powers and privileges with reference to or
incident to ownership, use and enjoyment of any of such securities, including,
but without limitation, the right, power and privilege to own, vote, hold,
purchase, sell, negotiate, assign, exchange, transfer, mortgage, pledge or
otherwise deal with, dispose of, use, exercise or enjoy any rights, title,
interest, powers or privileges under or with reference to any of such
securities; and to do any and all acts and things for the preservation,
protection, improvement and enhancement in value of any of such securities, or
designed to accomplish any such purpose.
3. To purchase or otherwise acquire, own, hold, sell, exchange, assign,
transfer, mortgage, pledge or otherwise dispose of, property of all kinds,
including, but without limitation, specie, money, and foreign exchange, to the
extent permitted by law, except that the corporation shall not purchase, own,
or sell commodities or future contracts for the delivery of commodities.
4. To buy, sell, mortgage, encumber, hold, own, exchange, rent or
otherwise acquire and dispose of, and to develop, improve, manage, subdivide,
build, erect, construct, alter and maintain buildings, structures, and other
improvements on real property for its own use for business offices exclusively
and may acquire real estate as a result of the foreclosure of mortgages
securing the payment of securities then owned by the corporation, or as a
result of any reorganization or other readjustment in connection with any
securities then owned by the corporation, or otherwise for the purpose of the
proper administration of the investments of the corporation in securities.
Nothing contained in this paragraph shall be construed to restrict the power
of the corporation, subject to all other restrictions and limitations
contained in these Articles of Incorporation, to invest in securities, as
defined in paragraph 1 of Article Third of these Articles of Incorporation,
whether or not any such security shall be deemed to be an interest in real
estate.
5. To borrow or raise moneys for any of the purposes of the corporation,
and from time to time, to draw, make, accept, endorse, execute and issue
bonds, debentures, notes, drafts, acceptances, bills of exchange, warrants and
other negotiable or non-negotiable instruments and evidences of indebtedness
and other securities; and to secure the payment thereof and of the interest
thereon by mortgage upon or pledge of, or by conveyance or assignment in trust
of, the whole or any part of the property and franchises of the corporation,
real, personal, and mixed, tangible or intangible, and wheresoever situate,
whether at the time owned or thereafter acquired, and to issue, sell,
negotiate, pledge, or otherwise dispose of such bonds or other obligations of
the corporation for its corporate purposes.
<PAGE>
The corporation shall not voluntarily incur an aggregate amount of
indebtedness at any time exceeding 25% of the total appraised value of all the
property and assets of the corporation, excepting that, in the event of an
emergency and by affirmative vote of not less than two-thirds in number of all
directors of the corporation, the Board of Directors may authorize the
corporation voluntarily to incur for a period not exceeding one year, an
aggregate amount of indebtedness exceeding 25%, but not exceeding 40%, of the
total appraised value of all the property and assets of the corporation.
6. To acquire all or any part of the good will, rights, property, and
business of any individual, association or corporation; to pay for the same in
cash or in shares of stock, bonds, notes or other obligations of the
corporation, or otherwise. To hold, utilize, operate, reorganize, liquidate,
and in any manner dispose of the whole or any part of the good will, rights,
property and business so acquired; to assume in connection therewith the whole
or any part of the liabilities and obligations of any such person, association
or corporation; and to conduct in any lawful manner the whole or any part of
the business thus acquired.
7. To enter into, make, perform and carry out contracts and undertakings
of every kind for any lawful purpose, without limit as to amount, with any
individual, association or corporation.
8. To purchase, sell and transfer, re-acquire, hold, trade and deal in,
the bonds, debentures and other securities of the corporation, from time to
time, to such extent and in such manner and upon such terms as the Board of
Directors shall, consistent with the provisions of these Articles
Incorporation, determine; and to purchase and re-acquire, from time to time,
the shares of its own capital stock; provided, however, that the corporation
shall not have power to trade or deal in the shares of its own Common Stock.
9. To conduct its business and maintain offices both within and without
the State of Maryland, and in all other states and territories and the
District of Columbia, in all dependencies, colonies or possessions of the
United States and any foreign countries and places, and to purchase or
otherwise acquire, hold, posses, convey, transfer or otherwise dispose of real
and personal property in all thereof to the extent that the same may be
permissible under their respective laws.
10. To carry out all or any part of the foregoing objects and purposes,
and to exercise any and all of the foregoing rights and powers, and to do any
and all of the foregoing acts and things, as principal, factor, agent,
contractor or otherwise, either alone or through or in conjunction with, or
jointly with, any individual,
<PAGE>
association or corporation.
11. In general to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
the State of Maryland upon corporations formed under the General Corporation
Law thereof.
The foregoing clauses shall each be construed as purposes, objects and
powers, and it is hereby expressly provided that the foregoing enumeration of
specific purposes, objects and powers shall not be held to limit or restrict
in any manner the powers of the corporation, and that they are in furtherance
of, and in addition to, and not in limitation of, the general powers conferred
upon the corporation by the laws of the State of Maryland or otherwise; nor
shall the enumeration of one thing be deemed to exclude another, although it
be of like nature, not expressed.
It is the intention that the purpose, objects and powers specified in
this Article Third, and all subdivisions thereof, shall, except as otherwise
expressly provided, in no wise be limited or restricted by reference to or
inference from the terms of any other clause or subdivision of this Article
Third, and that each of the purposes, objects and powers specified in this
Article Third shall be regarded as independent purposes, objects and powers.
FOURTH: The post office address of the principal office of the
------
corporation in the State of Maryland is:
c/o The Corporation Trust, Incorporated
32 South Street
Baltimore, Maryland 21202
The name and post office address of the initial resident agent of the
corporation in the State of Maryland is:
The Corporation Trust, Incorporated
32 South Street
Baltimore, Maryland 21202
FIFTH: The total number of shares of stock which the Corporation shall
-----
have authority to issue is One Hundred Million (100,000,000) shares of stock,
with a par value of One Dollar ($1.00) per share, to be known and designated
as Common Stock, such shares of Common Stock having an aggregate par value of
One Hundred Million Dollars ($100,000,000).
The Board of Directors of the corporation shall have the power to issue
shares in one or more series which together with the issued shares of stock of
the corporation shall have such designations as the Board may determine and
(subject to any applicable rule, regulation or order of the Securities
<PAGE>
and Exchange Commission or other applicable law or regulation) shall have such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of
redemption and other characteristics as the Board may determine (or in the
absence of contrary determination, such as set forth herein). At any time
when there are no shares outstanding or subscribed or a particular series
previously established and designated by the Board of Directors, the series
may be liquidated by similar means. If the Board so determines, one or more
series of stock may be treated for all purposes other than dividends as if all
shares of such series were shares of one series. The dividends payable to the
holders of any series (subject to any applicable rule, regulation or order of
the Securities and Exchange Commission or any other applicable law or
regulation) shall be determined by the Board and need not be individually
declared, but may be declared and paid in accordance with a formula adopted by
the Board. Except as otherwise provided herein, all references in these
Articles of Incorporation to Common Stock or series of stock shall apply
without discrimination to the shares of each series of stock.
The holders of each share of stock of the corporation shall be entitled
to one vote for each full share, and a fractional vote for each fractional
share of stock, irrespective of the series then standing in his or her name in
the books of the corporation. On any matter submitted to a vote of
shareholders, all shares of the corporation then issued and outstanding and
entitled to vote, irrespective of the series, shall be voted in the aggregate
and not by series, shall be voted in the aggregate and not by series except
(1) when otherwise expressly provided by the Maryland General Corporation Law,
or (2) when required by the Investment Company Act of 1940, as amended, shares
shall be voted by individual series; and (3) when the matter does not affect
any interest of a particular series, then only shareholders of the affected
series shall be entitled to vote thereon.
Each series of stock of the corporation shall have the following powers,
preferences and participating, voting, or other special rights and the
qualifications, restrictions, and limitations thereof shall be as follows:
1. All consideration received by the corporation for the issue or sale of
stock of each series, together with all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall irrevocably belong to
the series of shares of stock with respect to which such assets, payments or
funds were received by the corporation for all purposes, subject only to
<PAGE>
the rights of creditors, and shall be so handled upon the books of account of
the corporation. Such assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof
and any assets derived from any reinvestment of such proceeds, in whatever
form the same may be, are herein referred to as "assets belonging to" such
series.
2. The Board of Directors may from time to time declare and pay dividends
or distributions, in stock or in cash, on any or all series of stock;
provided, such dividends or distributions on shares of any series of stock
shall be paid only out of earnings, surplus, or other lawfully available
assets belonging to such series.
3. The Board of Directors shall have the power in its discretion to
distribute in any fiscal year as dividends, including dividends designated in
whole or in part as capital gain distributions, amounts sufficient, in the
opinion of the Board of Directors, to enable the corporation to qualify as a
"regulated investment company" under the Internal Revenue Code of 1954, as
amended, or any successor or comparable statute thereto, and regulations
promulgated thereunder, and to avoid liability for the corporation for Federal
income tax in respect of that year and to make other appropriate adjustments
in connection therewith.
4. In the event of the liquidation of dissolution of the corporation,
shareholders of each series shall be entitled to receive, as a series, out of
the assets of the corporation available for distribution to shareholders, but
other than general assets not belonging to any particular series of stock, the
assets belonging to such series, and the assets so distributable to the
shareholders of any series shall be distributed among such shareholders in
proportion to the number of shares of such series held by them and recorded on
the books of the corporation. In the event that there are any general assets
not belonging to any particular series of stock and available for
distribution, such distribution shall be made to the holders of stock of all
series in proportion to the asset value of the respective series determined as
hereinafter provided.
5. The assets belonging to any series of stock shall be charged with the
liabilities in respect to such series, and shall also be charged with its
share of the general liabilities of the corporation, in proportion to the
asset value of the respective series determined as hereinafter provided. The
determination of the Board of Directors shall be conclusive as to the amount
of liabilities, including accrued expenses and reserves, as to the allocation
of the same as to a given series, and as to whether the same or general assets
of the corporation are allocable to one or more series.
<PAGE>
The Board of Directors may provide for a holder of any series of stock of
the corporation, who surrenders his certificate in good form for transfer to
the corporation or, if the shares in question are not represented by
certificates, who delivers to the corporation a written request in good order
signed by the shareholder, to convert the shares in question on such basis as
the Board may
<PAGE>
provide, into shares of stock of any other series of the corporation.
The net asset value per share of a series of the corporation's common
stock shall be determined in accordance with the Investment Company Act of
1940, as amended, and with generally accepted accounting principles, by adding
the market or appraised value of all securities, cash and other assets of the
corporation pertaining to that series, subtracting the liabilities determined
by the Board of Directors to be applicable to that series, allocating any
general assets and general liabilities to that series, and dividing the net
result by the number of shares of that series outstanding. Securities and
other investments and assets will be valued at fair value as determined in
good faith by the Board of Directors.
The holders of the shares of Common Stock of the corporation shall have
no preemptive rights to subscribe to further or additional shares of its
Common Stock.
Without action or consent of the stockholder's of the corporation, the
Board of Directors shall have authority, subject to the provisions of these
Articles of Incorporation, to issue shares of Common Stock of the Corporation,
from time to time, for such consideration, not less than the par value
thereof, as may be fixed from time to time by the Board of Directors.
SIXTH: The number of directors of the Corporation shall be three, or such
-----
other number as may from time to time be fixed by the By-Laws of the
corporation or pursuant to authorization contained in such By-Laws, but the
number of directors shall never be less than three; provided, notwithstanding
anything herein to the contrary, the board of directors shall initially
consist of one director. The name of the director who shall act as such until
successors are duly chosen and qualify is: James P. Schellenger.
SEVENTH: The corporation is to have perpetual existence.
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EIGHTH: The private property of the stockholders shall not be liable for
------
the payment of corporate debts to any extent whatever.
NINTH: In furtherance, and not in limitation of the powers conferred by
-----
statute, the Board of Directors of the corporation is expressly authorized:
1. To make, alter and amend the By-Laws of the corporation, to fix the
amount to be reserved as working capital over and above its capital stock paid
in, and to authorize and cause to be executed mortgages and liens upon the
real personal property of the corporation.
<PAGE>
2. By resolution or resolutions passed by a majority of the whole board,
to designate one or more committees, each committee to consist of two or more
of the directors of the corporation, which, to the extent permitted in such
resolution or resolutions, or in the By-Laws of the corporation, shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation, and may have the power to authorize
the seal of the corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be provided
for in the By-Laws of the corporation, or as may be determined from time to
time by resolution adopted by the Board of Directors.
3. Pursuant to the affirmative vote of the holders of at least a majority
of the shares of the capital stock of the corporation issued and outstanding,
given at a meeting of the stockholders duly called for that purpose, or when
authorized by the written consent of the holders of a majority of the shares
of the capital stock of the corporation issued and outstanding, the Board of
Directors shall have power and authority at any meeting to authorize the sale,
lease or exchange of all of the property and assets of the corporation,
including its good will and its corporate franchises, upon such terms and
conditions as the Board of Directors may deem expedient and for the best
interests of the corporation.
4. The corporation may in its By-Laws confer powers upon its Board of
Directors in addition to the foregoing, and in addition to the powers and
authorities expressly conferred upon them by statute.
5. The Board of Directors shall have power generally to exercise all such
powers and do all such acts and things as may be exercised or done by the
corporation, subject, nevertheless, to the provisions of the statutes of the
State of Maryland and of these Articles of Incorporation, including any
amendments thereof, and of the By-Laws of the corporation.
TENTH: The following provisions are inserted for the management of the
-----
business and for the conduct of the affairs of the corporation:
1. The Board of Directors shall have power to fix an initial offering
price which will yield to the corporation not less than the par value thereof,
at which the shares of the Common Stock of the corporation shall be offered
for sale, and to determine from time to time thereafter the offering price
which will yield to the corporation not less than the par value thereof, of
the shares of its Common Stock; provided, however, that no shares of the
Common Stock of the corporation shall be issued or sold for a
<PAGE>
consideration which shall be less than the liquidation value of such shares,
determined as hereinafter provided, as of the close of business on the
business day preceding the business day on which such shares are sold, except
in the case of shares of such Common Stock issued in payment of a dividend
properly declared and payable.
The liquidation value of the property and assets of the corporation shall
be determined by or under the direction of the Board of Directors of the
corporation, as of the close of business on each business day, by deducting
from the total appraised value of all of the property and assets of the
corporation, determined in the manner hereinafter provided, all debts,
obligations and liabilities of the corporation (including, but without
limitation of the generality of any of the foregoing, any or all debts,
obligations, liabilities or claims of any and every kind and nature, whether
fixed, accrued, or unmatured, and any reserves or charges, determined in
accordance with sound accounting practice, for any or all thereof, whether for
taxes, including estimated taxes or unrealized book profits, expenses,
contingencies or otherwise) and reasonable approximation of brokers'
commission, taxes, stock transfer fees and other costs which would be incurred
in liquidating all of the property and assets of the corporation.
In determining the total appraised value of all the property and assets
of the corporation:
(a) Securities owned shall be valued at market value, or in the absence
of readily available market quotations at fair value, both as determined
pursuant to methods approved by the Board of Directors and in accordance with
applicable statutes and regulations.
(b) Dividends declared but not yet received, or rights, in respect of
securities which are quoted ex-dividend or ex-rights, shall be included in the
value of such securities as determined by or pursuant to the direction of the
Board of Directors on the day the particular securities are first quoted ex-
dividend or ex-rights, and on each succeeding day until the said dividends or
rights are received and become part of the assets of the corporation.
(c) The value of any other assets of the corporation (and any of the
assets mentioned in paragraphs (a) or (b), in the event of a national
financial emergency determined to be such by the Board of Directors, in their
discretion) shall be determined in such manner as may be approved from time to
time by or pursuant to the direction of the Board of Directors.
The liquidation value of each share of the Common Stock of the
corporation shall be determined by dividing the total liquidation value of the
property and assets of the
<PAGE>
corporation by the total number of shares of its Common Stock then issued and
outstanding, including any shares sold by the corporation up to and including
the date as of which such liquidation value is to be determined whether or not
certificates therefor have actually been issued. In case the liquidation
value of each share so determined shall include a fraction of one cent, such
liquidation value of each share shall be adjusted to the nearest full cent.
2. To the extent permitted by law, and except in the case of a national
financial emergency determined to be such by the Board of Directors in their
discretion, the corporation shall repurchase shares of its Common Stock from
its stockholders upon request of the holder thereof received by the
corporation or its designated agent during business hours of any business day,
provided such request be followed promptly by surrender of the certificate or
certificates for such shares in form for transfer, together with such proof of
the authenticity of signatures as may be reasonably required by, or pursuant
to the direction of the Board of Directors of the corporation, and accompanied
by proper stock transfer stamps. Shares repurchased upon any such request
shall be purchased by the corporation at a price not less than the liquidation
value of such shares determined in the manner provided in Paragraph (1) of
this Article Tenth, as of the close of business on the day following the day
during which such request was received by the corporation on which the New
York Stock Exchange shall be open for trading for its entire business day,
unless the corporation and the holder of such shares shall agree that the
purchase price of such shares shall be determined as of the time prior
thereto, but which shall not be earlier than the close of business on the day
on which the New York Stock Exchange shall have been open for trading during
its entire business day preceding the day during which such request shall ave
been received by the corporation. If the time so agreed upon for the
determining such purchase price shall be an intermediate time other than the
close of business on a business day, then the purchase price to be paid for
such shares shall be an amount not less than the liquidation value of such
shares as of the close of business on the preceding day on which the New York
Stock Exchange shall be open for trading for its entire business day, plus or
minus such amount, if any, as the corporation shall estimate properly to
reflect the fluctuation in the value of the corporation's assets between the
close of business on such preceding day and the time so agreed upon, as
measured by the Dow-Jones Averages, or other similar market averages. In no
case shall the price paid by the corporation for such repurchased shares
exceed the proportionate interests of the shares of stock in the assets of the
corporation, which shall be defined as the value per share of the
corporation's assets, appraised as set forth in Paragraph (1) above, less all
liabilities, but without making deduction for brokers' commissions, taxes,
stock transfer
<PAGE>
fees and other costs which would be incurred in liquidating all of the
property and assets of the corporation.
After receipt of any such request from a stockholder, the corporation
shall mail to such stockholder a written confirmation of the repurchases of
such shares, which shall state the number of shares to be repurchased by the
corporation, the time as of which the purchase price of such shares is to be
determined, and the purchase price of such shares.
Payments for shares of its Common Stock so repurchased by the corporation
shall be made in cash, except in the event that the Board of Directors shall
adopt a special resolution (notice of which shall be given forthwith to all
stockholders of the corporation in the manner provided in the By-Laws)
authorizing, during such period of time as the board may fix, payment of such
shares by the delivery to stockholders whose shares shall be repurchased by
the corporation of any assets of the corporation of a value equivalent to the
purchase price of the shares of its Common Stock so purchased by the
corporation, or, at the option of the corporation, by the payment to such
stockholder of such equivalent value partly in cash and partly by the delivery
of such assets. The value of any part of such purchase price paid by the
delivery of assets of the corporation shall be determined as provided in sub-
paragraphs (a), (b) and (c) of paragraph (1) of this Article Tenth. In order
to avoid delivering securities in kind in unreasonably small denominations
(that is, less than ten shares in the case of stocks and $1,000 principal
amount in the case of bonds, etc.) the corporation may adjust any interest in
any security so to be delivered to any such stockholder to somewhat more or
less than such stockholder's arithmetical proportion of such security, and may
adjust fractional differences in cash or in securities, and any such
adjustment made by the corporation in good faith shall be binding upon such
stockholder and upon all other stockholders of the corporation, past, present
or future.
Payment for shares of its Common Stock so repurchased by the corporation
shall be made by the corporation as provided above within three business days
on which New York Stock Exchange shall be open for trading during its entire
business day after the receipt of the request from a stockholder for the
purchase of such shares, but in any event within sixty days after the receipt
of such request by the corporation; provided, however, that if payment shall
be made by delivery of assets of the corporation, as provided above, any
securities to be delivered as part of such payment shall be delivered as
promptly as any necessary transfers or such securities are to be delivered may
be made, but not necessarily within such sixty day period. Anything contained
in this paragraph to the contrary notwithstanding, the corporation shall not
be required to make payment for any
<PAGE>
shares so repurchased unless and until the stockholder requesting such
purchase shall have surrendered the certificate or certificates for such
shares in form for transfer and accompanied by proper stock transfer stamps,
as set forth above.
The right of any holder of shares of the Common Stock of the corporation
to receive dividends thereon and all other rights of such stockholder with
respect to the shares so repurchased by the corporation shall cease and
determine from and after the time as of which the purchase price of such
shares shall be fixed, as provided above, except the right of such stockholder
to receive payment for such shares as provided for herein. Payment for shares
of its Common Stock so repurchased by the corporation, either in cash or by
delivery of assets of the corporation as provided for above, shall be binding
and effective, upon receipt and acceptance thereof by any stockholder whose
shares shall be repurchased by the corporation, as a discharge and release, as
of the time when the purchase price of such shares shall be fixed, as provided
above, to the corporation, to the Board of Directors, and to all holders of
other shares of the Common Stock of the corporation, past, present and future,
in respect of any liability hereunder, except for willful misfeasance, gross
negligence or fraud.
3. Any determination made in good faith by or pursuant to the direction
of the Board of Directors as to the amount of the assets, debts, obligations
or liabilities of the corporation, as to the amount of any reserves or
charges, determined in accordance with sound accounting practice, and set up
on the books of the corporation, as to the time of or purpose for creating
such reserves or charges, as to the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall have been paid or
discharged), as to the price or closing bid price of any security, as to the
value of any security or other asset of the corporation, as to the reasonable
approximation of brokers' commissions, taxes, stock transfer fees and other
costs which would be incurred upon liquidation of the property and assets of
the corporation, or as to any other matters relating to the issue, sale,
purchase, repurchase or other acquisition or disposition of securities or
other assets or shares of the Common Stock of the corporation, shall be final
and conclusive, and shall be binding upon the corporation and all holders of
its shares, past, present and future, and shares of the Common Stock of the
corporation shall be issued and sold on the condition and understanding,
evidenced by acceptance of certificates for such shares, that any and all such
determinations shall be binding as aforesaid. All reserves and all funds or
accounts remaining as reserves or as reserved funds or accounts after the
determination of the liquidation value of any shares of
<PAGE>
the Common Stock of the corporation purchased by the corporation as provided
in paragraph (2) of the Article Tenth, if and when the Board of Directors in
its discretion shall determine that the retention of any such reserve or
reserved funds or accounts shall no longer be necessary or advisable, shall be
reversed, or paid or transferred into the general funds or asset accounts of
the corporation or any other holders of the shares of its Common Stock, past,
present or future, to the former holders of any such shares of the Common
Stock of the corporation which have been repurchased by the corporation may
enter on its books after the date as of which the corporation may enter on its
books after the date as of which the liquidation value of any shares of its
Common Stock repurchased by the corporation as provided in paragraph (2) of
this Article Tenth shall have been determined, which in good faith have not
theretofore been carried on the books of the corporation as an asset, shall be
so entered without any liability in respect thereof by the corporation, or any
of the holders of the shares of its Common Stock, past, present or future, to
the former holders of such shares of the Common Stock of the corporation which
have been repurchased by the corporation as provided in paragraph (2) of this
Article Tenth.
4. Anything contained in these Articles of Incorporation to the contrary
notwithstanding, the corporation shall not purchase securities of any one
individual, association, private corporation, public corporation or government
(except bonds or other obligations of the United States of America and its own
capital stock) in excess of ten percent (10%) of the total property and assets
of the corporation; and as long as the investments of the corporation in the
securities of any one individual, association, private corporation, public
corporation or government (except bonds or other obligations of the United
States of America and is own capital stock) shall amount to ten percent (10%)
of the total property and assets of the corporation, no further investments in
the securities of such individual, association, private corporation, public
corporation or government shall be made.
5. The corporation shall not purchase or acquire any property from any of
its directors or officers, or from any partnership of which any of its
directors or officers shall be a member, or from any association or
corporation of which any one or more of its directors or officers shall own
twenty-five percent (25%) or more of the outstanding shares of the capital
stock or of the beneficial interest therein, nor shall the corporation acquire
any securities issued by any such association or corporation.
6. Meetings of stockholder may be held without the State of Maryland, if
the By-Laws so provide. The books of the corporation may be kept (subject to
any provision contained in the statutes) outside of the State of Maryland at
such
<PAGE>
place or places as may be from time to time designated by the Board of
Directors.
7. Notwithstanding any of the powers hereinbefore granted, the
corporation shall not acquire control of or operate any business other than
that of an investment company, except insofar as this may be deemed necessary
to protect investments already made; not shall it acquire an interest in or
purchase any securities of any business enterprise (not the business of an
investment company) whose securities do not have an established public market.
8. The corporation shall not sell any security or other property which it
shall not own at the time of sale, or for the acquisition of which it shall
not have at the time of sale option or agreement acquired in the operation of
its business as an investment company.
9. The corporation shall make no loans, whether of cash or of other
assets of the corporation, to any of its officers, directors, or employees, or
to any other person concerned in the management of the corporation, or to any
partnership or association in which any of its officers, directors, or
employees is a partner, or to any corporation of which any one or more its
officers, directors, or employees own in the aggregate ten percent (10%) or
more of the stock or beneficial interest.
ELEVENTH: Subject to the Investment Company Act of 1940, as amended, the
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corporation may take or authorize any action upon the concurrence of such
proportion of votes entitled to be cast thereon as specified in the by-laws of
the corporation, notwithstanding any provisions of the Maryland General
Corporation Law requiring a greater proportion, provided that such provisions
of law allow a corporation to act by a lesser proportion.
IN WITNESS WHEREOF, the undersigned incorporator of Decatur Income
Fund, Inc. who executed the foregoing Articles of Incorporation hereby
acknowledged the same to be his act and further acknowledge that, to the best
of his knowledge the matters and facts set forth therein are true and all
material respects under the penalties of perjury.
Dated the 4th day of March, 1983.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
<PAGE>
EX-99.B1B
Form of Articles
Supplementary (November __, 1995)
DELAWARE GROUP DECATUR FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Decatur Fund, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (the "Corporation"), hereby certifies,
in accordance with Section 2-208 of the Maryland General Corporation Law, to the
State Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation has authority to issue a total of Seven
Hundred Fifty Million (750,000,000) shares of common stock with a par value of
One Dollar ($1.00) per share of the Corporation (the "Common Stock"), having an
aggregate par value of Seven Hundred Fifty Million Dollars ($750,000,000). Of
such Seven Hundred Fifty Million (750,000,000) shares of Common Stock, Five
Hundred Fifty Million (550,000,000) shares have been allocated to the Decatur
Income Fund series of the Common Stock and Two Hundred Million (200,000,000)
shares have been allocated to the Decatur Total Return Fund series of the Common
Stock. The Five Hundred Fifty Million (550,000,000) shares of the Decatur
Income Fund series of the Common Stock have been allocated among three classes
as follows: (1) Four Hundred Fifty Million (450,000,000) shares have been
allocated to the Decatur Income Fund class and (2) Fifty Million (50,000,000)
shares have been allocated to each of the Decatur Income Fund (Institutional)
class and the Decatur Income Fund B Class. The Two Hundred Million
(200,000,000) shares of the Decatur Total Return Fund series of the Common Stock
have been allocated among three classes as follows: (1) One Hundred Million
(100,000,000) shares have been allocated to the Decatur Total Return Fund class
and (2) Fifty Million (50,000,000) shares have been allocated to each of the
Decatur Total Return Fund (Institutional) class and the Decatur Total Return B
Class.
SECOND: The Board of Directors of the Corporation, at a meeting held
on July 20, 1995, adopted a resolution taking the following actions:
1. Classifying a fourth class of shares of the Decatur Income Fund
series of the Common Stock as the Decatur Income Fund C Class (the
"Income Fund C Class") and reclassifying and allocating Fifty Million
(50,000,000) shares of the authorized and unissued Common Stock,
previously classified and allocated to the Decatur Income Fund class
of the Decatur Income
<PAGE>
Fund series of the Common Stock, to the Income Fund C Class.
2. Classifying a fourth class of shares of the Decatur Total Return
Fund series of the Common Stock as the Decatur Total Return Fund C
Class (the "Total Return Fund C Class") and reclassifying and
allocating Fifty Million (50,000,000) shares of authorized and
unissued Common Stock, previously classified and allocated to the
Decatur Income Fund class of the Decatur Income Fund series of the
Common Stock, to the Total Return C Class.
THIRD: The shares of the Income Fund C Class shall represent
proportionate interests in the same portfolio of investments as the shares of
the Decatur Income Fund (Institutional) class, Decatur Income Fund B Class and
the Decatur Income Fund class of the Decatur Income Fund series of the Common
Stock. The shares of the Income Fund C Class shall have the same preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption as the shares of
the Decatur Income Fund (Institutional) class, Decatur Income Fund B Class and
the Decatur Income Fund class of the Decatur Income Fund series of the Common
Stock, all as set forth in the Articles of Incorporation of the Corporation,
except for the differences hereinafter set forth:
1. The dividends and distributions of investment income and capital
gains with respect to shares of the Income Fund C Class shall be in
such amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary with respect
to such class from the dividends and distributions of investment
income and capital gains with respect to shares of other classes of
the Decatur Income Fund series of the Common Stock to reflect
differing allocations of the expenses of the Corporation among the
shares of such classes and any resultant difference among the net
asset values per share of the shares of such classes, to such extent
and for such purposes as the Board of Directors may deem appropriate.
The allocation of investment income and capital gains and expenses and
liabilities of the Corporation among the four classes of the Decatur
Income Fund series of the Common Stock shall be determined by the
Board of Directors in a manner that is consistent with the order, as
applicable, dated September 6, 1994 (Investment Company Act of 1940
Release No. 20529) issued by the Securities and Exchange Commission,
and any amendments to such order, any future order or any Multiple
Class Plan adopted by
-2-
<PAGE>
the Corporation in accordance with Rule 18f-3 under the Investment
Company Act of 1940, as amended, that modifies or supersedes such
order.
2. Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the Securities and
Exchange Commission, or otherwise, the holders of shares of the Income
Fund C Class shall have (i) exclusive voting rights with respect to
any matter submitted to a vote of stockholders that affects only
holders of shares of the Income Fund C Class, including without
limitation the provisions of any Distribution Plan adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (a
"Distribution Plan") applicable to shares of the Income Fund C Class,
and (ii) no voting rights with respect to the provisions of any
Distribution Plan applicable to any other class of Common Stock or
with regard to any other matter submitted to a vote of stockholders
which does not affect holders of the shares of the Income Fund C
Class.
3. The shares of the Income Fund C Class shall not automatically
convert into shares of the Decatur Income Fund class of the Decatur
Income Fund series of the Common Stock as do the shares of the Decatur
Income Fund B Class of the Decatur Income Fund series of the Common
Stock.
FOURTH: The shares of the Total Return Fund C Class shall represent
proportionate interests in the same portfolio of investments as the shares of
the Decatur Total Return Fund (Institutional) class, Decatur Total Return B
Class and the Decatur Total Return Fund class of the Decatur Total Return Fund
series of the Common Stock. The shares of the Total Return Fund C Class shall
have the same preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption as the shares of the Decatur Total Return Fund
(Institutional) class, Decatur Total Return B Class and the Decatur Total Return
Fund class of the Decatur Total Return Fund series of the Common Stock, all as
set forth in the Articles of Incorporation of the Corporation, except for the
differences hereinafter set forth:
1. The dividends and distributions of investment income and capital
gains with respect to shares of the Total Return Fund C Class shall be
in such amounts as may be declared from time to time by the Board of
Directors, and such dividends and distributions may vary with respect
to such class from the dividends and distributions of investment
income and capital gains
-3-
<PAGE>
with respect to shares of other classes of the Decatur Total Return
Fund series of the Common Stock to reflect differing allocations of
the expenses of the Corporation among the shares of such classes and
any resultant difference among the net asset values per share of the
shares of such classes, to such extent and for such purposes as the
Board of Directors may deem appropriate. The allocation of investment
income and capital gains and expenses and liabilities of the
Corporation among the four classes of the Decatur Total Return Fund
series of the Common Stock shall be determined by the Board of
Directors in a manner that is consistent with the order, as
applicable, dated September 6, 1994 (Investment Company Act of 1940
Release No. 20529) issued by the Securities and Exchange Commission,
and any amendments to such order, any future order or any Multiple
Class Plan adopted by the Corporation in accordance with Rule 18f-3
under the Investment Company Act of 1940, as amended, that modifies or
supersedes such order.
2. Except as may otherwise be required by law pursuant to any
applicable order, rule or interpretation issued by the Securities and
Exchange Commission, or otherwise, the holders of shares of the Total
Return Fund C Class shall have (i) exclusive voting rights with
respect to any matter submitted to a vote of stockholders that affects
only holders of shares of the Total Return Fund C Class, including
without limitation the provisions of any Distribution Plan applicable
to shares of the Total Return Fund C Class, and (ii) no voting rights
with respect to the provisions of any Distribution Plan applicable to
any other class of Common Stock or with regard to any other matter
submitted to a vote of stockholders which does not affect holders of
the shares of the Total Return Fund C Class.
3. The shares of the Total Return Fund C Class shall not automatically
convert into shares of the Decatur Total Return Fund class of the
Decatur Total Return Fund series of the Common Stock as do the shares
of the Decatur Total Return B Class of the Decatur Total Return Fund
series of the Common Stock.
FIFTH: The shares of the Decatur Income Fund class of the Decatur
Income Fund series of the Common Stock reclassified as shares of the Income Fund
C Class and the Total Return Fund C Class, respectively, pursuant to these
Articles Supplementary have been reclassified by the Board of Directors
-4-
<PAGE>
pursuant to authority contained in the Articles of Incorporation of the
Corporation.
SIXTH: These Articles Supplementary shall become effective on
November 28, 1995.
IN WITNESS WHEREOF, Delaware Group Decatur Fund, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf this 14th day
----
of November, 1995.
DELAWARE GROUP DECATUR FUND, INC.
By: /s/ George M. Chamberlain, Jr.
-------------------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/ Richelle S. Maestro
- -------------------------------
Assistant Secretary
-5-
<PAGE>
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DECATUR FUND,
INC., who executed on behalf of the said Corporation the foregoing Articles
Supplementary, of which this instrument is made a part, hereby acknowledges, in
the name of and on behalf of said Corporation, said Articles Supplementary to be
the corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
/s/ George M. Chamberlain, Jr.
-----------------------------------
George M. Chamberlain, Jr.
Senior Vice President
-6-
<PAGE>
EX-99.B2
By-Laws
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 7 OF ARTICLE III
JANUARY 28, 1995
The Undersigned Secretary of Delaware Group Decatur
Fund, Inc. does hereby certify that at the Board of Directors of the Fund at a
meeting duly called and held on January 28, 1995 did adopt the following
resolution amending Section 7 of Article III of the Fund's by-laws:
RESOLVED, that Article
III, Section 7, be
amended in its
entirely to read as
follows:
Section 7. At any
meeting of the
stockholders of the
Corporation every
stockholder having the
right to vote shall be
entitled, in person or
by proxy appointed by
an instrument in
writing subscribed by
such stockholder or by
his duly authorized
attorney-in-fact and
bearing a date not
more than eleven
months prior to said
meeting unless such
instrument provides
for a longer period,
to one vote for each
share of stock having
voting power
registered in his name
on the books of the
Corporation.
IN WITNESS WHEREOF, I have hereto subscribed my name
this 28th day of January, 1995.
<PAGE>
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 2 OF ARTICLE VI
NOVEMBER 21, 1991
The Undersigned Secretary of Delaware Group Decatur
Fund, Inc. does hereby certify that at the Board of Directors of the Fund at a
meeting duly called and held on November 21, 1991 did adopt the following
resolution amending Section 2 of Article VI of the Fund's by-laws:
RESOLVED, that Article
VI, Section 2 of the
Fund's by-laws be
amended to read in its
entirely as follows:
Section 2. The Chairman
of the Board shall be
elected from the
membership of the
Board of Directors,
but other officers
need not be members of
the Board of
Directors. Any two or
more offices may be
held by the same
person except the
offices of President
and Vice President.
All officers of the
Corporation shall
serve for one year and
until their successors
shall have been duly
elected and shall have
qualified; provided,
however, that any
officer may be removed
at any time, either
with our without
cause, by action by
the Board of
Directors.
AND FURTHER RESOLVED,
that the appropriate
officers of the Fund
are hereby authorized
to take such other
steps as may be
necessary to implement
the aforesaid
amendment.
<PAGE>
IN WITNESS WHEREOF, I have hereto subscribed my name
this 21st day of November, 1991.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 8 OF ARTICLE IV
JULY 22, 1991
The Undersigned Secretary of Delaware Group Decatur
Fund, Inc. does hereby certify that at the Board of Directors of the Fund at a
meeting duly called and held on July 22, 1991 did adopt the following
resolution amending Section 8 of Article IV of the Fund's by-laws:
RESOLVED, that Article
IV, Section 8, be
amended in its
entirely to read as
follows:
Section 8. The Board of
Directors may hold their
meetings and keep the
books of the
Corporation outside of
the State of Maryland
at such place or
places as it may from
time to time
determine.
AND FURTHER RESOLVED,
that the Secretary of
the Fund is hereby
authorized and
directed to include a
certified copy of this
Amendment with the
corporate records of
the Fund; and further
RESOLVED, that the
books and records of
the Fund shall be
maintained at the
offices of the Fund in
the City of
Philadelphia.
IN WITNESS WHEREOF, I have hereto subscribed my name
this 22nd day of July, 1991.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
AMENDING SECTION 2 OF ARTICLE III
JANUARY 17, 1991
The Undersigned secretary of Delaware Group Decatur
Fund, Inc. does hereby certify that at the Board of Directors of the Fund at a
meeting duly called and held on January 17, 1991 did adopt the following
resolution amending Section 2 of ARTICLE III of the Fund's by-laws:
WHEREAS, the Board of
Directors of the Fund
deems it to be in the
best interests of the
Fund to amend the By-
Laws of the Fund to
provide that holders
of at least 10% of the
Fund's shares be
permitted, at the
Fund's cost, to call a
special stockholders
meeting for any
purpose, in order to
enable the Fund's
shares to be qualified
and sold in the State
of California; and
therefore be it
RESOLVED, that the By-
Laws of the Fund are
hereby amended by
inserting, as amended
Section 2 of ARTICLE
III, the following:
Section 2. Special
meetings of the
stockholders
may be called at any
time by the Chairman,
President or a
majority of the
members of the Board
of Directors and shall
be called by the
Secretary upon the
written request of the
holders of at least
ten percent of the
shares of the capital
stock of the
Corporation issued and
<PAGE>
outstanding and
entitled to vote at
such meeting. Upon
receipt of a written
request from such
holders entitled to
call a special
meeting, which shall
state the purpose of
the meeting and the
matter proposed to be
acted on at it, the
Secretary shall issue
notice of such
meeting. The cost of
preparing and mailing
the notice of a
special meeting of
stockholders shall be
borne by the
Corporation. Special
meetings of the
stockholders shall be
held at the principal
office of the
Corporation, or at
such other place
within or without the
State of Maryland as
the Board of Directors
may from time to time
direct, or at such
place within or
without the State of
Maryland as shall be
specified in the
notice of such
meeting.
IN WITNESS WHEREOF, I have hereto subscribed my name
this 17th day of January, 1991.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
INSERTING A NEW ARTICLE VII AND RENUMBERING THE SUBSEQUENT
ARTICLES
FEBRUARY 16, 1989
The Undersigned Secretary of Delaware Group Decatur
Fund, Inc. does hereby certify that the Board of Directors of the Fund at a
meeting duly called and held on February 16, 1989 did adopt the following
resolutions inserting a new Article VII and renumbering the subsequent
articles of the Fund's by-laws:
WHEREAS, the Board of Directors of the Fund deems it
to be in the best interests of the Fund to amend the By-Laws of the Fund to
allow indemnification of officers and directors to the full extent provided by
Maryland law;
NOW THEREFORE, BE IT RESOLVED, that the By-Laws of
the Fund are hereby amended by renumbering ARTICLES VIII, IX, X, XI, XII AND
XIII as ARTICLES IX, X, XI, XII, XII AND XIV, and by inserting as ARTICLE VII,
the following:
"INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. The Corporation shall indemnify each
Officer and Director made party to a proceeding, by
reason of service in such capacity, to the fullest
extent, and in the manner provided, under Section 2-
418 of the Maryland General Corporation Law: (i)
unless it is proved that the person seeking
indemnification did not meet the standard of conduct
set forth in subsection (b) (1) of such section; and
(ii) provided, that the Corporation shall not
indemnify any Officer or Director for any liability
to the Corporation or its security holders arising
from the wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of such person's office.
Section 2. The provisions of clause (i) of Section
1 herein notwithstanding, the Corporation shall
indemnify each Officer and Director against
reasonable expenses incurred in connection with the
successful defense of any proceeding to which each
such Officer or Director is a party by
<PAGE>
reason of service in such capacity.
Section 3. The Corporation, in the manner and to
the extent provided by applicable law, shall advance
to each Officer and Director who is made party to a
proceeding by reason of service in such capacity the
reasonable expenses incurred by such person in
connection therewith."
IN WITNESS WHEREOF, I have hereto subscribed my name
this 16th day of February, 1989.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
ARTICLE 3, SECTION 2
JUNE 16, 1988
The Undersigned Secretary of Delaware Group Decatur Fund, Inc. does hereby
certify that the Board of Directors of the Fund at a meeting duly called and
held on June 16, 1988 did adopt the following resolution amending Article 3,
Section 2 of the Fund's by-laws:
RESOLVED, that Article
III, Section 2 of the
By-laws of the Fund be
amended to read as
follows:
Section 2. Special
meetings of the
stockholders may be
called at any time by
the Chairman,
President or a
majority of the
members of the Board
of Directors and shall
be called by the
Secretary upon the
written request of the
holders of at least
twenty-five percent of
the shares of the
capital stock of the
Corporation issued and
outstanding and
entitled to vote at
such meeting;
provided, if the
matter proposed to be
acted on is
substantially the same
as a matter voted on
at any special meeting
held during the
preceding twelve
months, such written
request shall be made
by holders of at least
a majority of the
capital stock of the
Corporation issued and
outstanding and
entitled to vote at
such meetings. A
special meeting of the
stockholders shall
also
<PAGE>
be called by the
Secretary upon the
written request of at
least ten percent of
the shares of the
capital stock of the
Corporation issued and
outstanding and
entitled to vote at
such meeting, for the
express purpose of
voting upon the
question of removal of
a director or
directors. Upon
receipt of a written
request from such
holders entitled to
call a special
meeting, which shall
state the purpose of
the meeting and the
matter proposed to be
acted on at it, the
Secretary shall inform
the holders who made
such request of the
reasonably estimated
cost of preparing and
mailing a notice of a
meeting and upon
payment of such costs
to the Corporation the
Secretary shall issue
notice of such
meeting. Special
meetings of the
stockholders shall be
held at the principal
office of the
Corporation, or at
such other place
within or without the
State of Maryland as
the Board of Directors
may from time to time
direct, or at such
place within or
without the State of
Maryland as shall be
specified in the
notice of such
meeting.
IN WITNESS WHEREOF, I have hereto subscribed my name
this 16th day of June, 1988.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
CERTIFICATION OF AMENDMENT TO BY-LAWS
ARTICLE 3, SECTION 1
AND
ARTICLE 4, SECTION 2 AND 4
JUNE 14, 1988
The Undersigned Secretary of Delaware Group Decatur
Fund, Inc. does hereby certify that the Shareholders of the Fund at a meeting
duly called and held on June 14, 1988 did adopt the following resolution
amending Article 3, Section 1 and Article 4, Section 2 and 4 of the Fund's by-
laws:
ARTICLE III
Section 1. An annual
meeting of the
shareholders of the
Corporation for the
election of directors
and for the
transaction of general
business shall not be
required to be held in
any year except that
an annual meeting must
be held in any year if
any of the following
items is required to
be acted upon by
shareholders under the
Investment Company Act
of 1940; election of
directors, approval of
the investment
advisory agreement,
ratification of the
selection of
independent public
accountants, or
approval of a
distribution
agreement. Any such
meeting shall be held
at the principal
office of the
Corporation, or at
such other place
within or without the
State of Maryland as
the Board of Directors
may from time to time
prescribe, on the
third Tuesday in April at
<PAGE>
10:00 a.m. or at
such other date and
time as the Board of
Directors may from
time to time
prescribe. A notice of
any change in the
place of the annual
meeting shall be given
to each shareholder
not less than ten days
before the election is
held.
ARTICLE IV
* * *
Section 2. The
directors shall be
elected by the
shareholders of the
Corporation at an
annual meeting, if
held, or at a special
meeting called for
such purpose, and
shall hold office
until their successors
shall be duly elected
and qualified.
* * *
Section 4. The Board
of Directors shall
have power to fill
vacancies occurring on
the Board, whether by
death, resignation or
otherwise. A vacancy
on the Board of
Directors resulting
from any cause except
an increase in the
number of directors
may be filled by a
vote of the majority
of the remaining
members of the Board,
though less than a
quorum. A vacancy on
the Board of Directors
resulting from an
increase in the number
of directors may be
filled by a majority
of the entire Board of
Directors. A director
elected by the Board
of Directors to fill a
<PAGE>
vacancy shall serve
until the next annual
meeting, whenever
held, or special
meeting called for
that purpose, and
until his successor is
elected and qualifies.
IN WITNESS WHEREOF, I have hereto subscribed my name
this 14th day of June, 1988.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Secretary
<PAGE>
DECATUR INCOME FUND, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The principal office of the Corporation
shall be in the City of Baltimore, State of Maryland. The Corporation shall
also have offices at such other places as the Board of Directors may from time
to time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS AND STOCK CERTIFICATES
Section 1. Every stockholder of record shall be
entitled to a stock certificate representing the shares owned by him. Stock
certificates shall be in such form as may be required by law and as the Board
of Directors shall prescribe. Every stock certificate shall be signed by the
Chairman or the President or a Vice President and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, and sealed
with the corporate seal, which may be a facsimile, either engraved or printed.
Stock certificates may bear the facsimile signatures of the officers
authorized to sign such certificates.
Section 2. Shares of the capital stock of the
Corporation shall be transferable only on the books of the Corporation by the
person in whose name such shares are registered, or by his duly authorized
attorney or representative. In all cases of transfer by an attorney-in-fact,
the original power of attorney, or an official copy thereof duly certified,
shall be deposited and remain with the Corporation or its duly authorized
transfer agent. In case of transfers by executors, administrators, guardians
or other legal representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited and remain with the
Corporation or its duly authorized transfer agent. No transfer shall be made
unless and until the certificate issued to the transferor shall be delivered
to the Corporation or its duly authorized transfer agent, properly endorsed.
Section 3. Any person desiring a certificate for
shares of the capital stock of the Corporation to be issued in lieu of one
lost or destroyed shall make an affidavit or affirmation setting forth the
loss or destruction of such stock certificate, and shall advertise such loss
or destruction in such manner as the Board of Directors may require, and
shall, if the Board of Directors shall so require, give the Corporation a bond
or indemnity,
<PAGE>
in such form and with such security as may be satisfactory to the Board,
indemnifying the Corporation against any loss that may result upon the
issuance of a new stock certificate. Upon receipt of such affidavit and proof
of publication of the advertisement of such loss or destruction, and the bond,
if any, required by the Board of Directors, a new stock certificate may be
issued of the same tenor and for the number of shares as the one alleged to
have been lost or destroyed.
Section 4. The Corporation shall be entitled to
treat the holder of record of any share or shares of its capital stock as the
owner thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not the Corporation shall have express or other notice
thereof.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 1. The annual meeting of the stockholders
of the Corporation for the election of Directors and for the transaction of
general business shall be held at the principal office of the Corporation, or
at such other place within or without the State of Maryland as the Board of
Directors may from time to time prescribe, on the third Tuesday in April at
10:00 a.m. in each year after the year 1985, unless that day shall be duly
designated as a legal holiday, in which event the annual meeting of the
stockholders shall be held on the first day following which is not a legal
holiday. A notice of any change in the place of the annual meeting shall be
given to each stockholder not less than ten days before the election is held.
Section 2. Special meetings of the stockholders may
be called at any time by the Chairman, President or a majority of the members
of the Board of Directors and shall be called by the Secretary upon the
written request of the holders of at least twenty-five percent of the shares
of the capital stock of the Corporation issued and outstanding and entitled to
vote at such meeting; provided, if the matter proposed to be acted on is
substantially the same as a matter voted on at any special meeting held during
the preceding twelve months, such written request shall be made by holders of
at least a majority of the capital stock of the Corporation issued and
outstanding and entitled to vote at such meetings. Upon receipt of a written
request from such holders entitled to call a special meeting, which shall
state the purpose of the meeting and the matter proposed to be acted on at it,
the Secretary shall inform the holders who made such request of the reasonably
estimated cost of preparing and mailing a notice of a meeting
<PAGE>
and upon payment of such costs to the Corporation the Secretary shall issue
notice of such meeting. Special meetings of the stockholders shall be held at
the principal office of the Corporation, or at such other place within or
without the State of Maryland as the Board of Directors may from time to time
direct, or at such place within or without the State of Maryland as shall be
specified in the notice of such meeting.
Section 3. Notice of the time and place of the
annual or any special meeting of the stockholders shall be given to each
stockholder entitled to notice of such meeting not less than ten days nor more
than ninety days prior to the date of such meeting. In the case of special
meetings of the stockholders, the notice shall specify the object or objects
of such meeting, and no business shall be transacted at such meeting other
than that mentioned in the call.
Section 4. The Board of Directors may close the
stock transfer books of the Corporation for a period not exceeding twenty days
preceding the date of any meeting of stockholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or for
a period of not exceeding twenty days in connection with the obtaining of the
consent of stockholders for any purpose; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of Directors may fix
in advance a date, not exceeding ninety days preceding the date of any meeting
of stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining
such consent, as a record date for the determination of the stockholders
entitled to notice of, and to vote at any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock or to give such consent, and in such
case such stockholders and only such stockholders as shall be stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of such
dividend or to receive such allotment of rights or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
Section 5. At all meetings of the stockholders a
quorum shall consist of the holders of a majority of the outstanding shares of
the capital stock of
<PAGE>
the Corporation entitled to vote at such meeting. In the absence of a quorum
no business shall be transacted except that the stockholders present in person
or by proxy and entitled to vote at such meeting shall have power to adjourn
the meeting from time to time to a date not more than one hundred twenty days
after the original record date without further notice other than announcement
at the meeting. At any such adjourned meeting at which a quorum shall be
present any business may be transacted which might have been transacted at the
meeting on the date specified in the original notice. If a quorum is present
at any meeting, the holders of a majority of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote at the meeting who
shall be present in person or by proxy at such meeting shall have power to
approve any matter properly before the meeting, except a plurality of all
votes cast at a meeting at which a quorum is present shall be sufficient for
the election of a director. The holders of such majority shall also have
power to adjourn the meeting to any specific time or times, and no notice of
any such adjourned meeting need be given to stockholders absent or otherwise.
Section 6. At all meetings of the stockholders the
following order of business shall be substantially observed, as far as it is
consistent with the purpose of the meeting:
Election of Directors;
Ratification of Selection of Auditors;
New business.
Section 7. At any meeting of the stockholders of
the Corporation every stockholder having the right to vote shall be entitled,
in person or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than eleven months prior to said
meeting unless such instrument provides for a longer period, to one vote for
each share of stock having voting power registered in his name on the books of
the Corporation.
ARTICLE IV
DIRECTORS
Section 1. The Board of Directors shall consist of
not less than three nor more than twelve members. The Board of Directors may
by a vote of the entire board increase or decrease the number of directors
without a vote of the stockholders; provided, that any such decrease shall not
affect the tenure of office of any director. Directors need not hold any
shares of the capital stock of the Corporation.
<PAGE>
Section 2. The directors shall be elected annually
by the stockholders of the Corporation at their annual meeting, and shall hold
office for the term of one year and until their successors shall be duly
elected and shall qualify.
Section 3. The Board of Directors shall have the
control and management of the business of the Corporation, and in addition to
the powers and authority by these By-Laws expressly conferred upon them, may
exercise, subject to the provisions of the laws of the State of Maryland and
of the Articles of Incorporation of the Corporation, all such powers of the
Corporation and do all such acts and things as are not required by law or by
the Articles of Incorporation to be exercised or done by the stockholders.
Section 4. The Board of Directors shall have power
to fill vacancies occurring on the Board, whether by death, resignation or
otherwise. A vacancy on the Board of Directors resulting from any cause except
an increase in the number of directors may be filled by a vote of the majority
of the remaining members of the Board, though less than a quorum. A vacancy on
the Board of Directors resulting from an increase in the number of directors
may be filled by a majority of the entire Board of Directors. A director
elected by the Board of Directors to fill a vacancy shall serve until the next
annual meeting of stockholders and until his successor is elected and
qualifies. If less than a majority of the directors in office shall have been
elected by the stockholders, a meeting of the stockholders shall be called as
required under the Investment Company Act of 1940, as amended.
Section 5. The Board of Directors shall have power
to appoint, and at its discretion to remove or suspend, any officers,
managers, superintendents, subordinates, assistants, clerks, agents and
employees, permanently or temporarily, as the Board may think fit, and to
determine their duties and to fix, and from time to time to change, their
salaries or emoluments, and to require security in such instances and in such
amounts as it may deem proper.
Section 6. In case of the absence of an officer of
the Corporation, or for any other reason which may seem sufficient to the
Board of Directors, the Board may delegate his powers and duties for the time
being to any other officer of the Corporation or to any director.
Section 7. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation
<PAGE>
which, to the extent provided in such resolution or resolutions and by
applicable law, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Any such committee shall keep regular minutes of its proceedings, and shall
report the same to the Board when required.
Section 8. The Board of Directors may hold their
meetings and keep the books of the Corporation, except the original or a
duplicate stock ledger and the original or a certified copy of these By-Laws,
outside of the State of Maryland, at such place or places as they may from
time to time determine.
Section 9. The Board of Directors shall have power
to fix, and from time to time to change the compensation, if any, of the
directors of the Corporation.
Section 10. Upon retirement of a Director, the
Board may elect him or her to the position of Director Emeritus. Said Director
Emeritus shall serve for one year and may be re-elected by the Board from year
to year thereafter. Said Director Emeritus shall not vote at meetings of
Directors and shall not be held responsible for actions of the Board but shall
receive fees paid to Board members for serving as such.
ARTICLE V
DIRECTORS MEETINGS
Section 1. The first regular meeting of the Board
of Directors shall be held each year within seven business days following the
annual meeting of stockholders at which the Directors are elected. Regular
meetings of the Board of Directors shall also be held without notice at such
times and places as may be from time to time prescribed by the Board.
Section 2. Special meetings of the Board of
Directors may be called at any time by the Chairman, and shall be called by
the Chairman upon the written request of a majority of the members of the
Board of Directors. Unless notice is waived by all the members of the Board of
Directors, notice of any special meeting shall be given to each director at
least twenty-four hours prior to the date of such meeting, and such notice
shall provide the time and place of such special meeting.
Section 3. One-third of the entire Board of
Directors shall constitute a quorum for the transaction of
<PAGE>
business at any meeting; except that if the number of directors on the Board
is less than six, two members shall constitute a quorum for the transaction of
business at any meeting. The act of a majority of the directors present at
any meeting where there is a quorum shall be the act of the Board of Directors
except as may be otherwise
Section 4. The order of business at meetings of the
Board of Directors shall be prescribed from time to time by the Board.
ARTICLE VI
OFFICERS AND AGENTS
Section 1. At the first meeting of the Board of
Directors after the election of Directors in each year, the Board shall elect
a Chairman, a President and Chief Executive Officer, one or more Vice
Presidents, a Secretary and a Treasurer and may elect or appoint one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers and agents as the Board may deem necessary and as the business of the
Corporation may require.
Section 2. The Chairman of the Board and the
President shall be elected from the membership of the Board of Directors, but
other officers need not be members of the Board of Directors. Any two or more
offices may be held by the same person except the offices of President and
Vice President. All officers of the Corporation shall serve for one year and
until their successors shall have been duly elected and shall have qualified;
provided, however, that any officer may be removed at any time, either with or
without cause, by action by the Board of Directors.
ARTICLE VII
DUTIES OF OFFICERS
CHAIRMAN OF THE BOARD
Section 1. The Chairman of the Board shall preside
at all meetings of the stockholders and the Board of Directors and shall be a
member ex officio of all standing committees. He shall have those duties and
responsibilities as shall be assigned to him by the Board of Directors. In the
absence, resignation, disability or death of the President, the Chairman shall
exercise all the powers and perform all the duties of the President until his
return, or until such disability shall be removed or until a new President
shall have been elected.
PRESIDENT
<PAGE>
Section 2. The President shall be the Chief
Executive Officer and head of the Corporation, and in the recess of the Board
of Directors shall have the general control and management of its business and
affairs, subject, however to the regulations of the Board of Directors.
The President shall, in the absence of the Chairman,
preside at all meetings of the stockholders and the Board of Directors. In the
event of the absence, resignation, disability or death of the Chairman, the
President shall exercise all powers and perform all duties of the Chairman
until his return, or until such disability shall have been removed or until a
new Chairman shall have been elected.
VICE PRESIDENTS
Section 3. The Executive Vice President, and the
Vice Presidents, shall have those duties and responsibilities as shall be
assigned to them by the Chairman or the President. In the event of the
absence, resignation, disability or death of the Chairman and President, the
Executive Vice President shall exercise all the powers and perform all the
duties of the President until his return, or until such disability shall be
removed or until a new President shall have been elected.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 4. The Secretary shall attend all meetings
of the stockholders and shall record all the proceedings thereof in a book to
be kept for that purpose, and he shall be the custodian of the corporate seal
of the Corporation. In the absence of the Secretary, an Assistant Secretary or
any other person appointed or elected by the Board of Directors, as is
elsewhere in these Bylaws provided, may exercise the rights and perform the
duties of the Secretary.
Section 5. The Assistant Secretary, or, if there be
more than one Assistant Secretary, then the Assistant Secretaries in the order
of their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the secretary. Any Assistant
Secretary elected by the Board shall also perform such other duties and
exercise such other powers as the Board of Directors shall from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 6. The Treasurer shall keep full and
correct accounts of the receipts and expenditures of the
<PAGE>
Corporation in books belonging to the Corporation, and shall deposit all
monies and valuable effects in the name and to the credit of the Corporation
and in such depositories as may be designated by the Board of Directors, and
shall, if the Board shall so direct, give bond with sufficient security and in
such amount as may be required by the Board of Directors for the faithful
performance of his duties.
He shall disburse funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Board of Directors at the
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as the chief fiscal officer of the Corporation and of the
financial condition of the Corporation, and shall present each year before the
annual meeting of the stockholders a full financial report of the preceding
fiscal year.
Section 7. The Assistant Treasurer, or, if there be
more than one Assistant Treasurer, then the Assistant Treasurers in the order
of their seniority, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. Any Assistant
Treasurer elected by the board shall also perform such duties and exercise
such powers as the Board of Directors shall from time to time prescribe.
ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.
Section 1. All checks shall bear the signature of
such person or persons as the Board of Directors may from time to time direct.
Section 2. All notes and other similar obligations
and acceptances of drafts by the Corporation shall be signed by such person or
persons as the Board of Directors may from time to time direct.
Section 3. Any officer of the Corporation or any
other employee, as the Board of Directors may from time to time direct, shall
have full power to endorse for deposit all checks and all negotiable paper
drawn payable to his or their order or to the order of the Corporation.
ARTICLE IX
CORPORATE SEAL
Section 1. The corporate seal of the Corporation
shall have inscribed thereon the name of the Corporation, the year of its
organization, and the words "Corporate Seal, Maryland." Such seal may be used
by causing
<PAGE>
it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE X
DIVIDENDS
Section 1. Dividends upon the shares of the capital
stock of the Corporation may, subject to the provisions of the Articles of
Incorporation of the Corporation, if any, be declared by the Board of
Directors at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock of the
Corporation.
Section 2. Before payment of any dividend there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors may, from time to time, in their
absolute discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall deem to
be for the best interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.
ARTICLE XI
FISCAL YEAR
Section 1. The fiscal year of the Corporation shall
begin on December 1 of each year, and end on November 30 of each year.
ARTICLE XII
NOTICES
Section 1. Whenever under the provisions of these
By-Laws notice is required to be given to any director or stockholder, such
notice is deemed given when it is personally delivered, left at the residence
or usual place of business of the director or stockholder, or mailed to such
director or stockholder at such address as shall appear on the books of the
Corporation and such notice, if mailed, shall be deemed to be given at the
time it shall be so deposited in the United States mail postage prepaid. In
the case of directors, such notice may also be given orally by telephone or by
telegraph or cable.
Section 2. Any notice required to be given under
these By-Laws may be waived in writing, signed by the person or persons
entitled to such notice, whether before or
<PAGE>
after the time stated therein.
ARTICLE XIII
AMENDMENTS
Section 1. These By-Laws may be amended, altered or
repealed by the affirmative vote of the holders of a majority of the shares of
capital stock of the Corporation issued and outstanding and entitled to vote
thereon, or by a majority of the Board of Directors, as the case may be.
<PAGE>
DECATUR INCOME FUND, INC.
AMENDMENT TO BY-LAWS
DECATUR INCOME FUND, INC.
At the meeting of the Board of Directors held
September 20, 1984 the following Resolutions amending the By-Laws were
adopted:
RESOLVED, that Article VI, Section 1 be amended as
of September 30, 1984 to read as follows:
Section 1. At the first meeting of the Board of
Directors after the election of Directors in each
year the Board shall elect a Chairman, a President
and Chief Executive Officer, one or more Vice
Presidents, a Secretary and a Treasurer, and may
elect or appoint one or more Assistant Secretaries,
one or more Assistant Treasurers, and such other
officers and agents as the Board may deem necessary
and as the business of the Corporation may require.
RESOLVED, that Article VII, Section 1 be amended as
of September 30, 1984 to read as follows:
Section 1. The Chairman of the Board shall preside
at all meetings of the stockholders and the Board of
Directors and shall be a member ex-officio of all
standing committees. He shall have those duties and
responsibilities as shall be assigned to him by the
Board of Directors. In the absence, resignation,
disability or death of the President, the Chairman
shall exercise all the powers and perform all the
duties of the President until his return, or until
such disability shall be moved or until a new
President shall have been elected.
FURTHER RESOLVED, that Article VII, Section 3 be
amended as of September 30, 1984 to read as follows:
Section 3. The President shall be the Chief
Executive Officer and head of the Corporation, and
in the recess of the Board of Directors shall have
the general control and management of its business
and affairs,
<PAGE>
subject, however, to the regulations of the Board of
Directors.
The President shall, in the absence of the Chairman,
preside at all meetings of the stockholders and the
Board of Directors. In the event of the absence,
resignation, disability or death of the Chairman,
the President shall exercise all powers and perform
all duties of the Chairman until his return, or
until such disability shall have been removed or
until a new Chairman shall have been elected.
FURTHER RESOLVED, that Article VII, Section 4 be
amended as of September 30, 1984 to read as follows:
Section 4. The Executive Vice President, and the
Vice Presidents, shall have those duties and
responsibilities as shall be assigned to them by the
Chairman or the President. In the event of the
absence, resignation, disability or death of the
Chairman and President, the Executive Vice President
shall exercise all the powers and perform all the
duties of the President until his return, or until
such disability shall be removed or until a new
President shall have been elected.
I, Donald M. Allen, Secretary of Decatur Income
Fund, Inc., do hereby certify that the foregoing is a true and correct copy of
the Resolutions adopted by the Board of Directors at their meeting held
September 20, 1984.
/s/Donald M. Allen
------------------
Donald M. Allen
<PAGE>
DECATUR INCOME FUND, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The principal office of the Corporation
shall be in the City of Baltimore, State of Maryland. The Corporation shall
also have offices at such other places as the Board of Directors may from time
to time determine and the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS AND STOCK CERTIFICATES
Section 1. Every stockholder of record shall be
entitled to a stock certificate representing the shares owned by him. Stock
certificates shall be in such form as may be required by law and as the Board
of Directors shall prescribe. Every stock certificate shall be signed by the
Chairman or the President or a Vice President and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, and sealed
with the corporate seal, which may be a facsimile, either engraved or printed.
Whenever permitted by law, the Board of Directors may authorize the issuance
of stock certificates bearing the facsimile signatures of the officers
authorized to sign such certificates.
Section 2. Shares of the capital stock of the
Corporation shall be transferable only on the books of the Corporation by the
person in whose name such shares are registered, or by his duly authorized
attorney or representative. In all cases of transfer by an attorney, the
original letter of attorney, or an official copy thereof duly certified, shall
be deposited and remain with the Corporation or its duly authorized transfer
agent. In case of transfers by executors, administrators, guardians or other
legal representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the Corporation
or its duly authorized transfer agent. No transfer shall be made unless and
until the certificate issued to the transferor shall be delivered to the
Corporation or its duly authorized transfer agent, properly endorsed.
Section 3. Any person desiring a certificate for
shares of the capital stock of the Corporation to be issued in lieu of one
lost or destroyed shall make an affidavit or affirmation setting forth the
loss or destruction of such stock certificate, and shall advertise
<PAGE>
such loss or destruction in such manner as the Board of Directors may require,
and shall, if the Board of Directors shall so require, give the Corporation a
bond of indemnity, in such form and with such security as may be satisfactory
to the Board, indemnifying the Corporation against any loss that may result
upon the issuance of a new stock certificate. Upon receipt of such affidavit
and proof of publication of the advertisement of such loss or destruction, and
the bond, if any, required by the Board of Directors, a new stock certificate
may be issued of the same tenor and for the number of shares as the one
alleged to have been lost or destroyed.
Section 4. The Corporation shall be entitled to
treat the holder of record of any share or shares of its capital stock as the
owner thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not the Corporation shall have express or other notice
thereof, except as otherwise provided by the laws of the State of Maryland.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 1. The annual meeting of the stockholders
of the Corporation for the election of Directors and for the transaction of
general business shall be held at the principal office of the Corporation, or
at such other place within or without the State of Maryland as the Board of
Directors may from time to time prescribe, on the third Tuesday in April at
10:00 a.m. in each year after the year 1983, unless that day shall be duly
designated as a legal holiday, in which event the annual meeting of the
stockholders shall be held on the first day following which is not a legal
holiday. The place of the annual meeting of the stockholders of the
Corporation shall be changed within sixty days next before the day on which
such meeting is to be held. A notice of any change in the place of the annual
meeting shall be given to each stockholder twenty days before the election is
held.
Section 2. Special meetings of the stockholders may
be called at any time by the Chairman and shall be called at any time by the
Chairman, or by the Secretary, upon the written request of a majority of the
members of the Board of Directors, or upon the written request of the holders
of a majority of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at such meeting. Upon receipt of a written
request from any person or persons entitled to call a special meeting, which
shall state the object of the meeting, it shall be the duty of the Chairman,
or, in his absence, the
<PAGE>
Secretary, to call such meeting to be held not less than ten days nor more
than sixty days after the receipt of such request. Special meetings of the
stockholders shall be held at the principal office of the Corporation, or at
such other place within or without the State of Maryland as the Board of
Directors may from time to time direct, or at such place within or without the
State of Maryland as shall be specified in the notice of such meeting.
Section 3. Notice of the time and place of the
annual or any special meeting of the stockholders shall be given to each
stockholder entitled to notice of such meeting at least ten days prior to the
date of such meeting. In the case of special meetings of the stockholders, the
notice shall specify the object or objects of such meeting, and no business
shall be transacted at such meeting other than that mentioned in the call.
Section 4. The Board of Directors may close the
stock transfer books of the Corporation for a period not exceeding sixty days
preceding the date of any meeting of stockholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or for
a period of not exceeding sixty days in connection with the obtaining of the
consent of stockholders for any purpose; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of Directors may fix
in advance a date, not exceeding sixty days preceding the date of any meeting
of stockholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, or a date in connection with obtaining
such consent, as a record date for the determination of the stockholders
entitled to notice of, and to vote any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock or to give such consent, and in such
case such stockholders and only such stockholders as shall be stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of such
dividend or to receive such allotment of rights or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
Section 5. At least ten days before every election
of directors of the Corporation, the Secretary shall prepare and file in the
office where the election is to be held a complete list of the stockholders
entitled to vote at
<PAGE>
the ensuing election, arranged in alphabetical order, with the residence of
each stockholder and the number of voting shares held by him, and such list
shall at all times, during the usual hours for business and during the whole
time of said election, be open to the examination of any stockholder.
Section 6. At all meetings of the stockholders a
quorum shall consist of the persons representing a majority of the outstanding
shares of the capital stock of the Corporation entitled to vote at such
meeting. In the absence of a quorum no business shall be transacted except
that the stockholders present in person or by proxy and entitled to vote at
such meeting shall have power to adjourn the meeting from time to time without
notice other than announcement at the meeting until a quorum shall be present.
At any such adjourned meeting at which a quorum shall be present any business
may be transacted which might have been transacted at the meeting on the date
specified in the original notice. If a quorum is present at any meeting, the
holder of the majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting who shall be
present in person or by proxy at the meeting shall have power to act upon all
matters properly before the meeting, and shall also have power to adjourn the
meeting to any specific time or times, and no notice of any such adjourned
meeting need be given to stockholders absent or otherwise.
Section 7. At all meetings of the stockholders the
following order of business shall be substantially observed, as far as it is
consistent with the purpose of the meeting:
Election of Directors;
Ratification of Selection of Auditors;
New Business.
Section 8. At any meeting of the stockholders of
the Corporation every stockholder having the right to vote shall be entitled,
in person or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three years prior to said meeting
unless such instrument provides for a longer period, to one vote for each
share of stock having voting power registered in his name on the books of the
Corporation. Except where the transfer books of the Corporation shall have
been closed, or a date shall have been fixed as a record date for the
determination of the stockholders entitled to vote at such meeting, no share
of stock shall be voted on at any election of the Directors which shall have
been transferred on the books of the Corporation with twenty days next
preceding such election of Directors.
<PAGE>
ARTICLE IV
DIRECTORS
Section 1. The Board of Directors shall consist of
not less than three nor more than twelve members, who may be any persons,
whether or not they hold any shares of the capital stock of the Corporation.
Section 2. The directors shall be elected annually
by the stockholders of the Corporation at their annual meeting, and shall hold
office for the term of one year and until their successors shall be duly
elected and shall qualify.
Section 3. The Board of Directors shall have the
control and management of the business of the Corporation, and in addition to
the powers and authority by these By-Laws expressly conferred upon them, may
subject to the provisions of the laws of the State of Maryland and of the
Certificate of Incorporation of the Corporation, exercise all such powers of
the Corporation and do all such acts and things as are not required by law or
by the Certificate of Incorporation to be exercised or done by the
stockholders.
Section 4. The Board of Directors shall have power
to fill vacancies occurring on the Board, whether by death, resignation or
otherwise. A vacancy on the Board of Directors may be filled by a vote of the
majority of the remaining members of the Board, though less than a quorum, but
such election shall be deemed to be only for the balance of the unexpired
term.
Section 5. The Board of Directors shall have power
to appoint, and at its discretion to remove or suspend, any officer, officers,
manager, superintendents, subordinates, assistants, clerks, agents and
employees, permanently or temporarily, as the Board may think fit, and to
determine their duties and to fix, and from time to time to change, their
salaries or emolument, and to require security in such instances and in such
amounts as it may deem proper. No contract of employment for services to be
rendered to the Corporation shall be of longer duration than two weeks, unless
such contract of employment shall be in writing, signed by the officers of the
Corporation and approved b the Board of Directors.
Section 6. In case of the absence of an officer of
the Corporation, or for any other reason which may seem sufficient to the
Board of Directors, the Board may delegate his powers and duties for the time
being to any other officer of the Corporation or to any director.
Section 7. The Board of Directors may, by
<PAGE>
resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation which, to the extent provided in such resolution
or resolutions, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
and may have power to authorize the seal of the Corporation to be affixed to
all papers which may require it. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. Any such committee shall keep regular minutes of its
proceedings, and shall report the same to the Board when required.
Section 8. The Board of Directors may hold their
meetings and keep the books of the Corporation, except the original or
duplicate stock ledger, outside of the State of Maryland, at such place or
places as they may from time to time determine.
Section 9. The Board of Directors shall have power
to fix, and from time to time to change the compensation, if any, of the
directors of the Corporation.
Section 10. Upon the retirement of a Director, the
Board may elect him or her to the position of Director Emeritus. Said Director
Emeritus shall serve for one year and may be re-elected by the Board from year
to year thereafter. Said Director Emeritus shall not vote at meetings of
Directors and shall not be held responsible for actions of the Board but shall
receive fees paid to Board members for serving as such.
ARTICLE V
DIRECTORS MEETINGS
Section 1. The first regular meeting of the Board
of Directors shall be held each year within seven business days following the
annual meeting of stockholders at which the Directors are elected. Regular
meetings of the Board of Directors shall also be held without notice at such
times and places as may be from time to time prescribed by the Board.
Section 2. Special meetings of the Board of
Directors may be called at any time by the Chairman, and shall be called by
the Chairman upon the written request of a majority of the members of the
Board of Directors. Unless notice is waived by all the members of the Board of
Directors, notice of any special meeting shall be sent to each director at
least twenty-four hours prior to the date of such meeting, and such notice
shall state the time, place and object or objects of such special meeting.
<PAGE>
Section 3. Three members of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting. The
act of a majority of the directors present at any meeting where there is a
quorum shall be the act of the Board of Directors except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation or by
these By-Laws.
Section 4. The order of business at meetings of the
Board of Directors shall be prescribed from time to time by the Board.
ARTICLE VI
OFFICERS AND AGENTS
Section 1. At the first meeting of the Board of
Directors after the election of directors in each year, the Board shall elect
a Chairman and Chief Executive Officer, a President, a Secretary and a
Treasurer and may elect or appoint one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers and agents as the Board may
deem necessary and as the business of the Corporation may require.
Section 2. The President and the Chairman of the
Board shall be elected from the membership of the Board of Directors, but
other officers need not be members of the Board of Directors. Any two or more
offices may be held by the same person except the offices of President and
Vice President. All officers of the Corporation shall serve for one year and
until their successors shall have been duly elected and shall have qualified;
provided, however, that any officer may be removed at any time, either with or
without cause, by action by the Board of Directors.
ARTICLE VII
DUTIES OF OFFICERS
CHAIRMAN OF THE BOARD
Section 1. The Chairman of the Board shall be the
Chief Executive Officer and head of the Corporation, and in the recess of the
Board of Directors shall have the general control and management of its
business and affairs, subject, however, to the regulations of the Board of
Directors. He shall preside at all meetings of the stockholders and the Board
of Directors and shall be a member ex officio of all standing committees.
Section 2. The Chairman shall call all special or
other meetings of the stockholders and Board of Directors.
In case the Chairman shall at any time
<PAGE>
neglect or refuse to call a special meeting of the stockholders when requested
so to do by a majority of the directors, or by the stockholders representing a
majority of the stock of the Corporation, as is elsewhere in these By-Laws
provided, then and in such case, such special meeting shall be called by the
Secretary, or in the event of his neglect or refusal to call such meeting, may
be called by a majority of the directors or by the stockholders representing a
majority of the stock of the corporation, who desire such special meeting, as
the case may be, upon notice as hereinbefore provided.
PRESIDENT
Section 3. The President shall have those duties and
responsibilities as shall be assigned to him by the Chairman or the Board of
Directors, and those not specifically reserved to the Chairman by law or by
the Board of Directors .
The President shall, in the absence of the Chairman,
preside at all meetings of the stockholders and the Board of Directors. In the
event of the absence, resignation, disability or death of the Chairman, the
President shall exercise all powers and perform all duties of the Chairman
until his return, or until such disability shall have been removed or until a
new Chairman shall have been elected.
VICE PRESIDENTS
Section 4. The Executive Vice President, and the Vice
Presidents, shall have those duties and responsibilities as shall be assigned
to them by the Chairman or the President. In the event of the absence,
resignation, disability or death of the President, the Executive Vice
President shall exercise all the powers and perform all the duties of the
President until his return, or until such disability shall be removed or until
a new President shall have been elected.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 5. The Secretary shall attend all meetings of
the stockholders and shall record all the proceedings thereof in a book to be
kept for that purpose, and he shall be the custodian of the corporate seal of
the Corporation. In the absence of the Secretary, an Assistant Secretary or
any other person appointed or elected by the Board of Directors, as is
elsewhere in these By-laws provided, may exercise the rights and perform the
duties of the Secretary.
<PAGE>
Section 6. The Assistant Secretary, or, if there be
more than one Assistant Secretary, then the Assistant Secretaries in the order
of their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the secretary. Any Assistant
Secretary elected by the Board shall also perform such other duties and
exercise such other powers as the Board of Directors shall from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 7. The Treasurer shall keep full and
correct accounts of the receipts and expenditures of the Corporation in books
belonging to the Corporation, and shall deposit all monies and valuable
effects in the name and to the credit of the Corporation and in such
depositories as may be designated by the Board of Directors, and shall, if the
Board shall so direct, give bond with sufficient security and in such amount
as may be required by the Board of Directors for the faithful performance of
his duties.
He shall disburse funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Board of Directors at the
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as the chief fiscal officer of the Corporation and of the
financial condition of the Corporation, and shall present each year before the
annual meeting of the stockholders a full financial report of the preceding
fiscal year.
Section 8. The Assistant Treasurer, or, if there be
more than one Assistant Treasurer, then the Assistant Treasurers in the order
of their seniority, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. Any Assistant
Treasurer elected by the board shall also perform such duties and exercise
such powers as the Board of Directors shall from time to time prescribe.
ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.
Section 1. All checks shall bear the signature of
such person or persons as the Board of Directors may from time to time direct.
Section 2. All notes and other similar obligations
and acceptances of drafts by the Corporation shall be signed by such person or
persons as the Board of Directors may from time to time direct.
<PAGE>
Section 3. Any officer of the Corporation or any
other employee, as the Board of Directors may from time to time direct, shall
have full power to endorse for deposit all checks and all negotiable paper
drawn payable to his or their order or to the order of the Corporation.
ARTICLE IX
CORPORATE SEAL
Section 1. The Corporate seal of the Corporation
shall have inscribed thereon the name of the Corporation, the year of its
organization, and the words "Corporate Seal, Maryland". Such seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced
or otherwise.
Section 2. Before payment of any dividend there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors may, from time to time, in their
absolute discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall deem to
be for the best interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.
ARTICLE X
DIVIDENDS
Section 1. Dividends upon the shares of the capital
stock of the Corporation may, subject to the provisions of the Certificate of
Incorporation of the Corporation, if any, be declared by the Board of
Directors at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock of the
Corporation.
ARTICLE XI
FISCAL YEAR
Section 1. The fiscal year of the Corporation shall
begin on December 1 of each year, and end on November 30 of each year.
ARTICLE XII
NOTICES
<PAGE>
Section 1. Whenever under the provisions of these
By-Laws notice is required to be given to any director or stockholder, it
shall not be construed to mean personal notice, and such notice may be given
in writing, by mail, by depositing the same in the post office or letter box,
in a postpaid sealed wrapper, addressed to such director or stockholder at
such address as shall appear on the books of the Corporation, or, if the
address of such director or stockholder does not appear on the books of the
Corporation, to such director or stockholder at the General Post Office in the
City of Baltimore, Maryland, and such notice shall be deemed to be given at
the time it shall be so deposited in the post office or letter box. In the
case of directors, such notice may also be given by telephone, telegraph or
cable.
Section 2. Any notice required to be given under
these By-Laws may be waived in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein.
Each director and officer (and his heirs, executors
and administrators) may be indemnified by the Corporation against reasonable
costs and expenses incurred by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being or having
been a director or officer of the Corporation, except in relation to any
actions, suits or proceedings, in which he has been adjudged liable because of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties in the conduct of his office. In the absence of an adjudication which
expressly absolves the director or officer of liability to the Corporation or
its stockholders for willful misfeasance, bad faith, gross negligence or
reckless disregard of the conduct of his office, or in the event of a
settlement, each director and officer (and his heirs, executors and
administrators) may be indemnified by the Corporation against payments made,
including reasonable costs and expenses, provided that such indemnity shall be
conditioned upon the prior determination by two thirds of the members of the
Board of Directors of the Corporation that the director or officer has no
liability by reason of willful misfeasance, bad faith, gross negligence in the
performance of duties or the reckless disregard of the duties involved in the
conduct of his office. Such payments in settlement, including reasonable costs
and expenses incident to settlement, shall not exceed costs and expenses which
would have been reasonably incurred if the action, suit or proceeding would
have been litigated and concluded. Such a determination by the Board of
Directors and the payments of amounts by the Corporation on the basis thereof
shall not prevent a stockholder from challenging such indemnification by
appropriate legal proceedings. The foregoing rights and indemnification shall
not be exclusive of any other rights to which officers and directors may be
entitled to according to
<PAGE>
law.
ARTICLE XIII
AMENDMENTS
Section 1. These By-Laws may be amended, altered,
repealed or added to at the annual meeting of the stockholders of the
Corporation or of the Board of Directors, or at any special meeting of the
stockholders or of the Board of Directors called for that purpose by the
affirmative vote of the holders of a majority of the shares of capital stock
of the Corporation then issued and outstanding and entitled to vote, or by a
majority of the whole Board of Directors, as the case may be.
<PAGE>
EX-99
EX-99.B5 INVESTMENT MANAGEMENT AGREEMENT
DELAWARE GROUP DECATUR FUND, INC.
DECATUR INCOME FUND SERIES
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE GROUP
DECATUR FUND, INC., a Maryland Corporation, (the "Fund") for the DECATUR
INCOME FUND SERIES (the "Series") and DELAWARE MANAGEMENT COMPANY, INC., a
Delaware Corporation, (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an
investment company registered under the Investment Company Act of 1940 and
engages in the business of investing and reinvesting its assets in securities;
and
WHEREAS, the Investment Manager is a registered Investment
Adviser under the Investment Advisers Act of 1940 and engages in the business
of providing investment management services; and
WHEREAS, the indirect parent company of the Investment Manager
has completed on the date of this Agreement a merger transaction which
resulted in a change of control of the Investment Manager and an automatic
termination of the previous Investment Management Agreement for the Series
dated as of the 29th day of June, 1988; and
<PAGE>
WHEREAS, the Board of Directors of the Fund and shareholders of
the Series have determined to enter into a new Investment Management Agreement
with the Investment Manager to be effective as of the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage
the investment and reinvestment of the Series' assets and to administer its
affairs, subject to the direction of the Board and officers of the Fund for
the period and on the terms hereinafter set forth. The Investment Manager
hereby accepts such employment and agrees during such period to render the
services and assume the obligations herein set forth for the compensation
herein provided. The Investment Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized, have no authority to act for or represent the Fund in
any way, or in any way be deemed an agent of the Fund. The Investment Manager
shall regularly make decisions as to what securities to purchase and sell on
behalf of the Series and shall give written instructions to the Trading
Department maintained by the Fund for implementation of such decisions and
shall furnish the Board of Directors of the Fund with such information and
reports regarding the Series' Investments as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto
including, but not in
<PAGE>
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of
stock, including issuance, redemption and repurchase of shares; preparation of
share certificates; reports and notices to shareholders; calling and holding
of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; and taxes. Directors,
officers and employees of the Investment Manager may be directors, officers
and employees of the funds of which Delaware Management Company, Inc. is
Investment Manager. Directors, officers and employees of the Investment
Manager who are directors, officers and/or employees of the funds shall not
receive any compensation from the funds for acting in such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment
Manager may share facilities common to each, with appropriate proration of
expenses between them.
3. (a) The Fund shall place and execute its own orders for the
purchase and sale of portfolio securities with broker/dealers. Subject to the
primary objective of obtaining the best available prices and execution, the
Fund will place orders for the purchase and sale of portfolio securities with
such broker/dealers selected from among those designated from time to time by
the Investment Manager, who provide statistical, factual and financial
information and services to the Fund, to the Investment Manager, or to any
other Fund for which the Investment Manager provides investment advisory
services and/or with broker/dealers who sell shares of the Fund or who sell
<PAGE>
of any other Fund for which the Investment Manager provides investment
advisory services. Broker/dealers who sell shares of the Funds of which
Delaware Management Company, Inc. is Investment Manager, shall only receive
orders for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the rules of the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund,
and the Fund may agree, to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would
have charged for effecting that transaction, in such instances where it and
the Investment Manager have determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such member, broker or dealer, viewed in terms
of either that particular transaction or the Investment Manager's overall
responsibilities with respect to the Fund and to other funds for which the
Investment Manager exercises investment discretion.
4. As compensation for the services to be rendered to the Fund
by the Investment Manager under the provisions of this Agreement, the Fund
shall pay to the Investment Manager monthly from the Series' assets a fee
based on the daily average net assets of the Series during the month. Such fee
shall be calculated in accordance with the following rates and provisions,
less the Series' proportionate part of
<PAGE>
all fees paid to members of the Board of Directors of the Fund during the
same period based on the number of publicly offered Series of the Fund:
<TABLE>
<CAPTION>
MONTHLY RATE EQUIVALENT ANNUAL RATE AVERAGE DAILY NET
ASSETS
<S> <C> <C>
6/120 of 1% .600% on the first
$100,000,000
5.25/120 of 1% .525% on the next
$150,000,000
5/120 of 1% .500% on the next
$250,000,000
4.75/120 of 1% .475% on assets over
$500,000,000
</TABLE>
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which
the number of calendar days during which the Agreement is in effect bears to
the number of calendar days in the month, and shall be payable within 10 days
after the date of termination.
5. The services to be rendered by the Investment Manager to
the Fund under the provisions of the Agreement are not to be deemed to be
exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
<PAGE>
6. The Investment Manager, its directors, officers, employees,
agents and shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other corporation,
association, firm or individual, may render underwriting services to the Fund
or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
8. This Agreement shall be executed and become effective as of
the date written below if approved by the vote of a majority of the
outstanding voting securities of the Series. It shall continue in effect for a
period of two years and may be renewed thereafter only so long as such renewal
and continuance is specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities of the
Series and only if the terms and the renewal hereof have been approved by the
vote of a majority of the directors of the Fund, who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on
<PAGE>
such approval. No amendment to this Agreement shall be effective unless the
terms thereof have been approved by the vote of a majority of the outstanding
voting securities of the Series and by the vote of a majority of directors of
the Fund who are not parties to the Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval. Notwith-standing the foregoing, this Agreement may be
terminated by the Fund at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Manager of the Fund's intention to do
so, pursuant to action by the Board of Directors of the Fund or pursuant to
vote of a majority of the outstanding voting securities of the Series. The
Investment Manager may terminate this Agreement at any time, without the
payment of penalty on sixty days' written notice to the Fund of its intention
to do so. Upon termination of this Agreement, the obligations of all the
parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to ouch termination, and except for the obligation
of the Fund to pay to the Investment Manager the fee provided in Paragraph 4
hereof, prorated to the date of termination. The Agreement shall automatically
terminate in the event of its assignment.
9. The Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
<PAGE>
10. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meanings defined in the Investment Company Act of
1940.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 3rd
---
day of April , 1995.
-------------------------
DELAWARE GROUP DECATUR FUND, INC. FOR THE DECATUR INCOME FUND SERIES
Attest:/s/Eric E. Miller By:/s/Brian F. Wruble
----------------------- ----------------------------
Eric E.Miller Brian F. Wruble
DELAWARE MANAGEMENT COMPANY, INC.
Attest:/s/Richelle S. Maestro By:/s/Wayne A. Stork
------------------------ ------------------
Richelle S. Maestro Wayne A. Stork
<PAGE>
DELAWARE GROUP DECATUR FUND, INC.
DECATUR TOTAL RETURN FUND SERIES
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE GROUP DECATUR FUND,
INC., a Maryland Corporation (the "Fund") for the DECATUR TOTAL RETURN FUND
SERIES (the "Series"), and DELAWARE MANAGEMENT COMPANY, INC., a Delaware
Corporation, (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an
investment company registered under the Investment Company Act of 1940 and
engages in the business of investing and reinvesting its assets in securities;
and
WHEREAS, the Investment Manager is a registered Investment
Adviser under the Investment Advisers Act of 1940 and engages in the business
of providing investment management services; and
WHEREAS, the indirect parent company of the Investment Manager
has completed on the date of this Agreement a merger transaction which
resulted in a change of control of the Investment Manager and an automatic
termination of the previous Investment Management Agreement for the Series
dated as of the 29th day of June, 1988, and subsequently was amended as of the
7th day of December, 1990; and
WHEREAS, the Board of Directors of the Fund and shareholders of
the Series have determined to enter into
<PAGE>
a new Investment Management Agreement with the Investment Manager to be
effective as of the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage
the investment and reinvestment of the Series' assets and to administer its
affairs, subject to the direction of the Board and officers of the Fund for
the period and on the terms hereinafter set forth. The Investment Manager
hereby accepts such employment and agrees during such period to render the
services and assume the obligations herein set forth for the compensation
herein provided. The Investment Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized, have no authority to act for or represent the Fund in
any way, or in any way be deemed an agent of the Fund. The Investment Manager
shall regularly make decisions as to what securities to purchase and sell on
behalf of the Series and shall give written instructions to the Trading
Department maintained by the Fund for implementation of such decisions and
shall furnish the Board of Directors of the Fund with such information and
reports regarding the Series' investments as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request.
<PAGE>
2. The Fund shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto
including, but not in limitation of the foregoing, the costs incurred in: the
maintenance of its corporate existence; the maintenance of its own books,
records and procedures; dealing with its own shareholders; the payment of
dividends; transfer of stock, including issuance, redemption and repurchase of
shares; preparation of share certificates; reports and notices to
shareholders; calling and holding of shareholders' meetings; miscellaneous
office expenses; brokerage commissions; custodian fees; legal and accounting
fees; and taxes. Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or
employees of the funds shall not receive any compensation from the funds for
acting in such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment
Manager may share facilities common to each, with appropriate proration of
expenses between them.
3. (a) The Fund shall place and execute its own orders for the
purchase and sale of portfolio securities with broker/dealers. Subject to the
primary
<PAGE>
objective of obtaining the best available prices and execution, the Fund will
place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services and may
place such orders with broker/dealers who sell shares of the Fund or who sell
shares of any other fund for which the Investment Manager provides investment
advisory services. Broker/dealers who sell shares of the funds of which
Delaware Management Company, Inc. is Investment Manager, shall only receive
orders for the purchase or sale of portfolio securities to the extent that the
placing of such orders is in compliance with the Rules of the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund,
and the Fund may agree, to pay a member of an exchange, broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would
have charged for effecting that transaction, in such instances
<PAGE>
where it and the Investment Manager have determined in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such member, broker or dealer, viewed in
terms of either that particular transaction or the Investment Manager's
overall responsibilities with respect to the Fund and to other funds for which
the Investment Manager exercises investment discretion.
4. As compensation for the services to be rendered to the Fund
by the Investment Manager under the provisions of this Agreement, the Fund
shall pay to the Investment Manager monthly a fee based on the average daily
net assets of the Series during the month. Such fee shall be calculated in
accordance with the following rates and provisions, less all amounts paid to
the members of the Board of Directors of the Fund during the same period:
<TABLE>
<CAPTION>
MONTHLY RATE EQUIVALENT ANNUAL RATE AVERAGE DAILY NET
ASSETS
<S> <C> <C>
6/120 of 1% .600% on the first
$500,000,000
5.75/120 of 1% .575% on the next
$250,000,000
5.5/120 of 1% .550% on assets over
$750,000,000
</TABLE>
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which
the number of calendar days during which the Agreement is in effect bears to
the number of
<PAGE>
calendar days in the month, and shall be payable within 10 days after the date
of termination.
5. The services to be rendered by the Investment Manager to
the Fund under the provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees,
agents and shareholders may engage in other businesses, may render investment
advisory services to other investment companies, or to any other corporation,
association, firm or individual and may render underwriting services to the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross
negligence, or a reckless disregard of the performance of duties of the
Investment Manager to the Fund, the Investment Manager shall not be subject to
liabilities to the Fund or to any shareholder of the Fund for any action or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
8. This Agreement shall be executed and become effective as of
the date written below if approved by
<PAGE>
the vote of a majority of the outstanding voting securities of the Series. It
shall continue in effect for a period of two years and may be renewed
thereafter only so long as such renewal and continuance is specifically
approved at least annually by the Board of Directors or by vote of a majority
of the outstanding voting securities of the Series and only if the terms and
the renewal hereof have been approved by the vote of a majority of the
Directors of the Fund, who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval. No amendment to this Agreement shall be effective unless the
terms thereof have been approved by the vote of a majority of the outstanding
voting securities of the Series and by the vote of a majority of Directors of
the Fund who are not parties to the Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval. Notwith-standing the foregoing, this Agreement may be
terminated by the Fund at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Manager of the Fund's intention to do
so, pursuant to action by the Board of Directors of the Fund or pursuant to
vote of a majority of the outstanding voting securities of the Series. The
Investment Manager may terminate this Agreement at any time, without the
payment of penalty on sixty days' written notice to the Fund of its intention
to do so. Upon termination of this Agreement, the obligations of all the
parties hereunder
<PAGE>
shall cease and terminate as of the date of such termination, except for any
obligation to respond for a breach of this Agreement committed prior to such
termination, and except for the obligation of the Fund to pay to the
Investment Manager the fee provided in Paragraph 4 hereof, prorated to the
date of termination. This Agreement shall automatically terminate in the event
of its assignment.
9. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meanings defined in the Investment Company Act of
1940.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 3rd
---
day of April , 1995.
----------------------
DELAWARE GROUP DECATUR FUND, INC. FOR THE DECATUR TOTAL RETURN FUND SERIES
Attest:/s/Eric E. Miller By:/s/Brian F. Wruble
----------------------- -------------------------
Eric E. Miller Brian F. Wruble
DELAWARE MANAGEMENT COMPANY, INC.
Attest:/s/Richelle S. Maestro By:/s/Brian F. Wruble
------------------------ ----------------------
Richellle S. Maestro Brian F. Wruble
<PAGE>
[FORM OF DISTRIBUTION AGREEMENT]
[FUND NAME]
[SERIES NAME, IF APPLICABLE]
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 3rd
day of April, 1995 by and between [FUND NAME], a [Maryland
corporation/Pennsylvania common law trust] (the "Fund")[, for the [SERIES NAME]
(the "Series")] and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware
limited partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund and the Distributor (or its predecessor)
were the parties to a contract under which the Distributor acted as the national
distributor of the shares of the [Fund/Series], which contract was amended and
restated as of the [date] and subsequently readopted as of January 3, 1995 (the
"Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"),
the indirect parent company of the Distributor, completed on the
date of this Agreement a merger transaction with a newly-formed
subsidiary of Lincoln National Corporation, pursuant to which
Holdings became a wholly-owned subsidiary of Lincoln National
Corporation, and
<PAGE>
WHEREAS, the merger transaction resulted in a change of
control of the Distributor and an automatic termination of the Prior
Distribution Agreement, and
WHEREAS, the Board of [Directors/Trustees] of the Fund has
determined to enter into a new agreement with the Distributor as of the date
hereof, pursuant to which the Distributor shall continue to be the national
distributor of the [Fund's/Series'] ____________ class (now doing business as
___________ A Class and hereinafter referred to as the "Class A Shares"), the
Fund's ___________ B Class (the "Class B Shares") and the Fund's ______________
(Institutional) class (now doing business as _____________ Institutional Class
and hereinafter referred to as the "Institutional Class Shares"), which classes
may do business under these or such other names as the Board of
[Directors/Trustees] may designate from time to time, on the terms and
conditions set forth below,
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of
the [Fund's/Series'] shares and, in connection therewith and as agent
for the Fund and not as principal, to advertise, promote, offer and
sell the [Fund's/Series'] shares to the public.
<PAGE>
2. (a) The Distributor agrees to serve as distributor of the
[Fund's/Series'] shares and, as agent for the Fund and
not as principal, to advertise, promote and use its best
efforts to sell the [Fund's/Series'] shares wherever
their sale is legal, either through dealers or otherwise,
in such places and in such manner, not inconsistent with
the law and the provisions of this Agreement and the
Fund's Registration Statement under the Securities Act of
1933, including the Prospectus contained therein and the
Statement of Additional Information contained therein, as
may be mutually determined by the Fund and the
Distributor from time to time.
(b) For the Institutional Class Shares, the Distributor will bear
all costs of financing any activity which is primarily
intended to result in the sale of that class of shares,
including, but not necessarily limited to, advertising,
compensation of underwriters, dealers and sales personnel, the
printing and mailing of sales literature and distribution of
that class of shares.
(c) For its services as agent for the Class A Shares and Class B
Shares, the Distributor shall be entitled to compensation on
each sale or redemption, as appropriate, of shares of such
classes equal to any front-end or deferred sales charge
described in the Prospectus from time to time and may allow
concessions to dealers in such amounts and on such terms as
are therein set forth.
<PAGE>
(d) For the Class A Shares and Class B Shares, the Fund
shall, in addition, compensate the Distributor for its
services as provided in the Distribution Plan as adopted
on behalf of the Class A Shares and Class B Shares,
respectively, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Plans"), copies of
which as presently in force are attached hereto as,
respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund
through the Distributor all or such part of the authorized but
unissued shares [of the Series] as the Distributor shall
require from time to time, and except as provided in Paragraph
3(b) hereof, the Fund will not sell [its/the Series'] shares
other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell
and issue shares other than for cash; (2) to issue shares
in exchange for substantially all of the assets of any
corporation or trust, or in exchange of shares of any
corporation or trust; (3) to pay stock dividends to its
shareholders, or to pay dividends in cash or stock at the
option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time
to time in cash, or to split up or combine its
outstanding shares of common stock; (4) to offer shares
for cash to its stockholders as a whole, by the use of
transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor
in any jurisdiction in which the Distributor is not registered
as a broker-dealer.
<PAGE>
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company, and any and all [Series] shares which it will sell
through the Distributor are, or will be, properly registered
with the Securities and Exchange Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of
any instrument by which the Fund is bound, nor do they violate
any law or regulation of any body having jurisdiction over the
Fund or its property.
5. (a) The Fund will supply to the Distributor a conformed copy
of the Registration Statement, all amendments thereto,
all exhibits, and each Prospectus and Statement of
Additional Information.
(b) The Fund will register or qualify the shares for sale in
such states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial
statements and other information as may be required
by the SEC or the proper public bodies of the
states in which the [Fund's/Series'] shares may be
qualified;
(2) from time to time, will furnish the Distributor as
soon as reasonably practicable true copies of its
periodic reports to stockholders;
<PAGE>
(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such
advice in writing, (a) when any amendment or
supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for
amendments or supplements to the Registration
Statement or the Prospectus or for additional
information, and (c) of the issuance by the SEC of
any Stop Order suspending the effectiveness of the
Registration Statement, or the initiation of any
proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order
suspending the effectiveness of the Registration
Statement, will make every reasonable effort to
obtain the lifting of such order at the earliest
possible moment;
(5) will from time to time, use its best effort to keep a
sufficient supply of [Series] shares authorized, any
increases being subject to approval of the Fund's
shareholders as may be required;
(6) before filing any further amendment to the
Registration Statement or to the Prospectus, will
furnish the Distributor copies of the proposed
amendment and will not, at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to the Prospectus of which
the Distributor shall not previously have been
advised or to which the Distributor shall reasonably
object (based upon the accuracy or completeness
thereof) in writing;
(7) will continue to make available to its stockholders
(and forward copies to the Distributor) of such
periodic, interim and any other reports as are now,
or as hereafter may be, required by the provisions of
the Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price
of [its/the Series'] shares, advise the Distributor
within one hour after the close of the New York Stock
Exchange (or as soon as practicable thereafter) on
each business day upon which the New York Stock
Exchange may be open of the net asset value per share
of [its/the Series'] shares of common stock outstand-
ing, determined in accordance with any applicable
provisions of law and the provisions of the Articles
of Incorporation, as amended, of the Fund as of the
close of business on such business day. In the event
that prices are to be calculated more than once
daily, the Fund will promptly advise the Distributor
of the time of each calculation and the price
computed at each such time.
<PAGE>
6. The Distributor agrees to submit to the Fund, prior to its
use, the form of all sales literature proposed to be generally
disseminated by or for the Distributor, all advertisements
proposed to be used by the Distributor, all sales literature
or advertisements prepared by or for the Distributor for such
dissemination or for use by others in connection with the sale
of the [Fund's/Series'] shares, and the form of dealers' sales
contract the Distributor intends to use in connection with
sales of the [Fund's/Series'] shares. The Distributor also
agrees that the Distributor will submit such sales literature
and advertisements to the NASD, SEC or other regulatory agency
as from time to time may be appropriate, considering practices
then current in the industry. The Distributor agrees not to
use such form of dealers' sales contract or to use or to
permit others to use such sales literature or advertisements
without the written consent of the Fund if any regulatory
agency expresses objection thereto or if the Fund delivers to
the Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectus, as amended from time to time,
determined in accordance with any applicable provision of law, the
provisions of its Articles of Incorporation and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
<PAGE>
8. The responsibility of the Distributor hereunder shall be
limited to the promotion of sales of [Fund/Series] shares. The
Distributor shall undertake to promote such sales solely as
agent of the Fund, and shall not purchase or sell such shares
as principal. Orders for [Series] shares and payment for such
orders shall be directed to the Fund's agent, Delaware Service
Company, Inc. for acceptance on behalf of the Fund. The
Distributor is not empowered to approve orders for sales of
shares or accept payment for such orders. Sales of [Fund/
Series] shares shall be deemed to be made when and where
accepted by Delaware Service Company, Inc. on behalf of the
Fund.
9. With respect to the apportionment of costs between the Fund
and the Distributor of activities with which both are
concerned, the following will apply:
(a) The Fund and the Distributor will cooperate in preparing
the Registration Statements, the Prospectus, the
Statement of Additional Information, and all amendments,
supplements and replacements thereto. The Fund will pay
all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs
incurred in printing and mailing Prospectuses and Annual,
Semi-Annual and other financial reports to its own
shareholders and fees and expenses of counsel and
accountants.
<PAGE>
(b) The Distributor will pay the costs incurred in printing
and mailing copies of Prospectuses to prospective
investors.
(c) The Distributor will pay advertising and promotional
expenses, including the costs of literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in
registering or qualifying the shares with the various
states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of
Fund financial and other reports and other Fund literature
supplied to the Distributor by the Fund for sales promotion
purposes.
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of
its obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless the
Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities
Act of 1933, from and against any and all losses, damages, or
liabilities to which, jointly or severally, the Distributor or
such controlling person may become subject, insofar as the
losses, damages or liabilities arise out of the performance of
its duties hereunder except that the Fund shall not be liable
<PAGE>
for indemnification of the Distributor or any controlling person
thereof for any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of their duties under
this Agreement.
12. Copies of financial reports, Registration Statements and
Prospectuses, as well as demands, notices, requests, consents,
waivers, and other communications in writing which it may be
necessary or desirable for either party to deliver or furnish
to the other will be duly delivered or furnished, if delivered
to such party at its address shown below during regular
business hours, or if sent to that party by registered mail or
by prepaid telegram filed with an office or with an agent of
Western Union or another nationally recognized telegraph
service, in all cases within the time or times herein
prescribed, addressed to the recipient at 1818 Market Street,
Philadelphia, Pennsylvania 19103, or at such other address as
the Fund or the Distributor may designate in writing and
furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the
Distributor. This Agreement shall not be assigned by the Fund without
the written consent of the Distributor signed by its duly authorized
officers and delivered to the Fund. Except as specifically provided in
<PAGE>
the indemnification provision contained in Paragraph 11 herein, this
Agreement and all conditions and provisions hereof are for the sole and
exclusive benefit of the parties hereto and their legal successors and
no express or implied provision of this Agreement is intended or shall
be construed to give any person other than the parties hereto and their
legal successors any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two
years from the date hereof and from year to year
thereafter, but only so long as such continuance is
specifically approved at least annually by the Board of
[Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Fund and only if the
terms and the renewal thereof have been approved by the
vote of a majority of the [Directors/Trustees] of the
Fund, who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for
the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written notice
to the Fund at any time in case the effectiveness of the
Registration Statement shall be suspended, or in case Stop
Order proceedings are initiated by the SEC in respect of the
Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also
<PAGE>
terminate this Agreement at any time by giving the Fund
written notice of its intention to terminate the Agreement at
the expiration of three months from the date of delivery of
such written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at
least thirty days prior written notice to the Distributor
(1) if proceedings are commenced by the Distributor or
any of its stockholders for the Distributor's liquidation
or dissolution or the winding up of the Distributor's
affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment
is not vacated within thirty days thereafter; (3) if, due
to any action by or before any court or any federal or
state commission, regulatory body, or administrative
agency or other governmental body, the Distributor shall
be prevented from selling securities in the United States
or because of any action or conduct on the Distributor's
part, sales of the shares are not qualified for sale. The
Fund may also terminate this Agreement at any time upon
prior written notice to the Distributor of its intention
to so terminate at the expiration of three months from
the date of the delivery of such written notice to the
Distributor.
<PAGE>
15. The validity, interpretation and construction of this
Agreement, and of each part hereof, will be governed by the
laws of the Commonwealth of Pennsylvania.
16. In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect
the remainder of the Agreement, which shall continue to be in
force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
----------------------------------------
General Partner
Attest:
By:
- -------------------------------- --------------------------------------
Name: Name:
Title: Title:
[FUND NAME]
[for the SERIES NAME]
Attest:
By:
- -------------------------------- --------------------------------------
Name: Name:
Title: Title:
<PAGE>
[FORM OF 12b-1 PLAN FOR CLASS A SHARES]
Exhibit A
12b-1 PLAN
----------
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND NAME]
(the "Fund")[, for the [SERIES NAME] (the "Series")] on behalf of the _________
class [(now doing business as __________ A Class and] hereinafter referred to as
the "Class"), which Fund[, Series] and Class may do business under these or such
other names as the Board of [Directors/Trustees] of the Fund may designate from
time to time. The Plan has been approved by a majority of the Board of
[Directors/Trustees], including a majority of the [Directors/Trustees] who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto, cast
in person at a meeting called for the purpose of voting on such Plan. Such
approval by the [Directors/Trustees] included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. If the Plan has not yet been approved by a majority of the
outstanding voting securities as required in the Act, the Plan will be presented
to the public shareholders at the next regular annual or special meeting.
<PAGE>
The Fund is a [corporation/common law trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
("DMC")/Delaware International Advisers Ltd. ("DIA Ltd.")] serves as the
[Fund's/Series'] investment adviser and manager pursuant to an Investment
Management Agreement. Delaware Service Company, Inc. serves as the
[Fund's/Series'] shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. ("the Distributor") is the principal underwriter and
national distributor for the [Fund's/Series'] shares, including shares of the
Class, pursuant to the Distribution Agreement between the Distributor and the
[Fund/Series] ("Distribution Agreement").
The Distributor may enter into agreements with other registered
broker-dealers substantially in the form of the Dealer Agreement approved by the
Fund in the implementation of this Plan and of the Distribution Agreement
between it and the [Fund/Series]. The [Fund/Series] may, in addition, enter into
arrangements with persons other than broker-dealers which are not "affiliated
persons" or "interested persons" of the Fund, [DMC/DIA Ltd.] or the Distributor
to provide to the [Fund/Series] services in the [Fund's/Series'] marketing of
the shares of the Class, such arrangements to be reflected by Service
Agreements.
<PAGE>
The Plan provides that:
l. The Fund shall pay a monthly fee not to exceed 0.3% (3/10
of 1%) per annum of the [Fund's/Series'] average daily net assets represented by
shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of [Directors/Trustees] from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund to persons other than
broker-dealers (the "Service Providers") pursuant to Service Agreements referred
to above.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund (2)
answering questions relating to their respective accounts and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreements and the Plan; both the Distributor and the
<PAGE>
Service Providers shall furnish the Board of [Directors/Trustees] of the Fund
with such other information as the Board may reasonably request in connection
with the payments made under the Plan and the use thereof by the Distributor and
the Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan, which time
shall not be before the first annual or special meeting of the public
shareholders at which the Plan is or was approved by the vote of a majority of
the outstanding voting securities as required in the Act (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of
[Directors/Trustees] of the Fund, and of the [Directors/Trustees] who are not
interested persons of the Fund and have no direct or indirect financial interest
in the operation of the Plan or in any agreements related to the Plan
("non-interested [Directors/Trustees]"), cast in person at a meeting called for
the purpose of voting on such Plan.
<PAGE>
6. (a) The Plan may be terminated at any time by vote
of a majority of the non-interested [Directors/Trustees] or by vote
of a majority of the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase
materially the amount to be spent for distribution pursuant to paragraph l
thereof without approval by the shareholders of the Class.
7. The Distribution Agreement between the [Fund/Series] and
the Distributor, and the Service Agreements between the [Fund/ Series] and the
Service Providers, shall specifically have a copy of this Plan attached to, and
its terms and provisions incorporated respectively by reference in, such
agreements.
8. All material amendments to this Plan shall be approved by
the non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested [Directors/Trustees] shall be committed
to the discretion of such non-interested [Directors/Trustees].
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(l9) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
<PAGE>
[FORM OF 12b-1 PLAN FOR CLASS B SHARES]
Exhibit B
12b-1 Plan
----------
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND NAME]
(the "Fund"), [for the [SERIES NAME] (the "Series")] on behalf of the _________
B Class (the "Class"), which Fund[, Series] and Class may do business under
these or such other names as the Board of [Directors/Trustees] of the Fund may
designate from time to time. The Plan has been approved by a majority of the
Board of [Directors/Trustees], including a majority of the [Directors/Trustees]
who are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto, cast in person at a meeting called for the purpose of voting on such
Plan. Such approval by the [Directors/Trustees] included a determination that in
the exercise of reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Class
and its shareholders. The Plan has been approved by a vote of the holders of a
majority of the outstanding voting securities of the Class, as defined in the
Act.
The Fund is a [corporation/common law trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class, pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
<PAGE>
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not
to exceed 0.75% (3/4 of 1%) per annum of the [Fund's/ Series'] average daily net
assets represented by shares of the Class as may be determined by the Fund's
Board of [Directors/Trustees] from time to time.
(b) In addition to the amounts described in (a) above, the
Fund shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
[Fund's/Series'] average daily net assets represented by shares of the Class, as
a service fee pursuant to dealer or servicing agreements, the forms of which
have been approved from time to time by the Fund's Board of
[Directors/Trustees].
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph 1(a) above to assist in the distribution and
promotion of shares of the Class. Payments made to the Distributor under the
Plan may be used for, among other things, preparation and distribution of
advertisements, sales literature and prospectuses and reports used for sales
purposes, as well as compensation related to sales and marketing personnel, and
holding special promotions. In addition, such fees may be used to pay for
advancing the commission costs to dealers with respect to the sale of Class
shares.
<PAGE>
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under paragraph 1(a) above.
In addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of
[Directors/Trustees] of the Fund with such other information as the Board may
reasonably request in connection with the payments made under the Plan and the
use thereof by the Distributor and others in order to enable the Board to make
an informed determination of the amount of the Fund's payments and whether the
Plan should be continued.
<PAGE>
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of [Directors/Trustees] of the
Fund, and of the [Directors/Trustees] who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to the Plan ("non-interested
[Directors/Trustees]"), cast in person at a meeting called for the purpose of
voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested [Directors/Trustees] or by vote of a majority of
the outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph 1 thereof without
approval by the shareholders of the Class.
<PAGE>
7. The Distribution Agreement between the [Fund/Series] and
the Distributor, and any dealers or servicing agreements between the Distributor
and brokers or others or between the [Fund/Series] and others receiving a
servicing fee, shall specifically have a copy of this Plan attached to, and its
terms and provisions incorporated respectively by reference in, such agreements.
8. All material amendments to this Plan shall be approved by
the non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
9. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested [Directors/Trustees] shall be committed
to the discretion of such non-interested [Directors/Trustees].
10. The definitions contained in Sections 2(a)(3), 2(a)(4),
2(a)(19) and 2(a)(42) of the Act shall govern the meaning of "affiliated
person," "assignment," "interested person(s)" and "vote of a majority of the
outstanding voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
<PAGE>
[Form of Amendment to Distribution Agreement]
[FUND NAME]
[SERIES NAME, IF APPLICABLE]
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the_____day of___________, 1995, by and between____________(the
"Fund"),[for the____________(the "Series"),] and DELAWARE DISTRIBUTORS, L.P.
(the "Distributor").
WITNESSETH
WHEREAS, the Fund[, for the Series,] and the Distributor are parties to
that certain Distribution Agreement made as of the 3rd day of April, 1995 (the
"Distribution Agreement"); and
WHEREAS, the Board of Directors of the Fund has established [CLASS C
SHARES NAME] (the "Class C Shares") as an additional class of [the Series]
[shares of the Fund] and the Fund and the Distributor desire to amend the
Distribution Agreement to provide that the Distributor shall act as the national
distributor of the Class C Shares pursuant thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Class C Shares are hereby included among the shares to which the
Distribution Agreement relates and the Distributor shall act as distributor for
the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.
2. Hereafter, each reference to "Class A Shares and Class B Shares" in
Section 2 (c) and (d) of the Distribution Agreement [compensation of the
Distributor] shall be deemed to include the Class C Shares, provided that the
<PAGE>
Distribution Plan adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940 for the Class C Shares and presently in force is attached hereto as
Exhibit "A."
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:
By:
- ------------------------------ --------------------------------
Name: Name:
Title: Title:
[FUND NAME][,for the [SERIES NAME]]
ATTEST:
By:
- ------------------------------ ---------------------------------
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
[FORM OF 12b-1 PLAN
C CLASS SHARES]
DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the Fund
(the "Fund"), on behalf of the Fund's C Class (the "Class"). The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a [corporation/business trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
A-1
<PAGE>
("DMC") or Delaware International Advisers Ltd. ("Delaware International"), an
affiliate of DMC,] serves as the Fund's investment adviser and manager pursuant
to an Investment Management Agreement. Delaware Service Company, Inc. serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. (the "Distributor") is the principal underwriter and
national distributor for the Fund's shares, including shares of the Class,
pursuant to the Distribution Agreement between the Distributor and the Fund
("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Fund's average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others; or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
A-2
<PAGE>
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Fund.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
A-3
<PAGE>
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, and the Directors shall review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the fund in writing of the commencement of the Plan (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of Directors of
the Fund, and of the Directors who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("non-interested Directors"), cast in person
at a meeting called for the purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
A-4
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(3), 2(a)(19) and
2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"interested person(s)" and "vote of a majority of the outstanding voting
securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
A-5
<PAGE>
DELAWARE GROUP
Administration and Service Agreement
Gentlemen:
We are the national distributor of the shares of all of the classes
(now existing or hereafter added) of all of the Funds in the Delaware Group of
Funds. The term "Fund" as used in this Agreement refers to each fund in the
Delaware Group which retains the Distributor to promote and sell its shares, and
any fund which may hereafter be added to the Delaware Group and retain us as
national distributor. You have indicated that you wish to provide certain
services to your customers relating to their ownership of Fund shares, in
accordance with the terms of this Agreement.
TERMS
1. With respect to any Fund that offers shares of classes for which
Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1
Plan") of the Investment Company Act of 1940 (the "1940 Act"), which 12b-1 Plans
provide for the payment of service fees, we expect you to provide administrative
and other services, including, but not limited to, furnishing personal and other
services and assistance to your customers who own Fund shares, answering routine
inquiries regarding a Fund, assisting in changing dividend options, account
designations and addresses, maintaining such accounts, or such other services as
a Fund may require, to the extent permitted by applicable statutes, rules, or
regulations. For such services, we shall pay you a fee, as established by us
from time to time, based on the value of the shares of each class of each Fund
which are attributable to customers of your firm. We are permitted to make this
payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as
such Plans may be in effect from time to time.
2. You shall furnish us and each Fund with such information as shall
reasonably be requested by the Board of Directors or Trustees with respect to
the fees paid to you pursuant to this Agreement.
3. We shall furnish to the Board of Directors or Trustees, for their
review, on a quarterly basis, a written report of the amounts expended under
<PAGE>
the Plan by us with respect to the relevant Fund and the purposes for which
such expenditures were made.
4. This Agreement may be terminated by either party at any time by
written notice to that effect and will terminate without notice upon any act of
insolvency by you. Notwithstanding the termination of this Agreement, you shall
remain liable for any amounts otherwise owing to the Distributor or the Funds
and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Distributor or the Fund, or upon any one or
more of the Distributor's dealers, based upon a claim that you and such dealers
or any of them constitute a partnership, an unincorporated business or other
separate entity.
5. Any obligation assumed by a Fund pursuant to this Agreement shall be
limited in all cases to the assets of such Fund and no person shall seek
satisfaction thereof from shareholders of a Fund.
6. The 12b-1 Plans in effect on the date of this Agreement are
described in the Funds' Prospectuses. Each Fund reserves the right to terminate
or suspend its 12b-1 Plan(s) at any time as specified in such Plan(s) and we
reserve the right, at any time, without notice, to modify, suspend or terminate
payments hereunder in connection with such 12b-1 Plan(s).
7. This Agreement shall take effect on the date set forth below.
8. The terms and provisions of the current Prospectus and Statement of
Additional Information for each relevant Fund are hereby accepted and agreed to
by the parties hereto as evidenced by our execution hereof.
GENERAL
9. Governing Law. This Agreement will be governed by and construed in
accordance with the law of the State of Pennsylvania, without reference to that
state's choice of law doctrine.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one Agreement.
11. Severability. In the event that any provision of this Agreement,
or the application of any such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
<PAGE>
to persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
13. Headings. The underlined headings contained herein are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the interpretation
hereof.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
By:
--------------------------------
Agreed and Accepted:
- ------------------------------
(Name)
By:
---------------------------
(Authorized Officer)
Date:
-------------------------
<PAGE>
DEALER'S AGREEMENT
We invite you, as a selected dealer, to participate as principal in the
distribution of the shares of all of the classes (now existing or hereafter
added) of all of the Funds in the Delaware Group of Investment Companies which
retain us, Delaware Distributors, L.P., to act as exclusive national
distributor. The term "Fund" as used in this Agreement, refers to each Fund in
the Delaware Group which retains us to promote and sell its shares, and any Fund
which may hereafter be added to the Delaware Group and retain us as national
distributor. Such additional Funds will be included in this Agreement upon our
providing you with written notice of such inclusion.
OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by a
Fund or its agent, Delaware Service Company, Inc., will be at the public
offering price applicable to each order as set forth in that Fund's Prospectus.
The manner of computing the net asset value of shares, the public offering price
and the effective time of orders received from you are described in the
Prospectus for each Fund. We reserve the right, at any time and without notice,
to suspend the sale of Fund shares.
CONCESSIONS TO YOU: You will be entitled to deduct the applicable concession as
set forth in the then current Prospectus of a Fund from the purchase price of
certain purchase orders placed by you for shares of a Fund having a sales
charge. We reserve the right from time to time, without prior notice, to modify,
suspend or eliminate such concessions by amendment, sticker or supplement to the
Prospectus for the Fund. If any shares confirmed to you under the terms of this
Agreement are redeemed or repurchased by the Fund or by us as agent for the
Fund, or are tendered for redemption or repurchase, within seven business days
after the date of our confirmation of the original purchase order, you shall
promptly refund to us the concession allowed to you on such shares.
PURCHASE PLANS: The purchase price on all orders placed by you and any
concessions or other fees otherwise due to you under this Agreement will be
subject to the then current terms and provisions of any applicable special plans
and accounts (e.g., volume purchases, letters of intent, rights of accumulation,
combined purchases privilege, exchange and reinvestment privileges and
<PAGE>
retirement plan accounts) as set forth from time to time in the Prospectus. We
must be notified when an order is placed if it qualifies for a reduced sales
charge under any of these plans. We reserve the right, at any time, without
prior notice, to modify, suspend or eliminate any such plans or accounts by
amendment, sticker or supplement to the Prospectus for the Fund.
SALES, ORDERS AND CONFIRMATIONS: In offering Fund shares to the public or
otherwise, you shall act as dealer for your own account, and in no transaction
shall you have any authority to act as agent for the Fund, for any other
selected dealer or for us. No person is authorized to make any representations
concerning the shares to the Fund except those contained in the Prospectus and
in written information issued by the Fund or by us as a supplement to such
Prospectus. In purchasing Fund shares, you shall rely only on such
representations.
All sales must be made subject to confirmation and orders are subject
to acceptance or rejection by the Fund in its sole discretion. Your orders must
be wired, telephoned or written to the Fund or its agent. You agree to place
orders for the same number of shares sold by you at the price at which such
shares are sold. You agree that you will not purchase Fund shares except for
investment or for the purpose of covering purchase orders already received and
that you will not, as principal, sell Fund shares unless purchased by you from
the Fund under the terms hereof. You also agree that you will not withhold
placing with us orders received from your customers so as to profit yourself
from such withholding. Each of your orders shall be confirmed by you in writing
on the same day.
PAYMENT AND ISSUANCE OF CERTIFICATES: The shares purchased by you hereunder
shall be paid for in full at the public offering price, less any concession to
you as set forth above, by check payable to the Fund, at its office, within
three business days after our acceptance of your order. If not so paid, we
reserve the right to cancel the sale and to hold you responsible for any loss
sustained by us or the Fund (including lost profit) in consequence. Certificates
representing the Fund's shares will not be issued unless (i) the Fund's
Prospectus indicates that certificates may be issued for the class of shares
being purchased, and (ii) a specific request is received from the purchaser.
Certificates, if requested, will be issued in the names indicated by
registration instructions accompanying your payment.
-2-
<PAGE>
REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will redeem shares held by shareholders on demand. You
agree that you will not make any representations to shareholders relating to the
redemption of their shares other than the statements contained in the Prospectus
and the underlying organizational documents of the Fund, to which it refers, and
that you will quote as the redemption price only the price determined by the
Fund. You shall not repurchase any shares from your customers at a price below
that next quoted by the Fund for redemption. You may charge a reasonable fee for
services in connection with the repurchase by you from your customers of shares.
You may hold such repurchased shares only for investment purposes or submit such
shares to the Fund for redemption.
12b-1 PLAN: With respect to any Fund that offers shares of classes for which
Distribution Plans have been adopted under Rule 12b-1 (individually a "12b-1
Plan") of the Investment Company Act of 1940 (the "1940 Act"), we expect you to
provide distribution and marketing services in the promotion of the Fund's
shares. In connection with the receipt of distribution fees and/or the receipt
of service fees as set forth under the 12b-1 Plan(s) applicable to the class or
classes of Fund shares purchased by your customers, we expect you to provide
administrative and other services to your customers who own Fund shares,
including, but not limited to, furnishing personal and other services and
assistance, answering routine inquiries regarding a Fund, assisting in changing
dividend options, account designations and addresses, maintaining such accounts,
or such other services as the Fund may require, to the extent permitted by
applicable statutes, rules, or regulations. For such services we will pay you a
fee, as established by us from time to time, based on a portion of the net asset
value of the accounts of your clients in the Fund. We are permitted to make this
payment under the terms of the 12b-1 Plans adopted by certain of the Funds, as
such Plans may be in effect from time to time. The 12b-1 Plans in effect on the
date of this Agreement are described in the Funds' Prospectuses. Each Fund
reserves the right to terminate or suspend its 12b-1 Plan at any time as
specified in the Plan and we reserve the right, at any time, without notice, to
modify, suspend or terminate payments hereunder in connection with such 12b-1
Plan. You will furnish the Fund and us with such information as may be
-3-
<PAGE>
reasonably requested by the Fund or its directors or trustees or by us with
respect to such fees paid to you pursuant to this Agreement.
LEGAL COMPLIANCE: This Agreement and any transaction with, or payment to, you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are, and at all times during its
effectiveness you will be: (a) a registered broker/dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws in
each jurisdiction in which you are required to be qualified to act as a
broker/dealer in securities, and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); or (b) a foreign
broker/dealer not eligible for membership in the NASD and otherwise in
compliance with applicable U.S. federal and state securities laws. You agree to
notify us promptly in writing and immediately suspend sales of Fund shares if
this representation ceases to be true. You also agree that, whether you are a
member of the NASD or a foreign broker/dealer not eligible for such membership,
you will comply with the rules of the NASD including, in particular, Sections 2
and 26 of Article III thereof, and that you will maintain adequate records with
respect to your transactions with the Funds.
BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we may furnish you with information identifying the states and jurisdictions
under the securities laws of which it is believed a Fund's shares may be sold.
You will not transact orders for Fund shares in states or jurisdictions in which
we indicate Fund shares may not be sold. You agree to offer and sell Fund shares
outside the United States only in compliance with all applicable laws, rules and
regulations of any foreign government having jurisdiction over such transactions
in addition to any applicable laws, rules and regulations of the United States.
LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicity available by the Fund, in
reasonable quantities upon your request. You agree to deliver a copy of the
current Prospectus in accordance with the provisions of the Securities Act of
1933 to each purchaser of Fund shares for whom you act as broker. We shall file
Fund sales literature and promotional material with the NASD and SEC as
required.
-4-
<PAGE>
You may not publish or use any sales literature or promotional materials with
respect to the Funds without our prior review and written approval.
NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Any
notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address set forth below. Each of us may change the
address to which notices shall be sent by notice to the other in accordance with
the terms hereof.
TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect and will terminate without notice upon the
appointment of a trustee for you under the Securities Investor Protection Act,
or any other act of insolvency by you. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Funds and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, or us, or upon any one or more of the
selected dealers based upon the claim that the selected dealers or any of them
constitute a partnership, an unincorporated business or other separate entity.
AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you notify us in writing to the contrary, you will be
deemed to have accepted such modifications.
GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach and we may offset any
such damages, losses, costs and expenses against any amounts due to you
hereunder. Nothing contained herein shall constitute you, us and any dealers an
association or partnership. All references in this Agreement to the "Prospectus"
refer to the then current version of the Prospectus and include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto. This Agreement supercedes and replaces any prior agreement
-5-
<PAGE>
between us and you with respect to your purchase and sale of Fund shares and is
to be construed in accordance with the laws of the State of Delaware.
Please confirm this Agreement by executing one copy of this Agreement
below and returning it to us. Keep the enclosed duplicate copy for your records.
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
By:/s/Keith E. Mitchell
----------------------
Name: Keith E. Mitchell
Title: President/Chief Executive Officer
-6-
<PAGE>
DEALER'S AGREEMENT ACCEPTANCE
DELAWARE DISTRIBUTORS, L.P.
The undersigned hereby confirms the Dealer's Agreement and acknowledges
that any purchase of Fund shares made during the effectiveness of this Agreement
is subject to all the applicable terms and conditions set forth in this
Agreement, and agrees to pay for the shares at the price and upon the terms and
conditions stated in the Agreement. The undersigned hereby acknowledges receipt
of Prospectuses relating to the Fund shares and confirms that, in executing the
Dealer's Agreement, it has relied on such Prospectuses and not on any other
statement whatsoever, written or oral.
INVESTMENT DEALER PLEASE SIGN HERE AND COMPLETE BELOW
By: DATE
------------------------------- ----------------------------
Name:
-----------------------------
Title:
----------------------------
- ----------------------------------
FIRM
- ----------------------------------
FIRM'S TAX IDENTIFICATION NUMBER
- ----------------------------------
STREET ADDRESS
- ----------------------------------
CITY/STATE/ZIP
<PAGE>
PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989
<PAGE>
PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
PURPOSE CLAUSE . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III
ELIGIBILITY OF EMPLOYEES
TO PARTICIPATE IN THE PLAN . . . . . . . . . . . . . . 6
ARTICLE IV
CONTRIBUTIONS TO PLAN . . . . . . . . . . . . . . . . . 7
ARTICLE V
ALLOCATION OF CONTRIBUTIONS . . . . . . . . . . . . . . 12
ARTICLE VI
RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
DISABILITY BENEFITS . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX
OTHER SEPARATION FROM SERVICE . . . . . . . . . . . . . 16
ARTICLE X
METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . 18
ARTICLE XI
ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . 26
ARTICLE XII
AMENDMENT, CONSOLIDATION, MERGER
OR TERMINATION . . . . . . . . . . . . . . . . . . . . 29
(i)
<PAGE>
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XIV
LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XV
LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . 32
ARTICLE XVI
TOP HEAVY DEFINITIONS AND RULES . . . . . . . . . . . . 36
(ii)
<PAGE>
PROFIT SHARING PLAN
OF
DELAWARE GROUP DELAWARE FUND, INC.
SECOND AMENDMENT AND RESTATEMENT
EFFECTIVE APRIL 1, 1989
ARTICLE I
PURPOSE CLAUSE
--------------
This Profit Sharing Plan and the Trust Agreement forming a part hereof are
established for the benefit of the employees of Delaware Group Delaware Fund,
Inc. and the other investment companies of the Delaware Group of Funds to
promote in them a strong interest in the successful operation of the business
and to provide for them an opportunity for accumulation of funds for their
retirement benefit.
ARTICLE II
DEFINITIONS
-----------
When used herein, the following words shall have the following meanings
unless the context clearly indicates otherwise:
2.1 "Administrative Committee" or "Committee" shall mean the Administrative
Committee with authority and responsibility to manage and direct the operation
and administration of this Plan. "Administrative Committee" shall be deemed to
also mean "Administrator" and "Plan Administrator" as defined in ERISA.
2.2 "Anniversary Date" shall mean the first day of each Plan Year.
2.3 "Beneficiary" shall mean the person or persons designated by a
Participant to receive benefits upon the death of said Participant pursuant to
Article VIII.
2.4 "Board of Directors" shall mean the Board of Directors of the Employer.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Effective Date" of the Plan shall mean October 1, 1983. The Effective
Date of this amended and restated Plan shall mean April 1, 1989, except where
indicated otherwise.
2.7 "Eligibility Computation Period" shall mean the period of twelve (12)
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consecutive months beginning on the date an Employee first performs an Hour of
Service upon hire or rehire after a One Year Break in Service, and any Plan Year
following such date of hire or date of rehire following a One Year Break in
Service.
2.8 "Eligibility Year of Service" shall mean the Eligibility Computation
Period during which the Employee performs one thousand (1,000) or more Hours of
Service. Eligibility Years of Service shall include an Employee's prior service
with Delaware Management Company, Inc. or any Entity required to be aggregated
with Delaware Management Company, Inc. under Sections 414(b) or(c) of the Code.
2.9 "Employee" shall mean any person employed by the Employer or by any
affiliated Entity which adopts this Plan; provided, however, no person covered
by a collective bargaining agreement under which the Employer has participated
in good faith bargaining concerning retirement benefits shall be considered an
Employee for the purposes of this Plan. Any Leased Employee shall not be
considered an Employee for purposes of the Plan.
2.10 "Employer" shall mean Delaware Group Delaware Fund, Inc. and any other
affiliated investment company which adopts this Plan. Effective October 1, 1987,
and solely for purposes of determining periods of service for eligibility for
participation and vesting, the term "Employer" shall include any corporation
which is a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes the Employer; any trade or business (whether
or not incorporated) which is under common control (as defined in Section 414(c)
of the Code) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Section 414(m)
of the Code) which includes the Employer; and any other Entity required to be
aggregated with the Employer pursuant to regulations under Section 414(o) of the
Code.
2.11 "Employer Contribution Account" shall mean a Participant's account
derived from Employer contributions and the earnings thereon.
2.12 "Entity" shall mean an individual, partnership, corporation or
unincorporated organization.
2.13 "ERISA" shall mean the Employee Retirement Income Security Act of 1974
and the Regulations promulgated thereunder by either the Department of Labor or
Treasury.
2.14 "Hour of Service" shall mean:
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(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours will be credited to the
Employee for the computation period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military service or leave of absence. No more than 501 Hours of Service
will be credited under this paragraph for any single continuous period (whether
or not such period occurs in a single computation period); and
(c) Each hour for which back pay, regardless of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service will not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
(d) Hours of Service will be calculated on the basis described in
Department of Labor Regulations Section 2530.200b-2(b) and (c).
(e) Solely for purposes of determining whether a Break in Service has
occurred, for participation and vesting purposes, an individual who is absent
from work for maternity or paternity reasons will receive credit for the Hours
of Service which would otherwise have been credited to such individual. In the
event these hours cannot be determined, eight (8) Hours of Service per day will
be used. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (i) by reason of the pregnancy of the
individual, (ii) by reason of the birth of a child of the individual, (iii) by
reason of the placement of a child with the individual in connection with the
adoption of the child by such individual, or (iv) for purposes of caring for the
child for a period beginning immediately following such birth or placement.
However, in no event will the hours treated as Hours of Service under this
paragraph (e), by reason of any pregnancy or placement, exceed 501 hours. The
Hours of Service credited under this paragraph will be credited (i) in the Plan
Year in which the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or (ii) in all other cases, in the following
Plan Year.
(f) Effective for Plan Years beginning on or after April 1, 1994, an
Employee shall be credited with 45 Hours of Service for each week for which he
would be required to be credited with at least one Hour of Service under
paragraphs (a)-(e) above.
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2.15 "Leased Employee" shall mean any person described in Section 414(n) of
the Code who is not an employee of the Employer who, pursuant to an agreement
between the Employer and any other person, has performed service for the
Employer (or for any related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one year and such services are of a type historically performed by
employees in the Employer's business field.
2.16 "Named Fiduciary" shall be the Administrative Committee and the
Trustee or Trustees serving from time to time and any other person who is
specifically so designated by the Board of Directors.
2.17 "Normal Retirement Date" shall mean the date on which a Participant
shall reach age 65.
2.18 "One Year Break in Service" or "Break in Service" shall mean a Plan
Year during which an Employee has or was separated from employment with Employer
and has completed 500 or less Hours of Service.
2.19 "Participant" shall mean any Employee who meets the eligibility
requirements under Article III or any Employee who is or may become eligible to
receive a benefit under the Plan or whose Beneficiaries may be eligible to
receive any such benefit.
2.20 "Participant Contribution Account" shall mean a Participant's account
derived from his voluntary contributions and the earnings thereon.
2.21 "Plan" shall mean the Employer's Profit Sharing Plan set forth in this
document and all subsequent amendments thereto.
2.22 "Plan Compensation" shall mean as of each Anniversary Date, the basic
compensation received by an Employee from the Employer during the preceding Plan
Year, including salary, draw, overtime and bonuses, but excluding contributions
to this or any other deferred compensation plan. Plan Compensation includes
salary reduction contributions paid by the Employer on the Employee's behalf to
a cafeteria plan, within the meaning of Section 125 of the Code, maintained by
the Employer. Effective for Plan Years beginning on or after April 1, 1994, Plan
Compensation shall mean the sum of (a) the total earnings which are received by
the Employee from the Employer for the preceding Plan Year and which are
required to be reported as wages on the Employee's Form W-2 (in the wages, tips
and other compensation box) and (b) the total amount contributed by the
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Employer on behalf of the Employee pursuant to a salary reduction agreement
which is not includable in the gross income of the Employee under Sections 125
or 402 (e)(3) of the Code, but excluding all of the following items (even if
includable in gross income): reimbursements or other expense allowances, fringe
benefits (cash and non-cash), moving expenses, deferred compensation and welfare
benefits.
For Plan Years beginning on or after April 1, 1989, the Plan Compensation
of each Participant taken into account under the Plan shall not exceed $200,000,
as adjusted by the Secretary of the Treasury. In determining the Plan
Compensation of a Participant for purposes of the limitations set forth in the
preceding sentence, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only the spouse
of the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of the
application of such rules, the adjusted $200,000 limitation is exceeded, then
the limitation shall be prorated among the affected individuals in proportion to
each such individual's Plan Compensation as determined under this Section 2.22
prior to the application of this limitation. Effective for Plan Years beginning
on or after January 1, 1994, the Plan Compensation of a Participant shall not
exceed $150,000, as adjusted at the time and manner prescribed by Section 401
(a)(17)(B) of the Code.
2.23 "Plan Year" shall mean a twelve-month period beginning on April 1st
and ending on March 31st. For the Plan Years beginning before April 1, 1989 and
after December 31, 1986, the term Plan Year means a twelve month period
beginning October 1st and ending September 30th, except that the Plan Year
beginning October 1, 1988 is a short year which ends March 31, 1989.
2.24 "Total and Permanent Disability" shall mean incapacity, resulting from
injury or disease, of a Participant to perform any work for Employer and shall
be presumed permanent after the same has continued uninterrupted for six months
as certified by a qualified physician selected by the Administrative Committee.
2.25 "Trustee" or "Trustees" shall mean the trustee or trustees named in
the Trust Agreement attached hereto and forming a part hereof, or any successor
thereto.
2.26 "Trust Fund" or "Fund" shall mean all property held pursuant to the
Trust Agreement.
2.27 "Valuation Date" means the last day of each Plan Year and such other
quarterly, monthly or daily dates as determined by the Administrative Committee.
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2.28 "Year of Service" shall mean a Plan Year during which an Employee
completes at least 1,000 Hours of Service; provided, however, that for the
period from October 1, 1988 through March 31, 1990, an Employee shall be given
credit for a Year of Service if he completes 1,000 Hours of Service during the
period October 1, 1988 to September 30, 1989 and shall be given credit for an
additional Year of Service if he completes 1,000 Hours of Service during the
period April 1, 1989 to March 31, 1990. For purposes of determining a
Participant's nonforfeitable right to his Employer Contribution Account, Years
of Service shall include an Employee's prior service with Delaware Management
Company, Inc. or any other Entity required to be aggregated with Delaware
Management Company, Inc. under Sections 414(b) or (c) of the Code. An Employee
shall also receive credit for a Year of Service if he completes 1000 or more
Hours of Service during his initial Eligibility Computation Period.
2.29 Whenever used herein, the masculine provision includes the feminine
and the singular includes the plural.
ARTICLE III
ELIGIBILITY OF EMPLOYEES
TO PARTICIPATE IN THE PLAN
--------------------------
3.1 Each Employee who was a Participant on March 31, 1989 shall continue as
a Participant. Each other Employee shall be eligible to participate in this Plan
on the first day of the Plan Year within which he completes one Eligibility Year
of Service.
3.2 Any Participant who returns to service after a Break in Service shall
be admitted to the Plan as a Participant on his date of re-employment.
3.3 Within 60 days of each Anniversary Date of this Plan, the Employer
shall furnish the Administrator a list showing all eligible Employees, the date
of employment, the Years of Service, the Plan Compensation of each eligible
Employee and the date of termination of any terminated Employees.
3.4 Notwithstanding the provisions of Section 3.1 to the contrary, if an
Employee is employed by the Employer on March 31, 1989 and has completed by such
date 1,000 or more Hours of Service during an Eligibility Computation Period
which began on or before October 1, 1988, such Employee shall be eligible to
participate in the Plan on October 1, 1988.
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ARTICLE IV
CONTRIBUTIONS TO PLAN
---------------------
4.1 Each participating Employer may contribute to the Plan's Trust Fund for
each taxable year an amount, if any, determined in accordance with a resolution
of the Board of Directors adopted before the date prescribed by law for filing
its Federal income tax return for such taxable year (including extensions
thereof); provided, however, that no contributions shall be made for any year in
excess of the amount deductible for such year under provisions of the Code and
regulations thereunder as then in effect. For Plan Years beginning on or after
April 1, 1989, the Employer may make contributions regardless of whether or not
it has Net Profits and Earnings for its tax year.
4.2 For Plan Years beginning before April 1, 1989, Net Profits and Earnings
in any one year of operations means the net income before provisions for Federal
and State income taxes as determined by the certified public accountants
employed by the Employer in accordance with generally accepted accounting
principles of open-end management investment companies.
4.3 For each taxable year, the contributions shall accrue on the
Anniversary Date thereof, but shall not be considered as accruing during the
said taxable year prior to the Anniversary Date thereof.
4.4 The Trust Fund shall not be diverted to any use other than the
exclusive benefit of eligible Employees and their Beneficiaries.
4.5 Effective August 1, 1991, a Participant may not make voluntary
contributions to his Participant Contribution Account. Prior to August 1, 1991,
a Participant may make voluntary contributions to his Participant Contribution
Account. Such contributions may be made by payroll deductions or in such other
manner and subject to such procedures as the Administrator may prescribe. No
Participant may contribute more than ten percent of his aggregate Plan
Compensation for all Plan Years during which he participated in the Plan.
4.6 Notwithstanding the provisions of Article IX, a Participant shall have
a nonforfeitable interest in all voluntary contributions made by him and in any
increase in his account attributable to such contributions.
4.7 A Participant shall have the right to withdraw the total amount of his
voluntary contributions at any time; provided, however, that such withdrawal
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shall be permissible only with respect to the amount of such Participant's
voluntary contributions and not to any increase in his account attributable to
such contributions. No Participant shall be permitted to make withdrawals of
his voluntary contributions more than four times in any one calendar year.
Effective as of the date of adoption of this amended and restated Plan, a
Participant shall be permitted to make withdrawals as frequently as monthly of
all or a portion of his voluntary contributions, including the earnings
thereon.
4.8 The Fund may accept rollover contributions on behalf of an Employee
(including an Employee who has not satisfied the requirements to be eligible to
participate) from any other plan maintained for his benefit which satisfies the
requirements of a tax-qualified plan, or a rollover individual retirement
account; provided, however, that such rollovers are permitted by and effected in
accordance with the requirements of the Code. The Administrative Committee may
as a condition of acceptance of such rollovers demand such information, opinions
and statements as it deems necessary to assure that such rollovers conform to
the requirements of the federal tax laws.
4.9 An Employee for whom a rollover has been made shall be deemed a
Participant with respect to the amount contributed and shall have a
nonforfeitable interest in such amount and any increases attributable to it. Any
such rollovers shall be held in a special account for the Participant segregated
from other assets held by the fund. Such contributions will be administered and
distributed pursuant to the provisions of this Plan.
4.10 The following special non-discrimination rules pertaining to voluntary
contributions shall be applicable for Plan Years beginning on or after October
1, 1987 and before April 1, 1990.
(a) For any Plan Year, the Contribution Percentage for all Highly
Compensated Employees will not exceed the greater of (i) or (ii) as follows:
(i) The Contribution Percentage for all Non-Highly Compensated Employees,
times 1.25; or
(ii) The lesser of the Contribution Percentage for all Non-Highly
Compensated Employees, times 2.0, provided that the Contribution Percentage for
all Highly Compensated Employees may not exceed the Contribution Percentage for
all Non-Highly Compensated Employees by more than two (2) percentage points or
such lesser amount as the Secretary of Treasury will prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.
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(b) Distribution of Excess Aggregate Contributions.
(i) Excess Aggregate Contributions, plus any income and minus any loss
allocable thereto, will be distributed no later than the last day of each Plan
Year to Participants to whose accounts Excess Aggregate Contributions were
allocated for the preceding Plan Year.
(ii) For the Plan Year beginning on October 1, 1987, the income or loss
allocable to Excess Aggregate Contributions shall be determined under any
reasonable method, which method shall be applied on a consistent basis for all
Participants. For Plan Years beginning after 1987, the income or loss allocable
to Excess Aggregate Contributions shall be the sum of (A) and (B) below:
(A) The income or loss for the Plan Year allocable to the Participant's
voluntary contribution Account multiplied by a fraction, the numerator of which
is the Participant's Excess Aggregate Contributions for the year, and the
denominator of which is the balance of the Participant's voluntary contribution
account as of the end of the Plan Year, minus income (or plus losses) allocable
to such account.
(B) The income or loss for the period between the end of the Plan Year and
the date of the distribution allocable to the Participant's voluntary
contribution account multiplied by the fraction described in (A), above.
In lieu of using the formula described in (B), the income or loss for the
period between the end of the Plan Year and the date of the distribution
allocable to Excess Aggregate Contributions for the year may be calculated under
the following alternative method, provided such method is applied on a
consistent basis for all Participants: ten percent (10%) of the amount
determined under (A), above, multiplied by the number of whole calendar months
that have elapsed since the end of the Plan Year. For this purpose, if a
distribution of Excess Aggregate Contributions is made after the 15th day of a
month, that month will be counted as a whole month.
(c) The following definitions apply for purposes of this Section 4.10.:
(i) "Contribution Percentage" means, for a group of Participants, the
average of the following ratios (calculated separately) for each Participant in
the group:
(A) The sum of voluntary contributions made on behalf of each Participant
for the Plan Year; over
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(B) The Participant's Compensation for that Plan Year, whether or not the
Participant was a Participant for the entire Plan Year.
The Contribution Percentage for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have voluntary employee
contributions or employer matching contributions allocated to his account under
two or more plans described in Section 401(a) of the Code or arrangements
described in Section 401(k) of the Code that are maintained by the employer or
an entity that is required to be aggregated with the employer pursuant to
Sections 414(b), (c), (m), or (o) of the Code will be determined as if all such
contributions were made under a single plan. If a Highly Compensated Employee
participates in two or more arrangements described in Section 401(k) of the Code
that have different plan years, all such arrangements ending with or within the
same calendar year shall be treated as a single arrangement.
For purposes of determining the Contribution Percentage of a Participant
who is a five-percent owner or one of the ten most Highly Compensated Employees,
the Contribution Percentage and compensation of such Participant will include
the Contribution Percentage and Compensation of Family Members, and such Family
Members will be disregarded in determining the Contribution Percentage for
Participants who are Non-Highly Compensated Employees.
Voluntary contributions will be considered made for a Plan Year if made by
the date specified in the applicable regulations and allocated to a
Participant's account for the Plan Year.
The determination and treatment of the Contribution Percentage of any
Participant will satisfy such other requirements as may be prescribed by
Secretary of the Treasury.
In the event that this Plan satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such Sections only if
aggregated with this Plan, then this Section 4.10 will be applied by determining
the Contribution Percentages of eligible Participants as if all such plans were
a single plan. For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code only if they have the
same plan year.
(ii) "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of:
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(A) The aggregate Contribution Percentage amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year; over
(B) The maximum Contribution Percentage amounts permitted by the
Contribution Percentage limits set forth in this Section 4.10 (determined by
reducing contributions made on behalf of Highly Compensated Employees in order
of their Contribution Percentages beginning with the highest of such
percentages).
(iii) "Family Member" means an individual described in Section 414(q)(6)(B)
of the Code.
(iv) "Highly Compensated Employee" means a highly compensated active
employee or a highly compensated former employee, as described below.
A highly compensated active employee includes any employee who performs
service for the employer during the determination year and who, during the
look-back year: (i)received compensation from the employer in excess of $75,000
(as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation
from the employer in excess of $50,000 (as adjusted pursuant to Section 415(d)
of the Code) and was a member of the top-paid group for such year; or (iii) was
an officer of the employer and received compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes:
(i) employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and the
employee is one of the 100 employees who received the most compensation from the
Employer during the determination year; and (ii) employees who are five percent
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or a look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back shall be the twelve (12)-month period immediately preceding the
determination year.
A highly compensated former employee includes any employee who separated
from service (or was deemed to have separated) prior to the determination year,
performs no service for the employer during the determination year, and was a
highly compensated active employee for either the separation year or any
determination year ending on or after the employee's fifty-fifth (55th)
birthday.
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If an employee is, during a determination year or look-back year, a Family
Member of either a five percent owner who is an active or former employee or a
Highly Compensated Employee who is one of the ten (10) most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the Family Member and the five percent owner or top-ten (10) Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
five percent owner or top-ten Highly Compensated Employee shall be treated as a
single employee receiving compensation and Plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the Family
Member and five percent owner or ten (10) most Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of employees in the top-paid group,
the top one hundred (100) employees, a five percent owner, the number of
employees treated as officers and the compensation that is considered, will be
made in accordance with Section 414(q) of the Code and the regulations
thereunder.
(v) "Compensation" means all of an Employee's compensation, as that term is
defined in Article XV, Limitations on Allocations, and shall include elective
contributions that are made by the Employer on behalf of the Employee and which
are not includable in income under Section 125 of the Code. Compensation shall
be subject to the limitation of Section 401(a)(17) of the Code.
ARTICLE V
ALLOCATION OF CONTRIBUTIONS
---------------------------
5.1 A separate and complete accounting shall be maintained for each
Participant which shall set forth the amount credited to or forfeited from his
Employer Contribution Account and his Participant Contribution Account. Employer
contributions and Participant contributions shall be allocated among investment
companies managed by Delaware Management Company, Inc. Each Participant shall
file a written notice with the Committee thereby making an election as to what
proportion of his contributions, including both contributions made by the
Employer and voluntary contributions, shall be allocated to the eligible
investment company funds, as announced from time to time by the Committee. Each
Participant shall have the right to change the investment allocation of his
contributions and his accumulated account balance, in accordance with rules and
procedures as announced from time to time by the Committee, provided changes are
subject to any limitations imposed on the right of exchange by the investment
media.
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5.2 The Employer's contributions and any forfeitures for each Plan Year
shall be credited to the Employer Contribution Accounts of Participants who are
employed by the Employer on the Anniversary Date and allocated in the proportion
that the Plan Compensation of each Participant bears to the total Plan
Compensation of all Participants for such Plan Year. A Participant who
terminates employment on the Anniversary Date shall be treated as employed by
the Employer on the Anniversary Date. All voluntary contributions made by a
Participant prior to August 1, 1991 shall be credited to his Participant
Contribution Account.
5.3 As of the Anniversary Date, each Participant's Employer Contribution
Account and his Participant Contribution Account shall be valued at its fair
market value. For the purposes of paying benefits to a Participant, his accounts
shall be valued on the most recent Valuation Date as determined by the
Administrative Committee.
5.4 Income when earned less expenses, if any, when charged, shall be
credited to or charged against each Participant's account, in accordance with
the self-directed investments selected by the Participant.
5.5 The Committee shall, as of each Anniversary Date, determine the total
amount of forfeitures which accrued during the Plan Year and shall add the
forfeited amount to the Employer's annual contribution for the purposes of
reallocation to the remaining Participants as provided in Section 5.2.
5.6 Any allocation made and credited to the account of a Participant under
this Article shall not cause such Participant to have any right, title or
interest in or to any assets of the Trust Fund except at the time or times, and
under the terms and conditions, expressly provided for in this Plan.
5.7 (a) In the case of a contribution to the Plan which is made by the
Employer because of a mistake of fact, the Employer may, within one year after
the payment of such contribution, withdraw such contribution from the Trust
Fund.
(b) Employer contributions to the Plan are expressly conditioned on the
deductibility of such contributions under Section 404 of the Code. To the extent
such contributions are disallowed, the Employer may, within one year of the
disallowance of the deduction, withdraw such contribution from the Trust Fund.
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ARTICLE VI
RETIREMENT BENEFITS
-------------------
6.1 Upon attaining Normal Retirement Date, a Participant shall have a fully
vested and nonforfeitable right to his entire Employer Contribution Account and
shall be entitled to retire and upon so retiring shall be entitled to the
commencement of the payment of his benefits, consisting of the balance of his
accounts, in accordance with the method of payment elected pursuant to Article
X.
6.2 A Participant who retires after his Normal Retirement Date shall
continue to be a Participant in the Plan until his actual retirement and shall
be eligible to share in the allocation of Employer contributions as provided in
Section 5.2.
ARTICLE VII
DISABILITY BENEFITS
-------------------
7.1 If the employment of a Participant has been terminated prior to his
retirement date because of Total and Permanent Disability, such Participant
shall be entitled to receive his entire Participant Contribution Account and his
entire Employer Contribution Account in accordance with the manner elected under
Article X.
7.2 Upon a Participant's cessation of Total and Permanent Disability and
upon his return to work for Employer before all of his account has been
distributed, no further payments shall be made therefrom by reason of the
disability. A Participant shall have no right or obligation to repay any amount
distributed to him pursuant to Section 7.1.
ARTICLE VIII
DEATH BENEFITS
--------------
8.1 Notwithstanding anything stated in the Plan to the contrary, if a
Participant dies prior to receiving the entire nonforfeitable amount credited to
his accounts, all such undistributed nonforfeitable amounts shall be paid to the
Participant's surviving spouse, unless there is no surviving spouse or the
surviving spouse consents in writing to the payment of death benefits to another
Beneficiary. A spouse's consent must satisfy the following requirements:
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(a) the consent must be in writing;
(b) the consent must be witnessed by a member of the Administrative
Committee or a notary public;
(c) the consent must approve a designation of a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent, or the spouse expressly permits
designations by the Participant without any further spousal consent; and
(d) the consent acknowledges the effect of the Participant's designation of
Beneficiary. If a consent permits designations by the Participant without any
requirement of further consent by such spouse, it must acknowledge that the
spouse has the right to limit consent to a specific Beneficiary and that the
spouse voluntarily elects to relinquish such right.
Written consent of a spouse need not be obtained if the Participant
establishes to the satisfaction of the Committee that there is no spouse or that
the spouse cannot be located. Any such designation may be changed from time to
time by the Participant by filing a new designation with the Committee, provided
the spousal consent requirements above are satisfied.
8.2 Each Participant may file with the Committee a designation of
Beneficiary to receive amounts payable under this Plan upon his death. The
designation may be changed from time to time by the Participant, except that a
married Participant may not name a Beneficiary other than his spouse without a
written consent which satisfies the requirements of Section 8.1. If no
designation has been filed, or all designated Beneficiaries have predeceased the
Participant, then any amounts payable shall be paid to his surviving spouse. If
there is no surviving spouse, any amounts payable shall be paid to his estate.
8.3 If at, after or during the time when a benefit is payable to any
Beneficiary, the Administrative Committee, upon request of the Trustee or at its
own instance, mails by registered or certified mail to the Beneficiary at the
Beneficiary's last known address a written demand for his then address, or for
satisfactory evidence of his continued life or both, and, if the Beneficiary
shall fail to furnish the information to the Committee within 3 years from the
mailing of the demand, then the Committee shall distribute the remaining
benefits to the Beneficiary next entitled thereto under Section 8.3 above as if
the Beneficiary designated by the Participant or Section 8.3 were then deceased.
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ARTICLE IX
OTHER SEPARATION FROM SERVICE
-----------------------------
9.1 (a) If a Participant separates from service other than under Articles
VI, VII or VIII, he shall be entitled to receive a lump sum distribution of his
entire Participant Contribution Account and his entire nonforfeitable Employer
Contribution Account. Such distribution shall be made upon the written request
of the Participant and shall be made as soon as practicable following the
Participant's separation from service, but not later than the close of the
second Plan which such separation occurs.
(b) If the non-forfeitable portion of the Participant's Employer
Contribution Account and his Participant Contribution Account exceeds $3500 (or
ever exceeded $3500 at the time of an earlier distribution), and the Participant
does not consent in writing to receive a lump sum distribution of his accounts
by the close of the second Plan Year following his separation from service, no
distribution shall be made to the Participant until he attains his Normal
Retirement Date. Regardless of whether the Participant consents in writing, if
the non-forfeitable portion of the Participant's Employer Contribution Account
and Participant Contribution Account does not exceed $3500 (or did not exceed
$3500 at the time of a prior distribution), a lump sum distribution shall be
made to the Participant of the entire value of the non-forfeitable portion of
his accounts not later than the end of the second Plan Year following his
separation from service.
(c) If a distribution is made to the Participant of the nonforfeitable
portion of his Employer Contribution Account upon his separation from service,
the non-vested portion of his Account, if any, will be treated as a forfeiture
and reallocated to remaining Participants as provided in Section 5.2. If the
Participant does not receive a distribution of his Employer Contribution Account
upon his separation from service, such Account shall be held for the Participant
until he attains Normal Retirement Date and the non-vested portion of the
Account shall be treated as a forfeiture when the Participant sustains five
consecutive One Year Breaks in Service.
(d) In the event a Participant who is less than fully vested in his
Employer Contribution Account receives a distribution of his vested interest in
such Account upon his separation from service, and such Participant subsequently
returns to employment of the Employer, the Participant's Employer Contribution
Account will be restored to the value of the Account on the date of the
distribution if the Participant repays to the Trustees the full amount of such
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distribution before the earlier of five consecutive One-Year Breaks in Service
or five years after the Participant's date of reemployment. Restoration of the
forfeited amount of a Participant's Account shall be made from forfeitures or
Employer contributions.
9.2 (a) In the event a Participant separates from service with the Employer
for reasons other than retirement, disability, death or a layoff by the
Employer, he shall have a nonforfeitable right to the amount credited to his
Employer Contribution Account in accordance with the following schedule:
Completed Years of Service Percentage
-------------------------- ----------
At least But less than
0 1 0%
1 2 20%
2 3 40%
3 4 60%
4 5 80%
5 or more 100%
(b) A Participant shall have a wholly vested and nonforfeitable right to
his Employer Contribution Account upon separation from service on account of
retirement on or after the Normal Retirement Date, Total and Permanent
Disability, death while in the employ of the Employer or layoff by the Employer.
For purposes of this Section 9.2, the term "layoff" shall mean any involuntary
separation from service other than separation due to cause. If a Participant
separates from service with the Employer, the non-vested portion of his Employer
Contribution Account, if any, shall be forfeited upon the death of the
Participant.
(c) If the Employer amends the Plan in a manner which directly or
indirectly affects the computation of a Participant's nonforfeitable percentage,
each Participant who completes an Hour of Service in any Plan Year beginning
after December 31, 1988 and who has at least three Years of Service may elect
after the adoption of such amendment to have his nonforfeitable interest
computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence the day the amendment is adopted
and shall end on later of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes effective; or
(iii) sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or the Committee.
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9.3 (a) In the case of a Participant who has a Break in Service, Years of
Service completed before such Break shall not be counted until the Participant
has completed a Year of Service for the purpose of determining his
nonforfeitable percentage of the amount credited to his Employer Contribution
Account after such Break in Service.
(b) Years of Service completed on reemployment and after separation from
service with the Employer in connection with which he has five consecutive One
Year Breaks in Service shall not be counted for purposes of determining such
Participant's nonforfeitable percentage right to amounts credited to his
Employer Contribution Account before such Break in Service.
ARTICLE X
METHOD OF PAYMENT
-----------------
10.1 At the request of a Participant, the form of benefit payments may be
one of the following in cash:
(a) in a lump sum payment; or
(b) in periodic, monthly, quarterly, semi-annual or annual installments
over a period certain not exceeding the Participant's life expectancy or the
joint life expectancy of the Participant and his designated Beneficiary. If
periodic installments are to be paid, a Participant's account shall be invested
in the investment company funds available under the Plan as designated by the
Participant.
If periodic installments are paid over the life expectancy of the
Participant or joint life expectancy of the Participant and a designated
Beneficiary, a Participant may elect, prior to the time distributions begin,
whether or not to have his life expectancy and his Beneficiary's life expectancy
(if the Beneficiary is his spouse) annually recalculated. In the absence of such
election, life expectancies will not be recalculated.
10.2 In no event shall payments of benefits under this Plan commence later
than sixty (60) days after the close of the Plan Year in which the latest of the
following events occur:
(a) the Participant attains age sixty-five (65); or
(b) the Participant completes ten years of participation in the Plan; or
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(c) the termination of the Participant's service with the Employer.
10.3 (a) Notwithstanding the other requirements of this Plan, distributions
on behalf of any Participant, including a five percent (5%) owner, may be made
in accordance with all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Trust Fund is one which would not have
disqualified such Trust under Section 401(a)(9) of the Code as in effect prior
to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of distribution
designated by the Participant whose interest is being distributed or, if the
Participant is deceased, by a Beneficiary of such Participant.
(iii) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(iv) The Participant had accrued a benefit under the Plan as of December
31, 1983.
(v) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant listed in order of
priority.
(b) A distribution upon death will not be covered by this Section unless
the information in the designation contains the required information described
above with the respect to the distributions to be made upon the death of the
Participant.
(c) For any distribution which commenced before January 1, 1984, but
continues after December 31, 1983, the Participant, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (v) above.
(d) If a designation is revoked, any subsequent distribution must satisfy
the requirements of Section 401(a)(9) of the Code. Any changes in the
designation will be considered to be revocation of the designation. However, the
mere substitution or addition of another Beneficiary (one not named in the
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designation) under the designation will not be considered to be revocation
of the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, either
directly or indirectly (for example, by altering the relevant measuring life).
10.4 Required Distributions. All distributions required under this Section
10.4 shall be determined and made in accordance with the proposed regulations
under Section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed
regulations.
(a) Required beginning date. The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's required
beginning date.
(b) Limits on Distribution Periods. As of the first distribution calendar
year, distributions, if not made in a single-sum, may only be made over one of
the following periods (or a combination thereof):
(1) a period certain not extending beyond the life expectancy of the
Participant, or
(2) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
(c) Determination of amount to be distributed each year. If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date:
(1) If a Participant's benefit is to be distributed over (i) a period not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's designated
beneficiary or (ii) a period not extending beyond the life expectancy of the
designated beneficiary, the amount required to be distributed for each calendar
year, beginning with distributions for the first distribution calendar year,
must at least equal the quotient obtained by dividing the Participant's benefit
by the applicable life expectancy.
(2) For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the life
expectancy of the Participant.
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(3) For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first distribution
calendar year, shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable life expectancy or (2)
if the Participant's spouse is not the designated beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of
the proposed regulations. Distributions after the death of the Participant shall
be distributed using the applicable life expectancy in (c)(i)(A) above as the
relevant divisor without regard to proposed regulations Section 1.401(a)(9)-2.
(4) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which the
Participant's required beginning date occurs, must be made on or before December
31 of that distribution calendar year.
(d) Death Distribution Provisions.
(1) Distribution beginning before death. If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(2) Distribution beginning after death. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth (5th) anniversary of the Participant's death except to the
extent that the Participant or his designated beneficiary elects to receive
distributions in accordance with (i) or (ii) below:
(i) if any portion of the Participant's interest is payable to a designated
beneficiary, distributions may be made over a period certain not greater than
the life expectancy of the designated beneficiary commencing on or before
December 31 of the calendar year immediately following the calendar year in
which the Participant died;
(ii) if the designated beneficiary is the Participant's surviving spouse,
the date distributions are required to begin in accordance with (i) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the Participant died and (2)
December 31 of the calendar year in which the Participant would have attained
age 70 1/2.
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If the Participant has not made an election pursuant to Section 10.4(d)(2)
by the time of his or her death, the Participant's designated beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
Section 10.4(d), or (2) December 31 of the calendar year which contains the
fifth (5th) anniversary of the date of death of the Participant. If the
Participant has no designated beneficiary, or if the designated beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth (5th) anniversary of the Participant's death.
(3) For purposes of Section 10.4(d)(2) above, if the surviving spouse dies
after the Participant, but before payments to such spouse begin, the provisions
of Section 10.4(d)(2), with the exception of subparagraph (ii) therein, shall be
applied as if the surviving spouse were the Participant.
(4) For purposes of Section 10.4(d), distribution of a Participant's
interest is considered to begin on the Participant's required beginning date
(or, if Section 10.4(d)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Section 10.4(d)(3) above).
(e) Definitions.
(1) Applicable life expectancy. The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the Participant (or
designated beneficiary) as of the Participant's (or designated beneficiary's)
birthday in the applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy will be the
life expectancy as so recalculated. The applicable calendar year shall be the
first distribution calendar year and if life expectancy is being recalculated,
such succeeding calendar year.
(2) Designated beneficiary. The individual who is designated as the
beneficiary under the Plan in accordance with Section 401(a)(9) and the proposed
regulations thereunder.
(3) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Section 10.4(d) above.
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(4) Life expectancy. Life expectancy and joint and last survivor expectancy
are computed by use of the expected return multiples in Tables V and VI of
Section 1.72-9 of the income tax regulations. Unless otherwise elected by the
Participant by the time distributions are required to begin, life expectancies
shall not be recalculated annually. Such election shall be irrevocable as to the
Participant (or spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse designated beneficiary may not be recalculated. A
spousal designated beneficiary may not elect to have his or her life expectancy
recalculated with respect to any distribution paid pursuant to Section
10.4(d)(2).
(5) Participant's benefit.
(i) The Participant's account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
(ii) For purposes of paragraph (i) above, if any portion of the minimum
distribution for the first distribution calendar year is made in the second
distribution calendar year on or before the required beginning date, the amount
of the minimum distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding distribution
calendar year.
(6) Required beginning date.
(i) General rule. The required beginning date of a Participant is the first
day of April of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
(ii) Transitional rules. The required beginning date of a Participant who
attains age 70 1/2 before January 1, 1988, shall be determined in accordance
with (A) or (B) below:
(A) Non-five (5)-percent owners. The required beginning date of a
Participant who is not a five (5)-percent owner is the first day of April of the
calendar year following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
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(B) Five (5)-percent owners. The required beginning date of a Participant
who is a five (5)-percent owner during any year beginning after December 31,
1979, is the first day of April following the later of:
(I) the calendar year in which the Participant attains age 70 1/2, or
(II) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a five (5)-percent owner, or the calendar
year in which the Participant retires.
The required beginning date of a Participant who is not a five (5)-percent
owner who attains age 70 1/2 during 1988 and who has not retired as of January
1, 1989, is April 1, 1990.
(iii) Five (5)-percent owner. A Participant is treated as a five
(5)-percent owner for purposes of this section if such Participant is a five
(5)-percent owner as defined in Section 416(i) of the Code (determined in
accordance with Section 416 but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age 66 1/2 or any subsequent Plan Year.
(iv) Once distributions have begun to a five (5)-percent owner under this
section, they must continue to be distributed, even if the Participant ceases to
be a five (5)-percent owner in a subsequent year.
10.5 Restrictions on Distributions Prior to Normal Retirement Date. If the
value of a Participant's vested account balance exceeds (or at the time of any
prior distribution exceeded) $3,500, the Participant must consent to any
distribution made to him before he attains the Normal Retirement Date. The
consent of the Participant shall be obtained in writing within the 90-day period
ending on the date benefits are paid. The Committee shall notify the Participant
of his right to defer any distribution until the Participant attains the Normal
Retirement Date (or would have attained the Normal Retirement Date if not
deceased). Such notification shall include a general description of the material
features, and an explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would satisfy the notice
requirements of Section 417(a)(3) of the Code below, and shall be provided no
less than 30 days and no more than 90 days prior to the date benefits are paid.
The consent of the Participant shall not be required to the extent that a
distribution is required to satisfy Sections 401(a)(9) or 415 of the Code. A
distribution may be paid to the Participant less than 30 days after the notice
described in this Section 10.5 is given to him, provided that the Administrative
Committee clearly informs the Participant that he has the right to a period of
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at least 30 days after receiving the notice to consider the decision of
whether or not to elect the distribution and the Participant, after receiving
the notice, affirmatively elects to receive a distribution. In addition, subject
to Section 10.7, upon termination of this Plan, the Participant's entire account
balance may be distributed without the Participant's consent to the Participant
or transferred to another defined contribution plan (other than an employee
stock ownership plan, as defined in Section 4975(e)(7) of the Code) within the
same controlled group as the Employer.
10.6 Withdrawals upon Attainment of Age 59-1/2. Upon the attainment of age
59-1/2, a Participant who is fully vested in his Employer Contribution Account
will be entitled to withdraw once a Plan Year all or any portion of his account
balance in a single sum. Any withdrawal by a Participant under this Section 10.6
will be made only after the Participant files a written request with the
Administrative Committee pursuant to such terms and conditions as the Committee
may prescribe.
10.7 Direct Rollovers
(a) This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Section, a distributee may elect, at
the time and in the manner prescribed by the Administrative Committee to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) Definitions.
(i) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).
(ii) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in section 408(a) of the Code, an individual
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retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(iii) Distributee: A distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse or former
spouse who is the alternate payee under a qualified domestic relations order, as
defined in section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
ARTICLE XI
ADMINISTRATION OF PLAN
----------------------
11.1 (a) This Plan shall be administered by a Committee which shall consist
of not less than two nor more than five members.
(b) The Committee shall serve without compensation from the Plan. Vacancies
may be filled by the Chief Executive Officer of Delaware Group Delaware Fund,
Inc. on an interim basis, until action to fill the vacancy is taken by the Board
of Directors of Delaware Group Delaware Fund, Inc.
(c) The Committee:
(1) shall act by affirmative vote of a majority of its members at a meeting
called with five days notice or in writing without a meeting;
(2) shall appoint a Secretary who may be but need not be one of its own
members. He shall keep complete records of the administration of the Plan;
(3) may authorize each and any one of its members to perform routine acts
and to sign documents on its behalf.
11.2 The Committee may appoint such persons or committees, employ such
attorneys, agents, accountants, investment managers, consultants, actuaries, and
other specialists as it deems necessary or desirable to advise or assist
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it in the performance of its duties hereunder and the Committee may rely upon
their respective written opinions or certificates. To the extent such persons
are empowered by written notification from the Committee to perform duties
defined in ERISA as fiduciary duties, such empowerment shall constitute a
delegation of fiduciary responsibility for purposes of determining the
co-fiduciary liability under ERISA. The Committee shall review the performance
of any such persons periodically.
11.3 Administration of the Plan shall consist of interpreting and carrying
out the provisions of this Plan. The Committee shall determine the eligibility
of Employees to participate in this Plan, their rights while Participants in
this Plan and the nature and amount of benefits to be received therefrom. The
Committee shall decide any disputes which may arise under this Plan and the
Trust Agreement. The Committee may provide rules and regulations for the
administration of the Plan consistent with its terms and provisions. Any
construction or interpretation of the Plan and any determination of fact in
administering the Plan made in good faith by the Committee shall be final and
conclusive for all Plan purposes. The Committee shall have the discretionary
authority to determine eligibility for benefits and to construe the terms of the
Plan.
11.4 (a) The Committee shall prescribe a form for the presentation of
claims under the terms of this Plan and/or Trust Agreement.
(b) Upon presentation to the Committee of a claim on the prescribed form,
the Committee shall make a determination of the validity thereof. If the
determination is adverse to the claimant, the Committee shall furnish to the
claimant within 90 days after the receipt of the claim a written notice setting
forth the following:
(1) The specific reason or reasons for the denial;
(2) Specific reference to pertinent provisions of the Plan on which the
denial is based;
(3) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary; and
(4) Appropriate information as to the steps to be taken if the claimant
wishes to submit his or her claim for review.
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(c) In the event of a denial of a claim, the claimant or his duly
authorized representative may appeal such denial to the Committee for a full and
fair review of the adverse determination. Claimant's request for review must be
in writing and made to the Committee within 60 days after receipt by claimant of
the written notification required under Section 11.4(b); provided, however, such
60 day period shall be extended if circumstances so warrant. Claimant or his
duly authorized representative may submit issues and comments in writing which
shall be given full consideration by the Committee in his review.
(d) The Committee may, in its sole discretion, conduct a hearing. A request
for a hearing made by claimant will be given full consideration. At such
hearing, the claimant shall be entitled to appear and present evidence and be
represented by counsel.
(e) A decision on a request for review shall be made by the Committee not
later than 60 days after receipt of the request; provided, however, in the event
of a hearing or other special circumstances, such decision shall be made not
later than 120 days after receipt of such request. If it is necessary to extend
the period of time for making a decision beyond 60 days after the receipt of the
request, the claimant shall be notified in writing of the extension of time
prior to the beginning of such extension.
(f) The Committee's decision on review shall state in writing the specific
reasons and references to the Plan provisions on which it is based. Such
decision shall be promptly provided to the claimant. If the decision on review
is not furnished in accordance with the foregoing, the claim shall be deemed
denied on review.
11.5 The Committee shall have the power to allocate its responsibilities
among its several members, except that all matters involving the hearing of and
decision on the claims and the review of the determination of benefits shall be
made by the full Committee; provided, however, that no member of the Committee
shall participate in any matter relating solely to himself.
11.6 To the extent required by law, the Committee shall give notice in
writing to all interested parties of any amendment of this Plan and/or Trust
Agreement and of any application to any government agency for any determination
of the effect of any such amendment on the Plan within the jurisdiction of that
agency.
11.7 (a) The Committee shall administer the Plan and the Trust Agreement
forming a part thereof under uniform rules of general application.
(b) The Committee or any member thereof:
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(1) May serve under the Plan and/or the Trust Agreement in one or more
fiduciary capacities, as that term is defined in ERISA; and
(2) May resign by giving written notice thereof to the Chief Executive
Officer of Delaware Group Delaware Fund, Inc. not less than fifteen (15) days
before the effective date of such resignation; and
(3) May be removed at any time, without cause, by the Board of Directors of
Delaware Group Delaware Fund, Inc.
ARTICLE XII
AMENDMENT, CONSOLIDATION, MERGER OR TERMINATION
-----------------------------------------------
12.1 Delaware Group Delaware Fund, Inc. may amend the Plan and the Trust
Agreement in any manner and at any time by action of its Board of Directors;
provided, however, that no amendment shall deprive any Participant or his
Beneficiary of any vested interest he may have hereunder unless the amendment is
for the purpose of conforming the Plan to the requirements of the Code or any
other applicable law. No amendment which affects the rights, responsibilities or
duties of the Trustee may be made without the Trustee's written consent. No
amendment shall be made to the Plan which has the effect of eliminating or
reducing an early retirement benefit or a retirement-type subsidy, eliminating
an optional form of benefit or decreasing a Participant's account balance with
respect to benefits attributable to service before the amendment. Further, if
the vesting schedule of the Plan is amended, in the case of an Employee who is a
Participant as of the later of the date such amendment is adopted or the date it
becomes effective, the nonforfeitable percentage (determined as of such date) of
such Employee's right to his Employer derived account balance will not be less
than his percentage computed under the Plan without regard to such amendment.
12.2 Any Participant on the effective date of an amendment who is not
actively participating in the Plan on such effective date shall not benefit from
an amendment unless otherwise required by law or unless such amendment is
specifically made applicable to such Participant.
12.3 In the event of any merger or consolidation with, or transfer of
assets or liabilities to, any other plan, each Participant shall be entitled to
a benefit after the merger, consolidation or transfer (if the Plan then
terminated) which is not less than the benefits he would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
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12.4 The Employer intends to continue the Plan indefinitely but reserves
the right to discontinue contributions, terminate or partially terminate the
Plan at any time. In the event of a complete discontinuance of contributions,
termination or partial termination of the Plan, the interests of all
Participants affected shall become nonforfeitable. Upon termination of the Plan,
the Employer shall in its complete discretion notify the Trustee to either hold
all assets of the Trust Fund and make payments in accordance with the terms of
the Plan or distribute to each Participant his net account balance in a lump sum
payment in cash or kind. The Employer's contribution to the Trust Fund or the
income thereof shall not be paid to, or shall not revert to Employer and shall
not be used for any purpose other than the exclusive benefit of the Participants
or their Beneficiaries.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 To the extent permitted by law, it is a condition of the Plan that the
benefits provided hereunder shall not be subject to assignment, anticipation,
alienation, attachment, levy or transfer, and any attempt to do so shall not be
recognized. The preceding sentence shall also apply to the creation, assignment
or recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order as defined in Section 414(p) of the Code. If
provided by the terms of a qualified domestic relations order, a distribution of
benefits may be made from the Plan to the alternate payee under such order in a
single lump sum as soon as practicable following the determination by the
Administrative Committee that the order constitutes a qualified domestic
relations order. Payment of benefits may be made to the alternate payee even
though the Participant identified in the order has not attained the earliest
retirement age under the Plan. For purposes of this Section 13.1, the "earliest
retirement age" means the earlier of (i) the date in which the Participant is
entitled to a distribution under the Plan or (ii) the later of the date the
Participant attains age 50 or the earliest date on which the Participant would
begin receiving benefits if the Participant separated from service.
13.2 Nothing herein contained shall be deemed to give any Employee the
right to be retained in the employ of Employer or to interfere with the right of
the Employer to discharge any Employee at any time, nor shall it be deemed to
give the Employer the right to require any Employee to remain in its employ, nor
shall it interfere with the Employee's right to terminate his employment at any
time.
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<PAGE>
13.3 All expenses incurred by the Trustees in the administration of the
Fund, including but not limited to the compensation of counsel, accountants,
Trustees, other agents or fiduciaries, shall be charged against the Employer,
unless otherwise paid by the Fund.
13.4 This Plan shall be interpreted in accordance with the laws of the
Commonwealth of Pennsylvania, except to the extent superseded by ERISA as in
effect from time to time.
ARTICLE XIV
LOANS
-----
14.1 The Committee, in its sole discretion, may direct the Trustees to make
a loan to a Participant, who is a party-in-interest, as defined in Section 3(14)
of ERISA, from the Participant's account balance upon receipt of a written
request from the Participant. The total amount of any such loan (when added to
the outstanding balance of all other loans to the Participant under the Plan or
any other qualified plan of the Employer) shall not exceed the lesser of $50,000
or 50% of the Participant's vested account balance. The $50,000 limitation shall
be reduced by the excess, if any, of the highest outstanding balance of loans to
the Participant from the Plan during the one-year period ending on the day
before the date on which such loan was made over the outstanding balance of
loans from the Plan to the Participant on the date that such loan was made.
14.2 A request by a Participant for a loan shall be made in writing to the
Committee and shall specify the amount of the loan. The terms and conditions on
which the Committee shall approve loans under the Plan shall be applied on a
reasonably equivalent basis with respect to all Participants. If a Participant's
request for a loan is approved by the Committee, the Committee shall furnish the
Trustees with written instructions directing the Trustees to make the loan in a
lump sum payment of cash to the Participant. In making any loan payment under
this Article XIV, the Trustees shall be fully entitled to rely on the
instructions furnished by the Committee, and shall be under no duty to make any
inquiry or investigation with respect thereto.
14.3 Loans shall be made on such terms and subject to such limitations as
the Committee may prescribe from time to time, provided that any such loan shall
be evidenced by a written note, shall bear a reasonable rate of interest on the
unpaid principal thereof, shall be adequately secured, and shall be repaid by
the Participant over a period not to exceed five years.
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<PAGE>
14.4 Any loan to a Participant under the Plan shall be secured by the
pledge of not more than 50% percent of the Participant's right, title and
interest in his vested account balance. Such pledge shall be evidenced by the
execution of a promissory note by the Participant.
14.5 The Committee shall have the sole responsibility for insuring that a
Participant timely makes all loan repayments, and for notifying the Trustees in
the event of any default by the Participant on the loan. Each loan repayment
shall be paid to the Trustees, and shall be accompanied by written instructions
from the Committee that identifies the Participant on whose behalf the loan
repayment is being made. Repayment of loans shall be made solely by means of
payroll deductions, or such other manner approved by the Committee.
14.6 In the event of a default by a Participant on a loan repayment, all
remaining principal payments on the loan shall be immediately due and payable.
The Committee shall be authorized (to the extent permitted by law) to take any
and all actions necessary and appropriate to enforce collection of an unpaid
loan. However, in the event of a default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the Plan.
14.7 Upon the occurrence of a Participant's retirement or death, or earlier
distribution of benefits, the unpaid balance of any loan, including any unpaid
interest, shall be deducted from any payment or distribution from the Trust Fund
to which such Participant or his Beneficiary may be entitled and his vested
interest in his account shall be reduced.
14.8 A loan to a Participant shall be considered an investment of the
separate account(s) of the Participant from which the loan is made. All loan
repayments shall be credited to such separate account(s) and reinvested in the
investment company fund designated by the Participant.
14.9 A loan may not be made to a Participant who owns (or is considered as
owning within the meaning of Section 318(a)(1) of the Internal Revenue Code)
more than 5% of the outstanding stock of the Employer.
14.10 For loans granted or renewed on or after the last day of first Plan
Year beginning on or after January 1, 1989, the Committee shall issue written
loan guidelines, which shall form part of the Plan, describing the procedures
and conditions for making loans, and may revise those guidelines at any time,
and for any reason.
-35-
<PAGE>
ARTICLE XV
LIMITATIONS ON ALLOCATIONS
--------------------------
15.1 The provisions of this Article XV shall be effective for limitation
years beginning after December 31, 1986.
(a) Notwithstanding any provisions of this Plan to the contrary, the annual
additions which may be credited to a Participant's account for any limitation
year will not exceed the lesser of the maximum permissible amount or any other
limitation contained in this Plan.
(b) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will be determined
on the basis of the Participant's actual compensation for the limitation year.
(c) In the event that it is determined that because of the allocation of
forfeitures, a reasonable error in estimating a Participant's annual
compensation or under other limited facts and circumstances permitted by the
Commissioner of the Internal Revenue Service, if there is an excess amount the
excess will be disposed of as follows:
(1) If the Participant is covered by the Plan at the end of the limitation
year, the excess amount shall be used to reduce employer contributions
(including any allocation of forfeitures) for such Participant in the next
limitation year, and each succeeding limitation year if necessary;
(2) If the Participant is not covered by the Plan at the end of the
limitation year, the excess amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future employer
contributions (including allocation of any forfeitures) for all remaining
Participants in the next limitation year, and each succeeding limitation year if
necessary;
(3) If a suspense account is in existence at any time during the limitation
year pursuant to this Section, it will not participate in the allocation of
investment gains and losses. The entire amount allocated to Participants from a
suspense account, including any such gains or other income or less any losses is
considered an annual addition.
(d) For the purpose of applying the limitations under this Article, all
defined contribution plans maintained by the employer are to be considered as a
single plan.
15.2 Definitions. For purposes of this Article only, the following
definitions and rules of interpretation will apply:
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<PAGE>
(a) "annual additions" -- The sum of the following amounts credited to a
Participant's account for the limitation year:
(1) employer contributions;
(2) forfeitures;
(3) voluntary Employee contributions;
(4) amounts allocated after March 31, 1984, to an individual medical
account, as defined in Section 415(1)(1) of the Code, which is part of a pension
or annuity maintained by the employer;
(5) amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of a key
employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit
fund as defined in Section 419(e) of the Code, maintained by the employer; and
(6) excess amounts applied under this Article in the limitation year to
reduce employer contributions.
(b) "compensation" -- a Participant's earned income, wages, salaries, and
fees for professional services and other amounts received (without regard to
whether an amount is paid in cash) for personal services actually rendered in
the course of employment with the employer to the extent that the amounts are
includable in gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances), and excluding the following:
(1) Employer contributions to a plan of deferred compensation which are not
includable in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a simplified employee pension to
the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
-37-
<PAGE>
(4) Other amounts which received special tax benefits, or contributions
made by the employer (whether or not under a salary reduction agreement) towards
the purchase of an annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross income of the Employee);
and
(5) Any contribution for medical benefits (within the meaning of Section
419A(f)(2) of the Code) after separation from service which is otherwise treated
as an annual addition; and
(6) Any amount otherwise treated as an annual addition under Section
415(i)(1) of the Code.
For purposes of applying the limitations of this Article, compensation for
a limitation year is the compensation actually paid or includable in gross
income during such year.
Notwithstanding the preceding sentence, compensation for a Participant who
is permanently and totally disabled (as defined in Section 37(e)(3) of the Code)
is the compensation such Participant would have received for the limitation year
if the Participant had been paid at the rate of compensation paid immediately
before becoming permanently and totally disabled; such imputed compensation for
the disabled Participant may be taken into account only if the Participant is
not an officer, an owner, or highly compensated, and contributions made on
behalf of such Participant are nonforfeitable when made.
(c) "employer" -- The Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section 414(b) of the Code as
modified by Section 415(h) of the Code), all commonly controlled trades or
businesses (as defined in Section 414(c) of the Code as modified by Section
415(h) of the Code), or affiliated service groups (as defined in Section 414(m)
of the Code) of which the adopting Employer is a part.
(d) "excess amount" -- The excess of the Participant's annual additions for
the limitation year over the maximum permissible amount.
(e) "limitation year" -- Effective April 2, 1989, the twelve-month period
beginning April 2 and ending April 1. Prior to April 2, 1989, the limitation
year is the twelve-month period from November 1 through the following October
31, except the limitation year beginning November 1, 1988 shall end April 1,
1989.
-38-
<PAGE>
(f) "maximum permissible amount" -- The lesser of $30,000 (or, if greater,
1/4 of the dollar limitation in effect under Section 415(b)(1)(A) of the Code)
or twenty-five percent (25%) of the Participant's compensation for the
limitation year.
ARTICLE XVI
TOP HEAVY DEFINITIONS AND RULES
-------------------------------
16.1 Key employee. An Employee or former Employee, (or the Beneficiary of
such an Employee or former Employee) who at any time during the determination
period was:
(a) An officer of the Employer having an annual compensation greater than
fifty percent (50%) of the amount in effect under Section 415(b)(1)(A) of the
Code for any such Plan Year;
(b) One of the ten Employees having annual compensation from the Employer
of more than the limitation in effect under Section 415(c)(1)(A) of the Code and
owning (or considered as owning within the meaning of Section 318 of the Code)
the largest interests in the Employer;
(c) A person owning (or considered as owning within the meaning of Section
318 of the Code) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more then five percent (5%) of the total combined
voting power of ail stock of the Employer, or
(d) A person who has annual compensation from the Employer of more than
$150,000 and who would be described in (c) hereof if one percent (1%) were
substituted for five percent (5%).
For purposes of (a) above, no more than fifty (50) Employees (or, if lesser, the
greater of three or ten percent of the Employees will be treated as officers.)
For purposes of (b), if two Employees have the same interest in the Employer,
the Employee having greater annual compensation from the Employer will be
treated as having a larger interest. For purposes of this Article the term
"compensation" shall have the same meaning as provided for in Article XV.
The determination period is the Plan Year containing the determination date
as defined in Section 16.8, and the four (4) preceding Plan Years. The
determination of who is a key employee will be made in accordance with the rules
and regulations under Section 416(i)(1) of the Code.
16.2 Non-key employee. Any Employee who is not a key employee. In addition,
any Beneficiary of a non-key employee will be treated as a non-key employee.
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<PAGE>
16.3 Permissive aggregation group. The required aggregation group of plans
plus any other plan or plans of the Employer, which considered as a group with
the required aggregation group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
16.4 Required aggregation group.
(a) Each qualified plan of the Employer in which at least one key employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and
(b) Any other qualified plan of the Employer which enables a plan described
in (a) to meet the requirements of Sections 401 (a)(4) and 410 of the Code.
16.5 Top-heavy plan. This Plan is top-heavy for any Plan Year if any of the
following conditions exist;
(a) If the top-heavy ratio for this Plan exceeds sixty percent (60%) and
this Plan is not part of any required aggregation group or permissive
aggregation group of plans.
(b) If this Plan is part of a required aggregation group of plans but not
part of a permissive aggregation group and the top-heavy ratio for the required
aggregation group of plans exceeds sixty percent (60%).
(c) If this Plan is a part of a permissive aggregation group of plans and
the top-heavy ratio for the required aggregation group exceeds sixty percent
(60%) and the top-heavy ratio for the permissive aggregation group exceeds sixty
percent (60%).
16.6 Super top-heavy plan. For any Plan Year in which this Plan would be a
Top-Heavy Plan pursuant to Section 16.5 above if "ninety percent (90%)" were
substituted for "sixty percent (60%)" at each place where "sixty percent (60%)"
appears therein.
16.7 Top-heavy ratio.
(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and has not maintained any
defined benefit plan which during the five (5) year period ending on the
determination date has or has had accrued benefits, the top-heavy ratio for this
Plan alone or for the required or permissive aggregation group as appropriate is
a fraction, the numerator of which is the sum of the account balances of all key
employees as of the determination date (including any part of any account
balance distributed in the five (5) year period ending on the determination
-40-
<PAGE>
date), and the denominator of which is the sum of all account balances
(including any part of any account balance distributed in the five (5) Year
period ending on the determination date), both computed in accordance with
Section 416 of the Code and the regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are increased to reflect any contribution not
actually made as of the determination date, but which is required to be taken
into account on that date under Section 416 of the Code and the regulations
thereunder.
(b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and maintains or has maintained
one or more defined benefit plans which during the five (5) year period ending
on the Determination Date has or has had any accrued benefits, the top-heavy
ratio for any required or permissive aggregation group as appropriate is a
fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all key employees determined
in accordance with (2) above, and the present value of accrued benefits under
the aggregated defined benefit plan or plans for all key employees as of the
determination date, and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans for all
Participants, determined in accordance with (a) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all
Participants as of the determination dates, all determined in accordance with
Section 416 of the Code and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and denominator of the
top-heavy ratio are increased for any distribution of an accrued benefit made in
the five year period ending on the determination date.
(c) For the purposes of (a) and (b) above, the value of account balances
and the present value of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with the twelve (12) month
period ending on the determination date, except as provided in Section 416 of
the Code and the regulations thereunder for the first and second plan years of a
defined benefit plan. The account balances and accrued benefits of a Participant
(1) who is a non-key employee but who was a key employee in a prior year, or (2)
who has not been credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the five (5) year period ending on the
determination date will be disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Section 416 of the Code and the
regulations thereunder. When aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the determination dates
that fall within the same calendar year. If any individual has not received
-41-
<PAGE>
any compensation from any employer maintaining the plan (other than benefits
under the Plan) at any time during the five (5) year period ending on the
determination date, any accrued benefit for such individual (and the account
of such individual) will not be taken into account.
Effective for Plan Years beginning after December 31, 1986, the accrued
benefit of a Participant other than a key employee shall be determined under (i)
the method, if any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code.
16.8 Determination date. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.
16.9 Valuation date. The last day of the Plan Year.
16.10 Present value. Present value will be based upon the interest and
mortality rates specified in the Employer's defined benefit plan.
16.11 Minimum Allocation.
(a) If in any Plan Year the Plan is a Top Heavy Plan and the Employer does
not maintain any qualified defined benefit plan in addition to this Plan, except
as provided in (b) and (c) below, the Employer contributions and forfeitures
allocated on behalf of any Participant who is a non-key employee will not be
less than the lesser of three percent (3%) of such Participant's compensation or
the largest percentage of Employer contributions and forfeitures, as a
percentage of the first $200,000 of the key employee's compensation (as defined
in Section 15.2(b)), and as limited by Section 401(a)(17) of the Code, allocated
on behalf of any key employee for that year. The minimum allocation is
determined without regard to any Social Security contributions. This minimum
allocation will be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of the Participant's
failure to complete 1,000 Hours of Service. The minimum allocation (if any)
required under this paragraph (a) shall be made to this Plan only to the extent
such allocation is not made for the Participant under any other defined
contribution plan(s) maintained by the Employer.
-42-
<PAGE>
(b) In the event the Employer maintains a qualified defined benefit plan(s)
in addition to this Plan, the Employer will provide a minimum allocation at
least equal to five percent (5%) of compensation (as defined in Section 15.2(b))
to each non-key employee, entitled under (a) above to receive a minimum
allocation, who is covered under this Plan and the qualified defined benefit
plan(s). If this Plan enables a defined benefit plan to meet the requirements of
Section 401(a) or 410 of the Code, the minimum allocation described in (a) above
must be at least three percent (3%) of a Participant's compensation, regardless
of the largest percentage of Employer contributions and forfeitures of a key
employee's compensation.
(c) The provisions in (a) and (b) above will not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year.
(d) The minimum allocation required under this Section 16.11 (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code.
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has caused this
amended and restated Plan, effective April 1, 1989, to be executed by its duly
authorized officers and its corporate seal to be impressed hereon this 17th day
of November, 1994.
Attest: DELAWARE GROUP DELAWARE FUND, INC.
/s/ George M. Chamberlain, Jr. By: /s/Brian F. Wruble
- ------------------------------ -------------------------
George M. Chamberlain, Jr. Brian F. Wruble
Senior Vice President/Secretary President and Chief
Executive Officer
-43-
<PAGE>
EX-99
EX-99.B11 CONSENT OF AUDITORS
Consent of Independent Auditors
We consent to the references to our firm the captions "Financial Highlights" in
the Prospectus and "Financial Statements" in the Statement of Additional
Information and to the incorporation by reference in this Post-Effective
Amendment No. 104 to the Registration Statement (Form N-1A) (No. 2-13017) of
Delaware Group Decatur Fund, Inc. -- Decatur Total Return Fund and Decatur
Income Fund of our reports dated January 6, 1995, included in the 1994 Annual
Reports to Shareholders of Delaware Group Decatur Fund, Inc. -- Decatur Total
Return Fund and Decatur Income Fund.
Ernst & Young LLP
Philadelphia, Pennsylvania
November 21, 1995
<PAGE>
DELAWARE
GROUP
- ----------
IRA APPLICATION
AND TRANSFER FORM
|| PERSONAL IRA
|| SPOUSAL IRA
|| ROLLOVER IRA
(PHOTO OF LARGE KEY) || DIRECT ROLLOVER
|| PARTICIPANT'S SEP/IRA
|| PARTICIPANT'S SARSEP
||=======================================
RETIREMENT
LOGO PLANNING
IS THE KEY
<PAGE>
Welcome to the Delaware Group
DELAWARE Before completing your Individual Retirement Account (IRA)
GROUP Application, please review the following points so you can
========== take advantage of the many options available to you with
your Delaware Group Account.
________________________________________________________________________________
To Open Your Delaware Group IRA:
When opening both a Personal and Spousal IRA be sure to complete a separate
application for yourself and for your non-working spouse. The overall maximum
for both accounts is $2,250 per year with no more than $2,000 in either account.
When making Your Investment Selection, talk to your financial adviser to
determine whether Class A shares or Class B shares are more appropriate for you.
Please indicate which fund, or funds, you have selected for your IRA investments
by checking the appropriate selection box next to the fund(s). There is no limit
to the number of funds you may select as long as you meet the required minimum
investment of $25 per fund. And there is only one $15 annual maintenance fee,
regardless of the number of funds you select for your Delaware Group IRA. This
fee can either be prepaid by you, or debited from your IRA account. Your initial
contribution must total $250.
When making your contribution by check, make your check payable to: Delaware
Management Trust Company, the Custodian of your Delaware Group IRA.
If this is a Rollover IRA, and you received a distribution check made payable to
you, be sure to sign and endorse the back of the check, "Payable to Delaware
Management Trust Company."
For Direct Rollovers, in which he plan assets flow directly from the former
trustee/custodian to Delaware Management Trust Company, please be sure to
complete the separate "Direct Rollover" form included with this package.
Checks representing Direct Rollover assets should be made payable to Delaware
Management Trust Company.
Send your completed and signed Application, along with your contribution and/or
Transfer of Assets or Direct Rollover instructions to:
Delaware Service Company, Inc.
Attn: Retirement Plans Department
1818 Market Street
Philadelphia, PA 19103-3682
Additional IRA Services
To establish an Automatic Investing Plan, where regularly scheduled
contributions are taken directly from your personal checking account and
invested into your Delaware Group IRA, call our offices at the telephone number
listed below. Your Shareholder Services Representative will explain this
valuable program of automatic investing and send you the appropriate sign-up
materials.
If you wish to begin taking systematic withdrawals from your account, you will
also need to complete a Retirement Plan Systematic Withdrawal Plan Form. This
service is available for Class A shares only. Just call the telephone number
listed below to request the form.
If you are 70 1/2 or older and need to take Required Distributions from your
account, please ask for an IRA Required Distribution Election Form. Shareholders
cannot roll over or transfer the minimum amount they are required to receive
during a distribution calendar year.
For Simplified Employee Pension/IRA and
Salary Reduction SEP Participants:
SEP/IRA and SARSEP Participants can also arrange to open a personal Delaware
Group IRA at the same time they establish their plan participant account. No
matter how many different Delaware Group IRAs you open, you only pay one $15
annual maintenance fee.
If you are an Employer Participant in the plan, be sure to complete the
appropriate Employer Adoption Agreement as well as the Participant IRA
Application.
If you have any questions or would like assistance
in completing the Individual Retirement Account Application, please call us at
800-523-1918. In Philadelphia, call 215-988-1241.
Again, welcome to the Delaware Group.
<PAGE>
DELAWARE
GROUP
======== Individual Retirement Account Application =======
1 __________________________________ || || ||-|| ||-|| || || ||
Information Name Social Security Number
About You __________________________________ _____/______/_____
Address Date of Birth
Please __________________________________ ( )_____________( )__________
print. City State Zip Phone: Business Home
===============================================================================
2
Type of IRA
Check one.
| | Personal IRA ($2,000 annual limit)
| | Spousal IRA ($2,250 overall limit for you and your non-working spouse with
no more than $2,000 in either account. Separate applications required.)
| | Rollover IRA (No dollar limit; complete Rollover Information section below
and on page 4 of this Application)
| | Transfer of Assets (No dollar limit; complete the Transfer of Assets Form on
page 7 of this Application)
| | SEP/IRA -- Simplified Employee Pension/IRA Plan ($30,000 overall limit).
Must be accompanied by a Delaware Group SEP Plan Establishment Document
completed by the Employer.
| | Self-Directed SEP/IRA -- Simplified Employee Pension/IRA Plan ($30,000
overall limit). Must be accompanied by IRS Form 5305-SEP.
| | SARSEP -- Salary Reduction SEP/IRA Plan ($8,994 salary deferral limit in
1993, indexed each year). Must be accompanied by a Delaware Group SARSEP
Plan Establishment Document completed by the Employer.
| | Self-Directed SARSEP -- Salary Reduction SEP/IRA Plan ($8,994 salary
deferral limit in 1993, indexed each year). Must be accompanied by IRS Form
5305A-SEP.
For SEP/IRA & SARSEP plans, please complete the following:
________________________________________________________________________________
Company Name
________________________________________________________________________________
Address of Employer
________________________________________________________________________________
City State Zip
| | | | - | | | | | | | | | | | | | |
Employer Tax I.D. Number
| | Check here if you are a new participant in an existing
SEP/IRA or SARSEP plan.
<TABLE>
<CAPTION>
====================================================================================================================================
(Employer Contribution) (Salary
IRA SEP/IRA Reduction
Current Prior Rollover/ Current Prior Contribution)
3 Year Year Transfer Year Year SARSEP
------------------- --------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Your
Investment Initial Contribution $_____ $_____ $_____ $_____ $_____ $_____
Selections Delaware Group -- Equity Funds
| | Decatur Income || Class A
Minimum initial Fund || Class B _____% _____% _____% _____% _____% _____%
contribution: | | Decatur Total || Class A
$250. Minimum Return Fund || Class B _____% _____% _____% _____% _____% _____%
investment per | | DelCap Fund || Class A
fund: $25. || Class B _____% _____% _____% _____% _____% _____%
Remember to | | Trend Fund || Class A
check off your || Class B _____% _____% _____% _____% _____% _____%
fund(s) selection. | | Value Fund || Class A
|| Class B _____% _____% _____% _____% _____% _____%
Please do not | | International || Class A
use fractional Equity Fund || Class B _____% _____% _____% _____% _____% _____%
percentages, for | | Dividend || Class A
example 33 1/3, Growth Fund || Class B _____% _____% _____% _____% _____% _____%
and be sure | | Delaware Fund || Class A
percentages || Class B _____% _____% _____% _____% _____% _____%
total 100% Income Funds
| | Delchester Fund || Class A
Investing for || Class B _____% _____% _____% _____% _____% _____%
prior year can | | U.S. Govt. Fund || Class A
only be done || Class B _____% _____% _____% _____% _____% _____%
prior to the tax | | Treasury Reserves || Class A
filing deadline. Intermediate Fund || Class B _____% _____% _____% _____% _____% _____%
If no year is Money Market Funds
designated, | | Delaware || Class A
current year will Cash Reserve || Class B _____% _____% _____% _____% _____% _____%
be assumed. || Consultant Class
| | U.S. Govt. || Class A
Money Fund || Consultant Class_____% _____% _____% _____% _____% _____%
Other
| | __________ || Class A
|| Class B _____% _____% _____% _____% _____% _____%
| | __________ || Class A
|| Class B _____% _____% _____% _____% _____% _____%
TOTALS 100% 100% 100% 100% 100% 100%
</TABLE>
<PAGE>
================================================================================
4 Source of Your Contribution
| | Contribution by Check -- Total Dollar Amount of Initial Investment: $______
| | IRA to IRA Transfer of Assets -- Make sure you complete and sign the
attached Transfer of Assets Form on page 7.
| | Director Rollover -- Complete and sign the enclosed Direct Rollover Form.
| | Broker-Placed Phone Order
________________________________________________________________________________
Delaware Confirmation Number
________________________________________________________________________________
Order Date
________________________________________________________________________________
Number of Shares
________________________________________________________________________________
Name of Fund
| | Contributing from an Existing Delaware Group Account -- convert $__________
from my regular fund account #________________to this IRA account. If your
regular fund account is registered as a joint account, we require a
signature guarantee from the joint owner.
================================================================================
5 Rollover Information Complete all that apply. Includes Direct Rollovers from
Qualified plans or 403(b)s.
| | IRA Rollover -- I hereby elect to treat this contribution as a rollover
contribution. I understand that this is an irrevocable election. The source
of the rollover is from:
| | A Qualified Plan
| | A 403(b) Plan
| | Another IRA
| | A Qualified Plan or IRA or 403(b) by Beneficiary (spouse only)
| | Death Benefit IRA -- Surviving spouse does not elect to treat the death
benefit rollover as his or her own IRA
| | Rollover IRA -- Surviving Spouse does elect to treat the death benefit
rollover as his or her own IRA
| | Rollover after age 70 1/2 -- Pursuant to IRS Regulations, I hereby certify
that I am not rolling over any minimum amount required to be distributed to
me with respect to any applicable distribution calendar year. In order to
receive required minimum distributions in the future under your Delaware
Group IRA, please contact the Delaware Group and we will send you an IRA
Required Distribution Election Form.
================================================================================
6 Additional Services for Your Consideration
These optional services are available as special elections for your Delaware
Group IRA.
Consult the prospectus(es) of the fund(s) for more details on the terms of these
optional services.
If you have further questions, ask your financial adviser or call us at
800-523-1918. In Philadelphia call 215-988-1241.
| | Wealth Builder Option -- I authorize Delaware Group to transfer $__________
($100 or more) per month, through liquidation of shares in this fund, to one
or more other Delaware Group funds ($100 minimum per fund) under this IRA.
Note: For Class A accounts, Wealth Builder transactions must be directed to
another Class A account. For Class B accounts, Wealth Builder transactions
must be directed to another Class B account.
_______________________________________________________________________________
Name of Fund from Section 3
_______________________________________________________________________________
Name of Fund from Section 3
_______________________________________________________________________________
New Fund (new account will be established)
_______________________________________________________________________________
New Fund (new account will be established)
$_______________________________________________________________________________
Amount per month
$_______________________________________________________________________________
Amount per month
| | Dividend Maximizer -- Dividends and any capital gains are reinvested in the
same fund automatically unless otherwise indicated. I elect to have
dividends and any capital gains under this IRA invested in another IRA
account.
| | New Account -- Name of Fund ________________________________________________
| | Systematic Withdrawal Plan -- If you wish to begin receiving periodic
distributions (available for Class A accounts only) under the Terms and
Conditions of the IRA, please contact our office and we will send you a
Retirement Plan Systematic Withdrawal Plan Form. Please note, if you are age
70 1/2 or older, you should request an IRA Required Distribution Election
Form.
| | Combined Purchases Privilege -- This privilege allows the combining of
shares currently owned in other non-money market Delaware Group funds with
the dollar amount of this IRA Account to determine a reduced sales charge,
if applicable.
Name of Fund Account Number Number of Shares
_____________________ _________________________________________________
_____________________ _________________________________________________
| | Letter of Intention -- This option allows the aggregation of anticipated
purchases by an individual in non-money market Delaware Group funds during a
13-month period, along with any existing assets listed in the Combined
Purchase Privilege Section, to obtain a reduced sales charge. This option is
available for funds with front-end sales charges only, though Class B shares
can be used for purposes of filling Class A Letters of Intention. To learn
more, please see your Fund's current prospectus and sales charge breakpoint
schedule. I have read and agree to the terms of the prospectus(es) of the
fund(s) I have selected on this application, and wish to establish a Letter
Of Intent, although I am not obligated to do so, where my investments in
non-money market funds will aggregate or exceed:
| | $100,000 | | $250,000 | | $500,000 | | $1,000,000
I understand that if I do not satisfy the investment level selected above
that my account will be adjusted to reflect the applicable sales charge.
Note to SEP/IRA SARSEP Participants: A separate Letter Of Intent Form must be
completed by your employer, on behalf of all participants in the Plan, to obtain
a reduced sales charge.
<PAGE>
If this is not a Personal or Spousal IRA, please contact Your financial adviser
or Delaware Group before completing this section.
| | Automatic Investing Plan -- Please transfer $____ ($25 or more for A Shares,
$100 or more for B Shares) from my bank account each month to invest in
_________________________________________. Date of Transfer each month:
Fund Name
| | 1st | | 5th | | 10th | | 15th | | 20th | | 25th
________________________________________________________________________________
Bank Name Bank Account #
________________________________________________________________________________
Name(s) on Bank Account
While we cannot guarantee that your bank will accept this offer, we will ask for
its cooperation. If you discontinue this plan at any time, and your banking
registration has not changed, we can reinstate it immediately via written or
telephone request.
Attach a voided check or deposit slip to avoid delays in processing.
================================================================================
7 Agreement And Beneficiary Designation
Your signature is required.
You can change your Beneficiary Designation at any time by completing a Change
of Beneficiary Designation Form and returning it to Delaware Service Company,
Inc. 1818 Market St. Philadelphia, PA 19103-3682.
Contact Delaware Group for the appropriate Change of Beneficiary Form.
By signing below, I designate the following person(s) to receive any benefit
from my Individual Retirement Account which may become due upon or after my
death according to the terms and conditions of the Plan. I understand that this
Beneficiary Designation will remain in full force and effect unless and until I
revoke this designation by completing a Change of Beneficiary Designation Form
for the Delaware Group Individual Retirement Custodial Account at a later date
and returning it to the Custodian.
Pay to: Primary Beneficiary ___________________________%
_______________________________________________________________________________
Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
____________________________________________________ ____/_____/____________
Relationship Date of Birth
| | | | | | - | | | | - | | | | | | | |
Social Security Number
If more than one Primary Beneficiary is selected and no percentage of plan
benefits is indicated, the assets will be divided equally between the Primary
Beneficiaries.
If no Beneficiary is designated, assets will be paid to your estate.
If the Custodian receives satisfactory proof that the Primary Beneficiary is
deceased, or if more than one Primary Beneficiary is selected and both are
deceased, the assets will be paid to the Contingent Beneficiary as indicated.
Pay to: Primary Beneficiary ___________________________%
_______________________________________________________________________________
Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
____________________________________________________ ____/_____/____________
Relationship Date of Birth
| | | | | | - | | | | - | | | | | | | |
Social Security Number
<PAGE>
Pay to: Contingent Beneficiary ___________________________%
_______________________________________________________________________________
Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
____________________________________________________ ____/_____/____________
Relationship Date of Birth
| | | | | | - | | | | - | | | | | | | |
Social Security Number
If you are married and you do not designate your spouse as your sole Primary
Beneficiary, you should consult with an attorney as to whether applicable law
may require your spouse to sign a written consent to your designation or a
written declaration to give up community or marital property interests in your
IRA. The Custodian shall have no responsibility for determining whether your
Beneficiary Designation is valid under applicable law and shall have no
liability to any person for acting in accordance with your Beneficiary
Designation.
===============================================================================
By signing below, I hereby establish an Individual Retirement Account under
Section 408(a) of the Internal Revenue Code of 1986, as amended, ("the
Code") to provide for my retirement and for the support of my beneficiaries
after my death. I hereby acknowledge receipt of the Terms and Conditions and
Disclosure Statement for the Individual Retirement Account required under the
Income Tax Regulations under Section 408(i) of the Code and am in receipt of an
effective prospectus(es) for the Fund(s) I am investing in. I hereby appoint
Delaware Management Trust Company as Custodian and agree to pay the annual
maintenance fee, currently $15. (If this fee is not included or is not paid by
April 30th annually, it will be debited from your account each May.)
X ___________________________________________ _______________________________
Investor's Signature Date
===============================================================================
Please send your completed and signed application, along with your contribution,
to Delaware Service Company, Inc., Attn: Retirement Plan Department, 1818 Market
Street, Philadelphia, PA 19103-3682. Be sure to make your check payable to
Delaware Management Trust Company.
<PAGE>
================================================================================
Broker Information
To be completed by Investment Dealer.
________________________________________________________________________________
Name of Brokerage Firm
________________________________________________________________________________
Home Office Address
________________________________________________________________________________
Authorized Firm Signature
________________________________________________________________________________
Representative's Name/Number
________________________________________________________________________________
Branch Office Address
________________________________________________________________________________
Representative's Phone Number
================================================================================
Custodian Acceptance
For use by Custodian only.
/s/ Diane Anderson
________________________________________________________________________________
Authorized Officer of Delaware Management Trust Company
================================================================================
DELAWARE
GROUP
=======
The Delaware Group Of Funds
Delaware's family of funds enables investors to match their needs with a broad
range of investment objectives covering the risk-reward spectrum. The following
are available as investment vehicles for any Delaware Group retirement program.
| | Trend Fund
Seeks long-term capital appreciation by investing in securities issued by
small, growth-oriented companies exhibiting a strong potential for capital
appreciation.
| | DelCap Fund
Seeks long-term growth by investing in common stocks and securities
convertible into common stocks of mid-sized companies that have demonstrated
their ability to grow and demonstrate a potential for continued growth.
| | Value Fund
Seeks long-term growth by investing primarily in common stocks of small and
mid-size companies whose market values appear low relative to their
underlying value or potential value.
| | International Equity Fund
Seeks long-term growth without undue risk to principal by investing
primarily in a range of foreign equity securities that have potential for
capital appreciation and income.
| | Decatur Income Fund
Seeks highest possible current income by investing primarily in common
stocks of established companies with strong dividend histories that provide
the potential for income and capital appreciation without undue risk to
principal.
| | Decatur Total Return Fund
Seeks long-term total return by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk
to principal.
| | Dividend Growth Fund
Seeks current income and capital appreciation by investing primarily in
income-producing common stocks. Focuses on common stocks believed to have
the potential for above-average dividend increases over time.
| | Delaware Fund
Seeks long-term growth through a balance of capital appreciation, income and
preservation of capital. Invests in common stock and investment grade bonds.
| | U.S. Government Fund
Seeks high current income consistent with safety of principal through
investment in securities issued by the U.S. government, its agencies or
instrumentalities.
| | Delchester Fund
Seeks high current income as is consistent with reasonable safety by
investing primarily in high-yielding, lower rated corporate bonds, U.S.
government securities and commercial paper issued by companies with the
ability to pay interest and repay principal.
| | Treasury Reserves Intermediate Fund
Seeks to provide a high, stable level of income with a high degree of
principal stability through investments in short- and intermediate-term
securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities.
| | U.S. Government Money Fund
Seeks a high current income with a goal of maintaining a constant share
price by investing in short-term securities issued and/or guaranteed by the
U.S. government, its agencies and instrumentalities.
| | Delaware Cash Reserve
Seeks high current income with a goal of maintaining a constant share price
by investing in high-quality money market instruments with maturities of no
more than one year.
All funds, except U.S. Government Money Fund, currently offer Class A and B
shares. Please consult your financial adviser about which class is more
appropriate for you.
===============================================================================
The Delaware Group investor can seek total return through equity-oriented
investments, stability and current income through fixed-income investments, or
combine these styles to achieve the desired investment balance. As the
investor's needs or objectives change, the exchange privilege enables
investments to be transferred from one fund to another within the Delaware Group
without losing their tax-advantaged status.
<PAGE>
DELAWARE
GROUP
========
IRA Transfer of Assets Form
Use this form to transfer your IRA assets to a Delaware Group IRA. If you don't
have an existing Delaware Group IRA, please fill out an application. If you are
transferring IRA assets from more than one custodial account, please complete a
separate Transfer Form for each transfer. Please note, you must complete a
separate Transfer of Assets Form for each plan trustee/ custodian and/or for
each CD maturity date, if applicable. If you wish to make a direct rollover of
assets from a qualified plan or 403(b), please complete a Direct Rollover form.
================================================================================
Information About Your Delaware Group IRA
_______________________________________________________________________________
Individual's Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
(__________)___________________________________________________________________
Telephone: Home
(__________)___________________________________________________________________
Business
| | | | | | - | | | | - | | | | | | | |
Social Security Number
Select One
| | 1. This is a transfer to a new Delaware Group IRA. My investment choices are
on page 3 of this IRA application.
| | 2. Invest the amount to be transferred into my existing Delaware Group IRA
as follows:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
================================================================================
Information About Your IRA to Be Transferred
_______________________________________________________________________________
Name of Present Custodian
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
___________________________________ (____________)_________________________
Contact Person Phone Number
IRA Account # _________________________________________________________________
Investment Fund # _____________________________________________________________
Investment Fund # _____________________________________________________________
For Certificates of Deposit:
_______________________________________________________________________________
Maturity Date
| | Please do not transfer until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.
Type of account you are transferring: | | Personal | | Rollover IRA (With
Qualified Plan or 403(b) assets) | | SEP or SARSEP Please note, you must
complete a separate Transfer of Assets Form for each plan trustee/custodian
and/or for each maturity date, if applicable. If you wish to make a direct
rollover of assets from a qualified plan of 403(b), please complete a Direct
Rollover form.
================================================================================
Your Authorization to Transfer
Your present Custodian may require additional documentation such as a
signature guarantee. Please check with them for their requirements.
<PAGE>
I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as successor
Custodian.
| | Complete -- Liquidate ALL of the above referenced account(s)
transfer IN CASH.
| | Partial -- Liquidate assets totaling $ ________________and transfer IN CASH.
| | Re-registration (Transfer in Kind) -- My IRA includes the Delaware Group
fund(s) listed below. Please re-register with Delaware Management Trust
Company as the Custodian. Send Delaware Group any outstanding Delaware Group
Fund certificates and proper documentation to re-register these shares.
Note, the Delaware Management Trust Company can accept only Delaware Group
funds for re-registration.
_____________________________________ _______________________________________
Fund Name Account Number
| | Transfer on or after age 70 1/2 -- Pursuant to IRS Regulations, I hereby
certify that this Transfer will not included any minimum amount required to
be distributed to me with respect to any applicable distribution calendar
year. In order to receive required minimum distributions in the future under
your Delaware Group IRA, please contact the Delaware Group and we will send
you an IRA Required Distribution Election Form.
SIGN HERE
X ____________________________________ _________________________
Your Signature - must be in ink Date
===============================================================================
Custodian Acceptance
For use by Custodian only.
Please be advised that the Delaware Management Trust Company is acting as
Custodian and is willing to accept the proceeds from the above referenced
Custodial Account.
Please make check payable to: Delaware Management Trust
Company, For the Benefit Of: (Participant), and mail to Delaware Management
Trust Company, Transfer of Assets Department, 1818 Market Street, Suite 1604,
Philadelphia, PA 19103-3682.
________________________________________________________ _________________
Authorized Officer of Delaware Management Trust Company Date
<PAGE>
DELAWARE
GROUP
========
IRA Transfer of Assets Form
Use this form to transfer your IRA assets to a Delaware Group IRA. If you don't
have an existing Delaware Group IRA, please fill out an application. If you are
transferring IRA assets from more than one custodial account, please complete a
separate Transfer Form for each transfer. Please note, you must complete a
separate Transfer of Assets Form for each plan trustee/ custodian and/or for
each CD maturity date, if applicable. If you wish to make a direct rollover of
assets from a qualified plan or 403(b), please complete a Direct Rollover form.
================================================================================
Information About Your Delaware Group IRA
_______________________________________________________________________________
Individual's Name
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
(__________)___________________________________________________________________
Telephone: Home
(__________)___________________________________________________________________
Business
| | | | | | - | | | | - | | | | | | | |
Social Security Number
Select One
| | 1. This is a transfer to a new Delaware Group IRA. My investment choices
are on page 3 of this IRA application.
| | 2. Invest the amount to be transferred into my existing Delaware Group IRA
as follows:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
Fund:________ | | Class A | | Class B Percent:_____ Account#:
================================================================================
Information About Your IRA to Be Transferred
_______________________________________________________________________________
Name of Present Custodian
_______________________________________________________________________________
Address
_______________________________________________________________________________
City State Zip
___________________________________ (____________)_________________________
Contact Person Phone Number
IRA Account # _________________________________________________________________
Investment Fund # _____________________________________________________________
Investment Fund # _____________________________________________________________
For Certificates of Deposit:
_______________________________________________________________________________
Maturity Date
| | Please do not transfer until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.
Type of account you are transferring: | | Personal | | Rollover IRA (With
Qualified Plan or 403(b) assets) | | SEP or SARSEP Please note, you must
complete a separate Transfer of Assets Form for each plan trustee/custodian
and/or for each maturity date, if applicable. If you wish to make a direct
rollover of assets from a qualified plan of 403(b), please complete a Direct
Rollover form.
================================================================================
Your Authorization to Transfer
Your present Custodian may require additional documentation such as a signature
guarantee. Please check with them for their requirements.
<PAGE>
I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as successor
Custodian.
| | Complete -- Liquidate ALL of the above referenced account(s)
transfer IN CASH.
| | Partial -- Liquidate assets totaling $________________ and transfer IN CASH.
| | Re-registration (Transfer in Kind) -- My IRA includes the Delaware Group
fund(s) listed below. Please re-register with Delaware Management Trust Company
as the Custodian. Send Delaware Group any outstanding Delaware Group Fund
certificates and proper documentation to re-register these shares. Note, the
Delaware Management Trust Company can accept only Delaware Group funds for
re-registration.
______________________________________ ________________________________________
Fund Name Account Number
| | Transfer on or after age 70 1/2 -- Pursuant to IRS Regulations, I hereby
certify that this Transfer will not included any minimum amount required to be
distributed to me with respect to any applicable distribution calendar year. In
order to receive required minimum distributions in the future under your
Delaware Group IRA, please contact the Delaware Group and we will send you an
IRA Required Distribution Election Form.
SIGN HERE
X ________________________________________ ____________________________
Your Signature - must be in ink Date
===============================================================================
Custodian Acceptance
For use by Custodian only.
Please be advised that the Delaware Management Trust Company is acting as
Custodian and is willing to accept the proceeds from the above referenced
Custodial Account.
Please make check payable to: Delaware Management Trust Company, For the Benefit
Of: (Participant), and mail to Delaware Management Trust Company, Transfer of
Assets Department, 1818 Market Street, Suite 1604, Philadelphia, PA 19103-3682.
_______________________________________________________ _____________________
Authorized Officer of Delaware Management Trust Company Date
<PAGE>
DELAWARE GROUP
| | Delaware Management Company, Inc.
Investment Manager
| | Delaware Distributors, L.P.
National Distributor
| | Delaware Service Company, Inc.
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
| | Delaware Management Trust Company
Custodian
DELAWARE
GROUP
========
1818 Market Street
Philadelphia, PA 19103-3682
800-523-1918 Nationwide
215-988-1241 in Philadelphia
Use of this material with the public, either in written or oral form, can only
be made in conjunction with the prospectuses of the funds in the Delaware Group
being offered. The prospectus contains further information, including sales
charges and expenses.
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, they are not obligations
of or guaranteed by any bank and are not FDIC or government insured. In
addition, they involve risk, including possible loss of principal.
RL-102-10/94
<PAGE>
DELAWARE
GROUP
========
IRA Direct Rollover Form
Use this form to roll over the assets in your Qualified Plan or 403(b) plan to a
Delaware Group IRA. Please note, you must complete a separate IRA Direct
Rollover Form for each plan trustee/custodian and/or for each CD maturity date,
if applicable.
Information About Your Delaware Group IRA
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
City State Zip
| | | | | | - | | | | - | | | | | | | |
Social Security Number
(__________)____________________________________________________________________
Phone: Home
(__________)____________________________________________________________________
Phone: Business
| | This is a rollover to a new Delaware Group IRA. My investment choices are
on page 3 of the enclosed IRA application.
| | Invest the amount to be rolled over into my existing Delaware Group IRA
as follows:
Fund Name: _________ Percent/Amt: _________ Account #: __________
Fund Name: _________ Percent/Amt: _________ Account #: __________
Fund Name: _________ Percent/Amt: _________ Account #: __________
================================================================================
Information About Your Qualified Plan or 403(b) to be Rolled Over
________________________________________________________________________________
Name of Employer
________________________________________________________________________________
Address
________________________________________________________________________________
City State Zip
____________________________________(________)__________________________________
Contact Person Phone Number
Account Number: ________________________________________________________________
Account Number: ________________________________________________________________
Account Number: ________________________________________________________________
Account Number: ________________________________________________________________
Type of account: | | Qualified Plan | | 403(b)
For Certificates of Deposit:
________________________________________________________________________________
Maturity Date
| | Please do not roll over until my CD matures.
| | Please roll over immediately. I am aware of the early withdrawal penalty.
Name of Financial Institution:
________________________________________________________________________________
<PAGE>
================================================================================
Your Authorization to Roll Over
Your present Custodian may require additional documentation such as a signature
guarantee. Please check with them for their requirements.
I have established an IRA with Delaware Management Trust Company as the
Custodian. Please roll over the amount listed below to them as IRA Custodian.
| | Partial -- Liquidate assets totaling $___________ and directly roll over
IN CASH.
| | Complete -- Liquidate ALL of the above referenced account(s) and directly
roll over IN CASH.
| | Check here if you are age 70 1/2 or older.
Pursuant to IRS Regulations, I hereby certify that I am not rolling over any
minimum amount required to be distributed to me with respect to any
applicable distribution calendar year. In order to receive required minimum
distributions in the future under your Delaware Group IRA, please contact
the Delaware Group and we will send you an IRA Required Distribution
Election Form.
X ______________________________ __________________
Your Signature - must be in ink Date
================================================================================
Custodian Acceptance
For use by Delaware Management Trust Company only.
Please be advised that the Delaware Management Trust Company, as Custodian, is
willing to accept the proceeds from the above-referenced plan as an IRA account
pursuant to Internal Revenue Code Section 408.
Please make check payable to: Delaware Management Trust Company, For the Benefit
Of: (Participant), Direct Rollover; and mail to Delaware Management Trust Co.,
1818 Market Street, Philadelphia, PA 19103-3682.
________________________________________________________ _______________
Authorized Officer of Delaware Management Trust Company Date
RL-102B - 10/93
<PAGE>
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
TABLE OF CONTENTS
Terms and Conditions
Article I. Contributions ....................... 2
Article II. Nonforfeitability .................. 2
Article III. Prohibited Investments ............ 2
Article IV. Required Distributions ............. 2
1. Required Beginning Date ................... 2
2. Changing Method of Payment ................ 2
3. Lifetime Distributions .................... 3
4. Death Distributions ....................... 3
5. Multiple individual Retirement Accounts ... 4
Article V. Reporting ........................... 4
Article VI. Amendment of Plan .................. 4
Article VII. The Custodian ..................... 4
1. Appointment of Agents ..................... 4
2. No Investment Responsibility .............. 4
3. Entire Contract ........................... 4
4. Delaware Service Company, Inc. ............ 5
5. Designation of Beneficiary ................ 5
6. Taxes and Expenses ........................ 5
7. Termination of Account .................... 5
8. Resignation or Removal of Custodian ....... 5
9. Custodian's Fees .......................... 5
10. Agreements with Investment Advisers ....... 5
11. Applicable Law ............................ 5
Disclosure Statement
Revocation ..................................... 6
Requirements of an Individual Retirement Account 6
Eligibility .................................... 6
Contributions .................................. 7
(A) Deductible Contributions .................. 7
(B) Non-deductible Contributions .............. 8
(C) Spousal IRA Contributions ................. 8
(D) Excess Contributions ...................... 8
(E) Rollover Contributions .................... 9
Distributions .................................. 10
(A) Normal Distributions ...................... 10
(B) Required Distributions .................... 10
(C) Distributions After Death ................. 10
Tax Treatment of Distributions ................. 11
(A) Income Tax ................................ 11
(B) Federal Income Tax Withholding ............ 11
(C) Early Withdrawal Tax ...................... 11
(D) Gift Tax .................................. 12
(E) Estate Tax ................................ 12
Borrowing/Prohibited Transactions .............. 12
Reporting to the IRS ........................... 12
(A) Form 5329 ................................. 12
(B) Form 8606 ................................. 12
IRS Approval ................................... 12
IRA Account Balance ............................ 12
Fees and Charges ............................... 13
(A) IRA Fees .................................. 13
(B) Mutual Fund Sales Charges ................. 13
(C) Redemption and Repurchase Charges ......... 13
(D) Further Details ........................... 13
Qualified Tax Advice ........................... 13
1
<PAGE>
DELAWARE MANAGEMENT COMPANY, INC.
Individual Retirement Custodial Account
The Delaware Management Company, Inc. Individual Retirement Custodial
Account (the "Plan"), including the Application which is a part thereof, is
established for the exclusive benefit of the individual ("Applicant") designated
in the Application, or his/her beneficiaries.
W I T N E S S E T H:
WHEREAS, the Applicant desires to provide for retirement and for the
support of his/her beneficiaries upon death; and
WHEREAS, to accomplish this purpose, the Applicant desires to establish an
individual Retirement Account (the "Account") as described in Section 408(a) of
the Internal Revenue Code of 1986, as amended, or any successor statute
(hereinafter referred to as "the Code").
NOW, THEREFORE, for the purposes aforesaid, the Account is established,
effective as of the date of the Application, as follows:
ARTICLE I. CONTRIBUTIONS
Except in the case of a rollover contribution described in Sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3) of the Code, or an employer contribution to a
simplified employee pension plan as described in Section 408(k), the Custodian
will only accept cash and will not accept contributions on behalf of the
Applicant in excess of $2,000 for any taxable year. In no event shall the
Custodian accept a rollover of property other than shares of the Delaware Group
of Funds. Rollover contributions before January 1, 1993 include rollovers
described in Sections 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or
408(d)(3).
ARTICLE II. NONFORFEITABILITY
The Applicant's interest in the balance in the Account is nonforfeitable.
ARTICLE III. PROHIBITED INVESTMENTS
1. No part of the Account shall be invested in life insurance contracts; nor may
assets of the Account be commingled with other property except in a common trust
fund or common investment fund (within the meaning of Section 408(a)(5) Code).
2. No part of the Account shall be invested incollectibles as defined in
Section 408(m) of the Code.
ARTICLE IV. REQUIRED DISTRIBUTIONS
1. Required Beginning Date. The Applicant's interest in the Account will be
distributed to him/her upon his/her providing Delaware Service Company, Inc.
with instructions as to the method of distribution. The entire interest of the
Applicant in the Account must be or commence to be distributed no later than the
first day of April following the calendar year in which the Applicant attains
age 70 1/2 (the "Required Beginning Date"). Not later than the Required
Beginning Date, the Applicant may elect to have the balance in the Account
distributed:
(a) In a lump sum;
(b) In monthly, quarterly or annual payments or over a period certain not
extending beyond the life expectancy of such Applicant or the joint life
and last survivor expectancy of the Applicant and his/her designated
beneficiary.
2. Changing Method of Payment. Even though distributions may have commenced
pursuant to 1(b) above, the Applicant may receive a distribution of the balance
in the Account in a lump sum or receive distributions under another method of
payment available in 1(b), by providing written notice to Delaware Service
Company, Inc. The Applicant may change the method of payment in 1(b) once a
year, provided: (i) written notice is given to Delaware Service Company, Inc. no
later than December 15 preceding the year in which the method of payment will be
changed and (ii) that distributions are made in accordance with the requirements
of Section 408(a)(6) of the Code and the regulations thereunder.
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3. Lifetime Distributions. If the Applicant is living on his/her Required
Beginning Date, the following distribution provisions shall apply:
(a) Required Minimum Distributions. If the Applicant's entire interest in the
account is to be distributed in a manner other than a lump sum, then the
amount to be distributed each year, commencing with the Required Beginning
Date and each year thereafter, must be at least equal to the quotient
obtained by dividing the Applicant's entire interest in the Account on the
December 31 of the preceding year by the applicable life expectancy.
(b) Minimum Distributions before 1989. For calendar years beginning before
January 1, 1989, if the Applicant's spouse is not the designated
beneficiary, the method of distribution selected must ensure that at least
50% of the present value of the amount available for distribution is paid
within the life expectancy of the Applicant.
(c) Minimum Distributions after 1988. For calendar years beginning after
December 31, 1988, the amount to be distributed each year, beginning with
the first calendar year for which distributions are required and then for
each succeeding calendar year, shall not be less than the quotient obtained
by dividing the balance in the Account as of the preceding December 31 by
the lesser of (1) the applicable life expectancy or (2) if the Applicant's
spouse is not the designated beneficiary, the applicable divisor determined
from the table set forth in Q & A-4 of Section 1.401 (a)(9)-2 of the
Proposed Income Tax Regulations. Distributions after the death of the
Applicant shall be calculated using the applicable life expectancy as the
relevant divisor without regard to Section 1401 (a)(9)-2 of the proposed
regulations.
(d) Computation of Life Expectancy. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. Unless otherwise elected by the Applicant by the
time distributions are required to begin, life expectancies shall not be
recalculated annually. Such election shall be irrevocable as to the
Applicant and will apply to all subsequent years. The life expectancy of a
non-spouse beneficiary may not be recalculated; rather, life expectancy
shall be calculated using the attained age of the beneficiary during the
calendar year in which distributions are required to begin pursuant to this
Section 3, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
4. Death Distributions. If the Applicant dies before the entire interest is
distributed, the following distribution provisions shall apply:
(a) Distributions beginning before death. If the Applicant dies after
distribution of his/her interest in the Account has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Applicant's death. However, if the designated beneficiary is the
Applicant's surviving spouse, the spouse may elect to treat the Account as
his/her own individual retirement account. This election will be deemed to
have been made if such surviving spouse makes a regular contribution to the
Account, makes a rollover to or from the Account, or fails to elect any of
the provisions in paragraph (b) below. Distributions under this Section 4
are considered to have begun if the distributions are made on account of
the individual reaching his or her required beginning date. If the
individual receives distributions prior to the required beginning date and
the individual dies, distributions will not be considered to begin.
(b) Distributions beginning after death. If the Applicant dies before the
distribution of his/her interest in the Account begins, the Applicant's
entire interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the applicant's death unless the
applicant elects or, if the Applicant has not so elected, the designated
beneficiary or beneficiaries elect that the entire interest be distributed
in accordance with one of the following three provisions:
(i) The Applicant's entire interest will be distributed over a period
certain not greater than the life expectancy of the Applicant's
designated beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
Applicant died. The designated beneficiary may elect at any time to
receive greater payments.
(ii) If the designated beneficiary of the Applicant is the Applicant's
surviving spouse, payments may be made to the surviving spouse over
his/her life expectancy commencing on any date prior to the later of (1)
the December 31 of the calendar year immediately following the calendar
year in which the Applicant died and (2) the December 31
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of the calendar year in which the Applicant would have attained age
70 1/2. The surviving spouse may accelerate these payments at any time
(i.e., increase the frequency or amount of such payments).
(iii) If the designated beneficiary is the Applicant's surviving spouse, the
spouse may elect to treat the Account as his/her own individual
retirement account. This election will be deemed to have been made if
the surviving spouse makes a regular contribution to the Account, makes
a rollover to or from the Account, or fails to elect any of the above
two provisions.
(c) Computation of Life Expectancy. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. For purposes of distributions beginning after the
Applicant's death, unless otherwise elected by the surviving spouse by the
time distributions are required to begin, life expectancy shall not be
recalculated annually. Such election shall be irrevocable as to the
surviving spouse and shall apply to all subsequent years. In the case of
any other designated beneficiary, life expectancy shall be calculated using
the attained age of the beneficiary during the calendar year in which
distributions are required to begin in accordance with this Section 4, and
payments for any subsequent calendar year shall be calculated based on such
life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
5. Multiple individual Retirement Accounts. An individual may satisfy the
minimum distribution requirements described above by receiving a distribution
from one IRA that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this purpose, the owner
of two or more IRAs may use the "alternative method" described in Notice
88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.
ARTICLE V. REPORTING
1. The Applicant agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under Section 408(i) of the Code
and related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Applicant as prescribed by the Internal Revenue Service. The Custodian shall
furnish the Applicant with an annual calendar year report concerning the value
of the Account.
ARTICLE VI. AMENDMENT OF PLAN
Delaware Management Company, Inc. may amend this Plan from time to time to
comply with the applicable provisions of the Code and related regulations and
to make any other changes determined by Delaware Management Company, Inc. to
be necessary and desirable.
ARTICLE VII. THE CUSTODIAN
1. Appointment of Agents. The Custodian appoints Delaware Service Company, Inc.
as its agent to receive the Applicant's contributions under this Plan. Delaware
Service Company, Inc., as the Custodian's agent, will deliver the Applicant's
contributions to the Custodian to be invested as provided in the Application.
The Custodian may also appoint one or more broker-dealers as its agent(s),
pursuant to a legally binding agency agreement with such broker-dealer(s), for
purposes of receiving the Applicant's contributions hereunder and receiving
contributions made on behalf of the Applicant pursuant to a simplified employee
pension plan (including a salary reduction SEP).
2. No Investment Responsibility. The Custodian shall have no investment
responsibility or discretion with respect to this Account. The Custodian shall
vote the regulated investment company shares held therein as directed by the
Applicant. If the Applicant does not provide voting instructions to the
Custodian, the Custodian shall vote Account shares in direct proportion to those
voting instructions, on an issue by issue basis, received by the Custodian from
other Individual Retirement Account shareholders of the fund.
3. Entire Contract. This Plan and Application constitute the entire contract
between Applicant and Custodian and, except as provided herein, no
representative of Delaware Management Company, Inc., Delaware Service Company,
Inc., Delaware Distributors, Inc., the Delaware Group of Funds nor any
broker-dealer shall be deemed to be a representative of or acting on
behalf of Custodian, nor shall any such representative have any
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authority to make representations or to bind the Custodian beyond the terms of
this document. The Custodian, Delaware Management Company, Inc., Delaware
Service Company, Inc., Delaware Distributors, Inc., the Delaware Group of Funds
and their affiliates shall not be responsible for any liability arising out of
this Plan and Application except such liability as is occasioned by their own
negligence or wilful misconduct. The Custodian and Delaware Service Company,
Inc. shall not be responsible for any action or omission taken in accordance
with any notice, request, instruction, certificate, beneficiary designation or
other instrument reasonably believed by Custodian or Delaware Service Company,
Inc. to be genuine.
4. Delaware Service Company, Inc. The Custodian may employ Delaware Service
Company, Inc. to carry out certain of the Custodian's administrative
functions hereunder in accordance with an agreement between Custodian and
Delaware Service Company, Inc.
5. Designation of Beneficiary. The Applicant shall have the right, by written
notice to Delaware Service Company, Inc., to designate or to change a
beneficiary to receive any benefit to which the Applicant may be entitled in the
event of death prior to the complete distribution of such benefits. If no such
designation is in effect upon the Applicant's death, the beneficiary shall be
the Applicant's estate. The Custodian and Delaware Service Company, Inc. shall
have no responsibility to determine whether any person or persons other than the
Applicant's designated beneficiary may be entitled, under applicable law, to
receive amounts from the Account on account of the death of the Applicant and
shall have no liability to any person for acting in accordance with Applicant's
beneficiary designation.
6. Taxes and Expenses. Any income taxes or other taxes of any kind whatsoever
that may be levied or assessed upon or in respect to the Account, any transfer
taxes incurred in connection with the investment and reinvestment of the assets
of the Account, other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian shall be paid from the assets
of the Account, unless paid by the Applicant.
7. Termination of Account. This Account shall terminate upon the complete
distribution of the Account to the Applicant or his/her beneficiaries or to
successor individual retirement accounts or annuities.
8. Resignation or Removal of Custodian. The Custodian may resign at any time
upon ninety (90) days notice in writing to the Applicant and to Delaware
Management Company, Inc. or may be removed by Delaware Management Company,
Inc. at any time upon ninety (90) days notice in writing to the Custodian.
Upon such resignation or removal, Delaware Management Company, Inc. will
appoint a successor Custodian. If within sixty (60) days after the
Custodian's resignation or removal, Delaware Management Company, Inc. has not
appointed a successor Custodian which has accepted such appointment, the
Custodian may appoint such successor itself.
9. Custodian's Fees. The Custodian's fees shall be as published or amended
from time to time.
10. Agreements with Investment Advisers. The Custodian, in its discretion, may
enter into an agreement with an investment adviser, registered under the
Investment Adviser's Act of 1940, for the purpose of redeeming investment
company shares held hereunder to pay for market timer services rendered by the
adviser with respect to the Applicant's Account.
11. Applicable Law. This Plan shall be construed under the laws of the
Commonwealth of Pennsylvania, without giving effect to conflict of laws
principles, and shall become effective only upon execution by Custodian at its
offices in Philadelphia, Pennsylvania. The Custodian shall not be called upon to
take any action outside the Commonwealth of Pennsylvania.
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DISCLOSURE STATEMENT
REVOCATION
You are entitled to revoke your individual retirement account ("IRA"), for
any reason and without penalty, by mailing or delivering written notice of
revocation to Delaware Service Company, Inc. within seven days after your
receipt of the IRA Disclosure Statement or within seven days after you establish
your IRA; however, if your IRA is established more than seven days after receipt
of the IRA Disclosure Statement, you may not revoke your IRA. If you wish to
revoke your IRA, mail or deliver your written notice to Delaware Service Co.,
Inc., Retirement Plans Department, 1818 Market Street, Philadelphia, PA 19103.
If mailed, the revocation notice will be considered mailed on the date of
postmark (or if sent by certified or registered mail, the date of certification
or registration) if it is deposited in the mail in the United States in an
envelope or other appropriate wrapper, first class postage prepaid, properly
addressed. While oral revocations are not accepted, you may contact us at (800)
523-1918 (In Philadelphia call 988-1241) if you have any questions with respect
to this procedure. If you should choose to revoke your IRA, the entire amount of
your contribution will be refunded without adjustment for administrative
expenses or any other amount.
REQUIREMENTS OF AN INDIVIDUAL
RETIREMENT ACCOUNT
An Individual Retirement Account investing contributions in any of the Funds
in the Delaware Group is a Custodial Account created in the United States for
the exclusive benefit of an individual or his/her beneficiaries. The written
instrument creating the Custodial Account must satisfy the following
requirements:
1. Except in the case of a rollover contribution (explained below),
contributions must be in cash and may not exceed $2,000, or $2,250 if a
spousal IRA, for any taxable year;
2. The Custodian must be a bank or other person approved by the Secretary of
the Treasury;
3. No part of the IRA funds may be invested in life insurance contracts;
4. The interest of an individual in the IRA must be nonforfeitable;
5. The assets of the IRA may not be commingled with other property except in
a common trust fund or common investment fund; and
6. The entire interest of an individual must be distributed in accordance with
certain rules (explained below under "Distributions").
ELIGIBILITY
You are eligible to establish and contribute to an IRA for any year in which
you work and receive compensation for such work, provided that you have not
attained age 70 1/2 in the year in question. If eligible, both a husband and
wife may each have their own separate IRA. If either spouse is ineligible to
establish an IRA, because the spouse has no "compensation," the other spouse may
be permitted to establish a Spousal IRA.
"Compensation" includes wages, salaries, professional fees, and other
amounts received for personal services, including such items as commissions paid
to salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses. Compensation also includes
earned income of a self-employed person and any amount includable in an
individual's income as alimony or separate maintenance payments. Compensation
does not include amounts derived from or received as earnings or profits from
property, such as interest, dividends and rent, or any amount not includable in
gross income.
If you satisfy certain requirements, you may also establish an IRA for the
purpose of transferring retirement savings distributed from another individual
retirement account, individual retirement annuity, tax-sheltered annuity or
qualified retirement plan maintained by your employer.
You may have an IRA whether or not you are a participant in any other
retirement plan. However, if you or your spouse are an active participant in
another retirement plan, the amount of your annual contribution which is tax
deductible may be reduced (explained below under "Contributions").
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CONTRIBUTIONS
(A) Deductible Contributions
You may make an annual contribution to your IRA up to a maximum of $2,000(1)
or 100% of your compensation, whichever is less. If neither you nor your spouse
is an "active participant" in an employer maintained retirement plan at any time
during the year, the entire amount of your contribution (within the above
limits) will be tax deductible.
As explained below, if either you or your spouse is an active participant in
an employer maintained retirement plan, but you have adjusted gross income (AGI)
below the "applicable dollar amount," your entire contribution will still be tax
deductible. However, if either you or your spouse is an active participant and
your AGI is above the applicable dollar amount, the amount of your contribution
which is tax deductible will be reduced or eliminated as illustrated by the
chart below:
Tax Deductible Contributions:
Who Qualifies:
If you are not an active participant in
an employer-sponsored retirement plan:
100% deductible at any income level
If you are an active participant in
an employer-sponsored retirement plan:
Adjusted Gross Income Contribution
Married Single Deductibility
--------------- --------------- ---------------
below $40,000 below $25,000 Full
$40,000-$50,000 $25,000-$35,000 Partial
over $50,000 over $35,000 No
In order to be deductible for a taxable year, annual contributions must be
made not later than the due date (without regard to extensions) of your tax
return for the year for which the deduction is claimed.
Definition of Active Participant
You are an "active participant" for a year if you are "covered" by any of the
following retirement plans:
1. A qualified plan described in Section 401(a) of the Internal Revenue Code
(hereinafter the "Code");
2. An annuity plan described in Section 403(a) of the Code;
- ------------
(1) An additional $250 may be contributed to a Spousal IRA for a total of $2,250
for a working and non-working spouse.
3. A plan established for its employees by the United States, by a state or
local government or by an agency or instrumentality thereof (other than an
eligible deferred compensation plan as defined in Section 457(b) of the Code);
4. An annuity contract or custodial account described in Section 403(b) of
the Code;
5. A simplified employee pension (SEP) and salary reduction SEP described in
Section 408(k) of the Code;
6. A trust described in Section 501(c)(18) of the code.
You are considered "covered" by a retirement plan for a year if your employer
or union has a retirement plan of a type described above under which money is
added to your account or you are eligible to earn retirement credits. You are an
active participant for a year even if you are not yet vested in your retirement
benefit. Also, if you make required contributions or voluntary employee
contributions to a retirement plan, you are an active participant. In certain
plans, you may be an active participant even if you were only with the employer
for part of the year. Your active participant status should be indicated on your
Form W-2.
You are not considered an active participant if you are covered by a plan
only because of your service as (1) an Armed Forces Reservist, for less than
ninety (90) days of active service; or (2) a volunteer fire fighter covered for
fire fighting service by a government plan. Of course, if you are covered under
any other plan, these exceptions do not apply.
If you would like specific advice as to whether you are an active participant
in a retirement plan, you should consult with your attorney or a qualified tax
adviser.
AGI Threshold Level
If you or your spouse are an active participant, you must calculate your
adjusted gross income (AGI) for the year (if you and your spouse file a joint
tax return, you must use your combined AGI) to determine whether your IRA
contribution will be deductible. The instructions to your tax return will show
you how to calculate your AGI for this purpose. If you are at or below a certain
AGI level, called the "Threshold Level," you are treated as if you were not an
active participant and can make a deductible contribution under the same rules
as a person who is not an active participant.
If you are single, your AGI Threshold Level is $25,000. If you are married
and file a joint tax return, the Threshold Level is $40,000. If you are married
but file a separate tax return, the Threshold Level is $0. If you and your
spouse file separate tax returns and you live apart at all times during the
year, both you and your spouse will be treated as single in determining the
deductibility of your IRA contributions and your spouse's IRA contributions.
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Calculation of Deduction Limit
If your AGI is less than $10,000 above your Threshold Level, you will still
be able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level (AGI minus Threshold
Level) is called your Excess AGI. The maximum allowable deduction is $2,000 (or
a total of $2,250 for a Spousal IRA). You may calculate your deduction limit by
using the following formula:
$10,000 -- Excess AGI x Maximum Allowable = Deduction
- ---------------------
$10,000 Deduction Limit
You must round up the result to the next highest $10 level. For example, if
the result is $1,525, you must round it up to $1,530. If the final result is
below $200 but above $0, your deduction limit is $200. Your deduction limit
cannot, in any event, exceed 100% of your compensation.
The following examples illustrate the above formula.
Example One: Bob, a single individual, is an active participant in his
employer's retirement plan and has AGI of $28,000. Bob has contributed $2,000 to
his IRA for the current year. Bob will calculate the deductible portion of his
IRA contribution as follows:
1. Bob must first determine the amount of his Excess AGI. His Excess AGI is
equal to his AGI minus his Threshold Level. Because Bob is a single
individual his Threshold Level is $25,000. Thus, his Excess AGI is $3,000
($28,000 -- $25,000).
2. Bob will now determine his deduction limit as follows:
$10,000 -- $3,000 x $2,000 = $1,400
----------------
$10,000
Example Two: Jack and Jane are a married couple who file a joint income tax
return and have a combined AGI of $45,000. Jack is not covered by his employer's
retirement plan. Jane is an active participant in her employer's retirement
plan. Jack and Jane have each contributed $2,000 to their separate IRAs. Jack
and Jane will calculate the deductible portion of their contributions as
follows:
1. Jack and Jane must first determine the amount of their Excess AGI. Since they
are a married couple filing a joint return their Threshold Level is $40,000.
Thus, their Excess AGI is $5,000 ($45,000 -- $40,000).
2. Jack and Jane will each determine their individual deduction limit as
follows:
$10,000 -- $5,000 x $2,000 = $1,000
----------------
$10,000
(B) Non-deductible Contributions
Even if your deduction limit is less than $2,000 ($2,250 for a Spousal IRA),
you may still contribute to your IRA up to the lesser of 100% of your
compensation or $2,000 ($2,250 for a Spousal IRA). The amount of your
contribution which is not deductible will be treated as a non-deductible
contribution to your IRA. You may also choose to treat a contribution as
non-deductible even if you could have deducted part or all of the contribution.
Interest or other earnings on your contribution, whether from deductible or non-
deductible contributions, will not be taxed until distributed to you from the
IRA.
You may make your $2,000 contribution at any time during the year, if your
compensation for the year will be at least $2,000, without having to designate
at such time how much of your contribution will be deductible. When you complete
your tax return, you must then determine how much of your contribution is
deductible. If you determine that all or a portion of your contribution is
non-deductible, you must report such amount to the Internal Revenue Service on
your tax return for the year.
(C) Spousal IRA Contributions
If you and your spouse file a joint income tax return and your spouse either
has no compensation for the taxable year or elects to be treated as having no
compensation for the taxable year, you may establish an IRA for the benefit of
your spouse. If you make contributions on behalf of yourself and your spouse for
a given tax year, the aggregate amount of the contributions to both your IRA and
your spouse's IRA may not exceed the lesser of $2,250 or the amount of your
compensation for such year. The contribution does not have to be split equally
between the IRAs belonging to you and your spouse. However, the total
contributions to either of your IRAs may not exceed $2,000.
You are not permitted to make contributions to your IRA in the year in which
you attain age 70 1/2 and subsequent years; however, you may continue to deduct
contributions to your non-working spouse's IRA until the year in which your
spouse reaches age 70 1/2.
(D) Excess Contributions
If you make a contribution to your IRA in excess of the deductible and
non-deductible limits, whichever is applicable, such amount is an "excess
contribution." A non-deductible 6% excise tax is imposed upon the excess
contribution for the year in which it is made and also for each following year
until it is eliminated. However, the amount of the tax for any year cannot
exceed 6% of the value of your IRA as of the close of the tax year.
You may avoid the imposition of such 6% tax if you withdraw any excess
contributions from your IRA before the due date for filing your federal
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tax return (not including extensions) for the year for which the excess
contribution is made. The earnings attributable to the excess contribution also
must be withdrawn by that date and must be included in your gross income in the
year for which the excess contribution was made. A timely withdrawal of the
excess contributions will permit you to avoid not only the 6% excise tax but
also the 10% penalty tax on premature distributions.
A withdrawal of an excess contribution after the tax return filing date will
avoid the 10% penalty tax on premature distributions, provided that the total
contribution for the year did not exceed $2,250 and no deduction was allowed for
the excess contribution.
As an alternative to withdrawing such excess contribution, you may eliminate
the excess by reducing your future annual contributions below the maximum
allowable amount. However, you will continue to be subject to the 6% excise tax
for each year until the excess contribution is completely eliminated.
(E) Rollover Contributions
A rollover contribution must consist of cash or other assets distributed from
one retirement program and "rolled over" tax free to another. There are two
types of rollover contributions to an IRA. The first type involves the
distribution of cash or other assets from one IRA which is "rolled over" to
another IRA. For this purpose, the term "IRA" includes individual retirement
accounts and individual retirement annuities. The second type involves the
distribution of cash or other assets from a tax-sheltered annuity or custodial
account or from a qualified retirement plan which is "rolled over" to an IRA. A
rollover contribution is neither includable in your income nor deductible.
Unlike annual contributions, rollover contributions are not subject to the
annual $2,000 limitation (or $2,250 in the case of the Spousal IRA) or 100% of
compensation limitation. A rollover contribution may not include any minimum
amounts required to be distributed to you during the calendar year in which you
attain age 70 1/2 or during any subsequent year. A rollover contribution must be
in cash or in shares of the Delaware Group of Funds.
IRA to IRA
If you receive a distribution from another individual retirement account or
individual retirement annuity, you may redeposit all or part of the amount you
receive into your IRA. You must roll over such amount within the sixty (60)-day
period following your receipt of the distribution in order for such amount to
qualify for rollover treatment and in order for such amount to avoid being
treated as a taxable distribution. Amounts not rolled over may also be subject
to the 10% penalty tax on premature distributions. A surviving spouse
beneficiary of an IRA may roll over a distribution from the IRA to the spouse's
own IRA; a non-spouse beneficiary is not eligible to roll over such a
distribution.
A rollover from each separate individual retirement account or individual
retirement annuity is allowed only once a year. The one-year period begins on
the date that you receive the distribution and not on the date it is rolled over
into another IRA. A rollover from one IRA to another should not be confused with
a direct transfer of your IRA assets from one IRA custodian or trustee to
another IRA custodian or trustee. A transfer from one IRA custodian to another
is not considered a rollover and, consequently, is not affected by the
once-a-year limitation on rollovers.
Qualified Retirement Plan to IRA
You may also be eligible for tax-free rollover treatment when you receive a
distribution from your employer's qualified retirement plan or from a
tax-sheltered annuity or custodial account.
In order to qualify for tax-free rollover treatment, a distribution from a
qualified retirement plan must constitute an "eligible rollover distribution."
Any distribution from an employer-sponsored tax-qualified retirement plan or
tax-sheltered annuity or custodial account will qualify as an eligible rollover
distribution unless it is one of the following:
(i) A distribution which is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the employee or the lives (or joint life expectancies) of
the employee and the employee's designated beneficiary, or for a specified
period of 10 years or more.
(ii) The portion of a distribution representing the minimum annual distribution
required after an employee attains age 70 1/2 or dies.
(iii) The non-taxable portion of a distribution representing after-tax
contributions to the plan.
(iv) Certain corrective distributions of elective deferrals, after-tax
contributions and matching contributions.
(v) A distribution to a non-spouse beneficiary of a deceased participant.
(vi) A distribution pursuant to a qualified domestic relations order to an
alternate payee who is neither the participant's spouse or former spouse.
(vii) A distribution to a surviving spouse to the extent the distribution is
subject to the Death Benefit Exclusion under Code section 101(b).
9
<PAGE>
If an eligible rollover distribution is paid to you, it wiII be subject to
mandatory 20% federal income tax withholding. You cannot elect to waive this
withholding tax, even if you intend to take advantage of tax-free rollover
treatment. If cash is available from some other source equal to the amount
withheld and you transfer that amount plus the net amount of the distribution to
your IRA within sixty (60) days after the distribution, no portion of the
eligible rollover distribution will be taxable to you. You may be entitled to a
full refund of the 20% withheld, depending upon your tax situation for the year.
If you roll over only the amount of the distribution actually received by you
and do not roll over an amount equal to the 20% withheld, you will be taxed on
the 20% withheld, and may be subject to a 10% additional tax on premature
distributions if you are younger than age 59 1/2.
However, the 20% withholding can be avoided by making a "direct rollover" to
your IRA. A direct rollover is a direct payment by the distributing
tax-qualified retirement plan or tax-sheltered annuity or custodial account to
your IRA rather than to you. If your eligible rollover distribution is at least
$200, your employer's plan must give you the option to make a direct rollover of
your eligible rollover distribution to an IRA.
The eligible rollover distribution rules also apply to distributions to a
surviving spouse who is a beneficiary of a deceased participant. These rules
also apply to distributions to a spouse or former spouse who is an alternate
payee with respect to a participant's benefits under a qualified domestic
relations order.
DISTRIBUTIONS
The IRA distribution rules are similar to the rules for distributions from
qualified retirement plans, in accordance with proposed regulations issued by
the Secretary of the Treasury. As of the date of issuance of this Disclosure
Statement, the regulations have not been finalized. Accordingly, the description
below of the distribution rules will be subject to modification upon issuance of
final regulations.
(A) Normal Distributions
Your IRA is intended to provide a source of income to you upon your
retirement on or after age 59 1/2 or if you become disabled. Distributions other
than amounts rolled over into another IRA or qualified plan are taxed as
ordinary income in the year received by you. With certain exceptions,
distributions which occur prior to age 59 1/2 will be subject to a 10%
additional tax on premature distributions (explained below).
(B) Required Distributions
While distributions from your IRA may commence any time, such distributions
must commence on or before the first day of April of the year following the year
in which you attain age 70 1/2 (known as the "Required Beginning Date").
Distributions must be paid to you in accordance with one of the following
methods:
(i) A single lump sum payment; or
(ii) In monthly, quarterly or annual payments over a period certain not
extending beyond your life expectancy or the joint and last survivor
expectancy of you and your designated beneficiary.
Even though distributions may have commenced in the method explained in
option (ii) above, you may receive a distribution of the balance in your IRA at
any time. Distributions may be received in a single payment or in installment
payments (but distributions which will be rolled over must exclude any minimum
amount required to be distributed during that calendar year).
If you elect to have your IRA distributed in other than a single payment, the
amount to be distributed each year, beginning with the first calendar year for
which distributions are required and for each succeeding year, must be at
least equal to the amount determined by dividing the entire amount of your IRA
as of the preceding December 31 by your life expectancy or by the joint and last
survivor life expectancies of you and your designated beneficiary. If your
designated benficiary is not your spouse and is more than 10 years younger than
you, your beneficiary will be treated as if he/she were only 10 years younger
than you for purposes of determining the joint life expectancy of you and your
beneficiary. In order to enforce such minimum distribution requirements, a 50%
tax is imposed on the amount, if any, by which the minimum required distribution
exceeds the actual amount distributed. If the failure to make the minimum
distribution is due to a reasonable error and steps are taken to remedy such
error, the 50% tax may be waived by the Internal Revenue Service.
If you have more than one IRA, you can satisfy the minimum distribution
requirements by taking from one IRA the amount required to satisfy the
requirement for all other IRAs.
(C) Distributions After Death
At the time that you establish your IRA, you have the right to select a
beneficiary who will be entitled to receive the balance in your IRA if you
should die prior to the complete distribution of your IRA. You have the right,
prior to the complete distribution of your IRA, to change your designation of
beneficiary. If you fail to properly designate a beneficiary, your estate will
be treated as your designated beneficiary.
10
<PAGE>
If you should die after the distribution of your IRA has commenced, the
remaining portion of your IRA will continue to be distributed at least as
rapidly as under the method of distribution being used prior to your death. If
you should die before the distribution of your IRA has commenced, the entire
interest in your IRA must be distributed in accordance with one of the following
provisions:
(i) The entire balance of your IRA is distributed by the December 31 of the
year containing the fifth anniversary of your death;
(ii) If the balance of your IRA is payable to a designated beneficiary, such
amount may be distributed in substantially equal periodic installments
over the life expectancy of the beneficiary commencing no later than the
December 31 of the year after your death;
(iii) If the designated beneficiary is your surviving spouse, your spouse may
elect to receive periodic payments over his/her life expectancy,
commencing at any date prior to the later of (1) the December 31 of the
year following your death or (2) the December 31 of the year in which you
would have attained age 70 1/2;
(iv) If the designated beneficiary is your surviving spouse, your spouse may
elect to treat your IRA as his/her own IRA and receive distributions under
the general distribution rules discussed above.
TAX TREATMENT OF DISTRIBUTIONS
(A) Income Tax
As a general rule, distributions from your IRA are taxable to you as ordinary
income. However, if non-deductible contributions have been made to your IRA,
the portion of your IRA distribution consisting of non-deductible contributions
will not be taxed again when received by you. If you make any non-deductible IRA
contributions, each distribution from your IRA will consist of a non-taxable
portion (return of non-deductible contributions) and a taxable portion (return
of deductible contributions, if any, and earnings). Thus, you may not take a
distribution which is entirely tax-free. The following formula is used to
determine the non-taxable portion of your distributions for a tax year:
Non-deductible Non-taxable
Contributions x Total Distribution = Distributions
---------------------- (for the year) (for the year)
Year-end IRA Balance
In determining your year-end IRA balance, you add back all distributions
taken during the year.
The following example illustrates how you will determine the non-taxable
portion of your distributions for a taxable year.
Example: Mary has made the following contributions to her IRA:
YEAR DEDUCTIBLE NON-DEDUCTIBLE
1985 $2,000 $0
1986 $2,000 $0
1987 $2,000 $0
1988 $1,000 $1,000
1989 $0 $2,000
------ ------
$7,000 $3,000
During 1990, Mary receives a $1,000 distribution from her IRA. On December
31, 1990 the total value of Mary's IRA is $11,000. The non-taxable portion of
the distribution she received during 1990 is determined as follows:
$3,000 x $1,000 = $250
--------------
11,000 + 1,000
To determine your year end balance you treat all of your IRAs as a single
IRA. This includes all regular IRAs, as well as simplified employee pension
(SEP) IRAs, salary reduction SEPs, and rollover IRAs.
A single lump sum distribution from your IRA is not entitled to special
10-year averaging, five-year averaging or capital gains treatment.
(B) Federal Income Tax Withholding
Distributions from your IRA are subject to Federal income tax withholding
unless the recipient elects in writing that no taxes be withheld. If the total
account balance or a portion of the account balance is distributed, then the
withheld amount will equal 10% of the distribution. If the distribution is part
of a series of periodic payments, the withheld amount will be calculated as if
the distribution were wages, and Form W-4P must be completed.
(C) Early Withdrawal Tax
In general, distributions from your IRA which occur prior to age 59 1/2 will
be subject to adverse tax consequences. Not only will such distributions be
fully taxable to you as ordinary income (subject to the formula described above
for determining the non-taxable portion of your distribution), such
distributions will also be subject to a 10% additional premature distribution
tax.
In addition to the exceptions for rollovers and the return of excess
contributions discussed above, distributions on account of your death or
disability will be exempt from the 10% additional tax. You are considered
11
<PAGE>
disabled if you are unable to engage in any substantial gainful activity because
of a medically determinable physical or mental impairment which can be expected
to result in death or to be of long, continued and indefinite duration. In
addition, distributions before age 59 1/2 are not subject to the 10% tax if made
in the form of substantially equal periodic payments and are made for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you and
your designated beneficiary.
A transfer of amounts held in your IRA to your spouse's or former spouse's
IRA pursuant to a divorce or separation instrument will not be taxable as
ordinary income or subject to the 10% additional tax.
(D) Gift Tax
Your designation of a beneficiary for your IRA will not be treated as a gift
and will not subject you to Federal gift taxes.
(E) Estate Tax
Any amounts remaining in your IRA after your death will be included in your
gross estate and may be subject to Federal estate tax.
BORROWING/PROHIBITED TRANSACTIONS
You may not use the IRA or any portion of the IRA as security for a loan. If
you do, the portion pledged as security will be treated as distributed to you,
and will thus be includable in your taxable income for that year. Certain other
transactions (called "prohibited transactions" in the Code) may also result in
the disqualification of your IRA and the inclusion in income of the fair market
value of the IRA. Neither you, nor your beneficiary, may engage in any of the
following prohibited transactions with the IRA:
(a) a sale, exchange, or leasing of any property;
(b) lending of money or other extension of credit;
(c) furnishing of goods, services or facilities;
(d) the transfer or use of income or assets of the IRA by you or your
beneficiary.
If such transactions are engaged in, your IRA will be disqualified and will
lose its tax-exempt status. Under such circumstances, your IRA will be
considered to have been distributed to you and will be subject to the income and
additional taxes discussed above.
REPORTING TO THE IRS
(A) FORM 5329
If a transaction has occurred upon which a special penalty tax is imposed,
such as an excess contribution, a premature distribution or a failure to make a
timely distribution, you are required to file Form 5329 with your income tax
return for the year of the transaction. Form 5329 need not be filed if the only
activity for the year is the making of contributions or the distribution of
permissible benefits.
(B) FORM 8606
You are required to file Form 8606 if you make a non-deductible IRA
contribution.
IRS APPROVAL
The Delaware Group Prototype IRA has previously been approved by the Internal
Revenue Service as to its written form. Since that time, it has been amended to
conform to changes in the law and has been resubmitted to the Internal Revenue
Service for approval. At the time this Disclosure Statement was prepared, the
Internal Revenue Service had not reviewed the amendments.
Please be aware that the Internal Revenue Service's approval is a
determination only as to the form of the IRA and does not represent a
determination as to the merits of your particular IRA.
IRA ACCOUNT BALANCE
Each of the mutual fund shares held in your IRA has an equal interest in the
assets, net investment income and capital gains of the mutual fund selected. The
value of the shares is dependent upon, among other things, the market values of
the securities in the mutual fund's investment portfolio, which are subject to
fluctuation; therefore, growth in the value of your IRA cannot be projected or
guaranteed. Dividends from net investment income and any capital gains
distributions paid by the mutual fund selected will be reinvested in fund shares
at the net asset value thereof as of the respective ex-dividend dates, and such
additional shares will be credited to your IRA.
12
<PAGE>
FEES AND CHARGES
(A) IRA Fees
In general, there is an annual maintenance fee (currently $15 per year) for
your IRA. If an investor owns more than one Delaware Group IRA or opens a
Delaware Group IRA and invests in multiple funds within the Delaware Group,
however, only one fee per Social Security number will be charged. IRA fees are
deducted from the IRA during May of each year, unless paid directly by the
shareholder to the Custodian prior to May of each calendar year. The IRA fees
are subject to change.
(B) Mutual Fund Sales Charges
A sales charge will be made against your investment except for Delaware Group
Cash Reserve and Delaware Group U.S. Government Money Fund. For investments
under $1 million, sales charge rates range from a maximum of 8.50% to 1.5% of
the offering price of the fund shares. Depending on the Delaware Group fund
selected, the maximum rate applicable to an initial $1,000 contribution would be
8.50%, 5.75%, 4.75% or 3.00%. The maximum rate is applicable to subsequent
contributions of $1,000 until the value of the fund shares meets or exceeds a
level that qualifies the shareholder to receive a reduced sales charge. An
account value of $10,000 reduces the sales charge for funds at the maximum 8.50%
level to 7.75%. The sales charge for funds with a maximum of 5.75% is reduced to
4.75% when the account reaches $100,000.
The sales charge for funds with a maximum of 4.75% is reduced to 3.75% when
the account reaches $100,000. The sales charge for funds with a maximum of 3.00%
is reduced to 2.50% when the account reaches $100,000. Further sales charge
reductions at lower rates are applicable on larger purchases and on purchases
under the fund's Right of Accumulation and Letter of Intention. Group purchases
that meet our minimum standard may be subject to a different sales charge.
Reduced sales charges also apply to the combination of shares of any of the
funds in the Delaware Group (except Delaware Group Cash Reserve and Delaware
Group U.S. Government Money Fund, unless they were acquired through an exchange
or unless the inclusion of such shares brings your total account balance to $1
million) held by you and those held in your IRA.
(C) Redemption and Repurchase Charges
Neither the fund nor the national distributor makes a charge for redemptions
or repurchases.
(D) Further Details
Please refer to the prospectus of the fund or funds selected as your
investment for further details, including current charges and expenses.
QUALIFIED TAX ADVICE
The above is only a general description of taxation of IRAs. Because of the
unfavorable tax consequences which could result from the improper establishment
or use of an IRA, you may wish to consult with an attorney or qualified tax
adviser. Neither Delaware Management Company, Inc., Delaware Service Co., Inc.,
the Delaware Group of Funds nor the Custodian assumes any liability for tax
consequences to investors or beneficiaries arising from IRAs.
13
<PAGE>
DELAWARE
GROUP
========
IRA
(PHOTO OF LARGE KEY)
|| PLAN DOCUMENT
|| TERMS AND CONDITIONS
|| DISCLOSURE STATEMENT
||=========================
THE DELAWARE ORGANIZATION
| | Delaware Management Company, Inc.
Investment Manager
| | Delaware Distributors, L.P.
National Distributor
| | Delaware Service Company, Inc.
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
| | Delaware Management Trust Company
Custodian
RETIREMENT
1818 Market Street PLANNING (LOGO)
Philadelphia, PA 19103-3682 IS THE KEY
800-523-4640
In Philadelphia 215-988-1333
RL-101-150M-12/93-U
Printed in the U.S.A.
<PAGE>
CLAIMS PROCEDURE
The Employer shall establish a claims procedure in accordance with the
requirements of the Employee Retirement Income Security Act of 1974, as amended,
if applicable, for the presentation of claims under the terms of the SEP
Document. A claim is a request for a plan benefit, including participation and
contributions, by an Employee or Beneficiary. The Employer shall make all
determinations as to the eligibility of any Employee for plan participation or
Employer contribution. In the event the claim is denied, the Employer shall
provide written notice of its determination to the Employee or Beneficiary
within ninety (90) days after receipt of the claim unless special circumstances
require an extension of time for processing the claim. If such an extension of
time for processing is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 90-day
period. The written notice will be set forth in a manner that may be understood
by the claimant and shall include:
1) The reason for the denial.
2) Specific reference to pertinent plan provisions on which the denial is
based.
3) Additional information necessary for the claimant to perfect the claim and
why the information is necessary.
4) Information about the procedures for submitting the denied claim for
review.
RL-210-1/93-5M-U
[FORM OF 12b-1 PLAN FOR CLASS A SHARES]
12b-1 Plan
Class A
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by [FUND
NAME] (the "Fund")[, now for the [SERIES NAME] (the "Series")] on behalf of the
_____________ class [now doing business as the _____________ A Class]
(hereinafter referred to as the "Class"), which Fund[, Series] and Class may do
business under these or such other names as the Board of [Directors/Trustees] of
the Fund may designate from time to time. The Plan has been approved by a
majority of the Board of [Directors/Trustees], including a majority of the
[Directors/Trustees] who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related thereto ("non-interested [Directors/Trustees]"), cast in
person at a meeting called for the purpose of voting on such Plan. Such approval
by the [Directors/Trustees] included a determination that in the exercise of
reasonable business judgment and in light of their fiduciary duties, there is a
reasonable likelihood that the Plan will benefit the Class and its shareholders.
If the Plan has not yet been approved by a majority of the outstanding voting
securities as required in the Act, the Plan will be presented to the public
shareholders at the next regular annual or special meeting.
<PAGE>
The Fund is a [corporation/common law trust] organized under the laws
of the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to exceed
0.3% (3/10 of l%) per annum of the [Fund's/Series'] average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of [Directors/Trustees] from time to time. Such monthly fee
shall be reduced by the aggregate sums paid by the Fund [on behalf of the
Series] to persons other than broker-dealers (the "Service Providers") who may,
pursuant to servicing agreements, provide to the [Fund/Series] services in the
[Fund's/Series'] marketing of shares of the Class.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of [Directors/Trustees] of the Fund with such other
information as the Board may reasonably request in connection with the payments
made under the Plan and the use thereof by the Distributor and the Service
Providers, respectively, in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of [Directors/Trustees] of the Fund, and
of the non-interested [Directors/Trustees], cast in person at a meeting called
for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested [Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested [Directors/Trustees] shall be committed to the
discretion of such non-interested [Directors/Trustees].
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
[FORM OF 12b-1 PLAN FOR CLASS B SHARES]
12b-1 Plan
Class B
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by [FUND
NAME] (the "Fund") [,for the [SERIES NAME] (the "Series")] on behalf of the
_______________________ B Class (the "Class"), which Fund[, Series] and Class
may do business under these or such other names as the Board of
[Directors/Trustees] of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of [Directors/Trustees], including a
majority of the [Directors/Trustees] who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related thereto ("non-interested
[Directors/Trustees]"), cast in person at a meeting called for the purpose of
voting on such Plan. Such approval by the [Directors/Trustees] included a
determination that in the exercise of reasonable business judgment and in light
of their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Class and its shareholders. The Plan has been approved by a vote of
the holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a [corporation/common law trust] organized under the laws
of the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company,
Inc./Delaware International Advisers Ltd.] serves as the [Fund's/Series']
investment adviser and manager pursuant to an Investment Management Agreement.
Delaware Service Company, Inc. serves as the [Fund's/Series'] shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the [Fund's/Series'] shares, including shares of the Class, pursuant to the
Distribution Agreement between the Distributor and the [Fund/Series]
("Distribution Agreement").
<PAGE>
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the [Fund's/Series'] average daily net
assets represented by shares of the Class as may be determined by the Fund's
Board of [Directors/Trustees] from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
[Fund's/Series'] average daily net assets represented by shares of the Class, as
a service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of
[Directors/Trustees] of the Fund with such other information as the Board may
reasonably request in connection with the payments made under the Plan and the
use thereof by the Distributor and others in order to enable the Board to make
an informed determination of the amount of the Fund's payments and whether the
Plan should be continued.
<PAGE>
4. The officers of the Fund shall furnish to the Board of
[Directors/Trustees] of the Fund, for their review, on a quarterly basis, a
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of [Directors/Trustees] of the
Fund, and of the non-interested [Directors/Trustees], cast in person at a
meeting called for the purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority
of the non-interested [Directors/Trustees] or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested [Directors/Trustees] in the manner described in paragraph 5
above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested [Directors/Trustees] shall be committed to the
discretion of such non-interested [Directors/Trustees].
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
<PAGE>
[FORM OF 12b-1 PLAN
C CLASS SHARES]
DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the Fund
(the "Fund"), on behalf of the Fund's C Class (the "Class"). The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a [corporation/business trust] organized under the laws of
the [State of Maryland/Commonwealth of Pennsylvania], is authorized to issue
different series and classes of securities and is an open-end management
investment company registered under the Act. [Delaware Management Company, Inc.
("DMC") or Delaware International Advisers Ltd. ("Delaware International"), an
<PAGE>
affiliate of DMC,] serves as the Fund's investment adviser and manager pursuant
to an Investment Management Agreement. Delaware Service Company, Inc. serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent.
Delaware Distributors, L.P. (the "Distributor") is the principal underwriter and
national distributor for the Fund's shares, including shares of the Class,
pursuant to the Distribution Agreement between the Distributor and the Fund
("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Fund's average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others; or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Fund's average daily net assets represented by shares of the Class, as a service
fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
<PAGE>
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Fund.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, and the Directors shall review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
<PAGE>
5. This Plan shall take effect at such time as the Distributor shall
notify the fund in writing of the commencement of the Plan (the "Commencement
Date"); thereafter, the Plan shall continue in effect for a period of more than
one year from the Commencement Date only so long as such continuance is
specifically approved at least annually by a vote of the Board of Directors of
the Fund, and of the Directors who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("non-interested Directors"), cast in person
at a meeting called for the purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(3), 2(a)(19) and
2(a)(42) of the Act shall govern the meaning of "affiliated person,"
<PAGE>
"interested person(s)" and "vote of a majority of the outstanding voting
securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
<PAGE>
EX-99
EX-99.B16 SCHEDULES OF COMPUTATION
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- -------------------------------------------------------
NAV
Average Annual Compounded Rate of Return:
n
P(1+T)=ERV
ONE
YEAR
- ------------
1
$1000(1-T)=$1,162.6
T= 16.27%
THREE
YEARS
- -------------
3
$1000(1-T)=$1,399.5
T= 11.86%
FIVE
YEARS
- -------------
5
$1000(1-T)=$1,637.4
T= 10.37%
LIFE OF
FUND
- ---------------
8.7616438
$1000(1-T)=$2,599.70
T= 11.52%
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ------------------------------------------
OFFER
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- --------
1
$1000(1 - T) = $1,107.14
T = 10.71%
THREE
YEARS
- --------
3
$1000(1 - T) = $1,332.73
T = 10.05%
FIVE
YEARS
- --------
5
$1000(1 - T) = $1,559.65
T = 9.30%
LIFE OF
FUND
- -------
8.7616438
$1000(1 - T) = $2,475.01
T = 10.90%
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
<TABLE>
- --------------------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.39
Initial Shares 74.683
</TABLE>
<TABLE>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ---------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
1995 74.683 $0.820 5.082 79.765
- ---------- ------------- -------------- -------------- -------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 79.765
Ending NAV x $13.88
----------
Investment Return $1,107.14
Total Return Performance
- ------------------------
Investment Return $1,107.14
Less Initial Investment $1,000.00
----------
$107.14 / $1,000.00 x 100
Total Return: 10.71%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
THREE YEARS
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Initial Investment $1,000.000
Beginning OFFER $14.46
Initial Shares 69.156
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1993 69.156 $1.500 8.035 77.191
- -------------- --------------- ---------------- ---------------- ---------------
1994 77.191 $2.090 12.711 89.902
- -------------- --------------- ---------------- ---------------- ---------------
1995 89.902 $0.820 6.116 96.018
- -------------- --------------- ---------------- ---------------- ---------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 96.018
Ending NAV x $13.88
---------
Investment Return $1,332,73
Total Return Performance
- ------------------------
Investment Return $1,332,73
Less Initial Investment $1,000.00
---------
$332.73 / $1,000.00 x 100
Total Return: 33.27%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
FIVE YEARS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.000
Beginning OFFER $13.48
Initial Shares 74.184
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1991 74.184 $0.580 3.646 77.830
- ------------------------------------------------------------------------------------------
1992 77.830 $0.520 3.101 80.931
- ------------------------------------------------------------------------------------------
1993 80.931 $1.500 9.403 90.334
- ------------------------------------------------------------------------------------------
1994 90.334 $2.090 14.875 105.209
- ------------------------------------------------------------------------------------------
1995 105.209 $0.820 7.158 112.367
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 112.367
Ending NAV x $13.88
------------
Investment Return $1,559.65
- -----------------
Investment Return $1,559.65
Less Initial Investment $1,000.00
------------
$559.65 / $1,000.00 x 100
Total Return: 55.97%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
INCEPTION
<TABLE>
- ------------------------------------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $10.00
Initial Shares 100.000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -------------- ---------------- -------------------- ---------------- --------------
<S> <C> <C> <C> <C>
1986 100.000 $0.000 0.000 100.000
- -------------- ---------------- -------------------- ---------------- --------------
1987 100.000 $0.080 0.582 100.582
- -------------- ---------------- -------------------- ---------------- --------------
1988 100.582 $0.350 3.467 104.049
- -------------- ---------------- -------------------- ---------------- --------------
1989 104.049 $0.490 4.600 108.649
- -------------- ---------------- -------------------- ---------------- --------------
1990 108.649 $1.070 9.072 117.721
- -------------- ---------------- -------------------- ---------------- --------------
1991 117.721 $0.580 5.787 123.508
- -------------- ---------------- -------------------- ---------------- --------------
1992 123.508 $0.520 4.920 128.428
- -------------- ---------------- -------------------- ---------------- --------------
1993 128.428 $1.500 14.922 143.350
- -------------- ---------------- -------------------- ---------------- --------------
1994 143.350 $2.090 23.605 166.955
- -------------- ---------------- -------------------- ---------------- --------------
1995 166.955 $0.820 11.360 178.315
- -------------- ---------------- -------------------- ---------------- --------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 178.315
Ending NAV $13.88
----------
Investment Return $2,475.01
Total Return Performance
- ------------------------
Investment Return $2,475.01
Less Initial Investment $1,000.00
----------
$1,475.01 / $1,000.00 x 100
Total Return: 147.50%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
THREE MONTHS
<TABLE>
- -------------------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.46
Initial Shares 74.294
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------- ------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Mar-95 74.294 $0.100 0.565 74.859
- --------- ------------- --------------- -------------- ------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 74.859
Ending NAV $13.88
-----------
Investment Return $1,039.04
Total Return Performance
- ------------------------
Investment Return $1,039.04
Less Initial Investment $1,000.00
-----------
$39.04 / $1,000.00 x 100
Total Return: 3.90%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
SIX MONTHS
<TABLE>
- ------------------------------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.93
Initial Shares 77.340
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------ ---------------- ----------------- ---------------- -------------
<S> <C> <C> <C> <C>
Dec-94 77.340 $0.520 3.360 80.700
- ------------ ---------------- ----------------- ---------------- -------------
Mar-95 80.700 $0.100 0.613 81.313
- ------------ ---------------- ----------------- ---------------- -------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 81.313
Ending NAV $13.88
---------
Investment Return $1,128.62
Total Return Performance
- ------------------------
Investment Return $1,128.62
Less Initial Investment $1,000.00
---------
$128.62 / $1,000.00 x 100
Total Return: 12.86%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND A
TOTAL RETURN PERFORMANCE
NINE MONTHS
<TABLE>
- --------------------------------------------------------------------------------
<S> <S>
Initial Investment $1,000.00
Beginning OFFER $13.84
Initial Shares 72.254
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------ ---------------- ------------------ ----------------- -------------
<S> <C> <C> <C> <C>
Sep-94 72.254 $0.100 0.561 72.815
- ------------ ---------------- ------------------ ----------------- -------------
Dec-94 72.815 $0.520 3.163 75.978
- ------------ ---------------- ------------------ ----------------- -------------
Mar-95 75.978 $0.100 0.577 76.555
- ------------ ---------------- ------------------ ----------------- -------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 76.555
Ending NAV $13.88
----------
Investment Return $1,062.58
Total Return Performance
- ------------------------
Investment Return $1,062.58
Less Initial Investment $1,000.00
----------
$62.58 / $1,000.00 x 100
Total Return: 6.26%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
THREE MONTHS (INCLUDING CDSC)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.80
Initial Shares 78.125
</TABLE>
<TABLE>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mar-95 78.125 $0.090 0.535 78.660
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Ending Shares 78.660
Ending NAV x $13.84
-----------
$1,088.65
Less CDSC $40.00
-----------
Investment Return $1,048.65
Total Return Performance
- ------------------------
Investment Return $1,048.65
Less Initial Investment $1,000.00
-----------
$48.65 / $1,000.00 x 100
Total Return: 4.87%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
THREE MONTHS (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.80
Initial Shares 78.125
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mar-95 78.125 $0.090 0.535 78.660
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 78.660
Ending NAV x $13.84
-----------
$1,088.65
Total Return Performance
- ------------------
Investment Return $1,088.65
Less Initial Investment $1,000.00
-----------
$88.65 / $1,000.00 x 100
Total Return: 8.87%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (INCLUDING CDSC)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.31
Initial Shares 81.235
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dec-94 81.235 $0.510 3.461 84.696
Mar-95 84.696 $0.090 0.580 85.276
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 85.276
Ending NAV x $13.84
----------
$1,180.22
Less CDSC $40.00
----------
Investment Return $1,140.22
Total Return Performance
- ------------------
Investment Return $1,140.22
Less Initial Investment $1,000.00
----------
$140.22 / $1,000.00 x 100
Total Return: 14.02%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.31
Initial Shares 81.235
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dec-94 81.235 $0.510 3.461 84.696
Mar-95 84.696 $0.090 0.580 85.276
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 85.276
Ending NAV $13.84
----------
Investment Return $1,180.22
Total Return Performance
- ------------------
$1,180.22
Less Initial Investment $1,000.00
----------
$180.22 / $1,000.00 x 100
Total Return: 18.02%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (INCLUDING CDSC)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.11
Initial Shares 76.278
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------ ---------------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C>
Sep-94 76.278 $0.100 0.593 76.871
Dec-94 76.871 $0.510 3.275 80.146
Mar-95 80.146 $0.090 0.549 80.695
- ------------ ---------------- ----------------- ----------------- -------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 80.695
Ending NAV $13.84
-----------
$1,116.82
Less CDSC $40.00
-----------
Investment Return $1,076.82
Total Return Performance
- ------------------------
Investment Return $1,076.82
Less Initial Investment $1,000.00
-----------
$76.82 / $1,000.00 x 100
Total Return: 7.68%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.11
Initial Shares 76.278
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------------ ---------------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C>
Sep-94 76.278 $0.100 0.593 76.871
Dec-94 76.871 $0.510 3.275 80.146
Mar-94 80.146 $0.090 0.549 80.695
- ------------ ---------------- ----------------- ----------------- -------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 80.695
Ending NAV $13.84
-----------
Investment Return $1,116.82
Total Return Performance
- ------------------------
Investment Return $1,116.82
Less Initial Investment $1,000.00
-----------
$116.82 / $1,000.00 x 100
Total Return: 11.68%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
OFFER
Average Annual Compounded Rate of Return:
n
P(1+T)=ERV
ONE
YEAR
- ------------
1
$1000(1-T)=$1,166.32
T= 16.63%
THREE
YEARS
- -------------
3
$1000(1-T)=$1,406.93
T= 12.05%
FIVE
YEARS
- -------------
5
$1000(1-T)=$1,646.0
T= 10.48%
LIFE OF
FUND
- ---------------
8.7616438
$1000(1-T)=$2,613.35
T= 11.59%
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
ONE YEAR
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.76
Initial Shares 78.370
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 78.370 $0.860 5.598 83.968
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 83.968
Ending NAV $13.89
----------
Investment Return $1,166.32
Total Return Performance
- -----------------
Investment Return $1,166.32
Less Initial Investment $1,000.00
----------
$166.32 / $1,000.00 x 100
Total Return: 16.63%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.77
Initial Shares 72.622
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1993 76.622 $1.500 8.439 81.061
- -----------------------------------------------------------
1994 81.061 $2.110 13.476 94.537
- -----------------------------------------------------------
1995 94.537 $0.860 6.754 101.291
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 101.291
Ending NAV x $13.89
----------
Investment Return $1,406.93
Total Return Performance
- -----------------
Investment Return $1,406.93
Less Initial Investment $1,000.00
----------
$406.93 / $1,000 x 100
Total Return: 40.69%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
FIVE YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.84
Initial Shares 77.882
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1991 77.882 $0.580 3.828 81.710
- -----------------------------------------------------------
1992 81.710 $0.520 3.255 84.965
- -----------------------------------------------------------
1993 84.965 $1.500 9.873 94.838
- -----------------------------------------------------------
1994 94.838 $2.110 15.765 110.603
- -----------------------------------------------------------
1995 110.603 $0.860 7.901 118.504
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 118.504
Ending NAV x $13.89
----------
Investment Return $1,646.02
- -----------------
Investment Return $1,646.02
Less Initial Investment $1,000.00
----------
$646.02 / $1,000.00 x 100
Total Return: 64.60%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
INCEPTION
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $9.53
Initial Shares 104.932
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1986 104.932 $0.000 12.364 104.932
- -----------------------------------------------------------
1987 104.932 $0.080 12.364 105.649
- -----------------------------------------------------------
1988 105.649 $0.350 12.364 109.290
- -----------------------------------------------------------
1989 109.290 $0.490 12.364 114.123
- -----------------------------------------------------------
1990 114.123 $1.070 12.364 123.653
- -----------------------------------------------------------
1991 123.653 $0.580 12.364 129.731
- -----------------------------------------------------------
1992 129.731 $0.520 12.364 134.899
- -----------------------------------------------------------
1993 134.899 $1.500 12.364 150.572
- -----------------------------------------------------------
1994 150.572 $2.110 12.364 175.602
- -----------------------------------------------------------
1995 175.602 $0.860 12.364 188.146
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 188.146
Ending NAV $13.89
----------
Investment Return $2,613.35
Total Return Performance
- -----------------
Investment Return $2,613.35
Less Initial Investment $1,000.00
----------
$1,613.35 / $1,000.00 x 100
Total Return: 161.34%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.83
Initial Shares 77.942
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Mar-95 77.942 $0.100 0.592 78.534
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 78.534
Ending NAV $13.89
----------
Investment Return $1,090.84
Total Return Performance
- -----------------
Investment Return $1,090.84
Less Initial Investment $1,000.00
----------
$90.84 / $1,000.00 x 100
Total Return: 9.08%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
SIX MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $12.35
Initial Shares 80.972
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Dec-94 80.972 $0.560 3.788 84.760
Mar-95 84.76 $0.100 0.644 85.404
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 85.404
Ending NAV $13.89
----------
Investment Return $1,186.26
Total Return Performance
- -----------------
Investment Return $1,186.26
Less Initial Investment $1,000.00
----------
$186.26 / $1,000.00 x 100
Total Return: 18.63%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR TOTAL RETURN FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
NINE MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.20
Initial Shares 75.758
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Sep-94 75.758 $0.100 0.588 76.346
Dec-94 76.346 $0.560 3.572 79.918
Mar-95 79.918 $0.100 0.607 80.525
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 80.525
Ending NAV $13.89
----------
Investment Return $1,118.49
Total Return Performance
- -----------------
Investment Return $1,118.49
Less Initial Investment $1,000.00
----------
$118.49 / $1,000.00 x 100
Total Return: 11.85%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,154.12
T = 15.41%
THREE
YEARS
- ---------
3
$1000(1 - T) = $1,398.66
T = 11.83%
FIVE
YEARS
- ---------
5
$1000(1 - T) = $1,559.3
T = 9.29%
TEN
YEARS
- ---------
10
$1000(1 - T) = $3,117.1
T = 12.04%
FIFTEEN
YEARS
- ---------
15
$1000(1 - T) = $7,408.40
T = 14.28%
LIFE OF
FUND
- ---------
38.20547945
$1000(1 - T) = $72,644.23
T = 11.87%
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,099.40
T = 9.94%
THREE
YEARS
- ---------
3
$1000(1 - T) = $1,332.14
T = 10.03%
FIVE
YEARS
- ---------
5
$1000(1 - T) = $1,485.3
T = 8.23%
TEN
YEARS
- ---------
10
$1000(1 - T) = $2,968.4
T = 11.49%
FIFTEEN
YEARS
- ---------
15
$1000(1 - T) = $7,058.69
T = 13.92%
LIFE OF
FUND
- ---------
38.20547945
$1000(1 - T) = $69,192.09
T = 11.73%
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- --------------------------------------------------------------------------------
Average Annual Compounded Rate of Return:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,156.00
T = 15.60%
THREE
YEARS
- ---------
3
$1000(1 - T) = $1,400.89
T = 11.89%
FIVE
YEARS
- ---------
5
$1000(1 - T) = $1,561.86
T = 9.33%
TEN
YEARS
- ---------
10
$1000(1 - T) = $3,122.1
T = 12.06%
FIFTEEN
YEARS
- ---------
15
$1000(1 - T) = $7,420.42
T = 14.30%
LIFE OF
FUND
- ---------
38.20547945
$1000(1 - T) = $72,761.95
T = 11.88%
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.19
Initial Shares 61.767
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 61.767 $0.180 0.657 62.424
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 62.424
Ending NAV $17.40
----------
Investment Return $1,086.18
Total Return Performance
- -----------------
Investment Return $1,086.18
Less Initial Investment $1,000.00
----------
$86.18 / $1,000.00 x 100
Total Return: 8.62%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
SIX MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $15.59
Initial Shares 64.144
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 64.144 $0.800 3.316 67.460
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 67.460
Ending NAV $17.40
----------
Investment Return $1,173.80
Total Return Performance
- -----------------
Investment Return $1,173.80
Less Initial Investment $1,000.00
----------
$173.80 / $1,000.00 x 100
Total Return: 17.38%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
NINE MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.69
Initial Shares 59.916
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 59.916 $0.971 3.766 63.682
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.682
Ending NAV $17.40
----------
Investment Return $1,108.07
Total Return Performance
- -----------------
Investment Return $1,108.07
Less Initial Investment $1,000.00
----------
$108.07 / $1,000.00 x 100
Total Return: 10.81%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.69
Initial Shares 59.916
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 59.916 $0.970 3.766 63.682
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.682
Ending NAV $17.40
----------
Investment Return $1,108.07
Total Return Performance
- -----------------
Investment Return $1,108.07
Less Initial Investment $1,000.00
----------
$108.07 / $1,000.00 x 100
Total Return: 10.81%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
ONE YEAR
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.28
Initial Shares 61.425
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 61.425 $1.254 5.012 66.437
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 66.437
Ending NAV x $17.40
----------
Investment Return $1,156.00
Total Return Performance
- -----------------
Investment Return $1,156.00
Less Initial Investment $1,000.00
----------
$156.00 / $1,000.00 x 100
Total Return: 15.6004%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
THREE YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.02
Initial Shares 58.754
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1993 58.754 $1.590 5.744 64.498
- -----------------------------------------------------------
1994 64.498 $2.500 9.940 74.438
- -----------------------------------------------------------
1995 74.438 $1.254 6.073 80.511
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 80.511
Ending NAV x $17.40
----------
Investment Return $1,400.89
Total Return Performance
- -----------------
Investment Return $1,400.89
Less Initial Investment $1,000.00
----------
$400.89 / $1,000.00 x 100
Total Return: 40.0891%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
FIVE YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.08
Initial Shares 58.548
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1991 58.548 $0.970 3.804 62.352
- -----------------------------------------------------------
1992 62.352 $0.810 3.152 65.504
- -----------------------------------------------------------
1993 65.504 $1.590 6.404 71.908
- -----------------------------------------------------------
1994 71.908 $2.500 11.082 82.990
- -----------------------------------------------------------
1995 82.990 $1.254 6.772 89.762
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 89.762
Ending NAV x $17.40
----------
Investment Return $1,561.86
- -----------------
Investment Return $1,561.86
Less Initial Investment $1,000.00
----------
$561.86 / $1,000.00 x 100
Total Return: 56.19%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
TEN YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.57
Initial Shares 60.350
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1986 60.350 $2.470 12.364 70.098
- -----------------------------------------------------------
1987 70.098 $2.800 12.364 81.538
- -----------------------------------------------------------
1988 81.538 $2.480 12.364 95.586
- -----------------------------------------------------------
1989 95.586 $1.070 12.364 101.870
- -----------------------------------------------------------
1990 101.870 $2.540 12.364 117.043
- -----------------------------------------------------------
1991 117.043 $0.970 12.364 124.645
- -----------------------------------------------------------
1992 124.645 $0.810 12.364 130.945
- -----------------------------------------------------------
1993 130.945 $1.590 12.364 143.748
- -----------------------------------------------------------
1994 143.748 $2.500 12.364 165.901
- -----------------------------------------------------------
1995 165.901 $1.254 12.364 179.436
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 179.436
Ending NAV $17.40
----------
Investment Return $3,122.19
Total Return Performance
- -----------------
Investment Return $3,122.19
Less Initial Investment $1,000.00
----------
$2,122.19 / $1,000.00 x 100
Total Return: 212.22%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
FIFTEEN YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $13.93
Initial Shares 71.788
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1981 71.788 $1.970 10.196 81.984
- -----------------------------------------------------------
1982 81.984 $2.310 15.166 97.150
- -----------------------------------------------------------
1983 97.150 $1.710 12.240 109.390
- -----------------------------------------------------------
1984 109.390 $2.340 17.226 126.616
- -----------------------------------------------------------
1985 126.616 $1.900 16.812 143.428
- -----------------------------------------------------------
1986 143.428 $2.470 23.167 166.595
- -----------------------------------------------------------
1987 166.595 $2.800 27.193 193.788
- -----------------------------------------------------------
1988 193.788 $2.480 33.387 227.175
- -----------------------------------------------------------
1989 227.175 $1.070 14.934 242.109
- -----------------------------------------------------------
1990 242.109 $2.540 36.062 278.171
- -----------------------------------------------------------
1991 278.171 $0.970 18.069 296.240
- -----------------------------------------------------------
1992 296.240 $0.810 14.971 311.211
- -----------------------------------------------------------
1993 311.211 $1.590 30.430 341.641
- -----------------------------------------------------------
1994 341.641 $2.500 52.650 394.291
- -----------------------------------------------------------
1995 394.291 $1.254 32.170 426.461
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 426.461
Ending NAV $17.40
----------
Investment Return $7,420.42
Total Return Performance
- -----------------
Investment Return $7,420.42
Less Initial Investment $1,000.00
----------
$6,420.42 / $1,000.00 x 100
Total Return: 642.04%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- ----------------------------------------------------
<S> <C>
Initial Investment $8.82
Beginning OFFER $8.82
Initial Shares 1.000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ----------------------------------------------------
<S> <C> <C> <C> <C>
1957 1.000 $0.050 113.022 114.022
- ----------------------------------------------------
1958 114.022 $0.460 6.670 120.692
- ----------------------------------------------------
1959 120.692 $0.550 6.960 127.652
- ----------------------------------------------------
1960 127.652 $0.950 12.657 140.309
- ----------------------------------------------------
1961 140.309 $0.730 10.958 151.267
- ----------------------------------------------------
1962 151.267 $0.850 12.830 164.097
- ----------------------------------------------------
1963 164.097 $0.480 8.287 172.384
- ----------------------------------------------------
1964 172.384 $0.800 13.604 185.988
- ----------------------------------------------------
1965 185.988 $0.850 13.660 199.648
- ----------------------------------------------------
1966 199.648 $0.950 15.657 215.305
- ----------------------------------------------------
1967 215.305 $1.000 20.164 235.469
- ----------------------------------------------------
1968 235.469 $1.705 32.457 267.926
- ----------------------------------------------------
1969 267.926 $1.705 32.775 300.701
- ----------------------------------------------------
1970 300.701 $1.555 42.339 343.040
- ----------------------------------------------------
1971 343.040 $0.775 25.346 368.386
- ----------------------------------------------------
1972 368.386 $1.100 35.629 404.015
- ----------------------------------------------------
1973 404.015 $1.100 41.487 445.502
- ----------------------------------------------------
1974 445.502 $0.620 29.650 475.152
- ----------------------------------------------------
1975 475.152 $0.650 38.818 513.970
- ----------------------------------------------------
1976 513.970 $0.620 32.651 546.621
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- --------------------------------------------------
<S> <C>
Initial Investment $8.82
Beginning OFFER $8.82
Initial Shares 1.000
</TABLE>
<TABLE>
- --------------------------------------------------
<S> <C> <C> <C> <C>
1977 546.621 $0.630 29.764 576.385
- --------------------------------------------------
1978 576.385 $0.720 36.583 612.968
- --------------------------------------------------
1979 612.968 $0.750 40.251 653.219
- --------------------------------------------------
1980 653.219 $0.950 50.706 703.925
- --------------------------------------------------
1981 703.925 $1.970 99.993 803.918
- --------------------------------------------------
1982 803.918 $2.310 148.716 952.634
- --------------------------------------------------
1983 952.634 $1.710 120.022 1,072.656
- --------------------------------------------------
1984 1072.656 $2.340 168.904 1,241.560
- --------------------------------------------------
1985 1241.560 $1.900 164.857 1,406.417
- --------------------------------------------------
1986 1406.417 $2.470 227.165 1,633.582
- --------------------------------------------------
1987 1633.582 $2.800 247.495 1,881.077
- --------------------------------------------------
1988 1881.077 $2.480 346.514 2,227.591
- --------------------------------------------------
1989 2227.591 $1.070 146.443 2,374.034
- --------------------------------------------------
1990 2374.034 $2.540 353.610 2,727.644
- --------------------------------------------------
1991 2727.644 $0.970 177.180 2,904.824
- --------------------------------------------------
1992 2904.824 $0.810 146.801 3,051.625
- --------------------------------------------------
1993 3051.625 $1.590 298.376 3,350.001
- --------------------------------------------------
1994 3350.001 $2.500 516.271 3,866.272
- --------------------------------------------------
1995 3866.272 $1.254 315.449 4,181.721
- --------------------------------------------------
</TABLE>
Ending Shares 4181.721
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $8.82
Beginning OFFER $8.82
Initial Shares 1.000
Ending NAV $17.40
----------
Investment Return $72,761.95
Total Return Performance
- -----------------
Investment Return $72,761.95
Less Initial Investment $1,000.00
----------
$71,761.95 / $1,000.00 x 100
Total Return: 7176.20%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
THREE MONTHS (INCLUDING CDSC)
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.17
Initial Shares 61.843
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 61.843 $0.135 0.494 62.337
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 62.337
Ending NAV x $17.38
----------
$1,083.42
Less CDSC $40.00
----------
Investment Return $1,043.42
Total Return Performance
- -----------------
Investment Return $1,043.42
Less Initial Investment $1,000.00
----------
$43.42 / $1,000.00 x 100
Total Return: 4.34%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
THREE MONTHS (EXCLUDING CDSC)
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.17
Initial Shares 61.843
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 61.843 $0.135 0.494 62.337
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 62.337
Ending NAV x $17.38
----------
Investment Return $1,083.42
Total Return Performance
- -----------------
Investment Return $1,083.42
Less Initial Investment $1,000.00
----------
$83.42 / $1,000.00 x 100
Total Return: 8.34%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (INCLUDING CDSC)
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $15.55
Initial Shares 64.309
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 64.309 $0.700 2.917 67.226
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 67.226
Ending NAV x $17.38
----------
$1,168.39
Less CDSC $40.00
----------
Investment Return $1,128.39
Total Return Performance
- -----------------
Investment Return $1,128.39
Less Initial Investment $1,000.00
----------
$128.39 / $1,000.00 x 100
Total Return: 12.84%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
SIX MONTHS (EXCLUDING CDSC)
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $15.55
Initial Shares 64.309
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 64.309 $0.700 2.917 67.226
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 67.226
Ending NAV $17.38
----------
Investment Return $1,168.39
Total Return Performance
- -----------------
Investment Return $1,168.39
Less Initial Investment $1,000.00
----------
$168.39 / $1,000.00 x 100
Total Return: 16.84%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (INCLUDING CDSC)
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.59
Initial Shares 60.277
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 60.277 $0.870 3.402 63.679
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.679
Ending NAV $17.38
----------
$1,106.74
Less CDSC $40.00
----------
Investment Return $1,066.74
Total Return Performance
- -----------------
Investment Return $1,066.74
Less Initial Investment $1,000.00
----------
$66.74 / $1,000.00 x 100
Total Return: 6.67%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
LIFE OF FUND (EXCLUDING CDSC)
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.59
Initial Shares 60.277
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 60.277 $0.870 3.402 63.679
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.679
Ending NAV $17.38
----------
Investment Return $1,106.74
Total Return Performance
- -----------------
Investment Return $1,106.74
Less Initial Investment $1,000.00
----------
$106.74 / $1,000.00 x 100
Total Return: 10.67%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.00
Initial Shares 58.824
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 58.824 $0.170 0.589 59.413
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 59.413
Ending NAV $17.40
----------
Investment Return $1,033.79
Total Return Performance
- -----------------
Investment Return $1,033.79
Less Initial Investment $1,000.00
----------
$33.79 / $1,000.00 x 100
Total Return: 3.38%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
SIX MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $16.35
Initial Shares 61.162
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 61.162 $0.774 3.058 64.220
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 64.220
Ending NAV $17.40
----------
Investment Return $1,117.43
Total Return Performance
- -----------------
Investment Return $1,117.43
Less Initial Investment $1,000.00
----------
$117.43 / $1,000.00 x 100
Total Return: 11.74%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
NINE MONTHS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.51
Initial Shares 57.110
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 57.110 $0.944 3.491 60.601
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 60.601
Ending NAV $17.40
----------
Investment Return $1,054.46
Total Return Performance
- -----------------
Investment Return $1,054.46
Less Initial Investment $1,000.00
----------
$54.46 / $1,000.00 x 100
Total Return: 5.45%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.09
Initial Shares 58.514
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1995 58.514 $1.227 4.670 63.184
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.184
Ending NAV x $17.40
----------
Investment Return $1,099.40
Total Return Performance
- -----------------
Investment Return $1,099.40
Less Initial Investment $1,000.00
----------
$99.40 / $1,000.00 x 100
Total Return: 9.94%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
THREE YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.87
Initial Shares 55.960
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1993 55.960 $1.590 5.471 61.431
- -----------------------------------------------------------
1994 61.431 $2.500 9.468 70.899
- -----------------------------------------------------------
1995 70.899 $1.227 5.661 76.560
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 76.560
Ending NAV x $17.40
----------
Investment Return $1,332.14
Total Return Performance
- -----------------
Investment Return $1,332.14
Less Initial Investment $1,000.00
----------
$332.14 / $1,000.00 x 10
Total Return: 33.21%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
FIVE YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.93
Initial Shares 55.772
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1991 55.772 $0.970 3.622 59.394
- -----------------------------------------------------------
1992 59.394 $0.810 3.002 62.396
- -----------------------------------------------------------
1993 62.396 $1.590 6.101 68.497
- -----------------------------------------------------------
1994 68.497 $2.500 10.556 79.053
- -----------------------------------------------------------
1995 79.053 $1.227 6.313 85.366
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 85.366
Ending NAV x $17.40
----------
Investment Return $1,485.37
- -----------------
Investment Return $1,485.37
Less Initial Investment $1,000.00
----------
$485.37 / $1,000 x 100
Total Return: 48.54%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
TEN YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $17.40
Initial Shares 57.471
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1986 57.471 $2.470 9.283 66.754
- -----------------------------------------------------------
1987 66.754 $2.800 10.895 77.649
- -----------------------------------------------------------
1988 77.649 $2.480 13.378 91.027
- -----------------------------------------------------------
1989 91.027 $1.070 5.985 97.012
- -----------------------------------------------------------
1990 97.012 $2.540 14.450 111.462
- -----------------------------------------------------------
1991 111.462 $0.970 7.241 118.703
- -----------------------------------------------------------
1992 118.703 $0.810 5.998 124.701
- -----------------------------------------------------------
1993 124.701 $1.590 12.193 136.894
- -----------------------------------------------------------
1994 136.894 $2.500 21.096 157.990
- -----------------------------------------------------------
1995 157.990 $1.227 12.613 170.603
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 170.603
Ending NAV $17.40
----------
Investment Return $2,968.49
Total Return Performance
- -----------------
Investment Return $2,968.49
Less Initial Investment $1,000.00
----------
$1,968.49 / $1,000.00 x 100
Total Return: 196.85%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
FIFTEEN YEARS
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $14.62
Initial Shares 68.399
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1981 68.399 $1.970 9.716 78.115
- -----------------------------------------------------------
1982 78.115 $2.310 14.450 92.565
- -----------------------------------------------------------
1983 92.565 $1.710 11.663 104.228
- -----------------------------------------------------------
1984 104.228 $2.340 16.412 120.640
- -----------------------------------------------------------
1985 120.640 $1.900 16.019 136.659
- -----------------------------------------------------------
1986 136.659 $2.470 22.074 158.733
- -----------------------------------------------------------
1987 158.733 $2.800 25.908 184.641
- -----------------------------------------------------------
1988 184.641 $2.480 31.811 216.452
- -----------------------------------------------------------
1989 216.452 $1.070 14.229 230.681
- -----------------------------------------------------------
1990 230.681 $2.540 34.360 265.041
- -----------------------------------------------------------
1991 265.041 $0.970 17.216 282.257
- -----------------------------------------------------------
1992 282.257 $0.810 14.265 296.522
- -----------------------------------------------------------
1993 296.522 $1.590 28.992 325.514
- -----------------------------------------------------------
1994 325.514 $2.500 50.164 375.678
- -----------------------------------------------------------
1995 375.678 $1.227 29.994 405.672
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 405.672
Ending NAV $17.40
----------
Investment Return $7,058.69
Total Return Performance
- -----------------
Investment Return $7,058.69
Less Initial Investment $1,000.00
----------
$6,058.69 / $1,000.00 x 100
Total Return: 605.87%
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- ----------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $4.86
Initial Shares 205.761
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ----------------------------------------------------
<S> <C> <C> <C> <C>
1957 205.761 $0.050 -97.158 108.603
- ----------------------------------------------------
1958 108.603 $0.460 6.353 114.956
- ----------------------------------------------------
1959 114.956 $0.550 6.630 121.586
- ----------------------------------------------------
1960 121.586 $0.950 12.056 133.642
- ----------------------------------------------------
1961 133.642 $0.730 10.437 144.079
- ----------------------------------------------------
1962 144.079 $0.850 12.220 156.299
- ----------------------------------------------------
1963 156.299 $0.480 7.894 164.193
- ----------------------------------------------------
1964 164.193 $0.800 12.958 177.151
- ----------------------------------------------------
1965 177.151 $0.850 13.011 190.162
- ----------------------------------------------------
1966 190.162 $0.950 14.911 205.073
- ----------------------------------------------------
1967 205.073 $1.000 19.206 224.279
- ----------------------------------------------------
1968 224.279 $1.705 30.915 255.194
- ----------------------------------------------------
1969 255.194 2 $0.143 31.217 286.411
- ----------------------------------------------------
1970 286.411 $1.555 40.328 326.739
- ----------------------------------------------------
1971 326.739 $0.775 24.141 350.880
- ----------------------------------------------------
1972 350.880 $1.100 33.936 384.816
- ----------------------------------------------------
1973 384.816 $1.100 39.515 424.331
- ----------------------------------------------------
1974 424.331 $0.620 28.242 452.573
- ----------------------------------------------------
1975 452.573 $0.650 36.974 489.547
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- ----------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $4.86
Initial Shares 205.761
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ----------------------------------------------------
<S> <C> <C> <C> <C>
1976 489.547 $0.620 31.100 520.647
- ----------------------------------------------------
1977 520.647 $0.630 28.349 548.996
- ----------------------------------------------------
1978 548.996 $0.720 34.843 583.839
- ----------------------------------------------------
1979 583.839 $0.750 38.339 622.178
- ----------------------------------------------------
1980 622.178 $0.950 48.296 670.474
- ----------------------------------------------------
1981 670.474 $1.970 95.240 765.714
- ----------------------------------------------------
1982 765.714 $2.310 141.649 907.363
- ----------------------------------------------------
1983 907.363 $1.710 114.318 1,021.681
- ----------------------------------------------------
1984 1021.681 $2.340 160.877 1,182.558
- ----------------------------------------------------
1985 1182.558 $1.900 157.023 1,339.581
- ----------------------------------------------------
1986 1339.581 $2.470 216.370 1,555.951
- ----------------------------------------------------
1987 1555.951 $2.800 253.960 1,809.911
- ----------------------------------------------------
1988 1809.911 $2.480 311.821 2,121.732
- ----------------------------------------------------
1989 2121.732 $1.070 139.483 2,261.215
- ----------------------------------------------------
1990 2261.215 $2.540 336.807 2,598.022
- ----------------------------------------------------
1991 2598.022 $0.970 168.761 2,766.783
- ----------------------------------------------------
1992 2766.783 $0.810 139.677 2,906.460
- ----------------------------------------------------
1993 2906.460 $1.590 284.345 3,190.805
- ----------------------------------------------------
</TABLE>
<PAGE>
DELAWARE GROUP DECATUR INCOME FUND A
TOTAL RETURN PERFORMANCE
LIFE OF FUND
<TABLE>
- -----------------------------------------------------------
<S> <C>
Initial Investment $1,000.00
Beginning OFFER $4.86
Initial Shares 205.761
</TABLE>
<TABLE>
<CAPTION>
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
1994 3190.805 $2.500 491.736 3,682.541
- -----------------------------------------------------------
1995 3682.541 $1.227 294.016 3,976.557
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 3976.557
Ending NAV x $17.40
----------
Investment Return $69,192.09
Total Return Performance
- -----------------
Investment Return $69,192.09
Less Initial Investment $1,000.00
----------
$68,192.09 / $1,000 x 100
Total Return: 6819.21%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, 1NC.
<SERIES>
<NUMBER> 011
<NAME> CLASS A
<S> <C>
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<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 1,352,712,312
<INVESTMENTS-AT-VALUE> 1,327,309,018
<RECEIVABLES> 25,645,347
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<OTHER-ITEMS-LIABILITIES> 2,324,093
<TOTAL-LIABILITIES> 14,396,573
<SENIOR-EQUITY> 85,950,930
<PAID-IN-CAPITAL-COMMON> 1,247,155,783
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<ACCUM-APPREC-OR-DEPREC> (25,403,294)
<NET-ASSETS> 1,153,883,754
<DIVIDEND-INCOME> 59,110,465
<INTEREST-INCOME> 9,878,943
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<EXPENSES-NET> 11,660,917
<NET-INVESTMENT-INCOME> 57,328,491
<REALIZED-GAINS-CURRENT> 36,051,478
<APPREC-INCREASE-CURRENT> (97,720,373)
<NET-CHANGE-FROM-OPS> (4,340,404)
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 144,029,198
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<NUMBER-OF-SHARES-REDEEMED> 23,687,288
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<ACCUMULATED-GAINS-PRIOR> 134,990,570
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,152,073
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,660,917
<AVERAGE-NET-ASSETS> 1,268,454,853
<PER-SHARE-NAV-BEGIN> 18.240
<PER-SHARE-NII> 0.670
<PER-SHARE-GAIN-APPREC> (0.730)
<PER-SHARE-DIVIDEND> 0.860
<PER-SHARE-DISTRIBUTIONS> 1.750
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.570
<EXPENSE-RATIO> 0.81
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<AVG-DEBT-PER-SHARE> 0
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<NAME> DELAWARE GROUP DECATUR FUND, INC.
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<DIVIDEND-INCOME> 59,110,465
<INTEREST-INCOME> 9,878,943
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<EXPENSES-NET> 11,660,917
<NET-INVESTMENT-INCOME> 57,328,491
<REALIZED-GAINS-CURRENT> 36,051,478
<APPREC-INCREASE-CURRENT> (97,720,373)
<NET-CHANGE-FROM-OPS> (4,340,404)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,826
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 177,186
<NUMBER-OF-SHARES-REDEEMED> 16
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<NET-CHANGE-IN-ASSETS> (173,439,973)
<ACCUMULATED-NII-PRIOR> 21,302,128
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,152,073
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,660,917
<AVERAGE-NET-ASSETS> 1,138,374
<PER-SHARE-NAV-BEGIN> 16,590
<PER-SHARE-NII> 0.150
<PER-SHARE-GAIN-APPREC> (1.020)
<PER-SHARE-DIVIDEND> 0.170
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 15.550
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<DISTRIBUTIONS-OF-GAINS> 85,820
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<NUMBER-OF-SHARES-REDEEMED> 16,951
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<ACCUMULATED-NII-PRIOR> 4,037,420
<ACCUMULATED-GAINS-PRIOR> 27,012,850
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<INTEREST-EXPENSE> 0
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 013
<NAME> INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1995
<INVESTMENTS-AT-COST> 1,334,501,725
<INVESTMENTS-AT-VALUE> 1,468,393,649
<RECEIVABLES> 34,697,857
<ASSETS-OTHER> 26,105
<OTHER-ITEMS-ASSETS> 5,790,222
<TOTAL-ASSETS> 1,508,907,833
<PAYABLE-FOR-SECURITIES> 19,374,557
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,717,226
<TOTAL-LIABILITIES> 22,091,783
<SENIOR-EQUITY> 85,441,139
<PAID-IN-CAPITAL-COMMON> 1,238,676,002
<SHARES-COMMON-STOCK> 10,747,746
<SHARES-COMMON-PRIOR> 11,684,397
<ACCUMULATED-NII-CURRENT> 3,105,001
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,701,984
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 133,891,924
<NET-ASSETS> 186,980,325
<DIVIDEND-INCOME> 26,891,347
<INTEREST-INCOME> 8,720,620
<OTHER-INCOME> 0
<EXPENSES-NET> 6,008,796
<NET-INVESTMENT-INCOME> 29,603,171
<REALIZED-GAINS-CURRENT> 34,550,634
<APPREC-INCREASE-CURRENT> 159,295,218
<NET-CHANGE-FROM-OPS> 223,449,023
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,096,376
<DISTRIBUTIONS-OF-GAINS> 4,868,512
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,024,727
<NUMBER-OF-SHARES-REDEEMED> 2,518,300
<SHARES-REINVESTED> 556,921
<NET-CHANGE-IN-ASSETS> 148,062,361
<ACCUMULATED-NII-PRIOR> 4,037,420
<ACCUMULATED-GAINS-PRIOR> 27,012,850
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,422,111
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,008,796
<AVERAGE-NET-ASSETS> 173,959,059
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<PER-SHARE-GAIN-APPREC> 2.260
<PER-SHARE-DIVIDEND> 0.380
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<PER-SHARE-NAV-END> 17,400
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NAME> DECATUR INCOME FUND RETAIL
<NUMBER> 011
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1995
<INVESTMENTS-AT-COST> 1,334,501,725
<INVESTMENTS-AT-VALUE> 1,468,393,649
<RECEIVABLES> 34,697,857
<ASSETS-OTHER> 26,105
<OTHER-ITEMS-ASSETS> 5,790,222
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<TOTAL-LIABILITIES> 22,091,783
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<PAID-IN-CAPITAL-COMMON> 1,238,676,002
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<SHARES-COMMON-PRIOR> 74,088,725
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,701,984
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 133,891,924
<NET-ASSETS> 1,290,593,566
<DIVIDEND-INCOME> 26,891,347
<INTEREST-INCOME> 8,720,620
<OTHER-INCOME> 0
<EXPENSES-NET> 6,008,796
<NET-INVESTMENT-INCOME> 29,603,171
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<DISTRIBUTIONS-OF-INCOME> 26,340,331
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<SHARES-REINVESTED> 3,194,600
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 411,291,099
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<PER-SHARE-GAIN-APPREC> (0.340)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 411,291,099
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<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141,014
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 191
<NET-CHANGE-IN-ASSETS> (26,855,893)
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<PER-SHARE-NII> 0.120
<PER-SHARE-GAIN-APPREC> (0.820)
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<PER-SHARE-NAV-END> 12.310
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NAME> DECATUR TOTAL RETURN FUND CLASS B
<NUMBER> 022
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1995
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<OVERDISTRIBUTION-GAINS> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> 2,717,799
<NET-INVESTMENT-INCOME> 6,323,707
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<DISTRIBUTIONS-OF-INCOME> 40,147
<DISTRIBUTIONS-OF-GAINS> 46,914
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<SHARES-REINVESTED> 8,390
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<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 0
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER>023
<NAME> INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 411,291,099
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<OVERDISTRIBUTION-GAINS> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> 5,369,112
<NET-INVESTMENT-INCOME> 12,298,767
<REALIZED-GAINS-CURRENT> 13,432,223
<APPREC-INCREASE-CURRENT> (25,513,930)
<NET-CHANGE-FROM-OPS> 217,060
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 39,777
<DISTRIBUTIONS-OF-GAINS> 105,220
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 53,343
<NUMBER-OF-SHARES-REDEEMED> 35,249
<SHARES-REINVESTED> 11,332
<NET-CHANGE-IN-ASSETS> (26,855,893)
<ACCUMULATED-NII-PRIOR> 4,310,657
<ACCUMULATED-GAINS-PRIOR> 48,445,139
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,566,050
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,369,112
<AVERAGE-NET-ASSETS> 1,227,513
<PER-SHARE-NAV-BEGIN> 14.400
<PER-SHARE-NII> 0.430
<PER-SHARE-GAIN-APPREC> (0.370)
<PER-SHARE-DIVIDEND> 0.450
<PER-SHARE-DISTRIBUTIONS> 1.660
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.350
<EXPENSE-RATIO> 0.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER>023
<NAME> INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1995
<INVESTMENTS-AT-COST> 435,554,078
<INVESTMENTS-AT-VALUE> 485,934,176
<RECEIVABLES> 15,840,404
<ASSETS-OTHER> 3,025
<OTHER-ITEMS-ASSETS> 115,022
<TOTAL-ASSETS> 501,892,627
<PAYABLE-FOR-SECURITIES> 7,588,343
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 877,289
<TOTAL-LIABILITIES> 8,465,632
<SENIOR-EQUITY> 35,555,326
<PAID-IN-CAPITAL-COMMON> 393,415,157
<SHARES-COMMON-STOCK> 631,640
<SHARES-COMMON-PRIOR> 111,445
<ACCUMULATED-NII-CURRENT> 2,341,206
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,735,208
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 50,380,098
<NET-ASSETS> 8,772,716
<DIVIDEND-INCOME> 8,635,282
<INTEREST-INCOME> 406,224
<OTHER-INCOME> 0
<EXPENSES-NET> 2,717,799
<NET-INVESTMENT-INCOME> 6,323,707
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<DISTRIBUTIONS-OF-INCOME> 70,414
<DISTRIBUTIONS-OF-GAINS> 70,859
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 519,332
<NUMBER-OF-SHARES-REDEEMED> 8,526
<SHARES-REINVESTED> 9,388
<NET-CHANGE-IN-ASSETS> 87,463,669
<ACCUMULATED-NII-PRIOR> 2,757,852
<ACCUMULATED-GAINS-PRIOR> 12,192,447
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,311,644
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 6,127,221
<PER-SHARE-NAV-BEGIN> 12.350
<PER-SHARE-NII> 0.200
<PER-SHARE-GAIN-APPREC> 2.000
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.890
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> RETAIL
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1995
<INVESTMENTS-AT-COST> 435,554,078
<INVESTMENTS-AT-VALUE> 485,934,176
<RECEIVABLES> 15,840,404
<ASSETS-OTHER> 3,025
<OTHER-ITEMS-ASSETS> 115,022
<TOTAL-ASSETS> 501,892,627
<PAYABLE-FOR-SECURITIES> 7,588,343
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 877,289
<TOTAL-LIABILITIES> 8,465,632
<SENIOR-EQUITY> 35,555,326
<PAID-IN-CAPITAL-COMMON> 393,415,157
<SHARES-COMMON-STOCK> 34,501,799
<SHARES-COMMON-PRIOR> 32,710,895
<ACCUMULATED-NII-CURRENT> 2,341,206
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,735,208
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 50,380,098
<NET-ASSETS> 478,813,770
<DIVIDEND-INCOME> 8,635,282
<INTEREST-INCOME> 406,224
<OTHER-INCOME> 0
<EXPENSES-NET> 2,717,799
<NET-INVESTMENT-INCOME> 6,323,707
<REALIZED-GAINS-CURRENT> 13,315,892
<APPREC-INCREASE-CURRENT> 55,711,648
<NET-CHANGE-FROM-OPS> 75,351,247
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,629,792
<DISTRIBUTIONS-OF-GAINS> 13,655,358
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,018,775
<NUMBER-OF-SHARES-REDEEMED> 2,809,450
<SHARES-REINVESTED> 1,581,579
<NET-CHANGE-IN-ASSETS> 87,463,669
<ACCUMULATED-NII-PRIOR> 2,757,852
<ACCUMULATED-GAINS-PRIOR> 12,192,447
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,311,644
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 432,598,360
<PER-SHARE-NAV-BEGIN> 12.320
<PER-SHARE-NII> 0.180
<PER-SHARE-GAIN-APPREC> 2.000
<PER-SHARE-DIVIDEND> 0.200
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.880
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Draft 11/8/95
SUBJECT TO BOARD APPROVAL
The Delaware Group of Funds
Multiple Class Plan Pursuant to Rule 18f-3
This Multiple Class Plan (the "Plan") has been adopted by a
majority of the Board of Directors of each of the investment companies listed on
Appendix A as may be amended from time to time (each individually a "Fund," and
collectively, the "Funds"), including a majority of the Directors who are not
interested persons of each Fund, pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "Act"). The Board of each Fund has
determined that the Plan, including the allocation of expenses, is in the best
interests of the Fund as a whole, each series of shares offered by such Fund
(individually and collectively the "Series") where the Fund offers its shares in
multiple series, and each class of shares offered by the Fund or Series, as
relevant. The Plan sets forth the provisions relating to the establishment of
multiple classes of shares for each Fund and, if relevant, its Series. To the
extent that a subject matter set forth in this Plan is covered by a Fund's
Articles of Incorporation or By-Laws, such Articles of Incorporation or By-Laws
will control in the event of any inconsistencies with descriptions contained in
this Plan.
The term "Portfolio," when used in this Plan in the context of
a Fund that offers only a single series of shares, shall be a reference to the
Fund, and when used in the context of a Fund that offers multiple series of
shares, shall be a reference to each series of such Fund.
CLASSES
1. Appendix A to this Plan describes the classes to be issued
by each Portfolio and identifies the names of such classes.
FRONT-END SALES CHARGE
2. Class A shares carry a front-end sales charge as described
in the Funds' relevant prospectuses; and Class B, Class C and Institutional
Class shares are sold without a front-end sales charge.
<PAGE>
CONTINGENT DEFERRED SALES CHARGE
3. Class A shares are not subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more for which a dealer's commission is paid by the
Fund's principal underwriter, a CDSC of 1.00% of the lesser of (i) the net asset
value at the time of redemption, or (ii) the original net asset value at the
time of purchase applies to redemptions of those investments within the
contingency period of 12 months from the month of purchase.
4. Class B shares redeemed within six years of their purchase
shall be assessed a CDSC at the following rate: (i) 4.00% if shares are redeemed
within two years of purchase; (ii) 3.00% if shares are redeemed during the third
or fourth year following purchase; (iii) 2.00% if shares are redeemed during the
fifth year following purchase; (iv) 1.00% if shares are redeemed during the
sixth year following purchase; and (vi) 0% thereafter.
5. Class C shares redeemed within twelve months of their
purchase shall be assessed a CDSC at the rate of 1.00% of the lesser of (i) the
net asset value at the time of redemption, or (ii) the original net asset value
at the time of purchase.
6. The CDSC for each class is waived in certain circumstances,
as described in the Funds' relevant prospectuses. Shares that are subject to a
CDSC age one month at the end of the month in which the shares were purchased,
regardless of the specific date during the month that the shares were purchased.
7. Institutional Class shares are not subject to a CDSC.
RULE 12b-1 PLANS
8. In accordance with the Rule 12b-1 Plan for the Class A
shares of each Portfolio, the Fund shall pay to Delaware Distributors, L.P. (the
"Distributor") a monthly fee not to exceed 0.30% per annum of such Portfolio's
average daily net assets represented by Class A shares as may be determined by
the Fund's Board of Directors from time to time. The monthly fee shall be
reduced by the aggregate sums paid by or on behalf of such Portfolio to persons
other than broker-dealers (the "Service Providers") pursuant to servicing
agreements.
9. In accordance with the Rule 12b-1 Plan for the Class B
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class B shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class B shares, as a service fee pursuant to
dealer or servicing agreements.
-2-
<PAGE>
10. In accordance with the Rule 12b-1 Plan for the Class C
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class C shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class C shares, as a service fee pursuant to
dealer or servicing agreements.
11. A Rule 12b-1 Plan has not been adopted for the
Institutional Class shares of any Portfolio.
ALLOCATION OF EXPENSES
12. The Fund shall allocate to each class of shares of a
Portfolio any fees and expenses incurred by the Fund in connection with the
distribution or servicing of such class of shares under a Rule 12b-1 Plan, if
any, adopted for such class. In addition, the Fund reserves the right, subject
to approval by the Fund's Board of Directors, to allocate fees and expenses of
the following nature to a particular class of shares of a Portfolio (to the
extent that such fees and expenses actually vary among each class of shares or
vary by types of services provided to each class of shares of the Portfolio):
(i) transfer agency and other recordkeeping costs;
(ii) Securities and Exchange Commission and blue sky
registration or qualification fees;
(iii) printing and postage expenses related to printing and
distributing class specific materials, such as
shareholder reports, prospectuses and proxies to
current shareholders of a particular class or to
regulatory authorities with respect to such class of
shares;
(iv) audit or accounting fees or expenses relating
solely to such class;
(v) the expenses of administrative personnel and
services as required to support the shareholders
of such class;
-3-
<PAGE>
(vi) litigation or other legal expenses relating solely
to such class of shares;
(vii) Directors' fees and expenses incurred as a result
of issues relating solely to such class of shares;
and
(viii) other expenses subsequently identified and determined
to be properly allocated to such class
of shares.
13. Except for any expenses that are allocated to a particular
class as described in paragraph 11 above, all expenses incurred by a Portfolio
will be allocated to each class of shares of such Portfolio on the basis of the
net asset value of each such class in relation to the net asset value of the
Portfolio.
ALLOCATION OF INCOME AND GAINS
14. Income and realized and unrealized capital gains and
losses of a Portfolio will be allocated to each class of shares of such
Portfolio on the basis of the net asset value of each such class in relation to
the net asset value of the Portfolio.
CONVERSIONS
15. (a) Except for shares acquired through a reinvestment of
dividends or distributions, Class B shares held for eight years after purchase
are eligible for automatic conversion into Class A shares of the same Portfolio
in accordance with the terms described in the relevant prospectus. Class B
shares acquired through a reinvestment of dividends or distributions will
convert into Class A shares of the same Portfolio pro rata with the Class B
shares that were not acquired through the reinvestment of dividends and
distributions.
(b) The automatic conversion feature of Class B shares
shall be suspended at any time that the Board of Directors of the Fund
determines that there is not available a reasonably satisfactory opinion of
counsel to the effect that (i) the assessment of the higher fee under the Fund's
Rule 12b-1 Plan for Class B does not result in the Fund's dividends or
distributions constituting a preferential dividend under the Internal Revenue
Code of 1986, as amended, and (ii) the conversion of Class B shares into Class A
shares does not constitute a taxable event under federal income tax law. In
addition, the Board of Directors of a Fund may suspend the automatic conversion
feature by determining that any other condition to conversion set forth in the
relevant prospectus, as amended from time to time, is not satisfied.
-4-
<PAGE>
(c) The Board of Directors of a Fund may also suspend the
automatic conversion of Class B shares if it determines that suspension is
appropriate to comply with the requirements of the Act, or any rule or
regulation issued thereunder, relating to voting by Class B shareholders on the
Fund's Rule 12b-1 Plan for Class A or, in the alternative, the Board of
Directors may provide Class B shareholders with alternative conversion or
exchange rights.
16. Class A, Class C and Institutional Class shares do
not have a conversion feature.
EXCHANGES
17. Exchanges are permitted between Class A Shares and
Institutional Class Shares of a Portfolio or of any other Portfolio in the
Delaware Group funds; Class B shares of a Portfolio may only be exchanged for
Class B shares of any other Portfolio in the Delaware Group; Class C shares of a
Portfolio may only be exchanged for Class C shares of any other Portfolio in the
Delaware Group. All exchanges are subject to the eligibility and minimum
purchase requirements set forth in the Funds' prospectuses. Exchanges cannot be
made between open-end and closed-end funds within the Delaware Group.
18. Each class will vote separately with respect to the Rule
12b-1 Plan related to that class; provided, however, that Class B shares of a
Portfolio may vote on any proposal to materially increase the fees to be paid by
the Fund under the Rule 12b-1 Plan for the Class A shares of the same Portfolio.
19. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will monitor the
Portfolio for the existence of any material conflicts between the interests of
all the classes of shares offered by such Portfolio. The Directors, including a
majority of the Directors who are not interested persons of the Fund, shall take
such action as is reasonably necessary to eliminate any such conflict that may
develop. The Manager and the Distributor shall be responsible for alerting the
Board to any material conflicts that arise.
20. As described more fully in the Funds' relevant
prospectuses, broker-dealers that sell shares of a Portfolio will be compensated
differently depending on which class of shares the investor selects.
21. Each Fund reserves the right to increase, decrease or
waive the CDSC imposed on any existing or future class of shares of a Portfolio
within the ranges permissible under applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") and the rules of the National
Association of Securities Dealers, Inc. (the "NASD"), as such rules may be
-5-
<PAGE>
amended or adopted from time to time. Each Fund may in the future alter the
terms of the existing classes of such Portfolio or create new classes in
compliance with applicable rules and regulations of the SEC and the NASD.
22. All material amendments to this Plan must be approved by a
majority of the Directors of each Fund affected by such amendments, including a
majority of the Directors who are not interested persons of the Fund.
Effective as of November 29, 1995
-6-
<PAGE>
APPENDIX A
List of Funds and Their Classes
1. Delaware Group Delaware Fund, Inc.
Delaware Fund
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
2. Delaware Group Trend Fund, Inc.
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
3. Delaware Group Value Fund, Inc.
Value Fund A Class
Value Fund B Class
Value Fund C Class
Value Fund Institutional Class
4. Delaware Group DelCap Fund, Inc.
DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class
5. Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
Decatur Income Fund Institutional Class
<PAGE>
Decatur Total Return Fund
Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class
6. Delaware Group Global & International Funds, Inc.
International Equity Series
International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class
Global Bond Series
Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class
Global Assets Series
Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class
-8-
<PAGE>
EX-99
EX-99.B19 DIRECTORS' POWER OF ATTORNEY
POWER OF ATTORNEY
Each of the undersigned, a member of the Board of Directors of DELAWARE
GROUP DECATUR FUND, INC., hereby constitutes and appoints Wayne A. Stork, W.
Thacher Longstreth and Walter P. Babich and any one of them acting singly, his
true and lawful attorneys-in-fact, in his name, place, and stead, to execute
and cause to be filed with the Securities and Exchange Commission and other
federal or state government agency or body, such registration statements, and
any and all amendments thereto as either of such designees may deem to be
appropriate under the Securities Act of 1933, as amended, the Investment
Company Act of 1940, as amended, and all other applicable federal and state
securities laws.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 20th day of April, 1995.
/s/Walter P. Babich /s/W. Thacher Longstreth
------------------------- ------------------------
Walter P. Babich W. Thacher Longstreth
/s/Anthony D. Knerr /s/Charles E. Peck
------------------------- ------------------------
Anthony D. Knerr Charles E. Peck
/s/Ann R. Leven /s/Wayne A. Stork
------------------------- ------------------------
Ann R. Leven Wayne A. Stork
<PAGE>
Financial
Statements
Delaware Group Decatur Fund, Inc. -
Decatur Total Return Fund
Statement of Net Assets
November 30, 1994
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK - 92.88%
Basic Industries - 16.39%
Dow Chemical...................................... 115,400 $ 7,385,600
DuPont (EI) deNemours............................. 179,600 9,675,950
Eastman Chemical.................................. 56,025 2,640,178
Freeport McMoRan.................................. 386,800 6,623,950
Freeport McMoran Copper & Gold A.................. 4,834 97,284
Grace (W.R.)...................................... 273,400 10,115,800
Imperial Chemical ADR............................. 43,900 2,096,225
Monsanto.......................................... 147,700 10,634,400
Occidental Petroleum.............................. 280,000 5,495,000
Union Camp........................................ 86,500 4,011,438
Union Pacific..................................... 41,500 1,929,750
Witco............................................. 222,600 5,843,250
------------
66,548,825
------------
Capital Goods - 12.87%
Cooper Industries................................. 165,600 5,754,600
Dresser Industries................................ 210,000 4,200,000
General Dynamics.................................. 97,300 3,916,325
General Electric.................................. 257,200 11,831,200
Honeywell......................................... 110,000 3,217,500
Hubbell Class B................................... 72,500 3,969,375
Lockheed.......................................... 65,000 4,468,750
Tenneco........................................... 163,700 6,363,838
Thomas & Betts.................................... 65,000 4,306,250
United Technologies............................... 71,800 4,200,300
------------
52,228,138
------------
Communications - 5.82%
ALLTEL............................................ 231,000 6,496,875
BellSouth......................................... 80,000 4,150,000
British Telecommunications ADR.................... 103,000 6,115,625
Pacific Telesis Group............................. 135,000 3,915,000
Rochester Telephone............................... 136,000 2,958,000
------------
23,635,500
------------
Consumer Cyclical - 7.03%
Armstrong World Industries........................ 41,000 1,640,000
Eastman Kodak..................................... 178,100 8,125,813
Genuine Parts..................................... 117,145 4,085,432
Penney (J.C.)..................................... 146,400 6,734,400
Sears Roebuck..................................... 168,000 7,938,000
------------
28,523,645
------------
Defensive Consumer Staples - 2.27%
General Mills..................................... 87,000 $ 4,676,250
Philip Morris..................................... 76,000 4,541,000
------------
9,217,250
------------
Consumer Growth - 14.26%
Avon Products..................................... 73,000 4,516,875
Baxter International.............................. 150,000 3,862,500
Dun & Bradstreet.................................. 88,000 4,653,000
Kimberly-Clark.................................... 86,000 4,310,750
Lilly (Eli)....................................... 47,600 2,980,950
McGraw-Hill....................................... 121,800 8,267,175
Minnesota Mining & Manufacturing.................. 108,000 5,535,000
Readers Digest.................................... 102,000 4,717,500
Rhone-Poulenc Rorer............................... 38,100 1,485,900
Smithkline Beecham ADR Unit....................... 181,000 5,633,625
Times Mirror...................................... 143,000 4,415,125
Upjohn............................................ 112,800 3,623,700
Warner-Lambert.................................... 50,000 3,868,750
------------
57,870,850
------------
Credit Sensitive/Banks - 10.49%
BankAmerica....................................... 87,000 3,567,000
Barnett Banks..................................... 78,900 3,106,688
Chemical Bank..................................... 156,300 5,685,413
CoreStates Financial.............................. 223,000 5,519,250
First Chicago..................................... 80,000 3,720,000
Great Western Financial........................... 280,000 4,760,000
Mellon Bank....................................... 150,000 4,968,750
Meridian Bancorp.................................. 75,000 2,029,688
NationsBank....................................... 81,600 3,661,800
UJB Financial..................................... 125,700 3,063,938
U.S. Bancorp...................................... 110,000 2,516,250
------------
42,598,777
------------
Credit Sensitive/Insurance & Other - 6.73%
Aetna Life & Casualty............................. 115,900 5,186,525
American Express.................................. 81,500 2,414,438
Aon............................................... 127,200 4,022,700
CIGNA............................................. 85,000 5,386,875
Marsh & McLennan.................................. 55,000 3,966,875
St. Paul.......................................... 154,000 6,352,500
------------
27,329,913
------------
Energy - 16.09%
Amoco............................................. 101,700 6,178,275
Atlantic Richfield................................ 50,000 5,175,000
Exxon............................................. 216,500 13,071,188
Imperial Oil Limited.............................. 185,700 6,174,525
McDermott International........................... 210,500 4,999,375
Mobil............................................. 30,000 2,557,500
Phillips Petroleum................................ 72,000 2,376,000
Sonat............................................. 118,000 3,318,750
Texaco............................................ 151,000 9,380,875
USX-Marathon Group................................ 440,000 7,920,000
YPF Sociedad Anonima ADR.......................... 184,000 4,163,000
------------
65,314,488
------------
</TABLE>
8
<PAGE>
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK (Continued)
Utilities - 0.93%
TransCanada Pipeline.............................. 300,000 $ 3,787,500
------------
3,787,500
------------
Total Common Stock
(cost $381,442,293)............................ 377,054,886
------------
PREFERRED STOCK - 5.28%
ARCO 9.01% "Lyondell" Notes....................... 159,900 3,937,538
Delta Air Lines $3.50 pfd cv "C".................. 68,000 3,085,500
Ford Motor $4.20 pfd cv "A"....................... 42,000 3,701,250
Freeport McMoRan Copper & Gold
7.00% pfd cv................................... 35,000 800,625
General Motors $3.25 pfd cv "C"................... 105,000 5,853,750
RJR Nabisco Holdings $0.6012
pfd cv......................................... 600,000 4,050,000
------------
Total Preferred Stock
(cost $22,372,806)............................. 21,428,663
------------
<CAPTION>
Principal
Amount
<S> <C> <C>
REPURCHASE AGREEMENTS -
1.84%
With Bankers Trust 5.68% 12/1/94
(dated 11/30/94, collateralized by
$349,000 U.S. Treasury Notes
7.75% due 3/31/96, market value
$356,037 and $2,281,000 U.S.
Treasury Notes 4.25% due 5/15/96,
market value $2,190,943)....................... $2,496,000 2,496,000
With PaineWebber 5.70% 12/1/94
(dated 11/30/94, collateralized by
$1,901,000 U.S. Treasury Bills
due 4/13/95, market value
$1,860,481 and $624,000 U.S.
Treasury Notes 9.25% due 1/15/96,
market value $660,529)......................... 2,471,000 2,471,000
With Prudential Securities 5.68%
12/1/94 (dated 11/30/94,
collateralized by $833,000 U.S.
Treasury Notes 3.875% due
8/31/95, market value $824,407
and $1,901,000 U.S. Treasury
Notes 4.75% due 8/31/98, market
value $1,739,105).............................. 2,509,000 2,509,000
------------
Total Repurchase Agreements
(cost $7,476,000).............................. 7,476,000
------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 100.00% (cost $411,291,099)............ $405,959,549
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 0.00%............................ 3,777
------------
NET ASSETS APPLICABLE TO 32,963,545
SHARES ($1 par value) OUTSTANDING -
100.00%........................................ $405,963,326
============
NET ASSET VALUE -
DECATUR TOTAL RETURN FUND A CLASS
($402,849,391 / 32,710,895 shares)............. $12.32
======
NET ASSET VALUE -
DECATUR TOTAL RETURN FUND
INSTITUTIONAL CLASS
($1,376,097 / 111,445 shares).................. $12.35
======
NET ASSET VALUE -
DECATUR TOTAL RETURN FUND B CLASS
($1,737,838 / 141,205 shares).................. $12.31
======
</TABLE>
See accompanying notes
9
<PAGE>
Delaware Group Decatur Fund, Inc. -
Decatur Total Return Fund
Statement of Operations
Year Ended November 30, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................... $17,198,391
Interest............................................ 469,488 $ 17,667,879
-----------
EXPENSES:
Management fees ($2,542,011) and
directors' fees ($24,039)........................ 2,566,050
Distribution expenses............................... 1,280,232
Dividend disbursing and transfer
agent fees and expenses.......................... 956,871
Reports to shareholders............................. 138,485
Salaries............................................ 112,205
Custodian fees...................................... 45,907
Federal and state registration fees................. 43,883
Auditing............................................ 23,750
Taxes, other than taxes on income................... 11,575
Other............................................... 190,154 5,369,112
----------- ------------
NET INVESTMENT INCOME............................... 12,298,767
------------
NET REALIZED GAIN AND
UNREALIZED LOSS ON
INVESTMENTS:
Net realized gain from security
transactions..................................... 13,432,223
Net unrealized depreciation of
investments during the period.................... (25,513,930)
------------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS.............................. (12,081,707)
------------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS....................................... $ 217,060
============
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE -
DECATUR TOTAL RETURN FUND A CLASS
Net asset value per share (A)....................... $12.32
Sales charge (5.75% of offering price, or 6.09% of
amount invested per share)(B).................... .75
------
Offering price...................................... $13.07
======
</TABLE>
- -------------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more.
See accompanying notes
Delaware Group Decatur Fund, Inc. -
Decatur Total Return Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/94 11/30/93
<S> <C> <C>
OPERATIONS:
Net investment income............................. $ 12,298,767 $ 13,621,651
Net realized gain from security
transactions................................... 13,432,223 50,535,241
Net unrealized depreciation of
investments during the period.................. (25,513,930) (5,361,523)
------------ ------------
Net increase in net assets resulting
from operations................................ 217,060 58,795,369
------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Decatur Total Return Fund A Class.............. (13,809,161) (13,624,469)
Decatur Total Return Fund
Institutional Class......................... (39,777) (6,622)
Decatur Total Return Fund B Class.............. (2,634) --
Net realized gain from security
transactions:
Decatur Total Return Fund A Class.............. (49,579,695) (30,633,876)
Decatur Total Return Fund
Institutional Class......................... (105,220) --
Decatur Total Return Fund B Class.............. -- --
------------ ------------
(63,536,487) (44,264,967)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Decatur Total Return Fund A Class.............. 43,830,883 58,952,860
Decatur Total Return Fund
Institutional Class......................... 686,198 1,183,508
Decatur Total Return Fund B Class.............. 1,802,152 --
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain from security transactions:
Decatur Total Return Fund A Class.............. 60,129,721 41,665,292
Decatur Total Return Fund
Institutional Class......................... 144,998 6,622
Decatur Total Return Fund B Class.............. 2,465 --
------------ ------------
106,596,417 101,808,282
------------ ------------
Cost of shares repurchased:
Decatur Total Return Fund A Class.............. (69,644,135) (92,488,650)
Decatur Total Return Fund
Institutional Class......................... (488,748) (16,357)
Decatur Total Return Fund B Class.............. -- --
------------ ------------
(70,132,883) (92,505,007)
Increase in net assets derived from
capital share transactions.................. 36,463,534 9,303,275
------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS..................................... (26,855,893) 23,833,677
NET ASSETS:
Beginning of period............................... 432,819,219 408,985,542
------------ ------------
End of period (including
undistributed net investment
income of $2,757,852 and
$4,310,657, respectively)...................... $405,963,326 $432,819,219
============ ============
</TABLE>
See accompanying notes
10
<PAGE>
Delaware Group Decatur Fund, Inc. -
Decatur Total Return Fund
Notes to Financial Statements
November 30, 1994
1. Significant Accounting Policies
Delaware Group Decatur Fund, Inc. (the "Company") is a diversified open-end
investment company of the Series type organized under the laws of Maryland and
is registered under the Investment Company Act of 1940, as amended. The Company
currently offers two Series, Decatur Total Return Fund (the "Fund") (formerly
known as Decatur Fund II) and Decatur Income Fund (formerly known as Decatur
Fund I). The Fund currently offers three classes of shares, Decatur Total Return
Fund A Class (formerly known as Decatur Total Return Fund class), Decatur Total
Return Fund Institutional Class (formerly known as Decatur Total Return Fund
(Institutional) class) and Decatur Total Return Fund B Class.
Portfolio securities listed or traded on a national securities exchange, except
for bonds, are valued at the last sale price on the exchange where they are
primarily traded. Securities not traded on a particular day, over-the-counter
securities and government and agency securities are valued at mean value between
bid and asked prices. Money market instruments having a maturity of less than 60
days are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Gains and losses are based upon the specific
identification method for both financial statement and federal tax purposes.
Dividend income and distributions to shareholders are recorded on the ex-
dividend date. Interest income and expenses are recorded on the accrual basis.
Expenses directly attributable to a specific Series are paid by that Series.
Other common expenses are apportioned on the basis of net assets of the
respective Series.
No provision for federal income taxes was made since it is the intention of the
Fund to comply with the provisions of the Internal Revenue Code available to
regulated investment companies and to make requisite distributions to
shareholders.
On July 26, 1993, the Fund began offering a new class of shares, the Decatur
Total Return Fund Institutional Class, which is available only to certain
institutions at net asset value and on September 6, 1994, the Fund began
offering the Decatur Total Return Fund B Class. Each share in each class bears,
pro rata, all of the common expenses of the Series except that the Decatur Total
Return Fund Institutional Class does not incur any distribution fees under the
12b-1 Plan. The net asset values of all outstanding shares of each class of the
Fund are computed on a pro rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of shares of
that class. All income earned and expenses incurred by the Fund, are borne on a
pro rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes. Due
to the specific distribution expenses, it is expected that net asset value, net
investment income and dividends paid to each class of the Fund will vary.
The Fund is permitted to borrow money as a temporary measure for extraordinary
or emergency purposes. The Fund had a line of credit arrangement with its
custodian bank, Chemical Bank, for an amount not to exceed $10 million. As of
and for the year ended November 30, 1994, there were no borrowings under this
line of credit.
2. Investment Management Fee and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, Delaware
Management Company, Inc., the investment manager of the Fund, will receive a fee
to be paid monthly, which is computed on the net assets of the Fund as of the
close of business each day at the annual rate of 0.6% on the first $500 million
of average daily net assets of the Fund, 0.575% or the next $250 and 0.55% on
the average daily net assets in excess of $750 million, less all amounts paid to
the unaffiliated directors by the Fund. On December 12, 1994, Delaware
Management Holdings, Inc., which indirectly owns all of the outstanding stock of
Delaware Management Company, Inc. entered into an agreement of merger with
Lincoln National Corporation. This merger will result in Delaware Management
Holdings, Inc. becoming a wholly-owned subsidiary of Lincoln National
Corporation. The transaction is subject to the receipt of all regulatory and
shareholder approvals.
Pursuant to the Distribution Agreement between the Fund and Delaware
Distributors, L.P., an affiliate of Delaware Management Company, Inc., the
Distributor will be paid monthly a fee which is computed on the net assets of
the Fund as of the close of business each day at the annual rate of 0.30% of the
Fund's average daily net assets attributable to the Decatur Total Return Fund A
class and at an annual rate of 1.00% of the Fund's average daily net assets
attributable to the Decatur Total Return Fund B Class.
Certain officers, directors and shareholders of Delaware Management Company,
Inc. are officers and/or directors of the Company. Directors, officers and
employees of Delaware Management Company, Inc., who are also directors, officers
and employees of the Fund, do not receive any compensation from the Fund.
Salaries of officers and employees who are exclusively employed by the Delaware
Group of Funds are apportioned on the basis of net assets of the respective
Funds. For the year ended November 30, 1994, expenses related to such salaries
for the Fund amounted to $112,205. During the year November 30, 1994, Delaware
Service Company, Inc., an affiliate of Delaware Management Company, Inc., billed
$890,021 for providing dividend disbursing and transfer agent services to the
Fund. In addition, Delaware Distributors, L.P., another affiliate of Delaware
Management Company, Inc., received $187,816 from commissions earned on sales of
Decatur Total Return Fund A Class capital stock.
On November 30, 1994, the Fund had an investment management fee payable to
Delaware Management Company, Inc. of $15,073. In addition, the Fund owes
Delaware Management Company, Inc. and its affiliates, Delaware Service Company,
Inc. and Delaware Distributors, L.P., $9,460, $3,015 and $20,069, respectively,
for other expenses related to operations.
11
<PAGE>
Notes to Financial Statements (Continued)
3. Investments
Investment securities based on cost for federal income tax purposes at
November 30, 1994 are as follows:
<TABLE>
<S> <C>
Cost of investments........................................ $413,005,662
Aggregate unrealized appreciation.......................... 9,973,518
Aggregate unrealized depreciation.......................... (17,019,631)
------------
Market value of investments................................ $405,959,549
============
</TABLE>
Net realized gain based on securities sold for federal income tax purposes was
$13,951,512 for the year ended November 30, 1994.
During the year ended November 30, 1994, the Fund had purchases of $306,563,235
and sales of $314,130,788 of investment securities, other than U.S. government
securities and short-term debt securities having maturities of one year or less.
On November 30, 1994, the Fund had a receivable for investment securities sold
of $8,628,767 and a payable for investment securities purchased of $11,009,924.
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Year Year
Ended Ended
11/30/94 11/30/93
<S> <C> <C>
Shares sold:
Decatur Total Return Fund A Class............. 3,387,631 4,218,704
Decatur Total Return Fund
Institutional Class........................ 53,343 82,697
Decatur Total Return Fund B Class............. 141,014 --
Shares issued upon reinvestment of
dividends from net investment income
and distributions of net realized gain
from security transactions:
Decatur Total Return Fund A Class............. 4,694,827 3,147,359
Decatur Total Return Fund
Institutional Class........................ 11,332 456
Decatur Total Return Fund B Class............. 191 --
---------- ----------
8,288,338 7,449,216
---------- ----------
Shares repurchased:
Decatur Total Return Fund A Class............. (5,385,395) (6,599,799)
Decatur Total Return Fund
Institutional Class........................ (35,249) (1,134)
Decatur Total Return Fund B Class............. -- --
---------- ----------
(5,420,644) (6,600,933)
---------- ----------
Net increase.................................. 2,867,694 848,283
========== ==========
</TABLE>
The Fund declared distributions from net realized gain from security
transactions in the amount of $0.42 per share and $0.10, $0.14 and $0.09 per
share for the Decatur Total Return Fund A Class, Decatur Total Return Fund
Institutional Class and Decatur Total Return Fund B Class, respectively, from
net investment income, payable on January 5, 1995 to shareholders of record
December 27, 1994. The ex-dividend date was December 28, 1994.
5. Components of Net Assets
<TABLE>
<S> <C>
Common stock, $1 par value, 200,000,000 shares
authorized to the Fund with 100,000,000
shares allocated to the Decatur Total Return
Fund A Class, 50,000,000 shares allocated to
the Decatur Total Return Fund Institutional
Class and 50,000,000 shares allocated to the
Decatur Total Return Fund B Class.......................... $396,344,577
Accumulated undistributed income:
Net investment income...................................... 2,757,852
Net realized gain on investments........................... 12,192,447
Net unrealized depreciation of investments................. (5,331,550)
------------
Total net assets.............................................. $405,963,326
============
</TABLE>
12
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Decatur Total Return Fund A Class
----------------------------------------------------------------------------
Year
Ended
11/30/94 11/30/93 11/30/92 11/30/91 11/30/90 11/30/89 11/30/88
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $14.38 $13.98 $12.73 $11.71 $13.64 $11.47 $ 9.04
Income from investment
operations:
Net investment income............... 0.37 0.45 0.47 0.53 0.58 0.54 0.50
Net realized and unrealized gain
(loss) from security
transactions..................... (0.34) 1.45 1.30 1.07 (1.44) 2.12 2.30
------ ------ ------ ------ ------ ------ ------
Total from investment operations.... 0.03 1.90 1.77 1.60 (0.86) 2.66 2.80
Less distributions:
Dividends from net investment
income........................... (0.43) (0.45) (0.52) (0.58) (0.60) (0.49) (0.37)
Distributions from net realized
gain on security transactions.... (1.66) (1.05) none none (0.47) none none
------ ------ ------ ------ ------ ------ ------
Total distributions................. (2.09) (1.50) (0.52) (0.58) (1.07) (0.49) (0.37)
Net asset value, end of period......... $12.32 $14.38 $13.98 $12.73 $11.71 $13.64 $11.47
====== ====== ====== ====== ====== ====== ======
Total return**......................... (0.04%) 14.74% 14.12% 13.94% (6.84%) 23.73% 31.51%
Ratios/supplemental data:
Net assets, end of period (000
omitted)......................... $402,849 $431,638 $408,986 $394,338 $357,139 $318,871 $200,085
Ratio of expenses to average net
assets........................... 1.26% 1.22% 1.23% 1.23% 1.23% 1.24% 1.28%
Ratio of net investment income
to average net assets............ 2.88% 3.15% 3.44% 4.20% 4.87% 4.60% 4.77%
Portfolio turnover rate............. 74% 119% 98% 67% 54% 60% 69%
<CAPTION>
-----------------------
8/27/86*
to
11/30/87 11/30/86
<S> <C> <C>
Net asset value, beginning of period... $10.29 $9.53
Income from investment
operations:
Net investment income............... 0.31 0.04
Net realized and unrealized gain
(loss) from security
transactions..................... (1.30) 0.72
------ ------
Total from investment operations.... (0.99) 0.76
Less distributions:
Dividends from net investment
income........................... (0.26) none
Distributions from net realized
gain on security transactions.... none none
------ ------
Total distributions................. (0.26) none
Net asset value, end of period......... $ 9.04 $10.29
====== ======
Total return**......................... (10.08%) 33.87%
Ratios/supplemental data:
Net assets, end of period (000
omitted)......................... $146,632 $16,118
Ratio of expenses to average net
assets........................... 1.27%/+/ *
Ratio of net investment income
to average net assets............ 4.17%/++/ *
Portfolio turnover rate............. 39% *
</TABLE>
- -------------------------
* Date of initial public offering; the ratios of expenses and net investment
income to average daily net assets and portfolio turnover have been
omitted as management believes that such ratios for this relatively short
period are not meaningful.
** Does not reflect any maximum sales charges that are or were in effect nor
the 1% limited contingent deferred sales charge that would apply in the
event of certain redemptions within 12 months of purchase.
/+/ Ratio of expenses to average net assets prior to expense limitation was
1.41%.
/++/ Ratio of net investment income to average net assets prior to expense
limitation was 4.03%.
13
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Decatur Total Decatur Total
Return Fund Return Fund
Institutional Class B Class
-------------------------------------------
Year 7/26/93* 9/6/94*
Ended to to
11/30/94 11/30/93 11/30/94
<S> <C> <C> <C>
Net asset value, beginning of period..................................... $14.40 $14.10 $13.11
Income from investment operations:
Net investment income................................................. 0.43 0.15 0.12
Net realized and unrealized gain (loss) from security transactions.... (0.37) 0.25 (0.82)
------ ------ ------
Total from investment operations...................................... 0.06 0.40 (0.70)
Less distributions:
Dividends from net investment income.................................. (0.45) (0.10) (0.10)
Distributions from net realized gain on security transactions......... (1.66) none none
------ ------ ------
Total distributions................................................... (2.11) (0.10) (0.10)
Net asset value, end of period........................................... $12.35 $14.40 $12.31
====== ====== ======
Total return**........................................................... 0.19% 14.89% (5.37%)
Ratios/supplemental data:
Net assets, end of period (000 omitted)............................... $1,376 $1,181 $1,738
Ratio of expenses to average net assets............................... 0.96% 0.92% 1.96%
Ratio of net investment income to average net assets.................. 3.18% 3.45% 2.18%
Portfolio turnover rate............................................... 74% 119% 74%
</TABLE>
- -------------------------
* Date of initial public offering; ratios and total return have been annualized
for Decatur Total Return Fund Institutional Class. Ratios have been
annualized and total return has not been annualized for Decatur Total Return
Fund B Class.
** Does not include contingent deferred sales charge which varies from 1% - 4%
depending upon the holding period for Decatur Total Return Fund B Class.
14
<PAGE>
Delaware Group Decatur Fund, Inc. - Decatur Total Return
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Decatur Fund, Inc. - Decatur Total Return Fund
We have audited the accompanying statement of net assets of Delaware Group
Decatur Fund, Inc. - Decatur Total Return Fund as of November 30, 1994 and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the eight years in the period ended
November 30, 1994, and the period August 27, 1986 (date of initial public
offering) to November 30, 1986. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Decatur Fund, Inc.-Decatur Total Return Fund at November 30,1994,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the eight years in the period ended November 30,1994 and
the period August 27, 1986 (date of initial public offering) to November 30,
1986, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 6, 1995
15
<PAGE>
Financial
Statements
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund
Statement of Net Assets
November 30, 1994
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCK - 77.48%
Basic Industries - 12.88%
Dow Chemical................................... 326,800 $ 20,915,200
DuPont (EI) deNemours.......................... 390,000 21,011,250
Grace (W.R.)................................... 916,300 33,903,100
Imperial Chemical ADR.......................... 296,800 14,172,200
Monsanto....................................... 336,300 24,213,600
Occidental Petroleum........................... 914,000 17,937,250
Union Camp..................................... 374,800 17,381,350
Witco.......................................... 874,300 22,950,375
--------------
172,484,325
--------------
Capital Goods - 7.41%
Cooper Industries.............................. 401,000 13,934,750
General Electric............................... 707,800 32,558,800
Lockheed....................................... 150,000 10,312,500
Tenneco........................................ 649,900 25,264,863
United Technologies............................ 292,100 17,087,850
--------------
99,158,763
--------------
Communications - 4.18%
ALLTEL......................................... 868,100 24,415,313
NYNEX.......................................... 502,900 18,921,613
Pacific Telesis Group.......................... 436,500 12,658,500
--------------
55,995,426
--------------
Consumer Cyclical - 5.15%
Eastman Kodak.................................. 483,700 22,068,813
Penney (J.C.).................................. 488,200 22,457,200
Sears Roebuck.................................. 516,100 24,385,725
--------------
68,911,738
--------------
Defensive Consumer Staples - 1.90%
General Mills.................................. 235,900 12,679,625
Philip Morris.................................. 212,600 12,702,850
--------------
25,382,475
--------------
Consumer Growth - 11.65%
Avon Products.................................. 174,000 10,766,250
Baxter International........................... 249,100 6,414,325
Dun & Bradstreet............................... 227,400 12,023,775
Kimberly-Clark................................. 259,400 13,002,425
Lilly (Eli).................................... 109,500 6,857,438
McGraw-Hill.................................... 406,500 27,591,188
Minnesota Mining &
Manufacturing............................... 512,000 26,240,000
Rhone-Poulenc Rorer............................ 127,700 4,980,300
SmithKline Beecham ADR Unit.................... 346,400 10,781,700
Times Mirror................................... 356,600 11,010,025
Upjohn......................................... 199,100 6,396,088
Warner-Lambert................................. 257,900 19,955,013
--------------
156,018,527
--------------
Credit Sensitive/Banks - 9.70%
BankAmerica.................................... 173,600 7,117,600
Barnett Banks.................................. 232,500 9,154,688
Chemical Bank.................................. 498,000 18,114,750
CoreStates Financial........................... 584,300 14,461,425
First Chicago.................................. 248,900 11,573,850
Great Western Financial........................ 896,000 15,232,000
Integra Financial.............................. 154,800 6,192,000
Keycorp........................................ 23,105 563,184
Mellon Bank.................................... 391,200 12,958,500
Meridian Bankcorp.............................. 429,800 11,631,463
NationsBank.................................... 145,700 6,538,288
UJB Financial.................................. 350,000 8,531,250
U.S. Bancorp................................... 343,500 7,857,563
--------------
129,926,561
--------------
Credit Sensitive/Insurance &
Other - 8.51%
Aetna Life & Casualty.......................... 469,900 21,028,025
American Express............................... 144,800 4,289,700
Aon............................................ 153,000 4,838,625
DeBartolo Realty............................... 989,300 13,973,863
Liberty Property Trust......................... 818,300 14,422,538
Lincoln National............................... 443,700 17,248,838
Marsh & McLennan............................... 45,700 3,296,113
St. Paul....................................... 459,100 18,937,875
Simon Property Group........................... 673,400 15,909,075
--------------
113,944,652
--------------
Energy - 16.10%
Amoco.......................................... 338,100 20,539,575
Atlantic Richfield............................. 268,100 27,748,350
Consolidated Natural Gas....................... 300,000 10,500,000
Dresser Industries............................. 577,300 11,546,000
Exxon.......................................... 539,800 32,590,425
Imperial Oil Limited........................... 278,400 9,256,800
McDermott International........................ 912,600 21,674,250
Royal Dutch Petroleum.......................... 81,400 8,842,075
Sonat.......................................... 441,000 12,403,125
Texaco......................................... 282,700 17,562,738
Ultramar....................................... 466,000 11,242,250
USX-Marathon Group............................. 1,189,200 21,405,600
YPF Sociedad Anonima-ADR....................... 450,000 10,181,250
--------------
215,492,438
--------------
Total Common Stock
(cost $1,056,439,467)....................... 1,037,314,905
--------------
</TABLE>
12
<PAGE>
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
PREFERRED STOCK - 10.38%
American Express 6.25% pfd cv.................. 577,200 $ 24,963,900
Aon $3.04 pfd "B".............................. 215,000 10,185,625
ARCO 9.01% "Lyondell" Notes.................... 324,800 7,998,200
Ford Motor $4.20 pfd cv "A".................... 147,000 12,954,375
Freeport McMoRan Copper & Gold
7.0% pfd cv................................. 620,900 14,203,088
General Motors $3.25 pfd cv "C"................ 498,800 27,808,100
Kaiser Aluminum $0.6525 pfd "A"................ 898,000 7,184,000
RJR Nabisco Holdings $0.6012
pfd cv...................................... 3,478,500 23,479,875
Westinghouse $1.30 pfd cv "C".................. 746,000 10,164,250
--------------
Total Preferred Stock
(cost $139,604,800)......................... 138,941,413
--------------
<CAPTION>
Principal
Amount
<S> <C> <C>
CORPORATE BONDS - 10.27%
Communications - 1.14%
Adelphia Communications 12.50%
sr unsec notes 2002......................... $2,500,000 2,450,000
Cablevision Industries 10.75%
sr sub notes 2004........................... 1,500,000 1,485,000
Century Communications
11.875% 2003................................ 1,500,000 1,556,250
Continental Cablevision 11.00%
sr sub deb 2007............................. 2,600,000 2,613,000
Falcon Holdings 11.00% P.I.K.
sr sub notes 2003........................... 2,373,750 2,148,244
K-III Communications 10.625%
sr sec notes 2002........................... 2,000,000 1,940,000
Lamar Advertising 11.00%
sr sec notes 2003........................... 1,495,000 1,446,413
Rogers Cantel Mobile 11.125%
sr sub notes 2002........................... 550,000 563,750
Sullivan Graphics 15.00%
sr sub notes 2000........................... 1,000,000 1,057,500
--------------
15,260,157
--------------
Consumer - 0.45%
Chiquita Brands 11.50%
sub notes 2001.............................. 2,250,000 2,278,125
Revlon 9.50% sr notes 1999..................... 1,500,000 1,380,000
Seven-Up/RC Bottling 11.50%
sr sec notes 1999........................... 1,500,000 1,432,500
Universal Outdoor 11.00% 2003.................. 1,000,000 920,000
--------------
6,010,625
--------------
Energy/Utility - 0.14%
Midland Funding II 11.75%
notes 2005.................................. 2,000,000 1,922,500
--------------
1,922,500
--------------
Entertainment - 1.34%
ACT III Theatres 11.875%
sr sub notes 2003........................... 2,150,000 2,257,500
AMC Entertainment 11.875%
sr sub notes 2000........................... 3,000,000 3,172,500
Aztar 11.00% sr sub notes 2002................. 1,500,000 1,316,250
Bally's Grand 10.375% 2003..................... 2,000,000 1,730,000
Bally's Health & Tennis 13.00%
sr sub deb 2003............................. 1,000,000 757,500
Cinemark U.S.A. 12.00%
sr notes 2002............................... 2,000,000 2,125,000
Kloster Cruise 13.00%
sr sec notes 2003........................... 1,500,000 1,436,250
MGM Grand Hotel Finance 12.00%
1st mtg notes 2002.......................... 2,000,000 2,160,000
Plitt Theatres 10.875%
sr sub notes 2004........................... 2,000,000 1,885,000
Santa Fe Hotels 11.00% 2000.................... 1,250,000 1,112,500
--------------
17,952,500
--------------
Financial - 0.38%
PMI Acquisition 10.25% 2003.................... 3,000,000 2,865,000
Saul B.F. 11.625% REIT 2002.................... 1,000,000 860,000
U.S. Banknote 11.625% 2002..................... 1,500,000 1,348,125
--------------
5,073,125
--------------
Healthcare - 0.38%
Continental Medsystems 10.875%
2002........................................ 1,500,000 1,353,750
Healthtrust 10.75% sub notes 2002.............. 2,000,000 2,125,000
Healthtrust 10.25% 2004........................ 1,500,000 1,593,750
--------------
5,072,500
--------------
Industrial - 2.47%
AK Steel 10.75% sr notes 2004.................. 2,800,000 2,709,000
Allied Waste Industrial 10.75% 2004............ 1,500,000 1,395,000
Associated Materials 11.50%
sr sub notes 2003........................... 1,500,000 1,464,375
Calmar Spraying Systems 14.00%
sr sub disc notes 1999...................... 1,000,000 1,007,500
Carbide Graphite 11.50% 2003................... 2,000,000 2,020,000
Container Corporation of America
11.25% sr notes 2004........................ 2,000,000 2,025,000
Gaylord Container 11.50%
sr notes 2001............................... 1,500,000 1,526,250
Georgia Gulf 15.00% 2000....................... 1,000,000 1,033,750
Harris Chemical 10.75%
sr sub notes 2003........................... 2,500,000 2,287,500
Mid-American Waste Systems
12.25% 2003................................. 750,000 761,250
NL Industries 11.75% sr notes 2003............. 2,000,000 1,940,000
Oriole Homes 12.50% sr notes 2003.............. 1,000,000 935,000
Owens-Illinois 11.00% sr debs 2003............. 2,000,000 2,045,000
Penda Industries 10.75%
sr notes 2004............................... 1,500,000 1,365,000
* Polymer Group 12.25%
sr notes 2002............................... 2,000,000 1,965,000
Talley Manufacturing and Technology
10.75% sr notes 2003........................ 1,500,000 1,342,500
Trans Ocean Container 12.25%
sr sub notes 2004........................... 600,000 594,000
</TABLE>
13
<PAGE>
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
CORPORATE BONDS (Continued)
Industrial (Continued)
UCC Investors 11.00% notes 2003................ $2,500,000 $ 2,443,750
U.S. Can 13.50% sr sub notes 2002.............. 2,000,000 2,230,000
WCI Steel 10.50% sr notes 2002................. 2,000,000 1,932,500
--------------
33,022,375
--------------
Manufacturing - 2.27%
Applied Extrusion 11.50% 2002.................. 1,500,000 1,498,125
Armco 11.375% sr notes 1999.................... 1,250,000 1,256,250
Atlantis Group 11.00% sr notes 2003............ 1,390,000 1,383,050
Buckeye Cellulose 10.25% 2001.................. 1,500,000 1,432,500
Domtar 11.75% sr notes 1999.................... 2,500,000 2,587,500
Drypers 12.50% 2002............................ 2,000,000 2,015,000
Essex Group 10.00% sr notes 2003............... 1,450,000 1,363,000
Fairchild 12.25% sr sec notes 1999............. 1,500,000 1,447,500
Huntsman 11.00% 2004........................... 2,500,000 2,562,500
Fort Howard 14.125%
jr sub disc deb 2004........................ 2,000,000 2,020,000
IMO Industries 12.00%
sr sub notes 2001........................... 2,000,000 2,035,000
Interlake 12.125% sr sub deb 2002.............. 2,000,000 1,870,000
JPS Automotive Products 11.125%
sr notes 2001............................... 2,000,000 1,957,500
Mafco 11.875% sr sub notes 2002................ 1,500,000 1,477,500
SPX 11.75% sr sub notes 2002................... 2,000,000 1,980,000
Sequa 9.375% sr sub notes 2003................. 2,000,000 1,720,000
Westpoint Stevens 9.375%
sr sub deb 2005............................. 2,000,000 1,760,000
--------------
30,365,425
--------------
Natural Resources - 0.30%
Global Marine 12.75%
sr sec notes 1999........................... 2,000,000 2,150,000
Pacific Lumber 10.50%
sr notes 2003............................... 2,000,000 1,850,000
--------------
4,000,000
--------------
Retail - 1.03%
Cort Furniture 12.00% 2000..................... 2,375,000 2,256,250
Dairy Mart Stores 10.25%
sr sub notes 2004........................... 1,500,000 1,162,500
DiGiorgio 12.00% sr notes 2003................. 1,600,000 1,576,000
Food 4 Less Supermarkets 10.45%
sr unsec notes 2000......................... 2,000,000 1,970,000
Penn Traffic 10.25% sr notes 2002.............. 1,500,000 1,443,750
Purity Supreme 11.75%
sr sec notes 1999........................... 1,500,000 1,267,500
Specialty Foods 11.25%
sr notes 2003............................... 1,500,000 1,335,000
Thrifty Payless 12.25% 2004.................... 1,500,000 1,500,000
U.S. Leather 10.25% sr notes 2003.............. 1,500,000 1,312,500
--------------
13,823,500
--------------
Technology - 0.37%
ANACOMP 15.00% sr sub notes 2000............... 2,000,000 2,185,000
Unisys 13.50% floating rate
notes 1997.................................. 2,500,000 2,733,993
--------------
4,918,993
--------------
Total Corporate Bonds
(cost $143,037,045)......................... 137,421,700
--------------
REPURCHASE AGREEMENTS -
1.02%
With Banker's Trust 5.68% 12/1/94
(dated 11/30/94, collateralized by
$636,000 U.S. Treasury Notes
7.75% due 3/31/96, market value
$649,162 and $4,159,000 U.S.
Treasury Notes 4.25% due
5/15/96, market value
$3,994,750)................................. 4,550,000 4,550,000
With PaineWebber 5.70% 12/1/94
(dated 11/30/94, collateralized by
$3,466,000 U.S. Treasury Bills
due 4/13/95, market value
$3,392,218 and $1,138,522 U.S.
Treasury Notes 9.25% due 1/15/96,
market value $1,204,343).................... 4,506,000 4,506,000
With Prudential Securities 5.68%
12/1/94 (dated 11/30/94,
collateralized by $1,519,000 U.S.
Treasury Notes 3.875% due
8/31/95, market value $1,503,141
and $3,465,000 U.S. Treasury
Notes 4.75% due 8/31/98, market
value $3,170,911)........................... $ 4,575,000 $ 4,575,000
--------------
Total Repurchase Agreements
(cost $13,631,000).......................... 13,631,000
--------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 99.15% (cost $1,352,712,312)........ 1,327,309,018
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 0.85%......................... 11,444,671
--------------
NET ASSETS APPLICABLE TO 85,950,930
SHARES ($1 par value) OUTSTANDING;
PER SHARE - 100.00%......................... $1,338,753,689
==============
NET ASSET VALUE -
DECATUR INCOME FUND A CLASS
($1,153,883,754 / 74,088,725 shares)........ $15.57
======
NET ASSET VALUE -
DECATUR INCOME FUND INSTITUTIONAL CLASS
($182,104,767 / 11,684,397 shares).......... $15.59
======
NET ASSET VALUE -
DECATUR INCOME FUND B CLASS
($2,765,168 / 177,808 shares)............... $15.55
======
</TABLE>
* This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
Summary of Abbreviations:
P.I.K. - Payment-in-Kind
REIT - Real Estate Investment Trust
See accompanying notes
14
<PAGE>
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund
Statement of Operations
Year Ended November 30, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................... $59,110,465
Interest.......................................... 9,878,943 $ 68,989,408
-----------
EXPENSES:
Management fees ($7,128,034)
and directors' fees ($24,039).................. 7,152,073
Dividend disbursing and transfer
agent fees and expenses........................ 2,037,985
Distribution expenses............................. 771,342
Salaries.......................................... 395,893
Stockholders meeting.............................. 324,475
Reports to shareholders........................... 308,752
Taxes, other than taxes on income................. 166,521
Custodian fees.................................... 91,073
Federal and state registration fees............... 61,125
Legal............................................. 31,400
Auditing.......................................... 28,003
Other............................................. 292,275 11,660,917
----------- ------------
NET INVESTMENT INCOME............................. 57,328,491
------------
NET REALIZED GAIN AND
UNREALIZED LOSS ON
INVESTMENTS:
Net realized gain from security
transactions................................... 36,051,478
Net unrealized depreciation of
investments during the period.................. (97,720,373)
------------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS............................ (61,668,895)
------------
NET DECREASE IN NET ASSETS
RESULTING FROM
OPERATIONS..................................... $ (4,340,404)
============
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE -
DECATUR INCOME FUND A CLASS
Net asset value per share (A)..................... $15.57
Sales charges(5.75% of offering price, or 6.10% of
amount invested per share)(B).................. .95
------
Offering price.................................... $16.52
======
</TABLE>
- -------------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more.
See accompanying notes
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/94 11/30/93
<S> <C> <C>
OPERATIONS:
Net investment income............................. $ 57,328,491 $ 66,247,065
Net realized gain from security
transactions................................... 36,051,478 139,843,603
Net unrealized appreciation
(depreciation) during the period............... (97,720,373) 19,165,063
-------------- --------------
Net increase (decrease )in net assets
resulting from operations..................... (4,340,404) 225,255,731
-------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Decatur Income Fund A Class.................... (66,582,316) (58,592,519)
Decatur Income Fund
Institutional Class......................... (7,995,057) --
Decatur Income Fund B Class.................... (15,826) --
Net realized gain from security
transactions:
Decatur Income Fund A Class.................... (144,029,198) (73,739,771)
Decatur Income Fund
Institutional Class......................... -- --
Decatur Income Fund B Class.................... -- --
-------------- --------------
(218,622,397) (132,332,290)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Decatur Income Fund A Class.................... 56,739,570 106,938,485
Decatur Income Fund
Institutional Class......................... 34,055,194 --
Decatur Income Fund B Class.................... 2,858,350 --
Net asset value of shares issued
upon reinvestment of dividends
from net investment income
and net realized gain from
security transactions:
Decatur Income Fund A Class.................... 187,326,243 117,185,733
Decatur Income Fund
Institutional Class......................... 7,137,272 --
Decatur Income Fund B Class.................... 10,142 --
-------------- --------------
288,126,771 224,124,218
-------------- --------------
Cost of shares repurchased:
Decatur Income Fund A Class.................... (174,051,022) (313,059,659)
Decatur Income Fund
Institutional Class......................... (64,552,660) --
Decatur Income Fund B Class.................... (261) --
-------------- --------------
(238,603,943) (313,059,659)
-------------- --------------
Increase (decrease) in net assets
derived from capital share
transactions................................ 49,522,828 (88,935,441)
-------------- --------------
NET INCREASE (DECREASE) IN
NET ASSETS..................................... (173,439,973) 3,988,000
NET ASSETS:
Beginning of period............................... 1,512,193,662 1,508,205,662
-------------- --------------
End of period (including
undistributed net investment
income of $4,037,420 and
$21,302,128, respectively)..................... $1,338,753,689 $1,512,193,662
============== ==============
</TABLE>
See accompanying notes
15
<PAGE>
Delaware Group Decatur Fund, Inc. -
Decatur Income Series
Notes to Financial Statements
November 30, 1994
1. Significant Accounting Policies
Delaware Group Decatur Fund, Inc. (the "Company"), is a diversified open-end
investment company of the Series type organized under the laws of Maryland and
registered under the Investment Company Act of 1940, as amended. The Company
currently offers two Series, Decatur Income Fund (the "Fund") (formerly known as
Decatur Fund I) and Decatur Total Return Fund (formerly known as Decatur Fund
II). The Fund currently offers three classes of shares, Decatur Income Fund A
Class (formerly known as Decatur Fund I class), Decatur Income Fund
Institutional Class (formerly known as Decatur I (Institutional) class) and
Decatur Income Fund B Class.
Equity securities listed or traded on a national securities exchange, except for
bonds, are valued at the last sale price on the exchange where they are
primarily traded. Securities not traded on a particular day, over-the-counter
securities and government and agency securities are valued at mean value between
bid and asked prices. Money market instruments having a maturity of less than 60
days are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Gains and losses are based upon the specific
identification method for both financial statement and federal tax purposes.
Dividend income and distributions to shareholders are recorded on the ex-
dividend date. Interest income and expenses are recorded on the accrual basis.
No provision for federal income taxes was made since it is the intention of the
Fund to comply with the provisions of the Internal Revenue Code available to
regulated investment companies and to make requisite distributions to
shareholders.
On January 13, 1994, the Fund began offering a new class of shares, the Decatur
Income Fund Institutional Class, which is available only to certain institutions
at net asset value and on September 6, 1994, the Fund began offering the Decatur
Income Fund B Class. Each share in each class bears, pro rata, all of the common
expenses of the Fund except that the Decatur Income Fund Institutional Class
does not incur any distribution fees under the 12b-1 Plan. The net asset values
of all outstanding shares of each class of the Fund are computed on a pro rata
basis for each outstanding share based on the proportionate participation in the
Fund represented by the value of shares of that class. All income earned and
expenses incurred by the Fund, are borne on a pro rata basis by each outstanding
share of a class, based on each class' percentage in the Fund represented by the
value of shares of such classes. Due to the specific distribution expenses it is
expected that net asset value, net investment income and dividends paid to each
class of the Fund will vary.
The Fund is permitted to borrow money as a temporary measure for extraordinary
or emergency purposes. The Fund has a line of credit arrangement with its
custodian bank, Chemical Bank, for an amount not to exceed $25 million. As of
and for the year ended November 30, 1994, there were no borrowings under this
line of credit.
2. Investment Management Fee and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the
compensation paid to Delaware Management Company, Inc., the investment manager
of the Fund, is equal to (on an annual basis) 0.60% on the first $100 million of
average daily net assets of the Fund, 0.525% on the next $150 million, 0.50% on
the next $250 million and 0.475% on the average daily net assets over $500
million, less all amounts paid to the unaffiliated directors by the Fund. On
December 12, 1994, Delaware Management Holdings, Inc., which indirectly owns all
of the outstanding stock of Delaware Management Company, Inc., entered into an
agreement of merger with Lincoln National Corporation. This merger will result
in Delaware Management Holdings, Inc. becoming a wholly-owned subsidiary of
Lincoln National Corporation. The transaction is subject to the receipt of all
regulatory and shareholder approvals.
On March 29, 1994, the shareholders of Delaware Group Decatur Income Fund
approved the adoption of a Plan of Distribution pursuant to and in accordance
with the requirements of Rule 12b-1 under the Investment Company Act of 1940.
The Plan, which became effective on May 2, 1994 permits the Fund to pay the
Distributor a monthly fee not to exceed 0.30% of the Fund's average daily net
assets attributable to the Decatur Income Fund A Class and 1.00% of the Fund's
average daily net assets attributable to the Decatur Income Fund B Class.
Certain officers, directors and shareholders of Delaware Management Company,
Inc. are officers and/or directors of the Company. Directors, officers and
employees of Delaware Management Company, Inc., who are also directors, officers
and employees of the Fund, do not receive any compensation from the Fund.
Salaries of officers and employees who are exclusively employed by the Delaware
Group of Funds are apportioned on the basis of net assets of the respective
Funds. For the year ended November 30, 1994, expenses related to such salaries
for the Fund amounted to $395,893. During the year ended November 30, 1994,
Delaware Service Company, Inc., an affiliate of Delaware Management Company,
Inc., billed $2,037,985 for providing dividend disbursing and transfer agent
services to the Fund. In addition, Delaware Distributors, L.P., another
affiliate of Delaware Management Company, Inc., received $351,761 from
commissions earned on sales of Decatur Income Fund A Class capital stock.
On November 30, 1994, the Fund had an investment management fee payable to
Delaware Management Company, Inc. of $9,599. Also, the Fund had dividend
disbursing, transfer agent fees and other expenses payable to Delaware Service
Company, Inc. of $67,819. In addition, the Fund owes Delaware Management
Company, Inc. and its affiliate, Delaware Distributors, L.P., $33,540, and
$22,363, respectively, for other expenses related to operations.
16
<PAGE>
Notes to Financial Statements (Continued)
3. Investments
Investment securities based on cost for federal income tax purposes at
November 30, 1994 are as follows:
<TABLE>
<S> <C>
Cost of investments..................................... $1,359,490,653
Aggregate unrealized appreciation....................... 29,878,180
Aggregate unrealized depreciation....................... (62,059,815)
--------------
Market value of investments............................. $1,327,309,018
==============
</TABLE>
Net realized gain based on specific securities sold for federal income tax
purposes was $36,225,710 for the year ended November 30, 1994.
During the year ended November 30, 1994, the Fund had purchases of
$1,294,425,592 and sales of $1,392,775,708 of investment securities, other than
U.S. government securities and short-term debt securities having maturities of
one year or less.
On November 30, 1994 the Fund had receivables for investment securities sold of
$15,129,042 and payables for investment securities purchased of $12,072,480.
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/94 11/30/93
<S> <C> <C>
Shares sold:
Decatur Income Fund A Class............ 3,434,662 6,066,889
Decatur Income Fund
Institutional Class................. 15,245,137 --
Decatur Income Fund B Class............ 177,186 --
Shares issued upon reinvestment of
dividends from net investment
income and distributions of net
realized gain from security
transactions:
Decatur Income Fund A Class............ 11,415,889 6,927,477
Decatur Income Fund
Institutional Class................. 445,742 --
Decatur Income Fund B Class............ 638 --
----------- -----------
30,719,254 12,994,366
----------- -----------
Shares repurchased:
Decatur Income Fund A Class............ (23,687,288) (17,772,144)
Decatur Income Fund
Institutional Class................. (4,006,482) --
Decatur Income Fund B Class............ (16) --
----------- -----------
(27,693,786) (17,772,144)
----------- -----------
Net increase (decrease)................... 3,025,468 (4,777,778)
=========== ===========
</TABLE>
The Fund declared distributions from net realized gain on security transactions
in the amount of $0.42 per share and $0.07, $0.08 and $0.055 per share for
Decatur Income Fund A Class, Decatur Income Fund Institutional Class and Decatur
Income Fund B Class, respectively, from net investment income, payable on
January 5, 1995 to shareholders of record December 27, 1994. The ex-dividend
date was December 28, 1994.
5. Components of Net Assets
<TABLE>
<S> <C>
Common stock, $1 par value, 550,000,000 shares
authorized to the Fund with 450,000,000 shares
allocated to Decatur Income Fund A Class,
50,000,000 shares allocated to Decatur Income
Fund Institutional Class and 50,000,000 shares
allocated to Decatur Income Fund B Class................ $1,333,106,713
Accumulated undistributed income:
Net investment income................................... 4,037,420
Net realized gain on investments........................ 27,012,850
Net unrealized depreciation of investments.............. (25,403,294)
--------------
Total net assets........................................... $1,338,753,689
==============
</TABLE>
17
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Decatur Income Fund A Class
--------------------------------------------------------------------------------
Year Ended November 30,
1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $18.24 $17.20 $15.76 $14.53 $19.07 $16.89 $15.86
Income from investment
operations:
Net investment income......... 0.67 0.78 0.78 0.83 0.93 1.00 0.76
Net realized and unrealized
gain (loss) from security
transactions............... (0.73) 1.79 1.47 1.37 (2.93) 2.25 2.75
------ ------ ------ ------ ------ ------ ------
Total from investment
operations................. (0.06) 2.57 2.25 2.20 (2.00) 3.25 3.51
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income.......... (0.86) (0.68) (0.81) (0.97) (1.05) (0.81) (0.73)
Distributions from net
realized gain on
security transactions...... (1.75) (0.85) none none (1.49) (0.26) (1.75)
------ ------ ------ ------ ------ ------ ------
Total distributions........... (2.61) (1.53) (0.81) (0.97) (2.54) (1.07) (2.48)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period... $15.57 $18.24 $17.20 $15.76 $14.53 $19.07 $16.89
====== ====== ====== ====== ====== ====== ======
Total return/1/.................. (0.57%) 15.85% 14.55% 15.46% (12.04%) 19.84% 25.20%
Ratios/supplemental data:
Net assets, end of period
(000 omitted).............. $1,153,884 $1,512,194 $1,508,206 $1,579,521 $1,560,641 $1,848,129 $1,517,445
Ratio of expenses to
average net assets......... 0.81% 0.71% 0.72% 0.70% 0.70% 0.67% 0.73%
Ratio of net investment
income to average
net assets................. 3.92% 4.34% 4.55% 5.18% 5.78% 5.48% 4.80%
Portfolio turnover............ 92% 80% 79% 78% 44% 38% 39%
</TABLE>
<TABLE>
<CAPTION>
Decatur Income Fund A Class
---------------------------------
Year Ended November 30,
1987 1986 1985
<S> <C> <C> <C>
Net asset value, beginning of
period........................ $19.32 $17.20 $15.41
Income from investment
operations:
Net investment income......... 0.77 0.79 0.94
Net realized and unrealized
gain (loss) from security
transactions............... (1.43) 3.69 2.76
------ ------ ------
Total from investment
operations................. (0.66) 4.48 3.70
------ ------ ------
Less distributions:
Dividends from net
investment income.......... (0.80) (0.80) (0.91)
Distributions from net
realized gain on
security transactions...... (2.00) (1.56) (1.00)
------ ------ ------
Total distributions........... (2.80) (2.36) (1.91)
------ ------ ------
Net asset value, end of period... $15.86 $19.32 $17.20
====== ====== ======
Total return/1/.................. (4.48%) 29.27% 26.20%
Ratios/supplemental data:
Net assets, end of period
(000 omitted).............. $1,346,411 $1,228,952 $850,393
Ratio of expenses to
average net assets......... 0.69% 0.63% 0.65%
Ratio of net investment
income to average
net assets................. 4.37% 4.84% 6.21%
Portfolio turnover............ 56% 72% 75%
</TABLE>
- -------------------------
/1/ Does not include maximum sales charges that are or were in effect nor the 1%
limited contingent deferred sales charge that would apply in the event of
certain redemptions within 12 months of purchase.
18
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Decatur Income Decatur Income
Fund Institutional Class Fund B Class
-------------------------------------------
1/13/94/2/ 9/6/94/3/
to to
11/30/94 11/30/94
<S> <C> <C>
Net asset value, beginning of period...................................... $16.72 $16.59
Income from investment operations:
Net investment income.................................................. 0.59 0.15
Net realized and unrealized gain (loss) from security transactions..... (1.10) (1.02)
------ ------
Total from investment operations....................................... (0.51) (0.87)
------ ------
Less distributions:
Dividends from net investment income................................... (0.62) (0.17)
Distributions from net realized gain on security transactions.......... none none
------ ------
Total distributions.................................................... (0.62) (0.17)
------ ------
Net asset value, end of period............................................ $15.59 $15.55
====== ======
Total return/1/........................................................... (0.45%) (5.27%)
Ratios/supplemental data:
Net assets, end of period (000 omitted)................................ $182,105 $2,765
Ratio of expenses to average net assets................................ 0.70% 1.70%
Ratio of net investment income to average net assets................... 4.03% 3.03%
Portfolio turnover..................................................... 92% 92%
</TABLE>
- -------------------------
/1/ Does not include the contingent deferred sales charge which varies from
1% - 4% depending upon the holding period for Decatur Income Fund B Class.
/2/ Date of initial public offering; ratios and total return have been
annualized.
/3/ Date of initial public offering; ratios have been annualized and total
return has not been annualized.
19
<PAGE>
Delaware Group Decatur Fund, Inc. - Decatur Income Fund
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Decatur Fund, Inc. - Decatur Income Fund
We have audited the accompanying statement of net assets of Delaware Group
Decatur Fund, Inc. - Decatur Income Fund as of November 30, 1994, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the ten years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Decatur Fund, Inc.-Decatur Income Fund at November 30, 1994, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the ten years in the period then ended, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 6, 1995
- --------------------------------------------------------------------------------
This annual report is for the information of Decatur Income Fund shareholders,
but it may be used with prospective investors when preceded or accompanied by a
current Prospectus, which gives details about charges, expenses, investment
objectives and operating policies of the Fund. Summary investment results are
documented in the current Statement of Additional Information. If used with
prospective investors after March 31, 1995, this report must be accompanied by a
Decatur Income Fund Performance Update for the most recently completed calendar
quarter. The figures in this report represent past results. The return and
principal value of an investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
20
