<PAGE> 1
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. / /
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Post-Effective Amendment No. 105 /X/
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AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 105
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DELAWARE GROUP DECATUR FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 751-2923
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George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
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(Name and Address of Agent for Service)
Approximate Date of Public Offering: January 29, 1996
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It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
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X on January 29, 1996 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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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, 1996.
<PAGE> 2
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. 105 to Registration File No. 2-13017 includes
the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
<PAGE> 3
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS-REFERENCE SHEET*
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
<S> <C> <C> <C>
A Classes/
B Classes/ Institutional
C Classes Classes
1 Cover Page . . . . . . . . . . . . . . . . . . . . Cover Cover
2 Synopsis . . . . . . . . . . . . . . . . . . . . . Synopsis, Summary Synopsis, Summary
of Expenses of Expenses
3 Condensed Financial Information . . . . . . . . . . Financial Financial
Highlights Highlights
4 General Description of Registrant . . . . . . . . Investment Objectives Investment
and Strategies, Objectives and
Shares Strategies, Shares
5 Management of the Fund . . . . . . . . . . . . . . Management of Management of
the Funds the Funds
6 Capital Stock and Other Securities . . . . . . . . Delaware Difference, Dividends and
Dividends and Distributions,
Distributions, Taxes, Taxes, Shares
Shares
7 Purchase of Securities Being Offered . . . . . . . Cover, How to Cover, How to Buy
Buy Shares, Calculation Shares, Calculation
of Offering Price of Net Asset Value
and Net Asset Value Per Share,
Per Share, Management Management of
of the Funds the Funds
8 Redemption or Repurchase . . . . . . . . . . . . . How to Buy Shares, How to Buy Shares,
Redemption Redemption
and Exchange and Exchange
9 Legal Proceedings . . . . . . . . . . . . . . . . . None None
</TABLE>
* This filing relates to the Decatur Income Fund A Class, the
Decatur Income Fund B Class, the Decatur Income Fund C Class
and the Decatur Income Fund Institutional Class of the Decatur
Income Fund, and the Decatur Total Return Fund A Class, the
Decatur Total Return Fund B Class, the Decatur Total Return
Fund C Class and the Decatur Total Return Fund Institutional
Class of the Decatur Total Return Fund. The Class A Shares,
the Class B Shares and the Class C Shares of each Series are
combined in one prospectus, and the Institutional Class of
each Series is combined in one prospectus. The two Series
(and eight classes) have a common Part B and Part C.
<PAGE> 4
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS REFERENCE SHEET
PART B
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
10 Cover Page . . . . . . . . . . . . . . . . . . . . . . . . Cover
11 Table of Contents . . . . . . . . . . . . . . . . . . . . . Table of Contents
12 General Information and History . . . . . . . . . . . . . . General Information
13 Investment Objectives and Policies . . . . . . . . . . . . Investment Policies and
Portfolio Techniques
14 Management of the Registrant . . . . . . . . . . . . . . . Officers and Directors
15 Control Persons and Principal Holders of
Securities . . . . . . . . . . . . . . . . . . . . . . . . Officers and Directors
16 Investment Advisory and Other Services . . . . . . . . . . Plans Under Rule 12b-1
for the Fund Classes (under
Purchasing Shares), Investment
Management Agreement, Officers
and Directors, General Information
Financial Statements
17 Brokerage Allocation . . . . . . . . . . . . . . . . . . . Trading Practices
and Brokerage
18 Capital Stock and Other Securities . . . . . . . . . . . . Capitalization and
Noncumulative Voting
(under General Information)
19 Purchase, Redemption and Pricing of Securities
Being Offered . . . . . . . . . . . . . . . . . . . . . . . Purchasing Shares, Determining
Offering Price and Net Asset
Value, Redemption and
Repurchase, Exchange Privilege
</TABLE>
<PAGE> 5
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
CROSS REFERENCE SHEET
PART B
(Continued)
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
20 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . Accounting and Tax Issues,
Distributions and Taxes
21 Underwriters . . . . . . . . . . . . . . . . . . . . . . . Purchasing Shares
22 Calculation of Performance Data . . . . . . . . . . . . . . Performance Information
23 Financial Statements . . . . . . . . . . . . . . . . . . . Financial Statements
<CAPTION>
PART C
------
Location in
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> 6
- ----------------------------------------
DECATUR INCOME FUND
DECATUR TOTAL RETURN FUND
A CLASS
B CLASS
C CLASS
P R O S P E C T U S
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JANUARY 29, 1996
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For
more information, contact your financial adviser or call Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
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
DELAWARE GROUP
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<PAGE> 7
TABLE OF CONTENTS
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES AND STRATEGIES
SUITABILITY
INVESTMENT STRATEGY
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
RETIREMENT PLANNING
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUNDS
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
APPENDIX A - INVESTMENT ILLUSTRATIONS
APPENDIX B - RATINGS
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<PAGE> 8
DECATUR INCOME FUND PROSPECTUS
DECATUR TOTAL RETURN FUND JANUARY 29, 1996
A CLASS SHARES
B CLASS SHARES
C CLASS SHARES
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1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR PROSPECTUS AND PERFORMANCE: NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS: (SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES: (BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
This Prospectus describes two series, the Decatur Income Fund and the
Decatur Total Return Fund (individually, a "Fund" and collectively, the
"Funds") of Delaware Group Decatur Fund, Inc. ("Decatur Fund, Inc."), a
professionally-managed mutual fund of the series type. The Decatur Income Fund
offers the Decatur Income Fund A Class ("Class A Shares"), the Decatur Income
Fund B Class ("Class B Shares") and the Decatur Income Fund C Class ("Class C
Shares") and Decatur Total Return Fund offers the Decatur Total Return Fund A
Class ("Class A Shares"), the Decatur Total Return Fund B Class ("Class B
Shares") and the Decatur Total Return Fund C Class ("Class C Shares")
(individually, a "Class" and collectively, the "Classes").
Decatur Income Fund's 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.
Decatur Total Return Fund's 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 of each Fund 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 of each Fund 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 .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%, which are assessed against the Class B Shares for approximately eight years
after purchase. See Automatic Conversion of Class B Shares under Classes of
Shares. Class C Shares are subject to a CDSC which may be imposed on
redemptions made within 12 months of purchase and annual 12b-1 Plan expenses of
1%, 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, and the length of time the
investor expects to hold the shares, among other circumstances. See Classes of
Shares.
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<PAGE> 9
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 Decatur Fund, Inc.'s registration
statement, dated January 29, 1996, as it may be amended from time to time,
contains additional information about the Fund and has been filed with the
Securities and Exchange Commission. Part B is incorporated by reference into
this Prospectus and is available, without charge, by writing to Delaware
Distributors, L.P. at the above address or by calling the above numbers. The
Funds' financial statements appear in their Annual Report, which will accompany
any response to requests for Part B.
Each Fund also offers an Institutional Class, which is available for
purchase only by certain investors. A prospectus for the Funds' Institutional
Classes can be obtained by writing to Delaware Distributors, L.P. at the above
address or by calling the above number.
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
FUNDS 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 FUNDS
ARE NOT BANK OR CREDIT UNION DEPOSITS.
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<PAGE> 10
SYNOPSIS
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for each 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 each
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 each Fund and for all of the other
mutual funds in the Delaware Group. See Management of the Funds.
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 Decatur Fund Inc.'s most recent
fiscal year, is equivalent to 4.98% of the amount invested with respect to
Decatur Income Fund and 5.00% of the amount invested with respect to the
Decatur Total Return Fund. The sales charge is reduced on certain transactions
of at least $100,000 but under $1,000,000. There is no front-end sales charge
on purchases of $1,000,000 or more. 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 Classes of 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 12 months of purchase. Class C Shares are subject to annual 12b-1 Plan
expenses for the life of the investment.
See Classes of Shares and Distribution (12b-1) and Service under
Management of the Funds.
PURCHASE AMOUNTS
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments in any Class must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed the maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative
purchases over a period of time. 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 How to
Buy Shares.
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<PAGE> 11
INVESTMENT OBJECTIVE
Decatur Income Fund - The objective of Decatur Income Fund 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.
Decatur Total Return Fund - The objective of Decatur Total Return Fund
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 Objectives and Policies.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Decatur Income Fund 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 Fund. See High Yield, High Risk Securities
under Investment Objectives and Policies.
Each Fund may enter into options and futures transactions for hedging
purposes to counterbalance portfolio volatility. While the Funds do not engage
in options and futures for speculative purposes, there are risks that result
from use of these instruments, and the investor should review the descriptions
of these risks in this Prospectus. See Futures Contracts and Options under
Investment Objectives and Policies.
OPEN-END INVESTMENT COMPANY
Decatur Fund, Inc., 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. Each Fund's portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
See Shares under Management of the Funds.
INVESTMENT MANAGEMENT FEES
The Manager furnishes investment management services to each Fund,
subject to the supervision and direction of Decatur Fund, Inc.'s Board of
Directors.
Under the Investment Management Agreement for Decatur Income Fund, the
annual compensation paid to the Manager is equal to .60% on the first $100
million of the Fund's 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 this Fund.
Under the Investment Management Agreement for Decatur Total Return
Fund, the annual compensation paid to the Manager is equal to .60% on the first
$500 million of the Fund's 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 this Fund.
See Management of the Funds.
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<PAGE> 12
REDEMPTION AND EXCHANGE
Class A Shares of each Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Funds 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 a dealer's commission was
paid in connection with such purchases. See Front-End Sales Charge Alternative
- - Class A Shares under Buying Shares.
Class B Shares 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 Funds
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.
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<PAGE> 13
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to each Series' Class A, Class B and Class C Shares follows:
DECATUR INCOME FUND AND DECATUR TOTAL RETURN FUND:
<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**
<CAPTION>
DECATUR INCOME FUND:
ANNUAL OPERATING EXPENSES CLASS A CLASS B CLASS C
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS) SHARES SHARES SHARES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49% 0.49% 0.49%
12b-1 Expenses (including service fees) . . . . . . . . . . . . . . . . 0.13%***/+ 1.00%+ 1.00%+
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . 0.25% 0.25% 0.25%++
----- ----- -----
Total Operating Expenses . . . . . . . . . . . 0.87% 1.74% 1.74%
===== ===== =====
<CAPTION>
DECATUR TOTAL RETURN FUND:
ANNUAL OPERATING EXPENSES CLASS A CLASS B CLASS C
(AS A PERCENTAGE OF AVERAGE 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 . . . . . . . . . . . . . . . . . . . . . . . 0.30% 0.30% 0.30%++
----- ----- -----
Total Operating Expenses . . . . . . . . . . . 1.19% 1.89% 1.89%
===== ===== =====
</TABLE>
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<PAGE> 14
The purpose of the above tables 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 12 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 12 months of purchase. See
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange; Deferred Sales
Charge Alternative - Class B Shares and Level Sales Charge Alternative - Class
C Shares under Classes of Shares.
**CoreStates Bank, N.A. currently charges $7.50 per
redemption for redemptions payable by wire.
***The actual 12b-1 Plan expenses to be paid and,
consequently, the "Total Operating Expenses" of the Decatur Income Fund A
Class, may vary because of the formula adopted by the Board of Directors for
use in calculating the 12b-1 Plan expenses for this Class beginning May 2,
1994, but the 12b-1 Plan expenses will not be more than .30% nor less than
.10%. See Distribution (12b-1) and Service under Management of the Funds.
+Class A Shares, Class B Shares and Class C Shares of
each Fund 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 Funds.
++"Other Operating Expenses" for Class C Shares of
each Fund are estimates based on actual expenses incurred by the Class A Shares
of the same Fund for the fiscal year ended November 30, 1995.
For expense information about the Decatur Income Fund
Institutional Class and Decatur Total Return Fund Institutional Class, see the
separate Prospectus relating to those classes.
The following example illustrates the expenses that an
investor would pay on a $1,000 investment over various time periods, assuming
(1) a 5% annual rate of return, (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.
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<PAGE> 15
DECATUR INCOME FUND:
<TABLE>
<CAPTION>
ASSUMING REDEMPTION ASSUMING NO REDEMPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES $56(1) $74 $93 $150 $56 $74 $93 $150
CLASS B SHARES $58 $85 $114 $182 $18 $55 $94 $182(2)
CLASS C SHARES $28 $55 $94 $205 $18 $55 $94 $205
</TABLE>
DECATUR TOTAL RETURN FUND:
<TABLE>
<CAPTION>
ASSUMING REDEMPTION ASSUMING NO REDEMPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES $59(1) $83 $110 $185 $59 $83 $110 $185
CLASS B SHARES $59 $89 $122 $203 $19 $59 $102 $203(2)
CLASS C SHARES $29 $59 $102 $221 $19 $59 $102 $221
</TABLE>
(1) Generally, no redemption charge is assessed 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 12
months of purchase. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased 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 Classes of 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.
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<PAGE> 16
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Decatur Fund, Inc. - Decatur Income Fund and Decatur Total
Return Fund and have been audited by Ernst & Young LLP, independent auditors.
The data should be read in conjunction with the financial statements, related
notes and the report of Ernst & Young LLP covering such financial information
and highlights, all of which are incorporated by reference into Part B.
Further information about each Fund's performance is contained in the Annual
Report to shareholders. A copy of the Funds' Annual Report (including the
report of Ernst & Young LLP) may be obtained from Decatur Fund, Inc. upon
request at no charge.
-10-
<PAGE> 17
<TABLE>
<CAPTION>
DECATUR INCOME FUND
CLASS A SHARES
-------------------------------------------------------------
11/30/95 11/30/94 11/30/93(1) 11/30/92(1) 11/30/91(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $15.57 $18.24 $17.20 $15.76 $14.53
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . 0.70 0.67 0.78 0.78 0.83
Net Gains (Losses) on Securities
(both realized and unrealized) . . . . . . . . . 3.91 (0.73) 1.79 1.47 1.37
---- ------ ---- ---- ----
Total From Investment Operations . . . . . . . . . . . 4.61 (0.06) 2.57 2.25 2.20
---- ------ ---- ---- ----
LESS DISTRIBUTIONS
- ------------------
Dividends from Net Investment Income . . . . . . . . . . . . . (0.69) (0.86) (0.68) (0.81) (0.97)
Distributions from Capital Gains . . . . . . . . . . . . . . . (0.42) (1.75) (0.85) none none
Returns of Capital . . . . . . . . . . . . . . . . . . . . . none none none none none
---- ---- ---- ---- ----
Total Distributions . . . . . . . . . . . . . . . . . (1.11) (2.61) (1.53) (0.81) (0.97)
------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $19.07 $15.57 $18.24 $17.20 $15.76
====== ====== ====== ====== ======
- -------------------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . . . . . . . . . . 31.02% (0.57%) 15.85% 14.55% 15.46%
- ------------
- ---------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . . . . .$1,382,693 $1,153,884 $1,512,194 $1,508,206 $1,579,521
Ratio of Expenses to Average Daily Net Assets . . . . . . . . . 0.87% 0.81% 0.71% 0.72% 0.70%
Ratio of Net Investment Income to Average Daily Net Assets . . 4.03% 3.92% 4.34% 4.55% 5.18%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 74% 92% 80% 79% 78%
<CAPTION>
DECATUR INCOME FUND
CLASS A SHARES
----------------------------------------------------------------
11/30/90(1) 11/30/89(1) 11/30/88(1) 11/30/87(1) 11/30/86(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $19.07 $16.89 $15.86 $19.32 $17.20
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . 0.93 1.00 0.76 0.77 0.79
Net Gains (Losses) on Securities
(both realized and unrealized) . . . . . . . . . (2.93) 2.25 2.75 (1.43) 3.69
------ ---- ---- ------ ----
Total From Investment Operations . . . . . . . . . . . (2.00) 3.25 3.51 (0.66) 4.48
------ ---- ---- ------ ----
LESS DISTRIBUTIONS
- ------------------
Dividends from Net Investment Income . . . . . . . . . . . . . (1.05) (0.81) (0.73) (0.80) (0.80)
Distributions from Capital Gains . . . . . . . . . . . . . . . (1.49) (0.26) (1.75) (2.00) (1.56)
Returns of Capital . . . . . . . . . . . . . . . . . . . . . none none none none none
---- ---- ---- ---- ----
Total Distributions . . . . . . . . . . . . . . . . . (2.54) (1.07) (2.48) (2.80) (2.36)
------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $14.53 $19.07 $16.89 $15.86 $19.32
====== ====== ====== ====== ======
- ----------------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . . . . . . . . . . (12.04%) 19.84% 25.20% (4.48%) 29.27%
- ------------
- ---------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . . . . . $1,560,641 $1,848,129 $1,517,445 $1,346,411 $1,228,952
Ratio of Expenses to Average Daily Net Assets . . . . . . . . . 0.70% 0.67% 0.73% 0.69% 0.63%
Ratio of Net Investment Income to Average Daily Net Assets . . 5.78% 5.48% 4.80% 4.37% 4.84%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 44% 38% 39% 56% 72%
</TABLE>
- ------------------------------
(1) The data appearing above do not reflect 12b-1 distribution expenses
which apply on and after May 2, 1994.
(2) Does not reflect maximum front-end sales charge that is or was in effect
nor the 1% Limited CDSC that would apply in the event of certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased At Net Asset
Value.
-11-
<PAGE> 18
<TABLE>
<CAPTION>
DECATUR INCOME FUND
CLASS B SHARES CLASS C SHARES
------------------------------- --------------
PERIOD PERIOD
YEAR 9/6/94(1) 11/29/95(2)
ENDED THROUGH THROUGH
11/30/95 11/30/94 11/30/95
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $15.55 $16.59 $19.15
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . 0.56 0.15 0.04
Net Gains (Losses) on Securities
(both realized and unrealized) . . . . . . . . . 3.89 (1.02) (0.06)
---- ------ ------
Total From Investment Operations . . . . . . . . . . . 4.45 (0.87) (0.02)
---- ------ ------
LESS DISTRIBUTIONS
- ------------------
Dividends from Net Investment Income . . . . . . . . . . . . . (0.55) (0.17) (0.05)
Distributions from Capital Gains . . . . . . . . . . . . . . . (0.42) none none
Returns of Capital . . . . . . . . . . . . . . . . . . . . . none none none
---- ---- ----
Total Distributions . . . . . . . . . . . . . . . . . (0.97) (0.17) (0.05)
------ ------ ------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $19.03 $15.55 $19.08
====== ====== ======
- -------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . 29.85%(3) (5.27%)(3) (4)
- ------------
- ---------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . . . . . $19,665 $2,765 $5
Ratio of Expenses to Average Daily Net Assets . . . . . . . . . 1.74% 1.70% (4)
Ratio of Net Investment Income to Average Daily Net Assets . . 3.16% 3.03% (4)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 74% 92% (4)
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) Date of initial public offering.
(3) Does not include any applicable CDSC.
(4) The ratios of expenses and net investment income to average daily net
assets, portfolio turnover and total return have been omitted as
management believes that such ratios, portfolio turnover and total return
for this relatively short period are not meaningful.
<PAGE> 19
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN FUND
CLASS A SHARES
-----------------------------------------------------
YEAR ENDED
11/30/95 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 . . . . . . . . . . . . . . . . . . . . . 0.37 0.37 0.45 0.47 0.53
Net Gains (Losses) on Securities
(both realized and unrealized) . . . . . . . . . 3.70 (0.34) 1.45 1.30 1.07
---- ------ ---- ---- ----
Total From Investment Operations . . . . . . . . . . . 4.07 0.03 1.90 1.77 1.60
---- ---- ---- ---- ----
LESS DISTRIBUTIONS
- ------------------
Dividends from Net Investment Income . . . . . . . . . . . . . (0.36) (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 . . . . . . . . . . . . . . . . . (0.78) (2.09) (1.50) (0.52) (0.58)
------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $15.61 $12.32 $14.38 $13.98 $12.73
====== ====== ====== ====== ======
- -------------------------------------------------------------------
TOTAL RETURN(2) . . . . . . . . . . . . . . . . . . . . . 34.68% (0.04%) 14.74% 14.12% 13.94%
- ------------
- ---------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . . . . . $534,342 $402,849 $431,638 $408,986 $394,338
Ratio of Expenses to Average Daily Net Assets(3) . . . . . . . 1.19% 1.26% 1.22% 1.23% 1.23%
Ratio of Net Investment Income to Average Daily Net Assets(3) . 2.72% 2.88% 3.15% 3.44% 4.20%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 81% 74% 119% 98% 67%
<CAPTION>
DECATUR TOTAL RETURN FUND
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(2) . . . . . . . . . . . . . . . . . . . . . (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(3) . . . . . . . 1.23% 1.24% 1.28% 1.27%(4) (1)
Ratio of Net Investment Income to Average Daily Net Assets(3) . 4.87% 4.60% 4.77% 4.17%(5) (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) Does not reflect any maximum front-end sales charge that is or was in
effect nor the 1% Limited CDSC that would apply in the event of certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased At Net Asset
Value. Total return for 1987 and 1986 reflect the expense limitation
referenced in Notes 3, 4 and 5.
(3) The Manager waived its management fee and assumed expenses to the extent
necessary to limit the Decatur Total Return Fund's ratio of annual
operating expenses, exclusive of taxes, interest, brokerage commissions
and extraordinary expenses, to average daily net assets to 1% for a
six-month period after the initial public offering.
(4) Ratio of expenses to average daily net assets prior to expense
limitation was 1.41%.
(5) Ratio of net investment income to average daily net assets prior to
expense limitation was 4.03%.
-13-
<PAGE> 20
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN FUND
CLASS B SHARES CLASS C SHARES
------------------------------ --------------
PERIOD PERIOD
YEAR 9/6/94(1) 11/29/95(2)
ENDED THROUGH THROUGH
11/30/95 11/30/94 11/30/95
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $12.31 $13.11 $15.61
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . 0.30 0.12 none
Net Gains (Losses) on Securities
(both realized and unrealized) . . . . . . . . . 3.67 (0.82) none
---- ------ ----
Total From Investment Operations . . . . . . . . . . . 3.97 (0.70) none
---- ------ ----
LESS DISTRIBUTIONS
- ------------------
Dividends from Net Investment Income . . . . . . . . . . . . . (0.30) (0.10) none
Distributions from Capital Gains . . . . . . . . . . . . . . . (0.42) none none
Returns of Capital . . . . . . . . . . . . . . . . . . . . . none none none
---- ---- ----
Total Distributions . . . . . . . . . . . . . . . . . (0.72) (0.10) none
------ ------ ----
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $15.56 $12.31 $15.61
====== ====== ======
- -------------------------------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . 33.79%(3) (5.37%)(3) (4)
- ------------
- ---------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . . . . . . . . . $14,745 $1,738 $5
Ratio of Expenses to Average Daily Net Assets . . . . . . . . . 1.89% 1.96% (4)
Ratio of Net Investment Income to Average Daily Net Assets . . 2.02% 2.18% (4)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 81% 74% (4)
</TABLE>
- ------------------------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) Date of initial public offering.
(3) Does not include any applicable CDSC.
(4) The ratios of expenses and net investment income to average daily net
assets, portfolio turnover and total return have been omitted as
management believes that such ratios, portfolio turnover and total
return for this relatively short period are not meaningful.
<PAGE> 21
INVESTMENT OBJECTIVES AND STRATEGIES
SUITABILITY
Decatur Income Fund - The Fund may be suitable for investors looking for
a current return with the potential for capital appreciation. Investors 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.
Decatur Total Return Fund - The Fund 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 Fund is suitable for
investors who want a current return with the possibility of capital
appreciation.
* * *
Naturally, the Funds cannot assure a specific rate of return or that
principal will be protected. The value of each Fund's shares can be expected
to move up and down depending upon market conditions. Consequently,
appreciation may be obtained in periods of generally rising markets, while in
declining markets, the value of its shares may, of course, decline. For this
reason, neither Fund is appropriate for short-term investors. However, through
the cautious selection and supervision of its portfolio, each Fund will strive
to achieve its objective set forth above.
Ownership of shares of each Fund reduces the bookkeeping and
administrative inconveniences that would be involved with direct purchases of
the securities held in each Fund's portfolio.
Investors should not consider a purchase of shares of either Fund 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.
INVESTMENT STRATEGY
Decatur Income Fund - The objective of Decatur Income Fund 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 Fund 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 Fund will normally invest at least 65% of its
total assets in income-producing securities. The Fund may invest up to 15% of
its net asset in high yield, high risk fixed income securities, which are
generally considered to be speculative. See High Yield, High Risk Securities
under Other Investment Policies and Risk Considerations.
The Manager carefully selects the Fund's diversified group of securities
for their high yields relative to risk involved.
The Fund generally invests in common stocks that the Manager 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.
-11-
<PAGE> 22
It is the Fund's policy not to purchase and sell securities with a view toward
obtaining short-term profits. However, the Fund may hold securities for any
period of time.
Decatur Total Return Fund - Decatur Total Return Fund 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. While the Fund 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 focus on fixed income securities can be
expected to be less than that of Decatur Income Fund. The Fund 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 Fund 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 Fund's policy to purchase and sell securities with a view
toward obtaining long-term rather than short-term capital gains. However, the
Fund may hold securities for any period of time.
* * *
For additional information on each Fund's investment policies and
certain risks associated with investments in certain types of securities, see
Other Investment Policies and Risk Considerations.
-12-
<PAGE> 23
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
INVESTOR INFORMATION CENTER
800-523-4640
FUND INFORMATION
LITERATURE
PRICE, YIELD AND
PERFORMANCE FIGURES
SHAREHOLDER SERVICE CENTER
800-523-1918
INFORMATION ON EXISTING
REGULAR INVESTMENT
ACCOUNTS AND RETIREMENT
PLAN ACCOUNTS
WIRE INVESTMENTS
WIRE LIQUIDATIONS
TELEPHONE LIQUIDATIONS
TELEPHONE EXCHANGES
DELAPHONE
800-362-FUND
(800-362-3863)
SHAREHOLDER SERVICES
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your
account, the Funds, the various service features and other funds in the
Delaware Group.
PERFORMANCE INFORMATION
During business hours, you can call the Investor Information Center for
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 also provides current
performance information on the Funds, as well as other funds in the Delaware
Group. Delaphone is available seven days a week, 24 hours a day.
STATEMENTS AND CONFIRMATIONS
You will receive quarterly statements of your account summarizing all
transactions during the period. 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 financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
TAX INFORMATION
Each year, Decatur Fund, Inc. will mail to you information on the tax
status of your dividends and distributions.
DIVIDEND ORDERS
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective, subject to
certain exceptions and limitations.
For more information, see Dividend Reinvestment Plan under How to Buy
Shares - Additional Methods of Adding to Your Investment or call the
Shareholder Service Center.
-13-
<PAGE> 24
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 a Fund with the dollar amount of new purchases of
Class A Shares of that Fund to qualify for a reduced front-end sales charge on
such purchases of Class A Shares. 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
Classes of Shares and Part B.
12-MONTH REINVESTMENT PRIVILEGE
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares within one year of the date of the
redemption, without paying 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 an
allocation strategy that meets their personal needs and goals. See How to Buy
Shares under Classes of Shares.
FINANCIAL INFORMATION ABOUT THE FUNDS
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
each Fund's investments and performance. Decatur Fund, Inc.'s fiscal year ends
on November 30.
-14-
<PAGE> 25
RETIREMENT PLANNING
An investment in either Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available
for investment only by Individual Retirement Accounts, Simplified Employee
Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans.
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 or 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.
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.
-15-
<PAGE> 26
Class A Shares are available for purchase by participants in certain
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 the Allied Plan may be combined with the dollar amount of new purchases
by that Allied Plan 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 Classes of 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
Contingent Deferred Sales Charge - 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 Redemptions of Class A Shares Purchased 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 Classes of Shares.
-16-
<PAGE> 27
CLASSES OF SHARES
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of the purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
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. Certain
purchases of Class A Shares qualify for reduced front-end sales charges. See
Front-End Sales Charge Alternative - Class A Shares, below. See also
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value and Distribution (12b-1) and Service.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales
charge when they are purchased, but are subject to a sales charge if they are
redeemed within six years of purchase. Class B Shares are subject to annual
12b-1 Plan expenses of up to a maximum of 1% (.25% of which are service fees to
be paid to the Distributor, dealers or others for providing personal service
and/or maintaining shareholder accounts) of average daily net assets of such
shares for approximately eight years after purchase. Class B Shares permit all
of the investor's dollars to work from the time the investment is made. 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 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, which do not incur a front-end sales
charge when they are purchased, but are subject to a sales charge if they are
redeemed within 12 months of purchase. Class C Shares are subject to annual
12b-1 Plan expenses of up to a maximum of 1% (.25% of which are service fees to
be paid to the Distributor, dealers or others for providing personal service
and/or maintaining shareholder accounts) of average daily net assets of such
shares for the life of the investment. 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 Class A Shares. Unlike Class B Shares, Class C Shares do
not convert to another class.
The alternative purchase arrangements described above permit investors
to choose the method of purchasing shares that is most suitable given the
amount of their purchase, the length of time they expect to hold their shares
and other relevant circumstances. Investors should determine whether, given
their particular circumstances, it is more advantageous to purchase Class A
Shares and incur a front-end sales charge, purchase Class B Shares and have the
entire initial purchase amount invested in a Fund with their investment being
subject to a CDSC if they redeem shares within six years of purchase, or
purchase Class C Shares and have the entire initial purchase amount invested in
a Fund with their investment being subject to a CDSC if they redeem shares
within 12 months of purchase. In addition, investors should consider the level
of annual 12b-1 Plan expenses applicable to each Class 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.
-17-
<PAGE> 28
As an illustration, investors who qualify for significantly reduced
front-end sales charges on purchases of Class A Shares, as described below,
might choose 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 Fund.
Other investors might determine it to be more advantageous to purchase
Class B Shares and have all their money invested initially, even they would be
subject to a CDSC for up to six years after purchase and annual 12b-1 Plan
expenses of up to 1% until the shares are automatically converted into 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 12 months after
purchase but that Class C Shares do not offer a conversion feature, so their
shares would be subject to annual 12b-1 Plan expenses of up to 1% for the life
of the investment. 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 upon the purchase of such shares. 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 effect that each of the purchase options may
have on a long-term shareholder's investment.
For the distribution and related services provided to, and the expenses
borne on behalf of, a Fund, 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 applicable
to 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 are used to finance the distribution of the respective Classes. See
12b-1 Distribution Plans - Class A, Class B and Class C Shares.
Dividends paid on 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 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. Decatur Fund, Inc. and the Distributor intend to operate in
compliance with these rules. FRONT-END SALES CHARGE ALTERNATIVE - CLASS A
SHARES
Class A Shares of each Fund 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.
-18-
<PAGE> 29
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
DECATUR TOTAL RETURN FUND A CLASS
- -------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------------
Decatur
Decatur Total
Income Return
Fund Fund
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.98% 5.00% 4.00%
$100,000 but under $250,000 3.75 3.88 3.91 3.00
$250,000 but under $500,000 2.50 2.57 2.56 2.00
$500,000 but under $1,000,000* 2.00 2.05 2.05 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 Decatur Fund, Inc.'s most recent fiscal
year.
*** Financial institutions or their affiliated brokers may
receive an agency transaction fee in the percentages set
forth above.
- --------------------------------------------------------------------------------
Decatur Income Fund or Decatur Total Return, as appropriate,
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 such 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
commission 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.
- --------------------------------------------------------------------------------
-19-
<PAGE> 30
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-
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 may be aggregated with those of the Class A Shares
of a Fund. 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 a dealer's commission or similar payment has
not been previously paid on the assets being exchanged. The schedule and
program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at 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 Redemptions of Class A Shares Purchased 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 Decatur Income Fund or Decatur Total Return
Fund 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 21 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 result in 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.
-20-
<PAGE> 31
BUYING CLASS A SHARES 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 Exchange
Privilege and the 12-Month Reinvestment 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, including those in retirement accounts, 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 after the registered representative changes employment, if the
purchase is funded by proceeds from an investment where a front-end sales
charge has been assessed and the redemption of the investment did not result in
the imposition of a contingent deferred sales charge or other redemption
charge. Purchases of Class A Shares may also 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 shares of Delaware
Group funds. 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.
Decatur Income Fund or Decatur Total Return Fund, as appropriate, 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 available on Class A Shares set forth in the
table on page ____, 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 in which it is investing that it qualifies for
the
-21-
<PAGE> 32
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
in which they are investing that they are eligible to combine purchase amounts
held in their plan account.
For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement
Planning.
DEFERRED SALES CHARGE ALTERNATIVE - CLASS B SHARES
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently 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 makes it possible for the Funds to
sell Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class B Shares
described in this Prospectus, even after the exchange. Such CDSC schedule may
be higher than the CDSC schedule for the Class B Shares acquired as a result of
the exchange. See Redemption and Exchange.
AUTOMATIC CONVERSION OF CLASS B SHARES
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business
day of the second full week of March, June, September and December (each, a
"Conversion Date"). If the eighth anniversary after a purchase of Class B
Shares falls on a Conversion Date, an investor's Class B Shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B Shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth
anniversary falls on the day after a Conversion Date, that shareholder will
have to hold Class B Shares for as long as 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.
-22-
<PAGE> 33
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
LEVEL SALES CHARGE ALTERNATIVE - CLASS C SHARES
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the Fund will invest the full amount of the
investor's purchase payment. The Distributor 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 12 months of
purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class
C Shares. Payments to the Distributor and others under the Class C 12b-1 Plan
may be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares
described in this Prospectus. See Redemption and Exchange.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage
of the dollar amount subject to the CDSC. The charge will be assessed on an
amount equal to the lesser of the net asset value at the time of purchase of
the shares being redeemed or the net asset value of those shares at the time of
redemption. No CDSC will be imposed on increases in net asset value above the
initial purchase price, nor will a CDSC be assessed on redemptions of shares
acquired through reinvestments of dividends or capital gains distributions.
For purposes of this formula, the "net asset value at the time of purchase"
will be the net asset value at purchase of either the Class B Shares or the
Class C Shares of Decatur Income Fund or Decatur Total Return Fund, as the case
may be, 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 Funds:
<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, 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 of such shares.
-23-
<PAGE> 34
In determining whether a CDSC applies to a redemption of Class B Shares,
it will be assumed that shares held for more than six years are redeemed first,
followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first, followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge - 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 Decatur Fund, Inc. in accordance
with Rule 12b-1 under the 1940 Act, Decatur Fund, Inc. is permitted to pay the
Distributor annual distribution fees of up to .30% of the average daily net
assets of the Class A Shares and 1% of the average daily net assets of each of
the Class B Shares and the Class C Shares. These fees, which are payable
monthly, compensate the Distributor for providing distribution and related
services and bearing certain expenses of each Class. The 12b-1 Plans
applicable to the Class B Shares and the Class C Shares are designed to permit
an investor to purchase these shares through dealers or brokers without paying
a front-end sales charge while enabling the Distributor to compensate dealers
and brokers for the sale of such shares. For a more detailed discussion of the
12b-1 Plans relating to the Class A, Class B, and Class C Shares, see
Distribution (12b-1) and Service under Management of the Funds.
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 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 commissions, 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.
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CLASSES OFFERED
The following funds currently offer Class A, 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.,
Delaware Group Trend Fund, Inc., International Equity Fund, Global Bond Fund
and Global Assets Fund of Delaware Group Global & International Funds, Inc.,
DMC Tax-Free Income Trust - Pennsylvania and each Fund. In addition, Delaware
Group Cash Reserve, Inc. offers Consultant Class shares.
U.S. Government Money Series of Delaware Group Limited-Term Government
Funds, Inc. and Delaware Group Tax-Free Money Fund, Inc. offer only Class A
and Consultant Class shares.
INSTITUTIONAL CLASSES
In addition to offering the Class A, Class B and Class C Shares of each
Fund, Decatur Fund, Inc. also offers the Decatur Income Fund Institutional
Class and the Decatur Total Return Fund Institutional Class, which are
described in a separate prospectus and are available for purchase only by
certain investors. Decatur Income Fund Institutional Class shares and 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 the prospectus that describes the Decatur Income Fund Institutional
Class and 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.
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HOW TO BUY 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. 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. Minimum purchase
requirements do not apply to retirement plans other than IRAs for which there
is a minimum initial purchase of $250, and a minimum subsequent purchase of
$25, regardless of which class is selected.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase
limitations by making cumulative purchases over a period of time. 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.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of shares of the Funds 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 the specific Fund and Class
selected (for example, if you wish to buy Class A Shares of Decatur Income
Fund, make the check payable to Decatur Income Fund A 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 the specific Fund and Class selected. 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 Decatur Fund,
Inc. 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 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 the specific Fund and Class selected, at 1818 Market
Street, Philadelphia, PA 19103.
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2. Subsequent Purchases--You may make additional investments anytime by
wiring funds to CoreStates Bank, N.A., as described above. You should advise
the Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
DELAWARE GROUP ASSET PLANNER
To invest in Delaware Group funds using the Delaware Group Asset Planner
asset allocation service, you should complete a Delaware Group Asset Planner
Account Registration Form, which is available only from a financial adviser or
investment dealer. As previously described, the Delaware Group Asset Planner
service offers a choice of four predesigned asset allocation strategies (each
with a difference risk/reward profile) in predetermined percentages in Delaware
Group funds or, with the help of a financial adviser, you may design a
customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. 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 through the
Asset Planner service; however, only shares within the same class 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 the funds within your Asset Planner account if not paid by
September 30th. See Part B.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent
following all transactions other than those involving a reinvestment of
distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of either Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus.
Holders of Class 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 Class A Shares for Class B Shares or
Class C Shares of either Fund or of any other fund in the Delaware Group.
Holders of Class B Shares of a Fund are permitted to exchange all or part of
their Class B Shares only into Class B Shares of other Delaware Group funds.
Similarly, holders of Class C Shares of a Fund are permitted to exchange all or
part of their Class C Shares only into Class C Shares of other Delaware Group
funds. Class B Shares of a Fund and Class C Shares of a Fund acquired by
exchange will continue to
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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 a Fund acquired by exchange will be added to that of the
shares that were exchanged for purposes of determining the time of the
automatic conversion into Class A Shares of that Fund.
Permissible exchanges into Class A Shares of a Fund will be made without
a front-end sales charge except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were
acquired through the reinvestment of dividends). Permissible exchanges into
Class B Shares or Class C Shares of a Fund will be made without the imposition
of a CDSC by the fund from which the exchange is being made at the time of the
exchange.
See 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. Automatic Investing Plan
THE AUTOMATIC INVESTING PLAN ENABLES YOU TO MAKE REGULAR MONTHLY
INVESTMENTS WITHOUT WRITING OR MAILING CHECKS. You may authorize Decatur Fund,
Inc. to transfer a designated amount monthly from your checking account to your
Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
2. Direct Deposit
YOU MAY HAVE YOUR EMPLOYER OR BANK MAKE REGULAR INVESTMENTS DIRECTLY TO
YOUR ACCOUNT FOR YOU (for example: payroll deduction, pay by phone, annuity
payments). Each Fund also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and check
clearing holds on payments such as social security, federal salaries, Railroad
Retirement benefits, etc.
* * *
Should investments by direct deposit or through an Automatic Investing
Plan be reclaimed or returned for some reason, Decatur Fund, Inc. has the right
to liquidate your Fund shares to reimburse the government or transmitting bank.
If there are insufficient funds in your account, you are obligated to reimburse
the Fund.
3. Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in a Fund
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 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 Fund account and invested automatically
into an account in one or more funds in the Delaware Group. If, in connection
with the Wealth Builder Option, a shareholder wishes to open a new account in
such other fund or funds to receive the automatic investment, such new account
must
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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 terminate their participation at any time by written
notice to their 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.
4. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Or, 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 a Fund or of other
Delaware Group funds are made without a front-end sales charge. Reinvestments
of distributions into Class B Shares of a Fund or of other Delaware Group funds
or into Class C Shares of a Fund 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 Classes of Shares for
information concerning the automatic conversion of Class B Shares acquired by
reinvesting dividends.
Holders of Class A Shares of a Fund may not reinvest their distributions
into Class B Shares or Class C Shares of any fund in the Delaware Group,
including the Funds. Holders of Class B Shares of a Fund 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 a 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 Classes Offered under Classes of Shares for a list of the funds
offering those classes of shares. For more information about reinvestments,
call the Shareholder Service Center.
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 in which the shares are being
purchased. 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
Each 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. Each 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. Each 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.
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Each 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 in which the
account is held 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.
Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC 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 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.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including charges
and expenses.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC 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 request may
indicate that he or she wishes to receive redemption proceeds of a specific
dollar amount. In the case of such a request, and in the case of certain
redemptions from retirement plan accounts, the Fund will redeem the number of
shares necessary to deduct the applicable CDSC in the case of Class B 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 Shareholder Service Center at 800-523-1918. Each
Fund may suspend, terminate, or amend the terms of the exchange privilege upon
60 days' written notice to shareholders.
Each 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
15 days from the purchase date. Telephone redemptions for shares recently
purchased by check will not be honored unless the Fund involved is reasonably
satisfied that the purchase check has cleared. You can avoid this potential
delay if you purchase shares by wiring Federal Funds. Each Fund reserves the
right to reject a written or telephone redemption request or delay payment of
redemption proceeds if there
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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 Fund from which the Original Shares were
exchanged. In an exchange of Class B Shares from Decatur Income Fund or
Decatur Total Return Fund, such Fund's CDSC schedule may be higher than the
CDSC schedule relating to the New Shares acquired as a result of the exchange.
For purposes of computing the CDSC that may be payable upon a disposition of
the New Shares, the period of time that an investor held the Original Shares is
added to the period of time that an investor held the New Shares. With respect
to Class B Shares, the automatic conversion schedule of the Original Shares may
be longer than that of the New Shares. Consequently, an investment in 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 either 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 to which the
authorization relates or its agent.
WRITTEN REDEMPTION
You can write to each 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 Funds require 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 Funds reserve the right to
reject a signature guarantee supplied by an eligible institution based on its
creditworthiness. The Funds 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. Certificates are issued for Class A Shares only if a
shareholder submits a specific request. Certificates are not issued for Class
B or Class C Shares.
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WRITTEN EXCHANGE
You may also write to each 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
redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption-Check to Your Address of Record service and the
Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your
account in writing that you do not wish to have such service available with
respect to your account. Each Fund reserves the right to modify, terminate or
suspend these procedures upon 60 days' written notice to shareholders. It may
be difficult to reach the Funds by telephone during periods when market or
economic conditions lead to an unusually large volume of telephone requests.
Neither the Funds nor the Funds' Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each 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, such Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent transactions. Instructions received by
telephone are generally tape recorded, and a written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your shares are being
exchanged.
TELEPHONE REDEMPTION--CHECK TO YOUR ADDRESS OF RECORD
THE TELEPHONE REDEMPTION FEATURE IS A QUICK AND EASY METHOD TO REDEEM
SHARES. You or your investment dealer of record can have redemption proceeds
of $50,000 or less mailed to you at your address of record. Checks will be
payable to the shareholder(s) of record. Payment is normally mailed the next
business day, but no later than seven days, after receipt of the request. This
service is only available to individual, joint and individual fiduciary-type
accounts.
TELEPHONE REDEMPTION--PROCEEDS TO YOUR BANK
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next
business day, but no later than seven days, after receipt of your request to
your predesignated bank account. Except for any CDSC which may be applicable
to Class B and Class C Shares and the Limited CDSC which may be applicable to
certain Class A Shares, there are no fees for this redemption method, but
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the mail time may delay getting funds into your bank account. Simply call the
Shareholder Service Center prior to the time the offering price and net asset
value are determined, as noted above.
If expedited payment by check or wire could adversely affect a Fund,
such 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 Funds do 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 Fund 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 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 additional shares while participating
in a Systematic Withdrawal Plan.
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 12 months prior to the withdrawal and a dealer's commission has been
paid on that purchase. See Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased 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
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12% of the account balance. If the annual amount selected to be withdrawn
exceeds 12% of the account balance on the date that the Systematic Withdrawal
Plan is established, all redemptions under the Plan will be subject to the
applicable CDSC. Whether a waiver of the CDSC is available or not, the first
shares to be redeemed for each Systematic Withdrawal Plan payment will be those
not subject to a CDSC because they have either satisfied the required holding
period or were acquired through the reinvestment of distributions. The 12%
annual limit will be reset on the date that any Systematic Withdrawal Plan is
modified (for example, a change in the amount selected to be withdrawn or the
frequency or date of withdrawals), based on the balance in the account on that
date. See Waiver of Contingent Deferred Sales Charge - Class B and Class C
Shares, below.
For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.
CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN REDEMPTIONS OF CLASS A SHARES
PURCHASED AT NET ASSET VALUE
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described. 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 12 months will not
be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Limited CDSC is assessed if such 12-month period is not satisfied
irrespective of whether the redemption triggering its payment is of Class A
Shares of a Fund or 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 CONTINGENT DEFERRED SALES CHARGE--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 a 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
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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 Class A Shares at Net Asset
Value under Classes of Shares).
WAIVER OF CONTINGENT DEFERRED SALES CHARGE--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 a 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 a 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.
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DIVIDENDS AND DISTRIBUTIONS
Decatur Fund, Inc. currently intends to make monthly payments from
Decatur Income Fund's net investment income and quarterly payments from Decatur
Total Return Fund's net investment income. Payments from a Fund's net realized
securities profits, if any, will be made during the first quarter of the next
fiscal year.
Each Class of a Fund will share proportionately in the investment income
and expenses of that Fund, except that the per share dividends from net
investment income on the Class A Shares, Class B Shares and 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 Funds.
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 Fund
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 Plans under
Redemption and Exchange for information regarding authorization of the
MoneyLine service. This service is not available for retirement plans.
(See The Delaware Difference for more information on reinvestment options.)
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TAXES
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code.
Each Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. 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 a Fund that so
qualifies will be designated each year in a notice from Decatur Fund, Inc. to
the Fund's shareholders. For the fiscal year ended November 30, 1995, all of
the Decatur Income Fund's and Decatur Total Return Fund's dividends from net
investment income qualified for the corporate dividends-received deduction.
Distributions paid by a Fund 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 Fund. The Funds do not seek
to realize any particular amount of capital gains during a year; rather,
realized gains are a byproduct of Fund 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 a
Fund 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 a Fund and received by
the shareholder on December 31 of the year declared.
The sale of shares of the Funds 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 a sale or exchange of a Fund's shares that 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 a Fund's shares will be excluded from
the federal tax basis of any of such shares sold or exchanged within 90 days of
their purchase (for purposes of determining gain or loss upon sale of such
shares) if the sale proceeds are reinvested in such Fund 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 Classes of
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 each
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<PAGE> 49
Fund are exempt from Pennsylvania county personal property taxes.
Each year, Decatur Fund, Inc. will mail to you information on the tax
status of the dividends and distributions paid by the Fund in which you hold
shares. 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 a Fund.
Each 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 a Fund.
See Accounting and Tax Issues and Distributions and Taxes in Part B for
additional information on tax matters relating to each Fund 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 60 days are
valued at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith and in a
method approved by Decatur Fund, Inc.'s Board of Directors.
The net asset values of all outstanding shares of each class of a Fund
will be computed on a pro-rata basis for each outstanding share based on the
proportionate participation in that Fund represented by the value of shares of
that class. All income earned and expenses incurred by a Fund will be borne on
a pro-rata basis by each outstanding share of a class, based on each class'
percentage in that Fund represented by the value of shares of such classes,
except that the Decatur Income Fund Institutional Class and the Decatur Total
Return 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 a Fund will vary.
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MANAGEMENT OF THE FUNDS
DIRECTORS
The business and affairs of Decatur Fund, Inc. 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 each Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1995, the Manager and its
affiliate, Delaware International Advisers Ltd., were supervising in the
aggregate more than $27 billion in assets in the various institutional
(approximately $17,389,902,000) and investment company (approximately
$10,383,560,000) 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, new
Investment Management Agreements between Decatur Fund, Inc. on behalf of each
Fund and the Manager were executed following shareholder approval.
The Manager manages each Fund's portfolio and makes investment decisions
which are implemented by Decatur Fund, Inc.'s Trading Department. The Manager
also administers Decatur Fund, Inc.'s affairs and pays the salaries of all the
directors, officers and employees of Decatur Fund, Inc. who are affiliated with
the Manager. For these services, under the Investment Management Agreement for
the Decatur Income Fund, the Manager is paid an annual fee of .60% on the first
$100 million of 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
this Fund. For the fiscal year ended November 30, 1995, investment management
fees paid by Decatur Income Fund were 0.49% of its average daily net assets.
For the services noted above, under the Investment Management Agreement
for the Decatur Total Return Fund, the Manager is paid an annual fee of .60% on
the first $500 million of average daily net assets of the Fund, .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 this
Fund. For the fiscal year ended November 30, 1995, investment management fees
paid by Decatur Total Return Fund were 0.59% of its average daily net assets.
John B. Fields has primary responsibility for making day-to-day
investment decisions for each Fund. He has been the Senior Portfolio Manager
for the Decatur Income Fund since 1993 and for the Decatur Total Return Fund
since 1992. Mr. Fields, who has 25 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 each Fund, Mr. Fields works with a
team of 12 portfolio managers and analysts, each of whom specializes in a
different industry sector and makes recommendations accordingly. Mr. Fields
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also regularly consults with Wayne A. Stork and Richard G. Unruh, Jr. Mr.
Stork, Chairman of the Board of the Manager and Decatur Fund, Inc.'s Board of
Directors, is a graduate of Brown University and attended New York University's
Graduate School of Business Administration. Mr. Stork joined the Delaware
Group in 1962 and has served in various executive capacities at different times
within the Delaware organization. Mr. Unruh is a graduate of Brown University
and received his MBA from the University of Pennsylvania's Wharton School. He
joined the Delaware Group in 1982 after 19 years of investment management
experience with Kidder, Peabody & Co. Inc. Mr. Unruh was named an executive
vice president of Decatur Fund, Inc. 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
Each Fund normally will not invest for short-term trading purposes.
However, a Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs
of a Fund and may affect taxes payable by such Fund's shareholders to the
extent that net capital gains are realized. Given each Fund's investment
objective, its annual portfolio turnover rate is not expected to exceed 100%.
During the past two fiscal years, Decatur Income Fund's portfolio turnover
rates were 92% for 1994 and 74% for 1995, and Decatur Total Return Fund's
portfolio turnover rates were 74% for 1994 and 81% for 1995.
Each Fund 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, each Fund
may consider a broker/dealer's sales of Fund shares in placing portfolio orders
and may place orders with broker/dealers that have agreed to defray certain
Fund expenses such as custodian fees.
PERFORMANCE INFORMATION
From time to time, each Fund may quote yield or total return performance
of its Classes in advertising and other types of literature.
The current yield for a Class will be calculated by dividing the
annualized net investment income earned by that Class during a recent 30-day
period by the net asset value per share on the last day of the period. The
yield formula provides for semi-annual compounding which assumes that net
investment income is earned and reinvested at a constant rate and annualized at
the end of a six-month period.
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. Each Fund may also
advertise aggregate and average total return information concerning a Class
over additional periods of time. In addition, each Fund 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.
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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 each Fund under separate Distribution Agreements dated April 3, 1995, as
amended on November 29, 1995.
Decatur Fund, Inc. 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"). Each Plan permits the Fund to which it relates to pay the
Distributor from the assets of its respective Classes a monthly fee for the
Distributor's services and expenses in distributing and promoting sales of
shares. These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special
promotions for specified periods of time, and paying distribution and
maintenance fees to brokers, dealers and others. In connection with the
promotion of Class A, 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, each Fund may
make payments from the assets of its respective Classes directly to others,
such as banks, who aid in the distribution of Class shares or provide services
in respect of such Classes, pursuant to service agreements with Decatur Fund,
Inc.
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 a Fund from the assets of its 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 such Fund to the Distributor, dealers and others,
for providing personal service and/or maintaining shareholder accounts) of each
of the Class B Shares' and the Class C Shares' average daily net assets in any
year. 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 Decatur
Income Fund A Class 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
were or 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 the Plan for Decatur Income Fund, the fee is a Class A Shares'
expense so that all Decatur Income Fund A Class 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 Decatur
Income Fund A Class
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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 Fund to pay a maximum of .30% on all
assets of the Decatur Income Fund A Class 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.
Decatur Fund, Inc.'s Plans do not apply to the Decatur Income Fund
Institutional Class or 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 the Decatur
Income Fund Institutional Class or the Decatur Total Return 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 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 Decatur Fund, Inc.'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 each Fund
under separate Agreements 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
Each Fund is responsible for all of its own expenses other than those
borne by the Manager under its Investment Management Agreements and those borne
by the Distributor under its Distribution Agreements. For the fiscal year
ended November 30, 1995, the ratios of expenses to average daily net assets for
the Class A Shares and the Class B Shares of the Decatur Income Fund were 0.87%
and 1.74%, respectively, and the ratios of expenses to average daily net assets
for the Class A Shares and the Class B Shares of the Decatur Total Return Fund
were 1.19% and 1.89%, respectively. The Fund anticipates that the expense
ratio for Class C Shares of a Fund will be approximately equal to the expense
ratio for Class B Shares of the same Fund. The expense ratio of each Class
reflects the impact of its 12b-1 Plan.
SHARES
The Decatur Income Fund is the original series of Decatur Fund, Inc. and the
Decatur Total Return Fund is the second series of Decatur Fund, Inc. Decatur
Fund, Inc. is an open-end management investment company, commonly known as a
mutual fund. Each Fund's portfolio of assets is diversified as defined by the
1940 Act. Decatur Fund, Inc. 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, Decatur Income Fund was named the Decatur I Series (which was known
and did business as Decatur Fund I) and Decatur Total Return Fund was named the
Decatur II Series (which was known and did business as Decatur Fund II).
All fund shares have a par value of $1.00, equal voting rights, except
as noted below, and
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are equal in all other respects. All of the shares have noncumulative voting
rights which means that the holders of more than 50% of Decatur Fund, Inc.'s
shares voting for the election of directors can elect 100% of the directors if
they choose to do so. Under Maryland law, Decatur Fund, Inc. 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 Decatur Fund, Inc.'s shares may request that a
special meeting be called to consider the removal of a director. Shares of
Decatur Income Fund have a priority over shares of Decatur Total Return Fund in
the assets and income of Decatur Income Fund and will vote separately on any
matter that affects only Decatur Income Fund. Likewise, shares of Decatur
Total Return Fund have a priority over shares of Decatur Income Fund 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,
Decatur Income Fund and Decatur Total Return Fund also offer, respectively, the
Decatur Income Fund Institutional Class and the Decatur Total Return Fund
Institutional Class. Shares of each class of a Fund represent proportionate
interests in the assets of such Fund and have the same voting and other rights
and preferences as the other classes of that Fund, except that shares of the
Decatur Income Fund Institutional Class and the Decatur Total Return Fund
Institutional Class are not subject to, and may not vote on matters affecting,
the Plans relating to the Classes. 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 any proposal to increase
materially the fees to be paid by a Fund under the Plan relating to its 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, it 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, it was known as Decatur Fund I
(Institutional) class.
From May 2, 1994 to September 5, 1994, the Decatur Total Return Fund A
Class was known as the Decatur Total Return Fund class and prior to May 2,
1994, it was known as the Decatur Fund II class. 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.
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OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
HIGH YIELD, HIGH RISK SECURITIES
Decatur Income Fund may invest up to 15% of its net assets in high
yield, high risk fixed income securities. These securities are rated lower
than BBB by Standard & Poor's Ratings Group ("S&P"), Baa by Moody's Investors
Service, Inc. ("Moody's") and/or rated similarly by another rating agency, or,
if unrated, are considered by the Manager to be of equivalent quality. The
Fund will not invest in securities which are rated lower than C by S&P, Ca by
Moody's or similarly by another rating agency, 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 Fund, there can be no assurance that
diversification will protect the Fund from widespread bond defaults brought
about by a sustained economic downturn.
Medium and low-grade bonds held by the Fund 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 additional
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 Fund's net asset value per share.
RESTRICTED AND ILLIQUID SECURITIES
Each Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain institutional buyers such as the Funds. Each Fund may invest no more
than 10% of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of a Fund's 10% limitation on
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<PAGE> 57
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 that was previously
determined to be liquid is no longer liquid and, as a result, a Fund's holdings
of illiquid securities exceed the Fund's 10% limit on investment in such
securities, the Manager will determine what action to take to ensure that the
Fund continues to adhere to such limitation.
PORTFOLIO LOAN TRANSACTIONS
Each Fund 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 a Fund 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 Funds 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
Each Fund 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 a Fund's positions in cash, short-term
debt securities and other money market instruments, at times when such Fund's
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 Fund involved.
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
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<PAGE> 58
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 a Fund's current or intended investments
from broad fluctuations in stock or bond prices. For example, a Fund 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 Fund's
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 a Fund 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 Fund
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
a Fund's current or intended investments in fixed income securities. For
example, if a Fund owned long-term bonds and interest rates were expected to
increase, the Fund 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
Fund's 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 Fund 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 Fund's interest
rate futures contracts would be expected to increase at approximately the same
rate, thereby keeping the net asset value of the Fund 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 Fund 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 Fund's cash reserve could then be used to buy long-term
bonds on the cash market.
Each Fund 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. A Fund 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 Fund's
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.
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<PAGE> 59
Conversely, a Fund 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 a Fund 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 Fund will sustain
losses on its futures position which could reduce or eliminate the benefits of
the reduced cost of portfolio securities to be acquired.
Each Fund may also purchase and write options on the types of futures
contracts in which the Fund 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 Fund is exercised, the Fund 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. A Fund 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, a Fund may not achieve the anticipated benefits of
investing in futures contracts and options thereon, or may realize a loss. To
the extent that a Fund 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 Fund from closing out its positions relating to futures. See Part B for a
further discussion of this investment technique.
OPTIONS
Each Fund may write covered call options on individual issues. For the
option to be considered to be covered, the Fund writing the option must own the
common stock underlying the option or securities convertible into such common
stock. In addition, each Fund may write call options on stock indices. Each
Fund 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 a Fund's portfolio as well as the price movement
of individual securities. The Funds do not currently intend to write or
purchase options on stock indices.
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<PAGE> 60
While there is no limit on the amount of a Fund's assets which may be
invested in covered call options, neither Fund will invest more than 2% of its
net assets in put options. The Funds will only use Exchange-traded options.
CALL OPTIONS
Writing Covered Call Options--A covered call option obligates a Fund to
sell one of its securities for an agreed price up to an agreed date. When a
Fund 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 Fund
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 Fund
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 a Fund the right to sell one
of its securities for an agreed price up to an agreed date. The advantage is
that the Fund can be protected should the market value of the security decline.
However, the Fund 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 a Fund offset
a put option or covered call option prior to its exercise or expiration. If
the Fund 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.
* * *
BORROWING
Although each Fund is permitted under certain circumstances to borrow
money, neither Fund normally do so. A Fund will not purchase new securities
while any borrowings are outstanding.
REPURCHASE AGREEMENTS
Each Fund may use repurchase agreements that are at least 100%
collateralized by securities in which the Fund can invest directly. Repurchase
agreements help a Fund to invest cash on a temporary basis. Under a repurchase
agreement, a Fund acquires ownership and possession of a security, and the
seller agrees to buy the security back at a specified time and higher price.
If the seller is unable to repurchase the security, the Fund could experience
delays in liquidating the securities. To minimize this possibility, the
Manager, pursuant to direction from Decatur Fund Inc.'s Board of Directors,
considers the creditworthiness of the banks and dealers with whom it enters
into repurchase agreements.
* * *
Part B sets forth more specific investment restrictions, some of which
limit the percentage of assets that may be invested in certain types of
securities.
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<PAGE> 61
APPENDIX A - INVESTMENT ILLUSTRATIONS
ILLUSTRATIONS OF THE POTENTIAL IMPACT ON INVESTMENT BASED ON PURCHASE OPTION
$10,000 PURCHASE
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3
No Redemption Redeem 1st Year Redeem 3rd Year
----------------------------------- ------------------------------- ------------------------------
Year 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>
0 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
2 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+
4 13,946 14,272 14,272
5 15,340 15,599 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
<CAPTION>
Scenario 4
Redeem 5th Year
------------------------------
Year Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
0 9,525 10,000 10,000
1 10,478 10,930 10,930
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to Class A Shares at the end
of the eighth year.
<TABLE>
<CAPTION>
$250,000 PURCHASE
Scenario 1 Scenario 2 Scenario 3
No Redemption Redeem 1st Year Redeem 3rd Year
----------------------------------- ------------------------------- ------------------------------
Year 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>
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+ 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 326,438 326,438 324,431 318,938 326,438+
4 356,874+ 356,797 356,797
5 392,562 389,979 389,979
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
<CAPTION>
$250,000 PURCHASE
Scenario 4
Redeem 5th Year
-------------------------------
Year Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
0 243,750 250,000 250,000
1 268,125 273,250 273,250
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
</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.
<PAGE> 62
APPENDIX B--RATINGS
Decatur Income Fund has the ability to invest up to 15% of its net
assets in high yield, high risk fixed income securities. The table set forth
below shows asset composition, based on rating categories, of such securities
held by the Fund. 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 Decatur Income Fund's high yield, high risk
securities which are not rated. The information contained in the table was
prepared based on a dollar weighted average of the Fund's portfolio composition
based on month end data for the fiscal year ended November 30, 1995. 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>
Baa/BBB 0.20%
Ba/BB 3.94%
B/B 5.59%
Not Rated/Other 0.13%
</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
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<PAGE> 63
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.
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<PAGE> 64
DECATUR INCOME FUND INSTITUTIONAL
DECATUR TOTAL RETURN FUND INSTITUTIONAL
P R O S P E C T U S
- ------------------------------------------
JANUARY 29, 1996
For more information contact the Delaware Group at 800-828-5052.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
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
DELAWARE
GROUP
---------
<PAGE> 65
TABLE OF CONTENTS
COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES AND STRATEGIES
SUITABILITY
INVESTMENT STRATEGY
CLASSES OF SHARES
HOW TO BUY SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
CALCULATION OF NET ASSET VALUE PER SHARE
MANAGEMENT OF THE FUNDS
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
APPENDIX A-RATINGS
-1-
<PAGE> 66
DECATUR INCOME FUND INSTITUTIONAL PROSPECTUS
DECATUR TOTAL RETURN FUND INSTITUTIONAL JANUARY 29, 1996
---------------------------------------------------------------------
1818 MARKET STREET, PHILADELPHIA, PA 19103
FOR MORE INFORMATION ABOUT THE
DECATUR INCOME FUND INSTITUTIONAL CLASS AND
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
CALL THE DELAWARE GROUP AT 800-828-5052.
This Prospectus describes two series, the Decatur Income Fund and the
Decatur Total Return Fund (individually, a "Fund" and collectively, the
"Funds") of Delaware Group Decatur Fund, Inc. ("Decatur Fund, Inc."), a
professionally-managed mutual fund of the series type. The Decatur Income Fund
offers the Decatur Income Fund Institutional Class and Decatur Total Return
Fund offers the Decatur Total Return Fund Institutional Class (individually, a
"Class" and collectively, the "Classes").
Decatur Income Fund's 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.
Decatur Total Return Fund's objective is to achieve long-term growth by
investing primarily in securities that provide the potential for income and
capital appreciation without undue risk to principal.
Shares of each Class are available for purchase only by certain
enumerated investors and are offered at net asset value without the imposition
of a front-end or contingent deferred sales charge and without a 12b-1 charge.
See Buying Shares.
This Prospectus relates only to the Classes and sets forth information
that you should read and consider before you invest. Please retain it for
future reference. Part B of the Decatur Income Fund's registration statement,
dated January 29, 1996, as it may be amended from time to time, contains
additional information about the Funds and has been filed with the Securities
and Exchange Commission. Part B is incorporated by reference into this
Prospectus and is available, without charge, by writing to Delaware
Distributors, L.P. at the above address or by calling the above number. The
Funds' financial statements appear in its Annual Report, which will accompany
any response to requests for Part B.
The Decatur Income Fund also offers the Decatur Income Fund A Class,
the Decatur Income Fund B Class and the Decatur Income Fund C Class. The
Decatur Total Return Fund also offers the Decatur Total Return Fund A Class,
the Decatur Total Return Fund B Class and the Decatur Total Return Fund C
Class. Shares of these classes are subject to sales charges and other
expenses, which may affect their performance. A prospectus for these classes
can be obtained by writing to Delaware Distributors, L.P. at the above address
or by calling the above number.
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<PAGE> 67
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
FUNDS 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 FUNDS
ARE NOT BANK OR CREDIT UNION DEPOSITS.
-3-
<PAGE> 68
SYNOPSIS
INVESTMENT MANAGER, DISTRIBUTOR AND SERVICE AGENT
Delaware Management Company, Inc. (the "Manager") is the investment
manager for each 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 each
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 each Fund and for all of the other
mutual funds in the Delaware Group. See Management of the Funds.
PURCHASE PRICE
Shares of each Class offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge and are
not subject to distribution fees under a Rule 12b-1 distribution plan. See
Classes of Shares.
INVESTMENT OBJECTIVE
Decatur Income Fund - The objective of Decatur Income Fund 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.
Decatur Total Return Fund - The objective of Decatur Total Return Fund
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 Objectives and Policies.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Decatur Income Fund 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 Fund. See High Yield, High Risk Securities
under Investment Objectives and Policies.
Each Fund may enter into options and futures transactions for hedging
purposes to counterbalance portfolio volatility. While the Funds do not engage
in options and futures for speculative purposes, there are risks that result
from use of these instruments, and the investor should review the descriptions
of these risks in this Prospectus. See Futures Contracts and Options under
Investment Objectives and Policies.
OPEN-END INVESTMENT COMPANY
Decatur Fund, Inc., 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. Each Fund's portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
See Shares under Management of the Funds.
INVESTMENT MANAGEMENT FEES
The Manager furnishes investment management services to each Fund,
subject to the supervision and direction of Decatur Fund, Inc.'s Board of
Directors.
Under the Investment Management Agreement for Decatur Income Fund, the
annual compensation paid to the Manager is equal to .60% on the first $100
million of the Fund's 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 this Fund.
-4-
<PAGE> 69
Under the Investment Management Agreement for Decatur Total Return
Fund, the annual compensation paid to the Manager is equal to .60% on the first
$500 million of the Fund's 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 this Fund.
See Management of the Funds.
REDEMPTION AND EXCHANGE
Shares of the Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
-5-
<PAGE> 70
SUMMARY OF EXPENSES
DECATUR INCOME FUND INSTITUTIONAL CLASS AND DECATUR TOTAL RETURN FUND
INSTITUTIONAL CLASS:
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . None*
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None**
</TABLE>
DECATUR INCOME FUND INSTITUTIONAL CLASS:
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
-------------------------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . 0.25%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . 0.74%
=====
</TABLE>
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS:
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
-------------------------------------------------------------------------------------------
<S> <C>
Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.59%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . 0.30%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . 0.89%
=====
</TABLE>
-6-
<PAGE> 71
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly.
*CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.
**Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply.
For expense information about the Decatur Income Fund A Class, Decatur
Income Fund B Class, Decatur Income Fund C Class, Decatur Total Return Fund A
Class, Decatur Total Return Fund B Class and Decatur Total Return Fund C Class,
see the separate Prospectus relating to those classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return and (2) redemption at the end of each time period. As noted in
the table above, neither Fund charges redemption fees.
<TABLE>
<CAPTION>
DECATUR INCOME FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
INSTITUTIONAL CLASS $8 $24 $41 $92
</TABLE>
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
FUND INSTITUTIONAL CLASS $9 $28 $49 $110
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
-7-
<PAGE> 72
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Decatur Fund, Inc. - Decatur Income Fund and Decatur Total
Return Fund and have been audited by Ernst & Young LLP, independent auditors.
The data should be read in conjunction with the financial statements, related
notes and the report of Ernst & Young LLP covering such financial information
and highlights, all of which are incorporated by reference into Part B.
Further information about each Fund's performance is contained in the Annual
Report to shareholders. A copy of the Funds' Annual Report (including the
report of Ernst & Young LLP) may be obtained from Decatur Fund, Inc. upon
request at no charge.
-8-
<PAGE> 73
<TABLE>
<CAPTION>
DECATUR INCOME FUND INSTITUTIONAL CLASS
--------------------------------------------------------------------------------
PERIOD
YEAR 1/13/94
ENDED THROUGH YEAR ENDED
11/30/95 11/30/94(2) 11/30/94(1) 11/30/93(1) 11/30/92(1) 11/30/91(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $15.59 $16.72 $18.24 $17.20 $15.76 $14.53
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . 0.71 0.59 0.67 0.78 0.78 0.83
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . . . 3.92 (1.10) (0.73) 1.79 1.47 1.37
---- ------ ------ ---- ---- ----
Total From Investment Operations 4.63 (0.51) (0.06) 2.57 2.25 2.20
---- ------ ------ ---- ---- ----
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . (0.74) (0.62) (0.86) (0.68) (0.81) (0.97)
Distributions (from capital gains) . . . . . . (0.42) none (1.75) (0.85) none none
Returns of Capital . . . . . . . . . . . . . . none none none none none none
---- ---- ---- ---- ---- ----
Total Distributions . . . . . . . ($1.16) ($0.62) ($2.61) ($1.53) ($0.81) ($0.97)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . $19.06 $15.59 $15.57 $18.24 $17.20 $15.76
====== ====== ====== ====== ====== ======
- --------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 31.14% (0.45%) (0.57%)(3) 15.85%(3) 14.55%(3) 15.46%(3)
- ------------
- --------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) . . . $211,409 $182,105 $1,153,884 $1,512,194 $1,508,206 $1,579,521
Ratio of Expenses to Average Daily Net Assets . 0.74% 0.70% 0.81% 0.71% 0.72% 0.70%
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . . . 4.16% 4.03% 3.92% 4.34% 4.55% 5.18%
Portfolio Turnover Rate . . . . . . . . . . . . 74% 92% 92% 80% 79% 78%
<CAPTION>
DECATUR INCOME FUND INSTITUTIONAL CLASS
----------------------------------------------------------------------
YEAR ENDED
11/30/90(1) 11/30/89(1) 11/30/88(1) 11/30/87(1) 11/30/86(1)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $19.07 $16.89 $15.86 $19.32 $17.20
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . 0.93 1.00 0.76 0.77 0.79
Net Gains or Losses on Securities
(both realized and unrealized) . . . . . . . (2.93) 2.25 2.75 (1.43) 3.69
------ ---- ---- ------ ----
Total From Investment Operations (2.00) 3.25 3.51 (0.66) 4.48
------ ---- ---- ------ ----
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . (1.05) (0.81) (0.73) (0.80) (0.80)
Distributions (from capital gains) . . . . . . (1.49) (0.26) (1.75) (2.00) (1.56)
Returns of Capital . . . . . . . . . . . . . . none none none none none
---- ---- ---- ---- ----
Total Distributions . . . . . . . ($2.54) ($1.07) ($2.48) ($2.80) ($2.36)
------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . $14.53 $19.07 $16.89 $15.86 $19.32
====== ====== ====== ====== ======
- --------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . (12.04%)(3) 19.84%(3) 25.20%(3) (4.48%)(3) 29.27%(3)
- ------------
- --------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . $1,560,641 $1,848,129 $1,517,445 $1,346,411 $1,228,932
Ratio of Expenses to Average Daily Net Assets . 0.70% 0.67% 0.73% 0.69% 0.63%
Ratio of Net Investment Income to Average
Daily Net Assets . . . . . . . . . . . . . . 5.78% 5.48% 4.80% 4.37% 4.84%
Portfolio Turnover Rate . . . . . . . . . . . . 44% 38% 39% 56% 72%
</TABLE>
- ------------------------------
(1) Data for the Decatur Income Fund Institutional Class are
derived from data of the Decatur Income Fund A Class
(formerly known as Decatur Fund I class), which prior to May
2, 1994 was not subject to Rule 12b-1 distribution expenses.
(2) Data are derived from data for the Decatur Income Fund
Institutional Class (formerly known as Decatur Fund I
(Institutional) class), which commenced operations on January
13, 1994. Ratios and total return have been annualized.
(3) Does not reflect current maximum sales charges that are or
were in effect applicable to Decatur Income Fund A Class.
<PAGE> 74
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
---------------------------------------------------------------------------------------
PERIOD
7/26/93(3)
YEAR ENDED THROUGH YEAR ENDED
11/30/95 11/30/94 11/30/93 11/30/93(1) 11/30/92(1) 11/30/91(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $12.35 $14.40 $14.10 $13.98 $12.73 $11.71
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . 0.47 0.43 0.15 0.45 0.47 0.53
Net Gains or Losses on Securities
(both realized and unrealized) . . . 3.65 (0.37) 0.25 1.45 1.30 1.07
---- ------ ---- ---- ---- ----
Total From Investment Operations . 4.12 0.06 0.40 1.90 1.77 1.60
---- ---- ---- ---- ---- ----
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . (0.40) (0.45) (0.10) (0.45) (0.52) (0.58)
Distributions (from capital gains) . . . . . . (0.42) (1.66) none (1.05) none none
Returns of Capital . . . . . . . . . . . . . . none none none none none none
---- ---- ---- ---- ---- ----
Total Distributions . . . . . . . (0.82) (2.11) (0.10) (1.50) (0.52) (0.58)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period . . . . . . . . $15.65 $12.35 $14.40 $14.38 $13.98 $12.73
====== ====== ====== ====== ====== ======
- ------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . 35.13% 0.19% 14.89% 14.74%(4) 14.12%(4) 13.94%(4)
- ------------
- ------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . $11,520 $1,376 $1,181 $431,638 $408,986 $394,338
Ratio of Expenses to Average Daily Net Assets(5) 0.89% 0.96% 0.92% 1.22% 1.23% 1.23%
Ratio of Net Investment Income to
Average Daily Net Assets(5) . . . . . . . . 3.02% 3.18% 3.45% 3.15% 3.44% 4.20%
Portfolio Turnover Rate . . . . . . . . . . . . 81% 74% 119% 119% 98% 67%
<CAPTION>
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
--------------------------------------------------------------------------------
PERIOD
8/27/86(1)(2)
YEAR ENDED THROUGH
11/30/90(1) 11/30/89(1) 11/30/88(1) 11/30/87(1) 11/30/86
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $13.64 $11.47 $9.04 $10.29 $9.53
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income . . . . . . . . . . . . . 0.58 0.54 0.50 0.31 0.04
Net Gains or Losses on Securities
(both realized and unrealized) . . . (1.44) 2.12 2.30 (1.30) 0.72
------ ---- ---- ------ ----
Total From Investment Operations . (0.86) 2.66 2.80 (0.99) 0.76
------ ---- ---- ------ ----
LESS DISTRIBUTIONS
- ------------------
Dividends (from net investment income) . . . . (0.60) (0.49) (0.37) (0.26) none
Distributions (from capital gains) . . . . . . (0.47) none none none none
Returns of Capital . . . . . . . . . . . . . . none none none none none
---- ---- ---- ---- ----
Total Distributions . . . . . . . (1.07) (0.49) (0.37) (0.26) none
------ ------ ------ ------ ----
Net Asset Value, End of Period . . . . . . . . $11.71 $13.64 $11.47 $9.04 $10.29
====== ====== ====== ===== ======
- -------------------------------------------
TOTAL RETURN . . . . . . . . . . . . . . . . (6.84%)(4) 23.73%(4) 31.51%(4) (10.08%)(4) 33.87%(2)(4)
- ------------
- -------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (000's omitted) . . . $357,139 $318,871 $200,085 $146,632 $16,118
Ratio of Expenses to Average Daily Net Assets(5) 1.23% 1.24% 1.28% 1.27%(6) (2)
Ratio of Net Investment Income to
Average Daily Net Assets(5) . . . . . . . . 4.87% 4.60% 4.77% 4.17%(7) (2)
Portfolio Turnover Rate . . . . . . . . . . . . 54% 60% 69% 39% (2)
</TABLE>
- ------------------------------
(1) Data are derived from data of Decatur Total Return Fund A
Class (formerly known as Decatur Fund II class) and reflect
the impact of Rule 12b-1 distribution expenses paid by the
Decatur Total Return Fund A Class. Decatur Total Return
Fund Institutional Class (formerly known as Decatur Fund II
(Institutional) class) is not subject to Rule 12b-1
distribution expenses and per share data for periods
beginning on and after July 26, 1993 will not reflect the
deduction of such expenses.
(2) Date of the initial public offering of the Decatur Total
Return Fund A Class. Total return has been annualized. The
ratios of expenses and net investment income to average
daily net assets and portfolio turnover have been omitted
from this chart for the period August 27, 1986 through
November 30, 1986 as management believes that such ratios
for this relatively short period are not meaningful.
(3) Date of initial public offering of Decatur Total Return Fund
Institutional Class (formerly known as Decatur Fund II
(Institutional) class); ratios and total return for this
period have been annualized.
(4) Does not reflect any maximum sales charges that are or were
in effect. Total return for 1986 and 1987 reflect expense
limitation referenced in Notes 5, 6 and 7.
(5) The Manager undertook to waive its management fee and assume
expenses to the extent necessary to limit the Decatur Total
Return Fund's ratio of annual operating expenses, exclusive
of taxes, interest, brokerage commissions and extraordinary
expenses, to average daily net assets to 1% for a six-month
period after the initial public offering.
(6) Ratio of expenses to average daily net assets prior to
expense limitation was 1.41%.
(7) Ratio of net investment income to average daily net assets
prior to expense limitation was 4.03%.
<PAGE> 75
INVESTMENT OBJECTIVES AND STRATEGIES
SUITABILITY
Decatur Income Fund - The Fund may be suitable for investors looking for
a current return with the potential for capital appreciation. Investors 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.
Decatur Total Return Fund - The Fund 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 Fund is suitable for
investors who want a current return with the possibility of capital
appreciation.
* * *
Naturally, the Funds cannot assure a specific rate of return or that
principal will be protected. The value of each Fund's shares can be expected
to move up and down depending upon market conditions. Consequently,
appreciation may be obtained in periods of generally rising markets, while in
declining markets, the value of its shares may, of course, decline. For this
reason, neither Fund is appropriate for short-term investors. However, through
the cautious selection and supervision of its portfolio, each Fund will strive
to achieve its objective set forth above.
Ownership of shares of each Fund reduces the bookkeeping and
administrative inconveniences that would be involved with direct purchases of
the securities held in each Fund's portfolio.
Investors should not consider a purchase of shares of either Fund 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.
-9-
<PAGE> 76
INVESTMENT STRATEGY
Decatur Income Fund - The objective of Decatur Income Fund 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 Fund 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 Fund will normally invest at least 65% of its
total assets in income-producing securities. The Fund may invest up to 15% of
its net asset in high yield, high risk fixed income securities, which are
generally considered to be speculative. See High Yield, High Risk Securities
under Other Investment Policies and Risk Considerations.
The Manager carefully selects the Fund's diversified group of securities
for their high yields relative to risk involved.
The Fund generally invests in common stocks that the Manager 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 Fund's policy not to purchase and
sell securities with a view toward obtaining short-term profits. However, the
Fund may hold securities for any period of time.
Decatur Total Return Fund - Decatur Total Return Fund 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. While the Fund 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 focus on fixed income securities can be
expected to be less than that of Decatur Income Fund. The Fund 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 Fund 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 Fund's policy to purchase and sell securities with a view
toward obtaining long-term rather than short-term capital gains. However, the
Fund may hold securities for any period of time.
* * *
For additional information on each Fund's investment policies and
certain risks associated with investments in certain types of securities, see
Other Investment Policies and Risk Considerations.
-10-
<PAGE> 77
CLASSES OF SHARES
The Distributor serves as the national distributor for each Fund.
Shares of each Class may be purchased directly by contacting a Fund or its
agent or through authorized investment dealers. All purchases of shares of
each Class are at net asset value. There is no front-end or contingent
deferred sales charge.
INVESTMENT INSTRUCTIONS GIVEN ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES CONSIDERING PURCHASING SHARES OF A CLASS
AS PART OF THEIR RETIREMENT PROGRAM SHOULD CONTACT THEIR EMPLOYER FOR DETAILS.
Shares of each Class are available for purchase only by: (a) retirement
plans introduced by persons not associated with brokers or dealers that are
primarily engaged in the retail securities business and rollover individual
retirement accounts from such plans; (b) tax-exempt employee benefit plans of
the Manager or its affiliates and securities dealer firms with a selling
agreement with the Distributor; (c) institutional advisory accounts of the
Manager or its affiliates and those having client relationships with Delaware
Investment Advisers, a division of the Manager, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit plans
and rollover individual retirement accounts from such institutional advisory
accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the class; and (e) registered investment advisers
investing on behalf of clients that consist solely of institutions and high
net-worth individuals having at least $1,000,000 entrusted to the adviser for
investment purposes, but only if the adviser is not affiliated or associated
with a broker or dealer and derives compensation for its services exclusively
from its clients for such advisory services.
DECATUR INCOME FUND A CLASS, DECATUR INCOME FUND B CLASS, DECATUR INCOME FUND C
CLASS, DECATUR TOTAL RETURN FUND A CLASS, DECATUR TOTAL RETURN FUND B CLASS
AND DECATUR TOTAL RETURN FUND C CLASS
In addition to offering the Decatur Income Fund Institutional Class and
the Decatur Total Return Fund Institutional Class, the Decatur Income Fund also
offers the Decatur Income Fund A Class, Decatur Income Fund B Class, Decatur
Income Fund C Class, and the Decatur Total Return Fund also offers the Decatur
Total Return Fund A Class, Decatur Total Return Fund B Class and Decatur Total
Return Fund C Class, which are described in a separate prospectus relating only
to those classes. The Decatur Income Fund A Class and Decatur Total Return
Fund A Class carry a front-end sales charge and have annual 12b-1 expenses
equal to a maximum of .30%. The maximum front-end sales charge as a percentage
of the offering price is 4.75% and is reduced on certain transactions of
$100,000 or more. The Decatur Income Fund B Class, Decatur Income Fund C
Class, Decatur Total Return Fund B Class and Decatur Total Return Fund C Class
have no front-end sales charge but are subject to annual 12b-1 expenses equal
to a maximum of 1%. Shares of Decatur Income Fund B Class, Decatur Income Fund
C Class, Decatur Total Return Fund B Class and Decatur Total Return Fund C
Class and certain shares of the Decatur Income Fund A Class and Decatur Total
Return Fund A Class may be subject to a contingent deferred sales charge upon
redemption. To obtain a prospectus relating to such classes, contact the
Distributor by writing to the address on the cover of this Prospectus or by
calling 800-523-4640.
-11-
<PAGE> 78
HOW TO BUY SHARES
Each Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
INVESTING DIRECTLY BY MAIL
1. Initial Purchases--An Investment Application or, in the case of a
retirement account, an appropriate retirement plan application, must be
completed, signed and sent with a check payable to the specific Fund and Class
selected (for example, if you wish to buy Institutional Class shares of Decatur
Income Fund, make check payable to Decatur Income Fund Institutional 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 the specific Fund and Class selected. Your check
should be identified with your name(s) and account number.
INVESTING DIRECTLY BY WIRE
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596
(include your name(s) and your account number for the class in which you are
investing).
1. Initial Purchases--Before you invest, telephone the Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application or, in the case of a retirement account, an
appropriate retirement plan application, to the specific Fund and Class
selected, to 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by
wiring funds to CoreStates Bank, N.A., as described above. You must advise
your Client Services Representative by telephone at 800-828-5052 prior to
sending your wire.
INVESTING BY EXCHANGE
If you have an investment in another mutual fund in the Delaware Group
and you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into shares of either Fund.
However, shares of the Decatur Income Fund B Class, Decatur Income Fund C
Class, Decatur Total Return Fund B Class and Decatur Total Return Fund C Class
and the Class B Shares and Class C Shares of the other funds in the Delaware
Group offering such a class of shares may not be exchanged into the Classes.
If you wish to open an account by exchange, call your Client Services
Representative at 800-828-5052 for more information.
INVESTING THROUGH YOUR INVESTMENT DEALER
You can make a purchase of shares of the Funds through most investment
dealers who, as part of the service they provide, must promptly transmit orders
to a Fund. They may charge for this service.
PURCHASE PRICE AND EFFECTIVE DATE
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when 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 in which the shares are being
purchased. The effective date of a direct purchase is the day your wire,
electronic transfer
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or check is received, unless it is received after the time the share price is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.
THE CONDITIONS OF YOUR PURCHASE
Each Fund reserves the right to reject any purchase order. If a
purchase is cancelled because your check is returned unpaid, you are
responsible for any loss incurred. Each 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. Each Fund
reserves the right to reject purchases 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.
Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of
redemptions.
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REDEMPTION AND EXCHANGE
REDEMPTION AND EXCHANGE REQUESTS MADE ON BEHALF OF PARTICIPANTS IN AN
EMPLOYER-SPONSORED RETIREMENT PLAN ARE MADE IN ACCORDANCE WITH DIRECTIONS
PROVIDED BY THE EMPLOYER. EMPLOYEES SHOULD THEREFORE CONTACT THEIR EMPLOYER
FOR DETAILS.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after we receive your request in good order.
Redemption and exchange requests received in good order after the time the net
asset value of shares is determined, as noted above, will be processed on the
next business day. See Purchase Price and Effective Date under Buying Shares.
Except as otherwise noted below, for a redemption request to be in "good
order," you must provide your Class account number, account registration, and
the total number of shares or dollar amount of the transaction. 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 also request a
redemption or an exchange by calling 800-828-5052.
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.
Each 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
15 days from the purchase date. Telephone redemptions for shares recently
purchased by check will not be honored unless the Fund involved is reasonably
satisfied that the purchase check has cleared. You can avoid this potential
delay if you purchase shares by wiring Federal Funds. Each Fund reserves the
right to reject a written or telephone redemption request or delay payment of
redemption proceeds if there has been a recent change to the shareholder's
address of record.
Shares of a Class may be exchanged into any other Delaware Group mutual
fund provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of a Class, such exchange will be exchanged at net
asset value. Shares of a Class may not be exchanged into the Class B Shares or
Class C Shares of any of the funds in the Delaware Group. Each Fund may
suspend or terminate, or amend the terms of, the exchange privilege upon 60
days' written notice to shareholders.
Various redemption and exchange methods are outlined below. No fee is
charged by either Fund or the Distributor for redeeming or exchanging your
shares. You may also have your investment dealer arrange to have your shares
redeemed or exchanged. Your investment dealer may charge for this service.
All authorizations, 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 to which the authorization relates
or its agent.
WRITTEN REDEMPTION AND EXCHANGE
You can write to each Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an
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exchange of any or all your shares into another mutual fund in the Delaware
Group, subject to the same conditions and limitations as other exchanges noted
above. The request must be signed by all owners of the account or your
investment dealer of record.
For redemptions of more than $50,000, or when the proceeds are not sent
to the shareholder(s) at the address of record, the Funds require a signature
by all owners of the account and may require a signature guarantee. Each
signature guarantee must be supplied by an eligible guarantor institution. The
Funds reserve the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Funds may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
The redemption request is effective at the net asset value next
determined after it is received in good order. Payment is normally mailed the
next business day, but no later than seven days, after receipt of your
redemption request. Certificates for shares are issued only if you submit a
specific request. If your shares are in certificate form, the certificate must
accompany your request and also be in good order.
Shareholders also may submit their written request for redemption or
exchange by facsimile transmission at the following number: 215-255-8864.
TELEPHONE REDEMPTION AND EXCHANGE
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you may redeem or
exchange only by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your
account in writing that you do not wish to have such service available with
respect to your account. Each Fund reserves the right to modify, terminate or
suspend these procedures upon 60 days' written notice to shareholders. It may
be difficult to reach the Funds by telephone during periods when market or
economic conditions lead to an unusually large volume of telephone requests.
Neither the Funds nor the Funds' Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Class shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each 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, such Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent transactions. A written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, 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
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 more than seven days, after receipt of the request.
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TELEPHONE REDEMPTION-PROCEEDS TO YOUR BANK
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next
business day, but no later than seven days, after receipt of your request to
your predesignated bank account. There are no fees for this redemption method,
but the mail time may delay getting funds into your bank account. Simply call
your Client Services Representative prior to the time the net asset value is
determined, as noted above.
TELEPHONE EXCHANGE
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
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DIVIDENDS AND DISTRIBUTIONS
Decatur Fund, Inc. currently intends to make monthly payments from
Decatur Income Fund's net investment income and quarterly payments from Decatur
Total Return Fund's net investment income. Payments from a Fund's net realized
securities profits, if any, will be made during the first quarter of the next
fiscal year.
Each class of a Fund will share proportionately in the investment income
and expenses of that Fund, except that the Classes will not incur any
distribution fees under the 12b-1 Plans which apply to the Decatur Income Fund
A Class, Decatur Income Fund B Class, Decatur Income Fund C Class, Decatur
Total Return Fund A Class, Decatur Total Return Fund B Class and Decatur Total
Return Fund C Class.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value.
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TAXES
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code"). As such, a Fund will not be subject to federal income tax, or to
any excise tax, to the extent its earnings are distributed as provided in the
Code.
Each Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income, even
though received in additional shares. For corporate investors, dividends from
net investment income will generally qualify in part for the corporate
dividends-received deduction. The portion of dividends paid by a Fund that so
qualifies will be designated each year in a notice from Decatur Fund, Inc.
to the Funds' shareholders. For the fiscal year ended November 30, 1995, all
of the Decatur Income Fund's and the Decatur Total Return Fund's dividends from
net investment income qualified for the corporate dividends-received deduction.
Distributions paid by a Fund from long-term capital gains, received in
additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Fund. The Funds do not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a byproduct
Fund 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 a Fund 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 a Fund and received by
the shareholder on December 31 of the year declared.
The sale of shares of a Fund 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 a sale or exchange of Fund shares that had been held for six
months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. Government securities may be exempt
from state personal income taxes. Shares of each Fund are exempt from
Pennsylvania county personal property taxes.
Each year, Decatur Fund, Inc. will mail you information on the tax
status of the dividends and distributions paid by the Fund in which you hold
shares. Shareholders will also receive each year information as to the portion
of dividend income, if any, that is derived from U.S. Government securities
that are exempt from state income tax. Of course, shareholders who are not
subject to tax on their income would not be required to pay tax on amounts
distributed to them by a Fund.
Each 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
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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 contact their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in a Fund.
See Accounting and Tax Issues and Distributions and Taxes in Part B for
additional information on tax matters relating to the Funds and their
shareholders.
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CALCULATION OF NET ASSET VALUE PER SHARE
The purchase and redemption price of a Class is the net asset value
("NAV") per share of the Class next computed after the order is received. The
NAV is computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market
value. Short-term investments having a maturity of less than 60 days are
valued at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith and in a
method approved by Decatur Fund, Inc.'s Board of Directors.
The net asset values of all outstanding shares of each class of a Fund
will be computed on a pro-rata basis for each outstanding share based on the
proportionate participation in the Fund represented by the value of shares of
that class. All income earned and expenses incurred by a Fund will be borne on
a pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes,
except that the Classes will not incur any of the expenses under the Company's
12b-1 Plans and the Decatur Income Fund A, B and C Classes and the Decatur
Total Return Fund A, B and C Classes alone will bear the 12b-1 Plan fees
payable under their respective Plans. Due to the specific distribution
expenses and other costs that will be allocable to each class, the net asset
value of and dividends paid to each class of a Fund will vary.
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MANAGEMENT OF THE FUNDS
DIRECTORS
The business and affairs of Decatur Fund, Inc. 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 each Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1995, the Manager and its
affiliate, Delaware International Advisers Ltd., were supervising in the
aggregate more than $27 billion in assets in the various institutional
(approximately $17,389,902,000) and investment company (approximately
$10,383,560,000) 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, new
Investment Management Agreements between Decatur Fund, Inc. on behalf of each
Fund and the Manager were executed following shareholder approval.
The Manager manages each Fund's portfolio and makes investment decisions
which are implemented by Decatur Fund, Inc.'s Trading Department. The Manager
also administers Decatur Fund, Inc.'s affairs and pays the salaries of all the
directors, officers and employees of Decatur Fund, Inc. who are affiliated with
the Manager. For these services, under the Investment Management Agreement for
the Decatur Income Fund, the Manager is paid an annual fee of .60% on the first
$100 million of 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
this Fund. For the fiscal year ended November 30, 1995, investment management
fees paid by Decatur Income Fund were 0.49% of its average daily net assets.
For the services noted above, under the Investment Management Agreement
for the Decatur Total Return Fund, the Manager is paid an annual fee of .60% on
the first $500 million of average daily net assets of the Fund, .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 this
Fund. For the fiscal year ended November 30, 1995, investment management fees
paid by Decatur Total Return Fund were 0.59% of its average daily net assets.
John B. Fields has primary responsibility for making day-to-day
investment decisions for each Fund. He has been the Senior Portfolio Manager
for the Decatur Income Fund since 1993 and for the Decatur Total Return Fund
since 1992. Mr. Fields, who has 25 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 each Fund, Mr. Fields works with a
team of 12 portfolio managers and analysts, each of whom specializes in a
different industry sector and makes recommendations accordingly. Mr. Fields
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also regularly consults with Wayne A. Stork and Richard G. Unruh, Jr. Mr.
Stork, Chairman of the Board of the Manager and Decatur Fund, Inc.'s Board of
Directors, is a graduate of Brown University and attended New York University's
Graduate School of Business Administration. Mr. Stork joined the Delaware
Group in 1962 and has served in various executive capacities at different times
within the Delaware organization. Mr. Unruh is a graduate of Brown University
and received his MBA from the University of Pennsylvania's Wharton School. He
joined the Delaware Group in 1982 after 19 years of investment management
experience with Kidder, Peabody & Co. Inc. Mr. Unruh was named an executive
vice president of Decatur Fund, Inc. 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
Each Fund normally will not invest for short-term trading purposes.
However, a Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs
of a Fund and may affect taxes payable by such Fund's shareholders to the
extent that net capital gains are realized. Given each Fund's investment
objective, its annual portfolio turnover rate is not expected to exceed 100%.
During the past two fiscal years, the Decatur Income Fund's portfolio turnover
rates were 92% for 1994 and 74% for 1995, and Decatur Total Return Fund's
portfolio turnover rates were 74% for 1994 and 81% for 1995.
Each Fund 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, each Fund
may consider a broker/dealer's sales of Fund shares in placing portfolio orders
and may place orders with broker/dealers that have agreed to defray certain
Fund expenses such as custodian fees.
PERFORMANCE INFORMATION
From time to time, the each Fund may quote yield or total return
performance of its Class in advertising and other types of literature.
The current yield for a Class will be calculated by dividing the
annualized net investment income earned by that Class during a recent 30-day
period by the net asset value per share on the last day of the period. The
yield formula provides for semi-annual compounding which assumes that net
investment income is earned and reinvested at a constant rate and annualized at
the end of a six-month period.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value. Each
presentation will include the average annual total return for one-, five- and
ten year periods, as relevant. Each Fund may also advertise aggregate and
average total return information concerning a Class over additional periods of
time.
Because securities prices fluctuate, investment results of a Class will
fluctuate over time and past performance should not be considered as a
representation of future results.
STATEMENTS AND CONFIRMATIONS
You will receive quarterly statements of your account 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 your Client Services Representative.
FINANCIAL INFORMATION ABOUT THE FUNDS
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed
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information about each Fund's investments and performance. Decatur Fund,
Inc.'s fiscal year ends on November 30.
DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for each Fund under separate Distribution Agreements dated April 3, 1995, as
amended on November 29, 1995. The Distributor bears all of the costs of
promotion and distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for each Fund
under separate Agreements dated June 29, 1988. The directors annually review
service fees paid to the Transfer Agent. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent
may be performed by certain other entities and the Transfer Agent may elect to
enter into an agreement to pay such other entities for those services. In
addition, participant account maintenance fees may be assessed for certain
recordkeeping provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and
the various services selected. Fees will be quoted upon request and are
subject to change.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
EXPENSES
Each Fund is responsible for all of its own expenses other than those
borne by the Manager under its Investment Management Agreements and those borne
by the Distributor under its Distribution Agreements. The ratio of expenses to
average daily net assets for the Decatur Income Fund Institutional Class was
0.74% and for the Decatur Total Return Fund Institutional Class was 0.89% for
the fiscal year ended November 30, 1995.
SHARES
The Decatur Income Fund is the original series of Decatur Fund, Inc. and
the Decatur Total Return Fund is the second series of Decatur Fund, Inc.
Decatur Fund, Inc. is an open-end management investment company, commonly known
as a mutual fund. Each Fund's portfolio of assets is diversified as defined by
the 1940 Act. Decatur Fund, Inc. 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, Decatur Income Fund was named the Decatur I Series (which
was known and did business as Decatur Fund I) and Decatur Total Return Fund was
named the Decatur II Series (which was known and did business as Decatur Fund
II).
All fund shares have a par value of $1.00, equal voting rights, except
as noted below, and are equal in all other respects. All of the shares have
noncumulative voting rights which means that the holders of more than 50% of
Decatur Fund, Inc.'s shares voting for the election of directors can elect 100%
of the directors if they choose to do so. Under Maryland law, Decatur Fund,
Inc. 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 Decatur Fund, Inc.'s shares may
request that a special meeting be called to consider the removal of a director.
Shares of Decatur Income Fund have a priority over shares of Decatur Total
Return Fund in the assets and income of
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Decatur Income Fund and will vote separately on any matter that affects only
Decatur Income Fund. Likewise, shares of Decatur Total Return Fund have a
priority over shares of Decatur Income Fund in the assets and income of Decatur
Total Return Fund and will vote separately on any matter that affects only
Decatur Total Return Fund.
The Decatur Income Fund also offers the Decatur Income Fund A Class,
Decatur Income Fund B Class and Decatur Income Fund C Class. The Decatur Total
Return Fund also offers the Decatur Total Return Fund A Class, Decatur Total
Return Fund B Class and Decatur Total Return Fund C Class. Shares of those
classes represent proportionate interests in the assets of the respective Fund
and have the same voting and other rights and preferences as the Decatur Income
Fund Institutional Class and the Decatur Total Return Fund Institutional Class,
respectively, except that shares of the Classes are not subject to, and may not
vote on matters affecting, the Distribution Plans under Rule 12b-1 relating to
the Decatur Income Fund A Class, Decatur Income Fund B Class, Decatur Income
Fund C Class, Decatur Total Return Fund A Class, Decatur Total Return Fund B
Class and the Decatur Total Return Fund C Class.
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 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 Decatur Fund I
(Institutional) class.
From May 2, 1994 to September 5, 1994, the Decatur Total Return Fund
Institutional Class was known as the Decatur Total Return Fund (Institutional)
class and prior to May 2, 1994, it was known as the Decatur Fund II
(Institutional) class. From May 2, 1994 to September 5, 1994, the Decatur
Total Return Fund A Class was known as the Decatur Total Return Fund class and
prior to May 2, 1994, it was known as the Decatur Fund II class.
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OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
HIGH YIELD, HIGH RISK SECURITIES
Decatur Income Fund may invest up to 15% of its net assets in high
yield, high risk fixed income securities. These securities are rated lower
than BBB by Standard & Poor's Ratings Group ("S&P"), Baa by Moody's Investors
Service, Inc. ("Moody's") and/or rated similarly by another rating agency, or,
if unrated, are considered by the Manager to be of equivalent quality. The
Fund will not invest in securities which are rated lower than C by S&P, Ca by
Moody's or similarly by another rating agency, 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 Fund, there can be no assurance that
diversification will protect the Fund from widespread bond defaults brought
about by a sustained economic downturn.
Medium and low-grade bonds held by the Fund 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 additional
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 Fund's net asset value per share.
RESTRICTED AND ILLIQUID SECURITIES
Each Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain institutional buyers such as the Funds. Each Fund may invest no more
than 10% of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of a Fund's 10% limitation on
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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 that was previously
determined to be liquid is no longer liquid and, as a result, a Fund's holdings
of illiquid securities exceed the Fund's 10% limit on investment in such
securities, the Manager will determine what action to take to ensure that the
Fund continues to adhere to such limitation.
PORTFOLIO LOAN TRANSACTIONS
Each Fund 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 a Fund 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 Funds 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
Each Fund 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 a Fund's positions in cash, short-term
debt securities and other money market instruments, at times when such Fund's
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 Fund involved.
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
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<PAGE> 93
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 a Fund's current or intended investments
from broad fluctuations in stock or bond prices. For example, a Fund 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 Fund's
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 a Fund 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 Fund
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
a Fund's current or intended investments in fixed income securities. For
example, if a Fund owned long-term bonds and interest rates were expected to
increase, the Fund 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
Fund's 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 Fund 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 Fund's interest
rate futures contracts would be expected to increase at approximately the same
rate, thereby keeping the net asset value of the Fund 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 Fund 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 Fund's cash reserve could then be used to buy long-term
bonds on the cash market.
Each Fund 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. A Fund 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 Fund's
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.
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<PAGE> 94
Conversely, a Fund 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 a Fund 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 Fund will sustain
losses on its futures position which could reduce or eliminate the benefits of
the reduced cost of portfolio securities to be acquired.
Each Fund may also purchase and write options on the types of futures
contracts in which the Fund 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 Fund is exercised, the Fund 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. A Fund 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, a Fund may not achieve the anticipated benefits of
investing in futures contracts and options thereon, or may realize a loss. To
the extent that a Fund 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 Fund from closing out its positions relating to futures. See Part B for a
further discussion of this investment technique.
OPTIONS
Each Fund may write covered call options on individual issues. For the
option to be considered to be covered, the Fund writing the option must own the
common stock underlying the option or securities convertible into such common
stock. In addition, each Fund may write call options on stock indices. Each
Fund 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 a Fund's portfolio as well as the price movement
of individual securities. The Funds do not currently intend to write or
purchase options on stock indices.
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<PAGE> 95
While there is no limit on the amount of a Fund's assets which may be
invested in covered call options, neither Fund will invest more than 2% of its
net assets in put options. The Funds will only use Exchange-traded options.
CALL OPTIONS
Writing Covered Call Options--A covered call option obligates a Fund to
sell one of its securities for an agreed price up to an agreed date. When a
Fund 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 Fund
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 Fund
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 a Fund the right to sell one
of its securities for an agreed price up to an agreed date. The advantage is
that the Fund can be protected should the market value of the security decline.
However, the Fund 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 a Fund offset
a put option or covered call option prior to its exercise or expiration. If
the Fund 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.
* * *
BORROWING
Although each Fund is permitted under certain circumstances to borrow
money, neither Fund normally do so. A Fund will not purchase new securities
while any borrowings are outstanding.
REPURCHASE AGREEMENTS
Each Fund may use repurchase agreements that are at least 100%
collateralized by securities in which the Fund can invest directly. Repurchase
agreements help a Fund to invest cash on a temporary basis. Under a repurchase
agreement, a Fund acquires ownership and possession of a security, and the
seller agrees to buy the security back at a specified time and higher price.
If the seller is unable to repurchase the security, the Fund could experience
delays in liquidating the securities. To minimize this possibility, the
Manager, pursuant to direction from Decatur Fund Inc.'s Board of Directors,
considers the creditworthiness of the banks and dealers with whom it enters
into repurchase agreements.
* * *
Part B sets forth more specific investment restrictions, some of which
limit the percentage of assets that may be invested in certain types of
securities.
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<PAGE> 96
APPENDIX A--RATINGS
The Decatur Income Fund 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 the assets composition, based on rating categories, of such
securities held by the Fund. 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 Decatur Income Fund's high yield, high
risk securities which are not rated. The information contained in the table
was prepared based on a dollar weighted average of the Fund's portfolio
composition based on month end data for the fiscal year ended November 30,
1995. 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>
Baa/BBB 0.20%
Ba/BB 3.94%
B/B 5.59%
Not Rated/Other 0.13%
</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
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<PAGE> 97
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.
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<PAGE> 98
- ---------------------------------------
DECATUR INCOME FUND
DECATUR TOTAL RETURN FUND
- ---------------------------------------
A CLASSES
- ---------------------------------------
B CLASSES
- ---------------------------------------
C CLASSES
INSTITUTIONAL CLASSES
- ---------------------------------------
CLASSES OF DELAWARE GROUP
DECATUR FUND, INC.
- ---------------------------------------
PART B
STATEMENT OF
ADDITIONAL INFORMATION
- ---------------------------------------
JANUARY 29, 1996
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, 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
DELAWARE
GROUP
------------
<PAGE> 99
- --------------------------------------------------------------------------------
PART B--STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, 1996
- --------------------------------------------------------------------------------
DELAWARE GROUP DECATUR FUND, INC.
- --------------------------------------------------------------------------------
1818 MARKET STREET
PHILADELPHIA, PA 19103
- --------------------------------------------------------------------------------
FOR MORE INFORMATION ABOUT THE
DECATUR INCOME FUND INSTITUTIONAL CLASS AND
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS:
800-828-5052
FOR PROSPECTUS AND PERFORMANCE OF THE DECATUR INCOME FUND A CLASS, DECATUR
INCOME FUND B CLASS, DECATUR INCOME FUND C CLASS, DECATUR TOTAL RETURN FUND A
CLASS, DECATUR TOTAL RETURN FUND B CLASS AND DECATUR TOTAL RETURN FUND C CLASS:
NATIONWIDE 800-523-4640
INFORMATION ON EXISTING ACCOUNTS OF THE DECATUR INCOME FUND A CLASS, DECATUR
INCOME FUND B CLASS, DECATUR INCOME FUND C CLASS, DECATUR TOTAL RETURN FUND A
CLASS, DECATUR TOTAL RETURN FUND B CLASS AND DECATUR TOTAL RETURN FUND C CLASS:
(SHAREHOLDERS ONLY)
NATIONWIDE 800-523-1918
DEALER SERVICES:
(BROKER/DEALERS ONLY)
NATIONWIDE 800-362-7500
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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<PAGE> 100
GENERAL INFORMATION
- --------------------------------------------------------------------------------
APPENDIX A -- IRA INFORMATION
- --------------------------------------------------------------------------------
APPENDIX B -- PERFORMANCE OVERVIEW
- --------------------------------------------------------------------------------
APPENDIX C -- THE COMPANY LIFE CYCLE
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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<PAGE> 101
Delaware Group Decatur Fund, Inc. ("Decatur Fund, Inc.") 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 and Decatur Total Return Fund series (individually
the "Fund" and collectively the "Funds") of Decatur Fund, Inc. Decatur Income
Fund and Decatur Total Return Fund offer respectively, the Decatur Income Fund
A Class and Decatur Total Return Fund A Class ("Class A Shares"), Decatur
Income Fund B Class and Decatur Total Return Fund B Class ("Class B Shares")
and Decatur Income Fund C Class and Decatur Total Return Fund C Class ("Class C
Shares") (Class A Shares, Class B Shares and Class C Shares together, the "Fund
Classes") and Decatur Income Fund Institutional Class and Decatur Total Return
Fund Institutional Class (the "Institutional Classes").
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 .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 12 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 each Fund, except where noted.
This Part B supplements the information contained in the current
Prospectus for the Fund Classes dated, January 29, 1996 and the current
Prospectus for the Institutional Classes dated January 29, 1996, as they may be
amended from time to time. It should be read in conjunction with the
respective Class' Prospectus. Part B is not itself a prospectus but is, in its
entirety, incorporated by reference into each Class' Prospectus. A prospectus
relating to the Fund Classes and a prospectus relating to the Institutional
Classes may be obtained by writing or calling your investment dealer or by
contacting Decatur Fund, Inc.'s national distributor, Delaware Distributors,
L.P. (the "Distributor"), 1818 Market Street, Philadelphia, PA 19103.
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<PAGE> 102
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
INVESTMENT RESTRICTIONS--Decatur Fund, Inc. has adopted the following
restrictions for the Funds which, along with a Fund's investment objective,
cannot be changed without approval by the holders of a "majority" of such
Fund's outstanding shares, which is a vote by the holders of the lesser of a)
67% or more of the voting securities present in person or by proxy at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy; or b) more than 50% of the outstanding
voting securities. The percentage limitations contained in the restrictions
and policies set forth herein apply at the time of purchase of securities.
Decatur Income Fund shall not:
1. 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. Acquire control of any company. (Decatur Fund, Inc.'s
Certificate of Incorporation permits control of companies to protect
investments already made, but its policy is not to acquire control.)
3. Purchase or retain securities of a company which has an
officer or director who is an officer or director of Decatur Fund, Inc., or an
officer, director or partner of its investment manager if, to the knowledge of
Decatur Fund, Inc., 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. Allow long or short positions on shares of the Fund to be
taken by Decatur Fund, Inc.'s officers, directors or any of its affiliated
persons. Such persons may buy shares of the Fund for investment purposes,
however.
5. 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 Fund's assets or (c) own securities of investment companies having an
aggregate value in excess of 10% of the Fund's assets.
6. Invest more than 10% of the value of its total assets in
illiquid assets.
7. Invest in securities of other investment companies except at
customary brokerage commission rates or in connection with mergers,
consolidations or offers of exchange.
8. Make any investment in real estate unless necessary for office
space or the protection of investments already made. (This restriction does
not preclude the Fund's purchase of securities issued by real estate investment
trusts.)
9. Sell short any security or property.
10. Deal in commodities, except that the Fund 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. 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 Fund's assets, asset coverage of
at least 300% is required. In the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three days thereafter (not
including Sunday 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 Fund shall not issue senior securities
as defined in the Investment Company Act of 1940, except for notes to banks.
12. 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 Fund and the Fund may loan up to 25% of its assets to
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<PAGE> 103
qualified broker/dealers or institutional investors for their use relating to
short sales or other transactions.
13. 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.
14. The Fund 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, Decatur Fund, Inc. has made a commitment that the Fund
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, Decatur Fund, Inc. has made a commitment that the
Fund's 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, Decatur Fund, Inc.
has also made a commitment that the Fund will not invest in warrants valued at
lower of cost or market exceeding 5% of the Fund's net assets. Included within
that amount, but not to exceed 2% of the Fund's net assets, may be warrants not
listed on the New York Stock Exchange or American Stock Exchange. In addition,
the Fund may not concentrate investments in any particular industry, which
means not investing more than 25% of its assets in any industry.
Although not a fundamental investment restriction, the Fund currently
does not invest its assets in real estate limited partnerships or oil, gas and
other mineral leases.
Decatur Total Return Fund 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 Fund's 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 Fund; and (ii) the Fund 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
Fund 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 Fund may acquire restricted or not readily marketable securities under
circumstances where, if such securities are sold, the Fund 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 Fund 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.
-5-
<PAGE> 104
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 the lower of cost or market
exceeding 5% of the Fund's net assets. Included in that amount, but not to
exceed 2% of the Fund's 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 Decatur
Fund, Inc. or of its investment manager if or so long as the directors and
officers of Decatur Fund, Inc. and of its investment 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 Fund's 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 Fund has no intention of increasing its net income
through borrowing. Any borrowing will be done from a bank and to the extent
that such borrowing exceeds 5% of the value of the Fund's net assets, asset
coverage of at least 300% is required. In the event that such asset coverage
shall at any time fall below 300%, the Fund shall, within three days thereafter
(not including Sunday or holidays) or such longer period as the Securities and
Exchange Commission (the "SEC") may prescribe by rules and regulations, reduce
the amount of its borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will not pledge more than 10% of
its net assets. The Fund will not issue senior securities as defined in the
Investment Company Act of 1940, except for notes to banks.
Although not a fundamental investment restriction, the Fund currently
does not invest its assets in real estate limited partnerships.
Although it is not a matter of fundamental policy, Decatur Total Return
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.
The application of each Fund's investment policy will be dependent upon
the judgment of Delaware Management Company, Inc. (the "Manager"). In
accordance with the judgment of the Manager, the proportions of a Fund's assets
invested in particular industries will vary from time to time. The securities
in which a Fund invests 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 investment
objective of each Fund can be achieved by investing primarily in common stocks,
each Fund may be invested in other securities including, but not limited to,
convertible securities, preferred stocks, bonds, warrants and foreign
securities. Decatur Income Fund may invest up to 15% of its net assets in high
yield, high risk securities. In periods during which the Manager feels that
market conditions warrant a more defensive portfolio positioning, each Fund may
also invest in various types of fixed income obligations.
Securities will not normally be purchased by a Fund while it has an
outstanding borrowing.
In addition, from time to time, each Fund may also engage in the
following investment techniques:
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<PAGE> 105
A. RULE 144A SECURITIES--Each Fund 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 a Fund's 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 Fund has no more than 10% of its net assets in illiquid securities.
B. REPURCHASE AGREEMENTS--In order to invest its cash reserves or
when in a temporary defensive posture, a Fund 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., a Fund)
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 a Fund's 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 a
Fund, if any, would be the difference between the repurchase price and the
market value of the security. A Fund 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 Fund must have collateral of at least 100% of the
repurchase price, including the portion representing a Fund's 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 Funds consider 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 Fund of the Company 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.
C. PORTFOLIO LOAN TRANSACTIONS--Each Fund 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 involved 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 Fund involved; 3) the Fund must be able to
terminate the loan after notice, at any time; 4) the Fund 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 Fund 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 Decatur Fund, Inc. 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.
-7-
<PAGE> 106
The major risk to which a Fund 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 Funds 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.
D. OPTIONS--Each Fund 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
Each Fund 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 Fund's investment objective. A call
option gives the purchaser of such option the right to buy, and the writer, in
this case a Fund, has the obligation to sell the underlying security at the
exercise price during the option period. The advantage to a Fund of writing
covered calls is that the Fund 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 Fund 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 a
Fund and options on stock indices, a Fund may enter into closing purchase
transactions. A closing purchase transaction is one in which a Fund, 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 a Fund
to write another call option on the underlying security with either a different
exercise price or expiration date or both. A Fund 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 written by a Fund expires unexercised, the Fund 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 written by a Fund is exercised, the Fund 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.
-8-
<PAGE> 107
Each Fund will write call options only on a covered basis, which means
that a Fund will own the underlying security subject to the call option at all
times during the option period. Unless a closing purchase transaction is
effected, the Fund 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 a Fund 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
Each Fund may invest up to 2% of its total assets in the purchase of
put options. A Fund will, at all times during which it holds a put option, own
the security covered by such option.
Each Fund may 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 a Fund 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 Fund will lose the value of the
premium paid. A Fund 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.
A Fund may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, a Fund may enter into closing sale
transactions. A closing sale transaction is one in which a Fund, 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 a Fund 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, a Fund 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
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<PAGE> 108
price movements in a Fund's 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 a Fund 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 a Fund's portfolio will not duplicate the components of an index, the
correlation will not be exact. Consequently, a Fund 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 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 a Fund's ability to effectively hedge
its securities. A Fund will enter into an option position only if there
appears to be a liquid secondary market for such options.
The Funds 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.
E. FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--As noted
in the Prospectuses, each Fund 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, each Fund may purchase and write options
on the types of futures contracts, 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 a Fund's portfolio.
If the futures price at expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium, which provides a
partial hedge against any decline that may have occurred in the Fund's
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, a Fund will retain the full amount of the option premium,
which provides a partial hedge against any increase in the price of securities
which a Fund intends to purchase. If a put or call option that a Fund has
written is exercised, the Fund 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, a Fund's losses from exercised
options on futures may to some extent be reduced or increased by changes in the
value of portfolio securities.
A Fund 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, a Fund 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 Fund will suffer a loss equal to the price of the
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<PAGE> 109
put. Where it is projected that the value of securities to be acquired by a
Fund will increase prior to acquisition, due to a market advance or changes in
interest or exchange rates, the Fund 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 Fund will suffer
a loss equal to the price of the call, but the securities which the Fund
intends to purchase may be less expensive.
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<PAGE> 110
ACCOUNTING AND TAX ISSUES
When a Fund writes a call option, an amount equal to the premium
received by it is included in the section of the Fund's 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 a Fund has written expires on its stipulated expiration date, the
Fund reports a realized gain. If a Fund enters into a closing purchase
transaction with respect to an option which the Fund has written, the Fund
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 a Fund has
written is exercised, the Fund 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--Each Fund 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"). Each Fund 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 a 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 Fund 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, a Fund 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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<PAGE> 111
PERFORMANCE INFORMATION*
From time to time, each Fund may state its Classes' total return in
advertisements and other types of literature. Any statement 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. Each Fund may also advertise
aggregate and average total return information for its Classes 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, each Fund 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, Class B Shares and the Institutional
Class, as shown below, is the average annual total return quotations through
November 30, 1995, computed as described above. The Class C Shares of each
Fund commenced operations on November 29, 1995 and therefore total return for
such a short period is not included.
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%.
The average annual total return for Class B Shares including deferred
sales charge reflects the deduction of the applicable CDSC that would be paid
if the shares were redeemed at November 30, 1995. The average annual total
return for Class B Shares excluding deferred sales charge assumes the shares
were not redeemed at November 30, 1995 and therefore does not reflect the
deduction of a CDSC.
Pursuant to applicable regulation, total return shown for the
Institutional Classes for the periods prior to the commencement of operations
of such Classes is calculated by taking the performance of the respective 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 by Decatur Total Return Fund, and performance for Decatur
Total Return Fund
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<PAGE> 112
Institutional Class would have been affected had such an adjustment been made.
Securities prices fluctuated during the periods covered and past
results should not be considered as representative of future performance.
DECATUR INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A CLASS A INSTITU-
SHARES(1)(2)(3) SHARES TIONAL
(AT OFFER) (AT NAV)(3) CLASS(4)
<S> <C> <C> <C>
1 year ended
11/30/95 24.77% 31.02% 31.14%
3 years ended
11/30/95 12.85% 14.70% 14.79%
5 years ended
11/30/95 13.72% 14.82% 14.87%
10 years ended
11/30/95 11.97% 12.52% 12.54%
15 years ended
11/30/95 13.59% 13.96% 13.98%
3/18/57(5)
through
11/30/95 11.89% 12.03% 12.03%
</TABLE>
DECATUR TOTAL RETURN FUND
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A CLASS A INSTITU-
SHARES SHARES TIONAL
(AT OFFER)(2) (AT NAV) CLASS(6)
<S> <C> <C> <C>
1 year ended
11/30/95 28.33% 34.68% 35.13%
3 years ended
11/30/95 13.73% 15.59% 15.87%
5 years ended
11/30/95 13.86% 14.97% 15.13%
Period 8/27/86(5)
through 11/30/95 11.82% 12.41% 12.50%
</TABLE>
(1) On May 2, 1994, the maximum front-end sales charge was reduced from
8.50% to 5.75%.
(2) Effective November 29, 1995, the maximum front-end sales charge was
reduced from 5.75% to 4.75%. 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) Performance figures reflect the applicable Rule 12b-1 distribution
expenses that apply on and after May 2, 1994.
(4) Date of initial public offering was January 13, 1994.
(5) Date of initial public offering of Class A Shares.
(6) Date of initial public offering was July 26, 1993.
DECATUR INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS B SHARES CLASS B SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED
SALES CHARGE) SALES CHARGE)
<S> <C> <C>
1 year ended
11/30/95 25.85% 29.85%
Period 9/6/94(1)
through 11/30/95 15.11% 18.23%
</TABLE>
DECATUR TOTAL RETURN FUND
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
CLASS B SHARES CLASS B SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED
SALES CHARGE) SALES CHARGE)
<S> <C> <C>
1 year ended
11/30/95 29.79% 33.79%
Period 9/6/94(1)
through 11/30/95 17.93% 21.03%
</TABLE>
(1) Date of initial public offering of Class B Shares.
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<PAGE> 113
As stated in the Funds' Prospectuses, each Fund may also quote its
Classes' current yield in advertisements and investor communications.
The yield computation is determined by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period and annualizing the resulting figure,
according to the following formula:
a -- b
------- 6
YIELD = 2[( cd + 1) -- 1]
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of the
period.
The above formula will be used in calculating quotations of yield of
each Class, based on specified 30-day periods identified in advertising by the
Funds. The yields of the Class A Shares of Decatur Income Fund and Decatur
Total Return Fund as of November 30, 1995, using this formula were 3.38% and
2.15%, respectively. The yields of the Class B Shares of Decatur Income Fund
and Decatur Total Return Fund as of November 30, 1995, were 2.68% and 1.54%,
respectively. The yields of the Institutional Class as of Decatur Income Fund
and Decatur Total Return Fund as of November 30, 1995, were 3.69% and 2.54%,
respectively. Yield calculations assume the maximum front-end sales charge, if
any, and do not reflect the deduction of any contingent deferred sales charge.
Actual yield on Class A Shares may be affected by variations in front-end sales
charges on investments. Information regarding the performance of Class C
Shares is not shown because such shares were not offered to the public until
November 29, 1995.
Past performance, such as reflected in quoted yields, should not be
considered as a representation of the results which may be realized from an
investment in any class of the Funds in the future. Investors should note that
the income earned and dividends paid by each Fund will vary with the
fluctuation of interest rates and performance of the portfolio.
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. As of December 31, 1995, Delaware Investment Advisers managed
approximately $13 billion in institutional assets under management in that
style.
From time to time, each Fund may also quote its Classes' 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
-15-
<PAGE> 114
and market price fluctuations. The indices do not take into account any sales
charge or other fees. In seeking a particular investment objective, a Fund's
portfolio may include 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 either Fund in the future.
From time to time, each Fund may also quote actual total return
performance for its Classes in advertising and other types of literature
compared to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include
the average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts as monitored by 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 Fund 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 a Fund. 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.
-16-
<PAGE> 115
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, Class B Shares
and the Institutional Classes through November 30, 1995. The Class C Shares of
each Fund commenced operations on November 30, 1995 and therefore total return
for such a short period is not included. Pursuant to applicable regulation,
total return shown for the Institutional Classes for the periods prior to the
commencement of operations of such Classes is calculated by taking the
performance of the respective 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 by Decatur Total Return
Fund, and performance for Decatur Total Return Fund Institutional Class would
have been affected had such an adjustment been made. 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.
DECATUR INCOME FUND
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
CLASS A INSTITU- STANDARD DOW
SHARES(1)(2)(3) TIONAL & POOR'S JONES
(AT OFFER) CLASS(4) 500(5) INDUSTRIAL(5)
<S> <C> <C> <C> <C>
3 months
ended
11/30/95 1.34% 6.50% 8.38% 10.74%
6 months
ended
11/30/95 6.34% 11.72% 14.92% 15.09%
9 months
ended
11/30/95 15.44% 21.36% 26.62% 28.99%
1 year
ended
11/30/95 24.77% 31.14% 36.93% 39.33%
3 years
ended
11/30/95 43.73% 51.25% 52.33% 66.73%
5 years
ended
11/30/95 90.17% 100.03% 117.10% 129.44%
10 years
ended
11/30/95 209.77% 225.97% 311.08% 381.12%
15 years
ended
11/30/95 576.39% 611.81% 654.46% 832.95%
3/18/57(6)
through
11/30/95 7,625.87% 8,029.16% N/A N/A
</TABLE>
-17-
<PAGE> 116
DECATUR TOTAL RETURN FUND
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
INSTITU- STANDARD DOW
CLASS A TIONAL & POOR'S JONES
SHARES CLASS(7) 500(5) INDUSTRIAL(5)
(AT OFFER)(2)
<S> <C> <C> <C> <C>
3 months
ended
11/30/95 1.84% 7.02% 8.38% 10.74%
6 months
ended
11/30/95 8.32% 13.91% 14.92% 15.09%
9 months
ended
11/30/95 18.14% 24.26% 26.62% 28.99%
1 year
ended
11/30/95 28.33% 35.13% 36.93% 39.33%
3 years
ended
11/30/95 47.09% 55.56% 52.33% 66.73%
5 years
ended
11/30/95 91.36% 102.26% 117.10% 129.44%
Period
8/27/86(6)
through
11/30/95 181.42% 197.69% 219.52% 261.41%
</TABLE>
(1) On May 2, 1994, the maximum front-end sales charge was reduced from 8.50%
to 5.75%.
(2) Effective November 29, 1995, the maximum front-end sales charge was
reduced to 4.75% from 5.75%. 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.
(3) Performance figures for periods after May 1, 1994 reflect applicable Rule
12b-1 distribution expenses. Future performance will be affected by such
expenses.
(4) Date of initial public offering was January 13, 1994.
(5) Source: Interactive Data Corp.
(6) Date of initial public offering of Class A Shares.
(7) Date of initial public offering was July 26, 1993.
DECATUR INCOME FUND
<TABLE>
<CAPTION>
CLASS B CLASS B
SHARES SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED STANDARD DOW
SALES SALES & POOR'S JONES
CHARGE) CHARGE) 500(1) INDUSTRIAL(1)
<S> <C> <C> <C> <C>
3 months
ended
11/30/95 2.37% 6.37% 8.38% 10.74%
6 months
ended
11/30/95 7.13% 11.13% 14.92% 15.09%
9 months
ended
11/30/95 16.40% 20.40% 26.62% 28.99%
1 year
ended
11/30/95 25.85% 29.85% 36.93% 39.33%
Period
9/6/94(2)
through
11/30/95 18.99% 22.99% 32.55% 34.53%
</TABLE>
DECATUR TOTAL RETURN FUND
<TABLE>
<CAPTION>
CLASS B CLASS B
SHARES SHARES
(INCLUDING (EXCLUDING
DEFERRED DEFERRED STANDARD DOW
SALES SALES & POOR'S JONES
CHARGE) CHARGE) 500(1) INDUSTRIAL(1)
<S> <C> <C> <C> <C>
3 months
ended
11/30/95 2.71% 6.71% 8.38% 10.74%
6 months
ended
11/30/95 9.36% 13.36% 14.92% 15.09%
9 months
ended
11/30/95 19.41% 23.41% 26.62% 28.99%
1 year
ended
11/30/95 29.79% 33.79% 36.93% 39.33%
Period
9/6/94(2)
through
11/30/95 22.60% 26.60% 32.55% 34.53%
</TABLE>
(1) Source: Interactive Data Corp.
(2) Date of initial public offering of Class B Shares.
-18-
<PAGE> 117
See Appendix B for additional performance information of the Decatur
Income Fund.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Funds 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 a Fund's, and other Delaware Group
funds', investment disciplines employed in seeking their objectives. The
Distributor may also from time to time cite general or specific information
about the institutional clients of the Manager, including the number of such
clients serviced by the Manager.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding and the following chart illustrates just how powerful
it can be.
COMPOUNDED RETURNS
Results at various assumed fixed rates of return on a $10,000
investment compounded monthly for 10 years:
Decatur Income Fund:
<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>
Results at various assumed fixed rates of return on a $10,000
investment compounded quarterly for 10 years:
Decatur Total Return Fund:
<TABLE>
<CAPTION>
8% 10% 12% 14%
RATE OF RATE OF RATE OF RATE OF
RETURN RETURN RETURN 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,
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.
-19-
<PAGE> 118
TRADING PRACTICES AND BROKERAGE
Decatur Fund, Inc. selects brokers or dealers to execute
transactions on behalf of a Fund 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 a 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 involved 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, 1993, 1994 and 1995, the
aggregate dollar amounts of brokerage commissions paid by the Decatur Income
Fund were $3,497,612, $3,843,614 and $3,039,414, respectively. During the same
periods, the aggregate dollar amounts of brokerage commissions paid by the
Decatur Total Return Fund were $1,600,528, $895,815 and $1,150,026,
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 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, 1995, portfolio
transactions of Decatur Income Fund and Decatur Total Return Fund in the
amounts of $498,885,320 and $191,450,988, respectively, resulting in brokerage
commissions of $763,091 and $272,121, respectively, were directed to brokers
for brokerage and research services provided.
As provided in the Securities Exchange Act of 1934 and the Funds'
Investment Management Agreements, 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 Funds believe 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
-20-
<PAGE> 119
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 Funds 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 Decatur Fund, Inc.'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 Funds may place orders with broker/dealers that
have agreed to defray certain Fund expenses such as custodian fees, and may, at
the request of the Distributor, give consideration to sales of shares of a Fund
as a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
PORTFOLIO TURNOVER
Portfolio trading will be undertaken principally to accomplish a
Fund's objective in relation to anticipated movements in the general level of
interest rates. The Funds are 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 Funds will not attempt to achieve or be
limited to a predetermined rate of portfolio turnover, such a turnover always
being incidental to transactions undertaken with a view to achieving a Fund's
investment objective.
The degree of portfolio activity may affect brokerage costs of a
Fund and taxes payable by Fund shareholders to the extent of any net realized
capital gains. Each Fund's portfolio turnover rate is not expected to exceed
100%; however, under certain market conditions a Fund may experience a high
rate of portfolio turnover which could exceed 100%. Each Fund's 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 such Fund 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 a Fund's portfolio at the beginning of the
year were replaced by the end of the year.
During the fiscal years ended November 30, 1994 and 1995, Decatur
Income Fund's portfolio turnover rates were 92% and 74%, respectively, and
Decatur Total Return Fund's portfolio turnover rates were 74% and 81%,
respectively.
Each Fund may hold securities for any period of time. A Fund's
portfolio turnover will be increased if the Fund 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 Fund
shares. Total brokerage costs generally increase with higher portfolio
turnover rates.
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<PAGE> 120
PURCHASING SHARES
The Distributor serves as the national distributor for the each
Fund's 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 each Fund. See the Prospectuses for additional information on how to
invest. Shares of each Fund are offered on a continuous basis, and may be
purchased through authorized investment dealers or directly by contacting
Decatur Fund, Inc. 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. Shares purchased pursuant to the Uniform Gifts
to Minors Act or the Uniform Transfers to Minors Act and shares purchased in
connection with an Automatic Investing Plan are subject to a minimum initial
purchase of $250 and a minimum subsequent purchase of $25. Accounts opened
under the Delaware Group Asset Planner service are subject to a minimum initial
investment of $2,000 per Asset Planner strategy selected. There 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 retirement plans.) Decatur Fund, Inc. will reject any
purchase order for 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
expenses 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. Decatur Fund, Inc. reserves the right to reject any order for the
purchase of its shares if in the opinion of management such rejection is in a
Fund's best interest.
The NASD has adopted Rules of Fair Practice relating to investment
company sales charges. Decatur Fund, Inc. 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 12 months following purchase. Class C
Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment which are equal to those to which Class B Shares are subject.
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.
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<PAGE> 121
Institutional Class shares, Class A Shares, Class B Shares and Class
C Shares represent a proportionate interest in a Fund's assets and will receive
a proportionate interest in that Fund's income, before application, as to the
Class A, Class B and Class C Shares, of any expenses under the Fund's 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 or Class C 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 their 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 a Fund 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 12 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 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.
-23-
<PAGE> 122
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.
DECATUR INCOME FUND A CLASS
DECATUR TOTAL RETURN FUND A CLASS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission**
Amount of Purchase Offering Amount as % of
Price Invested Offering Price
- ------------------------------------------------------------------------------------------------------
Decatur Decatur
Income Total
Fund Return
Fund
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.98% 5.00% 4.00%
$100,000 but under $250,000 3.75 3.88 3.91 3.00
$250,000 but under $500,000 2.50 2.57 2.56 2.00
$500,000 but under $1,000,000* 2.00 2.05 2.05 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 shares that were purchased at net asset
value and 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
Decatur Fund, Inc.'s most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- -------------------------------------------------------------------------------
Decatur Income Fund or Decatur Total Return Fund, as appropriate, 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 such 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.
- -------------------------------------------------------------------------------
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<PAGE> 123
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 commission 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 commission 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 a Fund. 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 a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The
schedule and program for payment of the dealer's commission are subject to
change or termination at any time by the Distributor at its discretion.
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES AND CLASS C SHARES
Class B and Class C Shares are purchased without 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 12
months of purchase may be subject to a CDSC of 1%. CDSCs are charged as a
percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time of
purchase of the shares being redeemed or the net asset value of those shares at
the time of redemption. No CDSC will be imposed on increases in net asset
value above the initial purchase price. Nor will a CDSC be assessed on
redemptions of shares acquired through the reinvestment of dividends or capital
gains distributions. See the Prospectus for the Fund Classes under Redemption
and Exchange - Waiver of Contingent Deferred Sales Charge - 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 each Fund:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE (AS A
PERCENTAGE OF
DOLLAR AMOUNT
YEAR AFTER PURCHASE MADE SUBJECT TO CHARGE)
------------------------ ------------------
<S> <C>
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
</TABLE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares. 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,
-25-
<PAGE> 124
the investor's Class B Shares will be automatically converted into Class A
Shares of the same Fund. See Automatic Conversion of Class B Shares under
Classes of 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, Decatur
Fund, Inc. has adopted a separate plan for each of the Class A Shares, the
Class B Shares and the Class C Shares of each Fund (the "Plans"). Each Plan
permits the relevant Fund to pay for certain distribution, promotional and
related expenses involved in the marketing of only the Class to which the Plan
applies. The Plans do not apply to the Institutional Classes 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 shares of the Institutional
Classes. Shareholders of the Institutional Classes may not vote on matters
affecting the Plans.
The Plans permit a Fund, pursuant to its 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, each Fund may make payments out of the assets of its 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 a Fund under its Plans, and the
Fund's Distribution Agreements, 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 its Class B
Shares' and the Class C Shares' average daily net assets for the year. Decatur
Fund, Inc.'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 Decatur Income Fund A Class will be equal
to the sum of: (i) the amount obtained by multiplying .30% by the average
daily net assets represented by the Decatur Income Fund A Class shares that
were or 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 Decatur Income Fund A Class shares that were acquired before May 2,
1994. While this is the method for calculating the 12b-1 fees to be paid by
the Decatur Income Fund A Class shares, the fee is a Class expense so that all
shareholders of the Class, regardless of when they purchased their shares, will
bear 12b-1 expenses at the same per share rate. As Decatur Income Fund A Class
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 Decatur Income Fund A Class
shares purchased on or after May 2, 1994 to outstanding Decatur Income Fund A
Class 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 Fund to pay a full .30% on all
Decatur Income Fund A Class 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,
a Fund may, from time to time, buy or sell portfolio securities from or to
firms which receive payments under the Plans.
-26-
<PAGE> 125
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 Agreements, as amended, have all been
approved by the Board of Directors of Decatur Fund, Inc., including a majority
of the directors who are not "interested persons" (as defined in the Investment
Company Act of 1940) of Decatur Fund, Inc. 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 Agreements.
Continuation of the Plans and the Distribution Agreements, 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 of each Fund 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 Agreements, 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 a Plan 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 each 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 of the same Fund.
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
Decatur Fund, Inc. 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 Decatur Fund, Inc. 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, 1995, payments from the Decatur
Income Fund A Class pursuant to its Plan amounted to $1,662,238 and such amount
was used for the following purposes: $11,006 - Advertising; $5,452 -
Annual/Semi-Annual Reports; $1,392,769 - Broker Trails; $102,962 - Commissions
to Wholesalers; $43,311 - Promotional-Broker Meetings; $66,150 -
Promotional-Other; $11,902 - Telephone; and $28,686 - Wholesaler Expenses. For
the same period, payments from the Decatur Income Fund B Class pursuant to its
Plan amounted to $96,207 and such amount was used for the following purposes:
$34,038 - Broker Sales Charges; $4,198 - Commission to Wholesalers; $532 -
Promotional-Broker Meetings; $55 - Telephone; $33,307 - Interest on Broker
Sales Charges; and $24,077 - Broker Trails. There were no payments made with
respect to the Decatur Income Fund C Class for the fiscal year ended November
30, 1995.
For the fiscal year ended November 30, 1995, payments from the Decatur
Total Return Fund A Class pursuant to its Plan amounted to $1,401,952 and such
amount was used for the following purposes: $12,207 - Advertising; $20,720 -
Annual/Semi-Annual Reports; $1,141,021 - Broker Trails; $89,558 - Commissions
to Wholesalers; $12,675 - Promotional-Broker Meetings; $66,327 -
Promotional-Other; $6,225 - Telephone; and $31,710 - Wholesaler Expenses; and
$21,509 - Prospectus Printing. For the same period, payments from the Decatur
Total Return Fund B Class pursuant to its Plan amounted to $63,985 and such
amount was used for the following purposes: $23,261 - Broker Sales Charges;
$2,807 - Commission to Wholesalers; $360 - Promotional-Broker Meetings; $34 -
Telephone; $21,527 - Interest on Broker Sales Charges; and $15,996 - Broker
Trails. There were no payments made with respect to the Decatur Income Fund C
Class for the fiscal year ended November 30, 1995.
-27-
<PAGE> 126
The staff of the SEC has proposed amendments to Rule 12b-1 and other
related regulations that could impact Rule 12b-1 Distribution Plans. Decatur
Fund, Inc. 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.
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 CLASS A SHARES 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 Exchange
Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, directors and employees of Decatur Fund,
Inc., 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 of the Funds and 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 after the registered representative changes
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 may also 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 shares
of Delaware Group funds. 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 Decatur Fund, Inc. may reasonably require to establish
eligibility for purchase at net asset value. Decatur Fund, Inc. 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.
-28-
<PAGE> 127
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 Decatur Fund, Inc., 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 Intention may be dated to
include shares purchased up to 90 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 20 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 Funds 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 a Fund and the corresponding classes
of shares of other Delaware Group funds which offer such shares may be
aggregated with Class A Shares of that Fund 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 a Fund 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 Class A Shares, purchasers may combine the
total amount of any combination of the Class B Shares and/or Class C Shares of
a Fund, 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
-29-
<PAGE> 128
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 21; 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 Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of a Fund, 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 Class A Shares (and of Institutional Class 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 have one
year from the date of redemption to reinvest all or part of their redemption
proceeds in Class A Shares of a Fund 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 Funds' shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Fund Classes' Prospectus) in connection with the
features described above.
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<PAGE> 129
GROUP INVESTMENT PLANS
Group Investment Plans that are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 00, 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 in which
the investment is being made 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 which the investment is being made in connection
with each purchase. For other retirement plans and special services, see
Retirement Plans for the Fund Classes under Investment Plans.
DECATUR INCOME FUND INSTITUTIONAL CLASS AND DECATUR TOTAL RETURN FUND
INSTITUTIONAL CLASS
The Institutional Classes are available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee benefit
plans of the Manager or its affiliates and securities dealer firms with a
selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, a division of the Manager, or its affiliates and
their corporate sponsors, as 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 Classes 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.
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<PAGE> 130
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
Classes are reinvested in the accounts of the holders of such shares (based on
the net asset value in effect on the reinvestment date). A confirmation of
each dividend payment from net investment income and of distributions from
realized securities profits, if any, 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
specific Fund and class in which shares are being purchased. Such purchases,
which must meet the minimum subsequent purchase requirements set forth in the
Prospectuses 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 their dividends and/or
distributions in any of the mutual funds in the Delaware Group, including the
Funds, 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 Funds,
provided an account has been established. Dividends from Class A Shares may
not be directed to Class B or Class C Shares. Likewise, dividends from Class B
Shares may only be directed to other Class B Shares and dividends from Class C
Shares may only be directed to other Class C Shares. See Classes Offered under
Classes of Shares in the Fund Classes' Prospectus for the funds in the Delaware
Group that are eligible for investment by holders of Fund 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 a Fund 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
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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 Fund
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.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such Plans must be for $25 or more. An investor wishing to take
advantage of either service must complete an authorization form. Either
service can be discontinued by the shareholder at any time without penalty by
giving written notice.
Payments to a Fund 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, a Fund may liquidate sufficient shares from a shareholder's
account to reimburse the government or the private source. In the event there
are insufficient shares in the shareholder's account, the shareholder is
expected to reimburse the Fund.
DIRECT DEPOSIT PURCHASES BY MAIL
Shareholders may authorize a third party, such as a bank or employer, to
make investments directly to their Fund accounts. Each Fund will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers
or financial institutions who in turn should contact the Company for proper
instructions.
RETIREMENT PLANS FOR THE FUND CLASSES
An investment in either Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available
for investment only by Individual Retirement Accounts, Simplified Employee
Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans. 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 Contingent Deferred Sales Charge - 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
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Fund or 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 Classes.
See Decatur Income Fund Institutional Class and 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.
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 a Fund. 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 for
information on reduced front-end sales charges applicable to Class A Shares.
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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 Contingent Deferred Sales Charge - 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 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 24.
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 24.
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 24.
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DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated after receipt of the order by the Fund in which shares are
being purchased 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 in which shares
are being purchased 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 Funds 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 each
Fund's financial statements which are incorporated by reference into this Part
B.
Each Fund's net asset value per share is computed by adding the value of
all the Fund's securities and other assets, deducting any liabilities of the
Fund, and dividing by the number of Fund 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 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. 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 a Fund will bear, pro-rata, all of the common expenses of
that Fund. The net asset values of all outstanding shares of each Class of a
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that Class. All income earned and expenses incurred by a Fund will be borne
on a pro-rata basis by each outstanding share of a Class, based on each Class'
percentage in the Fund represented by the value of shares of such Classes,
except that the Institutional Classes will not incur any of the expenses under
the relevant Fund's 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 a Fund will vary.
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REDEMPTION AND REPURCHASE
Any shareholder may require a Fund to redeem the shareholder's shares by
sending a WRITTEN REQUEST, signed by the record owner or owners exactly as the
shares are registered, to the Fund at 1818 Market Street, Philadelphia, PA
19103. In addition, certain expedited redemption methods described below are
available when stock certificates have not been issued. Certificates are
issued for Class A Shares and Institutional Class shares only if a shareholder
specifically requests them. Certificates are not issued for Class B Shares or
Class C Shares. If stock certificates have been issued for shares being
redeemed, they must accompany the written request. For redemptions of $50,000
or less paid to the shareholder at the address of record, the request must be
signed by all owners of the shares or the investment dealer of record, but a
signature guarantee is not required. When the redemption is for more than
$50,000, or if payment is made to someone else or to another address,
signatures of all record owners are required and a signature guarantee may be
required. Each signature guarantee must be supplied by an eligible guarantor
institution. Each Fund reserves the right to reject a signature guarantee
supplied by an eligible institution based on its creditworthiness. The Funds
may request further documentation from corporations, retirement plans,
executors, administrators, trustees or guardians.
In addition to redemption of Fund shares by the Funds, the Distributor,
acting as agent of the Funds, offers to repurchase Fund shares from
broker/dealers acting on behalf of shareholders. The redemption or repurchase
price, which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order by
the respective 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 Funds and the Distributor end their business days at 5 p.m.,
Eastern time. This offer is discretionary and may be completely withdrawn
without further notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to 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 Redemptions of Class A Shares Purchased at Net Asset Value
under Redemption and Exchange in the 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 12 months following purchase. See Contingent Deferred Sales
Charge under Classes of Shares in the Funds' 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 Funds nor the Funds' 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 redemption request
will be honored but the proceeds will not be mailed until the Fund involved is
reasonably satisfied of the collection of the investment check. This potential
delay can be avoided by making investments by wiring Federal Funds.
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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 involved will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to a Fund or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result
of which disposal by a Fund of securities owned by it is not reasonably
practical, or it is not reasonably practical for a Fund fairly to value its
assets, or in the event that the SEC has provided for such suspension for the
protection of shareholders, a Fund may postpone payment or suspend the right of
redemption or repurchase. In such case, the shareholder may withdraw the
request for redemption or leave it standing as a request for redemption at the
net asset value next determined after the suspension has been terminated.
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, Decatur
Fund, Inc. has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940 pursuant to which each Fund is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of
such Fund during any 90-day period for any one shareholder.
The value of a Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to the Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
SMALL ACCOUNTS
Before a 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 Funds' 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
60 days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under How to Buy Shares
in the Funds' 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 against accounts with balances below the stated minimum, nor subject
to involuntary redemption.
* * *
Each Fund has made available certain redemption privileges, as described
below. The Funds reserve the right to suspend or terminate these expedited
payment procedures upon 60 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 Shareholder Service Center at
800-523-1918 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.
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In addition, redemption proceeds of $1,000 or more can be transferred to
your predesignated bank account by wire or by check by calling the phone
numbers listed above. An authorization form must have been completed by the
shareholder and filed with the relevant 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 relevant
Fund and a signature guarantee may be required. Each signature guarantee must
be supplied by an eligible guarantor institution. The Funds reserve 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.
Telephone redemptions for Fund shares recently purchased by check will
not be honored unless the Fund involved is reasonably satisfied that the
purchase check has cleared.
If expedited payment under these procedures could adversely affect a
Fund, the Fund may take up to seven days to pay the shareholder.
Neither the Funds nor the Funds' Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each 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, such 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 Funds do not recommend any
specific amount of withdrawal. This $5,000 minimum does not apply for the
Funds' prototype retirement plans. Shares purchased with the initial
investment and through reinvestment of cash dividends and realized securities
profits distributions will be credited to the shareholder's account and
sufficient full and fractional shares will be redeemed at the net asset value
calculated on the third business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected by
the shareholder, (unless such date falls on a holiday or a weekend) and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically
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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 made concurrently with the purchases of
additional shares of the same Fund may be disadvantageous to the shareholder.
Purchases of Class A Shares through a periodic investment program in a fund
managed by the Manager must be terminated before a Systematic Withdrawal Plan
with respect to such shares 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. 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
Contingent Deferred Sales Charge - Class B and Class C Shares and Waiver of
Limited Contingent Deferred Sales Charge - Class A Shares under Redemption and
Exchange in the Prospectus for the Fund Classes. Shareholders should consult
their financial advisers to determine whether a Systematic Withdrawal Plan
would be suitable for them.
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 Funds reserve 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 for 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 program through periods of low fund share prices.
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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 their 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
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a 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 a Fund will share proportionately in the
investment income and expenses of the Fund, except that Class A Shares, Class B
Shares and Class C Shares alone will incur distribution fees under their
respective 12b-1 Plans.
Decatur Income Fund intends to pay dividends from net investment income
on a monthly basis. Decatur Total Return Fund 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 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. A Fund may deduct from a shareholder's account the costs of
the Fund's effort to locate a shareholder if a shareholder's mail is returned
by the Post Office or the Fund is otherwise unable to locate the shareholder or
verify the shareholder's mailing address. These costs may include a percentage
of the account when a search company charges a percentage fee in exchange for
their location services. See also Other Tax Requirements under Accounting and
Tax Issues.
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 Fund is treated as a separate tax
entity and capital gains and losses for each Fund are calculated separately.
A portion of a Funds' dividends may qualify for the dividends-received
deduction for corporations provided in the federal income tax law. The portion
of dividends paid by a Fund that so qualifies will be designated each year in a
notice mailed to Fund shareholders, and cannot exceed the gross amount of
dividends received by such Fund from domestic (U.S.) corporations that would
have qualified for the dividends-received deduction in the hands of the Fund if
the Fund 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, 1995, all of the dividends from net investment
income of the Decatur Income Fund and Decatur Total Return Fund, respectively,
were eligible for this deduction.
Shareholders will be notified annually by Decatur Fund, Inc. as to the
federal income tax status of dividends and distributions paid by the Funds.
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INVESTMENT MANAGEMENT AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Funds, subject to the
supervision and direction of Decatur Fund, Inc.'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,
1995 were approximately $10,383,560,000. Investment advisory services are also
provided to institutional accounts with assets on November 30, 1995 of
approximately $17,389,902,000.
The Investment Management Agreements for the Funds are dated April 3,
1995 and were approved by shareholders on March 29, 1995.
Each 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 Fund to which the Agreement relates, and
only if the terms and the renewal thereof have been approved by the vote of a
majority of the directors of Decatur Fund, Inc. 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. Each Agreement is terminable without
penalty on 60 days' notice by the directors of Decatur Fund, Inc. or by the
Manager. Each Agreement will terminate automatically in the event of its
assignment.
The annual compensation paid by the Decatur Income Fund for investment
management services is equal to .60% on the first $100 million of the Fund's
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 this Fund.
The annual compensation paid by the Decatur Total Return Fund for
investment management services is equal to .60% on the first $500 million of
the Fund's 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 this Fund.
On November 30, 1995, the total net assets of Decatur Fund, Inc. were
$1,613,771,593, broken down as follows: Decatur Income Fund - $1,053,159,989
and Decatur Total Return Fund - $560,611,604. Investment management fees paid
by the Decatur Income Fund during the past three fiscal years were $7,496,533
for 1993, $7,128,034 for 1994 and $7,182,707 for 1995. Investment management
fees paid by the Decatur Total Return Fund during the past three fiscal years
were $2,567,182 for 1993, $2,542,011 for 1994 and $2,859,001 for 1995.
Under the general supervision of the Board of Directors, the Manager
makes all investment decisions which are implemented by Decatur Fund, Inc.'s
Trading Department. The Manager pays the salaries of all directors, officers
and employees of Decatur Fund, Inc. who are affiliated with the Manager. Each
Fund pays all of its other expenses, including its proportionate share of rent
and certain other administrative expenses.
The ratios of expenses to average daily net assets for the Decatur Income
Fund A Class, Decatur Income Fund B Class and Decatur Income Fund Institutional
Class for the fiscal year ended November 30, 1995 were 0.87%, 1.74% and 0.74%,
respectively. The ratios of expenses to average daily net assets for the
Decatur Total Return Fund A Class, Decatur Total Return Fund B Class and
Decatur Total Return Fund Institutional Class for the fiscal year ended
November 30, 1995 were 1.19%, 1.89% and 0.89%, respectively. The expense
ratios for the Class A Shares and the Class B Shares reflect the impact of
their 12b-1 Plans. Each Fund anticipates that the ratio of expenses to average
daily net assets of Class C Shares will be approximately equal to that of its
Class B Shares.
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By California regulation, the Manager is required to waive certain fees
and reimburse a Fund for certain expenses to the extent that such Fund's 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, 1995, no such reimbursement was necessary or paid for either Fund.
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 Fund shares under
separate Distribution Agreements 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 Funds on behalf
of the Class A, Class B 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 each Fund's shares. On that date, Delaware
Distributors, L.P., a newly formed limited partnership, succeeded to the
business of DDI. All officers and employees of DDI became officers and
employees of Delaware Distributors, L.P. DDI is the corporate general partner
of Delaware Distributors, L.P. and both DDI and Delaware Distributors, L.P. are
indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate of
the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the Funds' shareholder servicing, dividend disbursing and transfer agent
pursuant to separate Shareholders Services Agreements 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 Decatur Fund, Inc. are managed under the
direction of its Board of Directors.
Certain officers and directors of Decatur Fund, Inc. hold identical
positions in each of the other funds in the Delaware Group. On December 31,
1995, Decatur Fund, Inc.'s officers and directors owned less than 1% of the
outstanding shares of the Class A Shares, Class B Shares, Class C Shares and
the Institutional Class, respectively, of Decatur Income Fund, and less than 1%
of the outstanding shares of the Class A Shares, Class B Shares, Class C Shares
and the Institutional Class, respectively, of Decatur Total Return Fund.
As of December 31, 1995, management believes the following shareholders
held 5% or more of the outstanding shares of, respectively, the Decatur Income
Fund B Class, Decatur Income Fund C Class and the Decatur Income Fund
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 81,288 (6.85%)
of the outstanding shares of the Class B Shares. Donaldson, Lufkin, Jenerette
Securities Corporation, Inc., P.O. Box 2052, Jersey City, NJ 07303 held 1,637
shares (48.66%); James L. Pottratz, TTEE UA DTD 8/18/88 Pottratz Exemption Tr.,
4839 Averill Dr., Grants Pass, OR 97526 held 1,106 shares (32.87%); Robert M.
Weiss MD, Profit Sharing Plan DTD, Robert M. Weiss Trustee FBO Susan Zoeller,
6017 Benchmark Trail, Floyds Knobs, IN 47119 held 330 shares (9.80%); and
Delaware Management Company, Inc., Attn. Joseph H. Hastings, 1818 Market
Street, Philadelphia, PA 19103 held 289 shares (8.59%) of the outstanding
shares of the Class C Shares. The Northern Trust Company cust. J. Paul Getty
Trust, 26-00813/2-255243, P.O. Box 92956, Chicago, IL 60690 held 2,754,775
shares (23%); Price Waterhouse, LLP 401(k) Savings Plan, National
Administrative Center, P.O. Box 30004, Tampa, FL 33630 held 2,110,259 shares
(17.62%); Patterson & Co. PNB Personal Trust Accounting, P.O. Box 7829,
Philadelphia, PA 19101 held 1,120,962 shares (9.36%); Brigham Young University,
R L Ball & Associates, c-242 ASB, Provo, UT 84602 held 1,050,240 shares
(8.77%); and Grace S & W Linton Nelson Foundation Incorporated 7/5/84, c/o Fred
C. Aldridge, Jr., 940 West Valley Road, Suite 1601, Wayne, PA 19087 held
807,148 shares (6.74%) of the outstanding shares of the Institutional Class.
As of December 31, 1995, management believes the following shareholders
held 5% or more of the outstanding shares of, respectively, the Decatur Total
Return Fund B Class, Decatur Total Return Fund C Class and the Decatur Total
Return Fund 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 89,966
shares (8.04%) of the outstanding shares of the Class B Shares. Donaldson,
Lufkin, Jenerette Securities Corporation, Inc., P.O. Box 2052, Jersey City, NJ
07303 held 10,792 shares (87.95%) of the outstanding shares of the Class C
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 662,412
shares (73.98%); Delaware Management Company, Inc. Employee Profit Sharing
Trust, 1818 Market Street, Philadelphia, PA 19103 held 98,220 shares (10.97%);
and Castle Harlan, Inc. 401(k) Plan, 150 East 58th Street, New York, NY 10155
held 55,001 shares (6.14%) 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.
DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Investment
Counselors, Inc. and Delaware Investment & Retirement Services, Inc. are
direct or indirect, wholly-owned
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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,
new Investment Management Agreements between Decatur Fund, Inc. on behalf of
each Fund and the Manager were 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 Decatur Fund, Inc. 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.
*WAYNE A. STORK (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
Decatur Fund, Inc., 15 other investment companies in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.), Delaware
Management Holdings, Inc., DMH Corp., Delaware International
Holdings Ltd. and Founders Holdings, Inc.
Chairman and Director of Delaware Investment Counselors, Inc., Delaware
Investment & Retirement Services, Inc. and Delaware Pooled Trust,
Inc.
Chairman, Chief Executive Officer, Chief Investment Officer and Director
of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd.
Director of Delaware 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 Decatur Fund, Inc., 15 other investment
companies in the Delaware Group (which excludes Delaware Pooled
Trust, Inc.) and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware 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., Delaware International Advisers Ltd. and Delaware Investment
& Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various executive
capacities at different times within the Delaware organization.
RICHARD G. UNRUH, JR. (56)
Executive Vice President of Decatur Fund, Inc. and each of the other 16
investment companies in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
- -----------------------------
*Director affiliated with the Funds' investment manager and considered an
"interested person" as defined in the Investment Company Act of 1940.
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WALTER P. BABICH (68)
Director and/or Trustee of Decatur Fund, Inc. and each of the other 16
investment companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
ANTHONY D. KNERR (57)
Director and/or Trustee of Decatur Fund, Inc. and each of the other 16
investment companies in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Consultant, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he
was also a lecturer in English at the University. In addition, Mr.
Knerr was Chairman of The Publishing Group, Inc., New York, from
1988 to 1990. Mr. Knerr founded The Publishing Group, Inc. in
1988.
ANN R. LEVEN (55)
Director and/or Trustee of Decatur Fund, Inc. and each of the other 16
investment companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of
the Smithsonian Institution, Washington, DC, and from 1975 to 1994,
she was Adjunct Professor of Columbia Business School.
W. THACHER LONGSTRETH (75)
Director and/or Trustee of Decatur Fund, Inc. and each of the other 16
investment companies 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 (70)
Director and/or Trustee of Decatur Fund, Inc. and each of the other 16
investment companies in the Delaware Group.
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.
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DAVID K. DOWNES (56)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of Decatur Fund, Inc., each of the other 16 investment
companies in the Delaware Group and Delaware Management Company,
Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment & Retirement
Services, Inc.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director of
DMH Corp.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Senior Vice President/Chief Administrative Officer and Director of
Delaware Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
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/Chief Financial Officer and Director of Founders
Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer of
Equitable Capital Management Corporation, New York, from December
1985 through August 1992, Executive Vice President from December
1985 through March 1992 and Vice Chairman from March 1992 through
August 1992.
GEORGE M. CHAMBERLAIN, JR. (48)
Senior Vice President and Secretary of Decatur Fund, Inc., each of the
other 16 investment companies in the Delaware Group, Delaware
Management Holdings, Inc., Delaware Distributors, L.P. and Delaware
Investment Counselors, Inc.
Executive Vice President, Secretary and Director of Delaware Management
Trust Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc. and Delaware
Investment & Retirement Services, Inc.
Corporate Vice President, Secretary and Director of
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 Decatur Fund, Inc., of seven
other equity investment companies 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.
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JOSEPH H. HASTINGS (46)
Vice President/Corporate Controller of Decatur Fund, Inc., each of the
other 16 investment companies in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company,
Inc., Delaware Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Investment Counselors,
Inc., Founders Holdings, Inc. and Delaware International Holdings
Ltd.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Chief Financial Officer/Treasurer of Delaware Investment &
Retirement Services, Inc.
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 Decatur Fund, Inc., each of the other 16
investment companies in the Delaware Group, Delaware Management
Company, Inc., Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc. and Founders Holdings, Inc.
Assistant Treasurer of Founders CBO Corporation.
Vice President/Manager of Investment Accounting of Delaware International
Holdings Ltd.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a Vice
President for CS First Boston Investment Management, New York, NY
from 1993 to 1994 and an Assistant Vice President for Equitable
Capital Management Corporation, New York, NY from 1987 to 1993.
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<PAGE> 148
The following is a compensation table listing for each director entitled
to receive compensation, the aggregate compensation received from Decatur Fund,
Inc. and the total compensation received from all Delaware Group funds for the
fiscal year ended November 30, 1995 and an estimate of annual benefits to be
received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of November 30, 1995.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART OF BENEFITS FROM ALL 17
FROM DECATUR DECATUR FUND, UPON DELAWARE
NAME FUND, INC. INC. EXPENSES RETIREMENT* GROUP FUNDS
<S> <C> <C> <C> <C>
W. Thacher Longstreth $8,230 None $18,100 $58,188
Ann R. Leven $8,402 None $18,100 $66,324
Walter P. Babich $9,568 None $18,100 $67,324
Anthony D. Knerr $8,588 None $18,100 $62,613
Charles E. Peck $8,230 None $18,100 $58,188
</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, 1995, 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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<PAGE> 149
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 Funds may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and
carefully read that fund's prospectus before buying shares in an exchange. The
prospectus contains more complete information about the fund, including charges
and expenses. A shareholder requesting an exchange 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 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 relevant Fund receives written notice from the shareholder
to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 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 Fund account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See 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 Funds 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 Funds' Prospectuses, neither the Funds nor their
Transfer Agent is responsible for any shareholder loss incurred in acting upon
written or telephone instructions for redemption or exchange of Fund shares
which are reasonably believed to be genuine.
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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"), each Fund will refuse any new Timing
Arrangements, as well as any new purchases (as opposed to exchanges) in
Delaware Group funds from Timing Firms. Each Fund reserves the right to
temporarily or permanently terminate the exchange privilege or reject any
specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of the Fund within two
weeks of an earlier exchange request out of the Fund, or (ii) makes more than
two exchanges out of the Fund per calendar quarter, or (iii) exchanges shares
equal in value to at least $5 million, or more than 1/4 of 1% of the Fund's net
assets. Accounts under common ownership or control, including accounts
administered so as to redeem or purchase shares based upon certain
predetermined market indicators, will be aggregated for purposes of the
exchange limits.
RESTRICTIONS ON TIMED EXCHANGES
Timing Accounts operating under existing Timing Agreements may only
execute exchanges between the following eight Delaware Group funds: (1) Decatur
Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund, and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds are available for Timed Exchanges. Assets redeemed or exchanged out of
Timing Accounts in Delaware Group funds not listed above may not be reinvested
back into that Timing Account. Each 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).
Each 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 a
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 a Fund and therefore may be
refused.
Except as noted above only shareholders and their authorized brokers of
record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other Delaware
Group funds:
DELAWARE FUND seeks long-term growth by a balance of capital appreciation,
income and preservation of capital. It uses a dividend-oriented valuation
strategy to select securities issued by established companies that are believed
to demonstrate potential for income and capital growth. DEVON FUND seeks
current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
TREND FUND seeks long-term growth by investing in common stocks issued by
emerging growth companies exhibiting strong capital appreciation potential.
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.
DELCHESTER FUND seeks as high a current income as possible by investing
principally in high-yield, high risk corporate bonds, and also in U.S.
Government securities and commercial paper.
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<PAGE> 151
U.S. GOVERNMENT FUND seeks high current income by investing primarily in
long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
LIMITED-TERM GOVERNMENT FUND seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
instruments secured by such securities. U.S. GOVERNMENT MONEY FUND seeks
maximum current income with preservation of principal and maintenance of
liquidity by investing only in short-term securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements collateralized by such securities,
while maintaining a stable net asset value.
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 funds available exclusively as
funding vehicles for certain insurance company separate accounts.
EQUITY/INCOME SERIES seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. HIGH YIELD SERIES seeks as high
a current income as possible by investing in rated and unrated corporate bonds,
U.S. Government securities and commercial paper. CAPITAL RESERVES SERIES seeks
a high stable level of current income while minimizing fluctuations in
principal by investing in a diversified portfolio of short- and
intermediate-term securities. MONEY MARKET SERIES seeks the highest level of
income consistent with preservation of capital and liquidity through
investments in short-term money market instruments. GROWTH SERIES seeks
long-term capital appreciation by investing its assets in a diversified
portfolio of securities exhibiting the potential for significant growth.
MULTIPLE STRATEGY SERIES seeks a balance of capital appreciation, income and
preservation of capital. It uses a dividend-oriented valuation strategy to
select securities issued by established companies that are believed to
demonstrate potential for income and capital growth. INTERNATIONAL EQUITY
SERIES seeks long-term growth without undue risk to principal by investing
primarily in equity securities of foreign issuers that provide the potential
for capital appreciation and income. VALUE SERIES seeks capital appreciation
by investing in small- to mid-cap common stocks whose market 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-
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<PAGE> 152
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 the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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<PAGE> 153
GENERAL INFORMATION
The Manager is the investment manager for the Funds. 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 each Fund are made
independently from those of the other funds and accounts, investment decisions
for such other funds and accounts may be made at the same time as investment
decisions for a Fund.
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 each of the Funds 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 Funds. In
its capacity as such, the Distributor ("DDLP") (for all periods after January
3, 1995) or DDI (prior to January 3, 1995) received net commissions from each
Fund on behalf of Class A Shares, after reallowances to dealers, as follows:
DECATUR INCOME FUND
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT AMOUNTS NET
YEAR OF UNDERWRITING REALLOWED COMMISSION
ENDED COMMISSION TO DEALERS TO DDLP/DDI
- ----- --------------- ---------- -----------------
<S> <C> <C> <C>
11/30/95 $2,136,781 $1,849,211 $287,570
11/30/94 2,113,539 1,761,778 351,761
11/30/93 2,354,791 1,898,608 456,183
</TABLE>
DECATUR TOTAL RETURN FUND
<TABLE>
<CAPTION>
FISCAL TOTAL AMOUNT AMOUNTS NET
YEAR OF UNDERWRITING REALLOWED COMMISSION
ENDED COMMISSION TO DEALERS TO DDLP/DDI
- ----- ------------- ------------ -----------------
<S> <C> <C> <C>
11/30/95 $1,637,530 $1,416,914 $220,616
11/30/94 1,406,240 1,218,424 187,816
11/30/93 1,771,659 1,533,223 238,436
</TABLE>
For the fiscal years ended November 30, 1993, 1994 and 1995, no Limited
CDSC payments were recieved by DDI or the Distributor with respect to Decatur
Income Fund A Class. 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 Decatur Income Fund B Class. For the fiscal year ended November 30, 1995,
in their capacities as the national distributor, DDI and the Distributor
received CDSC payments in the aggregate amount of $21,252 with respect to the
Decatur Income Fund B Class. For the period November 29, 1995 (date of initial
public offering) through November 30, 1995, no CDSC payments were received by
the Distributor with respect to the Decatur Income Fund C Class.
For the fiscal years ended November 30, 1993, 1994 and 1995, no Limited
CDSC payments were received by DDI or the Distributor with respect to Decatur
Total Return Fund A Class. For the period September 6, 1994 (date of initial
public offering) through November 30, 1994, no CDSC payments were received by
DDI with respect to the Decatur Total Return Fund B Class. For the fiscal year
ended November 30, 1995, in their capacities
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<PAGE> 154
as the national distributor, DDI and the Distributor received CDSC payments in
the aggregate amount of $15,098 with respect to the Decatur Total Return Fund B
Class. For the period November 29, 1995 (date of initial public offering)
through November 30, 1995, no CDSC payments were received by the Distributor
with respect to the Decatur Total Return Fund C Class.
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 each Fund and for the
other mutual funds in the Delaware Group. The Transfer Agent is paid a fee by
each Fund 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 Decatur Fund, Inc.'s
advisory relationship with the Manager or its distribution relationship with
the Distributor, the Manager and its affiliates could cause Decatur Fund, Inc.
to delete the words "Delaware Group" from Decatur Fund, Inc.'s name.
Chemical Bank, 450 West 33rd Street, New York, NY 10001, is custodian
of each Fund's securities and cash. As custodian for the Funds, Chemical Bank
maintains a separate account or accounts for each Fund; receives, holds and
releases portfolio securities on account of each Fund; receives and disburses
money on behalf of each Fund; and collects and receives income and other
payments and distributions on account of each Fund's 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 Decatur Fund, Inc. by Stradley, Ronon, Stevens & Young, Philadelphia,
Pennsylvania.
CAPITALIZATION
Decatur Fund, Inc. 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, Decatur Income Fund offered only one class of
shares, the class currently designated the Class A Shares. Beginning January
13, 1994, Decatur Income Fund began offering its Institutional Class, beginning
September 6, 1994, Decatur Income Fund began offering its Class B Shares, and
beginning November 29, 1995, Decatur Income Fund began offering its Class C
Shares. Prior to July 26, 1993, Decatur Total Return Fund offered only one
class of shares, the class currently designated the Class A Shares. Beginning
July 26, 1993, Decatur Total Return Fund began offering its Institutional
Class, beginning September 6, 1994, Decatur Total Return Fund began offering
its Class B Shares, and beginning November 29, 1995, Decatur Total Return Fund
began offering its Class C Shares.
Shares of each Class of a Fund represent a proportionate interest in
the assets of such Fund, and have the same voting and other rights and
preferences as the other classes of that Fund, except that shares of a Fund's
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 of a Fund may vote only on
matters affecting the 12b-1 Plan that relates to the Class of shares that they
hold. However, Class B Shares may vote on any proposal to increase materially
the fees to be paid by a Fund under the 12b-1 Plan relating to its Class A
Shares. General expenses of a Fund will be allocated on a pro-rata basis to
the classes according to asset size, except that expenses of the 12b-1 Plans of
each Fund's Class A, Class B and Class C Shares will be allocated solely to
those classes.
The Board of Directors has allocated three hundred fifty million shares
to the Decatur Income Fund A Class, fifty million shares to the Decatur Income
Fund B Class, fifty million shares to the Decatur Income Fund C Class and fifty
million shares to the Decatur Income Fund Institutional Class. In addition,
the Board of Directors has allocated one hundred million shares to the Decatur
Total Return Fund A Class, fifty million shares to the Decatur Total Return
Fund B Class, fifty million
-56-
<PAGE> 155
shares to the Decatur Total Return Fund C Class and fifty million shares to the
Decatur Total Return Fund Institutional Class. While all shares have equal
voting rights on matters affecting Decatur Fund, Inc. as a corporate entity, a
Fund would vote separately on any matter which affects only that Fund, such as
any change in its own investment objective and policy or action to dissolve the
Fund and as otherwise prescribed by the Investment Company Act of 1940. Shares
of a Fund have a priority in that Fund's assets, and in gains on and income
from the portfolio of the Fund.
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 did 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.
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).
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
THE FUNDS' SHARES HAVE NONCUMULATIVE VOTING RIGHTS WHICH MEANS THAT THE
HOLDERS OF MORE THAN 50% OF THE SHARES OF DECATUR FUND, INC. 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.
-57-
<PAGE> 156
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.
-58-
<PAGE> 157
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 either Fund, 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%]
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<PAGE> 158
31% Tax Bracket Single - $55,101-$115,000
---------------
Joint - $91,851-$140,000
<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 $ 1,475 $ 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%]
36% Tax Bracket* Single - $115,001-$250,000
---------------
Joint - $140,001-$250,000
<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 $ 1,362 $ 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%]
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<PAGE> 159
39.6% Tax Bracket* Single - over $250,000
-----------------
Joint - over $250,000
<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 $ 1,281 $ 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.
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<PAGE> 160
$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.
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<PAGE> 161
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing $2,000
each January--the earliest opportunity--compared to contributing on April 15th
of the following year--the latest, for each tax year.
<TABLE>
<S> <C> <C> <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 Funds either in the past or in the
future.
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<PAGE> 162
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 November 30,
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>
DECATUR INCOME FUND A CLASS
CUMULA-
TIVE NET
ASSET PERCENTAGE CHANGES DURING YEAR
NET ASSET VALUE AT ----------------------------------------------------
MAXIMUM VALUE DISTRIBUTIONS YEAR-END
OFFERING ----------------- ------------------ WITH ALL DECATUR INCOME FUND
YEAR PRICE AT BEGIN- FROM FROM DISTRIBU- ----------------------------------------------------
ENDED BEGIN- NING END INVEST- REALIZED TIONS MAXIMUM OFFERING PRICE NET ASSET VALUE
NOV NING OF OF OF MENT SECURI- REIN- TO NET ASSET VALUE TO NET ASSET VALUE
30 YEAR(2) YEAR YEAR INCOME TIES PROFITS VESTED ANNUAL CUMULATIVE(3) ANNUAL CUMULATIVE(4)
- -------- ---- ------ ------ ------ ------------ --------- ------ ---------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $18.06 $17.20 $19.32 $0.80 $1.56 $22.24 23.1% 23.1% 29.3% 29.3%
1987 20.28 19.32 15.86 0.80 2.00 21.24 -9.0% 17.6% -4.5% 23.5%
1988 16.65 15.86 16.89 0.73 1.75 26.59 19.3% 47.3% 25.2% 54.6%
1989 17.73 16.89 19.07 0.81 0.26 31.87 14.1% 76.5% 19.8% 85.3%
1990 20.02 19.07 14.53 1.05 1.49 28.03 -16.2% 55.2% -12.0% 63.0%
1991 15.25 14.53 15.76 0.97 0.00 32.37 10.0% 79.2% 15.5% 88.2%
1992 16.55 15.76 17.20 0.81 0.00 37.07 9.1% 105.3% 14.6% 115.5%
1993 18.06 17.20 18.24 0.68 0.85 42.95 10.3% 137.8% 15.9% 149.7%
1994 19.15 18.24 15.57 0.86 1.75 42.71 -5.3% 136.4% -0.6% 148.3%
1995 16.35 15.57 19.07 0.69 0.42 55.95 24.8% 209.8% 31.0% 225.3%
---- ----
TOTAL DISTRIBUTIONS 8.20 10.08
</TABLE>
<TABLE>
<CAPTION>
DECATUR INCOME FUND A CLASS
PERCENTAGE CHANGES DURING YEAR
-----------------------------------------------------------------------------------
YEAR
ENDED STANDARD & DOW JONES CONSUMER
NOV POOR'S 500(5) INDUSTRIAL(5) PRICE INDEX(6)
30 ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE
- -------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1986 27.7% 27.7% 35.0% 35.0% 1.3% 1.3%
1987 -4.7% 21.7% -1.1% 33.5% 4.5% 5.9%
1988 23.3% 50.0% 19.8% 59.9% 4.2% 10.3%
1989 30.8% 96.2% 33.4% 113.2% 4.7% 15.5%
1990 -3.5% 89.4% -1.7% 109.6% 6.3% 22.7%
1991 20.3% 127.8% 16.9% 145.0% 3.0% 26.4%
1992 18.4% 169.8% 17.7% 188.4% 3.1% 30.3%
1993 10.1% 197.0% 14.7% 230.7% 2.7% 33.7%
1994 1.0% 200.1% 4.4% 245.1% 2.7% 37.3%
1995 36.9% 311.0% 39.3% 380.8% 2.6% 40.9%
</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 $18.06 on November 30, 1985.
(4) Reflects a net asset value of $17.20 on November 30, 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 may also include investments in preferred and fixed income
securities.
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.
*The Decatur Income Fund C Class commenced operations on November 29, 1995.
Total return for this short of a time period may not be representative of
longer-term results.
<PAGE> 163
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
initial public offering) through November 30, 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>
DECATUR INCOME FUND B CLASS
CUMULA- PERCENTAGE CHANGES DURING YEAR
TIVE NET ---------------------------------------------
ASSET
NET ASSET VALUE AT
MAXIMUM VALUE DISTRIBUTIONS YEAR-END DECATUR INCOME FUND
OFFERING ------------------ -------------------- WITH ALL ----------------------------------------------
PERIOD PRICE AT BEGIN- FROM FROM DISTRIBU- RETURNS INCLUDING RETURNS EXCLUDING
ENDED BEGIN- NING END INVEST- REALIZED TIONS CDSC CDSC
NOV NING OF OF OF MENT SECURI- REIN- ----------------------------------------------
30 YEAR YEAR(2) YEAR INCOME TIES PROFITS VESTED ANNUAL CUMULATIVE(2) ANNUAL CUMULATIVE(2)
- ---------- --------- ------- ----- ------ ------------ --------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(1) $16.59 $16.59 $15.55 $0.17 $0.00 $15.72 N/A -9.0% N/A -5.3%
1995 15.55 15.55 19.03 0.55 0.42 20.40 25.9% 19.0% 29.9% 23.0%
---- ----
TOTAL DISTRIBUTIONS $0.72 $0.42
</TABLE>
<TABLE>
<CAPTION>
DECATUR INCOME FUND B CLASS
PERCENTAGE CHANGES DURING YEAR
-----------------------------------------------------------------------------------
PERIOD STANDARD & DOW JONES CONSUMER
ENDED POOR'S 500(3) INDUSTRIAL(3) PRICE INDEX(4)
NOV -----------------------------------------------------------------------------------
30 ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE
- ---------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1994(1) N/A -3.0% N/A -3.1% N/A 0.5%
1995 36.9% 32.8% 39.3% 35.0% 2.6% 3.1%
</TABLE>
- -----------------------------------------------
(1) Total return provided for the period September 6, 1994 (date of initial
public offering) through November 30, 1994 is not annualized. 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.
<PAGE> 164
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 Institutional Class(1) during the 10-year period ended
November 30, 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>
DECATUR INCOME FUND INSTITUTIONAL CLASS
CUMULA-
TIVE NET PERCENTAGE CHANGES DURING YEAR
ASSET ------------------------------
NET ASSET VALUE AT
MAXIMUM VALUE DISTRIBUTIONS YEAR-END DECATUR INCOME FUND
OFFERING ---------------------- ----------------------- WITH ALL ------------------------
YEAR PRICE AT BEGIN- FROM FROM DISTRIBU- NET ASSET VALUE
ENDED BEGIN- NING END INVEST- REALIZED TIONS TO NET ASSET VALUE
NOV NING OF OF OF MENT SECURI- REIN- ------------------------
30 YEAR YEAR YEAR INCOME TIES PROFITS VESTED ANNUAL CUMULATIVE(2)
- -------- ---------- ------ ------ ------ ------------ --------- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $17.20 $17.20 $19.32 $0.80 $1.56 $22.24 29.3% 29.3%
1987 19.32 19.32 15.86 0.80 2.00 21.24 -4.5% 23.5%
1988 15.86 15.86 16.89 0.73 1.75 26.59 25.2% 54.6%
1989 16.89 16.89 19.07 0.81 0.26 31.87 19.8% 85.3%
1990 19.07 19.07 14.53 1.05 1.49 28.03 -12.0% 63.0%
1991 14.53 14.53 15.76 0.97 0.00 32.37 15.5% 88.2%
1992 15.76 15.76 17.20 0.81 0.00 37.07 14.6% 115.5%
1993 17.20 17.20 18.24 0.68 0.85 42.95 15.9% 149.7%
1994 18.24 18.24 15.59 0.86 1.75 42.76 -0.5% 148.6%
1995 15.59 15.59 19.06 0.74 0.42 56.07 31.1% 226.0%
---- ----
TOTAL DISTRIBUTIONS $8.25 $10.08
</TABLE>
<TABLE>
<CAPTION>
DECATUR INCOME FUND INSTITUTIONAL CLASS
PERCENTAGE CHANGES DURING YEAR
-----------------------------------------------------------------------------------
YEAR STANDARD & DOW JONES CONSUMER
ENDED POOR'S 500(3) INDUSTRIAL(3) PRICE INDEX(4)
NOV ----------------------- ----------------------- -----------------------
30 ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE
- -------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1986 27.7% 27.7% 35.0% 35.0% 1.3% 1.3%
1987 -4.7% 21.7% -1.1% 33.5% 4.5% 5.9%
1988 23.3% 50.0% 19.8% 59.9% 4.2% 10.3%
1989 30.8% 96.2% 33.4% 113.2% 4.7% 15.5%
1990 -3.5% 89.4% -1.7% 109.6% 6.3% 22.7%
1991 20.3% 127.8% 16.9% 145.0% 3.0% 26.4%
1992 18.4% 169.8% 17.7% 188.4% 3.1% 30.3%
1993 10.1% 197.0% 14.7% 230.7% 2.7% 33.7%
1994 1.0% 200.1% 4.4% 245.1% 2.7% 37.3%
1995 36.9% 311.0% 39.3% 380.8% 2.6% 40.9%
</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 $17.20 on November 30, 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.
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.
<PAGE> 165
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
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 stage where sales show more definitive highs
and lows.
The above chart illustrates the path traditionally followed by companies that
successfully survive the growth sequence.
-64-
<PAGE> 166
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Decatur Fund, Inc.
and, in its capacity as such, audits the financial statements contained in the
Funds' Annual Report. The Delaware Group Decatur Fund, Inc. - Decatur Income
Fund's and Delaware Group Decatur Fund, Inc. - Decatur Total Return Fund's
Statements of Net Assets, Statements of Operations, Statements 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, 1995
are included in the Funds' Annual Report to shareholders. The financial
statements, the notes relating thereto and the report of Ernst & Young LLP,
listed above are incorporated by reference from the Annual Report into this
Part B.
-65-
<PAGE> 167
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
Report for the fiscal year ended November 30, 1995
and are herein included as an Exhibit.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended and
supplemented to date, incorporated into this
filing by reference to Post-Effective
Amendment No. 104 filed November 27, 1995.
(b) Executed Articles Supplementary (November 28,
1995) attached as Exhibit.
(2) By-Laws. By-Laws, as amended to date,
incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed November 27, 1995.
(3) Voting Trust Agreement. Inapplicable.
i
<PAGE> 168
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.
(i) 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)
incorporated into this filing by
reference to Post-Effective Amendment
No. 104 filed November 27, 1995.
(ii) Executed Articles Supplementary
(November 28, 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,
incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed November
27, 1995.
(5) Investment Management Agreements. Investment Management
Agreements between Delaware Management Company, Inc. and
the Registrant on behalf of each Series dated April 3,
1995 incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed November 27, 1995.
(6) (a) Distribution Agreements.
(i) Form of Distribution Agreements
(April 1995) incorporated into this
filing by reference to Post-Effective
Amendment No. 104 filed November 27,
1995.
(ii) Form of Amendment No. 1 to
Distribution Agreement (November 1995)
incorporated into this filing by
reference to Post-Effective Amendment
No. 104 filed November 27, 1995.
(b) Administration and Service
Agreement. Form of Administration and
Service Agreement (as amended November 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed November
27, 1995.
ii
<PAGE> 169
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
(c) Dealer's Agreement. Dealer's
Agreement (as amended November 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed November
27, 1995.
(d) Mutual Fund Agreement for the
Delaware Group of Funds (November 1995)
included as Module.
(7) Bonus, Profit Sharing, Pension Contracts.
(a) Amended and Restated Profit
Sharing Plan incorporated into this
filing by reference to Post-Effective Amendment
No. 104 filed November 27, 1995.
(b) Amendment to Profit Sharing
Plan (December 21, 1995) 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.
(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, 1996.
(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, Post-Effective Amendment No. 95 filed
May 27, 1993 and Post-Effective Amendment No. 104 filed
November 27, 1995.
(15) Plans under Rule 12b-1.
(a) Form of Plan under Rule 12b-1 for Class A
(November 1995) incorporated into this filing
by reference to Post-Effective Amendment No.
104 filed November 27, 1995.
iii
<PAGE> 170
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
(b) Form of Plan under Rule 12b-1 for Class B
(November 1995) incorporated into this
filing by reference to Post-Effective Amendment
No. 104 filed November 27, 1995.
(c) Form of Plan under Rule 12b-1
for Class C (November 1995) incorporated
into this filing by reference to Post-Effective
Amendment No. 104 filed November 27, 1995.
(16) Schedules of Computation for each
Performance Quotation. Incorporated into this
filing by reference to Post-Effective Amendment No. 104
filed November 27, 1995.
Schedules of Computation for each Performance
Quotation for periods not previously electronically
filed attached as Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Plan under Rule 18f-3. Plan under Rule 18f-3 included
as Module.
(19) Other: Directors' Power of Attorney.
Incorporated into this filing by reference to
Post-Effective Amendment No. 104 filed
November 27, 1995.
(20) Other: Financial Statements. The Registrant's
financial statements for each Series for
the fiscal year ended November 30, 1995
attached as Exhibit.
Item 25. Persons Controlled by or under Common Control with Registrant. None.
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Delaware Group Decatur Fund, Inc.'s
Decatur Income Fund series:
Decatur Income Fund A Class
Common Stock Par Value 78,000 Accounts as of
$1.00 Per Share December 31, 1995
Decatur Income Fund B Class
Common Stock Par Value 1,219 Accounts as of
$1.00 Per Share December 31, 1995
</TABLE>
iv
<PAGE> 171
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>
Decatur Income Fund C Class
Common Stock Par Value 5 Accounts as of
$1.00 Per Share December 31, 1995
Decatur Income Fund Institutional Class
Common Stock Par Value 100 Accounts as of
$1.00 Per Share December 31, 1995
Delaware Group Decatur Fund, Inc.'s
Decatur Total Return Fund series:
Decatur Total Return Fund A Class
Common Stock Par Value 66,049 Accounts as of
$1.00 Per Share December 31, 1995
Decatur Total Return Fund B Class
Common Stock Par Value 1,206 Accounts as of
$1.00 Per Share December 31, 1995
Decatur Total Return Fund C Class
Common Stock Par Value 6 Accounts as of
$1.00 Per Share December 31, 1995
Decatur Total Return Fund Institutional Class
Common Stock Par Value 50 Accounts as of
$1.00 Per Share December 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, incorporated into this
filing by reference to Post-Effective Amendment No. 104 filed
November 27, 1995.
v
<PAGE> 172
Form N-1A
File No. 2-13017
Delaware Group Decatur Fund, Inc.
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 indirectly 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:
<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, Delaware Management Holdings, Inc.,
DMH Corp., Delaware International Holdings Ltd. and Founders Holdings, Inc.; Chairman of
the Board and Director of Delaware Pooled Trust, Inc., Delaware Investment Counselors,
Inc. and Delaware Investment & Retirement Services, Inc.; Chairman, Chief Executive
Officer and Director of Delaware International Advisers Ltd.; and Director of Delaware
Distributors, Inc. and Delaware Service Company, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vi
<PAGE> 173
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>
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, Delaware
International Advisers Ltd. and Delaware Investment & Retirement Services, Inc.; 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.
vii
<PAGE> 174
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 and Chief Administrative
Officer of Delaware Distributors, L.P.; Senior Vice President, Chief Administrative
Officer Officer and Director of Delaware Distributors, Inc.; Senior Vice President,
Chief Administrative Officer, Chief Financial Officer and Director of Delaware Service
Company, Inc.; Chief Financial Officer and Director of Delaware International Holdings
Ltd.; Senior Vice President, Chief Financial Officer and Treasurer of Delaware
Investment Counselors, Inc.; Senior Vice President, Chief Financial Officer and Director
of Founders Holdings, Inc.; Chief Executive Officer and Director of Delaware Investment
& Retirement Services, Inc.; and Director of Delaware International Advisers Ltd.
Chief Executive Officer, Chief Financial Officer and Treasurer of Forewarn, Inc. since
1992, 8 Clayton Place, Newtown Square, PA
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of Delaware Management Company, Inc., DMH
Corp., Delaware Distributors, Inc., Delaware Service Company, Inc., Founders Holdings,
Inc. and Delaware Investment & Retirement Services, Inc.; Senior Vice President and
Secretary of the Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Investment Counselors, Inc. and Delaware Management
Holdings, Inc.; Executive Vice President, Secretary and Director of Delaware Management
Trust Company; 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.
viii
<PAGE> 175
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
Investment Counselors, Inc., Founders CBO Corporation and Delaware Investment &
Retirement Services, Inc.; Vice President of the Registrant and each of the other funds
in the Delaware Group; Managing Director/Corporate Tax & Affairs and Director of Founders
Holdings, Inc.; Managing Director and Director of Delaware International Holdings Ltd.;
and Director of Delaware International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton, PA; Director
and Member of Executive Committee of Stonewall Links, Inc. since 1991, Bulltown Rd.,
Elverton, PA
Michael P. Bishof(1) Vice President and Treasurer of Delaware Management Company, Inc., the Registrant, each
of the other funds in the Delaware Group, Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc. and Founders Holdings, Inc.; Assistant
Treasurer of Founders CBO Corporation; and Vice President and Manager of Investment
Accouting of Delaware International Holdings Ltd.
Eric E. Miller Vice President and Assistant Secretary of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware
Service Company, Inc., Delaware Management Trust Company, Founders Holdings, Inc.,
Delaware Investment Counselors, Inc. and Delaware Investment & Retirement Services, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
ix
<PAGE> 176
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>
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.,
Delaware Investment & Retirement Services, Inc. and Founders Holdings, Inc.; and
Assistant Secretary of Founders CBO Corporation and Delaware International Holdings Ltd.
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Ln., Philadelphia, PA
John M. Zerr(2) Vice President and Assistant Secretary of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware Investment Counselors, Inc. and Delaware Investment &
Retirement Services, Inc.
Secretary and Counsel of Renovisions, Inc. since 1990, 4284 South Dixi Road, Resaca, GA
Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, Delaware Management Holdings, Inc., DMH
Corp., Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Investment Counselors, Inc., Founders Holdings, Inc. and Delaware
International Holdings Ltd.; Executive Vice President, Chief Financial Officer and
Treasurer of Delaware Management Trust Company; Chief Financial Officer and Treasurer of
Delaware Investment & Retirement Services, Inc.; and Assistant Treasurer of Founders CBO
Corporation
Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp. and Delaware Management Trust Company; and Vice President/Internal Audit
of Delaware Investment & Retirement Services, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
x
<PAGE> 177
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>
Steven T. Lampe(3) Vice President/Taxation of Delaware Management Company, Inc., the Registrant, each of the
other funds in the Delaware Group, Delaware Management Holdings, Inc., DMH Corp.,
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders Holdings, Inc., Founders CBO Corporation and
Delaware Investment Counselors, Inc.
Lisa O. Brinkley(4) Vice President/Compliance of Delaware Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware Investment Counselors, Inc. and Delaware Investment & Retirement Services, Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the Registrant, each of the
other funds in the Delaware Group, Delaware Distributors, L.P. and Delaware Distributors,
Inc.
Douglas L. Anderson(5) Vice President/Operations of Delaware Management Company, Inc., Delaware Service
Company, Inc. and Delaware Investment & Retirement Services, Inc.; and Vice
President/Operations and Director of Delaware Management Trust Company
Michael T. Taggart Vice President/Facilities Management and Administrative Services of Delaware Management
Company, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., each of the
tax-exempt funds, the fixed income funds and the closed-end funds in the Delaware Group;
Vice President of Founders Holdings, Inc.; and Treasurer and Director of Founders CBO
Corporation
J. Michael Pokorny Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., 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.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE> 178
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>
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
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(6) 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
General Partner of Zeke Investment Partners since 1991, 569 Canterbury Lane, Berwyn, PA
George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., 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.
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>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xii
<PAGE> 179
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>
Faye P. Staples(7) Vice President/Human Resources of Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc.; and Vice President and Director of Human
Resources of Delaware Service Company, Inc.
</TABLE>
(1) VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers
Trust and VICE PRESIDENT, CS First Boston Investment Management
prior to June 1995.
(2) ATTORNEY, Ballard, Spahr, Andrews and Ingersoll prior to July
1995.
(3) TAX MANAGER, Price Waterhouse prior to October 1995.
(4) VICE PRESIDENT AND COMPLIANCE OFFICER, Banc One Securities
Corporation prior to June 1994 and ASSISTANT VICE PRESIDENT AND
COMPLIANCE OFFICER, Aetna Life and Casualty prior to March 1993.
(5) VICE PRESIDENT OF OPERATIONS, Supervised Service Company prior to
March 1994.
(6) SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors
prior to July 1994.
(7) VICE PRESIDENT/HUMAN RESOURCES, Nova Care
prior to September 1995.
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter
for all the mutual funds in the Delaware Group.
(b) Information with respect to each director, officer or
partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------------------- --------------------- -----------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management
Company, Inc. Limited Partner Investment Manager
Delaware Investment
Counselors, Inc. Limited Partner None
Winthrop S. Jessup Vice Chairman Executive Vice President
Keith E. Mitchell President and Chief None
Executive Officer
David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiii
<PAGE> 180
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>
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
John M. Zerr 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
Steven T. Lampe Vice President/Taxation Vice President/Taxation
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.
xiv
<PAGE> 181
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
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
Mac McAuliffe Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xv
<PAGE> 182
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>
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Thomas E. Sawyer Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Faye P. Staples Vice President/Human Resources 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.
(d) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting
upon the question of removal of any director when
requested in writing to do so by the record holders
of not less than 10% of the outstanding shares.
xvi
<PAGE> 183
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 26th day of January, 1996.
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 January 26, 1996
- --------------------------------------------------
Wayne A. Stork
Senior Vice President/Chief Administrative
Officer/Chief Financial Officer (Principal
Financial Officer and Principal Accounting
/s/David K. Downes Officer) January 26, 1996
- --------------------------------------------------
David K. Downes
/s/Walter P. Babich * Director January 26, 1996
- --------------------------------------------------
Walter P. Babich
/s/Anthony D. Knerr * Director January 26, 1996
- --------------------------------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director January 26, 1996
- --------------------------------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director January 26, 1996
- --------------------------------------------------
W. Thacher Longstreth
/s/Charles E. Peck * Director January 26, 1996
- --------------------------------------------------
Charles E. Peck
</TABLE>
*By/s/Wayne A. Stork
--------------------------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
<PAGE> 184
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE> 185
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
EX-99.B1B Executed Articles Supplementary (November 28, 1995)
EX-99.B6D Mutual Fund Agreement for the Delaware Group of Funds (November 1995)
(Module Name
MFAGMT95)
EX-99.B7B Amendment to Profit Sharing Plan (December 21, 1995)
(Module Name
AMEND_PROF_SHAR)
EX-99.B11 Consents of Auditors
EX-99.B16 Schedules of Computation for each Performance Quotation for periods not previously shown
EX-27 Financial Data Schedules
EX-99.B18 Plan under Rule 18f-3 (November 1995)
(Module Name
MOD18F3)
EX-99.B20 Financial Statements: The Registrant's financial statements for each Series for the fiscal
year ended November 30, 1995
</TABLE>
<PAGE> 1
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 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.
<PAGE> 2
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 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.
<PAGE> 3
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
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
<PAGE> 4
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 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 28th 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
- ----------------------
Richelle S. Maestro
Assistant Secretary
<PAGE> 5
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
<PAGE> 1
<PAGE>
MUTUAL FUND AGREEMENT
FOR THE DELAWARE GROUP OF FUNDS
Gentlemen:
We are the national distributor for the Delaware Group of Funds with exclusive
right to sell and distribute Fund shares. (The term "Funds" in this Agreement
refers to each or any of the Funds that from time to time comprise the Delaware
Group and for whom we act as distributor.) You have indicated that you wish to
act as agent for your customers in connection with the purchase, sale and
redemption of Fund shares and desire to provide certain services to your
customers relating to their ownership of Fund shares, all in accordance with the
terms of this Agreement.
AGENT FOR CUSTOMERS: In placing orders for the purchase and sale of Fund shares,
you will be acting as agent for your customers and will not have any authority
to act as agent for us, any of the Funds or any of our affiliates or
representatives. Neither you nor any of your employees or agents are authorized
to make any representations concerning the Funds or Fund shares except those
contained in the then current "Prospectus" and in written information issued by
the Fund or by us as a supplement to the Prospectus. In purchasing Fund shares
your customers may rely on such authorized information.
OFFERING PRICE TO PUBLIC: Orders for shares received from you and accepted by
the Fund or its agent, Delaware Service Co., Inc., will be at the public
offering price applicable to each order as set forth in the Prospectus. The
manner of computing the net asset value, the public offering price and the
effective time of orders received from you are described in the Prospectus for
each Fund. We reserve the right at any time, without notice, to suspend the sale
of Fund shares or withdraw the public offering.
SALES, ORDERS AND CONFIRMATIONS: All orders must be made subject to
confirmation. Your orders must be wired, telephoned or written to the Fund or
its agent. You agree to place orders on behalf of your customers for the number
of shares, and at the price, as in bona fide orders from your customers. We will
not accept any conditional orders. We will send a written confirmation of each
trade indicating that the trade was on a fully disclosed basis to your customer.
It is agreed and understood that, whether shares are registered in the
purchaser's name, in your name or in the name of your nominee, your customer
will have full beneficial ownership of the Fund shares.
AGENCY FEES: On each order accepted by us for a Fund with a sales charge, we
understand that you will charge your customer an agency commission or agency
transaction fee ("agency fee") as set forth in the schedule of sales concessions
and agency fees set forth in that Fund's Prospectus, as it may be amended from
time to time. This fee shall be subject to the provisions of all terms set forth
in the Prospectus for volume purchases and special plans and accounts (e.g.
retirement plans, letters of intent, etc.) You will not receive from us a
<PAGE>
dealer's concession or similar allowance out of the sales charge. In accordance
with interpretations by the Staff of the Securities and Exchange Commission (the
"Commission"), the agency fee will be your sole charge to your customers for
placing such orders. You may elect to make payments in either of two ways: (a)
you may send us the public offering price for the Fund shares purchased less the
amount of the agency fee due you or (b) you or your customer may send us the
entire public offering price for the Fund shares and we will, on a periodic
basis, remit to you the agency fee due. You will notify us in writing of which
method of payment you elect. If any shares sold to your customer under the terms
of this Agreement are repurchased by the Fund or by us, or are tendered to a
Fund for redemption or repurchase, within seven (7) business days after the date
of the confirmation of the original purchase order, you will promptly refund to
us full agency fee paid or allowed to you on such shares.
PAYMENT AND ISSUANCE OF CERTIFICATES: Regardless of the payment method elected,
Fund shares purchased by you for your customers hereunder shall be paid for in
full by check payable to the Fund at its office within three business days after
our acceptance of your order. If not so paid, the Fund reserves the right,
without notice, to cancel the sale and to hold you responsible for any loss,
including lost profit, sustained by us or the Fund in consequence. Certificates
representing Fund shares will not be issued unless a specific request is
received from you or your customer. Certificates, if requested, will be issued
in the names indicated by registration instructions accompanying payment.
REDEMPTION: The Prospectus describes the provisions whereby the Fund, under all
ordinary circumstances, will repurchase its shares from shareholders on demand.
You agree that you will not make any representations to shareholders relating to
the purchase of their Fund shares other than the statements contained in the
Prospectus and the underlying organizational documents of the Fund, to which it
refers, and that you will quote to your customers as the redemption price only
the price determined by the Fund.
12b-1 PLAN: With respect to any Fund that has a Distribution Plan under Rule
12b-1 (a "12b-1Plan") of the Investment Company Act of 1940 (the "1940 Act"), we
expect you will provide shareholder and administrative services to your
customers who own Fund shares, such as: answering inquiries regarding the Fund;
assisting in changing dividend options, account designations and addresses;
establishing and maintaining shareholder accounts and records; arranging for
bank wires; or such other services as the Fund may require to the extent
permitted by applicable statutes, rules or regulations. You will promptly answer
all written complaints received by you relating to Fund accounts or promptly
forward such complaints to us and assist us in answering such complaints. For
such services we will pay you a fee as set by us from time to time, based on a
portion of the net asset value of the accounts of your clients in the Fund. We
are permitted to make this payment under the terms of the 12b-1 Plan adopted by
2
<PAGE>
certain of the Funds, as such 12b-1 Plans may be in effect from time to time.
Each Fund reserves the right, at any time, to suspend payments under its 12b-1
Plan. You will furnish the Fund and us with such information as may be
reasonably requested by the Fund or its directors or trustees or by us with
respect to fees paid to you pursuant to this Agreement. In accordance with
interpretations and rulings to the Staff of the Commission, you will not charge
your customers any fees for services for which you are being compensated under a
12b-1 Plan of a Fund.
SALES OF NO-LOAD - NON 12b-1 PLAN FUNDS: In connection with any orders placed by
you on behalf of your customers for shares of Funds that do not charge a sales
load and do not have a 12b-1 Plan, we understand that you may charge your
customers a limited service or transaction fee, in accordance with
interpretations and rulings of the Staff of the Commission.
LEGAL COMPLIANCE: This Agreement and any transaction with or payment to you
pursuant to the terms hereof is conditioned on your representation to us that,
as of the date of this Agreement you are and at all times during its
effectiveness you will be (a) a registered broker-dealer under the Securities
Exchange Act of 1934 and qualified under applicable state securities laws, if
any, to act as a broker or dealer in securities, and a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD"); or (b) a
"bank" as defined in Section 3(a)(6) of the Securities and Exchange Act of 1934
(or other financial institution) and not otherwise required to register as a
broker or dealer under such Act. You agree to notify us promptly in writing if
this representation ceases to be true. You also agree that you will comply with
the rules of the NASD including, in particular, Sections 2 and 26 of Article III
thereof, to the extent applicable, that you will maintain adequate records with
respect to your customers and their transactions, and that such transactions
will be without recourse against you by your customers. We recognize that, in
addition to applicable provisions of state and federal securities laws, you may
be subject to the provisions of the Glass-Steagall Act and other laws governing,
among other things, the conduct of activities by federal and state chartered and
supervised financial institutions and their affiliated organizations. Because
you will be the only one having a direct relationship with the customer, you
will be responsible in that relationship for insuring compliance with all laws
and regulations, including those of all applicable federal and state regulatory
authorities and bodies having jurisdiction over you or your customers to the
extent applicable to securities purchases hereunder.
BLUE SKY MATTERS: We shall have no obligation or responsibility with respect to
your right to sell Fund shares in any state or jurisdiction. From time to time
we shall furnish you with information identifying the states under the
securities laws of which it is believed a Fund's shares may be sold. You will
not transact orders for Fund shares in states which we indicate Fund shares may
not be sold.
LITERATURE: We will furnish you with copies of each Fund's Prospectus, sales
literature and other information made publicly available by the Fund, in
3
<PAGE>
reasonable quantities upon your request. We shall file Fund sales literature and
promotional material with the NASD and SEC as required. You may not publish or
use any sales literature or promotional material with respect to the Funds
without our prior review and written approval.
CUSTOMERS: The name of your customers will remain your sole property and will
not be used by us except for servicing or informational mailings and other
correspondence in the normal course of business.
NOTICES AND COMMUNICATIONS: All communications from you should be addressed to
us at 1818 Market Street, Philadelphia, PA 19103. Any notice from us to you
shall be deemed to have been duly given if mailed or telegraphed to you at the
address set forth above. Each of us may change the address to which notices
shall be sent by notice to the other in accordance with the terms hereof.
TERMINATION: This Agreement may be terminated by either party at any time by
written notice to that effect. Notwithstanding the termination of this
Agreement, you shall remain liable for any amounts otherwise owing to us or the
Fund and for your portion of any transfer tax or other liability which may be
asserted or assessed against the Fund, us or any one or more of our dealers,
based upon the claim that you and such dealers or any of them constitute a
partnership, an unincorporated business or other separate entity.
AMENDMENT: This Agreement may be amended or revised at any time by us upon
notice to you and, unless you promptly notify us in writing to the contrary, you
will be deemed to have accepted such modifications.
GENERAL: Your acceptance hereof will constitute an obligation on your part to
observe all the terms and conditions hereof. In the event you breach any of the
terms and conditions of this Agreement, you will indemnify us, the Funds, and
our affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees) arising out of or relating to such breach. Nothing contained
herein shall constitute you, us and any dealers an association or partnership.
All references in this Agreement to the "Prospectus" include the Statement of
Additional Information incorporated by reference therein and any stickers or
supplements thereto, provided that any requirement in this Agreement to deliver
a copy of the Prospectus shall not include the Statement of Additional
Information unless requested by the customer. This Agreement is to be construed
in accordance with the laws of the State of Delaware.
4
<PAGE>
Please confirm this Agreement by executing one copy of this Agreement below and
returning it to us. Keep the enclosed duplicate copy for your records.
Date: DELAWARE DISTRIBUTORS, L.P.
----------------------------
BY: DELAWARE DISTRIBUTORS, INC.
General Partner
BY:
--------------------------------
Accepted and Agreed to:
- ---------------------------------
(Name of Firm)
BY:
------------------------------
Name:
Title:
5
<PAGE> 1
AMENDMENT NO. 1
TO THE
SECOND AMENDMENT AND RESTATEMENT OF THE
PROFIT SHARING PLAN OF
DELAWARE GROUP DELAWARE FUND, INC.
EFFECTIVE APRIL 1, 1989
This Amendment is made this 21st day of December, 1995, by Delaware
Group Delaware fund, Inc. (the "Employer").
WITNESSETH:
-----------
WHEREAS, the Employer adopted the second amendment and restatement of
the Profit Sharing Plan of Delaware Management Company, Inc. (the "Plan"),
effective April 1, 1989; and
WHEREAS, the Employer desires to clarify the provisions of the Plan
pertaining to the crediting of service for vesting purposes.
NOW THEREFORE, Section 2.28 of the Plan is hereby amended as follows:
"2.28 "Year of Service" shall mean the completion by an Employee of
1,000 or more Hours of Service during his initial Eligibility
Computation Period and during any Plan Year, beginning with the Plan
Year which commences after the Employee first performs an Hour of
Service. However, for the period from October 1, 1988 through March 31,
1990, an Employee shall be given credit for a Year of Service if he
completes 1,000 Hours of Service during the period October 1, 1988 to
September 30, 1989 and shall be given credit for an additional Year of
Service if he completes 1,000 Hours of Service during the period April
1, 1989 to March 31, 1990. For purposes of determining a Participant's
nonforfeitable right to his Employer Contribution Account, Years of
Service shall include an Employee's prior service with Delaware
Management Company, Inc. or any other Entity required to be aggregated
with Delaware Management Company, Inc. under Sections 414(b) or (c) of
the Code."
IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed by its duly authorized officers and its corporate seal to be impressed
hereon the date first written above.
ATTEST: DELAWARE GROUP DELAWARE FUND, INC.
/s/ George M. Chamberlain, Jr. By: /s/ Wayne A. Stork
- ------------------------------- -------------------------
Senior Vice President/Secretary Chairman
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statement
of Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 105 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 report dated January 5, 1996, included
in the 1995 Annual Report to Shareholders of Delaware Group Decatur Fund,
Inc. -- Decatur Total Return Fund and Decatur Income Fund.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
January 25, 1996
<PAGE> 2
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Decatur Fund, Inc. -- Decatur Income Fund
Delaware Group Decatur Fund, Inc. -- Decatur Total Return Fund
We have audited the accompanying statements of net assets of Delaware Group
Decatur Fund, Inc. -- Decatur Income Fund and Delaware Group Decatur Fund, Inc.
- -- Decatur Total Return Fund, as of November 30, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, 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 and Delaware Group
Decatur Fund, Inc. -- Decatur Total Return Fund at November 30, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
----------------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
January 5, 1996
<PAGE> 1
DELAWARE GROUP DECATUR INCOME FUND B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ---------------------------------------------------
AVERAGE ANNUAL COMPOUNDED RATE OF RETURN:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,258.45
T = 25.85%
LIFE OF
FUND
- ---------
1.23561644
$1000(1 - T) = $1,189.93
T = 15.11%
<PAGE> 2
DELAWARE GROUP DECATUR INCOME FUND B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- ----------
AVERAGE ANNUAL COMPOUNDED RATE OF RETURN:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,298.45
T = 29.85%
LIFE OF
FUND
- ---------
1.23561644
$1000(1 - T) = $1,229.93
T = 18.23%
<PAGE> 3
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
NINE 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 $0.405 1.426 63.269
- ----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.269
Ending NAV $19.03
--------------
$1,204.01
Less CDSC $40.00
--------------
Investment Return $1,164.01
Total Return Performance
- ------------------------
Investment Return $1,164.01
Less Initial Investment $1,000.00
--------------
$164.01 /$1,000.00 x 100
Total Return: 16.40%
</TABLE>
<PAGE> 4
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
NINE 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 $0.405 1.426 63.269
- ----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 63.269
Ending NAV $19.03
----------------
Investment Return $1,204.01
Total Return Performance
- ------------------------
Investment Return $1,204.01
Less Initial Investment $1,000.00
----------------
$204.01 /$1,000.00 x 100
Total Return: 20.40%
</TABLE>
<PAGE> 5
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (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 $0.970 3.923 68.232
- -------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 68.232
Ending NAV $19.03
-----------
$1,298.45
Less CDSC $40.00
-----------
Investment Return $1,258.45
Total Return Performance
- ------------------------
Investment Return $1,258.45
Less Initial Investment $1,000.00
-----------
$258.45 /$1,000.00 x 100
Total Return: 25.85%
</TABLE>
<PAGE> 6
DELAWARE GROUP DECATUR INCOME FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (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 $0.970 3.923 68.232
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 68.232
Ending NAV $19.03
---------------
Investment Return $1,298.45
Total Return Performance
- ------------------------
Investment Return $1,298.45
Less Initial Investment $1,000.00
---------------
$298.45 /$1,000.00 x 100
Total Return: 29.85%
</TABLE>
<PAGE> 7
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- -------------------------------------------------------------
AVERAGE ANNUAL COMPOUNDED RATE OF RETURN:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,337.88
T = 33.79%
LIFE OF
FUND
- ---------
1.23561644
$1000(1 - T) = $1,266.01
T = 21.03%
<PAGE> 8
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
ANNUALIZED RATE OF RETURN
FOR FISCAL YEAR ENDING 1995
- -------------------------------------------------------------
AVERAGE ANNUAL COMPOUNDED RATE OF RETURN:
n
P(1 + T) = ERV
ONE
YEAR
- ---------
1
$1000(1 - T) = $1,297.88
T = 29.79%
LIFE OF
FUND
- ---------
1.23561644
$1000(1 - T) = $1,226.01
T = 17.93%
<PAGE> 9
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
NINE 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 $0.210 17.468 79.311
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 79.311
Ending NAV $15.56
-----------
$1,234.08
Less CDSC $40.00
-----------
Investment Return $1,194.08
Total Return Performance
- ------------------------
Investment Return $1,194.08
Less Initial Investment $1,000.00
-----------
$194.08 /$1,000.00 x 100
Total Return: 19.41%
</TABLE>
<PAGE> 10
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
NINE 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>
1994 78.125 $0.210 1.186 79.311
- --------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 79.311
Ending NAV $15.56
-------------
Investment Return $1,234.08
Total Return Performance
- ------------------------
Investment Return $1,234.08
Less Initial Investment $1,000.00
-------------
$234.08 /$1,000.00 x 100
Total Return: 23.41%
</TABLE>
<PAGE> 11
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (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>
1994 81.235 $0.720 4.747 85.982
- ----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 85.982
Ending NAV $15.56
--------------
$1,337.88
Less CDSC $40.00
--------------
Investment Return $1,297.88
Total Return Performance
- ------------------------
Investment Return $1,297.88
Less Initial Investment $1,000.00
--------------
$297.88 /$1,000.00 x 100
Total Return: 29.79%
</TABLE>
<PAGE> 12
DELAWARE GROUP DECATUR TOTAL RETURN FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (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>
1994 81.235 $0.720 4.747 85.982
- ---------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Ending Shares 85.982
Ending NAV $15.56
-------------
Investment Return $1,337.88
Total Return Performance
- ------------------------
Investment Return $1,337.88
Less Initial Investment $1,000.00
-------------
$337.88 /$1,000.00 x 100
Total Return: 33.79%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 011
<NAME> DECATUR INCOME FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1,411,222,202
<INVESTMENTS-AT-VALUE> 1,602,986,643
<RECEIVABLES> 20,591,237
<ASSETS-OTHER> 1,883,864
<OTHER-ITEMS-ASSETS> 356
<TOTAL-ASSETS> 1,625,462,100
<PAYABLE-FOR-SECURITIES> 9,339,378
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,351,129
<TOTAL-LIABILITIES> 11,690,507
<SENIOR-EQUITY> 84,613,952
<PAID-IN-CAPITAL-COMMON> 1,225,387,942
<SHARES-COMMON-STOCK> 72,488,322
<SHARES-COMMON-PRIOR> 74,088,725
<ACCUMULATED-NII-CURRENT> 3,740,547
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 108,264,711
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191,764,441
<NET-ASSETS> 1,382,692,713
<DIVIDEND-INCOME> 53,611,573
<INTEREST-INCOME> 18,007,218
<OTHER-INCOME> 0
<EXPENSES-NET> 12,557,134
<NET-INVESTMENT-INCOME> 59,061,657
<REALIZED-GAINS-CURRENT> 117,113,362
<APPREC-INCREASE-CURRENT> 217,167,735
<NET-CHANGE-FROM-OPS> 393,342,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 51,112,035
<DISTRIBUTIONS-OF-GAINS> 30,907,169
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,832,322
<NUMBER-OF-SHARES-REDEEMED> 9,773,875
<SHARES-REINVESTED> 4,341,150
<NET-CHANGE-IN-ASSETS> 275,017,904
<ACCUMULATED-NII-PRIOR> 4,037,420
<ACCUMULATED-GAINS-PRIOR> 27,012,850
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,182,707
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,557,134
<AVERAGE-NET-ASSETS> 1,270,949,221
<PER-SHARE-NAV-BEGIN> 15.570
<PER-SHARE-NII> 0.700
<PER-SHARE-GAIN-APPREC> 3.910
<PER-SHARE-DIVIDEND> 0.690
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.070
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 012
<NAME> DECATUR INCOME FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1,411,222,202
<INVESTMENTS-AT-VALUE> 1,602,986,643
<RECEIVABLES> 20,591,237
<ASSETS-OTHER> 1,883,864
<OTHER-ITEMS-ASSETS> 356
<TOTAL-ASSETS> 1,625,462,100
<PAYABLE-FOR-SECURITIES> 9,339,378
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,351,129
<TOTAL-LIABILITIES> 11,690,507
<SENIOR-EQUITY> 84,613,952
<PAID-IN-CAPITAL-COMMON> 1,225,387,942
<SHARES-COMMON-STOCK> 1,033,579
<SHARES-COMMON-PRIOR> 177,808
<ACCUMULATED-NII-CURRENT> 3,740,547
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 108,264,711
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191,764,441
<NET-ASSETS> 19,664,856
<DIVIDEND-INCOME> 53,611,573
<INTEREST-INCOME> 18,007,218
<OTHER-INCOME> 0
<EXPENSES-NET> 12,557,134
<NET-INVESTMENT-INCOME> 59,061,657
<REALIZED-GAINS-CURRENT> 117,113,362
<APPREC-INCREASE-CURRENT> 217,167,735
<NET-CHANGE-FROM-OPS> 393,342,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 320,672
<DISTRIBUTIONS-OF-GAINS> 85,820
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 904,441
<NUMBER-OF-SHARES-REDEEMED> 66,590
<SHARES-REINVESTED> 17,920
<NET-CHANGE-IN-ASSETS> 275,017,904
<ACCUMULATED-NII-PRIOR> 4,037,420
<ACCUMULATED-GAINS-PRIOR> 27,012,850
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,182,707
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,557,134
<AVERAGE-NET-ASSETS> 9,816,616
<PER-SHARE-NAV-BEGIN> 15.550
<PER-SHARE-NII> 0.560
<PER-SHARE-GAIN-APPREC> 3.890
<PER-SHARE-DIVIDEND> 0.550
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.030
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 013
<NAME> DECATUR INCOME FUND C CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1,411,222,202
<INVESTMENTS-AT-VALUE> 1,602,986,643
<RECEIVABLES> 20,591,237
<ASSETS-OTHER> 1,883,864
<OTHER-ITEMS-ASSETS> 356
<TOTAL-ASSETS> 1,625,462,100
<PAYABLE-FOR-SECURITIES> 9,339,378
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,351,129
<TOTAL-LIABILITIES> 11,690,507
<SENIOR-EQUITY> 84,613,952
<PAID-IN-CAPITAL-COMMON> 1,225,387,942
<SHARES-COMMON-STOCK> 263
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,740,547
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 108,264,711
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191,764,441
<NET-ASSETS> 5,019
<DIVIDEND-INCOME> 53,611,573
<INTEREST-INCOME> 18,007,218
<OTHER-INCOME> 0
<EXPENSES-NET> 12,557,134
<NET-INVESTMENT-INCOME> 59,061,657
<REALIZED-GAINS-CURRENT> 117,113,362
<APPREC-INCREASE-CURRENT> 217,167,735
<NET-CHANGE-FROM-OPS> 393,342,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 263
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 275,017,904
<ACCUMULATED-NII-PRIOR> 4,037,420
<ACCUMULATED-GAINS-PRIOR> 27,012,850
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,182,707
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,557,134
<AVERAGE-NET-ASSETS> 30
<PER-SHARE-NAV-BEGIN> 19.150
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> (0.060)
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.080
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 014
<NAME> DECATUR INCOME FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1,411,222,202
<INVESTMENTS-AT-VALUE> 1,602,986,643
<RECEIVABLES> 20,591,237
<ASSETS-OTHER> 1,883,864
<OTHER-ITEMS-ASSETS> 356
<TOTAL-ASSETS> 1,625,462,100
<PAYABLE-FOR-SECURITIES> 9,339,378
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,351,129
<TOTAL-LIABILITIES> 11,690,507
<SENIOR-EQUITY> 84,613,952
<PAID-IN-CAPITAL-COMMON> 1,225,387,942
<SHARES-COMMON-STOCK> 11,091,788
<SHARES-COMMON-PRIOR> 11,684,397
<ACCUMULATED-NII-CURRENT> 3,740,547
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 108,264,711
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191,764,441
<NET-ASSETS> 211,409,005
<DIVIDEND-INCOME> 53,611,573
<INTEREST-INCOME> 18,007,218
<OTHER-INCOME> 0
<EXPENSES-NET> 12,557,134
<NET-INVESTMENT-INCOME> 59,061,657
<REALIZED-GAINS-CURRENT> 117,113,362
<APPREC-INCREASE-CURRENT> 217,167,735
<NET-CHANGE-FROM-OPS> 393,342,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,925,823
<DISTRIBUTIONS-OF-GAINS> 4,868,512
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,480,766
<NUMBER-OF-SHARES-REDEEMED> 3,828,087
<SHARES-REINVESTED> 754,712
<NET-CHANGE-IN-ASSETS> 275,017,904
<ACCUMULATED-NII-PRIOR> 4,037,420
<ACCUMULATED-GAINS-PRIOR> 27,012,850
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,182,707
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12,557,134
<AVERAGE-NET-ASSETS> 182,689,628
<PER-SHARE-NAV-BEGIN> 15.590
<PER-SHARE-NII> 0.710
<PER-SHARE-GAIN-APPREC> 3.920
<PER-SHARE-DIVIDEND> 0.740
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.060
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> DECATUR TOTAL RETURN FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 482,038,338
<INVESTMENTS-AT-VALUE> 558,690,248
<RECEIVABLES> 5,850,155
<ASSETS-OTHER> 18,756
<OTHER-ITEMS-ASSETS> 3,873
<TOTAL-ASSETS> 564,563,032
<PAYABLE-FOR-SECURITIES> 2,801,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,149,895
<TOTAL-LIABILITIES> 3,951,428
<SENIOR-EQUITY> 35,913,341
<PAID-IN-CAPITAL-COMMON> 398,616,558
<SHARES-COMMON-STOCK> 34,229,185
<SHARES-COMMON-PRIOR> 32,710,895
<ACCUMULATED-NII-CURRENT> 3,462,778
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,967,017
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,651,910
<NET-ASSETS> 534,341,867
<DIVIDEND-INCOME> 17,907,081
<INTEREST-INCOME> 973,447
<OTHER-INCOME> 0
<EXPENSES-NET> 5,782,397
<NET-INVESTMENT-INCOME> 13,098,131
<REALIZED-GAINS-CURRENT> 47,547,702
<APPREC-INCREASE-CURRENT> 81,983,460
<NET-CHANGE-FROM-OPS> 142,629,293
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,097,109
<DISTRIBUTIONS-OF-GAINS> 13,655,359
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,675,772
<NUMBER-OF-SHARES-REDEEMED> 6,091,530
<SHARES-REINVESTED> 1,934,048
<NET-CHANGE-IN-ASSETS> 154,648,278
<ACCUMULATED-NII-PRIOR> 2,757,852
<ACCUMULATED-GAINS-PRIOR> 12,192,447
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,859,001
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,782,397
<AVERAGE-NET-ASSETS> 467,298,842
<PER-SHARE-NAV-BEGIN> 12.320
<PER-SHARE-NII> 0.370
<PER-SHARE-GAIN-APPREC> 3.700
<PER-SHARE-DIVIDEND> 0.360
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.610
<EXPENSE-RATIO> 1.19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 022
<NAME> DECATUR TOTAL RETURN FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 482,038,338
<INVESTMENTS-AT-VALUE> 558,690,248
<RECEIVABLES> 5,850,155
<ASSETS-OTHER> 18,756
<OTHER-ITEMS-ASSETS> 3,873
<TOTAL-ASSETS> 564,563,032
<PAYABLE-FOR-SECURITIES> 2,801,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,149,895
<TOTAL-LIABILITIES> 3,951,428
<SENIOR-EQUITY> 35,913,341
<PAID-IN-CAPITAL-COMMON> 398,616,558
<SHARES-COMMON-STOCK> 947,553
<SHARES-COMMON-PRIOR> 141,205
<ACCUMULATED-NII-CURRENT> 3,462,778
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,967,017
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,651,910
<NET-ASSETS> 14,744,372
<DIVIDEND-INCOME> 17,907,081
<INTEREST-INCOME> 973,447
<OTHER-INCOME> 0
<EXPENSES-NET> 5,782,397
<NET-INVESTMENT-INCOME> 13,098,131
<REALIZED-GAINS-CURRENT> 47,547,702
<APPREC-INCREASE-CURRENT> 81,983,460
<NET-CHANGE-FROM-OPS> 142,629,293
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 114,525
<DISTRIBUTIONS-OF-GAINS> 70,859
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 836,434
<NUMBER-OF-SHARES-REDEEMED> 43,212
<SHARES-REINVESTED> 13,126
<NET-CHANGE-IN-ASSETS> 154,648,278
<ACCUMULATED-NII-PRIOR> 2,757,852
<ACCUMULATED-GAINS-PRIOR> 12,192,447
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,859,001
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,782,397
<AVERAGE-NET-ASSETS> 6,538,164
<PER-SHARE-NAV-BEGIN> 12.310
<PER-SHARE-NII> 0.300
<PER-SHARE-GAIN-APPREC> 3.670
<PER-SHARE-DIVIDEND> 0.300
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.560
<EXPENSE-RATIO> 1.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 023
<NAME> DECATUR TOTAL RETURN FUND C CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 482,038,338
<INVESTMENTS-AT-VALUE> 558,690,248
<RECEIVABLES> 5,850,155
<ASSETS-OTHER> 18,756
<OTHER-ITEMS-ASSETS> 3,873
<TOTAL-ASSETS> 564,563,032
<PAYABLE-FOR-SECURITIES> 2,801,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,149,895
<TOTAL-LIABILITIES> 3,951,428
<SENIOR-EQUITY> 35,913,341
<PAID-IN-CAPITAL-COMMON> 398,616,558
<SHARES-COMMON-STOCK> 322
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,462,778
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,967,017
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,651,910
<NET-ASSETS> 5,028
<DIVIDEND-INCOME> 17,907,081
<INTEREST-INCOME> 973,447
<OTHER-INCOME> 0
<EXPENSES-NET> 5,782,397
<NET-INVESTMENT-INCOME> 13,098,131
<REALIZED-GAINS-CURRENT> 47,547,702
<APPREC-INCREASE-CURRENT> 81,983,460
<NET-CHANGE-FROM-OPS> 142,629,293
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 322
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 154,648,278
<ACCUMULATED-NII-PRIOR> 2,757,852
<ACCUMULATED-GAINS-PRIOR> 12,192,447
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,859,001
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,782,397
<AVERAGE-NET-ASSETS> 30
<PER-SHARE-NAV-BEGIN> 15.610
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.610
<EXPENSE-RATIO> 1.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000027574
<NAME> DELAWARE GROUP DECATUR FUND, INC.
<SERIES>
<NUMBER> 024
<NAME> DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 482,038,338
<INVESTMENTS-AT-VALUE> 558,690,248
<RECEIVABLES> 5,850,155
<ASSETS-OTHER> 18,756
<OTHER-ITEMS-ASSETS> 3,873
<TOTAL-ASSETS> 564,563,032
<PAYABLE-FOR-SECURITIES> 2,801,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,149,895
<TOTAL-LIABILITIES> 3,951,428
<SENIOR-EQUITY> 35,913,341
<PAID-IN-CAPITAL-COMMON> 398,616,558
<SHARES-COMMON-STOCK> 736,281
<SHARES-COMMON-PRIOR> 111,445
<ACCUMULATED-NII-CURRENT> 3,462,778
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,967,017
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,651,910
<NET-ASSETS> 11,520,337
<DIVIDEND-INCOME> 17,907,081
<INTEREST-INCOME> 973,447
<OTHER-INCOME> 0
<EXPENSES-NET> 5,782,397
<NET-INVESTMENT-INCOME> 13,098,131
<REALIZED-GAINS-CURRENT> 47,547,702
<APPREC-INCREASE-CURRENT> 81,983,460
<NET-CHANGE-FROM-OPS> 142,629,293
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 181,571
<DISTRIBUTIONS-OF-GAINS> 46,914
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 628,702
<NUMBER-OF-SHARES-REDEEMED> 20,876
<SHARES-REINVESTED> 17,010
<NET-CHANGE-IN-ASSETS> 154,648,278
<ACCUMULATED-NII-PRIOR> 2,757,852
<ACCUMULATED-GAINS-PRIOR> 12,192,447
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,859,001
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,782,397
<AVERAGE-NET-ASSETS> 8,293,867
<PER-SHARE-NAV-BEGIN> 12.350
<PER-SHARE-NII> 0.470
<PER-SHARE-GAIN-APPREC> 3.650
<PER-SHARE-DIVIDEND> 0.400
<PER-SHARE-DISTRIBUTIONS> 0.420
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.650
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
<PAGE>
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.
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
<PAGE>
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;
(vi) litigation or other legal expenses relating solely
to such class of shares;
-3-
<PAGE>
(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.
(c) The Board of Directors of a Fund may also suspend the
automatic conversion of Class B shares if it determines that suspension is
-4-
<PAGE>
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
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.
-5-
<PAGE>
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> 1
FINANCIAL
- -----------------
STATEMENTS
- -----------------
DELAWARE GROUP DECATUR FUND, INC. -
DECATUR INCOME FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
<S> <C> <C>
COMMON STOCK - 83.94%
AEROSPACE & DEFENSE - 1.46%
General Dynamics . . . . . . . . . . . . . . . . . . . . . . 394,800 $ 23,539,950
------------
23,539,950
------------
AUTOMOTIVES & AUTOMOTIVE PARTS - 2.95%
Chrysler . . . . . . . . . . . . . . . . . . . . . . . . . . 520,812 27,017,123
Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . 729,400 20,605,550
------------
47,622,673
------------
BANKING, FINANCE & INSURANCE - 20.36%
American General . . . . . . . . . . . . . . . . . . . . . . 573,200 19,417,150
AmSouth Bancorp . . . . . . . . . . . . . . . . . . . . . . 180,300 7,144,388
Aon . . . . . . . . . . . . . . . . . . . . . . . . . . 492,800 23,223,200
Bank of Boston . . . . . . . . . . . . . . . . . . . . . . . 421,100 19,528,513
Bank of New York . . . . . . . . . . . . . . . . . . . . . . 52,000 2,450,500
Beneficial . . . . . . . . . . . . . . . . . . . . . . . . . 360,100 18,275,075
Block (H&R) . . . . . . . . . . . . . . . . . . . . . . . . 187,300 8,334,850
Chase Manhattan . . . . . . . . . . . . . . . . . . . . . . 479,700 29,201,738
CIGNA . . . . . . . . . . . . . . . . . . . . . . . . . . 174,800 19,228,000
CoreStates Financial . . . . . . . . . . . . . . . . . . . . 200,000 7,750,000
Crestar Financial . . . . . . . . . . . . . . . . . . . . . 307,200 18,739,200
First Chicago . . . . . . . . . . . . . . . . . . . . . . . 35,300 2,453,350
Fleet Financial Group . . . . . . . . . . . . . . . . . . . 498,400 20,808,200
Integra Financial . . . . . . . . . . . . . . . . . . . . . 4,000 247,500
Marsh & McLennan . . . . . . . . . . . . . . . . . . . . . . 81,200 7,044,100
Mellon Bank . . . . . . . . . . . . . . . . . . . . . . . . 352,700 18,869,450
Meridian Bancorp . . . . . . . . . . . . . . . . . . . . . . 770,200 35,477,338
NBD Bancorp . . . . . . . . . . . . . . . . . . . . . . . . 108,600 4,167,525
St. Paul . . . . . . . . . . . . . . . . . . . . . . . . . . 374,300 20,960,800
UJB Financial . . . . . . . . . . . . . . . . . . . . . . . 614,400 20,582,400
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . 724,500 24,587,719
------------
328,490,996
------------
CABLE, MEDIA & PUBLISHING - 2.03%
McGraw-Hill . . . . . . . . . . . . . . . . . . . . . . . . 391,700 32,804,875
------------
32,804,875
------------
CHEMICALS - 8.92%
Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . 320,400 22,708,350
DuPont (E.I.) deNemours . . . . . . . . . . . . . . . . . . 567,500 37,738,750
Imperial Chemical ADR . . . . . . . . . . . . . . . . . . . 416,400 19,466,700
Monsanto . . . . . . . . . . . . . . . . . . . . . . . . . . 310,900 35,598,050
Witco . . . . . . . . . . . . . . . . . . . . . . . . . . 924,300 28,422,225
------------
143,934,075
------------
CONSUMER PRODUCTS - 0.32%
UST . . . . . . . . . . . . . . . . . . . . . . . . . . 156,500 5,105,813
------------
5,105,813
------------
ELECTRONICS & ELECTRICAL - 2.55%
General Electric . . . . . . . . . . . . . . . . . . . . . . 438,800 29,509,300
Pitney Bowes . . . . . . . . . . . . . . . . . . . . . . . . 260,000 11,635,000
------------
41,144,300
------------
ENERGY - 12.16%
Amoco . . . . . . . . . . . . . . . . . . . . . . . . . . 320,500 21,713,875
Atlantic Richfield . . . . . . . . . . . . . . . . . . . . . 139,400 15,107,475
Consolidated Natural Gas . . . . . . . . . . . . . . . . . . 12,500 554,688
Dresser Industries . . . . . . . . . . . . . . . . . . . . . 579,000 13,678,875
Exxon . . . . . . . . . . . . . . . . . . . . . . . . . . 413,100 31,963,613
Imperial Oil Limited . . . . . . . . . . . . . . . . . . . . 457,900 15,969,263
McDermott International . . . . . . . . . . . . . . . . . . 792,400 14,362,250
Occidental Petroleum . . . . . . . . . . . . . . . . . . . . 705,100 15,600,338
Sonat . . . . . . . . . . . . . . . . . . . . . . . . . . 656,900 21,185,025
Tenneco . . . . . . . . . . . . . . . . . . . . . . . . . . 498,700 23,937,600
Ultramar . . . . . . . . . . . . . . . . . . . . . . . . . . 874,900 22,091,225
------------
196,164,227
------------
FOOD, BEVERAGE & TOBACCO - 5.77%
General Mills . . . . . . . . . . . . . . . . . . . . . . . 279,000 15,379,875
Heinz (H.J.) . . . . . . . . . . . . . . . . . . . . . . . . 825,950 26,327,156
Philip Morris . . . . . . . . . . . . . . . . . . . . . . . 427,200 37,486,800
RJR Nabisco Holdings . . . . . . . . . . . . . . . . . . . . 477,840 13,917,090
------------
93,110,921
------------
HEALTHCARE & PHARMACEUTICALS - 7.39%
American Home Products . . . . . . . . . . . . . . . . . . . 316,000 28,835,000
Bristol-Myers Squibb . . . . . . . . . . . . . . . . . . . . 292,200 23,449,050
Glaxo Wellcome PLC-ADR . . . . . . . . . . . . . . . . . . . 570,000 15,247,500
SmithKline Beecham PLC-ADR Unit . . . . . . . . . . . . . . 505,700 26,928,525
Warner-Lambert . . . . . . . . . . . . . . . . . . . . . . . 277,700 24,784,725
------------
119,244,800
------------
INDUSTRIAL MACHINERY - 2.94%
Cooper Industries . . . . . . . . . . . . . . . . . . . . . 691,900 25,254,350
Minnesota Mining & Manufacturing . . . . . . . . . . . . . . 339,700 22,250,350
------------
47,504,700
------------
PAPER & FOREST PRODUCTS - 2.94%
Federal Paper Board . . . . . . . . . . . . . . . . . . . . 352,000 18,304,000
Kimberly-Clark . . . . . . . . . . . . . . . . . . . . . . . 187,200 14,391,000
Union Camp . . . . . . . . . . . . . . . . . . . . . . . . . 300,200 14,747,325
------------
47,442,325
------------
REAL ESTATE - 3.18%
DeBartolo Realty . . . . . . . . . . . . . . . . . . . . . . 989,300 12,737,238
Liberty Property Trust . . . . . . . . . . . . . . . . . . . 818,300 15,956,850
Simon Property Group . . . . . . . . . . . . . . . . . . . . 973,400 22,631,550
------------
51,325,638
------------
RETAIL - 2.79%
May Department Stores . . . . . . . . . . . . . . . . . . . 165,000 7,198,125
Penney (J.C.) . . . . . . . . . . . . . . . . . . . . . . . 808,700 37,907,813
------------
45,105,938
------------
</TABLE>
14
<PAGE> 2
DECATUR INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
<S> <C> <C>
COMMON STOCK (CONTINUED)
TRANSPORTATION & SHIPPING - 1.20%
Norfolk Southern . . . . . . . . . . . . . . . . . . . . . . 32,100 $ 2,527,875
Union Pacific . . . . . . . . . . . . . . . . . . . . . . . 249,400 16,896,850
--------------
19,424,725
--------------
UTILITIES - 6.98%
ALLTEL . . . . . . . . . . . . . . . . . . . . . . . . . . 515,000 15,192,500
BellSouth . . . . . . . . . . . . . . . . . . . . . . . . . 220,000 8,552,500
Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . 571,500 14,787,563
GTE . . . . . . . . . . . . . . . . . . . . . . . . . . 379,400 16,171,925
Houston Industries . . . . . . . . . . . . . . . . . . . . . 479,100 21,918,825
NYNEX . . . . . . . . . . . . . . . . . . . . . . . . . . 370,300 18,376,138
Royal PTT Nederland-SP ADR . . . . . . . . . . . . . . . . . 500,000 17,687,500
--------------
112,686,951
--------------
TOTAL COMMON STOCK
(COST $1,176,006,611) . . . . . . . . . . . . . . . . . 1,354,652,907
--------------
PREFERRED STOCKS - 3.23%
AUTOMOTIVES & AUTOMOTIVE PARTS - 1.04%
General Motors $3.25 pfd cv "C" . . . . . . . . . . . . . . 234,200 16,803,850
--------------
16,803,850
--------------
BANKING, FINANCE & INSURANCE - 1.10%
American Express 6.25% pfd cv . . . . . . . . . . . . . . . 306,400 17,771,200
--------------
17,771,200
--------------
METALS & MINING - 1.09%
Freeport McMoRan Copper & Gold
7.0% pfd cv . . . . . . . . . . . . . . . . . . . . . . 620,900 17,540,425
--------------
17,540,425
--------------
TOTAL PREFERRED STOCKS
(cost of $42,872,250) . . . . . . . . . . . . . . . . . 52,115,475
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS - 10.03%
AEROSPACE & DEFENSE - 0.33%
BE Aerospace 9.75% sr nts 2003 . . . . . . . . . . . . . . . $1,960,000 1,960,000
Fairchild 12.25% sr sec nts 1999 . . . . . . . . . . . . . . 1,500,000 1,575,000
Sequa 9.375% sr sub nts 2003 . . . . . . . . . . . . . . . . 2,000,000 1,802,500
-----------
5,337,500
-----------
AUTOMOBILES & AUTOMOTIVE PARTS - 0.42%
Exide 10.00% sr nts 2005 . . . . . . . . . . . . . . . . . . 2,000,000 2,150,000
JPS Automotive Products
11.125% sr nts 2001 . . . . . . . . . . . . . . . . . . 2,000,000 2,020,000
SPX 11.75% sr sub nts 2002 . . . . . . . . . . . . . . . . . 2,500,000 2,681,250
-----------
6,851,250
-----------
BANKING, FINANCE & INSURANCE - 0.29%
AIM Management Group
9.00% sr sec nts 2003 . . . . . . . . . . . . . . . . . 1,100,000 1,116,500
UCC Investors 11.00% sr sub nts 2003 . . . . . . . . . . . . 2,500,000 2,565,625
U.S. Banknote 11.625% sr nts 2002 . . . . . . . . . . . . . 1,500,000 930,000
-----------
4,612,125
-----------
BUILDING & MATERIALS - 0.27%
American Standard 10.875% sr nts 1999 . . . . . . . . . . . 2,750,000 3,025,000
USG 8.50% sr nts 2005 . . . . . . . . . . . . . . . . . . . 1,250,000 1,284,375
-----------
4,309,375
-----------
CABLE, MEDIA & PUBLISHING - 1.80%
Cablevision Systems
10.75% sr sub debs 2004 . . . . . . . . . . . . . . . . 1,500,000 1,582,500
Century Communications
11.875% sr sub debs 2003 . . . . . . . . . . . . . . . . 1,500,000 1,608,750
Comcast Cellular 0.00% sr part nts 2000 . . . . . . . . . . 2,000,000 1,535,000
Continental Cablevision
9.00% sr deb 2008 . . . . . . . . . . . . . . . . . . . 1,000,000 1,042,500
Continental Cablevision
11.00% sr sub debs 2007 . . . . . . . . . . . . . . . . 2,600,000 2,892,500
Galaxy Telecom 12.375% sr sub nts 2005 . . . . . . . . . . . 1,000,000 986,250
IXC Communications 13.00% sr nts 2005 . . . . . . . . . . . 1,500,000 1,575,000
Jones Intercable 9.625% sr nts 2002 . . . . . . . . . . . . 2,500,000 2,675,000
K-III Communications
10.625% sr sec nts 2002 . . . . . . . . . . . . . . . . 2,500,000 2,650,000
Lamar Advertising
11.00% sr sec nts 2003 . . . . . . . . . . . . . . . . . 1,495,000 1,526,769
Paging Network
10.125% sr sub nts 2007 . . . . . . . . . . . . . . . . 1,000,000 1,067,500
Rogers Cablesystems
10.00% sr sec nts 2005 . . . . . . . . . . . . . . . . . 2,500,000 2,612,500
Rogers Cablesystems
10.00% sr sec debs 2007 . . . . . . . . . . . . . . . . 1,350,000 1,397,250
Rogers Cablesystems
11.00% sr sub debs 2015 . . . . . . . . . . . . . . . . 840,000 869,400
*Sullivan Graphics
12.75% sr sub nts 2005 . . . . . . . . . . . . . . . . . 2,000,000 2,002,500
Telewest Communications PLC
9.625% sr debs 2006 . . . . . . . . . . . . . . . . . . 3,000,000 3,000,000
-----------
29,023,419
-----------
CHEMICALS - 0.66%
Carbide/Graphite Group
11.50% sr nts 2003 . . . . . . . . . . . . . . . . . . . 1,818,000 1,958,895
Huntsman 11.00% 1st mtg nts 2004 . . . . . . . . . . . . . . 2,500,000 2,790,625
Interlakes 12.00% sr nts 2001 . . . . . . . . . . . . . . . 1,500,000 1,485,000
NL Industries 11.75% sr sec nts 2003 . . . . . . . . . . . . 1,290,000 1,378,688
Polymer Group 12.25% sr nts 2002 . . . . . . . . . . . . . . 2,000,000 2,062,500
Scotts 9.875% sr sub nts 2004 . . . . . . . . . . . . . . . 950,000 1,017,688
-----------
10,693,396
-----------
COMPUTERS & TECHNOLOGY - 0.15%
Unisys 13.50% credit-sensitive nts1997 . . . . . . . . . . . 2,500,000 2,437,500
-----------
2,437,500
-----------
CONSUMER PRODUCTS - 0.16%
American Safety Razor
9.875% sr nts 2005 . . . . . . . . . . . . . . . . . . . 1,000,000 995,000
Revlon 9.50% sr nts 1999 . . . . . . . . . . . . . . . . . . 1,500,000 1,515,000
-----------
2,510,000
-----------
</TABLE>
15
<PAGE> 3
DECATUR INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
ELECTRONICS & ELECTRICAL - 0.41%
CAI Wireless Systems 12.25% sr nts 2002 . . . . . . . . . . $1,500,000 $ 1,576,875
Essex Group 10.00% sr nts 2003 . . . . . . . . . . . . . . . 1,450,000 1,421,000
IMO Industries 12.00% sr sub debs 2001 . . . . . . . . . . . 2,000,000 2,047,500
Mark IV Industries 8.75% sub debs 2003 . . . . . . . . . . . 1,500,000 1,560,000
-----------
6,605,375
-----------
ENERGY - 0.19%
California Energy 9.875% sr sec nts 2003 . . . . . . . . . . 1,500,000 1,556,250
Gulf Canada Resources
9.25% sr sub debs 2004 . . . . . . . . . . . . . . . . . 1,500,000 1,511,250
-----------
3,067,500
-----------
ENVIRONMENTAL SERVICES - 0.24%
Allied Waste Industrial
12.00% sr sub nts 2004 . . . . . . . . . . . . . . . . . 1,500,000 1,620,000
Global Marine 12.75% sr sec nts 1999 . . . . . . . . . . . . 2,000,000 2,210,000
-----------
3,830,000
-----------
FOOD, BEVERAGE & TOBACCO - 0.57%
Chiquita Brands 11.50% sub nts 2001 . . . . . . . . . . . . 2,250,000 2,385,000
Mafco 11.875% sr sub nts 2002 . . . . . . . . . . . . . . . 2,800,000 2,863,000
PMI Acquisition 10.25% sr sub nts 2003 . . . . . . . . . . . 3,000,000 3,075,000
Specialty Foods 11.125% sr nts 2002 . . . . . . . . . . . . 850,000 807,500
-----------
9,130,500
-----------
HEALTHCARE & PHARMACEUTICALS - 0.59%
Columbia/HCA Healthcare
6.41% nts 2000 . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,522,500
Columbia/HCA Healthcare
6.91% nts 2005 . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,045,000
HEALTHSOUTH Rehabilitation
9.50% sr sub nts 2001 . . . . . . . . . . . . . . . . . 2,500,000 2,665,625
Tenet Healthcare
10.125% sr sub nts 2005 . . . . . . . . . . . . . . . . 2,980,000 3,244,475
-----------
9,477,600
-----------
LEISURE, LODGING & ENTERTAINMENT - 0.96%
ACT III Theatres 11.875% sr sub nts 2003 . . . . . . . . . . 2,150,000 2,311,250
AMC Entertainment
11.875% sr sub nts 2000 . . . . . . . . . . . . . . . . 3,000,000 3,360,000
Aztar 11.00% sr sub nts 2002 . . . . . . . . . . . . . . . . 2,500,000 2,493,750
Bally's Grand 10.375% 1st mtg 2003 . . . . . . . . . . . . . 2,000,000 2,015,000
*Calmar 11.50% sr sub nts 2005 . . . . . . . . . . . . . . . 1,000,000 1,010,000
Cinemark U.S.A. 12.00% sr nts 2002 . . . . . . . . . . . . . 2,000,000 2,180,000
MGM Grand Hotel Finance
12.00% 1st mtg nts 2002 . . . . . . . . . . . . . . . . 2,000,000 2,202,500
-----------
15,572,500
-----------
METALS & MINING - 0.72%
AK Steel 10.75% sr nts 2004 . . . . . . . . . . . . . . . . 3,300,000 3,638,250
Armco 11.375% sr nts 1999 . . . . . . . . . . . . . . . . . 1,250,000 1,303,125
G.S. Technologies 12.25% sr nts 2005 . . . . . . . . . . . . 3,000,000 3,007,500
Magma Copper 8.70% sr sub nts 2005 . . . . . . . . . . . . . 1,500,000 1,503,750
U.S. Can 13.50% sr sub nts 2002 . . . . . . . . . . . . . . 2,000,000 2,190,000
-----------
11,642,625
-----------
PACKAGING & CONTAINERS - 0.34%
Container Corporation of America
11.25% sr nts 2004 . . . . . . . . . . . . . . . . . . . 2,000,000 2,080,000
Gaylord Container 11.50% sr nts 2001 . . . . . . . . . . . . 1,500,000 1,545,000
Stone Container 12.625% sr nts 1998 . . . . . . . . . . . . 1,000,000 1,085,000
Stone Container
10.75% 1st mtg nts 2002 . . . . . . . . . . . . . . . . 785,000 806,588
-------------
5,516,588
-------------
PAPER & FOREST PRODUCTS - 0.75%
Doman Industries Limited
8.75% sr nts 2004 . . . . . . . . . . . . . . . . . . . 3,000,000 2,887,500
Domtar 11.75% sr nts 1999 . . . . . . . . . . . . . . . . . 1,000,000 1,110,000
Ivex Packaging 12.50% sr sub nts 2002 . . . . . . . . . . . 1,330,000 1,409,800
Owens-Illinois
11.00% sr amortizing debs 2003 . . . . . . . . . . . . . 2,000,000 2,235,000
Pacific Lumber 10.50% sr nts 2003 . . . . . . . . . . . . . 2,000,000 1,900,000
Repapa New Brunswick
10.625% sr sec nts 2005 . . . . . . . . . . . . . . . . 2,000,000 2,000,000
Repapa Wisconsin 9.25% sr nts 2002 . . . . . . . . . . . . . 625,000 603,125
-------------
12,145,425
-------------
RETAIL - 0.49%
Cort Furniture Rental 12.00% sr nts 2000 . . . . . . . . . . 1,679,000 1,813,320
Fleming 10.625% sr nts 2001 . . . . . . . . . . . . . . . . 2,000,000 2,115,000
Grand Union 12.00% sr nts 2004 . . . . . . . . . . . . . . . 660,000 582,450
Penn Traffic 10.25% sr nts 2002 . . . . . . . . . . . . . . 1,500,000 1,391,250
Ralph's Grocery 10.45% sr nts 2004 . . . . . . . . . . . . . 2,000,000 1,965,000
-------------
7,867,020
-------------
TEXTILES & FURNITURE - 0.16%
Westpoint Stevens
9.375% sr sub deb 2005 . . . . . . . . . . . . . . . . . 2,500,000 2,525,000
-------------
2,525,000
-------------
TRANSPORTATION & SHIPPING - 0.21%
Trans Ocean Container
12.25% sr sub nts 2004 . . . . . . . . . . . . . . . . . 600,000 624,000
Viking Star Shipping
9.625% 1st pfd ship mgt nts 2003 . . . . . . . . . . . . 2,625,000 2,710,313
-------------
3,334,313
-------------
UTILITIES - 0.23%
Midland Funding II 11.75% debs 2005 . . . . . . . . . . . . 2,000,000 2,107,500
Pronet 11.875% sr sub nts 2005 . . . . . . . . . . . . . . . 1,000,000 1,082,500
Rogers Cantel Mobile Communications
11.125% sr sub nts 2002 . . . . . . . . . . . . . . . . 550,000 584,375
-------------
3,774,375
-------------
MISCELLANEOUS - 0.09%
Graphic Controls 12.00% sr sub nts 2005 . . . . . . . . . . 1,500,000 1,531,875
-------------
1,531,875
-------------
TOTAL CORPORATE BONDS
(COST $157,920,341) . . . . . . . . . . . . . . . . . . 161,795,261
-------------
</TABLE>
16
<PAGE> 4
DECATUR INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS - 2.13%
With Chase Manhattan 5.875% 12/1/95
(dated 11/30/95, collateralized by
$12,136,000 U.S. Treasury Notes
6.125% due 5/31/97, market value
$12,253,591 . . . . . . . . . . . . . . . . . . . . . . . $11,943,000 $ 11,943,000
With Morgan (J.P.) 5.875% 12/1/95
(dated 11/30/95, collateralized by
$11,254,000 U.S. Treasury Notes
6.50% due 4/30/97, market
value $11,479,592 . . . . . . . . . . . . . . . . . . . 11,240,000 11,240,000
With PaineWebber 5.85% 12/1/95
(dated 11/30/95, collateralized by
$11,444,000 U.S. Treasury Notes
5.625% due 11/30/00, market
value $11,490,113 . . . . . . . . . . . . . . . . . . . 11,240,000 11,240,000
--------------
TOTAL REPURCHASE AGREEMENTS
(COST $34,423,000) . . . . . . . . . . . . . . . . . . . 34,423,000
--------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 99.33% (COST $1,411,222,202) . . . . . . . . . . 1,602,986,643
RECEIVABLE AND OTHER ASSETS
NET OF LIABILITIES - 0.67% . . . . . . . . . . . . . . . 10,784,950
--------------
NET ASSETS APPLICABLE TO 84,613,952
SHARES ($1 PAR VALUE) OUTSTANDING;
PER SHARE - 100.00% . . . . . . . . . . . . . . . . . . $1,613,771,593
==============
NET ASSETS VALUE -
DECATUR INCOME FUND A CLASS
($1,382,692,713 / 72,488,322 SHARES) . . . . . . . . . . $19.07
======
NET ASSETS VALUE -
DECATUR INCOME FUND B CLASS
($19,664,856 / 1,033,579 SHARES) . . . . . . . . . . . . $19.03
======
NET ASSETS VALUE -
DECATUR INCOME FUND C CLASS
($5,019 / 263 SHARES) . . . . . . . . . . . . . . . . . $19.08
======
NET ASSETS VALUE -
DECATUR INCOME FUND INSTITUTIONAL CLASS
($211,409,005 / 11,091,788 SHARES) . . . . . . . . . . . $19.06
======
</TABLE>
- ------------------
* These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At November 30, 1995, these securities amounted to $3,012,500 or 0.19%
of net assets.
SUMMARY OF ABBREVIATIONS:
cv - convertible part - participation
deb - debenture pfd - preferred
disc - discount sec - secured
mtg - mortgage sr - senior
nts - notes sub - subordinated
<TABLE>
<S> <C>
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1995:
Common stock, $1 par value, 500,000,000 shares
authorized to the Fund with 350,000,000 shares
allocated to Decatur Income Fund A Class,
50,000,000 shares allocated to Decatur Income
Fund B Class, 50,000,000 shares allocated to
Decatur Income Fund C Class and 50,000,000
shares allocated to Decatur Income Fund
Institutional Class . . . . . . . . . . . . . . . . . . $1,310,001,894
Accumulated undistributed income:
Net investment income . . . . . . . . . . . . . . . . 3,740,547
Net realized gain on investments . . . . . . . . . . . 108,264,711
Net unrealized appreciation of investments . . . . . . 191,764,441
--------------
Total net assets . . . . . . . . . . . . . . . . . . . . $1,613,771,593
==============
</TABLE>
See accompanying notes
DELAWARE GROUP DECATUR FUND, INC. -
DECATUR TOTAL RETURN FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
<S> <C> <C>
COMMON STOCK - 96.44%
AEROSPACE & DEFENSE - 1.44%
General Dynamics . . . . . . . . . . . . . . . . . . . . . . 135,300 8,067,263
---------------
8,067,263
---------------
AUTOMOTIVES & AUTOMOTIVE PARTS - 4.49%
Chrysler . . . . . . . . . . . . . . . . . . . . . . . . . . 234,516 12,165,518
Ford Motor . . . . . . . . . . . . . . . . . . . . . . . . . 220,000 6,215,000
Genuine Parts . . . . . . . . . . . . . . . . . . . . . . . 167,645 6,768,667
---------------
25,149,185
---------------
BANKING, FINANCE & INSURANCE - 22.56%
American General . . . . . . . . . . . . . . . . . . . . . . 219,900 7,449,113
AmSouth Bancorporation . . . . . . . . . . . . . . . . . . . 96,300 3,815,888
Aon . . . . . . . . . . . . . . . . . . . . . . . . . . 167,200 7,879,300
Bank of Boston . . . . . . . . . . . . . . . . . . . . . . . 164,100 7,610,138
Bank of New York . . . . . . . . . . . . . . . . . . . . . . 20,500 966,063
Beneficial . . . . . . . . . . . . . . . . . . . . . . . . . 127,500 6,470,625
Block (H. & R.) . . . . . . . . . . . . . . . . . . . . . . 71,300 3,172,850
Chase Manhattan . . . . . . . . . . . . . . . . . . . . . . 173,700 10,573,988
CIGNA . . . . . . . . . . . . . . . . . . . . . . . . . . 65,900 7,249,000
CoreStates Financial . . . . . . . . . . . . . . . . . . . . 108,000 4,185,000
Crestar Financial . . . . . . . . . . . . . . . . . . . . . 125,400 7,649,400
First Chicago . . . . . . . . . . . . . . . . . . . . . . . 13,600 945,200
Fleet Financial Group . . . . . . . . . . . . . . . . . . . 191,400 7,990,950
Integra Financial . . . . . . . . . . . . . . . . . . . . . 1,200 74,250
Marsh & McLennan . . . . . . . . . . . . . . . . . . . . . . 79,600 6,905,300
Mellon Bank . . . . . . . . . . . . . . . . . . . . . . . . 136,000 7,276,000
Meridian Bancorp . . . . . . . . . . . . . . . . . . . . . . 216,300 9,963,319
NBD Bancorp . . . . . . . . . . . . . . . . . . . . . . . . 42,200 1,619,425
St. Paul . . . . . . . . . . . . . . . . . . . . . . . . . . 153,900 8,618,400
UJB Financial . . . . . . . . . . . . . . . . . . . . . . . 197,200 6,606,200
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . 278,200 9,441,413
---------------
126,461,822
---------------
</TABLE>
17
<PAGE> 5
DECATUR INCOME FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
<S> <C> <C>
COMMON STOCK (CONTINUED)
CABLE, MEDIA & PUBLISHING - 2.43%
McGraw-Hill . . . . . . . . . . . . . . . . . . . . . . . . 162,400 $13,601,000
-----------
13,601,000
-----------
CHEMICALS - 9.43%
Dow Chemical . . . . . . . . . . . . . . . . . . . . . . . . 102,000 7,229,250
DuPont (E.I.) deNemours . . . . . . . . . . . . . . . . . . 220,200 14,643,300
Imperial Chemical PLC-ADR . . . . . . . . . . . . . . . . . 157,900 7,381,825
Monsanto . . . . . . . . . . . . . . . . . . . . . . . . . . 126,100 14,438,450
Witco . . . . . . . . . . . . . . . . . . . . . . . . . . 299,100 9,197,325
-----------
52,890,150
-----------
CONSUMER PRODUCTS - 0.45%
UST . . . . . . . . . . . . . . . . . . . . . . . . . . 77,900 2,541,488
-----------
2,541,488
-----------
ELECTRONICS & ELECTRICAL - 5.46%
General Electric . . . . . . . . . . . . . . . . . . . . . . 157,200 10,571,700
Hubbell-Class B . . . . . . . . . . . . . . . . . . . . . . 97,600 5,965,800
Pitney Bowes . . . . . . . . . . . . . . . . . . . . . . . . 175,000 7,831,250
Thomas & Betts . . . . . . . . . . . . . . . . . . . . . . . 85,200 6,251,550
-----------
30,620,300
-----------
ENERGY - 13.90%
Amoco . . . . . . . . . . . . . . . . . . . . . . . . . . 139,700 9,464,675
Atlantic Richfield . . . . . . . . . . . . . . . . . . . . . 60,000 6,502,500
Dresser Industries . . . . . . . . . . . . . . . . . . . . . 334,700 7,907,288
Exxon . . . . . . . . . . . . . . . . . . . . . . . . . . 168,500 13,037,688
Imperial Oil Limited . . . . . . . . . . . . . . . . . . . . 185,700 6,476,288
McDermott International . . . . . . . . . . . . . . . . . . 303,300 5,497,313
Mobil . . . . . . . . . . . . . . . . . . . . . . . . . . 56,300 5,876,313
Occidental Petroleum . . . . . . . . . . . . . . . . . . . . 302,800 6,699,450
Sonat . . . . . . . . . . . . . . . . . . . . . . . . . . 192,000 6,192,000
Tenneco . . . . . . . . . . . . . . . . . . . . . . . . . . 213,700 10,257,600
-----------
77,911,115
-----------
FOOD, BEVERAGE & TOBACCO - 6.07%
General Mills . . . . . . . . . . . . . . . . . . . . . . . 118,000 6,504,750
Heinz (H.J.) . . . . . . . . . . . . . . . . . . . . . . . . 318,350 10,147,406
Philip Morris . . . . . . . . . . . . . . . . . . . . . . . 131,000 11,495,250
RJR Nabisco Holdings . . . . . . . . . . . . . . . . . . . . 201,220 5,860,533
-----------
34,007,939
-----------
HEALTHCARE & PHARMACEUTICALS - 7.99%
American Home Products . . . . . . . . . . . . . . . . . . . 122,000 11,132,500
Bristol-Myers Squibb . . . . . . . . . . . . . . . . . . . . 122,000 9,790,500
Glaxo Wellcome PLC-ADR . . . . . . . . . . . . . . . . . . . 213,800 5,719,150
SmithKline Beecham PLC-ADR Unit . . . . . . . . . . . . . . 180,600 9,616,950
Warner-Lambert . . . . . . . . . . . . . . . . . . . . . . . 95,500 8,523,375
-----------
44,782,475
-----------
INDUSTRIAL MACHINERY - 2.81%
Cooper Industries . . . . . . . . . . . . . . . . . . . . . 221,600 8,088,400
Minnesota Mining & Manufacturing . . . . . . . . . . . . . . 116,600 7,637,300
-----------
15,725,700
-----------
METALS & MINING - 1.32%
Freeport-McMoRan Copper & Gold Class B . . . . . . . . . . . 272,764 7,398,723
-----------
7,398,723
-----------
PAPER & FOREST PRODUCTS - 3.96%
Federal Paper Board . . . . . . . . . . . . . . . . . . . . 140,000 7,280,000
Kimberly-Clark . . . . . . . . . . . . . . . . . . . . . . . 90,000 6,918,750
Union Camp . . . . . . . . . . . . . . . . . . . . . . . . . 163,500 8,031,938
-----------
22,230,688
-----------
RETAIL - 2.61%
May Department Stores . . . . . . . . . . . . . . . . . . . 65,000 2,835,625
Penney (J.C.) . . . . . . . . . . . . . . . . . . . . . . . 251,400 11,784,375
-----------
14,620,000
-----------
TRANSPORTATION &RELATED - 1.17%
Union Pacific . . . . . . . . . . . . . . . . . . . . . . . 97,200 6,585,300
-----------
6,585,300
-----------
UTILITIES - 10.35%
ALLTEL . . . . . . . . . . . . . . . . . . . . . . . . . . 227,800 6,720,100
BellSouth . . . . . . . . . . . . . . . . . . . . . . . . . 188,800 7,339,600
FPL Group . . . . . . . . . . . . . . . . . . . . . . . . . 62,000 2,689,250
Frontier . . . . . . . . . . . . . . . . . . . . . . . . . . 209,400 5,418,225
GTE . . . . . . . . . . . . . . . . . . . . . . . . . . 170,200 7,254,775
Houston Industries . . . . . . . . . . . . . . . . . . . . . 131,200 6,002,400
PECO Energy . . . . . . . . . . . . . . . . . . . . . . . . 95,000 2,755,000
Royal PTT Nederland-SP ADR . . . . . . . . . . . . . . . . . 200,000 7,075,000
SBC Communications . . . . . . . . . . . . . . . . . . . . . 128,000 6,912,000
Williams . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000 5,880,000
-----------
58,046,350
-----------
TOTAL COMMON STOCK
(COST 465,031,067) . . . . . . . . . . . . . . . . . . . 540,639,498
-----------
PREFERRED STOCKS - 0.83%
AUTOMOTIVES & AUTOMOTIVE PARTS - 0.83%
General Motors $3.25 pfd cv C . . . . . . . . . . . . . . . 65,000 4,663,750
-----------
TOTAL PREFERRED STOCK
(COST 3,620,271) . . . . . . . . . . . . . . . . . . . . 4,663,750
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS - 2.39%
With Chase Manhattan 5.875% 12/1/95
(dated 11/30/95, collateralized by
$4,720,000 U.S. Treasury Notes
6.125% due 5/31/97, market value
$4,765,798 . . . . . . . . . . . . . . . . . . . . . . . $4,645,000 4,645,000
With Morgan (J.P.) 5.875% 12/1/95
(dated 11/30/95, collateralized by
$4,376,000 U.S. Treasury Notes
6.50% due 4/30/97, market value
$4,464,172 . . . . . . . . . . . . . . . . . . . . . . . 4,371,000 4,371,000
</TABLE>
18
<PAGE> 6
DECATUR TOTAL RETURN FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
With PaineWebber 5.85% 12/1/95
(dated 11/30/95, collateralized by
$4,450,000 U.S. Treasury Notes
5.625% due 11/30/00, market
value $4,468,264 . . . . . . . . . . . . . . . . . . . . $4,371,000 $ 4,371,000
------------
TOTAL REPURCHASE AGREEMENTS
(COST $13,387,000) . . . . . . . . . . . . . . . . . . . 13,387,000
------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 99.66% (COST $482,038,338) . . . . . . . . . . . 558,690,248
RECEIVABLE AND OTHER ASSETS
NET OF LIABILITIES - 0.34% . . . . . . . . . . . . . . . 1,921,356
------------
NET ASSETS APPLICABLE TO 35,913,341
SHARES ($1 PAR VALUE) OUTSTANDING;
PER SHARE - 100.00% . . . . . . . . . . . . . . . . . . $560,611,604
============
NET ASSETS VALUE -
DECATUR TOTAL RETURN FUND A CLASS
($534,341,867 / 34,229,185 SHARES) . . . . . . . . . . . $15.61
======
NET ASSETS VALUE -
DECATUR TOTAL RETURN FUND B CLASS
($14,744,372 / 947,553 SHARES) . . . . . . . . . . . . . $15.56
======
NET ASSETS VALUE -
DECATUR TOTAL RETURN FUND C CLASS
($5,028 / 322 SHARES) . . . . . . . . . . . . . . . . . $15.61
======
NET ASSETS VALUE -
DECATUR TOTAL RETURN FUND INSTITUTIONAL CLASS
($11,520,337 / 736,281 SHARES) . . . . . . . . . . . . . $15.65
======
- ------------------
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1995:
Common stock, $1 par value, 250,000,000 shares
authorized to the Fund with 100,000,000 shares
allocated to Decatur Total Return Fund A Class,
50,000,000 shares allocated to Decatur Total
Return Fund B Class, 50,000,000 shares allocated
to Decatur Total Return Fund C Class and 50,000,000
shares allocated to Decatur Total Return Fund
Institutional Class . . . . . . . . . . . . . . . . . . $434,529,899
Accumulated undistributed income:
Net investment income . . . . . . . . . . . . . . . . . 3,462,778
Net realized gain on investments . . . . . . . . . . . . 45,967,017
Net unrealized appreciation of investments . . . . . . . 76,651,910
------------
Total net assets . . . . . . . . . . . . . . . . . . . . . . $560,611,604
============
</TABLE>
See accompanying notes
DELAWARE GROUP DECATUR FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
DECATUR DECATUR TOTAL
INCOME FUND RETURN FUND
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 53,611,573 $ 17,907,081
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 18,007,218 973,447
------------ ------------
71,618,791 18,880,528
------------ ------------
EXPENSES:
Management fees . . . . . . . . . . . . . . . . . . . . . . . 7,182,707 2,859,001
Dividend disbursing and transfer agent
fees and expenses . . . . . . . . . . . . . . . . . . . 2,280,425 804,735
Distribution expenses . . . . . . . . . . . . . . . . . . . . 1,758,447 1,464,746
Reports to shareholders . . . . . . . . . . . . . . . . . . . 380,715 210,643
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . 364,938 119,992
Taxes (other than taxes on income) . . . . . . . . . . . . . 168,025 55,925
Federal and state registration fees . . . . . . . . . . . . . 62,000 50,909
Professional fees . . . . . . . . . . . . . . . . . . . . . . 54,427 33,145
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . 31,071 33,929
Directors' fees . . . . . . . . . . . . . . . . . . . . . . . 30,335 30,335
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 244,044 119,037
------------ ------------
12,557,134 5,782,397
------------ ------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . 59,061,657 13,098,131
------------ ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain from
security transactions . . . . . . . . . . . . . . . . . 117,113,362 47,547,702
Net unrealized appreciation of
investments during the period . . . . . . . . . . . . . 217,167,735 81,983,460
------------ ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS . . . . . . . . . . . . . . . . . . 334,281,097 129,531,162
------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . $393,342,754 $142,629,293
============ ============
</TABLE>
<TABLE>
<CAPTION>
DECATUR DECATUR TOTAL
INCOME FUND RETURN FUND
A CLASS A CLASS
<S> <C> <C>
NET ASSET VALUE AND OFFERING PRICE
PER SHARE:
Net asset value per share (A) . . . . . . . . . . . . . . . . $19.07 $15.61
Sale charges (4.75% of offering price,
or 4.98% and 5.00% of amount
invested per share, respectively) (B) . . . . . . . . . 0.95 0.78
------ ------
Offering price . . . . . . . . . . . . . . . . . . . . . . . $20.02 $16.39
====== ======
</TABLE>
- ------------------
(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon the redemption of repurchase of shares.
(B) See How to Buy Shares in the current Prospectus, for purchases of
$100,000 or more.
See accompanying notes
19
<PAGE> 7
DELAWARE GROUP DECATUR FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED 11/30/95
------------------------------
DECATUR DECATUR TOTAL
INCOME FUND RETURN FUND
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . $ 59,061,657 $ 13,098,131
Net realized gain from
security transactions . . . . . . . . . . . . . . . . . 117,113,362 47,547,702
Net appreciation
during the period . . . . . . . . . . . . . . . . . . . 217,167,735 81,983,460
-------------- ------------
Net increase in net assets
resulting from operations . . . . . . . . . . . . . . . 393,342,754 142,629,293
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (51,112,035) (12,097,109)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (320,672) (114,525)
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (7,925,823) (181,571)
Net realized gain from security transactions:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (30,907,169) (13,655,359)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (85,820) (70,859)
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (4,868,512) (46,914)
-------------- ------------
(95,220,031) (26,166,337)
-------------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 65,059,932 78,281,294
B Class . . . . . . . . . . . . . . . . . . . . . . . . 15,750,776 11,806,856
C Class . . . . . . . . . . . . . . . . . . . . . . . . 5,030 5,030
Institutional Class . . . . . . . . . . . . . . . . . . 43,751,896 7,957,834
Net asset value of shares issued upon
reinvestment of dividends from
net investment income and realized
securities profits:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 70,989,710 24,347,338
B Class . . . . . . . . . . . . . . . . . . . . . . . . 305,545 171,844
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . 12,326,277 228,573
-------------- ------------
208,189,166 122,798,769
-------------- ------------
Cost of shares repurchased:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (167,065,887) (83,705,933)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (1,184,376) (616,336)
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (63,043,722) (291,178)
-------------- ------------
(231,293,985) (84,613,447)
-------------- ------------
Increase (Decrease) in net assets
derived from capital share
transactions . . . . . . . . . . . . . . . . . . . . . . (23,104,819) 38,185,322
-------------- ------------
NET INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . 275,017,904 154,648,278
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . 1,338,753,689 405,963,326
-------------- ------------
End of period (including undistributed
net investment income of $3,740,547
and $3,462,778, respectively) . . . . . . . . . . . . $1,613,771,593 $560,611,604
============== ============
</TABLE>
See accompanying notes
DELAWARE GROUP DECATUR FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED 11/30/95
-------------------------------
DECATUR DECATUR TOTAL
INCOME FUND RETURN FUND
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . $ 57,328,491 $ 12,298,767
Net realized gain from
security transactions . . . . . . . . . . . . . . . . . 36,051,478 13,432,223
Net depreciation during the period . . . . . . . . . . . . . (97,720,373) (25,513,930)
-------------- ------------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . . . . . . . . (4,340,404) 217,060
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (66,582,316) (13,809,161)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (15,826) (2,634)
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (7,995,057) (39,777)
Net realized gain from
security transactions:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (144,029,198) (49,579,695)
B Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . -- (105,220)
--------------- ------------
(218,622,397) (63,536,487)
--------------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 56,739,570 43,830,883
B Class . . . . . . . . . . . . . . . . . . . . . . . . 2,858,350 1,802,152
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . 34,055,194 686,198
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and realized
securities profits:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 187,326,243 60,129,721
B Class . . . . . . . . . . . . . . . . . . . . . . . . 10,142 2,465
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . 7,137,272 144,998
-------------- ------------
288,126,771 106,596,417
-------------- ------------
Cost of shares repurchased:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (174,051,022) (69,644,135)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (261) --
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (64,552,660) (488,748)
-------------- ------------
(238,603,943) (70,132,883)
-------------- ------------
Increase in net assets derived from
capital share transactions . . . . . . . . . . . . . . . 49,522,828 36,463,534
-------------- ------------
NET DECREASE IN NET ASSETS . . . . . . . . . . . . . . . . . (173,439,973) (26,855,893)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . 1,512,193,662 432,819,219
-------------- ------------
End of period (including undistributed
net investment income of
$4,037,420 and $2,757,852,
respectively) . . . . . . . . . . . . . . . . . . . . . $1,338,753,689 $405,963,326
============== ============
</TABLE>
See accompanying notes
20
<PAGE> 8
DELAWARE GROUP DECATUR FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
Delaware Group Decatur Fund, Inc. ("the Company"), is registered as a
diversified open-end investment company under the Investment Company Act of
1940. The Company is organized as a Maryland Corporation and offers two series,
the Decatur Income Fund and the Decatur Total Return Fund (the "Funds"). Each
series offers four classes of shares.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with general accounting
principles and are consistently followed by the Funds:
SECURITY VALUATION - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 PM on the valuation date. Securities not traded
or securities not listed on an exchange are valued at the mean of the last
quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service when such prices are believed to reflect the fair
value of such securities. Money market instruments having less than 60 days to
maturity are valued at amortized cost.
FEDERAL INCOME TAXES - Each Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the financial
statements.
REPURCHASE AGREEMENTS - Each Fund may invest in a pooled cash account along
with other members of the Delaware Group of Funds. The aggregate daily balance
of the pooled cash account is invested in repurchase agreements secured by
obligations of the U.S. government. The respective collateral is held by the
Funds' custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 100% collateralized. However, in the
event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
CLASS ACCOUNTING - Investment income, common expenses and gains (losses) on
investments are allocated to the various classes of the Funds on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
OTHER - Expenses common to all funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale
of investment securities are those of the specific securities sold. Dividend
income is recorded on the ex-dividend date and interest income is recorded on
an accrual basis. Original issue discounts are accreted to interest income over
the lives of the respective securities. The Decatur Income Fund declares and
pays dividends from net investment income on a monthly basis and the Decatur
Total Return Fund declares and pays dividends from net investment income on a
quarterly basis.
Certain fund expenses are paid directly by brokers. The amount of these
expenses is less than 0.01% of each Fund's average net assets.
The Decatur Income Fund declared distributions from net realized gain from
security transactions in the amount of $1.34 per share and from net investment
income in the amount of $0.07, $0.045, $0.055 and $0.06 per share for the
Decatur Income Fund A Class, Decatur Income Fund B Class, Decatur Income Fund C
Class and Decatur Income Fund Institutional Class, respectively, payable on
January 4, 1996, to shareholders of record on December 26, 1995. The
ex-dividend date was December 27, 1995.
The Decatur Total Return Fund declared distributions from net realized gain
from security transactions in the amount of $1.285 per share and from net
investment income in the amount of $0.11, $0.06, $0.14 and $0.15 per share for
the 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, respectively, payable on January 4, 1996, to shareholders of record on
December 26, 1995. The ex-dividend date was December 27, 1995.
2. INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS
In accordance with the terms of the Investment Management Agreement, the Funds
pay Delaware Management Company, Inc. (DMC), the investment manager of the
Fund, an annual fee which is calculated daily at the following rates less fees
paid to the unaffiliated directors; 0.60% on the first $100 million of average
daily net assets, 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 for the
Decatur Income Fund, and 0.60% on the first $500 million of average daily net
assets 0.575% on the next $250 million, and 0.55% on the average daily net
assets over $750 million for the Decatur Total Return Fund. At
November 30, 1995, the Funds had liabilities for Investment Management fees and
other expenses payable to DMC for $83,495 and $70,905 for the Decatur Income
Fund and Decatur Total Return Fund, respectively.
Pursuant to the Distribution Agreement, the Funds pay Delaware Distributors
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class for each Fund and
1.00% of the average daily net assets of B Class and C Class for each Fund. At
November 30, 1995, the Funds had liabilities for distribution fees and other
expenses payable to DDLP for $23,144 and $19,153 for Decatur Income Fund and
Decatur Total Return Fund, respectively. For the year ended November 30, 1995,
the Fund paid DDLP $287,570 and $220,616 for commissions earned on sales of
Decatur Income Fund A Class shares and Decatur Total Return Fund A Class
shares, respectively.
The Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC to serve as dividend disbursing and transfer agent for the Funds. For the
year ended November 30, 1995, the Decatur Income Fund and the Decatur Total
Return Fund expensed $2,280,425 and $804,735 for these services and had
liabilities for such fees and other expenses payable to DSC for $63,511 and
$23,503, respectively.
Certain officers of DMC are officers, directors and/or employees of the Funds.
These officers, directors and employees are paid no compensation by the Funds.
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DDLP and DSC, through a merger transaction (the "Merger") became a
wholly-owned subsidiary of Lincoln National Corporation. Other than the
resulting change in ownership, the Merger will not materially change the manner
in which DMC, DDLP and DSC have heretofore conducted their relationships with
the Funds.
21
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
During the year ended November 30, 1995, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
<TABLE>
<CAPTION>
DECATUR DECATUR TOTAL
INCOME FUND RETURN FUND
----------- -----------
<S> <C> <C>
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . $1,048,944,601 $395,857,178
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . $1,126,306,700 $378,551,122
</TABLE>
At November 30, 1995, unrealized appreciation for federal income tax purposes
as follows:
<TABLE>
<CAPTION>
DECATUR DECATUR TOTAL
INCOME FUND RETURN FUND
----------- -----------
<S> <C> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . $202,211,934 $79,937,523
Unrealized depreciation . . . . . . . . . . . . . . . . . . . 13,467,990 3,824,170
------------ -----------
Aggregated unrealized appreciation . . . . . . . . . . . . . $188,743,944 $76,113,353
============ ===========
Net realized gain for federal
income tax purposes . . . . . . . . . . . . . . . . . . $113,355,518 $46,371,695
</TABLE>
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
DECATUR INCOME FUND
-----------------------------
YEAR ENDED YEAR ENDED
11/30/95 11/30/94
----------- -----------
<S> <C> <C>
Shares sold:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 3,832,322 3,434,662
B Class . . . . . . . . . . . . . . . . . . . . . . . . 904,441 177,186
C Class . . . . . . . . . . . . . . . . . . . . . . . . 263 --
Institutional Class . . . . . . . . . . . . . . . . . . 2,480,766 15,245,137
Shares issued upon reinvestment of
dividends from net investment income
and distributions of realized gain
from security transactions:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 4,341,150 11,415,889
B Class . . . . . . . . . . . . . . . . . . . . . . . . 17,920 638
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . 754,712 445,742
----------- -----------
12,331,574 30,719,254
----------- -----------
Shares repurchased:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (9,773,875) (23,687,288)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (66,590) (16)
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (3,828,087) (4,006,482)
----------- -----------
(13,668,552) (27,693,786)
----------- -----------
Net increase (decrease) . . . . . . . . . . . . . . . . . (1,336,978) 3,025,468
=========== ===========
</TABLE>
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN FUND
----------------------------
YEAR ENDED YEAR ENDED
11/30/95 11/30/94
---------- ----------
<S> <C> <C>
Shares sold:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 5,675,772 3,387,631
B Class . . . . . . . . . . . . . . . . . . . . . . . . 836,434 141,014
C Class . . . . . . . . . . . . . . . . . . . . . . . . 322 --
Institutional Class . . . . . . . . . . . . . . . . . . 628,702 53,343
Shares issued upon reinvestment of
dividends from net investment income
and distributions of realized gain
from security transactions:
A Class . . . . . . . . . . . . . . . . . . . . . . . . 1,934,048 4,694,827
B Class . . . . . . . . . . . . . . . . . . . . . . . . 13,126 191
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . 17,010 11,332
---------- ----------
9,105,414 8,288,338
---------- ----------
Shares repurchased:
A Class . . . . . . . . . . . . . . . . . . . . . . . . (6,091,530) (5,385,395)
B Class . . . . . . . . . . . . . . . . . . . . . . . . (43,212) --
C Class . . . . . . . . . . . . . . . . . . . . . . . . -- --
Institutional Class . . . . . . . . . . . . . . . . . . (20,876) (35,249)
---------- ----------
(6,155,618) (5,420,644)
---------- ----------
Net increase . . . . . . . . . . . . . . . . . . . . . . 2,949,796 2,867,694
========== ==========
</TABLE>
5. SECURITIES LENDING
The market value of securities on loan to broker/dealers at November 30, 1995,
was $202,730,486 and $42,782,050 for Decatur Income Fund and Decatur Total
Return Fund, respectively for which each Fund received cash collateral of
$206,225,840 and $43,410,000, respectively.
6. LINES OF CREDIT
The Funds have committed lines of credit of $25 million for Decatur Income Fund
and $10 million for Decatur Total Return Fund. No amount was outstanding at
November 30, 1995, or at any time during the fiscal year period.
7. CONCENTRATION OF CREDIT RISK
The Decatur Income Fund may invest in high-yield fixed-income securities which
carry ratings of BB or lower by Standard & Poor's and/or Baa or lower by
Moody's. Investments in these higher yielding securities may be accompanied by
a greater degree of credit risk than higher rated securities. Additionally,
lower-rated securities may be more susceptible to adverse economic and
competitive industry conditions than investment grade securities.
The Decatur Income Fund may invest up to 10% of its total net assets in
illiquid securities which include securities with contractual restrictions on
resale, securities exempt from registration under Rule 144A of the Securities
Act of 1933, as amended, and other securities which may not be readily
marketable. The relative illiquidity of some of these securities may adversely
affect the Fund's ability to dispose of such securities in a timely manner and
at a fair price when it is necessary to liquidate such securities. These
securities have been denoted in the Statement of Net Assets.
22
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FINANCIAL HIGHLIGHTS
Selected data for each share of the Decatur Income Fund outstanding throughout
each period were as follows:
<TABLE>
<CAPTION>
DECATUR INCOME FUND A CLASS
----------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . $15.57 $18.24 $17.20 $15.76 $14.53
Income from investment operations:
Net investment income . . . . . . . . . . . . . 0.70 0.67 0.78 0.78 0.83
Net realized and unrealized gain
(loss) from security transactions . . . . . . 3.91 (0.73) 1.79 1.47 1.37
------ ------ ------ ------ ------
Total from investment operations . . . . . . . . 4.61 (0.06) 2.57 2.25 2.20
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income . . . . . . (0.69) (0.86) (0.68) (0.81) (0.97)
Distributions from net realized gain
from security transactions . . . . . . . . . . (0.42) (1.75) (0.85) none none
------ ------ ------ ------ ------
Total distributions . . . . . . . . . . . . . . (1.11) (2.61) (1.53) (0.81) (0.97)
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . $19.07 $15.57 $18.24 $17.20 $15.76
====== ====== ====== ====== ======
Total return(1) . . . . . . . . . . . . . . . . . . 31.02% (0.57%) 15.85% 14.55% 15.46%
Ratios/supplemental data:
Net assets, end of period
(000 omitted) . . . . . . . . . . . . . . . . $1,382,693 $1,153,884 $1,512,194 $1,508,206 $1,579,521
Ratio of expenses to average
net assets . . . . . . . . . . . . . . . . . . 0.87% 0.81% 0.71% 0.72% 0.70%
Ratio of net investment income
to average net assets . . . . . . . . . . . . 4.03% 3.92% 4.34% 4.55% 5.18%
Portfolio turnover . . . . . . . . . . . . . . . 74% 92% 80% 79% 78%
</TABLE>
- ------------------
(1) 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.
23
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Decatur Income Fund outstanding throughout
each period were as follows:
<TABLE>
<CAPTION>
DECATUR INCOME DECATUR INCOME DECATUR INCOME
FUND B CLASS FUND C CLASS FUND INSTITUTIONAL CLASS
------------------------- -------------- --------------------------
YEAR 9/6/94(1) 11/29/95(2) YEAR 1/13/94(3)
ENDED TO TO ENDED TO
11/30/95 11/30/94 11/30/95 11/30/95 11/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . $15.55 $16.59 $19.15 $15.59 $16.72
Income from investment operations:
Net investment income . . . . . . . . . . . . . 0.56 0.15 0.04 0.71 0.59
Net realized and unrealized gain
(loss) from security transactions . . . . . . 3.89 (1.02) (0.06) 3.92 (1.10)
------ ------ ------ ------ ------
Total from investment operations . . . . . . . . 4.45 (0.87) (0.02) 4.63 (0.51)
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income . . . . . . (0.55) (0.17) (0.05) (0.74) (0.62)
Distributions from net realized gain
from security transactions . . . . . . . . . . (0.42) none none (0.42) none
------ ------ ------ ------ ------
Total distributions . . . . . . . . . . . . . . (0.97) (0.17) (0.05) (1.16) (0.62)
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . $19.03 $15.55 $19.08 $19.06 $15.59
====== ====== ====== ====== ======
Total return(4) . . . . . . . . . . . . . . . . . . 29.85% (5.27%) 5 31.14% (0.45%)
Ratios/supplemental data:
Net assets, end of period (000 omitted) . . . . $19,665 $2,765 $5 $211,409 $182,105
Ratios of expenses to average net assets . . . . 1.74% 1.70% 5 0.74% 0.70%
Ratio of net investment income to
average net assets . . . . . . . . . . . . . . 3.16% 3.03% 5 4.16% 4.03%
Portfolio turnover . . . . . . . . . . . . . . . 74% 92% 5 74% 92%
</TABLE>
- ------------------
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Date of initial public offering.
(3) Date of initial public offering; ratios and total return have been
annualized.
(4) Does not include the contingent deferred sales charge which varies from
1% - 4% depending upon the holding period for Decatur Income Fund B Class.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management
believes that such ratios and return for this relatively short period are
not meaningful.
24
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FINANCIAL HIGHLIGHTS
Selected data for each share of the Decatur Total Return Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN FUND A CLASS
--------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991
<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 . . . . . . . . . . . . . 0.37 0.37 0.45 0.47 0.53
Net realized and unrealized gain
(loss) from security transactions . . . . . . 3.70 (0.34) 1.45 1.30 1.07
------ ------ ------ ------ ------
Total from investment operations . . . . . . . . 4.07 0.03 1.90 1.77 1.60
Less distributions:
Dividends from net investment income . . . . . . (0.36) (0.43) (0.45) (0.52) (0.58)
Distributions from net realized gain
from security transactions . . . . . . . . . . (0.42) (1.66) (1.05) none none
------ ------ ------ ------ ------
Total distributions . . . . . . . . . . . . . . (0.78) (2.09) (1.50) (0.52) (0.58)
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . $15.61 $12.32 $14.38 $13.98 $12.73
====== ====== ====== ====== ======
Total return(1) . . . . . . . . . . . . . . . . . . 34.68% (0.04%) 14.74% 14.12% 13.94%
Ratios/supplemental data
Net assets, end of period
(000 omitted) . . . . . . . . . . . . . . . . $534,342 $402,849 $431,638 $408,986 $394,338
Ratio of expenses to average
net assets . . . . . . . . . . . . . . . . . . 1.19% 1.26% 1.22% 1.23% 1.23%
Ratio of net investment income to
average net assets . . . . . . . . . . . . . . 2.72% 2.88% 3.15% 3.44% 4.20%
Portfolio turnover . . . . . . . . . . . . . . . 81% 74% 119% 98% 67%
</TABLE>
- ------------------
(1) 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.
25
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Decatur Total Return Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DECATUR TOTAL DECATUR TOTAL DECATUR TOTAL
RETURN FUND RETURN FUND RETURN FUND
B CLASS C CLASS INSTITUTIONAL CLASS
------------------------ ------------- -----------------------------------
YEAR 9/6/94(1) 11/29/95(2) YEAR YEAR 7/26/93(3)
ENDED TO TO ENDED ENDED TO
11/30/95 11/30/94 11/30/95 11/30/95 11/30/94 11/30/93
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. . . . . . . . $12.31 $13.11 $15.61 $12.35 $14.40 $14.10
Income from investment operations:
Net investment income . . . . . . . . . . . . 0.30 0.12 none 0.47 0.43 0.15
Net realized and unrealized gain (loss) from
security transactions . . . . . . . . . . . 3.67 (0.82) none 3.65 (0.37) 0.25
------ ------ ------ ------ ------ ------
Total from investment operations . . . . . . . 3.97 (0.70) none 4.12 0.06 0.40
Less distributions:
Dividends from net investment income . . . . . (0.30) (0.10) none (0.40) (0.45) (0.10)
Distributions from net realized gain from
security transactions . . . . . . . . . . . (0.42) none none (0.42) (1.66) none
------ ------ ------ ------ ------ ------
Total distributions . . . . . . . . . . . . . (0.72) (0.10) none (0.82) (2.11) (0.10)
------ ------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . $15.56 $12.31 $15.61 $15.65 $12.35 $14.40
====== ====== ====== ====== ====== ======
Total return(4) . . . . . . . . . . . . . . . . . . 33.79% (5.37%) 5 35.13% 0.19% 14.89%
Ratios/supplemental data
Net assets, end of period (000 omitted) . . . $14,745 $1,768 $5 $11,520 $1,376 $1,181
Ratio of expenses to average net assets . . . 1.89% 1.96% 5 0.89% 0.96% 0.92%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . 2.02% 2.18% 5 3.02% 3.18% 3.45%
Portfolio turnover . . . . . . . . . . . . . 81% 74% 5 81% 74% 119%
</TABLE>
- ------------------
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Date of initial public offering.
(3) Date of initial public offering; ratios and total return have been
annualized.
(4) Does not include the contingent deferred sales charge which varies from
1% - 4% depending upon the holding period for Decatur Total Return Fund B
Class.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management
believes that such ratios and return for this relatively short period are
not meaningful.
26
<PAGE> 14
DELAWARE GROUP DECATUR FUND, INC.
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
DELAWARE GROUP DECATUR FUND, INC. - DECATUR INCOME FUND
DELAWARE GROUP DECATUR FUND, INC. - DECATUR TOTAL RETURN FUND
We have audited the accompanying statements of net assets of Delaware Group
Decatur Fund, Inc. - Decatur Income Fund and Delaware Group Decatur Fund, Inc.
- - Decatur Total Return Fund, as of November 30, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, 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 and Delaware Group
Decatur Fund, Inc. - Decatur Total Return Fund at November 30, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
January 5, 1996
27
