<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 2-10765
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | X |
Pre-Effective Amendment No. | |
---
Post-Effective Amendment No. 103 | X |
---
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | X |
Amendment No. 103
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DELAWARE GROUP DELAWARE FUND, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 751-2923
--------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: December 29, 1995
-----------------
It is proposed that this filing will become effective:
_______ immediately upon filing pursuant to paragraph (b)
___X___ on December 29, 1995 pursuant to paragraph (b)
_______ 60 days after filing pursuant to paragraph (a)(1)
_______ on (date) pursuant to paragraph (a)(1)
_______ 75 days after filing pursuant to paragraph (a)(2)
_______ on (date) pursuant to paragraph (a)(2) of Rule 485.
Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year will be filed on or about December 29, 1995.
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
--- C O N T E N T S ---
This Post-Effective Amendment No. 103 to Registration File No. 2-10765 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>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
CROSS-REFERENCE SHEET*
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
A Classes/ Institutional
B Classes/ Classes
C Classes
<S> <C> <C> <C>
1 Cover Page...................................................... Cover Cover
2 Synopsis........................................................ Synopsis, Synopsis,
Summary of Summary of
Expenses Expenses
3 Condensed Financial Information................................. Financial Financial
Highlights Highlights
4 General Description of Registrant .............................. Investment Investment
Objectives and Objectives and
Policies, Shares Policies, Shares
5 Management of the Fund ......................................... Management of Management of
the Fund the Fund
6 Capital Stock and Other Securities ............................. Delaware Dividends and
Difference, Distributions
Dividends and Taxes,
Distributions, Shares
Taxes, Shares
7 Purchase of Securities Being Offered............................ Cover, Cover,
Buying Shares, Buying Shares,
Calculation of Calculation of
Offering Price Net Asset
and Net Asset Value Per Share,
Value Per Share, Management of
Management of the Fund
the Fund
8 Redemption or Repurchase........................................ Buying Shares, Buying Shares,
Redemption Redemption
and Exchange and Exchange
9 Pending Legal Proceedings....................................... None None
</TABLE>
* This filing relates to the Delaware Fund A Class, Delaware Fund B Class,
Delaware Fund C Class and Delaware Fund Institutional Class of Delaware Fund,
and the Devon Fund A Class (formerly Dividend Growth Fund A Class), Devon
Fund B Class (formerly Dividend Growth Fund B Class), Devon Fund C Class and
Devon Fund Institutional Class (formerly Dividend Growth Fund Institutional
Class) of Devon Fund (formerly Dividend Growth Fund). There is one prospectus
that describes the Class A, B and C Shares of each Series and one prospectus
which describes the Institutional Class of each Series. The two Series have a
common Part B and Part C.
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware 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 Restrictions
and Policies
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
Agreements, 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
20 Tax Status...................................................... Taxes,
21 Underwriters ................................................... Purchasing Shares
22 Calculation of Performance Data................................. Performance Information
23 Financial Statements............................................ Financial Statements
</TABLE>
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
CROSS-REFERENCE SHEET
PART C
<TABLE>
<CAPTION>
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>
----------------------------
DELAWARE FUND
DEVON FUND
----------------------------
A CLASS
----------------------------
B CLASS
----------------------------
C CLASS
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 P R O S P E C T U S
800-523-4640.
----------------------------
DECEMBER 29, 1995
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 DELAWARE
Chemical Bank GROUP
450 West 33rd Street --------
New York, NY 10001
<PAGE>
DELAWARE FUND PROSPECTUS
DEVON FUND DECEMBER 29, 1995
(FORMERLY DIVIDEND GROWTH FUND)
A CLASS SHARES
B CLASS SHARES
C CLASS SHARES
----------------------------------------------
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
Delaware Group Delaware Fund, Inc. (the "Fund") is a
professionally-managed mutual fund of the series type. This Prospectus describes
the shares of the Common Stock series, which is known as and does business as
the Delaware Fund series ("Delaware Fund"), and the Devon Fund series ("Devon
Fund") (collectively, the "Series"). Delaware Fund's objective is to seek a
balance of capital appreciation, income and preservation of capital. Devon
Fund's objective is to seek current income and capital appreciation.
Delaware Fund offers the Delaware Fund A Class ("Class A Shares"),
Delaware Fund B Class ("Class B Shares") and Delaware Fund C Class ("Class C
Shares") and Devon Fund offers the Devon Fund A Class ("Class A Shares"), Devon
Fund B Class ("Class B Shares") and Devon Fund C Class ("Class C Shares") (such
classes, individually, a "Class" and collectively, the "Classes"). Devon Fund A
Class was formerly known as Dividend Growth Fund A Class and Devon Fund B Class
was formerly known as Dividend Growth Fund B Class.
Class A Shares may be purchased at the public offering price, which is
equal to the next determined net asset value per share, plus a front-end sales
charge. Class B Shares and Class C Shares may be purchased at a price equal to
the next determined net asset value per share. Class A Shares of each Series 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 of each Series 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 Buying 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, the length of time the investor expects to hold the
shares and other circumstances. See Buying Shares.
-1-
<PAGE>
This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. Part B of the Fund's registration statement, dated
December 29, 1995, 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. Each Series' financial statements
appear in its Annual Report, which will accompany any response to requests for
Part B.
Delaware Fund also offers the Delaware Fund Institutional Class, and
Devon Fund also offers the Devon Fund Institutional Class. Those classes are
available for purchase only by certain investors. A prospectus for the Delaware
Fund Institutional Class and the Devon Fund Institutional Class can be obtained
by writing to Delaware Distributors, L.P. at the above address or by calling the
above number.
TABLE OF CONTENTS
Cover Page
Synopsis
Summary of Expenses
Financial Highlights
Investment Objectives and Policies
Investment Strategy
Suitability
The Delaware Difference
Plans and Services
Retirement Planning
Buying Shares
Redemption and Exchange
Dividends and Distributions
Taxes
Calculation of Offering Price and
Net Asset Value Per Share
Management of the Fund
Appendix A - Investment Illustrations
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.
-2-
<PAGE>
SYNOPSIS
Capitalization
The Fund offers the Delaware Fund series, consisting of the Delaware
Fund A Class, the Delaware Fund B Class, the Delaware Fund C Class and the
Delaware Fund Institutional Class of shares, as well as the Devon Fund series,
consisting of the Devon Fund A Class, the Devon Fund B Class, the Devon Fund C
Class and the Devon Fund Institutional Class of shares. The Fund has a present
authorized capitalization of five hundred million shares of capital stock with a
$1.00 par value per share. One hundred million shares of that stock have been
allocated to the Delaware Fund A Class, twenty-five million shares to the
Delaware Fund B Class, twenty-five million shares to the Delaware Fund C Class,
fifty million shares to the Delaware Fund Institutional Class, fifty million
shares to the Devon Fund A Class, twenty-five million shares to the Devon Fund B
Class, twenty-five million shares to the Devon Fund C Class and twenty-five
million shares to the Devon Fund Institutional Class. See Shares under
Management of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager or its affiliate, Delaware International
Advisers Ltd., also manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Management of the Fund.
Sales Charges
The price of each of the Class A Shares includes a maximum front-end
sales charge of 4.75% of the offering price, which, based on the net asset value
per share of the Class A Shares as of the end of the Fund's most recent fiscal
year, is equivalent to 4.96% of the amount invested for the Delaware Fund A
Class and 5.02% of the amount invested for the Devon Fund A Class. The sales
charge is reduced on certain transactions of at least $100,000 but under
$1,000,000. For purchases of $1,000,000 or more, the front-end sales charge is
eliminated. Class A Shares are subject to annual 12b-1 Plan expenses.
The price of each of the Class B Shares is equal to the net asset value
per share. Class B Shares are subject to a CDSC of: (i) 4% if shares are
redeemed within two years of purchase; (ii) 3% if shares are redeemed during the
third or fourth year following purchase; (iii) 2% if shares are redeemed during
the fifth year following purchase; and (iv) 1% if shares are redeemed during the
sixth year following purchase. Class B Shares are subject to annual 12b-1 Plan
expenses for approximately eight years after purchase. See Automatic Conversion
of Class B Shares under Buying Shares.
The price of the Class C Shares is equal to the net asset value per
share. Class C Shares are subject to a CDSC of 1% if shares are redeemed within
12 months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses
for the life of the investment.
See Buying Shares and Distribution (12b-1) and Service under Management
of the Fund.
Purchase Amounts
Generally, the minimum initial investment is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent investments generally must be at
least $100. Class B Shares are 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
-3-
<PAGE>
subject to lower annual 12b-1 Plan expenses than Class B Shares and Class C
Shares and generally are not subject to a CDSC. The minimum and maximum purchase
amounts for retirement plans may vary. See Buying Shares.
Investment Objectives
The objective of the Delaware Fund is to seek a balance of capital
appreciation, income and preservation of capital. The objective of the Devon
Fund is to seek current income and capital appreciation. For further details,
see Investment Objectives and Policies.
Risk Factors and Special Considerations
The Delaware Fund typically invests a portion of its assets in
mortgage-backed and asset-backed securities (commonly considered to be
"derivative securities"), which may present greater risks than other types of
portfolio securities, and the investor should review the descriptions of these
risks in this Prospectus. See Mortgage-Backed Securities and Asset-Backed
Securities under Investment Objectives and Policies.
The Devon Fund may enter into options and futures transactions for
hedging purposes to counterbalance portfolio volatility. While the Devon Fund
does not engage in options and futures for speculative purposes, there are risks
that result from use of these instruments by the Series, and the investor should
review the descriptions of these risks in this Prospectus. See Futures Contracts
and Options under Investment Objectives and Policies.
Open-End Investment Company
The Fund, which was organized as a Maryland corporation on March 4,
1983 and previously organized as a Delaware corporation in 1937, is an open-end
management investment company and each Series' portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
See Shares under Management of the Fund.
Investment Management Fees
The Manager furnishes investment management services to the Fund,
subject to the supervision and direction of the Board of Directors. Under the
Investment Management Agreements, the annual compensation paid to the Manager is
equal to: for Delaware Fund, .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 that Series'
proportionate share of all directors' fees paid to the unaffiliated directors of
the Fund; and, for Devon Fund, .60% on the first $500 million of average daily
net assets and .50% on the average daily net assets in excess of $500 million.
See Management of the Fund.
Redemption and Exchange
Class A Shares of the Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Fund nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares purchased
at net asset value which may be subject to a contingent deferred sales charge if
such purchases triggered the payment of a dealer's commission. See Front-End
Sales Charge Alternative - Class A Shares under Buying Shares. Class B and Class
C Shares may be redeemed or exchanged at the net asset value calculated after
receipt of the redemption or exchange request subject, in the case of
redemptions, to any applicable CDSC. Neither the Fund nor the Distributor
assesses any charges other than the CDSC for redemptions or exchanges of Class B
or Class C Shares. There are certain limitations on an investor's ability to
exchange shares between the various classes of shares that are offered. See
Redemption and Exchange.
-4-
<PAGE>
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to each Series' Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
Delaware Fund
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)....................... 4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)............. None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, whichever is lower).................. None* 4.00%* 1.00%*
Redemption Fees........................................... None** None** None**
</TABLE>
<TABLE>
<CAPTION>
Annual Operating Expenses Delaware Fund
(as a percentage of average Class A Class B Class C
daily net assets) Shares Shares Shares
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees........................................... 0.52% 0.52% 0.52%
12b-1 Expenses (including service fees) .................. 0.18%***/+ 1.00%*** 1.00%***
Other Operating Expenses.................................. 0.27% 0.27% 0.27%++
----- ----- -----
Total Operating Expenses............................. 0.97% 1.79% 1.79%
===== ===== =====
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Devon Fund
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)....................... 4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)............. None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, whichever is lower).................. None* 4.00%* 1.00%*
Redemption Fees........................................... None** None** None**
</TABLE>
<TABLE>
<CAPTION>
Annual Operating Expenses Devon Fund
(as a percentage of average Class A Class B Class C
daily net assets) Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees (after voluntary waivers).................. 0.00%**** 0.00%**** 0.00%****
12b-1 Expenses (including service fees).................... 0.30%*** 1.00%*** 1.00%***
Other Operating Expenses (after voluntary waivers)......... 0.95%**** 0.95%**** 0.95%****++
----- ----- -----
Total Operating Expenses.............................. 1.25%**** 1.95%**** 1.95%****
===== ===== =====
</TABLE>
The purpose of these 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 shares are redeemed within 12
months of purchase. See Contingent Deferred Sales Charge for Certain Purchases
of Class A Shares Made at Net Asset Value under Redemption and Exchange;
Deferred Sales Charge Alternative - Class B Shares and Level Sales Charge
Alternative - Class C Shares under Buying Shares.
-6-
<PAGE>
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
***Class A Shares, Class B Shares and Class C Shares of each Series are
subject to separate 12b-1 Plans. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted by rules of
the National Association of Securities Dealers, Inc. (the "NASD"). See
Distribution (12b-1) and Service under Management of the Fund.
****The Manager had elected voluntarily to waive that portion, if any,
of the annual management fees payable by the Devon Fund and to reimburse the
Series to the extent necessary to ensure that the "Total Operating Expenses" of
this Series did not exceed .95% (exclusive of taxes, interest, brokerage
commissions, extraordinary expenses and 12b-1 expenses) during the commencement
of the public offering of the Series through December 31, 1994. This waiver has
been extended through June 30, 1996. If the voluntary expense waivers were not
in effect, it is estimated that the "Total Operating Expenses," as a percentage
of average daily net assets, would be 2.29%, 2.99% and 2.99% for the Devon Fund
A Class, Devon Fund B Class and Devon Fund C Class, respectively, reflecting
Management Fees of 0.60%.
+As the portion of Fund assets attributable to the Delaware Fund A
Class of shares acquired after June 1, 1992 increases, this figure may increase
or decrease somewhat pursuant to the current 12b-1 fee calculation approved by
the Board of Directors. See Distribution (12b-1) and Service under Management of
the Fund.
++"Other Operating Expenses" for Delaware C Class are estimates based
on actual expenses incurred by Delaware Fund A Class for the fiscal year ended
October 31, 1995. "Other Operating Expenses" for the Devon Fund C Class are
estimates based on actual expenses incurred by Devon Fund A Class during the
fiscal year ended October 31, 1995, after giving effect to the voluntary expense
waiver.
See Delaware Fund Institutional Class and Devon Fund Institutional
Class under Buying Shares for expense information for 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.
DELAWARE FUND
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A Shares $57(1) $77 $99 $161
Class B Shares $58 $86 $117 $189(2)
Class C Shares $28 $56 $97 $211
-7-
<PAGE>
DEVON FUND
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A Shares $60(1) $85 $113 $191
Class B Shares $60 $91 $125 $209(2)
Class C Shares $30 $61 $105 $227
An investor would pay the following expenses on the same $1,000
investment, assuming no redemption at the end of the period:
DELAWARE FUND
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A Shares $57 $77 $99 $161
Class B Shares $18 $56 $97 $189(2)
Class C Shares $18 $56 $97 $211
DEVON FUND
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A Shares $60 $85 $113 $191
Class B Shares $20 $61 $105 $209(2)
Class C Shares $20 $61 $105 $227
(1) Generally, the Fund does not assess a redemption charge upon redemption
of Class A Shares. Under certain circumstances, however, a Limited
CDSC, which has not been reflected in this calculation, may be imposed
on certain redemptions within 12 months of purchase. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at
Net Asset Value under Redemption and Exchange.
(2) At the end of approximately eight years after purchase, Class B Shares
of a Series will be automatically converted into Class A Shares of that
Series. The example above assumes conversion of Class B Shares at the
end of the eighth year. However, the conversion may occur as late as
three months after the eighth anniversary of purchase, during which
time the higher 12b-1 Plan fees payable by Class B Shares will continue
to be assessed. Information for the ninth and tenth years reflects
expenses of the Class A Shares. See Automatic Conversion of Class B
Shares under Buying Shares for a description of the automatic
conversion feature.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
-8-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Delaware Fund, Inc. - Delaware Fund and Delaware Group Delaware
Fund, Inc. - Devon 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 reports of Ernst & Young LLP covering such financial
information and highlights, all of which are incorporated by reference into Part
B. Further information about the Series' performance is contained in their
Annual Reports to shareholders. A copy of each Series' Annual Report (including
the report of Ernst & Young LLP) may be obtained from the Fund upon request at
no charge. Information regarding Class C Shares has not been included in these
tables because such shares were not offered to the public prior to the close of
the Fund's fiscal year.
- --------------------------------------------------------------------------------
-9-
<PAGE>
<TABLE>
<CAPTION>
Delaware Fund A Class
-------------------------------------------------------------
Year Ended
10/31/95(1) 10/31/94(1) 10/31/93(1) 10/31/92(1) 10/31/91
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......................... $18.000 $19.430 $18.720 $18.810 $16.190
Income From Investment Operations
- ---------------------------------
Net Investment Income........................................ 0.664 0.615 0.631 0.660 0.757
Net Gains (Losses) on Securities
(both realized and unrealized).................... 2.156 (0.285) 1.509 1.490 3.033
------- ------- ------- ------- -------
Total From Investment Operations....................... 2.820 0.330 2.140 2.150 3.790
------- ------- ------- ------- -------
Less Distributions
- ------------------
Dividends (from net investment income)....................... (0.630) (0.600) (0.660) (0.700) (0.880)
Distributions (from capital gains)........................... (0.250) (1.160) (0.770) (1.540) (0.290)
Returns of Capital........................................... none none none none none
------- ------- ------- ------- -------
Total Distributions.................................... (0.880) (1.760) (1.430) (2.240) (1.170)
------- ------- ------- ------- -------
Net Asset Value, End of Period............................... $19.940 $18.000 $19.430 $18.720 $18.810
======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------------------
Total Return(2) ............................................. 16.26% 1.80% 11.91% 12.37% 24.32%
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted).................... $493,243 $456,074 $507,528 $487,343 $453,449
Ratio of Expenses to Average Daily Net Assets................ 0.97% 0.97% 0.89% 0.79% 0.71%
Ratio of Net Investment Income to Average Daily Net Assets... 3.55% 3.31% 3.27% 3.64% 4.29%
Portfolio Turnover Rate...................................... 94% 142% 160% 144% 212%
</TABLE>
<TABLE>
<CAPTION>
Delaware Fund A Class
----------------------------------------------------------------
Year Ended
10/31/90 10/31/89 10/31/88 10/31/87 10/31/86
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......................... $17.480 $15.250 $16.850 $23.200 $20.860
Income From Investment Operations
- ---------------------------------
Net Investment Income........................................ 0.856 0.796 0.551 0.331 0.554
Net Gains (Losses) on Securities
(both realized and unrealized).................... (1.366) 2.384 2.259 (1.971) 4.486
------- ------- ------- ------- -------
Total From Investment Operations....................... (0.510) 3.180 2.810 (1.640) 5.040
------- ------- ------- ------- -------
Less Distributions
- ------------------
Dividends (from net investment income)....................... (0.780) (0.950) (0.320) (0.400) (0.700)
Distributions (from capital gains)........................... none none (4.090) (4.310) (2.000)
Returns of Capital........................................... none none none none none
------- ------- ------- ------- -------
Total Distributions.................................... (0.780) (0.950) (4.410) (4.710) (2.700)
------- ------- ------- ------- -------
Net Asset Value, End of Period............................... $16.190 $17.480 $15.250 $16.850 $23.200
======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------------------
Total Return(2) ............................................. (3.17%) 21.66% 22.03% (9.14%) 26.85%
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted).................... $349,873 $361,625 $328,650 $320,854 $405,856
Ratio of Expenses to Average Daily Net Assets................ 0.75% 0.76% 0.77% 0.73% 0.69%
Ratio of Net Investment Income to Average Daily Net Assets... 4.99% 4.73% 4.01% 1.64% 2.53%
Portfolio Turnover Rate...................................... 147% 129% 180% 205% 104%
</TABLE>
- --------------
(1) Reflects 12b-1 distribution expenses beginning June 1, 1992.
(2) Does not reflect any maximum sales charge that is or was in effect nor the
1% Limited CDSC that would apply in the event of certain redemptions
within 12 months of purchase. See Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value.
<PAGE>
Delaware Fund B Class
Period
Year 9/6/94(1)
Ended through
10/31/95 10/31/94
Net Asset Value, Beginning of Period............ $17.980 $18.340
Income From Investment Operations
- ---------------------------------
Net Investment Income........................... 0.567 0.070
Net Gains (Losses) on Securities
(both realized and unrealized)....... 2.113 (0.280)
----- -------
Total From Investment Operations.......... 2.680 (0.210)
----- -------
Less Distributions
- ------------------
Dividends (from net investment income).......... (0.510) (0.150)
Distributions (from capital gains).............. (0.250) none
Returns of Capital.............................. none none
------- -------
Total Distributions....................... (0.760) (0.150)
------- -------
Net Asset Value, End of Period.................. $19.900 $17.980
======= =======
- -------------------------------------------------------------------------------
Total Return(2) ................................ 15.36% (1.14%)
- ---------------
- -------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)....... $3,383 $568
Ratio of Expenses to Average Daily Net Assets .. 1.79% 1.81%
Ratio of Net Investment Income to Average Daily
Net Asset ................................... 2.73% 2.47%
Portfolio Turnover Rate......................... 94% 142%
- -------------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) Does not include any CDSC which varies from 1% - 4%, depending upon the
holding period for Delaware Fund B Class.
<PAGE>
<TABLE>
<CAPTION>
Devon Fund A Class
Period
Year 12/29/93(1)
Ended through
10/31/95 10/31/94
<S> <C> <C>
Net Asset Value, Beginning of Period ........................... $10.830 $10.000
Income From Investment Operations
- ---------------------------------
Net Investment Income(5) ....................................... 0.207 0.136
Net Gains (Losses) on Securities
(both realized and unrealized) ............................ 2.053 0.784
------- --------
Total From Investment Operations .......................... 2.260 0.920
------- --------
Less Distributions
- ------------------
Dividends (from net investment income)......................... (0.220) (0.090)
Distributions (from capital gains)............................. (0.320) none
Returns of Capital............................................. none none
------- --------
Total Distributions....................................... (0.540) (0.090)
------- --------
Net Asset Value, End of Period ................................ $12.550 $10.830
======= ========
- --------------------------------------------------------------------------------------------
Total Return(2) ............................................... 21.98% 11.09%
- ---------------
- --------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted) ..................... $8,846 $4,600
Ratio of Expenses to Average Daily Net Assets.................. 1.25%(3) 1.25%(3)
Ratio of Net Investment Income to Average Daily Net Assets..... 1.82%(4) 1.96%(4)
Portfolio Turnover Rate ....................................... 99% 180%
</TABLE>
- -----------------
(1) Date of initial sale of Devon Fund A Class; this class was formerly known
as Dividend Growth Fund A Class. Ratios and total return have been
annualized.
(2) Total return does not include any maximum sales charge that is or was in
effect nor the 1% Limited CDSC that would apply in the event of certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Purchases of Class A Shares Made at Net Asset Value.
Total return reflects the reflects expense limitation referenced in Notes
3 and 4.
(3) Ratio of expenses to average daily net assets prior to expense limitation
was 2.29% for the year ended October 31, 1995 and 3.26% for the period
ended October 31, 1994.
(4) Ratio of net investment income (loss) to average daily net assets prior to
expense limitation was 0.78% for the year ended October 31, 1995 and
(0.05%) for the period ended October 31, 1994.
(5) 1995 per share information was based on the average shares outstanding
method.
<PAGE>
<TABLE>
<CAPTION>
Devon Fund B Class
Period
Year 9/6/94(1)
Ended through
10/31/95 10/31/94
<S> <C> <C>
Net Asset Value, Beginning of Period.............................. $10.820 $10.900
Income From Investment Operations
- ---------------------------------
Net Investment Income(5).......................................... 0.127 0.027
Net Gains (Losses) on Securities
(both realized and unrealized)......................... 2.053 (0.077)
----- -------
Total From Investment Operations............................ 2.180 (0.050)
----- -------
Less Distributions
- ------------------
Dividends (from net investment income)............................ (0.180) (0.030)
Distributions (from capital gains)................................ (0.320) none
Returns of Capital................................................ none none
------ -------
Total Distributions............................................... (0.500) (0.030)
------- -------
Net Asset Value, End of Period.................................... $12.500 $10.820
======= =======
- ----------------------------------------------------------------------------------------------
Total Return(2) .................................................. 21.09% (0.46%)
- ---------------
- ----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)......................... $863 $115
Ratio of Expenses to Average Daily Net Assets..................... 1.95%(3) 1.95%(3)
Ratio of Net Investment Income to Average Daily Net Assets........ 1.12%(4) 1.26%(4)
Portfolio Turnover Rate........................................... 99% 180%
</TABLE>
- ----------------
(1) Date of initial sale of Devon Fund B Class; this class was formerly known
as Dividend Growth Fund B Class. Ratios have been annualized but total
return has not been annualized.
(2) Total return does not include any CDSC which varies from 1%-4%, depending
upon the holding period for Devon Fund B Class. Total return reflects the
expense limitation referenced in Notes 3 and 4.
(3) Ratio of expenses to average daily net assets prior to expense limitation
was 2.99% for the year ended October 31, 1995 and 3.96% for the period
ended October 31, 1994.
(4) Ratio of net investment income (loss) to average daily net assets prior to
expense limitation was 0.08% for the year ended October 31, 1995 and
(0.75%) for the period ended October 31, 1994.
(5) 1995 per share information was based on the average shares outstanding
method.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The objective of the Delaware Fund is to seek a balance of capital
appreciation, income and preservation of capital.
The objective of the Devon Fund is to seek current income and capital
appreciation.
Although each Series will constantly strive to attain its objective,
there can be no assurance that it will be obtained. The objective of each Series
cannot be changed without shareholder approval.
INVESTMENT STRATEGY
Delaware Fund - As a "balanced" fund, the Delaware Fund will generally
invest at least 25% of its assets in fixed income securities, including U.S.
Government securities and corporate bonds. The remainder of the Series will be
allocated to equity securities principally, including convertible securities,
and also to cash and cash equivalents. A portion of the Series' investment in
certain convertible securities may be deemed fixed income in nature for purposes
of this 25% fixed income allocation. The Series may also invest in foreign
securities.
The Series uses a dividend-oriented valuation strategy to select
individual securities in which it will invest. In seeking capital appreciation,
the Series invests primarily in common stocks of established companies believed
to have a potential for long-term capital growth. In seeking current income and
preservation of capital, in addition to capital appreciation, the Series invests
in various types of fixed income securities, including U.S. Government and
government agency securities and corporate bonds. The Series generally invests
in bonds that are rated in the top four grades by a nationally-recognized rating
agency (e.g., Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Rating Group ("S&P")) at the time of purchase, or, if unrated, are determined to
be equivalent to the top four grades in the judgment of the Manager. The fourth
grade is considered medium grade and may have some speculative characteristics.
Typically, the maturity of the bonds will range between five and 30 years. The
Series may invest not more than 5% of its assets in convertible debentures rated
below investment grade.
The Series will analyze existing and expected economic and market
conditions and seek to identify those market sectors or individual securities
that are expected to benefit from those conditions. Its appraisal of these
economic conditions will determine the types of securities it will hold and the
degree of investment emphasis placed upon capital appreciation and income.
Devon Fund - The Devon Fund will seek to achieve its objective by
investing primarily in income-producing common stocks, with a focus on common
stocks that the Manager believes have the potential for above average dividend
increases over time. Under normal circumstances, the Series will generally
invest at least 65% of its total assets in dividend paying common stocks.
In selecting stocks for the Series, the Manager will focus primarily on
dividend paying common stocks issued by companies with market capitalizations in
excess of $100 million, but is not precluded from purchasing shares of companies
with market capitalizations of less than $100 million. In seeking stocks with
potential for above average dividend increases, the Manager will consider such
factors as the historical growth rate of a dividend, the frequency of prior
dividend increases, the issuing company's potential to generate cash flows, and
the price/earnings multiple of the stock relative to the market. The Manager
will generally avoid stocks that it believes are overvalued and may select
<PAGE>
stocks with current dividend yields that are lower than the current yield of the
S&P 500 Stock Index in exchange for anticipated dividend growth.
While management believes that the Series' objective may best be
attained by investing in common stocks, the Series may also invest in other
securities including, but not limited to, convertible and preferred securities,
rights and warrants to purchase common stock, and various types of fixed income
securities, such as U.S. Government and government agency securities, corporate
debt securities, and bank obligations, and may also engage in futures
transactions. The Series may invest in foreign securities.
Mortgage-Backed Securities--Each Series may invest in mortgage-backed
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or government sponsored corporations. Each Series also may
invest in securities issued by certain private, non-government corporations,
such as financial institutions, if the securities are fully collateralized at
the time of issuance by securities or certificates issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Two principal types of
mortgage-backed securities are collateralized mortgage obligations (CMOs) and
real estate mortgage investment conduits (REMICs).
CMOs are debt securities issued by U.S. Government agencies or by
financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in sequence
as the underlying mortgages are repaid. Prepayment may shorten the stated
maturity of the obligation and can result in a loss of premium, if any has been
paid. Certain of these securities may have variable or floating interest rates
and others may be stripped (securities which provide only the principal or
interest feature of the underlying security).
REMICs, which were authorized under the Tax-Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. The Series will
invest in such private-backed securities only if they are 100% collateralized at
the time of issuance by securities issued or guaranteed by the U.S. Government,
its agencies, or instrumentalities. The Series currently invest in
privately-issued CMOs and REMICs only if they are rated at the time of purchase
in the four highest grades by a nationally-recognized rating agency.
Asset-Backed Securities--Each Series may also invest in securities
which are backed by assets such as receivables on home equity and credit loans,
and receivables regarding automobile, mobile home and recreational vehicle
loans, wholesale dealer floor plans and leases. All such securities must be
rated in the highest rating category by a reputable credit rating agency (e.g.,
AAA by S&P's or Aaa by Moody's). Such receivables are securitized in either a
pass-through or a pay-through structure. Pass-through securities provide
investors with an income stream consisting of both principal and interest
payments in respect of the receivables in the underlying pool. Pay-through
asset-backed securities are debt obligations issued usually by a special purpose
entity, which are collateralized by the various receivables and in which the
payments on the underlying receivables provide the funds to pay the debt service
<PAGE>
on the debt obligations issued. The Series may invest in these and other types
of asset-backed securities that may be developed in the future. It is each
Series' current policy to limit asset-backed investments to those represented by
interests in credit card receivables, wholesale dealer floor plans, home equity
loans and automobile loans.
Due to the shorter maturity of the collateral backing such securities,
there is less of a risk of substantial prepayment than with mortgage-backed
securities. Such asset-backed securities do, however, involve certain risks not
associated with mortgage-backed securities, including the risk that security
interests cannot be adequately or in many cases, ever, established. In addition,
with respect to credit card receivables, a number of state and federal consumer
credit laws give debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the outstanding balance. In the case of automobile
receivables, there is a risk that the holders may not have either a proper or
first security interest in all of the obligations backing such receivables due
to the large number of vehicles involved in a typical issuance and technical
requirements under state laws. Therefore, recoveries on repossessed collateral
may not always be available to support payments on the securities. For further
discussion concerning the risk of investing in such asset-backed securities, see
Part B.
Real Estate Investment Trusts--Each Series may invest in shares or
convertible bonds issued by real estate investment trusts ("REITS"). REITS
invest primarily in income producing real estate as well as real estate related
loans or interests. A REIT is not taxed on income distributed to shareholders if
it complies with several requirements relating to its organization, ownership,
assets and income, and a requirement that it distribute to its shareholders at
least 95% of its taxable income (other than net capital gains) for each taxable
year. Each Series anticipates investing only in REITS that invest the majority
of their assets directly in real property and derive their income primarily from
rents, which are known as "equity REITS." Equity REITS can also realize capital
gains by selling properties that have appreciated in value.
Restricted and Illiquid Securities--Each Series may purchase privately
placed securities the resale of which is restricted under applicable securities
laws. Most of the privately placed securities acquired by the Series will be
eligible for resale by the Series 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. Each Series may invest not more than 10% of
its assets in illiquid securities. While maintaining oversight, the Board of
Directors of the Fund has delegated to the Manager the day-to-day function of
determining whether individual Rule 144A Securities are liquid for purposes of
each Series' 10% limitation on investments in illiquid securities. The Devon
Fund currently intends to limit its investments in restricted securities,
excluding Rule 144A Securities, to not more than 5% of its assets.
The Board has instructed the Manager to consider the following factors
in determining the liquidity of a Rule 144A Security: (i) the frequency of
trades and trading volume for the security; (ii) whether at least three dealers
are willing to purchase or sell the security and the number of potential
purchasers; (iii) whether at least two dealers are making a market in the
security; (iv) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer).
<PAGE>
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, a
Series' holdings of illiquid securities exceed the Series' limit noted above on
investments in such securities, the Manager will determine what action to take
to ensure that the Series continues to adhere to such limitation.
Convertible Securities--Each Series may invest in convertible
securities, including corporate debentures, bonds, notes and preferred stocks
that may be converted into or exchanged for common stock. These securities are
generally convertible either at a stated price or a stated rate (that is, for a
specific number of shares of common stock or other security). As with other
fixed income securities, the price of a convertible security to some extent
varies inversely with interest rates. While providing a fixed income stream, a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. Each Series may invest not more than 5% of
its assets in convertible debentures that are rated below investment grade or
are unrated but are determined by the Manager to be of comparable quality. For a
discussion concerning the risks of investing in such securities, see Part B.
Foreign Securities and ADRs--Each Series may invest up to 5% of its
assets in foreign securities. Each Series may also invest without limitation in
sponsored and unsponsored American Depository Receipts ("ADRs") that are
actively traded in the United States. ADRs are receipts typically issued by a
U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. "Sponsored" ADRs are issued jointly by the
issuer of the underlying security and a depository, and "unsponsored" ADRs are
issued without the participation of the issuer of the deposited security.
Holders of unsponsored ADRs generally bear all the costs of such facilities and
the depository of an unsponsored ADR facility frequently is under no obligation
to distribute shareholder communications received from the issuer of the
deposited security or to pass through voting rights to the holders of such
receipts in respect of the deposited securities. Therefore, there may not be a
correlation between information concerning the issuer of the security and the
market value of an unsponsored ADR.
Foreign markets may be more volatile than U.S. markets, and investments
in foreign securities involve sovereign risks in addition to the normal risks
associated with U.S. 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 control regulations apart from market fluctuations. Each
Series may also experience delays in foreign securities settlement.
Each Series will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions.
The Fund's Custodian for its foreign securities is Morgan Guaranty
Trust Company of New York, located at 60 Wall Street, New York, NY 10260.
<PAGE>
Futures Contracts--The Devon Fund may enter into futures contracts on
stocks and stock indices, and purchase or sell options on stock index futures
and stock indices. These activities will not be entered into for speculative
purposes, but rather for hedging purposes and to facilitate the ability to
quickly deploy into the stock market the Series' positions in cash, short-term
debt securities and other money market instruments, at times when the Series'
assets are not fully invested in equity securities. Such positions will
generally be eliminated when it becomes possible to invest in securities that
are appropriate for the Series.
A futures contract is a bilateral agreement providing for the purchase
and sale of a specified type and amount of a financial instrument, or for the
making and acceptance of a cash settlement, at a stated time in the future for a
fixed price. By its terms, a futures contract provides for a specified
settlement date on which the securities underlying the contract are delivered,
or in the case of securities index futures contracts, the difference between the
price at which the contract was entered into and the contract's closing value is
settled between the purchaser and seller in cash. Futures contracts differ from
options in that they are bilateral agreements, with both the purchaser and the
seller equally obligated to complete the transaction. In addition, futures
contracts call for settlement only on the expiration date, and cannot be
"exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalents, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin" as a good faith deposit. This
amount is generally maintained in a segregated account at the custodian bank.
Subsequent payments to and from the broker, referred to as "variation margin,"
are made on a daily basis as the value of the index or instrument underlying the
futures contract fluctuates, making positions in the futures contract more or
less valuable, a process known as "marking to the market."
The Series may also purchase and write options on the types of futures
contracts in which the Series may invest, and enter into related closing
transactions. Options on futures are similar to options on securities, as
described below, except that options on futures give the purchaser the right, in
return for the premium paid, to assume a position in a futures contract, rather
than to actually purchase or sell the futures contract, at a specified exercise
price at any time during the period of the option. In the event that an option
written by the Series is exercised, the Series will be subject to all the risks
associated with the trading of futures contracts, such as payment of variation
margin deposits. In addition, the writer of an option on a futures contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.
At any time prior to the expiration of a futures contract, a trader may
elect to close out its position by taking an opposite position on the contract
market on which the position was entered into, subject to the availability of a
secondary market, which will operate to terminate the initial position.
Likewise, a position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to availability of a secondary market, which is the
purchase or sale of an option of the same series (i.e., the same exercise price
and expiration date) as the option previously purchased or sold. The Series may
realize a profit or a loss when closing out a futures contract or an option on a
futures contract.
<PAGE>
To the extent that interest or exchange rates or securities prices move
in an unexpected direction, the Series may not achieve the anticipated benefits
of investing in futures contracts and options thereon, or may realize a loss. To
the extent that the Series purchases an option on a futures contract and fails
to exercise the option prior to the exercise date, it will suffer a loss of the
premium paid. Further, the possible lack of a secondary market could prevent the
Series from closing out its positions relating to futures. See Part B for a
further discussion of this investment technique.
Options--The Devon Fund may write covered call options on individual
issues as well as write call options on stock indices. The Series may also
purchase put options on individual issues and on stock indices. The Manager will
employ these techniques in an attempt to protect appreciation attained, to
offset capital losses and to take advantage of the liquidity available in the
option markets. The ability to hedge effectively using options on stock indices
will depend, in part, on the correlation between the composition of the index
and the Series' portfolio as well as the price movement of individual
securities. The Series does not currently intend to write or purchase options on
stock indices.
While there is no limit on the amount of the Series' assets which may
be invested in covered call options, the Series will not invest more than 2% of
its net assets in put options. The Series will only use Exchange-traded options.
Call Options
Writing Covered Call Options--A covered call option obligates the
Series to sell one of its securities for an agreed price up to an agreed date.
When the Series writes a call, it receives a premium and agrees to sell the
callable securities to a purchaser of a corresponding call during the call
period (usually not more than nine months) at a fixed exercise price regardless
of market price changes during the call period. The advantage is that the Series
receives premium income for the limited purpose of offsetting the costs of
purchasing put options or offsetting any capital loss or decline in market value
of the security. However, if the Manager's forecast is wrong, the Series may not
fully participate in the market appreciation if the security's price rises.
Writing a Call Option on Stock Indices--Writing a call option on stock
indices is similar to the writing of a call option on an individual stock. Stock
indices used will include, but not be limited to, the S&P 500, the S&P 100 and
the S&P Over-The-Counter ("OTC") 250.
Put Options
Purchasing a Put Option--A put option gives the Devon Fund the right to
sell one of its securities for an agreed price up to an agreed date. The
advantage is that the Series can be protected should the market value of the
security decline. However, the Series must pay a premium for this right which
would be lost if the option is not exercised. The Series will, at all times
during which it holds a put option, own the security covered by such option.
Purchasing a Put Option on Stock Indices--Purchasing a protective put
option on stock indices is similar to the purchase of protective puts on an
individual stock. Indices used will include, but not be limited to, the S&P 500,
the S&P 100 and the S&P OTC 250.
Closing Transactions--Closing transactions essentially let the Series
offset a put option or covered call option prior to its exercise or expiration.
If the Series cannot effect a closing transaction, it may have to hold a
security it would otherwise sell or deliver a security it might want to hold.
<PAGE>
Repurchase Agreements--In order to invest its short-term cash reserves
or when in a temporary defensive posture, each Series may enter into repurchase
agreements with banks or broker/dealers deemed to be creditworthy by the
Manager, under guidelines approved by the Board of Directors. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Series)
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, thereby determining the yield during
the purchaser's holding period. Generally, repurchase agreements are of short
duration, often less than one week, but on occasion for longer periods. Not more
than 10% of a Series' assets may be invested in repurchase agreements of over
seven-days' maturity or other illiquid assets. Should an issuer of a repurchase
agreement fail to repurchase the underlying security, the loss to the Series, if
any, would be the difference between the repurchase price and the market value
of the security. Each Series will limit its investments in repurchase agreements
to those which the Manager under the guidelines of the Board of Directors
determines to present minimal credit risks and which are of high quality. In
addition, each Series must have collateral of at least 100% of the repurchase
price, including the portion representing such Series' yield under such
agreements which is monitored on a daily basis. Such collateral is held by the
Custodian in book entry form. Such agreements may be considered loans under the
1940 Act, but the Series consider repurchase agreements contracts for the
purchase and sale of securities, and each seeks to perfect a security interest
in the collateral securities so that it has the right to keep and dispose of the
underlying collateral in the event of default.
The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the Investment Company Act to
allow the Delaware Group funds jointly to invest cash balances. Each Series of
the Fund may invest cash balances in a joint repurchase agreement in accordance
with the terms of the Order and subject generally to the conditions described
above.
Portfolio Loan Transactions--Each Series may loan up to 25% of its
assets to qualified broker/dealers or institutional investors for their use
relating to short sales or other security transactions.
The major risk to which a Series would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, each Series will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
Other Investment Policies--Neither Series may concentrate investments
in any industry, which means that a Series may generally not invest more than
25% of its assets in any one industry.
In pursuing its investment objective, each Series may hold securities
for any period of time. For temporary, defensive purposes, each Series may hold
a substantial portion of its assets in cash, cash equivalents or short-term
obligations, including repurchase agreements. Each Series may also enter into
repurchase agreements to invest excess cash balances.
While each Series is permitted under certain circumstances to borrow
money, neither Series normally does so. A Series will not purchase investment
securities while it has any borrowings outstanding.
<PAGE>
Each Series may purchase securities on a when-issued or delayed
delivery basis. It is the current intention of each Series not to enter into
when-issued commitments exceeding in the aggregate 5% of the market value of the
Series' total assets less liabilities other than obligations created by these
commitments.
* * *
Part B provides more information on the Fund's investment restrictions
and policies, and includes Appendix A which describes security ratings.
SUITABILITY
Each Series may be suitable for investors interested in long-term
capital appreciation. Delaware Fund may be more suitable for investors wishing
to expose a portion of their assets to fixed income securities, while Devon Fund
may be more suitable for investors seeking a greater emphasis on common stocks
and securities convertible into common stocks. Investors in each Series should
be willing to accept the risks associated with investments in equity securities.
Investors in Delaware Fund and, to a lesser extent, investors in Devon Fund
should also be willing to accept the risks associated with investments in fixed
income securities. Net asset values may fluctuate in response to market
conditions and, as a result, neither Series is appropriate for a short-term
investor.
Ownership of Series shares reduces the bookkeeping and administrative
inconveniences connected with direct purchases of these securities.
An investor should not consider a purchase of either Series shares as
equivalent to a complete investment program. The Delaware Group includes a
family of funds, generally available through registered investment dealers,
which may be used together to create a more complete investment program.
<PAGE>
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
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 Fund's Shareholder Service
Center. Our representatives can answer any questions about your account, the
Series, various service features and other funds in the Delaware Group.
Performance Information
During business hours, you can call the Investor Information Center to
get current performance information.
Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone is available
seven days a week, 24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of distributions. See
Dividend Reinvestment Plan below. You should examine statements and
confirmations immediately and promptly report any discrepancy by calling the
Shareholder Service Center.
Duplicate Confirmations
If your investment dealer is noted on your investment application, we
will send your dealer a duplicate confirmation. This makes it easier for your
investment dealer to help you manage your investments.
Tax Information
Each year, the Fund will mail you information on the tax status of your
dividends and distributions.
Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Also, you may 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.
<PAGE>
Reinvestments of distributions into Class A Shares of a Series or of
other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of a Series or of other
Delaware Group funds into Class C Shares of a Series or of other Delaware Group
funds are also made without any sales charge and will not be subject to a CDSC
if later redeemed. See Automatic Conversion of Class B Shares under Buying
Shares for information concerning the automatic conversion of Class B Shares
acquired by reinvesting dividends.
Holders of Class A Shares of a Series may not reinvest their
distributions into Class B Shares or Class C Shares of any fund in the Delaware
Group, including the Series. Holders of Class B Shares of a Series may reinvest
their distributions only into Class B Shares of the funds in the Delaware Group
which offer that class of shares (the "Class B Funds"). Similarly, holders of
Class C Shares of a Series may reinvest their distributions only into Class C
Shares of the funds in the Delaware Group which offer that class of shares (the
"Class C Funds"). See Class B Funds and Class C Funds under Buying Shares for a
list of the funds offering those classes of shares. For more information about
reinvestments, call the Shareholder Service Center.
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
Wealth Builder Option
You may elect to have amounts in your account automatically invested in
shares of other funds in the Delaware Group. Investments under this feature are
exchanges and are therefore subject to the same conditions and limitations as
other exchanges of Class A, Class B and Class C Shares. See Redemption and
Exchange.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of a Series with the dollar amount of new
purchases of Class A Shares to qualify for a reduced front-end sales charge.
Under the Combined Purchases Privilege, you may also include certain shares that
you own in other funds in the Delaware Group. See Buying Shares.
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain of
your purchases of Delaware Group fund shares over a 13-month period. See Buying
Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds of
Class A Shares within one year of the date of redemption, without a front-end
sales charge. See Part B.
Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
investors, working with a professional financial adviser, the ability to more
easily design and maintain investments in a diversified selection of Delaware
Group mutual funds. The Asset Planner service offers a choice of four
predesigned allocation strategies (each with a different risk/reward profile)
made up of separate investments in predetermined percentages of Delaware Group
funds. With the guidance of a financial adviser, investors may also tailor a
<PAGE>
Strategy that meets their personal needs and goals. See How to Buy Shares under
Buying Shares.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. The Fund's fiscal year ends on October
31.
<PAGE>
RETIREMENT PLANNING
An investment in a Series may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase the Delaware Fund Institutional Class
or the Devon 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.
<PAGE>
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions for investment in Class A Shares or Class C Shares. Class
B Shares are not available for purchase by such plans.
Allied Plans
Class A Shares are available for purchase by participants in 401(k)
Defined Contribution Plans ("Allied Plans") which are made available under a
joint venture agreement between the Distributor and another institution through
which mutual funds are marketed and which allow investments in Class A Shares of
designated Delaware Group funds ("eligible Delaware Group fund shares"), as well
as shares of designated classes of non-Delaware Group funds ("eligible
non-Delaware Group fund shares"). Class B Shares and Class C Shares are not
eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by a participant under the Allied Plan may be combined with the dollar
amount of new purchases by that participant to obtain a reduced front-end sales
charge on additional purchases of eligible Delaware Group fund shares. See
Front-End Sales Charge Alternative - Class A Shares under Buying Shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non-Delaware Group, which were not subject to a front end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described below under Waiver of Limited CDSC -
Class A Shares, apply to redemptions by participants in Allied Plans, except in
the case of exchanges between eligible Delaware Group and non-Delaware Group
fund shares. When eligible Delaware Group fund shares are exchanged into
eligible non-Delaware Group fund shares, the Limited CDSC will be imposed at the
time of the exchange, unless the joint venture agreement specifies that the
amount of the CDSC will be paid by the financial adviser or selling dealer. See
Contingent Deferred Sales Charge for Certain Purchases of Class A Shares Made at
Net Asset Value under Redemption and Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of Delaware
Group fund shares in connection with Allied Plans, all participant holdings in
the Allied Plan will be aggregated. See Front-End Sales Charge Alternative -
Class A Shares under Buying Shares.
<PAGE>
BUYING SHARES
Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases generally must be $100
or more. Class A Shares purchased under the Uniform Gifts to Minors Act or
Uniform Transfers to Minors Act are subject to a minimum initial purchase of
$250 and a minimum subsequent purchase of $25. In addition, there is a maximum
purchase limitation of $250,000 on each purchase of Class B Shares; for Class C
Shares, each purchase must be in an amount that is less than $1,000,000. An
investor may exceed these maximum purchase limitations by making cumulative
purchases over a period of time. In doing so, an investor should keep in mind
that reduced front-end sales charges are available on investments of $100,000 or
more in Class A Shares, and that Class A Shares (i) are subject to lower annual
12b-1 Plan expenses than Class B Shares and Class C Shares and (ii) generally
are not subject to a CDSC.
For retirement plans, the maximum purchase limitations apply only to
the initial purchase of Class B Shares or Class C Shares by the plan. Minimum
purchase requirements do not apply to retirement plans other than IRAs for which
there is a minimum initial purchase of $250, and a minimum subsequent purchase
of $25, regardless of which class is selected.
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of the purchase with respect to Class A
Shares ("front-end sales charge alternative"), or on a contingent deferred basis
with respect to Class B Shares ("deferred sales charge alternative") or Class C
Shares ("level sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares. Class A Shares incur a sales charge when
they are purchased but generally are not subject to any sales charge when they
are redeemed. Class A Shares are subject to annual 12b-1 Plan expenses of up to
a maximum of .30% of average daily net assets of such shares. See Contingent
Deferred Sales Charge for Certain Purchases of Class A Shares Made at Net Asset
Value and Distribution (12b-1) and Service. Certain purchases of Class A Shares
qualify for reduced front-end sales charges. See Front-End Sales Charge
Alternative - Class A Shares, below.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares. Class B Shares do not incur a front-end
sales charge when they are purchased, but are subject to a sales charge if they
are redeemed within six years of purchase and are subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of such shares for
approximately eight years after purchase. Class B Shares permit all of the
investor's dollars to work from the time the investment is made. The higher
12b-1 Plan expenses paid by Class B Shares will cause such shares to have a
higher expense ratio and to pay lower dividends than those related to the Class
A Shares. At the end of approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares. See Automatic
Conversion of Class B Shares, below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares. Class C Shares do not incur a front-end
sales charge when they are purchased, but are subject to a sales charge if they
are redeemed within 12 months of purchase and are subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of such shares for
the life of the investment. The higher 12b-1 Plan expenses paid by Class C
-23-
<PAGE>
Shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to the Class A Shares. Unlike Class B Shares, Class
C Shares do not convert to another class.
The alternative purchase arrangements described above permit investors
in a Series to choose the method of purchasing shares that is most suitable
given the amount of their purchase, the length of time they expect to hold their
shares and other relevant circumstances. Investors should determine whether,
given their particular circumstances, it is more advantageous to purchase Class
A Shares and incur a front-end sales charge, purchase Class B Shares and have
the entire initial purchase amount invested in the Series with their investment
being subject to a CDSC if they redeem shares within six years of purchase, or
purchase Class C Shares and have the entire initial purchase amount invested in
the Series with their investment being subject to a CDSC if they redeem shares
within 12 months of purchase. In addition, investors should consider the level
of annual 12b-1 Plan expenses to which each of the Classes is subject and, in
comparing Class B Shares to Class C Shares, the desirability of an automatic
conversion feature, which is available only for Class B Shares.
As an illustration, investors who qualify for significantly reduced
front-end sales charges on purchases of Class A Shares, as described below,
might elect the front-end sales charge alternative because similar sales charge
reductions are not available for purchases 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
would not have their full purchase amount invested initially.
Certain other investors might determine it to be more advantageous to
purchase Class B Shares and have all their money invested initially, although
they would be subject to a CDSC for up to six years after purchase, as well as
annual 12b-1 Plan expenses of up to 1% until the shares are automatically
converted into Class A Shares. Still other investors might determine it to be
more advantageous to purchase Class C Shares and have all of their funds
invested initially, recognizing that they would be subject to a CDSC for just 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 under the deferred sales charge alternative
or the level sales charge alternative. However, there can be no assurance as to
the return, if any, that will be realized on such additional money.
Prospective investors should refer to Appendix A to this Prospectus for
an illustration of the potential impact on a long-term shareholder's investment
in the Fund under each of the purchase options.
For the distribution and related services provided to, and the expenses
borne on behalf of, a Series, the Distributor and others will be paid, in the
case of the Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of the Class B Shares and the Class C Shares,
from the proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred
upon redemption. Sales personnel may receive different compensation for selling
Class A, Class B and Class C Shares. Investors should understand that the
purpose and function of the respective 12b-1 Plans and the CDSCs applicable to
the Class B Shares and Class C Shares are the same as those of the 12b-1 Plan
and the front-end sales charge applicable to Class A Shares in that such fees
and charges provide for the financing of the distribution of the respective
Classes. See 12b-1 Distribution Plans - Class A, Class B and Class C Shares.
-24-
<PAGE>
Dividends paid by the Series with respect to the Class A, Class B and
Class C Shares, to the extent any dividends are paid, will be calculated in the
same manner, at the same time, on the same day and will be in the same amount,
except that the additional amount of 12b-1 Plan expenses relating to the Class B
and Class C Shares will be borne exclusively by such shares. See Calculation of
Offering Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. The Fund and the Distributor intend to operate in compliance with these
rules.
Front-End Sales Charge Alternative - Class A Shares
The Class A Shares may be purchased at the offering price, which
reflects a maximum front-end sales charge of 4.75%. See Calculation of Offering
Price and Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge
as shown in the following table.
Delaware Fund A Class and Devon 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
- --------------------------------------------------------------------------------------------------------------------------
Delaware Devon
Fund Fund
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.96% 5.02% 4.00%
$100,000 but under $250,000 3.75 3.91 3.90 3.00
$250,000 but under $500,000 2.50 2.56 2.55 2.00
$500,000 but under $1,000,000* 2.00 2.06 2.07 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 upon the net asset value per share of the Class A Shares as of the
end of the Fund's most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify for
the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Fund. Such reduced
front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which
the Distributor may reallow to dealers up to the full amount of the
front-end sales charge shown above. In addition, certain dealers who enter
into an agreement to provide extra training and information on Delaware
Group products and services and who increase sales of Delaware Group funds
may receive an additional concession of up to .15% of the offering price.
Dealers who receive 90% or more of the sales charge may be deemed to be
underwriters under the Securities Act of 1933.
- --------------------------------------------------------------------------------
-25-
<PAGE>
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are made, in accordance with the following schedule:
Dealer's
Commission
-----------
(as a percent-
Amount age of amount
of Purchase purchased)
- -----------
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
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 Series. Financial advisers also may be eligible for a dealer's commission
in connection with certain purchases made under a Letter of Intention or
pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for payment
of the dealer's commission, unless such exchange is from a Delaware Group fund
with assets as to which a dealer's commission or similar payment has not been
previously paid. The schedule and program for payment of the dealer's commission
are subject to change or termination at any time by the Distributor in its
discretion.
Redemptions of Class A Shares purchased at net asset value may result in
the imposition of a Limited CDSC if the dealer's commission described above was
paid in connection with the purchase of those shares. See Contingent Deferred
Sales Charge for Certain Purchases of Class A Shares Made at Net Asset Value
under Redemption and Exchange.
Combined Purchases Privilege
By combining your holdings of Class A Shares of a Series with your
holdings of Class B Shares and/or Class C Shares of that Series and shares of
the other funds in the Delaware Group, except those noted below, you can reduce
the front-end sales charges on any additional purchases of Class A Shares.
Shares of Delaware Group Premium Fund, Inc., beneficially owned in connection
with ownership of variable insurance products, may be combined with other
Delaware Group fund holdings. Shares of other funds that do not carry a
front-end sales charge or CDSC may not be included, unless they were acquired
through an exchange from a Delaware Group fund that does carry a front-end sales
charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 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 trigger the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares under Buying
Shares.
<PAGE>
Buying at Net Asset Value
Class A Shares of a Series may be purchased at net asset value under
the Delaware Group Dividend Reinvestment Plan and, under certain circumstances,
the 12-Month Reinvestment Privilege and the Exchange Privilege. See The Delaware
Difference and Redemption and Exchange for additional information.
Purchases of Class A Shares may be made at net asset value by current
and former officers, directors and employees (and members of their immediate
families) of the Manager, any affiliate, any of the funds in the Delaware Group,
certain of their agents and registered representatives and employees of
authorized investment dealers and by employee benefit plans for such entities.
Individual purchases include retirement accounts and must be for accounts in the
name of the individual or a qualifying family member. Purchases of Class A
Shares may be made by clients of registered representatives of an authorized
investment dealer at net asset value within six months of a change of the
registered representative's employment, if the purchase is funded by proceeds
from an investment where a front-end sales charge has been assessed and the
redemption of the investment did not result in the imposition of a contingent
deferred sales charge or other redemption charge. Purchases of Class A Shares
also may be made at net asset value by bank employees who provide services in
connection with agreements between the bank and unaffiliated brokers or dealers
concerning sales of Class A Shares. Officers, directors and key employees of
institutional clients of the Manager or any of its affiliates may purchase Class
A Shares at net asset value. Moreover, purchases may be effected at net asset
value for the benefit of the clients of brokers, dealers and registered
investment advisers affiliated with a broker or dealer, if such broker, dealer
or investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
See Retirement Planning for a description of net asset value purchase for Allied
Plans.
The Fund must be notified in advance that an investment qualifies for
purchase of Class A Shares at net asset value.
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit
Sharing, Pension and 401(k) Defined Contribution Plans) may benefit from the
reduced front-end sales charges relating to the Class A Shares set forth in the
table on page , 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 front-end sales charge reduction on
each purchase, both initial and subsequent, if at the time of each such
<PAGE>
purchase, the company notifies the Fund that it qualifies for the reduction.
Employees participating in such Group Investment Plans may also combine the
investments held in their plan account to determine the front-end sales charge
applicable to purchases in non-retirement Delaware Group investment accounts if,
at the time of each such purchase, they notify the Fund that they are eligible
to combine purchase amounts held in their plan account.
For additional information on these plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement
Planning.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without the
imposition of a front-end sales charge and, as a result, a Series will invest
the full amount of the investor's purchase payment. The Distributor currently
anticipates compensating dealers or brokers for selling Class B Shares at the
time of purchase from its own assets in an amount equal to no more than 4% of
the dollar amount purchased. As discussed below, however, Class B Shares are
subject to annual 12b-1 Plan expenses and, if redeemed within six years of
purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution related services, and bearing
related expenses, in connection with the sale of Class B Shares. These payments
support the compensation paid to dealers or brokers for selling Class B Shares.
Payments to the Distributor and others under the Class B 12b-1 Plan may be in
an amount equal to no more than 1% annually. The combination of the CDSC and the
proceeds of the 12b-1 Plan fees facilitates the ability of a Series to sell the
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Shareholders of a Series' Class B Shares exercising 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 relating to the Class B
Shares acquired as a result of the exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Except for shares acquired through a reinvestment of dividends, Class B
Shares of a Series held for eight years after purchase are eligible for
automatic conversion into Class A Shares of that Series. The Fund will effect
conversions of Class B Shares into Class A Shares only four times in any
calendar year, on the last business day of the second full week of March, June,
September and December (each, a "Conversion Date"). If the eighth anniversary
after a purchase of Class B Shares falls on a Conversion Date, an investor's
Class B Shares will be converted on that date. If the eighth anniversary occurs
between Conversion Dates, an investor's Class B Shares will be converted on the
next Conversion Date after such anniversary. Consequently, if a shareholder's
eighth anniversary falls on the day after a Conversion Date, that shareholder
will have to hold Class B Shares for as long as three additional months after
the eighth anniversary of 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.
<PAGE>
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without the
imposition of a front-end sales charge and, as a result, the Fund will invest
the full amount of the investor's purchase payment. The Distributor currently
anticipates compensating dealers or brokers for selling Class C Shares at the
time of purchase from its own assets in an amount equal to no more than 1% of
the dollar amount purchased. As discussed below, however, Class C Shares are
subject to annual 12b-1 Plan expenses and, if redeemed within 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 expenses related to providing distribution and
related services, and bearing related expenses, in connection with the sale of
Class C Shares. These payments support the compensation paid to dealers or
brokers for selling Class C Shares. Payments to the Distributor and others under
the Class C 12b-1 Plan may be in an amount equal to no more than 1% annually.
Shareholders of the Class C Shares who exercise the exchange privilege
described below will continue to be subject to the CDSC schedule for the Class C
Shares as 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. In addition, no CDSC will be assessed on redemptions of shares
received through reinvestments of dividends or capital gains distributions. For
purposes of this formula, the "net asset value at the time of purchase" will be
the net asset value at purchase of either the Class B Shares or the Class C
Shares of a Series, even if those shares are later exchanged for shares of
another Delaware Group fund. In the event of an exchange of the shares, the "net
asset value of such shares at the time of redemption" will be the net asset
value of the shares that were acquired in the exchange.
The following table sets forth the rates of the CDSC for the Class B
Shares of each Series:
Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
- ------------------------ ------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of a Series, the Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of those shares. See Automatic Conversion of Class B Shares, above.
Investors are reminded that the Class A Shares into which the Class B Shares
will convert are subject to ongoing annual 12b-1 Plan expenses of up to a
maximum of .30% of average daily net assets representing such shares.
<PAGE>
In determining whether a CDSC is applicable to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to the Class C Shares, it will be assumed that shares held for more
than 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 CDSC - Class B and Class C Shares under Redemption and
Exchange.
12b-1 Distribution Plans - Class A, Class B
and Class C Shares
Under the distribution plans adopted by the Fund in accordance with Rule
12b-1 under the 1940 Act, the Fund is permitted to pay the Distributor annual
distribution fees of up to .30% of the average daily net assets of a Series'
Class A Shares, 1% of the average daily net assets of a Series' Class B Shares
and 1% of the average daily net assets of a Series' Class C Shares. These fees,
which are payable monthly, compensate the Distributor for providing distribution
and related services and bearing certain expenses of each Class. The 12b-1 Plans
applicable to the Class B Shares and the Class C Shares are designed to permit
an investor to purchase Class B Shares or Class C Shares through dealers or
brokers without the assessment of a front-end sales charge while enabling the
Distributor to compensate dealers and brokers for the sale of such shares. For a
more detailed discussion of the 12b-1 Plans relating to the Class A, Class B,
and Class C Shares, see Distribution (12b-1) and Service under Management of the
Fund.
Other Payments to Dealers -- Class A, Class B
and Class C Shares
In addition, from time to time at the discretion of the Distributor, all
registered broker/dealers whose aggregate sales of the Classes exceed certain
limits, as set by the Distributor, may receive from the Distributor an
additional payment of up to .25% of the dollar amount of such sales. The
Distributor may also provide additional promotional incentives or payments to
dealers that sell shares of the Delaware Group of funds. In some instances,
these incentives or payments may be offered only to certain dealers who
maintain, have sold or may sell certain amounts of shares.
Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended. In addition, as noted
above, the Distributor may pay dealers a commission in connection with net asset
value purchases.
<PAGE>
Class B Funds and Class C Funds
The following funds currently offer Class B and Class C Shares:
Delaware Group Delchester High-Yield Bond Fund, Inc., Delaware Group Government
Fund, Inc., Limited-Term Government Fund of Delaware Group Limited-Term
Government Funds, Inc., Delaware Group Cash Reserve, Inc., Tax-Free USA Fund,
Tax-Free Insured Fund and Tax-Free USA Intermediate Fund of Delaware Group
Tax-Free Fund, Inc., Delaware Group DelCap Fund, Inc., Delaware Group Value
Fund, Inc., Decatur Income Fund and Decatur Total Return Fund of Delaware Group
Decatur Fund, Inc., Delaware Group Trend Fund, Inc., Global Assets Series,
Global Bond Series and International Equity Series of Delaware Group Global &
International Funds, Inc., DMC Tax-Free Income Trust-Pennsylvania and each
Series of the Fund.
Delaware Fund Institutional Class and Devon
Fund Institutional Class
In addition to offering the Delaware Fund A Class, the Delaware Fund B
Class, the Delaware Fund C Class, the Devon Fund A Class, the Devon Fund B Class
and the Devon Fund C Class, the Fund also offers the Delaware Fund Institutional
Class and the Devon Fund Institutional Class of shares, which are described in a
separate prospectus relating to those classes of shares and are available for
purchase only by certain investors. Delaware Fund Institutional Class and Devon
Fund Institutional Class shares generally are distributed directly by the
Distributor and do not have a front-end sales charge, a CDSC or a Limited CDSC,
and are not subject to 12b-1 Plan distribution expenses. To obtain a prospectus
which describes the Delaware Fund Institutional Class and the Devon Fund
Institutional Class, contact the Distributor by writing to the address or by
calling the telephone number listed on the cover of this Prospectus.
Dividend Orders
You may have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective. For more
information, see Dividend Reinvestment Plan under The Delaware Difference or
call the Shareholder Service Center.
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer.
Investing through Your Investment Dealer
You can make a purchase of shares of the Classes through most
investment dealers who, as part of the service they provide, must transmit
orders promptly. They may charge for this service. If you want a dealer but do
not have one, we can refer you to one.
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 Class selected, to 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 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 the Fund. Use of this investment slip can
expedite processing of your check when making additional purchases. Your
investment may be delayed if you send additional purchases by certified mail.
<PAGE>
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include
your name(s) and your account number for the Class in which you are investing).
1. Initial Purchases--Before you invest, telephone the Fund's Shareholder
Service Center to get an account number. If you do not call first, processing of
your investment may be delayed. In addition, you must promptly send your
Investment Application or, in the case of a retirement account, an appropriate
retirement plan application, to the Class selected by you, at 1818 Market
Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the Fund's
Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Asset Planner service, you
should complete a Delaware Group Asset Planner Account Registration Form, which
is available only from a financial adviser. The sales charge on the investment
is determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. The minimum initial investment
per Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available for use inside the Asset
Planner service; however, only "like" class shares may be used within the same
Strategy.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30th of each subsequent year. The
fee, payable to Delaware Service Company, Inc. to defray extra costs associated
with administering the Asset Planner service, will be deducted automatically
from one of your Fund accounts if not paid by September 30th. See 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 the 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.
Shareholders of Class A Shares may exchange all or part of their shares
for certain of the shares of other funds in the Delaware Group including other
Class A Shares, but may not exchange their shares for Class B Shares or Class C
Shares of the Series or for Class B Shares or Class C Shares of any other fund
<PAGE>
in the Delaware Group. Shareholders of Class B Shares of a Series are permitted
to exchange all or part of their Class B Shares only into the corresponding
class of shares of the Class B Funds. Similarly, shareholders of Class C Shares
of a Series are permitted to exchange all or part of their Class C Shares only
into the corresponding class of shares of the Class C Funds. Class B Shares and
Class C Shares of a Series acquired by exchange will continue to carry the CDSC
and, in the case of Class B Shares, the automatic conversion schedule of the
fund from which the exchange is made. The holding period of the Class B Shares
of a Series acquired by exchange will be added to that of the shares that were
exchanged for purposes of determining the time of the automatic conversion into
Class A Shares of that Series.
Permissible exchanges into Class A Shares of a Series will be made
without a front-end sales charge imposed by the Series except for exchanges from
funds not subject to a front-end sales charge (unless such shares were acquired
in an exchange from a fund subject to such a charge or such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of the Series will be made without the imposition of a
CDSC by the fund from which the exchange is being made at the time of the
exchange.
See Allied Plans under Retirement Planning for information on exchanges
by participants in an Allied Plan.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:
1. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The 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.
2. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize the Fund to
transfer a designated amount monthly from your checking account to your 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.
* * *
Should investments by these two methods be reclaimed or returned for
some reason, the Fund has the right to liquidate your shares to reimburse the
government or transmitting bank. If there are insufficient funds in your
account, you are obligated to reimburse the Series.
Purchase Price and Effective Date
The offering price and net asset value of the Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open.
<PAGE>
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received, unless
it is received after the time the offering price or net asset value of shares is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that have remained below the
minimum stated account balance for a period of three or more consecutive months.
Holders of such accounts may be notified of their insufficient account balance
and advised that they have until the end of the current calendar quarter to
raise their balance to the stated minimum. If the account has not reached the
minimum balance requirement by that time, the Fund will charge a $9 fee for that
quarter and each subsequent calendar quarter until the account is brought up to
the minimum balance. The service fee will be deducted from the account during
the first week of each calendar quarter for the previous quarter, and will be
used to help defray the cost of maintaining low-balance accounts. No fees will
be charged without proper notice and no CDSC will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under a Class' minimum initial
purchase amount as a result of redemptions. An investor making the minimum
initial investment may be subject to involuntary redemption without the
imposition of a CDSC or Limited CDSC if he or she redeems any portion of his or
her account.
<PAGE>
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax-advantaged funds, bond
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares from one fund or class to another
constitute taxable events. See Taxes. Further, in order for an exchange to be
processed, shares of the fund being acquired must be registered in the state
where the acquiring shareholder resides. You may want to consult your financial
adviser or investment dealer to discuss which funds in the Delaware Group will
best meet your changing objectives, and the consequences of any exchange
transaction. You may also call the Delaware Group directly for fund information.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after we receive your request in good order subject,
in the case of a redemption, to any applicable CDSC or Limited CDSC. Redemption
or exchange requests received in good order after the time the offering price
and net asset value of shares are determined, as noted above, will be processed
on the next business day. See Purchase Price and Effective Date under Buying
Shares. A shareholder submitting a redemption may indicate that he or she wishes
to receive redemption proceeds of a specific dollar amount. In the case of such
a request, and in the case of certain redemptions from retirement plan accounts,
the Series will redeem the number of shares necessary to deduct the applicable
CDSC in the case of Class B or Class C Shares or, if applicable, the Limited
CDSC in the case of Class A Shares and tender to the shareholder the requested
amount assuming the shareholder holds enough shares in his or her account for
the redemption to be processed in this manner. Otherwise, the amount tendered to
the shareholder upon redemption will be reduced by the amount of the applicable
CDSC or Limited CDSC.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Fund at 800-523-1918. The Fund may suspend, terminate,
or amend the terms of the exchange privilege upon 60 days' written notice to
shareholders.
The Fund will honor written redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied that the purchase check has cleared, which may take up to
15 days from the purchase date. The Fund will not honor telephone redemptions
for shares recently purchased by check unless it is reasonably satisfied that
the purchase check has cleared. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. The Fund reserves the right to reject a
written or telephone redemption request or delay payment of redemption proceeds
if there has been a recent change to the shareholder's address of record.
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not subject
<PAGE>
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. In an exchange of Class B Shares, a Series' CDSC
schedule may be higher than the CDSC schedule relating to the New Shares
acquired as a result of the exchange. For purposes of computing the CDSC that
may be payable upon a disposition of the New Shares, the period of time that an
investor held the Original Shares is added to the period of time that an
investor held the New Shares. With respect to Class B Shares, the automatic
conversion schedule of the Original Shares may be longer than that of the New
Shares. Consequently, an investment in New Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares of a Series for a
longer period of time than if the investment in New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for
the CDSC applicable to certain redemptions of Class B Shares and Class C Shares
and the Limited CDSC applicable to certain redemptions of Class A Shares
purchased at net asset value, there is no fee charged by the Fund or the
Distributor for redeeming or exchanging your shares, but such fees could be
charged in the future. You may have your investment dealer arrange to have your
shares redeemed or exchanged. Your investment dealer may charge for this
service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares. The request must be signed by all owners
of the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day, but no later than
seven days, after receipt of your redemption request. If your Class A Shares are
in certificate form, the certificate must accompany your request and also be in
good order. The Fund issues certificates for Class A Shares only if a
shareholder submits a specific request. The Fund does not issue certificates for
Class B or Class C Shares.
<PAGE>
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may only
redeem or exchange by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such service available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.
Neither the Fund nor the Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Series shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day, but no later than seven days, after receipt of the request. This service is
only available to individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires an Authorization Form with your signature guaranteed.
For your protection, your authorization must be on file. If you request a wire,
your funds will normally be sent the next business day. CoreStates Bank, N.A.'s
fee (currently $7.50) will be deducted from your redemption. If you ask for a
check, it will normally be mailed the next business day, but no later than seven
days, after receipt of your request to your predesignated bank account. Except
for any CDSC which may be applicable to the Class B and Class C Shares and the
Limited CDSC which may be applicable to certain Class A Shares, there are no
fees for this redemption method, but the mail time may delay getting funds into
<PAGE>
your bank account. Simply call the Fund's Shareholder Service Center prior to
the time the offering price and net asset value are determined, as noted above.
If expedited payment by check or wire could adversely affect a Series,
the Fund may take up to seven days to pay.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into any fund in the Delaware Group under the same registration, subject
to the same conditions and limitations as other exchanges noted above. As with
the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it can provide them with a stable supplemental amount. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more.
The Fund does not recommend any particular monthly amount, as each shareholder's
situation and needs vary. Payments are normally made by check. You may elect to
have your payments transferred from your Series account to your predesignated
bank account through the Delaware Group's MoneyLine service. Your funds will
normally be credited to your bank account two business days after the payment
date. Except for the Limited CDSC which may be applicable to Class A Shares and
the CDSC which may be applicable to Class B Shares and Class C Shares as noted
below, there are no fees for this redemption method. You can initiate the
MoneyLine service by completing an Authorization Agreement. If the name and
address on your bank account are not identical to the name and address on your
Fund account, you must have your signature guaranteed. Please call the
Shareholder Service Center for additional information.
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the Fund's Systematic Withdrawal Plan
provides you with maximum flexibility. A number of formulas are available for
calculating your withdrawals depending upon whether the distributions are
required or optional. Withdrawals must be for $25 or more; however, no minimum
account balance is required. The MoneyLine service described above is not
available for retirement plans.
* * *
Shareholders should not purchase Class A Shares while participating in a
Systematic Withdrawal Plan. Also, redemptions of Class A Shares via a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the original purchase was
made at net asset value within the 12 months prior to the withdrawal and a
dealer's commission was paid on that purchase. See Contingent Deferred Sales
Charge for Certain Purchases of Class A Shares Made at Net Asset Value, below.
With respect to Class B Shares and Class C Shares redeemed via a
Systematic Withdrawal Plan, any applicable CDSC will be waived if, on the date
that the Plan is established, the annual amount selected to be withdrawn is less
than 12% of the account balance. If the annual amount selected to be withdrawn
<PAGE>
exceeds 12% of the account balance on the date that the Systematic Withdrawal
Plan is established, all redemptions under the Plan will be subject to the
applicable CDSC. Whether a waiver of the CDSC is available or not, the first
shares to be redeemed for each Systematic Withdrawal Plan payment will be those
not subject to a CDSC because they have either satisfied the required holding
period or were acquired through the reinvestment of distributions. The 12%
annual limit will be reset on the date that any Systematic Withdrawal Plan is
modified (for example, a change in the amount selected to be withdrawn or the
frequency or date of withdrawals), based on the balance in the account on that
date. See Waiver of CDSC Class B and Class C Shares, below.
For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.
Wealth Builder Option
Shareholders may elect to invest in other mutual funds in the Delaware
Group through our Wealth Builder Option. Under this automatic exchange program,
shareholders can authorize regular monthly amounts (minimum of $100 per fund) to
be liquidated from their Series account and invested automatically into an
account in one or more funds in the Delaware Group. If, in connection with the
Wealth Builder Option, a shareholder wishes to open a new account in such other
fund or funds to receive the automatic investment, such new account must meet
such other fund's minimum initial purchase requirements. Investments under this
option are exchanges and are therefore subject to the same conditions and
limitations as other exchanges noted above.
Shareholders can use the Wealth Builder Option to invest in the 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 can terminate their participation at any
time by written notice to the Fund. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
Contingent Deferred Sales Charge for Certain
Purchases of Class A Shares Made at Net Asset Value
A Limited CDSC will be imposed by the Fund upon certain redemptions of
Class A Shares (or shares into which such Class A Shares are exchanged) made
within twelve months of purchase, if such purchases were made at net asset value
and triggered the payment by the Distributor of the dealer's commission
described above. See Buying Shares.
The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A Shares
at the time of redemption. For purposes of this formula, the "net asset value at
the time of purchase" will be the net asset value at purchase of the Class A
Shares even if those shares are later exchanged for shares of another Delaware
Group fund and, in the event of an exchange of Class A Shares, the "net asset
value of such shares at the time of redemption" will be the net asset value of
the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than twelve months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
<PAGE>
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Fund assesses the Limited CDSC if such 12-month period is not
satisfied irrespective of whether the redemption triggering its payment is of
the Class A Shares of a Series or the Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are redeemed first followed by other
shares held for the longest period of time. The Limited CDSC will not be imposed
upon shares representing reinvested dividends or capital gains distributions, or
upon amounts representing share appreciation. All investments made during a
calendar month, regardless of what day of the month the investment occurred,
will age one month on the last day of that month and each subsequent month.
Waiver of Limited CDSC - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
Rbeen paid will be waived in the following instances: (i) redemptions that
result from the Series' right to liquidate a shareholder's account if the
aggregate net asset value of the shares held in the account is less than the
then-effective minimum account size; (ii) distributions to participants from a
retirement plan qualified under section 401(a) or 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code"), or due to death of a participant in such
a plan; (iii) redemptions pursuant to the direction of a participant or
beneficiary of a retirement plan qualified under section 401(a) or 401(k) of the
Code with respect to that retirement plan; (iv) distributions from a section
403(b)(7) Plan or an IRA due to death, disability, or attainment of age 59 1/2;
(v) returns of excess contributions to an IRA; (vi) distributions by other
employee benefit plans to pay benefits; (vii) distributions described in (ii),
(iv), and (vi) above pursuant to a Systematic Withdrawal Plan; and (viii)
redemptions by the classes of shareholders who are permitted to purchase shares
at net asset value, regardless of the size of the purchase (see Buying at Net
Asset Value under Buying Shares).
Waiver of CDSC - Class B and Class C Shares
The CDSC is waived on redemptions of Class B Shares in connection with
the following redemptions: (i) redemptions that result from the Fund's right to
liquidate a shareholder's account if the aggregate net asset value of the shares
held in the account is less than the then-effective minimum account size; (ii)
returns of excess contributions to an IRA or 403(b)(7) Deferred Compensation
Plan; (iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan or 457 Deferred Compensation Plan; and (iv) distributions from
an account if the redemption results from the death of all registered owners of
the account (in the case of accounts established under the Uniform Gifts to
Minors or Uniform Transfers to Minors Acts or trust accounts, the waiver applies
upon the death of all beneficial owners) or a total and permanent disability (as
defined in Section 72 of the Code) of all registered owners occurring after the
purchase of the shares being redeemed.
The CDSC on certain redemptions of Class C Shares is waived in
connection with the following redemptions: (i) redemptions that result from the
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA, 403(b)(7) Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or 401(k)
Defined Contribution Plan; (iii) required minimum distributions from an IRA,
<PAGE>
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.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Each Series will normally make payments from net investment income on a
quarterly basis. During the fiscal year ended October 31, 1995, dividends
totaling $0.63 and $0.51 per share of the Delaware Fund A Class and the Delaware
Fund B Class, respectively, were paid from net investment income. During the
same period, dividends totaling $0.22 and $0.18 per share of the Devon Fund A
Class and the Devon Fund B Class, respectively, were paid from net investment
income. The amounts included undistributed net investment income earned by the
Series during the previous fiscal year.
Payments from net realized securities profits of each Series, if any,
will be distributed annually in the quarter following the close of the fiscal
year. During the fiscal year ended October 31, 1995, distributions totaling
$0.25 per share of the Delaware Fund A Class and Delaware Fund B Class were paid
from realized securities profits. During the same period, distributions totaling
$0.32 per share of the Devon Fund A Class and Devon Fund B Class were paid from
realized securities profits. Class C Shares of each Series commenced operations
on November 29, 1995.
Each of the Classes of a Series will share proportionately in the
investment income and expenses of that Series, except that the per share
dividends from net investment income on the Class A Shares, the Class B Shares
and the Class C Shares will vary due to the expenses under the 12b-1 Plan
applicable to each Class. Generally, the dividends per share on Class B Shares
and Class C Shares can be expected to be lower than the dividends per share on
Class A Shares because the expenses under the 12b-1 Plans relating to Class B
and Class C Shares will be higher than the expenses under the 12b-1 Plan
relating to Class A Shares. See Distribution (12b-1) and Service under
Management of the Fund.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value, unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by the
United States Post Office or which remains uncashed for a period of more than
one year may be reinvested in the shareholder's account at the then-current net
asset value and the dividend option may be changed from cash to reinvest. If you
elect to take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the Delaware
Group's MoneyLine service and have such payments transferred from your Series
account to your predesignated bank account. Your funds will normally be credited
to your bank account two business days after the payment date. There are no fees
for the MoneyLine service. See Systematic Withdrawal Plans under Redemption and
Exchange for information regarding authorization of this service. This service
is not available for retirement plans. (See The Delaware Difference for more
information on reinvestment options.)
<PAGE>
TAXES
Each Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a Series
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code.
Each Series intends to distribute substantially all of its net
investment income and net capital gains, if any. Dividends from net investment
income or net short-term capital gains will be taxable to you as ordinary
income, whether received in cash or in additional shares. For corporate
investors, dividends from net investment income will generally qualify in part
for the corporate dividends-received deduction. The portion of dividends paid by
a Series that so qualifies will be designated each year in a notice from the
Fund to the Series' shareholders. For the fiscal year ended October 31, 1995,
27% and 31% of, respectively, the Delaware Fund's and the Devon Fund's dividends
from net investment income qualified for the corporate dividends-received
deduction.
Distributions paid by a Series from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who are
subject to income taxes as long-term capital gains, regardless of the length of
time an investor has owned shares in the Series. The Series do not seek to
realize any particular amount of capital gains during a year; rather, realized
gains are a byproduct of a Series' management activities. Consequently, capital
gains distributions may be expected to vary considerably from year to year.
Also, for those investors subject to tax, if purchases of shares in a Series are
made shortly before the record date for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November, or December to shareholders
of record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Series and received by the
shareholder on December 31 of the year declared.
The sale of shares of a Series is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series or portfolios of a mutual fund). Any loss
incurred on sale or exchange of a Series' shares which had been held for six
months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares. All or a portion of
the sales charge incurred in acquiring a Series' 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 the Series or in another fund in
the Delaware Group of funds and a sales charge that would otherwise apply to the
reinvestment is reduced or eliminated. Any portion of such sales charge excluded
from the tax basis of the shares sold will be added to the tax basis of the
shares acquired in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Buying Shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. Government securities may be exempt from
<PAGE>
state personal income taxes. Shares of the Series are exempt from Pennsylvania
county personal property taxes.
Each year, the Fund will mail to you information on the tax status of
the Series' dividends and distributions. Shareholders will also receive each
year information as to the portion of dividend income, if any, that is derived
from U.S. Government securities that are exempt from state income tax. Of
course, shareholders who are not subject to tax on their income would not be
required to pay tax on amounts distributed to them by the Series.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The tax discussion set forth above is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in a Series.
See Taxes in Part B for additional information on tax matters relating
to each Series and its shareholders.
<PAGE>
CALCULATION OF OFFERING PRICE
AND NET ASSET VALUE PER SHARE
Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the net asset value ("NAV")
per share. The offering price per share of Class A Shares consists of the NAV
per share next computed after the order is received, plus any applicable
front-end sales charges. The offering price and NAV are computed as of the close
of regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
Debt securities are priced at fair value by an independent pricing service using
methods approved by the Fund's Board of Directors. Short-term investments having
a maturity of less than 60 days are valued at amortized cost, which approximates
market value. All other securities are valued at their fair value as determined
in good faith and in a method approved by the Fund's Board of Directors.
Each of a Series' four classes will bear, pro-rata, all of the common
expenses of that Series. The net asset values of all outstanding shares of each
class of a Series will be computed on a pro-rata basis for each outstanding
share based on the proportionate participation in that Series represented by the
value of shares of that class. All income earned and expenses incurred by a
Series will be borne on a pro-rata basis by each outstanding share of a class,
based on each class' percentage in that Series represented by the value of
shares of such classes, except that the Delaware Fund Institutional Class and
the Devon Fund Institutional Class will not incur any distribution fees under
the 12b-1 Plans and the Class A, Class B and Class C Shares of each Series 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 Series will vary.
<PAGE>
MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of
its Board of Directors. Part B contains additional information regarding the
Fund's directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 1995, the Manager and its affiliate,
Delaware International Advisers Ltd., were managing in the aggregate more than
$27 billion in assets in the various institutional (approximately
$16,961,505,000) and investment company (approximately $10,172,570,000)
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 the Fund on behalf of each Series and the Manager were executed
following shareholder approval.
The Manager manages each Series' portfolio and makes investment
decisions which are implemented by the Fund's Trading Department. The Manager
also administers the Fund's affairs and pays the salaries of all the directors,
officers and employees of the Fund who are affiliated with the Manager. For
these services, the Manager is paid an annual fee equal to: for the Delaware
Fund, .60% on the first $100 million of average daily net assets of the Fund,
.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 the Series'
proportionate share of all directors' fees paid to the unaffiliated directors of
the Fund; and, for the Devon Fund, .60% on the first $500 million of average
daily net assets and .50% on the average daily net assets in excess of $500
million. Investment management fees paid by the Delaware Fund for the fiscal
year ended October 31, 1995 were 0.52% of average daily net assets. Investment
management fees earned by the Devon Fund for the fiscal year ended October 31,
1995 were 0.60% of average daily net assets and no fees were paid by this Series
as a result of the voluntary waiver of fees by the Manager described under
Summary of Expenses.
George H. Burwell and Gary A. Reed have primary responsibility for
making day-to-day investment decisions for the Delaware Fund and Mr. Burwell
has such responsibility for the Devon Fund. Mr. Burwell, who has been the Fund's
Senior Portfolio Manager for equities since 1992, holds a BA from the University
of Virginia. Prior to joining the Delaware Group in 1992, Mr. Burwell was a
portfolio manager for Midlantic Bank in Edison, New Jersey, where he managed an
equity mutual fund and three commingled funds. Mr. Burwell is a Chartered
Financial Analyst.
Mr. Reed has been the Delaware Fund's Senior Portfolio Manager for fixed
income since April 1995. He holds an AB in Economics from the University of
Chicago and an MA in Economics from Columbia University. He began his career in
1978 with the Equitable Life Assurance Company in New York City, where he
specialized in credit analysis. Prior to joining the Delaware Group in 1989, Mr.
Reed was Vice President and Manager of the fixed income department at Irving
Trust Company in New York.
<PAGE>
In making investment decisions for the Fund, Mr. Burwell and Mr. Reed
regularly consult with Wayne A. Stork, Richard G. Unruh, Jr. and Paul E. Suckow.
Mr. Stork, Chairman of the Manager and the Fund's Board of Directors, is a
graduate of Brown University and attended New York University's Graduate School
of Business Administration. Mr. Stork joined the Delaware Group in 1962 and has
served in various executive capacities at different times within the Delaware
organization. A graduate of Brown University, Mr. Unruh received his MBA from
the University of Pennsylvania's Wharton School and joined the Delaware Group in
1982 after 19 years of investment management experience with Kidder, Peabody &
Co. Inc. Mr. Unruh was named an executive vice president of the Fund in 1994. He
is also a member of the Board of 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. Mr. Suckow is
Delaware's Chief Investment Officer for fixed income. A Chartered Financial
Analyst, he is a graduate of Bradley University with an MBA from Western
Illinois University. Mr. Suckow was a fixed income portfolio manager at the
Delaware Group from 1981 to 1985. He returned to the Delaware Group in 1993
after eight years with Oppenheimer Management Corporation.
Portfolio Trading Practices
The Series normally will not invest for short-term trading purposes.
However, each Series may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Series and may affect taxes payable by the Series' shareholders to
the extent that net capital gains are realized. Given the Series' investment
objectives, their annual portfolio turnover rates may exceed 100%. A turnover
rate of 100% would occur if all the investments in a Series' portfolio at the
beginning of the year were replaced by the end of the year. During the past two
fiscal years, Delaware Fund's portfolio turnover rates were 142% for 1994 and
94% for 1995. For the period December 29, 1993 (date of initial public offering)
through October 31, 1994, Devon Fund's portfolio turnover rate was 180%,
annualized, and for the fiscal year ended October 31, 1995, Devon Fund's
portfolio turnover rate was 99%.
The 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, the Fund may consider a
broker/dealer's sales of Series shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Series expenses
such as custodian fees.
Performance Information
From time to time, Delaware Fund and Devon Fund may quote total return
performance of their respective classes, in advertising and other types of
literature. Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value and: (i) in
the case of Class A Shares, the impact of the maximum front-end sales charge at
the beginning of each specified period; and (ii) in the case of Class B Shares
and Class C Shares, the deduction of any applicable CDSC at the end of the
relevant period. Each presentation will include the average annual total return
for one-, five- and ten-year or life-of-Series periods, as relevant. The Series
<PAGE>
may also advertise aggregate and average total return information concerning a
Class over additional periods of time. In addition, each Series may present
total return information that does not reflect the deduction of the maximum
front-end sales charge or any applicable CDSC. In this case, such total return
information would be more favorable than total return information which includes
deductions of the maximum front-end sales charge or any applicable CDSC.
Because securities prices fluctuate, investment results of the Classes
will fluctuate over time and past performance should not be considered as a
representation of future results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor for
the Series under separate Distribution Agreements dated April 3, 1995, as
amended on November 29, 1995.
The Fund has adopted a separate distribution plan under Rule 12b-1 (the
"Plan") for each of the Classes which permits the Fund to pay the Distributor
from the assets of the respective Classes a monthly fee for its services and
expenses in distributing and promoting sales of shares. These expenses include,
among other things, preparing and distributing advertisements, sales literature,
and prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, holding special promotions for specified periods of time,
and paying distribution and maintenance fees to brokers, dealers and others. In
connection with the promotion of Class A, 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 shares of a Class. In
addition, the Fund may make payments from the assets of the respective Class
directly to others, such as banks, who aid in the distribution of Class shares
or provide services in respect of a Class, pursuant to service agreements with
the Fund.
The 12b-1 Plan expenses relating to each of the Class B Shares and Class
C Shares are also used to pay the Distributor for advancing the commission costs
to dealers with respect to the initial sale of such shares.
The aggregate fees paid by the Fund on behalf of each Series from the
assets of the respective Classes to the Distributor and others under the Plans
may not exceed .30% of a Class A Shares' average daily net assets in any year,
and 1% (.25% of which are service fees to be paid by the Fund to the
Distributor, dealers and others, for providing personal service and/or
maintaining shareholder accounts) of each Series' Class B Shares' and Class C
Shares' average daily net assets in any year. Each Series' 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.
Effective June 1, 1992, the Board of Directors has determined that the
annual fee payable from Delaware Fund A Class on a monthly basis, under its
Plan, will be equal to the sum of: (i) the amount obtained by multiplying .30%
by the average daily net assets represented by shares of that Class that are
acquired by shareholders on or after June 1, 1992; and (ii) the amount obtained
by multiplying .10% by the average daily net assets represented by shares of
<PAGE>
that Class that were acquired before June 1, 1992. While this is the method for
calculating the Delaware Fund A Class' 12b-1 fee, the fee is a Class expense so
that all shareholders, regardless of when they purchase their shares, will bear
12b-1 expenses at the same per share rate. As Delaware Fund A Class shares are
sold on or after June 1, 1992, the initial rate of at least .10% will increase
over time. Thus, as the proportion of Delaware Fund A Class shares purchased on
or after June 1, 1992, to Class shares outstanding prior to June 1, 1992,
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, on behalf of the Delaware Fund
series, to pay a full .30% on all assets of the Delaware 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.
On September 23, 1993, the Board of Directors set the fee for the Devon
Fund A Class at .30% of average daily net assets.
The Plans do not apply to the Delaware Fund Institutional Class or the
Devon 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 Delaware Fund Institutional Class or the Devon
Fund Institutional Class.
While payments pursuant to the Plans may not exceed .30% annually with
respect to each Series' Class A Shares and 1% annually with respect to each
Series' Class B Shares and 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 under the Plans are subject to the review and approval of the Fund's
unaffiliated directors who may reduce the fees or terminate the Plans at any
time.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Delaware
Fund under an Agreement dated June 29, 1988 and for the Devon Fund under an
Agreement dated December 29, 1993. The directors annually review service fees
paid to the Transfer Agent.
The Distributor and the Transfer Agent are indirect, wholly-owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreements and those borne
by the Distributor under the Distribution Agreements. The ratios of expenses to
average daily net assets for the Class A Shares and the Class B Shares of the
Delaware Fund for the fiscal year ended October 31, 1995 were 0.97% and 1.79%,
respectively. The ratio of expenses to average daily net assets for the Class A
Shares and Class B Shares of the Devon Fund for the fiscal year ended October
31, 1995 were 1.25% and 1.95%, respectively, after voluntary fee waivers and
expense reimbursements by the Manager. The Fund anticipates that the expense
ratio for Class C Shares will be identical to the expense ratio for the
respective Class B Shares for each Series. The ratio of each Class reflects the
impact of its 12b-1 Plan.
Shares
The Fund is an open-end management investment company, commonly known as
a mutual fund, and each Series' portfolio of assets is diversified as defined by
the 1940 Act. The Fund, which was organized as a Maryland corporation on March
4, 1983, was previously organized as a Delaware corporation in 1937.
<PAGE>
The Fund currently offers two Series of shares - the Delaware Fund
series and the Devon Fund series. Series shares have a par value of $1.00, equal
voting rights, except as noted below, and are equal in all other respects. Each
Series will vote separately on any matter which affects only that Series. Shares
of each Series have a priority over shares of any other series of the Fund in
the assets and income of that Series. All Fund shares have noncumulative voting
rights which means that the holders of more than 50% of the Fund's shares voting
for the election of directors can elect 100% of the directors if they choose to
do so. Under Maryland law, the Fund is not required, and does not intend, to
hold annual meetings of shareholders unless, under certain circumstances, it is
required to do so under the 1940 Act. Shareholders of 10% or more of the Fund's
shares may request that a special meeting be called to consider the removal of a
director.
In addition to Class A, Class B and Class C Shares, the Delaware Fund
and the Devon Fund offer the Delaware Fund Institutional Class and the Devon
Fund Institutional Class of shares, respectively, which represent proportionate
interests in the assets of the respective Series and have the same voting and
other rights and preferences as the other classes of that Series, except that
shares of the Delaware Fund Institutional Class and the Devon 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, the shareholders of the
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 the Fund under the Plan relating to the Class A Shares.
Prior to September 6, 1994, the Delaware Fund A Class was known as the
Delaware Fund class and the Delaware Fund Institutional Class was known as the
Delaware Fund (Institutional) class. Prior to the same date, the Dividend Growth
Fund A Class was known as the Dividend Growth Fund class and the Dividend Growth
Fund Institutional Class was known as the Dividend Growth Fund (Institutional)
class. Effective as of the close of business on August 28, 1995, the name
Dividend Growth Fund was changed to Devon Fund. At the same time, the names of
Dividend Growth Fund A Class, Dividend Growth Fund B Class and Dividend Growth
Fund Institutional Class were changed to, respectively, Devon Fund A Class,
Devon Fund B Class and Devon Fund Institutional Class.
<PAGE>
APPENDIX A
Illustrations of the Potential Impact on Investment Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
--------------------------- --------------------------- --------------------------- ---------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+ 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 13,058 13,058 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272 13,946 14,272 14,272
5 15,340 15,599 15,599 15,340 15,399 15,599+
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333
</TABLE>
*This assumes that Class B Shares were converted to Class A shares at the end of
the eighth year.
$250,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2 Scenario 3 Scenario 4
No Redemption Redeem 1st Year Redeem 3rd Year Redeem 5th Year
--------------------------- --------------------------- --------------------------- ---------------------------
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C Class A Class B Class C
- ---- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+ 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 326,438 326,438 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797 356,874+ 356,797 356,797
5 392,562 389,979 389,979 392,562 384,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
</TABLE>
*This assumes that Class B Shares were converted to Class A shares at the end of
the eighth year.
Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% per year for years 1-8 and 10% for years 9-10, and a
hypothetical return for Class C of 9.3% per year. Hypothetical returns may 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>
--------------------------------
DELAWARE FUND INSTITUTIONAL
DEVON FUND INSTITUTIONAL
--------------------------------
--------------------------------
For more information 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 P R O S P E C T U S
SHAREHOLDER SERVICING, --------------------------------
DIVIDEND DISBURSING
AND TRANSFER AGENT DECEMBER 29, 1995
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>
DELAWARE FUND PROSPECTUS
INSTITUTIONAL DECEMBER 29, 1995
DEVON FUND
(FORMERLY DIVIDEND GROWTH FUND)
INSTITUTIONAL
-------------------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For more information about the Delaware Fund
Institutional Class and the Devon Fund Institutional
Class call Delaware Group at 800-828-5052.
Delaware Group Delaware Fund, Inc. (the "Fund") is a
professionally-managed mutual fund of the series type. This Prospectus describes
the shares of the Common Stock series, which is known as and does business as
the Delaware Fund series ("Delaware Fund"), and the Devon Fund series ("Devon
Fund") (collectively, the "Series"). Delaware Fund's objective is to seek a
balance of capital appreciation, income and preservation of capital. Devon
Fund's objective is to seek current income and capital appreciation.
Delaware Fund offers the Delaware Fund Institutional Class and Devon
Fund offers the Devon Fund Institutional Class (individually, a "Class" and
collectively, the "Classes"). Shares of the Classes 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. Devon Fund Institutional Class was formerly
known as Dividend Growth Fund Institutional Class.
This Prospectus relates only to the Classes and sets forth information
that you should read and consider before you invest. Please retain it for future
reference. Part B of the Fund's registration statement, dated December 29, 1995,
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 number. Each Series' financial statements appear in its
respective Annual Report, which will accompany any response to requests for Part
B.
Delaware Fund also offers Delaware Fund A Class, Delaware Fund B
Class and Delaware Fund C Class, and Devon Fund also offers Devon Fund A Class,
Devon Fund B Class and Devon 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 800-523-4640.
<PAGE>
TABLE OF CONTENTS
Cover Page Buying Shares
Synopsis Redemption and Exchange
Summary of Expenses Dividends and Distributions
Financial Highlights Taxes
Investment Objectives and Policies Calculation of Net Asset Value
Investment Strategy Per Share
Suitability Management of the Fund
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL FUNDS
CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND ARE
NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT UNION,
ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK
OR CREDIT UNION DEPOSITS.
<PAGE>
SYNOPSIS
Capitalization
The Fund offers the Delaware Fund series, consisting of the Delaware
Fund Institutional Class, the Delaware Fund A Class, the Delaware Fund B Class
and the Delaware Fund C Class, and the Devon Fund series, consisting of the
Devon Fund Institutional Class, the Devon Fund A Class, the Devon Fund B Class
and the Devon Fund C Class. The Fund has a present authorized capitalization of
five hundred million shares of capital stock with a $1.00 par value per share.
Fifty million shares have been allocated to the Delaware Fund Institutional
Class, one hundred million shares to the Delaware Fund A Class, twenty-five
million shares to the Delaware Fund B Class, twenty-five million shares to the
Delaware Fund C Class, twenty-five million shares to the Devon Fund
Institutional Class, fifty million shares to the Devon Fund A Class, twenty-five
million shares to the Devon Fund B Class and twenty-five million shares to the
Devon Fund C Class. See Shares under Management of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") is the investment
manager for the Fund. The Manager or its affiliate, Delaware International
Advisers Ltd., also manages the other funds in the Delaware Group. Delaware
Distributors, L.P. (the "Distributor") is the national distributor for the Fund
and for all of the other mutual funds in the Delaware Group. Delaware Service
Company, Inc. (the "Transfer Agent") is the shareholder servicing, dividend
disbursing and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Management of the Fund.
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 Buying
Shares.
Investment Objective
The objective of the Delaware Fund is to seek a balance of capital
appreciation, income and preservation of capital. The objective of the Devon
Fund is to seek current income and capital appreciation. For further details,
see Investment Objectives and Policies.
Risk Factors and Special Considerations
The Delaware Fund typically invests a portion of its assets in
mortgaged-backed and asset-backed securities (commonly considered to be
"derivative securities"), which may present greater risks than other types of
portfolio securities, and the investor should review the descriptions of these
risks in this Prospectus. See Mortgaged-Backed Securities and Asset-Backed
Securities under Investment Objectives and Policies.
The Devon Fund may enter into options and futures transactions for
hedging purposes to counterbalance portfolio volatility. While the Devon Fund
does not engage in options and futures for speculative purposes, there are risks
that result from use of these instruments by the Series, and the investor should
review the descriptions of these risks in this Prospectus. See Futures Contracts
and Options under Investment Objectives and Policies.
<PAGE>
Open-End Investment Company
The Fund, which was organized as a Maryland corporation on March 4,
1983 and previously organized as a Delaware corporation in 1937, is an open-end
management investment company and each Series' portfolio of assets is
diversified as defined by the Investment Company Act of 1940 (the "1940 Act").
See Shares under Management of the Fund.
Investment Management Fees
The Manager furnishes investment management services to the Fund,
subject to the supervision and direction of the Board of Directors. Under the
Investment Management Agreements, the annual compensation paid to the Manager is
equal to: for Delaware Fund, .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 that Series'
proportionate share of all directors' fees paid to the unaffiliated directors of
the Fund; and, for Devon Fund, .60% on the first $500 million of average daily
net assets and .50% on the average daily net assets in excess of $500 million.
See Management of the Fund.
Redemption and Exchange
Shares of each Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
<PAGE>
SUMMARY OF EXPENSES
Delaware
Fund
Institutional
Shareholder Transaction Expenses Class
-----------------------------------------------------------------------------
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**
Delaware
Fund
Annual Operating Expenses Institutional
(as a percentage of average daily net assets) Class
- -------------------------------------------------------------------------------
Management Fees................................................... 0.52%
12b-1 Fees........................................................ None
Other Operating Expenses.......................................... 0.27%
-----
Total Operating Expenses........................................ 0.79%
=====
<PAGE>
Devon
Fund
Institutional
Shareholder Transaction Expenses Class
- -------------------------------------------------------------------------------
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**
Devon
Fund
Annual Operating Expenses Institutional
(as a percentage of average daily net assets) Class
- -------------------------------------------------------------------------------
Management Fees (after voluntary waivers)......................... 0.00%***
12b-1 Fees........................................................ None
Other Operating Expenses (after voluntary waivers)................ 0.95%***
-----
Total Operating Expenses........................................ 0.95%***
=====
The purpose of these tables is to assist the investor in understanding
the various costs and expenses that an investor in either 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. ***The Manager
had elected voluntarily to waive that portion, if any, of the annual management
fees payable by the Devon Fund and to reimburse the Series to the extent
necessary to ensure that the "Total Operating Expenses" of the Devon Fund
Institutional Class did not exceed .95% (exclusive of taxes, interest, brokerage
commissions and extraordinary expenses) during the commencement of the public
offering of the Class through December 31, 1994. This waiver has been extended
through June 30, 1996. If the voluntary expense waivers were not in effect, it
is estimated that the "Total Operating Expenses," as a percentage of average
daily net assets, would be 1.99% for the Devon Fund Institutional Class,
reflecting Management Fees of 0.60%.
See Delaware Fund A Class, Delaware Fund B Class, Delaware Fund C
Class, Devon Fund A Class, Devon Fund B Class and Devon Fund C Class for expense
information about those classes.
<PAGE>
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return and (2) redemption at the end of each time period. As noted in
the tables above, the Fund charges no redemption fees.
Delaware Fund 1 year 3 years 5 years 10 years
------ ------- ------- --------
Institutional Class $8 $25 $44 $98
Devon Fund 1 year 3 years 5 years 10 years
------ ------- ------- --------
Institutional Class $10 $30 $53 $117
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.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Delaware Fund, Inc. - Delaware Fund and Delaware Group Delaware
Fund, Inc. - Devon 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 reports of Ernst & Young LLP covering such financial
information and highlights, all of which are incorporated by reference into Part
B. Further information about the Series' performance is contained in their
Annual Reports to shareholders. A copy of each Series' Annual Report (including
the report of Ernst & Young LLP) may be obtained from the Fund upon request at
no charge.
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Delaware Fund Institutional Class
---------------------------------------------------------------------------------
Period
11/9/92(2)
Year Ended to Year Ended
10/31/95(2) 10/31/94(2) 10/31/93 10/31/93(1) 10/31/92(1) 10/31/91(1)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $18.030 $19.460 $18.820 $18.720 $18.810 $16.190
Income From Investment Operations
- ---------------------------------
Net Investment Income.......................... 0.694 0.653 0.632 0.631 0.660 0.757
Net Gains (Losses) on Securities
(both realized and unrealized)..... 2.166 (0.293) 1.438 1.509 1.490 3.033
----- ------- ----- ----- ----- -----
Total From Investment Operations......... 2.860 0.360 2.070 2.140 2.150 3.790
----- ------- ----- ----- ----- -----
Less Distributions
- ------------------
Dividends (from net investment income)......... (0.660) (0.630) (0.660) (0.660) (0.700) (0.880)
Distributions (from capital gains)............. (0.250) (1.160) (0.770) (0.770) (1.540) (0.290)
Returns of Capital............................. none none none none none none
---- ---- ---- ---- ---- ----
Total Distributions...................... (0.910) (1.790) (1.430) (1.430) (2.240) (1.170)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period................. $19.980 $18.030 $19.460 $19.430 $18.720 $18.810
======= ======= ======= ======= ======= =======
- -------------------------------
Total Return .................................. 16.50% 1.96% 11.76% 11.91%(3) 12.37%(3) 24.32%(3)
- ------------
- -----------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)...... $108,747 $93,990 $72,052 $507,528 $487,343 $453,449
Ratio of Expenses to Average
Daily Net Assets............................. 0.79% 0.81% 0.77% 0.89% 0.79% 0.71%
Ratio of Net Investment
Income to Average Daily Net Assets........... 3.73% 3.47% 3.39% 3.27% 3.64% 4.29%
Portfolio Turnover Rate........................ 94% 142% 160% 160% 144% 212%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Delaware Fund Institutional Class
--------------------------------------------------------------------------------
Year Ended
<S> <C> <C> <C> <C> <C>
10/31/90(1) 10/31/89(1) 10/31/88(1) 10/31/87(1) 10/31/86(1)
Net Asset Value, Beginning of Period........... $17.480 $15.250 $16.850 $23.200 $20.860
Income From Investment Operations
- ---------------------------------
Net Investment Income.......................... 0.856 0.796 0.551 0.331 0.554
Net Gains (Losses) on Securities
(both realized and unrealized)..... (1.366) 2.384 2.259 (1.971) 4.486
------- ----- ----- ------- -----
Total From Investment Operations......... (0.510) 3.180 2.810 (1.640) 5.040
------- ----- ----- ------- -----
Less Distributions
- ------------------
Dividends (from net investment income)......... (0.780) (0.950) (0.320) (0.400) (0.700)
Distributions (from capital gains)............. none none (4.090) (4.310) (2.000)
Returns of Capital............................. none none none none none
---- ---- ---- ---- ----
Total Distributions...................... (0.780) (0.950) (4.410) (4.710) (2.700)
------- ----- ----- ------- -----
Net Asset Value, End of Period................. $16.190 $17.480 $15.250 $16.850 $23.200
======= ======= ======= ======= =======
Total Return .................................. (3.17%)(3) 21.66%(3) 22.03%(3) (9.14%)(3) 26.85%(3)
- ------------
- -----------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted)...... $349,873 $361,625 $328,650 $320,854 $405,856
Ratio of Expenses to Average
Daily Net Assets............................. 0.75% 0.76% 0.77% 0.73% 0.69%
Ratio of Net Investment
Income to Average Daily Net Assets........... 4.99% 4.73% 4.01% 1.64% 2.53%
Portfolio Turnover Rate........................ 147% 129% 180% 205% 104%
</TABLE>
- ----------
(1) Data are derived from data of the Delaware Fund A Class which was subject to
12b-1 distribution expenses effective June 1, 1992.
(2) Data are derived from Delaware Fund Institutional Class shares, which
commenced operations on November 9, 1992. Ratios and total return have been
annualized.
(3) Does not reflect the maximum sales charge that is or was in effect for the
Delaware Fund A Class.
<PAGE>
<TABLE>
<CAPTION>
Devon Fund Institutional Class
------------------------------
Period
Year 12/29/93(1)
Ended to
10/31/95 10/31/94
<S> <C> <C>
Net Asset Value, Beginning of Period......................... $10.860 $10.000
Income From Investment Operations
- ---------------------------------
Net Investment Income(5)..................................... 0.241 0.201
Net Gains (Losses) on Securities
(both realized and unrealized)...................... 2.049 0.749
----- -----
Total From Investment Operations......................... 2.290 0.950
----- -----
Less Distributions
- ------------------
Dividends (from net investment income)....................... (0.240) (0.090)
Distributions (from capital gains)........................... (0.320) none
Returns of Capital........................................... none none
------- -------
Total Distributions...................................... (0.560) (0.090)
------- -------
Net Asset Value, End of Period............................... $12.590 $10.860
======= =======
- ---------------------------------------------
Total Return ............................................... 22.26%(2) 11.45%(1)(2)
- ------------
- -----------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000's omitted).................... $2,870 $2,516
Ratio of Expenses to Average Daily Net Assets................ 0.95% 0.95%(1)(3)
Ratio of Net Investment Income to Average Daily Net Assets... 2.12% 2.26%(1)(4)
Portfolio Turnover Rate...................................... 99% 180%
</TABLE>
- ----------
(1) Date of initial sale of Devon Fund Institutional Class (formerly known as
Dividend Growth Fund Institutional Class). Ratios and total return have been
annualized.
(2) Total return reflects expense limitation referenced in Notes 3 and 4.
(3) Ratio of expenses to average daily net assets prior to expense limitation
was 1.99% for the year ended October 31, 1995 and 2.96% for the period ended
October 31, 1994.
(4) Ratio of net investment income to average daily net assets prior to expense
limitation was 1.08% for the year ended October 31, 1995 and 0.25% for the
period ended October 31, 1994.
(5) 1995 per share information was based on the average shares outstanding
method.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The objective of the Delaware Fund is to seek a balance of capital
appreciation, income and preservation of capital.
The objective of the Devon Fund is to seek current income and capital
appreciation.
Although each Series will constantly strive to attain its objective,
there can be no assurance that it will be obtained. The objective of each Series
cannot be changed without shareholder approval.
INVESTMENT STRATEGY
Delaware Fund - As a "balanced" fund, the Delaware Fund will generally
invest at least 25% of its assets in fixed income securities, including U.S.
Government securities and corporate bonds. The remainder of the Series will be
allocated to equity securities principally, including convertible securities,
and also to cash and cash equivalents. A portion of the Series' investment in
certain convertible securities may be deemed fixed income in nature for purposes
of this 25% fixed income allocation. The Series may also invest in foreign
securities.
The Series uses a dividend-oriented valuation strategy to select
individual securities in which it will invest. In seeking capital appreciation,
the Series invests primarily in common stocks of established companies believed
to have a potential for long-term capital growth. In seeking current income and
preservation of capital, in addition to capital appreciation, the Series invests
in various types of fixed income securities, including U.S. Government and
government agency securities and corporate bonds. The Series generally invests
in bonds that are rated in the top four grades by a nationally-recognized rating
agency (e.g., Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Rating Group ("S&P")) at the time of purchase, or, if unrated, are determined to
be equivalent to the top four grades in the judgment of the Manager. The fourth
grade is considered medium grade and may have some speculative characteristics.
Typically, the maturity of the bonds will range between five and 30 years. The
Series may invest not more than 5% of its assets in convertible debentures rated
below investment grade.
The Series will analyze existing and expected economic and market
conditions and seek to identify those market sectors or individual securities
that are expected to benefit from those conditions. Its appraisal of these
economic conditions will determine the types of securities it will hold and the
degree of investment emphasis placed upon capital appreciation and income.
Devon Fund - The Devon Fund will seek to achieve its objective by
investing primarily in income-producing common stocks, with a focus on common
stocks that the Manager believes have the potential for above average dividend
increases over time. Under normal circumstances, the Series will generally
invest at least 65% of its total assets in dividend paying common stocks.
In selecting stocks for the Series, the Manager will focus primarily on
dividend paying common stocks issued by companies with market capitalizations in
excess of $100 million, but is not precluded from purchasing shares of companies
with market capitalizations of less than $100 million. In seeking stocks with
potential for above average dividend increases, the Manager will consider such
factors as the historical growth rate of a dividend, the frequency of prior
dividend increases, the issuing company's potential to generate cash flows, and
the price/earnings multiple of the stock relative to the market. The Manager
will generally avoid stocks that it believes are overvalued and may select
stocks with current dividend yields that are lower than the current yield of the
S&P 500 Stock Index in exchange for anticipated dividend growth.
<PAGE>
While management believes that the Series' objective may best be
attained by investing in common stocks, the Series may also invest in other
securities including, but not limited to, convertible and preferred securities,
rights and warrants to purchase common stock, and various types of fixed income
securities, such as U.S. Government and government agency securities, corporate
debt securities, and bank obligations, and may also engage in futures
transactions. The Series may invest in foreign securities.
Mortgage-Backed Securities--Each Series may invest in mortgage-backed
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or government sponsored corporations. Each Series also may
invest in securities issued by certain private, non-government corporations,
such as financial institutions, if the securities are fully collateralized at
the time of issuance by securities or certificates issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Two principal types of
mortgage-backed securities are collateralized mortgage obligations (CMOs) and
real estate mortgage investment conduits (REMICs).
CMOs are debt securities issued by U.S. Government agencies or by
financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in sequence
as the underlying mortgages are repaid. Prepayment may shorten the stated
maturity of the obligation and can result in a loss of premium, if any has been
paid. Certain of these securities may have variable or floating interest rates
and others may be stripped (securities which provide only the principal or
interest feature of the underlying security).
REMICs, which were authorized under the Tax-Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
CMOs and REMICs issued by private entities are not government securities
and are not directly guaranteed by any government agency. They are secured by
the underlying collateral of the private issuer. The Series will invest in such
private-backed securities only if they are 100% collateralized at the time of
issuance by securities issued or guaranteed by the U.S. Government, its
agencies, or instrumentalities. The Series currently invest in privately-issued
CMOs and REMICs only if they are rated at the time of purchase in the four
highest grades by a nationally-recognized rating agency.
Asset-Backed Securities--Each Series may also invest in securities which
are backed by assets such as receivables on home equity and credit loans, and
receivables regarding automobile, mobile home and recreational vehicle loans,
wholesale dealer floor plans and leases. All such securities must be rated in
the highest rating category by a reputable credit rating agency (e.g., AAA by
S&P's or Aaa by Moody's). Such receivables are securitized in either a
pass-through or a pay-through structure. Pass-through securities provide
investors with an income stream consisting of both principal and interest
payments in respect of the receivables in the underlying pool. Pay-through
asset-backed securities are debt obligations issued usually by a special purpose
entity, which are collateralized by the various receivables and in which the
payments on the underlying receivables provide the funds to pay the debt service
on the debt obligations issued. The Series may invest in these and other types
of asset-backed securities that may be developed in the future. It is each
Series' current policy to limit asset-backed investments to those represented by
interests in credit card receivables, wholesale dealer floor plans, home equity
loans and automobile loans.
<PAGE>
Due to the shorter maturity of the collateral backing such securities,
there is less of a risk of substantial prepayment than with mortgage-backed
securities. Such asset-backed securities do, however, involve certain risks not
associated with mortgage-backed securities, including the risk that security
interests cannot be adequately or in many cases, ever, established. In addition,
with respect to credit card receivables, a number of state and federal consumer
credit laws give debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the outstanding balance. In the case of automobile
receivables, there is a risk that the holders may not have either a proper or
first security interest in all of the obligations backing such receivables due
to the large number of vehicles involved in a typical issuance and technical
requirements under state laws. Therefore, recoveries on repossessed collateral
may not always be available to support payments on the securities. For further
discussion concerning the risk of investing in such asset-backed securities, see
Part B.
Real Estate Investment Trusts--Each Series may invest in shares or
convertible bonds issued by real estate investment trusts ("REITS"). REITS
invest primarily in income producing real estate as well as real estate related
loans or interests. A REIT is not taxed on income distributed to shareholders if
it complies with several requirements relating to its organization, ownership,
assets and income, and a requirement that it distribute to its shareholders at
least 95% of its taxable income (other than net capital gains) for each taxable
year. Each Series anticipates investing only in REITS that invest the majority
of their assets directly in real property and derive their income primarily from
rents, which are known as "equity REITS." Equity REITS can also realize capital
gains by selling properties that have appreciated in value.
Restricted and Illiquid Securities--Each Series may purchase privately
placed securities the resale of which is restricted under applicable securities
laws. Most of the privately placed securities acquired by the Series will be
eligible for resale by the Series 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. Each Series may invest not more than 10% of
its assets in illiquid securities. While maintaining oversight, the Board of
Directors of the Fund has delegated to the Manager the day-to-day function of
determining whether individual Rule 144A Securities are liquid for purposes of
each Series' 10% limitation on investments in illiquid securities. The Devon
Fund currently intends to limit its investments in restricted securities,
excluding Rule 144A Securities, to not more than 5% of its assets.
The Board has instructed the Manager to consider the following factors
in determining the liquidity of a Rule 144A Security: (i) the frequency of
trades and trading volume for the security; (ii) whether at least three dealers
are willing to purchase or sell the security and the number of potential
purchasers; (iii) whether at least two dealers are making a market in the
security; (iv) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer).
<PAGE>
If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Series'
holdings of illiquid securities exceed the Series' limit noted above on
investments in such securities, the Manager will determine what action to take
to ensure that the Series continues to adhere to such limitation.
Convertible Securities--Each Series may invest in convertible
securities, including corporate debentures, bonds, notes and preferred stocks
that may be converted into or exchanged for common stock. These securities are
generally convertible either at a stated price or a stated rate (that is, for a
specific number of shares of common stock or other security). As with other
fixed income securities, the price of a convertible security to some extent
varies inversely with interest rates. While providing a fixed income stream, a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. Each Series may invest not more than 5% of
its assets in convertible debentures that are rated below investment grade or
are unrated but are determined by the Manager to be of comparable quality. For a
discussion concerning the risks of investing in such securities, see Part B.
Foreign Securities and ADRs--Each Series may invest up to 5% of its
assets in foreign securities. Each Series may also invest without limitation in
sponsored and unsponsored American Depository Receipts ("ADRs") that are
actively traded in the United States. ADRs are receipts typically issued by a
U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. "Sponsored" ADRs are issued jointly by the
issuer of the underlying security and a depository, and "unsponsored" ADRs are
issued without the participation of the issuer of the deposited security.
Holders of unsponsored ADRs generally bear all the costs of such facilities and
the depository of an unsponsored ADR facility frequently is under no obligation
to distribute shareholder communications received from the issuer of the
deposited security or to pass through voting rights to the holders of such
receipts in respect of the deposited securities. Therefore, there may not be a
correlation between information concerning the issuer of the security and the
market value of an unsponsored ADR.
Foreign markets may be more volatile than U.S. markets, and investments
in foreign securities involve sovereign risks in addition to the normal risks
associated with U.S. 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 control regulations apart from market fluctuations. Each
Series may also experience delays in foreign securities settlement.
Each Series will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions.
The Fund's Custodian for its foreign securities is Morgan Guaranty Trust
Company of New York, located at 60 Wall Street, New York, NY 10260.
Futures Contracts--The Devon Fund may enter into futures contracts on
stocks and stock indices, and purchase or sell options on stock index futures
and stock indices. These activities will not be entered into for speculative
purposes, but rather for hedging purposes and to facilitate the ability to
quickly deploy into the stock market the Series' positions in cash, short-term
debt securities and other money market instruments, at times when the Series'
assets are not fully invested in equity securities. Such positions will
generally be eliminated when it becomes possible to invest in securities that
are appropriate for the Series.
<PAGE>
A futures contract is a bilateral agreement providing for the purchase
and sale of a specified type and amount of a financial instrument, or for the
making and acceptance of a cash settlement, at a stated time in the future for a
fixed price. By its terms, a futures contract provides for a specified
settlement date on which the securities underlying the contract are delivered,
or in the case of securities index futures contracts, the difference between the
price at which the contract was entered into and the contract's closing value is
settled between the purchaser and seller in cash. Futures contracts differ from
options in that they are bilateral agreements, with both the purchaser and the
seller equally obligated to complete the transaction. In addition, futures
contracts call for settlement only on the expiration date, and cannot be
"exercised" at any other time during their term.
The purchase or sale of a futures contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalents, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin" as a good faith deposit. This
amount is generally maintained in a segregated account at the custodian bank.
Subsequent payments to and from the broker, referred to as "variation margin,"
are made on a daily basis as the value of the index or instrument underlying the
futures contract fluctuates, making positions in the futures contract more or
less valuable, a process known as "marking to the market."
The Series may also purchase and write options on the types of futures
contracts in which the Series may invest, and enter into related closing
transactions. Options on futures are similar to options on securities, as
described below, except that options on futures give the purchaser the right, in
return for the premium paid, to assume a position in a futures contract, rather
than to actually purchase or sell the futures contract, at a specified exercise
price at any time during the period of the option. In the event that an option
written by the Series is exercised, the Series will be subject to all the risks
associated with the trading of futures contracts, such as payment of variation
margin deposits. In addition, the writer of an option on a futures contract,
unlike the holder, is subject to initial and variation margin requirements on
the option position.
At any time prior to the expiration of a futures contract, a trader may
elect to close out its position by taking an opposite position on the contract
market on which the position was entered into, subject to the availability of a
secondary market, which will operate to terminate the initial position.
Likewise, a position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to availability of a secondary market, which is the
purchase or sale of an option of the same series (i.e., the same exercise price
and expiration date) as the option previously purchased or sold. The Series may
realize a profit or a loss when closing out a futures contract or an option on a
futures contract.
To the extent that interest or exchange rates or securities prices move
in an unexpected direction, the Series may not achieve the anticipated benefits
of investing in futures contracts and options thereon, or may realize a loss. To
the extent that the Series purchases an option on a futures contract and fails
to exercise the option prior to the exercise date, it will suffer a loss of the
premium paid. Further, the possible lack of a secondary market could prevent the
Series from closing out its positions relating to futures. See Part B for a
further discussion of this investment technique.
Options--The Devon Fund may write covered call options on individual
issues as well as write call options on stock indices. The Series may also
purchase put options on individual issues and on stock indices. The Manager will
employ these techniques in an attempt to protect appreciation attained, to
offset capital losses and to take advantage of the liquidity available in the
option markets. The ability to hedge effectively using options on stock indices
will depend, in part, on the correlation between the composition of the index
and the Series' portfolio as well as the price movement of individual
securities. The Series does not currently intend to write or purchase options on
stock indices.
While there is no limit on the amount of the Series' assets which may be
invested in covered call options, the Series will not invest more than 2% of its
net assets in put options. The Series will only use Exchange-traded options.
<PAGE>
Call Options
Writing Covered Call Options--A covered call option obligates the Series
to sell one of its securities for an agreed price up to an agreed date. When the
Series writes a call, it receives a premium and agrees to sell the callable
securities to a purchaser of a corresponding call during the call period
(usually not more than nine months) at a fixed exercise price regardless of
market price changes during the call period. The advantage is that the Series
receives premium income for the limited purpose of offsetting the costs of
purchasing put options or offsetting any capital loss or decline in market value
of the security. However, if the Manager's forecast is wrong, the Series may not
fully participate in the market appreciation if the security's price rises.
Writing a Call Option on Stock Indices--Writing a call option on stock
indices is similar to the writing of a call option on an individual stock. Stock
indices used will include, but not be limited to, the S&P 500, the S&P 100 and
the S&P Over-The-Counter ("OTC") 250.
Put Options
Purchasing a Put Option--A put option gives the Devon Fund the right to
sell one of its securities for an agreed price up to an agreed date. The
advantage is that the Series can be protected should the market value of the
security decline. However, the Series must pay a premium for this right which
would be lost if the option is not exercised. The Series will, at all times
during which it holds a put option, own the security covered by such option.
Purchasing a Put Option on Stock Indices--Purchasing a protective put
option on stock indices is similar to the purchase of protective puts on an
individual stock. Indices used will include, but not be limited to, the S&P 500,
the S&P 100 and the S&P OTC 250.
Closing Transactions--Closing transactions essentially let the Series
offset a put option or covered call option prior to its exercise or expiration.
If the Series cannot effect a closing transaction, it may have to hold a
security it would otherwise sell or deliver a security it might want to hold.
Repurchase Agreements--In order to invest its short-term cash reserves
or when in a temporary defensive posture, each Series may enter into repurchase
agreements with banks or broker/dealers deemed to be creditworthy by the
Manager, under guidelines approved by the Board of Directors. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Series)
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, thereby determining the yield during
the purchaser's holding period. Generally, repurchase agreements are of short
duration, often less than one week, but on occasion for longer periods. Not more
than 10% of a Series' assets may be invested in repurchase agreements of over
seven-days' maturity or other illiquid assets. Should an issuer of a repurchase
agreement fail to repurchase the underlying security, the loss to the Series, if
any, would be the difference between the repurchase price and the market value
of the security. Each Series will limit its investments in repurchase agreements
to those which the Manager under the guidelines of the Board of Directors
determines to present minimal credit risks and which are of high quality. In
addition, each Series must have collateral of at least 100% of the repurchase
price, including the portion representing such Series' yield under such
agreements which is monitored on a daily basis. Such collateral is held by the
Custodian in book entry form. Such agreements may be considered loans under the
1940 Act, but the Series consider repurchase agreements contracts for the
purchase and sale of securities, and each seeks to perfect a security interest
in the collateral securities so that it has the right to keep and dispose of the
underlying collateral in the event of default.
<PAGE>
The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the Investment Company Act to
allow the Delaware Group funds jointly to invest cash balances. Each Series of
the Fund may invest cash balances in a joint repurchase agreement in accordance
with the terms of the Order and subject generally to the conditions described
above.
Portfolio Loan Transactions--Each Series may loan up to 25% of its
assets to qualified broker/dealers or institutional investors for their use
relating to short sales or other security transactions.
The major risk to which a Series would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, each Series will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
Other Investment Policies--Neither Series may concentrate investments in
any industry, which means that a Series may generally not invest more than 25%
of its assets in any one industry.
In pursuing its investment objective, each Series may hold securities
for any period of time. For temporary, defensive purposes, each Series may hold
a substantial portion of its assets in cash, cash equivalents or short-term
obligations, including repurchase agreements. Each Series may also enter into
repurchase agreements to invest excess cash balances.
While each Series is permitted under certain circumstances to borrow
money, neither Series normally does so. A Series will not purchase investment
securities while it has any borrowings outstanding.
Each Series may purchase securities on a when-issued or delayed delivery
basis. It is the current intention of each Series not to enter into when-issued
commitments exceeding in the aggregate 5% of the market value of the Series'
total assets less liabilities other than obligations created by these
commitments.
* * *
Part B provides more information on the Fund's investment restrictions
and policies, and includes Appendix A which describes security ratings.
<PAGE>
SUITABILITY
Each Series may be suitable for investors interested in long-term
capital appreciation. Delaware Fund may be more suitable for investors wishing
to expose a portion of their assets to fixed income securities, while Devon Fund
may be more suitable for investors seeking a greater emphasis on common stocks
and securities convertible into common stocks. Investors in each Series should
be willing to accept the risks associated with investments in equity securities.
Investors in Delaware Fund and, to a lesser extent, investors in Devon Fund
should also be willing to accept the risks associated with investments in fixed
income securities. Net asset values may fluctuate in response to market
conditions and, as a result, neither Series is appropriate for a short-term
investor.
Ownership of Series shares reduces the bookkeeping and administrative
inconveniences connected with direct purchases of these securities.
An investor should not consider a purchase of either Series shares as
equivalent to a complete investment program. The Delaware Group includes a
family of funds, generally available through registered investment dealers,
which may be used together to create a more complete investment program.
<PAGE>
BUYING SHARES
The Distributor serves as the national distributor for the Fund. Shares
of each Class may be purchased directly by contacting the 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.
Delaware Fund A Class, Delaware Fund B Class, Delaware Fund C Class, Devon Fund
A Class, Devon Fund B Class and Devon Fund C Class
In addition to offering Delaware Fund Institutional Class and Devon Fund
Institutional Class, the Fund also offers Delaware Fund A Class, Delaware Fund B
Class, Delaware Fund C Class, Devon Fund A Class, Devon Fund B Class and Devon
Fund C Class, which are described in a separate prospectus relating only to
those classes. Those classes may be purchased through authorized investment
dealers or directly by contacting the Fund or its agent. The Delaware Fund A
Class and Devon 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% (which, based on the net asset value
of such shares as of the end of the Fund's most recent fiscal year, is
equivalent to 4.96% of the amount invested with respect to Delaware Fund A Class
and 5.02% of the amount invested with respect to Devon Fund A Class) and is
reduced on certain transactions of $100,000 or more. Delaware Fund B Class,
Delaware Fund C Class, Devon Fund B Class and Devon 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 Delaware Fund B Class, Delaware Fund C Class, Devon
Fund B Class and Devon Fund C Class and certain shares of Delaware Fund A Class
and Devon Fund A Class may be subject to a contingent deferred sales charge upon
redemption. To obtain a prospectus relating to Delaware Fund A Class, Delaware
Fund B Class, Delaware Fund C Class, Devon Fund A Class, Devon Fund B Class and
Devon Fund C Class, contact the Distributor by writing to the address on the
cover of this Prospectus or by calling 800- 523-4640.
<PAGE>
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase the shares of the Classes.
Investing Directly by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
plan account, an appropriate retirement plan application, must be completed,
signed and sent with a check, payable to the specific Class selected, 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 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 Fund's Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application or, in the case of a retirement plan account, an
appropriate retirement plan application, to the Class selected by you, 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 Classes, you may write and authorize
an exchange of part or all of your investment into the Classes. However, shares
of Delaware Fund B Class, Delaware Fund C Class, Devon Fund B Class and Devon
Fund C Class and 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 Class shares through most investment dealers
who, as part of the service they provide, must promptly transmit orders to the
Fund. They may charge for this service.
Purchase Price and Effective Date
The purchase price (net asset value) of each Class 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.
<PAGE>
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received, unless
it is received after the time the share price is determined, as noted above.
Purchase orders received after such time will be effective the next business
day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of redemptions.
<PAGE>
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 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 the Fund at 800-828-5052.
The Fund will honor written redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied that the purchase check has cleared, which may take up to
15 days from the purchase date. The Fund will not honor telephone redemptions
for shares recently purchased by check unless it is reasonably satisfied that
the purchase check has cleared. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. The Fund reserves the right to reject a
written or telephone redemption request or delay payment of redemption proceeds
if there has been a recent change to the shareholder's address of record.
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 the Classes, such exchange will be exchanged at
net asset value. Shares of the Classes may not be exchanged into Class B Shares
or Class C Shares of any of the funds in the Delaware Group. The Fund may
suspend, 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 the Fund or the Distributor for redeeming or exchanging your shares.
You may also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
Written Redemption and Exchange
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an 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.
<PAGE>
For redemptions of more than $50,000, or when the proceeds are not sent
to the shareholder(s) at the address of record, the Fund requires a signature by
all owners of the account and may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
The redemption request is effective at the net asset value next
determined after it is received in good order. Payment is normally mailed the
next business day, but no later than seven days, after receipt of your
redemption request. The Fund issues certificates for Class shares 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 only redeem
or exchange by written request and you must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such service available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.
Neither the Fund nor the Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Series shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. 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 later than seven days, after receipt of the request.
<PAGE>
Telephone Redemption-Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, the Fund requires a written authorization and may require that you have
your signature guaranteed. For your protection, your authorization must be on
file. If you request a wire, your funds will normally be sent the next business
day. CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next business
day, but no later than seven days, after receipt of your request to your
predesignated bank account. There are no fees for this 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.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Each Series will normally make payments from net investment income on a
quarterly basis. During the fiscal year ended October 31, 1995, dividends
totaling $0.66 and $0.24 per share of the Delaware Fund Institutional Class and
the Devon Fund Institutional Class, respectively, were paid from net investment
income. The amounts included undistributed net investment income earned by the
Series during the previous fiscal year.
Payments from net realized securities profits of each Series, if any,
will be distributed annually in the quarter following the close of the fiscal
year. During the fiscal year ended October 31, 1995, distributions totaling
$0.25 and $0.32 per share of the Delaware Fund Institutional Class and the Devon
Fund Institutional Class, respectively, were paid from realized securities
profits.
Each class of a Series will share proportionately in the investment
income and expenses of that Series, except that the Classes will not incur any
distribution fees under the 12b- 1 Plans which apply only to the Delaware Fund A
Class, the Delaware Fund B Class, the Delaware Fund C Class, the Devon Fund A
Class, the Devon Fund B Class and the Devon Fund C Class.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value.
<PAGE>
TAXES
Each Series has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code"). As such, a Series will not be subject to federal income tax, or to
any excise tax, to the extent its earnings are distributed as provided in the
Code.
Each Series intends to distribute substantially all of its net
investment income and net capital gains, if any. Dividends from net investment
income or net short-term capital gains will be taxable to you as ordinary
income, even though received in additional shares. For corporate investors,
dividends from net investment income will generally qualify in part for the
corporate dividends-received deduction. The portion of dividends paid by a
Series that so qualifies will be designated each year in a notice from the Fund
to the Series' shareholders. For the fiscal year ended October 31, 1995, 27% and
31% of, respectively, the Delaware Fund's and the Devon Fund's dividends from
net investment income qualified for the corporate dividends-received deduction.
Distributions paid by a Series from long-term capital gains, received in
additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Series. The Series do not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a byproduct of
a Series' management activities. Consequently, capital gains distributions may
be expected to vary considerably from year to year. Also, for those investors
subject to tax, if purchases of shares in a Series are made shortly before the
record date for a dividend or capital gains distribution, a portion of the
investment will be returned as a taxable distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November, or December to shareholders
of record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Series and received by the
shareholder on December 31 of the year declared.
The sale of shares of a Series is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series or portfolios of a mutual fund). Any loss
incurred on sale or exchange of a Series' shares which had been held for six
months or less will be treated as a long-term capital loss to the extent of
capital gain dividends received with respect to such shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. Government securities may be exempt from
state personal income taxes. Shares of the Series are exempt from Pennsylvania
county personal property taxes.
Each year, the Fund will mail you information on the tax status of the
Series' dividends and distributions. Shareholders will also receive each year
information as to the portion of dividend income, if any, that is derived from
U.S. Government securities that are exempt from state income tax. Of course,
shareholders who are not subject to tax on their income would not be required to
pay tax on amounts distributed to them by the Series.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form your proper Taxpayer
Identification Number and by certifying that you are not subject to backup
withholding.
The tax discussion set forth above is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in a Series.
See Taxes in Part B for additional information on tax matters relating
to each Series and its shareholders.
<PAGE>
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.
Debt securities are priced at fair value by an independent pricing service using
methods approved by the Fund's Board of Directors. Short-term investments having
a maturity of less than 60 days are valued at amortized cost, which approximates
market value. All other securities are valued at their fair value as determined
in good faith and in a method approved by the Fund's Board of Directors.
Each of a Series' four classes will bear, pro-rata, all of the common
expenses of that Series. The net asset values of all outstanding shares of each
class of a Series will be computed on a pro-rata basis for each outstanding
share based on the proportionate participation in the Series represented by the
value of shares of that class. All income earned and expenses incurred by a
Series, will be borne on a pro-rata basis by each outstanding share of a class,
based on each class' percentage in the Series represented by the value of shares
of such classes, except that the Classes will not incur any of the expenses
under the Fund's 12b-1 Plans and the Delaware Fund A, B and C Classes and the
Devon 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 Series will vary.
<PAGE>
MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of
its Board of Directors. Part B contains additional information regarding the
Fund's directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On October 31, 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
$16,961,505,000) and investment company (approximately $10,172,570,000)
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 became 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 the Fund on behalf of each Series and the Manager were executed
following shareholder approval.
The Manager manages each Series' portfolio and makes investment
decisions which are implemented by the Fund's Trading Department. The Manager
also administers the Fund's affairs and pays the salaries of all the directors,
officers and employees of the Fund who are affiliated with the Manager. For
these services, the Manager is paid an annual fee equal to: for the Delaware
Fund, .60% on the first $100 million of average daily net assets of the Fund,
.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 the Series'
proportionate share of all directors' fees paid to the unaffiliated directors of
the Fund; and, for the Devon Fund, .60% on the first $500 million of average
daily net assets and .50% on the average daily net assets in excess of $500
million. Investment management fees paid by the Delaware Fund for the fiscal
year ended October 31, 1995 were 0.52% of average daily net assets. Investment
management fees earned by the Devon Fund for the fiscal year ended October 31,
1995 were 0.60% of average daily net assets and no fees were paid by this Series
as a result of the voluntary waiver of fees by the Manager as described under
Summary of Expenses.
George H. Burwell and Gary A. Reed have primary responsibility for
making day-to-day investment decisions for the Delaware Fund and Mr. Burwell has
such responsibility for the Devon Fund. Mr. Burwell, who has been the Fund's
Senior Portfolio Manager for equities since 1992, holds a BA from the University
of Virginia. Prior to joining the Delaware Group in 1992, Mr. Burwell was a
portfolio manager for Midlantic Bank in Edison, New Jersey, where he managed an
equity mutual fund and three commingled funds. Mr. Burwell is a Chartered
Financial Analyst.
Mr. Reed has been the Delaware Fund's Senior Portfolio Manager for fixed
income since April 1995. He holds an AB in Economics from the University of
Chicago and an MA in Economics from Columbia University. He began his career in
1978 with the Equitable Life Assurance Company in New York City, where he
specialized in credit analysis. Prior to joining the Delaware Group in 1989, Mr.
Reed was Vice President and Manager of the fixed income department at Irving
Trust Company in New York.
<PAGE>
In making investment decisions for the Fund, Mr. Burwell and Mr. Reed
regularly consult with Wayne A. Stork, Richard G. Unruh, Jr. and Paul E. Suckow.
Mr. Stork, Chairman of the Manager and the Fund's Board of Directors, is a
graduate of Brown University and attended New York University's Graduate School
of Business Administration. Mr. Stork joined the Delaware Group in 1962 and has
served in various executive capacities at different times within the Delaware
organization. A graduate of Brown University, Mr. Unruh received his MBA from
the University of Pennsylvania's Wharton School and joined the Delaware Group in
1982 after 19 years of investment management experience with Kidder, Peabody &
Co. Inc. Mr. Unruh was named an executive vice president of the Fund in 1994. He
is also a member of the Board of 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. Mr. Suckow is
Delaware's Chief Investment Officer for fixed income. A Chartered Financial
Analyst, he is a graduate of Bradley University with an MBA from Western
Illinois University. Mr. Suckow was a fixed income portfolio manager at the
Delaware Group from 1981 to 1985. He returned to the Delaware Group in 1993
after eight years with Oppenheimer Management Corporation.
Portfolio Trading Practices
The Series normally will not invest for short-term trading purposes.
However, each Series may sell securities without regard to the length of time
they have been held. The degree of portfolio activity will affect brokerage
costs of the Series and may affect taxes payable by the Series' shareholders to
the extent of any net realized capital gains. A turnover rate of 100% would
occur if all the investments in a Series' portfolio at the beginning of the year
were replaced by the end of the year. During the past two fiscal years, Delaware
Fund's portfolio turnover rates were 142% for 1994 and 94% for 1995. For the
period December 29, 1993 (date of initial public offering) through October 31,
1994, Devon Fund's portfolio turnover rate was 180%, annualized, and for the
fiscal year ended October 31, 1995, Devon Fund's portfolio turnover rate was
99%.
The 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, the Fund may consider a
broker/dealer's sales of Series shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Series expenses
such as custodian fees.
Performance Information
From time to time, Delaware Fund and Devon Fund may quote total return
performance for their respective Class, in advertising and other types of
literature. Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value. Each
presentation will include the average annual total return for one-, five- and
ten-year or life-of-Series periods, as relevant. The Series 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.
<PAGE>
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 Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. The Fund's fiscal year ends on October
31.
Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor for
the Series under 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 the Delaware
Fund under an Agreement dated June 29, 1988 and for the Devon Fund under an
Agreement dated December 29, 1993. 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
services 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 indirect, wholly-owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreements and those borne
by the Distributor under the Distribution Agreements. For the fiscal year ended
October 31, 1995, the ratio of operating expenses to average daily net assets
for the Delaware Fund Institutional Class was 0.79%. For the fiscal year ended
October 31, 1995, the ratio of operating expenses to average daily net assets
for the Devon Fund Institutional Class was 0.95%, after voluntary fee waivers
and expense reimbursements by the Manager.
Shares
The Fund is an open-end management investment company, commonly known as
a mutual fund, and each Series' portfolio of assets is diversified as defined by
the 1940 Act. The Fund, incorporated in Maryland on March 4, 1983, was
previously organized as a Delaware corporation in 1937.
The Fund currently offers two Series of shares - the Delaware Fund
series and the Devon Fund series. Series shares have a par value of $1.00, equal
voting rights, except as noted below, and are equal in all other respects. Each
Series will vote separately on any matter which affects only that Series. Shares
of each Series have a priority over shares of any other series of the Fund in
the assets and income of that Series.
<PAGE>
All Fund shares have noncumulative voting rights which means that the
holders of more than 50% of the Fund's shares voting for the election of
directors can elect 100% of the directors if they choose to do so. Under
Maryland law, the Fund is not required, and does not intend, to hold annual
meetings of shareholders unless, under certain circumstances, it is required to
do so under the 1940 Act. Shareholders of 10% or more of the Fund's shares may
request that a special meeting be called to consider the removal of a director.
The Delaware Fund and the Devon Fund also offer the Delaware Fund A
Class, the Delaware Fund B Class and the Delaware Fund C Class, and the Devon
Fund A Class, the Devon Fund B Class and the Devon Fund C Class, respectively,
which represent proportionate interests in the assets of the respective Series
and have the same voting and other rights and preferences as the Delaware Fund
Institutional Class and the Devon 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 Delaware Fund
A Class, the Delaware Fund B Class, the Delaware Fund C Class, the Devon Fund A
Class, the Devon Fund B Class and the Devon Fund C Class.
Prior to September 6, 1994, the Delaware Fund Institutional Class was
known as the Delaware Fund (Institutional) class, the Dividend Growth Fund
Institutional Class was known as the Dividend Growth Fund (Institutional) class,
the Delaware Fund A Class was known as the Delaware Fund class and the Dividend
Growth Fund A Class was known as the Dividend Growth Fund class. Effective as of
the close of business on August 28, 1995, the name Dividend Growth Fund was
changed to Devon Fund. At the same time, the names of Dividend Growth Fund
Institutional Class, Dividend Growth Fund A Class and Dividend Growth Fund B
Class were changed to, respectively, Devon Fund Institutional Class, Devon Fund
A Class and Devon Fund B Class.
<PAGE>
-------------------------------
DELAWARE FUND
-------------------------------
A CLASS
-------------------------------
B CLASS
The Delaware Group includes funds with -------------------------------
a wide range of investment objectives. Stock C CLASS
funds, income funds, tax-free funds, money -------------------------------
market funds, global and international funds -------------------------------
and closed-end equity funds give investors INSTITUTIONAL CLASS
the ability to create a portfolio that fits -------------------------------
their personal financial goals. For more DEVON FUND
information, shareholders of the Fund Classes
should contact their financial adviser or (FORMERLY DIVIDEND GROWTH FUND)
call Delaware Group at 800-523-4640 and -------------------------------
shareholders of the Institutional Classes A CLASS
should contact Delaware Group at 800-828-5052. -------------------------------
B CLASS
-------------------------------
C CLASS
-------------------------------
-------------------------------
INSTITUTIONAL CLASS
-------------------------------
CLASSES OF DELAWARE GROUP
INVESTMENT MANAGER DELAWARE FUND, INC.
Delaware Management Company, Inc.
One Commerce Square -------------------------------
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING, PART B
DIVIDEND DISBURSING
AND TRANSFER AGENT STATEMENT OF
Delaware Service Company, Inc. ADDITIONAL INFORMATION
1818 Market Street
Philadelphia, PA 19103 -------------------------------
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young DECEMBER 29, 1995
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>
- -------------------------------------------------------------------------------
PART B--STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 29, 1995
- -------------------------------------------------------------------------------
DELAWARE GROUP DELAWARE FUND, INC.
- -------------------------------------------------------------------------------
1818 Market Street
Philadelphia, PA 19103
- -------------------------------------------------------------------------------
For more information about Delaware Fund Institutional Class and
Devon Fund Institutional Class:
800-828-5052
For Prospectus and Performance of Delaware Fund A Class,
Delaware Fund B Class, Delaware Fund C Class, Devon Fund A Class,
Devon Fund B Class and Devon Fund C Class:
Nationwide 800-523-4640
Information on Existing Accounts of Delaware Fund A Class,
Delaware Fund B Class, Delaware Fund C Class, Devon Fund A Class,
Devon Fund B Class and Devon Fund C Class:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Cover Page
- -------------------------------------------------------------------------------
Investment Restrictions and Policies
- -------------------------------------------------------------------------------
Performance Information
- -------------------------------------------------------------------------------
Trading Practices and Brokerage
- -------------------------------------------------------------------------------
Purchasing Shares
- -------------------------------------------------------------------------------
Investment Plans
- -------------------------------------------------------------------------------
Determining Offering Price and
Net Asset Value
- -------------------------------------------------------------------------------
Redemption and Repurchase
- -------------------------------------------------------------------------------
Dividends and Realized Securities
Profits Distributions
- -------------------------------------------------------------------------------
Taxes
- -------------------------------------------------------------------------------
Investment Management Agreements
- -------------------------------------------------------------------------------
Officers and Directors
- -------------------------------------------------------------------------------
Exchange Privilege
- -------------------------------------------------------------------------------
General Information
- -------------------------------------------------------------------------------
Appendix A -- Description of Ratings
- -------------------------------------------------------------------------------
Appendix B -- IRA Information
- -------------------------------------------------------------------------------
Appendix C -- Performance Overview
- -------------------------------------------------------------------------------
Appendix D -- The Company Life Cycle
- -------------------------------------------------------------------------------
Financial Statements
- -------------------------------------------------------------------------------
<PAGE>
Delaware Group Delaware Fund, Inc. (the "Fund") is a
professionally-managed mutual fund of the series type presently offering two
series of portfolios: the Common Stock series, which is known as and does
business as the Delaware Fund series ("Delaware Fund") and the Devon Fund series
("Devon Fund") (collectively, the "Series"). The Delaware Fund and the Devon
Fund offer, respectively, the Delaware Fund A Class and the Devon Fund A Class
("Class A Shares"), the Delaware Fund B Class and the Devon Fund B Class ("Class
B Shares"), the Delaware Fund C Class and the Devon Fund C Class ("Class C
Shares") (Class A Shares, Class B Shares and Class C Shares together referred to
as the "Fund Classes"), and the Delaware Fund Institutional Class and the Devon
Fund Institutional Class ("Institutional Classes"). Effective as of the close of
business on August 28, 1995, the name Dividend Growth Fund was changed to Devon
Fund and the names of Dividend Growth Fund A Class, Dividend Growth Fund B Class
and Dividend Growth Fund Institutional Class were changed to Devon Fund A Class,
Devon Fund B Class and Devon Fund Institutional Class, respectively.
Class B Shares, Class C Shares and Institutional Class shares of a
Series may be purchased at a price equal to the next determined net asset value
per share. Class A Shares may be purchased at the public offering price, which
is equal to the next determined net asset value per share, plus a front-end
sales charge. Class A Shares are subject to a maximum front-end sales charge of
4.75% and annual 12b-1 Plan expenses of up to 0.30%. Class B Shares are subject
to a contingent deferred sales charge ("CDSC") which may be imposed on
redemptions made within six years of purchase and annual 12b-1 Plan expenses of
up to 1%, which are assessed against Class B Shares for approximately eight
years after purchase. See Automatic Conversion of Class B Shares under Buying
Shares in the Fund Classes' Prospectus. Class C Shares are subject to a CDSC
which may be imposed on redemptions made within 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 Statement of
Additional Information ("Part B" of the registration statement) refer to all
Classes of shares of the Fund, except where noted.
This Part B supplements the information contained in the current
Prospectus for the Fund Classes dated December 29, 1995 and the current
Prospectus for the Institutional Classes dated December 29, 1995, as they may be
amended from time to time. It should be read in conjunction with the respective
Class' Prospectus. Part B is not itself a prospectus but is, in its entirety,
incorporated by reference into each Class' Prospectus. A prospectus relating to
the Fund Classes and a prospectus relating to the Institutional Classes may be
obtained by writing or calling your investment dealer or by contacting the
Fund's national distributor, Delaware Distributors, L.P. (the "Distributor"),
1818 Market Street, Philadelphia, PA 19103.
<PAGE>
INVESTMENT RESTRICTIONS AND
POLICIES
Investment Restrictions--The Fund has adopted the following fundamental
restrictions which are applied to each Series except as noted. Fundamental
restrictions may not be amended without approval of a majority of the
outstanding voting securities of a Series, which is more than 50% of the
outstanding voting securities of a Series which proposes to change its
fundamental policy, or 67% of the voting securities of a Series which proposes
to change its fundamental policy present at a shareholder meeting if the holders
of more than 50% of such voting securities are present in person or represented
by proxy, whichever is less. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities.
1. Not to invest more than 5% of the value of its assets in securities of
any one company (except U.S. Government bonds) or purchase more than 10% of the
voting or nonvoting securities of any one company.
2. Not to acquire control of any company. (The Fund's Certificate of
Incorporation permits control of companies to protect investments already made,
but its policy is not to acquire control.)
3. Not to purchase or retain securities of a company which has an officer
or director who is an officer or director of the Fund, or an officer, director
or partner of its investment manager if, to the knowledge of the Fund, one or
more of such persons own beneficially more than 1/2 of 1% of the shares of the
company, and in the aggregate more than 5% thereof.
4. No long or short positions on shares of the Fund may be taken by its
officers, directors or any of its affiliated persons. Such persons may buy
shares of the Fund for investment purposes, however.
5. Not to purchase any security issued by any other investment company if
after such purchase it would: (a) own more than 3% of the voting stock of such
company, (b) own securities of such company having a value in excess of 5% of
the Fund's assets or (c) own securities of investment companies having an
aggregate value in excess of 10% of the Fund's assets.
6. Not to act as an underwriter of securities of other issuers, except that
the Fund may acquire restricted securities and securities which are not readily
marketable under circumstances where, if such securities are sold, the Fund may
be deemed an underwriter for purposes of the Securities Act of 1933.
7. Not to invest in securities of other investment companies except at
customary brokerage commission rates or in connection with mergers,
consolidations or offers of exchange.
8. Not to make any investment in real estate unless necessary for office
space or the protection of investments already made. (This restriction does not
preclude the Fund's purchase of securities issued by real estate investment
trusts.)
9. Not to sell short any security or property.
10. Not to deal in commodities, except that the Devon 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. Not to borrow, except as a temporary measure for extraordinary or
emergency purposes and then not in excess of 10% of gross assets taken at cost
or market, whichever is lower, and not to pledge more than 15% of gross assets
taken at cost. Any borrowing will be done from a bank and to the extent that
such borrowing exceeds 5% of the value of the 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 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.
<PAGE>
12. Not to make loans. However, the purchase of a portion of an issue of
publicly distributed bonds, debentures or other securities, whether or not the
purchase was made upon the original issuance of the securities, and the entry
into "repurchase agreements" are not to be considered the making of a loan by
the Fund and 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.
13. Not to invest more than 5% of the value of its total assets in
securities of companies less than three years old. Such three-year period shall
include the operation of any predecessor company or companies.
Investment Policies--All investment policies of the Series are
nonfundamental and may be changed without shareholder approval, except those
identified above as fundamental restrictions.
Each Series has made a commitment that it will not invest in warrants
valued at the lower of cost or market exceeding 5% of such Series' net assets.
Included within that amount, but not to exceed 2% of each Series' net assets,
may be warrants not listed on the New York Stock Exchange or American Stock
Exchange.
Neither Series currently invests its assets in real estate limited
partnerships or oil, gas and other mineral leases. Each Series currently intends
to limit its investments in real estate investment trusts to not more than 10%
of each such Series' net assets.
While each Series is permitted under certain circumstances to borrow
money, neither Series normally does so. Investment securities will not normally
be purchased by a Series while it has an outstanding borrowing. Neither Series
may concentrate investments in any industry, which means that a Series generally
may not invest more than 25% of its assets in any one industry.
Mortgage-Backed Securities--In addition to mortgage-backed securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
or government sponsored corporations, each Series may also invest its assets in
securities issued by certain private, nongovernment corporations, such as
financial institutions, if the securities are fully collateralized at the time
of issuance by securities or certificates issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. Two principal types of
mortgage-backed securities are collateralized mortgage obligations (CMOs) and
real estate mortgage investment conduits (REMICs).
CMOs are debt securities issued by U.S. Government agencies or by
financial institutions and other mortgage lenders and collateralized by a pool
of mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in sequence
as the underlying mortgages are repaid. Prepayment may shorten the stated
maturity of the obligation and can result in a loss of premium, if any has been
paid. Certain of these securities may have variable or floating interest rates
and others may be stripped (securities which provide only the principal or
interest feature of the underlying security).
REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
CMOs and REMICs issued by private entities are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. The Series will
invest in such private-backed securities only if they are 100% collateralized at
the time of issuance by securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. The Series currently invest in
privately-issued CMOs and REMICs only if they are rated at the time of purchase
in the four highest grades by a nationally-recognized rating agency.
<PAGE>
Asset-Backed Securities--Each Series may invest a portion of its assets
in asset-backed securities. The rate of principal payment on asset-backed
securities generally depends on the rate of principal payments received on the
underlying assets. Such rate of payments may be affected by economic and various
other factors such as changes in interest rates. Therefore, the yield may be
difficult to predict and actual yield to maturity may be more or less than the
anticipated yield to maturity. The credit quality of most asset-backed
securities depends primarily on the credit quality of the assets underlying such
securities, how well the entities issuing the securities are insulated from the
credit risk of the originator or affiliated entities, and the amount of credit
support provided to the securities.
Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, such
securities may contain elements of credit support. Such credit support falls
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
due on the underlying pool is timely. Protection against losses resulting from
ultimate default enhances the likelihood of payments of the obligations on at
least some of the assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained by the issuer or
sponsor from third parties, through various means of structuring the transaction
or through a combination of such approaches. The Series will not pay any
additional fees for such credit support, although the existence of credit
support may increase the price of a security.
Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over collateralization" (where the scheduled payments on, or
the principal amount of, the underlying assets exceeds that required to make
payments of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information respecting the level of credit information respecting the level of
credit risk associated with the underlying assets. Delinquencies or losses in
excess of those anticipated could adversely affect the return on an investment
in such issue.
Portfolio Loan Transactions--Each Series may loan up to 25% of its
assets to qualified broker/dealers or institutional investors for their use
relating to short sales or other security transactions.
It is the understanding of Delaware Management Company, Inc. (the
"Manager") that the staff of the Securities and Exchange Commission 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 Series from the
borrower; 2) this collateral must be valued daily and should the market value of
the loaned securities increase, the borrower must furnish additional collateral
to the Series; 3) the Series must be able to terminate the loan after notice, at
any time; 4) the Series must receive reasonable interest on any loan, and any
dividends, interest or other distributions on the lent securities, and any
increase in the market value of such securities; 5) the Series may pay
reasonable custodian fees in connection with the loan; and 6) the voting rights
on the lent securities may pass to the borrower; however, if the directors of
the Fund know that a material event will occur affecting an investment loan,
they must either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the directors to vote the
proxy.
<PAGE>
The major risk to which a Series would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, each Series will only enter into loan arrangements
after a review of all pertinent facts by the Manager, under the supervision of
the Board of Directors, including the creditworthiness of the borrowing broker,
dealer or institution and then only if the consideration to be received from
such loans would justify the risk. Creditworthiness will be monitored on an
ongoing basis by the Manager.
Restricted and Illiquid Securities--Most of the privately placed
securities acquired by the Series will be eligible for resale by the Series
without registration pursuant to Rule 144A ("Rule 144A Securities") under the
Securities Act of 1933. While maintaining oversight, the Board of Directors has
delegated to the Manager the day-to-day function of determining whether
individual Rule 144A Securities are liquid for purposes of each Series' 10%
limitation on investments in illiquid securities. 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).
Investing in Rule 144A Securities could have the effect of increasing
the level of a Series' illiquidity to the extent that qualified institutional
buyers become, for a period of time, uninterested in purchasing these
securities. If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, a
Series' holdings of illiquid securities exceed the Series' 10% limit on
investment in such securities, the Manager will determine what action shall be
taken to ensure that the Series continues to adhere to such limitation.
Convertible Securities--Each Series may invest in convertible
securities, including corporate debentures, bonds, notes and preferred stocks
that may be converted into or exchanged for common stock. While providing a
fixed income stream (generally higher in yield than the income derivable from a
common stock but lower than that afforded by a non-convertible debt security), a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. As the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis and so may not experience market declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the price of a convertible security tends to rise as a reflection of
the value of the underlying common stock. To obtain such a higher yield, a
Series may be required to pay for a convertible security an amount in excess of
the value of the underlying common stock. Common stock acquired by a Series upon
conversion of a convertible security will generally be held for so long as the
Manager anticipates such stock will provide the Series with opportunities which
are consistent with the Series' investment objectives and policies.
Each Series may invest not more than 5% of its assets in convertible
debentures that are rated below investment grade or are unrated but are
determined by the Manager to be of comparable quality. Investing in convertible
debentures that are rated below investment grade or unrated but of comparable
quality entails certain risks, including the risk of loss of principal, which
may be greater than the risks involved in investing in investment grade
convertible debentures. Under rating agency guidelines, lower rated securities
and comparable unrated securities will likely have some quality and protective
characteristics that are outweighed by large uncertainties or major risk
exposures to adverse conditions.
<PAGE>
The Series may have difficulty disposing of such lower rated
convertible debentures because the trading market for such securities may be
thinner than the market for higher rated convertible debentures. To the extent a
secondary trading market for these securities does exist, it generally is not as
liquid as the secondary trading market for higher rated securities. The lack of
a liquid secondary market as well as adverse publicity with respect to these
securities, may have an adverse impact on market price and the Series' ability
to dispose of particular issues in response to a specific economic event such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for each
Series to obtain accurate market quotations for purposes of pricing the Series'
portfolio and calculating its net asset value. The market behavior of
convertible securities in lower rating categories is often more volatile than
that of higher quality securities. Lower quality convertible securities are
judged by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Rating Group ("S&P") to have speculative elements or characteristics; their
future cannot be considered as well assured and earnings and asset protection
may be moderate or poor in comparison to investment grade securities.
In addition, such lower quality securities face major ongoing
uncertainties or exposure to adverse business, financial or economic conditions,
which could lead to inadequate capacity to meet timely payments. The market
values of securities rated below investment grade tend to be more sensitive to
company specific developments and changes in economic conditions than higher
rated securities. Issuers of these securities are often highly leveraged, so
that their ability to service their debt obligations during an economic downturn
or during sustained periods of rising interest rates may be impaired. In
addition, such issuers may not have more traditional methods of financing
available to them, and may be unable to repay debt at maturity by refinancing.
Foreign Securities--Each Series may invest in securities of foreign
companies. However, neither Series will invest more than 5% of the value of its
total assets, at the time of purchase, 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).
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Series. Payment of
such interest equalization tax, if imposed, would reduce a Series' rate of
return on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to the Series by United States
corporations.
Investors should recognize that investing in foreign corporations
involves certain considerations, including those set forth below, which are not
typically associated with investing in United States corporations. Foreign
corporations are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to United
States corporations. There may also be less supervision and regulation of
foreign stock exchanges, brokers and listed corporations than exist in the
United States. The Series may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange as between the currencies of
different nations and control regulations. Furthermore, there may be the
possibility of expropriation or confiscatory taxation, political, economic or
social instability or diplomatic developments which could affect assets of the
Series held in foreign countries.
Each Series will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions. Each Series may enter into
forward contracts to "lock in" the price of a security it has agreed to purchase
or sell, in terms of U.S. dollars or other currencies in which the transaction
will be consummated. When the Manager believes that the currency of a particular
foreign country may suffer a decline against the U.S. dollar or against another
currency, the Series may enter into a forward contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of the Series' securities
denominated in such foreign currency. It is impossible to predict precisely the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for a Series to purchase or sell additional
foreign currency on the spot market (and bear the expense of such purchase or
sale) if the market value of the security is less than or greater than the
amount of foreign currency the Series is obligated to deliver.
<PAGE>
The Series may incur gains or losses from currency transactions. No
type of foreign currency transaction will eliminate fluctuations in the prices
of the Series' foreign securities or will prevent loss if the prices of such
securities should decline.
Futures Contracts and Options on Futures Contracts--The Devon Fund may
enter into futures contracts on stocks and stock indices, purchase and sell
options on such futures, and enter into closing transactions with respect to
those activities. The Series currently intends to limit such investments to the
extent that not more than 5% of its assets are required as futures contract
margin deposits and premiums on options and only to the extent that obligations
under such contracts and transactions represent not more than 20% of the Series'
assets. A futures contract may be purchased and sold only on an exchange, known
as a "contract market," designated by the Commodity Futures Trading Commission
for the trading of such contract, and only through a registered futures
commission merchant which is a member of such contract market. A commission must
be paid on each completed purchase and sale transaction.
When the Series enters into a futures transaction, it must deliver to
the futures commission merchant selected by the Series an amount referred to as
"initial margin." This amount is maintained by the futures commission merchant
in an account at the Series' custodian bank. Thereafter, a "variation margin"
may be paid by the Series to, or drawn by the Series from, such account in
accordance with controls set for such accounts, depending upon changes in the
price of the underlying securities subject to the futures contract.
Although futures contracts by their terms generally call for the actual
delivery or acquisition of underlying securities or the cash value of the index,
in most cases the contractual obligation is fulfilled before the date of the
contract without having to make or take such delivery. The contractual
obligation is offset by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take, as the case may be, delivery of the securities
or cash value of the index underlying the contractual obligations. At the time
such transaction is effected, a final determination of variation margin is made
and any loss experienced by the Series must be paid to the contract market
clearing house while any profit due to the Series must be delivered to it.
Positions taken in futures markets are not normally held to maturity,
but instead liquidated through offsetting transactions which may result in a
profit or a loss. While the Series' futures contracts on securities will usually
be liquidated in this manner, the Series may instead make or take delivery of
the underlying securities whenever it appears economically advantageous to do
so. The clearing house associated with the market on which futures on the
securities are traded guarantees that, if still open, the sale or purchase will
be performed on settlement date.
<PAGE>
The Series may enter into such futures contracts to protect against the
adverse affects of fluctuations in security prices or interest rates without
actually buying or selling the securities. For example, if interest rates are
expected to increase, the Series might enter into futures contracts for the sale
of debt securities. Such a sale would have much the same effect as selling an
equivalent value of the debt securities in the portfolio owned by the Series. If
interest rates did increase, the value of the debt securities in the portfolio
would decline, but the value of the futures contracts to the Series would
increase at approximately the same rate, thereby keeping the net asset value of
the Series from declining as much as it otherwise would have. Similarly, when it
is expected that interest rates may decline, futures contracts may be purchased
to hedge in anticipation of subsequent purchases of securities at higher prices.
Since the fluctuations in the value of futures contracts should be similar to
those of debt securities, the Series could take advantage of the anticipated
rise in value of debt securities without actually buying them until the market
had stabilized. At that time, the futures contracts could be liquidated and the
Series could then buy debt securities on the cash market.
With respect to options on futures contracts, when the Series is not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based, or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration of
the option is below the exercise price, the Series will retain the full amount
of the option premium which provides a partial hedge against any decline that
may have occurred in the Series' portfolio holdings. The writing of a put option
on a futures contract constitutes a partial hedge against the increasing price
of the security which is deliverable upon exercise of the futures contract. If
the futures price at the expiration of the option is higher than the exercise
price, the Series will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
the Series intends to purchase.
Call and put options on stock index futures are similar to options on
securities except that, rather than the right to purchase or sell stock at a
specified price, options on a stock index future give the holder the right to
receive cash. Upon exercise of the option, the delivery of the futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the futures contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing price of the futures contract on the expiration date.
If a put or call option the Series has written is exercised, the Series
will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, the
Series' losses from existing options on futures may, to some extent, be reduced
or increased by changes in the value of portfolio securities. The purchase of a
put option on a futures contract is similar in some respects to the purchase of
protective puts on portfolio securities. For example, the Series will purchase a
put option on a futures contract to hedge the Series' portfolio against the risk
of rising interest rates.
<PAGE>
To the extent that interest rates move in an unexpected direction, the
Series may not achieve the anticipated benefits of futures contracts or options
on futures contracts or may realize a loss. For example, if the Series is hedged
against the possibility of an increase in interest rates which would adversely
affect the price of securities held in its portfolio and interest rates decrease
instead, the Series will lose part or all of the benefit of the increased value
of its securities which it has because it will have offsetting losses in its
futures position. In addition, in such situations, if the Series had
insufficient cash, it may be required to sell securities from its portfolio to
meet daily variation margin requirements. Such sales of securities may, but will
not necessarily, be at increased prices which reflect the rising market. The
Series may be required to sell securities at a time when it may be
disadvantageous to do so.
Further, with respect to options on futures contracts, the Series may
seek to close out an option position by writing or buying an offsetting position
covering the same securities or contracts and have the same exercise price and
expiration date. The ability to establish and close out positions on options
will be subject to the maintenance of a liquid secondary market, which cannot be
assured.
Options--The Devon 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.
A. Covered Call Writing--The Series may write covered call options from
time to time on such portion of its portfolio, without limit, as the Manager
determines is appropriate in seeking to obtain the Series' investment objective.
A call option gives the purchaser of such option the right to buy, and the
writer, in this case the Series, has the obligation to sell the underlying
security at the exercise price during the option period. The advantage to the
Series of writing covered calls is that the Series receives additional income,
in the form of a premium, which may offset any capital loss or decline in market
value of the security. However, if the security rises in value, the Series may
not fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
With respect to both options on actual portfolio securities owned by
the Series and options on stock indices, the Series may enter into closing
purchase transactions. A closing purchase transaction is one in which the
Series, when obligated as a writer of an option, terminates its obligation by
purchasing an option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable the
Series to write another call option on the underlying security with either a
different exercise price or expiration date or both. The Series may realize a
net gain or loss from a closing purchase transaction depending upon whether the
net amount of the original premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. Any loss incurred
in a closing purchase transaction may be partially or entirely offset by the
premium received from a sale of a different call option on the same underlying
security. Such a loss may also be wholly or partially offset by unrealized
appreciation in the market value of the underlying security. Conversely, a gain
resulting from a closing purchase transaction could be offset in whole or in
part by a decline in the market value of the underlying security.
If a call option expires unexercised, the Series will realize a
short-term capital gain in the amount of the premium on the option, less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, the Series will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the underlying
security, and the proceeds of the sale of the security plus the amount of the
premium on the option, less the commission paid.
<PAGE>
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.
Devon Fund will write call options only on a covered basis, which means
that the Series will own the underlying security subject to a call option at all
times during the option period. Unless a closing purchase transaction is
effected, the Series would be required to continue to hold a security which it
might otherwise wish to sell, or deliver a security it would want to hold.
Options written by the Series will normally have expiration dates between one
and nine months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
B. Purchasing Put Options--Devon Fund may invest up to 2% of its total
assets in the purchase of put options. The Series will, at all times during
which it holds a put option, own the security covered by such option.
The Series intends to purchase put options in order to protect against
a decline in the market value of the underlying security below the exercise
price less the premium paid for the option ("protective puts"). The ability to
purchase put options will allow the Series to protect unrealized gain in an
appreciated security in its portfolio without actually selling the security. If
the security does not drop in value, the Series will lose the value of the
premium paid. The Series may sell a put option which it has previously purchased
prior to the sale of the securities underlying such option. Such sales will
result in a net gain or loss depending on whether the amount received on the
sale is more or less than the premium and other transaction costs paid on the
put option which is sold.
The Series may sell a put option purchased on individual portfolio
securities or stock indices. Additionally, the Series may enter into closing
sale transactions. A closing sale transaction is one in which the Series, when
it is the holder of an outstanding option, liquidates its position by selling an
option of the same series as the option previously purchased.
Options on Stock Indices
A stock index assigns relative values to the common stocks included in
the index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to the Series on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
<PAGE>
As with stock options, the Devon 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 price movements in the
Series' portfolio correlate with price movements of the stock index selected.
Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Series will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Since the Series'
portfolio will not duplicate the components of an index, the correlation will
not be exact. Consequently, the Series bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedging
instrument. It is also possible that there may be a negative correlation between
the index or other securities underlying the hedging instrument and the hedged
securities which would result in a loss on both such securities and the hedging
instrument. Accordingly, successful use by the Series of options on stock
indices will be subject to the Manager's ability to predict correctly movements
in the direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on the Series' ability to effectively
hedge its securities. The Devon Fund will enter into an option position only if
there appears to be a liquid secondary market for such options.
The Series will not engage in transactions in options on stock indices
for speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.
When-Issued and Delayed Delivery Securities--Each Series may purchase
securities on a when-issued or delayed delivery basis. In such transactions,
instruments are purchased with payment and delivery taking place in the future
in order to secure what is considered to be an advantageous yield or price at
the time of the transaction. Delivery of and payment for these securities may
take as long as a month or more after the date of the purchase commitment. Each
Series will maintain with the Fund's custodian a separate account with a
segregated portfolio of securities in an amount at least equal to these
commitments. The payment obligation and the interest rates that will be received
are each fixed at the time a Series enters into the commitment and no interest
accrues to the Series until settlement. Thus, it is possible that the market
value at the time of settlement could be higher or lower than the purchase price
if the general level of interest rates has changed. It is a current policy of
each Series not to enter into when-issued commitments exceeding in the aggregate
5% of the market value of such Series' total assets less liabilities other than
the obligations created by these commitments.
<PAGE>
PERFORMANCE INFORMATION*
From time to time, the respective Series may state a Class' total
return in advertisements and other types of literature. Any statements of total
return performance data for a Class will be accompanied by information on the
average annual compounded rate of return for that Class over, as relevant, the
most recent one-, five- and ten-year (or life of fund, if applicable) periods.
The Series may also advertise aggregate and average total return information for
a Class over additional periods of time.
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 computations
of total return. See the Prospectus for the Fund Classes for a description of
the Limited CDSC and the limited instances in which it applies. All references
to a CDSC 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 Series may
present total return information that does not reflect the deduction of the
maximum front-end sales charge or any applicable CDSC.
The performance, as shown below, is the average annual total return
quotations for applicable periods ended October 31, 1995 for the Class A Shares,
the Class B Shares and the Institutional Class of Delaware Fund and Devon Fund,
computed as described above. The average annual total return for Class A Shares
at offer reflects the maximum front-end sales charges paid on the purchase of
shares. The average annual total return for Class A Shares at net asset value
(NAV) does not reflect the payment of the maximum front-end sales charge. 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 October 31, 1995. The average annual total return for Class B
Shares excluding deferred sales charge assumes the shares were not redeemed at
October 31, 1995 and therefore does not reflect the deduction of a CDSC.
Pursuant to applicable regulation, total return shown for the Delaware Fund
Institutional Class for the periods prior to the commencement of operations of
such class is calculated by taking the performance of the Delaware Fund A Class
and adjusting it to reflect the elimination of all sales charges. However, for
those periods, no adjustment has been made to eliminate the impact of 12b-1
payments, and performance would have been affected had such an adjustment been
made.
<PAGE>
Securities prices fluctuated during the periods covered and past results
should not be considered as representative of future performance. On June 14,
1988, the Delaware Fund's investment objective was changed from growth with
income to a balance of capital appreciation, income and preservation of capital.
Average Annual Total Return
Delaware Delaware
Fund Fund Delaware
Class A Class A Fund
Shares(1)(2) Shares(1) Institutional
(at Offer) (at NAV) Class(3)
1 year
ended
10/31/95 10.73% 16.26% 16.50%
3 years
ended
10/31/95 8.06% 9.82% 10.01%
5 years
ended
10/31/95 12.00% 13.09% 13.21%
10 years
ended
10/31/95 11.31% 11.85% 11.91%
15 years
ended
10/31/95 13.33% 13.69% 13.73%
Period
4/25/38(4)
through
10/31/95 11.01% 11.10% 11.11%
Delaware Fund Delaware Fund
Class B Shares Class B Shares
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
10/31/95 11.36% 15.36%
Period
9/6/94(5)
through
10/31/95 8.65% 12.07%
(1) Delaware Fund A Class began paying 12b-1 payments on June 1, 1992 and
performance prior to that date does not reflect such payments.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was
reduced to 4.75% and the above performance numbers are calculated using
4.75% as the applicable sales charge, and are more favorable than they
would have been had they been calculated using 5.75%.
(3) Date of initial public offering was November 9, 1992.
(4) Date of initial public offering for Delaware Fund.
(5) Date of initial public offering.
Average Annual Total Return(1)
Devon Fund Devon Fund Devon Fund
Class A Shares Class A Shares Institutional
(at Offer)(2) (at NAV) Class
1 year
ended
10/31/95 16.19% 21.98% 22.26%
Period
12/29/93(3)
through
10/31/95 13.82% 16.88% 17.20%
<PAGE>
Devon Fund Devon Fund
Class B Shares Class B Shares
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
10/31/95 17.09% 21.09%
Period
9/6/94(3)
through
10/31/95 14.19% 17.58%
(1) Certain expenses of this Series have been waived and reimbursed by the
Manager. In the absence of such waiver and reimbursement, performance
would have been affected negatively.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was
reduced to 4.75% and the above performance numbers are calculated using
4.75% as the applicable sales charge, and are more favorable than they
would have been had they been calculated using 5.75%.
(3) Date of initial public offering.
Information regarding the performance of Class C Shares is not shown
because such shares were not offered to the public prior to November 29, 1995.
From time to time, the respective Series 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 generally-conservative
securities used for measuring general market performance. The total return
performance reported will reflect the reinvestment of all distributions on a
quarterly basis and market price fluctuations. The indices do not take into
account any sales charge or other fees.
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 reflect the maximum sales charge, if
any, paid for the illustrated investment amount, but not any income taxes
payable by shareholders on the reinvested distributions included in the
calculation. Because securities prices fluctuate, past performance should not be
considered as a representation of the results which may be realized from an
investment in the Fund in the future.
The respective Series may also state total return performance of its
Classes in the form of an average annual return. This average annual return
figure will be computed by taking the sum of annual returns, then dividing that
figure by the number of years in the overall period indicated. The computation
will reflect the impact of the maximum front-end sales charge or CDSC, if any,
paid on the illustrated investment amount against the first year's return. The
performance of Class B Shares and Class C Shares may also be computed without
taking into account any applicable CDSC. From time to time, the Series may quote
actual total return performance 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.
Statistical and performance information and various indices compiled and
maintained by organizations such as the following may also be used in preparing
exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Series activity and performance and in illustrating
general financial planning principles. From time to time, certain mutual fund
performance ranking information, calculated and provided by these organizations,
may also be used in the promotion of sales in the Series. Any indices used are
not managed for any investment goal.
<PAGE>
CDA Technologies, Inc., Lipper Analytical Services, Inc. and
Morningstar, Inc. are performance evaluation services that maintain
statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
Ibbotson Associates, Inc. is a consulting firm that provides a variety of
historical data including total return, capital appreciation and income
on the stock market as well as other investment asset classes, and
inflation. With their permission, this information will be used primarily
for comparative purposes and to illustrate general financial planning
principles.
Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators, such
as historical and current price/earning information, individual equity
and fixed income price and return information.
Compustat Industrial Databases, a service of Standard & Poor's, may also
be used in preparing performance and historical stock and bond market
exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.
Salomon Brothers and Lehman Brothers are statistical research firms that
maintain databases of international market, bond market, corporate and
government-issued securities of various maturities. This information, as
well as unmanaged indices compiled and maintained by these firms, will be
used in preparing comparative illustrations.
Comparative information on the Consumer Price Index and the CDA Balanced
Fund 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. The CDA Balanced Fund Index
was developed and is maintained by CDA Technologies, Inc. The Index is comprised
of 64 separately-managed, balanced mutual funds. It reflects the reinvestment of
any dividend and capital gains distributions paid during a specified period.
The following tables are examples, for purposes of illustration only, of
cumulative total return performance for applicable periods ended October 31,
1995 for the Class A Shares, the Class B Shares and the Institutional Class of
Delaware Fund and Devon Fund. For these purposes, the calculations assume the
reinvestment of any capital gains distributions and income dividends paid during
the indicated periods. Comparative information on the Dow Jones Industrial
Average and the Standard & Poor's 500 Stock Index is also included.
The performance of each Class, as shown below, does not reflect any
income taxes payable by shareholders on the reinvested distributions included in
the calculations. The performance of Class A Shares reflects the maximum
front-end sales charge paid on the purchase of shares. The performance of Class
B Shares is calculated both with the applicable CDSC included and excluded.
Pursuant to applicable regulation, total return shown for the Delaware Fund
Institutional Class for the periods prior to the commencement of operations of
such class is calculated by taking the performance of the Delaware Fund A Class
and adjusting it to reflect the elimination of all sales charges. However, for
those periods no adjustment has been made to eliminate the impact of 12b-1
payments, and performance would have been affected had such an adjustment been
made. On June 14, 1988, the Delaware Fund's investment objective was changed
from growth with income to a balance of capital appreciation, income and
preservation of capital. The net asset values of the Series fluctuate so shares,
when redeemed, may be worth more or less than the original investment and the
Series' results should not be considered as representative of future
performance.
<PAGE>
Information regarding the performance of Class C Shares is not shown
because such shares were not offered to the public prior November 29, 1995.
Cumulative Total Return
Delaware Delaware
Fund Fund Dow
Class A Institu- Jones Standard &
Shares(1) tional Indus- Poor's
(at Offer) Class(2) trial(3) 500(3)
3 months
ended
10/31/95 (1.38%) 3.66% 1.65% 4.11%
6 months
ended
10/31/95 4.81% 10.21% 11.47% 14.44%
9 months
ended
10/31/95 12.36% 18.18% 26.14% 26.02%
1 year
ended
10/31/95 10.73% 16.50% 24.97% 26.39%
3 years
ended
10/31/95 26.17% 33.13% 60.15% 50.80%
5 years
ended
10/31/95 76.20% 85.97% 125.64% 121.33%
10 years
ended
10/31/95 191.97% 208.12% 383.80% 321.09%
15 years
ended
10/31/95 552.98% 589.05% 841.44% 699.98%
Period
4/25/38(4)
through
10/31/95 40,504.24% 42,727.23% N/A N/A
Delaware Delaware
Fund Fund
Class B Class B
Shares Shares
(Includ- (Exclud-
ing ing Dow
Deferred Deferred Jones Standard
Sales Sales Indus- Poor's
Charge) Charge) trial(3) 500(3)
3 months
ended
10/31/95 (0.70%) 3.30% 1.65% 4.11%
6 months
ended
10/31/95 5.56% 9.56% 11.47% 14.44%
9 months
ended
10/31/95 13.23% 17.23% 26.14% 26.02%
1 year
ended
10/31/95 11.36% 15.36% 24.97% 26.39%
Period
9/6/94(5)
through
10/31/95 10.05% 14.05% 25.81% 27.08%
(1) Delaware Fund A Class began paying 12b-1 payments on June 1, 1992 and
performance prior to that date does not reflect such payments. Prior to
November 29, 1995, the maximum front-end sales charge was 5.75%. Effective
November 29, 1995, the maximum front-end sales charge was reduced to 4.75%
and the above performance numbers are calculated using 4.75% as the
applicable sales charge, and are more favorable than they would have been
had they been calculated using 5.75%.
(2) Date of initial public offering was November 9, 1992.
(3) Source--Lipper Analytical Services, Inc.
(4) Date of initial public offering of Delaware Fund.
(5) Date of initial public offering.
<PAGE>
Devon Devon
Fund Fund Dow
Class A Institu- Jones Standard &
Shares(1)(2) tional Indus- Poor's
(at Offer) Class(1) trial(4) 500(4)
3 months
ended
10/31/95 (0.48%) 4.47% 1.65% 4.11%
6 months
ended
10/31/95 8.07% 13.66% 11.47% 14.44%
9 months
ended
10/31/95 19.62% 25.81% 26.14% 26.02%
1 year
ended
10/31/95 16.19% 22.26% 24.97% 26.39%
Period
12/29/93(3)
through
10/31/95 26.92% 33.93% 31.72% 29.92%
Devon Devon
Fund Fund
Class B Class B
Shares Shares
(Including (Excluding Dow
Deferred Deferred Jones Standard &
Sales Sales Indus- Poor's
Charge)(1) Charge)(1) trial(4) 500(4)
3 months
ended
10/31/95 0.25% 4.25% 1.65% 4.11%
6 months
ended
10/31/95 9.08% 13.08% 11.47% 14.44%
9 months
ended
10/31/95 20.87% 24.87% 26.14% 26.02%
1 year
ended
10/31/95 17.09% 21.09% 24.97% 26.39%
Period
9/6/94(3)
through
10/31/95 16.54% 20.54% 25.81% 27.08%
(1) Certain expenses of this Series have been waived and reimbursed by the
Manager. In the absence of such waiver and reimbursement, performance would
have been affected negatively.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was reduced
to 4.75% and the above performance numbers are calculated using 4.75% as the
applicable sales charge and are more favorable than they would have been had
they been calculated using 5.75%.
(3) Date of initial public offering.
(4) Source--Lipper Analytical Services, Inc.
For additional performance information, see Appendix C.
<PAGE>
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and the other mutual funds in the
Delaware Group, will provide general information about investment alternatives
and scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
will provide information that discusses the Manager's overriding investment
philosophy and how that philosophy impacts the 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 quarterly for 10 years:
8% Rate 10% Rate 12% Rate 14% Rate
of Return of Return of Return of Return
--------- --------- --------- ---------
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 $24,326 $28,983 $34,503
12-'94 $22,080 $26,851 $32,620 $39,593
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 or sales charges, are not intended to be a
projection of investment results and do not reflect the actual performance
results of any of the Classes.
<PAGE>
TRADING PRACTICES AND BROKERAGE
The Fund selects brokers or dealers to execute transactions 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. A number of trades are made on a net basis where the Fund either
buys securities directly from the dealer or sells them to the dealer. In these
instances, there is no direct commission charged but there is a spread (the
difference between the buy and sell price) which is the equivalent of a
commission. When a commission is paid, the Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, the Fund pays a minimal share
transaction cost when the transaction presents no difficulty.
During the fiscal years ended October 31, 1993, 1994 and 1995, the
aggregate dollar amounts of brokerage commissions paid by Delaware Fund were
$1,216,817, $1,026,737 and $918,750, respectively. For the period from December
29, 1993 (date of initial public offering) through October 31, 1994, the
aggregate dollar amount of brokerage commissions paid by Devon Fund was $25,927
and for the fiscal year ended October 31, 1995, such payment by Devon Fund was
$29,982.
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 October 31, 1995, portfolio transactions of
Delaware Fund in the amount of $110,186,715, resulting in brokerage commissions
of $194,820, were directed to brokers for brokerage and research services
provided. During the same period, portfolio transactions of Devon Fund in the
amount of $3,362,890, resulting in brokerage commissions of $6,990, were
directed to brokers for brokerage and research services provided.
<PAGE>
As provided in the Securities Exchange Act of 1934 and the Fund's
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 Fund believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
Manager which constitute in some part brokerage and research services used by
the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to the Fund and to other funds in the Delaware
Group. Subject to best price and execution, commissions allocated to brokers
providing such pricing services may or may not be generated by the funds
receiving the pricing service.
The Manager may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and the Fund's
Board of Directors that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Fund may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of shares of the Fund as a factor
in the selection of brokers and dealers to execute Fund portfolio transactions.
Portfolio Turnover
Management frequently transfers investments between securities, or types
of securities, in carrying out its investment policy. As a result, the Fund may,
at times, buy and sell more investment securities and thereby incur greater
brokerage commissions than funds which do not frequently transfer investments.
The rate of portfolio turnover is not a limiting factor when management deems it
desirable to purchase or sell securities.
The degree of portfolio activity may affect taxes payable by the Series'
shareholders to the extent of any net realized capital gains. A turnover rate of
100% would occur, for example, if all the investments in the Series' portfolio
at the beginning of the year were replaced by the end of the year. The turnover
rate also may be affected by cash requirements from redemptions and repurchases
of Series shares.
During the past two fiscal years, Delaware Fund's portfolio turnover
rates were approximately 142% for 1994 and 94% for 1995. During the period from
December 29, 1993 (date of initial public offering) through October 31, 1994,
Devon Fund's portfolio turnover rate was 180%, annualized, and for the fiscal
year ended October 31, 1995, Devon Fund's portfolio turnover rate was 99%.
Should it become necessary to sell investments for monies with which to
redeem shares, the Board of Directors, in its discretion, may deduct from the
net asset value the brokerage commissions and other costs incurred to determine
the redemption price. However, the Fund has never redeemed or repurchased shares
at other than net asset value.
<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for each Series' four
classes of shares and has agreed to use its best efforts to sell shares of the
Fund. See the Prospectuses for information on how to invest. Shares of the Fund
are offered on a continuous basis and may be purchased through authorized
investment dealers or directly by contacting the Fund or its agent.
The minimum initial investment generally is $1,000 for each of the Fund
Classes. Subsequent purchases generally must be at least $100. The initial and
subsequent investment minimums for Class A Shares will be waived for purchases
by officers, directors and employees of any Delaware Group fund, the Manager or
any of the Manager's affiliates if the purchases are made pursuant to a payroll
deduction program. Class A Shares purchased pursuant to the Uniform Gifts to
Minors Act or Uniform Transfers to Minors Act and Class A Shares purchased in
connection with an Automatic Investing Plan are subject to a minimum initial
purchase of $250 and a minimum subsequent purchase of $25. Accounts opened under
the Delaware Group Asset Planner service are subject to a minimum initial
investment of $2000 per Asset Planner Strategy selected. There are no minimum
purchase requirements for the Institutional Classes, but certain eligibility
requirements must be satisfied.
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. (See Investment Plans for purchase limitations applicable
to each of the Fund's master retirement plans.) The Fund will reject any order
for purchase of more than $250,000 of Class B Shares and $1,000,000 or more of
Class C Shares. An investor may exceed these limitations by making cumulative
purchases over a period of time. In doing so, 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.
Selling dealers have the responsibility of transmitting orders promptly.
The Fund reserves the right to reject any order for the purchase of its shares
if in the opinion of management such rejection is in the Fund's best interest.
The NASD has adopted Rules of Fair Practice relating to investment
company sales charges. The Fund and the Distributor intend to operate in
compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales charges
apply for larger purchases. See the table below. Class A Shares are also subject
to annual 12b-1 Plan expenses.
Class B Shares are purchased at net asset value and are subject to a CDSC
of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
also subject to annual 12b-1 Plan expenses which are higher than those to which
Class A Shares are subject and are assessed against Class B Shares for
approximately eight years after purchase.
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 sales charge, CDSC or 12b-1 Plan expenses.
<PAGE>
Institutional Class shares, Class A Shares, Class B Shares and Class C
Shares represent a proportionate interest in a Series' assets and will receive a
proportionate interest in that Series' income, before application, as to the
Class A, Class B and Class C Shares, of any expenses under the Fund's 12b-1
Plans.
See Automatic Conversion of Class B Shares under Buying Shares in the
Fund Classes' Prospectus, and Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.
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 an investor to choose the method of purchasing shares that is most
suitable for his or her needs given the amount of their purchase, the length of
time they expect to hold their shares and other relevant circumstances.
Investors should determine whether, given 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 Class A Shares, or to purchase either Class B or Class C Shares
and have the entire initial purchase amount invested in the 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 by the Fund to the Distributor, dealers or others for providing
personal service and/or maintaining shareholder accounts) of average daily net
assets of the respective Class. Class B Shares will automatically convert to
Class A Shares at the end of approximately eight years after purchase and,
thereafter, be subject to annual 12b-1 Plan expenses of up to a maximum of .30%
of average daily net assets of such shares. Unlike Class B Shares, Class C
Shares do not convert to another Class.
Class A Shares
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
<PAGE>
<TABLE>
<CAPTION>
Delaware Fund A Class and Devon Fund A Class
- -------------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
Delaware Devon
Fund Fund
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 4.96% 5.02% 4.00%
$100,000 but under $250,000 3.75 3.91 3.90 3.00
$250,000 but under $500,000 2.50 2.56 2.55 2.00
$500,000 but under $1,000,000* 1.00 2.06 2.07 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% CDSC may
apply upon redemption of such shares ("Limited CDSC"). The Limited CDSC
that may be applicable arises only in the case of certain net asset value
purchases which have triggered the payment of a dealer's commission.
** Based on the net asset value per share of Class A Shares as of the end of
the Fund's most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- -------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify for
the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by the Fund. Such reduced
front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of the
front-end sales charge shown above. Dealers who receive 90% or more of
the sales charge may be deemed to be underwriters under the Securities
Act of 1933.
- -------------------------------------------------------------------------------
<PAGE>
Certain dealers who enter into an agreement to provide extra training and
information on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional 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:
Dealer's
Commission
----------
(as a percent-
Amount age of amount
of Purchase purchased)
- ------------
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
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 the Class A Shares of a Series. Financial advisers also may be
eligible for a dealer's commission in connection with certain purchases made
under a Letter of Intention or pursuant to an investor's Right of Accumulation.
Financial advisers should contact the Distributor concerning the applicability
and calculation of the dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for payment
of the dealer's commission, unless such exchange is from a Delaware Group fund
with assets as to which a dealer's commission or similar payment has not been
previously paid. The schedule and program for payment of the dealer's commission
are subject to change or termination at any time by the Distributor in its
discretion.
Contingent Deferred Sales Charge - Class B Shares
and Class C Shares
Class B and Class C Shares are purchased without the imposition of a
front-end sales charge. Class B Shares redeemed within six years of purchase may
be subject to a CDSC at the rates set forth below, and Class C Shares redeemed
within 12 months of purchase may be subject to a CDSC of 1%. CDSC fees are
charged as a percentage of the dollar amount subject to the CDSC. The charge
will be assessed on an amount equal to the lesser of the net asset value at the
time of purchase of the shares being redeemed or the net asset value of those
shares at the time of redemption. No CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no CDSC will be
assessed on redemptions of shares received through reinvestment of dividends or
capital gains distributions. See Waiver of CDSC--Class B and Class C Shares
under Redemption and Exchange in the Prospectus for the Fund Classes 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 Series:
Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
- ------------------------ --------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
<PAGE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares of a Series, Class B Shares will still be
subject to the annual 12b-1 Plan expenses of up to 1% of average daily net
assets of those shares. At the end of approximately eight years after purchase,
the investor's Class B Shares of the Series will be automatically converted into
Class A Shares of that Series. See Automatic Conversion of Class B Shares under
Buying Shares in the Fund Classes' Prospectus. Such conversion will constitute a
tax-free exchange for federal income tax purposes. See Taxes in the Prospectus
for the Fund Classes.
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"), the Fund has adopted a separate plan for each of the Class A
Shares, Class B Shares and Class C Shares of the Fund (the "Plans"). Each Plan
permits a Series to pay for certain distribution, promotional and related
expenses involved in the marketing of only the Class to which the Plan applies.
The Plans do not apply to the Institutional 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 the Institutional Classes of shares.
Shareholders of the Institutional Classes may not vote on matters affecting the
Plans.
The Plans permit a Series, 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 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 Series may make payments out of the assets of the
respective Class A, Class B and Class C Shares directly to other unaffiliated
parties, such as banks, who either aid in the distribution of shares of, or
provide services to, such classes.
The maximum aggregate fee payable by the Fund under the Plans, and each
Series' Distribution Agreement, is on an annual basis, up to .30% of a Class A
Shares' average daily net assets for the year, and up to 1% (.25% of which are
service fees to be paid to the Distributor, dealers and others for providing
personal service and/or maintaining shareholder accounts) of each Series' Class
B Shares' and Class C Shares' average daily net assets for the year. The Fund's
Board of Directors may reduce these amounts at any time.
Effective June 1, 1992, the Board of Directors has determined that the
annual fee, payable on a monthly basis, for the Delaware Fund A Class under its
Plan will be equal to the sum of: (i) the amount obtained by multiplying .30% by
the average daily net assets represented by shares of the Delaware Fund A Class
that were acquired by shareholders on or after June 1, 1992; and (ii) the amount
obtained by multiplying .10% by the average daily net assets represented by
shares of the Delaware Fund A Class that were acquired before June 1, 1992.
While this is the method for calculating the 12b-1 fees to be paid by the
Delaware Fund A Class, the fee is a Class expense so that all shareholders of
that Class, regardless of when they purchased their shares, will bear 12b-1
expenses at the same per share rate. As Delaware Fund A Class shares are sold on
or after June 1, 1992, the initial rate of at least .10% will increase over
time. Thus, as the proportion of Delaware Fund A Class shares purchased on or
after June 1, 1992 to Delaware Fund A Class shares outstanding prior to June 1,
1992 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 Delaware
Fund A Class assets at any time.
<PAGE>
On September 23, 1993, the Board of Directors set the fee for the Devon
Fund A Class at .30% of average daily net assets.
All of the distribution expenses incurred by the Distributor and others,
such as broker/dealers, in excess of the amount paid on behalf of the Class A,
Class B and Class C Shares would be borne by such persons without any
reimbursement from such classes. Subject to seeking best price and execution,
the Series may, from time to time, buy or sell portfolio securities from or to
firms which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreements, as amended, have all been
approved by the Board of Directors of the Fund, including a majority of the
directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or indirect financial interest in the Plans, by vote
cast in person at a meeting duly called for the purpose of voting on the Plans
and such Distribution 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 and that there is a reasonable likelihood of the
Plan relating to a Fund Class providing a benefit to that Class. The Plans and
the Distribution Agreement, as amended, may be terminated with respect to a
class at any time without penalty by a majority of those directors who are not
"interested persons" or by a majority vote of the outstanding voting securities
of the relevant Fund Class. Any amendment materially increasing the percentage
payable under the Plans must likewise be approved by a majority vote of the
outstanding voting securities of the relevant Fund Class, as well as by a
majority vote of those directors who are not "interested persons." With respect
to the Class A Shares' Plan, any material increase in the maximum percentage
payable thereunder must also be approved by a majority of the outstanding voting
Class B Shares. Also, any other material amendment to the Plans must be approved
by a majority vote of the directors including a majority of the noninterested
directors of the Fund having no interest in the Plans. In addition, in order for
the Plans to remain effective, the selection and nomination of directors who are
not "interested persons" of the Fund must be effected by the directors who
themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plans. Persons authorized to make payments under the
Plans must provide written reports at least quarterly to the Board of Directors
for their review.
For the fiscal year ended October 31, 1995, payments from the Class A
Shares and the Class B Shares of Delaware Fund and Devon Fund pursuant to their
Plans amounted to the following: Delaware Fund A Class - $842,300 and such
amount was used for: Annual/Semi-Annual Reports - $49,792; Broker Trails -
$569,507; Commissions to Wholesalers - $31,368; Dealer Service Expenses -
$37,141; Promotional-Broker Meetings - $28,175; Promotional-Other - $4,903;
Prospectus Printing - $30,947; Telephone - $13,507; Wholesaler Expenses -
$60,837; Advertising - $1.00; and amount retained by the Distributor for future
use - $16,122. Delaware Fund B Class - $17,069 and such amount was used for:
Broker Trails - $4,108; Commissions to Wholesalers - $861; Promotional-Broker
Meetings $109; Brokers Sales Charges - $6,225; Interest on Broker Sales Charges
- - $5,724; Wholesaler Expenses - $21; and Telephone - $21. Devon Fund A Class -
$20,303 and such amount was used for: Annual/Semi-Annual Reports - $1,427;
Broker Trails - $14,099; Commissions to Wholesalers - $1,730; Promotional-Broker
Meetings - $234; Promotional-Other - $2,468; Prospectus Printing - $344; and
Advertising - $1.00. Devon Fund B Class - $4,726 and such amount was used for:
Broker Trails - $1,116; Commissions to Wholesalers - $251; Dealer Service
Expenses - $1.00; Promotional-Broker Meetings - $31; Brokers Sales Charges -
$1,743; Interest on Broker Sales Charges - $1,565; Wholesaler Expenses - $14;
and Telephone - $5.
The staff of the Securities and Exchange Commission ("SEC") has proposed
amendments to Rule 12b-1 and other related regulations that could impact Rule
12b-1 Distribution Plans. The Fund intends to amend the Plans, if necessary, to
comply with any new rules or regulations the SEC may adopt with respect to Rule
12b-1.
<PAGE>
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.
Payment to dealers made in connection with seminars, conferences or
contests relating to the promotion of fund shares may be in an amount up to 100%
of the expenses incurred or awards made. The Distributor may also pay a portion
of the expense of preapproved dealer advertisements promoting the sale of
Delaware Group fund shares.
Special Purchase Features - Class A Shares
Buying at Net Asset Value
Class A Shares may be reinvested without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the 12-Month
Reinvestment Privilege and the Exchange Privilege.
Current and former officers, directors and employees of the Fund, any
other fund in the Delaware Group, the Manager or any of the Manager's current
affiliates and those that may in the future be created, legal counsel to the
funds and registered representatives and employees of broker/dealers who have
entered into Dealer's Agreements with the Distributor may purchase Class A
Shares and any such class of shares of any of the funds in the Delaware Group,
including any fund that may be created, at the net asset value per share.
Spouses, parents, brothers, sisters and children (regardless of age) of such
persons at their direction, and any employee benefit plan established by any of
the foregoing funds, corporations, counsel or broker/dealers may also purchase
shares at net asset value. Purchases of Class A Shares may also be made by
clients of registered representatives of an authorized investment dealer at net
asset value within six months of a change of the registered representative's
employment, if the purchase is funded by proceeds from an investment where a
front-end sales charge has been assessed and the redemption of the investment
did not result in the imposition of a contingent deferred sales charge or other
redemption charges. Purchases of Class A Shares also may be made at net asset
value by bank employees who provide services in connection with agreements
between the bank and unaffiliated brokers or dealers concerning sales of Class A
Shares. Officers, directors and key employees of institutional clients of the
Manager or any of its affiliates may purchase Class A Shares at net asset value.
Moreover, purchases may be effected at net asset value for the benefit of the
clients of brokers, dealers and registered investment advisers affiliated with a
broker or dealer, if such broker, dealer or investment adviser has entered into
an agreement with the Distributor providing specifically for the purchase of
Class A Shares in connection with special investment products, such as wrap
accounts or similar fee based programs. Such purchasers are required to sign a
letter stating that the purchase is for investment only and that the securities
may not be resold except to the issuer. Such purchasers may also be required to
sign or deliver such other documents as the Fund may reasonably require to
establish eligibility for purchase at net asset value. The Fund must be notified
in advance that the trade qualifies for purchase at net asset value. Investments
in Class A Shares made by plan level and/or participant retirement accounts that
are for the purpose of repaying a loan taken from such accounts will be made at
net asset value. Loan repayments made to a Delaware Group account in connection
with loans originated from accounts previously maintained by another investment
firm will also be invested at net asset value.
<PAGE>
Letter of Intention
The reduced front-end sales charges described above with respect to Class
A Shares are also applicable to the aggregate amount of purchases made by any
such purchaser previously enumerated within a 13-month period pursuant to a
written Letter of Intention provided by the Distributor and signed by the
purchaser, and not legally binding on the signer or the Fund, which provides for
the holding in escrow by the Transfer Agent, of 5% of the total amount of the
Class A Shares intended to be purchased until such purchase is completed within
the 13-month period. A Letter of Intention may be dated to include shares
purchased up to ninety days prior to the date the Letter is signed. The 13-month
period begins on the date of the earliest purchase. If the intended investment
is not completed, except as noted below, the purchaser will be asked to pay an
amount equal to the difference between the front-end sales charge on the Class A
Shares purchased at the reduced rate and the front-end sales charge otherwise
applicable to the total shares purchased. If such payment is not made within 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 Fund and of any class of any of the other mutual funds in the Delaware
Group (except shares of any Delaware Group fund which do not carry a front-end
sales charge, CDSC or Limited CDSC other than shares of Delaware Group Premium
Fund, Inc. beneficially owned in connection with the ownership of variable
insurance products, unless they were acquired through an exchange from a
Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC) previously purchased and still held as of the date of their Letter of
Intention toward the completion of such Letter. For purposes of satisfying an
investor's obligation under a Letter of Intention, Class B Shares and Class C
Shares of a Series and the corresponding classes of shares of other Delaware
Group funds which offer such shares may be aggregated with the Class A Shares of
a Series and the corresponding class of shares of the other Delaware Group
funds.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments in
Class A Shares made by the plan. The aggregate investment level of the Letter of
Intention will be determined and accepted by the Transfer Agent at the point of
plan establishment. The level and any reduction in front-end sales charge will
be based on actual plan participation and the projected investments in Delaware
Group funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust the
signed Letter of Intention based on this acceptance criteria. The 13-month
period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and equal an
amount that would qualify the plan for further discounts, any front-end sales
charges will be automatically adjusted. In the event this Letter of Intention is
not fulfilled within the 13-month period, the plan level will be adjusted
(without completing another Letter of Intention) and the employer will be billed
for the difference in front-end sales charges due, based on the plan's assets
under management at that time. Employers may also include the value (at offering
price at the level designated in their Letter of Intention) of all their shares
intended for purchase that are offered with a front-end sales charge, CDSC or
Limited CDSC of any class. Class B Shares and Class C Shares of a Series and
other Delaware Group funds which offer corresponding classes of shares may also
be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of the Class B Shares and/or Class C Shares of a
Series, as well as shares of any other class of any of the other Delaware Group
funds (except shares of any Delaware Group fund which do not carry a front-end
sales charge, CDSC or Limited CDSC, other than shares of Delaware Group Premium
Fund, Inc. beneficially owned in connection with the ownership of variable
insurance products, unless they were acquired through an exchange from a
Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC).
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 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).
<PAGE>
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to the Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of the 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 the Institutional Classes holding
shares which were acquired through an exchange of one of the other mutual funds
in the Delaware Group offered with a front-end sales charge) who redeem such
shares of the Fund have one year from the date of redemption to reinvest all or
part of their redemption proceeds in Class A Shares of the 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 Fund's shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Purchases of Class A Shares Made at Net Asset Value under Redemption and
Exchange in the Fund Classes' Prospectus) in connection with the features
described above.
Group Investment Plans
Group Investment Plans which 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 , based on
total plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans would be used in
determining the applicable front-end sales charge reduction upon each purchase,
both initial and subsequent, upon notification to the Fund at the time of each
such purchase. Employees participating in such Group Investment Plans may also
combine the investments made in their plan account when determining the
applicable front-end sales charge on purchases to non-retirement Delaware Group
investment accounts if they so notify the Fund in connection with each purchase.
For other retirement plans and special services, see Retirement Plans for the
Fund Classes under Investment Plans.
<PAGE>
Institutional Classes
Each Series' Institutional Class is available for purchase only by: (a)
retirement plans introduced by persons not associated with brokers or dealers
that are primarily engaged in the retail securities business and rollover
individual retirement accounts from such plans; (b) tax-exempt employee benefit
plans of the Manager or its affiliates and securities dealer firms with a
selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, a division of the Manager, or its affiliates and
their corporate sponsors, as well as subsidiaries and related employee benefit
plans and rollover individual retirement accounts from such institutional
advisory accounts; (d) banks, trust companies and similar financial institutions
investing for their own account or for the account of their trust customers for
whom such financial institution is exercising investment discretion in
purchasing shares of the Class; and (e) registered investment advisers investing
on behalf of clients that consist solely of institutions and high net-worth
individuals having at least $1,000,000 entrusted to the adviser for investment
purposes, but only if the adviser is not affiliated or associated with a broker
or dealer and derives compensation for its services exclusively from its clients
for such advisory services.
Shares of the Institutional Classes are available for purchase at net
asset value, without the imposition of a front-end sales charge or CDSC and are
not subject to Rule 12b-1 expenses.
<PAGE>
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 account of the holders of such shares (based on
the net asset value of the Fund in effect on the reinvestment date). A
confirmation of each dividend payment from net investment income will be mailed
to shareholders quarterly. A confirmation of any distributions from realized
securities profits will be mailed to shareholders in the first quarter of the
fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the Fund. Such
purchases, which must meet the minimum subsequent purchase requirements set
forth in the Prospectuses and this Part B, are made for Class A Shares at the
public offering price, and for Class B and Class C Shares and Institutional
Class shares 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, Class B
and Class C Shares may automatically reinvest dividends and/or distributions
from the Fund in any of the other mutual funds in the Delaware Group, including
the Fund, in states where their shares may be sold. Such investments will be at
net asset value at the close of business on the reinvestment date without any
front-end sales charge or service fee. Nor will such investments be subject to a
CDSC or Limited CDSC. The shareholder must notify the Transfer Agent in writing
and must have established an account in the fund into which the dividends and/or
distributions are to be invested. Any reinvestment directed to a fund in which
the investor does not then have an account will be treated like all other
initial purchases of a fund's shares. Consequently, an investor should obtain
and read carefully the prospectus for the fund in which the investment is
proposed to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses. See
also Dividend Reinvestment Plan in the Prospectus for the Fund Classes.
Subject to the following limitations, dividends and/or distributions from
other funds in the Delaware Group may be invested in shares of the Fund,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B or Class C Shares of another fund in the Delaware Group.
Dividends from Class B Shares may only be directed to Class B Shares of another
fund in the Delaware Group that offers such class of shares. Dividends from
Class C Shares may only be directed to Class C Shares of another fund in the
Delaware Group that offers such class of shares. See Class B Funds and Class C
Funds under Buying Shares in the Fund Classes' Prospectus for the funds in the
Delaware Group that are eligible for investment by holders of Series shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for a Series to
accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
<PAGE>
Automatic Investing Plan--Shareholders of 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 the relevant
Class. This type of investment will be handled in either of the two ways noted
below. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
Investments under the Direct Deposit Purchase Plan and the Automatic
Investing Plan must be for $25 or more for Class A Shares and $100 or more for
Class B and Class C Shares. An investor wishing to take advantage of either
service must complete an authorization form. Either service can be discontinued
by the shareholder at any time without penalty by giving written notice.
Payments to a Series from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the 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 Series.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer, to
make investments directly to their Series accounts. A Series will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers or
financial institutions who in turn should contact the Fund for proper
instructions.
Retirement Plans for the Fund Classes
An investment in the 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 Waiver of CDSC - Class B and Class C Shares under Redemption and
Exchange in the Prospectus for the Fund Classes 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.
<PAGE>
Minimum investment limitations generally applicable to other investors do
not apply to retirement plans, other than Individual Retirement Accounts
("IRAs"), for which there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25, regardless of which Class is selected. Retirement
plans may be subject to plan establishment fees, annual maintenance fees and/or
other administrative or trustee fees. Fees are based upon the number of
participants in the plan as well as the services selected. Additional
information about fees is included in retirement plan materials. Fees are quoted
upon request. Annual maintenance fees may be shared by Delaware Management Trust
Company, the Transfer Agent, other affiliates of the Manager and others that
provide services to such plans.
Certain shareholder investment services available to non-retirement plan
shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class. See
Institutional Classes 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.
<PAGE>
A company or association may establish a Group IRA for employees or
members who want to purchase shares of a Series. Purchases of $1 million or more
of Class A Shares qualify for purchase at net asset value but may, under certain
circumstances, be subject to a Limited CDSC. See Purchasing Shares concerning
reduced front-end sales charges applicable to Class A Shares.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Class B Shares and Class C Shares under Alternative Purchase
Arrangements, Contingent Deferred Sales Charge - Class B Shares and Class C
Shares, and Waiver of CDSC - Class B and Class C Shares in the Fund Classes'
Prospectus concerning the applicability of a CDSC upon redemption.
See Appendix A for additional IRA information.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Fund Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension
Plan ("SAR/SEP")
Employers with 25 or fewer eligible employees can establish this plan
which permits employer contributions and salary deferral contributions in Class
A Shares and Class C Shares only.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified plans
based on salary deferral contributions. Plan documents are available to enable
employers to establish a plan. An employer may also elect to make profit sharing
contributions and/or matching contributions with investments in only Class A
Shares and Class C Shares or certain other funds in the Delaware Group.
Purchases under the plan may be combined for purposes of computing the reduced
front-end sales charge applicable to Class A Shares as set forth in the table on
page __.
Deferred Compensation Plan for Public Schools
and Non-Profit Organizations ("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page __.
<PAGE>
Deferred Compensation Plan for State and Local
Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of any of the Fund Classes. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or their
investment dealers to obtain further information. Applicable front-end sales
charges for such purchases of Class A Shares are set forth in the table on page
__.
<PAGE>
DETERMINING OFFERING PRICE AND NET
ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering price
next calculated by the Fund after receipt of the order by the Fund or its agent.
Orders for purchases of Class B Shares, Class C Shares and the Institutional
Classes are effected at the net asset value per share next calculated after
receipt of the order by the Fund or its agent. Selling dealers have the
responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value per
share plus any applicable 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, 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
Series' financial statements which are incorporated by reference into this Part
B.
Each Series' net asset value per share is computed by adding the value of
all securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. Expenses and fees are accrued
daily. In determining a Series' total net assets, portfolio securities listed or
traded on a national securities exchange, except for bonds, are valued at the
last sale price on the exchange upon which such securities are primarily traded.
Securities not traded on a particular day, over-the-counter securities and
government and agency securities are valued at the mean value between bid and
asked prices. Money market instruments having a maturity of less than sixty days
are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities. Use
of a pricing service has been approved by the Board of Directors. Prices
provided by a pricing service take into account appropriate factors such as
institutional trading in similar groups of securities, yield, quality, coupon
rate, maturity, type of issue, trading characteristics and other market data. If
no quotations are available, all other securities and 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 Series will bear, pro-rata, all of the common expenses of
that Series. The net asset values of all outstanding shares of each Class of a
Series will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Series represented by the value of shares
of that Class. All income earned and expenses incurred by a Series, will be
borne on a pro-rata basis by each outstanding share of a Class, based on each
Class' percentage in the Series represented by the value of shares of such
Classes, except that the Institutional Classes will not incur any of the
expenses under the Fund's 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
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 Series will
vary.
<PAGE>
REDEMPTION AND REPURCHASE
Any shareholder may require the Fund to redeem shares by sending a
written request, signed by the record owner or owners exactly as the shares are
registered, to the Fund, 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. The Fund issues certificates for
Class A Shares or Institutional Class shares only if a shareholder specifically
requests them. The Fund does not issue certificates for Class B Shares or Class
C Shares. If stock certificates have been issued for shares being redeemed, they
must accompany the written request. For redemptions of $50,000 or less paid to
the shareholder at the address of record, the Fund requires a request signed by
all owners of the shares or the investment dealer of record, but does not
require signature guarantees. When the redemption is for more than $50,000, or
if payment is made to someone else or to another address, signatures of all
record owners are required and a signature guarantee may be required. Each
signature guarantee must be supplied by an eligible guarantor institution. The
Fund reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may request further
documentation from corporations, retirement plans, executors, administrators,
trustees or guardians.
In addition to redemption of Series shares by the Fund, the Distributor,
acting as agent for the Fund, offers to repurchase Series shares from
broker/dealers acting on behalf of shareholders. The redemption or repurchase
price, which may be more or less than the shareholder's cost, is the net asset
value per share next determined after receipt of the request in good order by
the Fund or its agent, less any applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset value are
determined. See Determining Offering Price and Net Asset Value. The Fund and the
Distributor end their business day at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Series shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Purchases of Class A Shares Made at Net Asset Value under Redemption
and Exchange in the 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 - Class B Shares and
Class C Shares under Buying Shares in the Prospectus for the Fund Classes.
Except for the applicable CDSC or Limited CDSC and, with respect to the
expedited payment by wire described below, for which there is currently a $7.50
bank wiring cost, neither the Fund nor the Distributor charges a fee for
redemptions or repurchases, but such fees could be charged at any time in the
future.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order.
<PAGE>
If a shareholder who recently purchased shares by check seeks to redeem
all or a portion of those shares in a written request, the Fund will honor the
redemption request but will not mail the proceeds until it is reasonably
satisfied of the collection of the investment check. This potential delay can be
avoided by making investments by wiring Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund will automatically redeem from the shareholder's account the Series shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Series or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by a Series of securities owned by it is not reasonably
practical, or it is not reasonably practical for the Fund fairly to value its
assets, or in the event that the Securities and Exchange Commission has provided
for such suspension for the protection of shareholders, a Series may postpone
payment or suspend the right of redemption or repurchase. In such case, the
shareholder may withdraw the request for redemption or leave it standing as a
request for redemption at the net asset value next determined after the
suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash or
kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, the Fund has
elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which the
Fund is obligated to redeem Series shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Series during any 90-day period for
any one shareholder.
The value of a Series' investments is subject to changing market prices.
Thus, a shareholder reselling shares to a Series may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
Small Accounts
Before the Fund involuntarily redeems shares from an account that, under
the circumstances noted in the relevant Prospectus, has remained below the
minimum amounts required by the Series' Prospectuses and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than the minimum required and will be allowed
60 days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under Buying Shares in the
Series' Prospectuses. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption. No CDSC or Limited CDSC
will apply to the redemptions described in this paragraph.
Effective November 29, 1995, the minimum initial investment in Class A
Shares was increased from $250 to $1,000. Class A accounts that were established
prior to 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.
* * *
The Fund has available certain redemption privileges, as described below.
The Fund reserves the right to suspend or terminate these expedited payment
procedures upon 60 days' written notice to shareholders.
<PAGE>
Expedited Telephone Redemptions
Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of shares of $50,000 or less for which certificates
have not been issued may call the Fund at 800-523-1918 or, in the case of
shareholders of the Institutional Classes, their Client Services Representative
at 800-828-5052 prior to the time the offering price and net asset value are
determined, as noted above, and have the proceeds mailed to them at the record
address. Checks payable to the shareholder(s) of record will normally be mailed
the next business day, but no later than seven days, after the receipt of the
redemption request. This option is only available to individual, joint and
individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred to
your predesignated bank account by wire or by check by calling the Fund, as
described above. An authorization form must have been completed by the
shareholder and filed with the Fund before the request is received. Payment will
be made by wire or check to the bank account designated on the authorization
form as follows:
1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption. If the proceeds are wired to the shareholder's account at
a bank which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
Redemption Requirements: In order to change the name of the bank and the
account number it will be necessary to send a written request to the Fund and a
signature guarantee may be required. Each signature guarantee must be supplied
by an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
The Fund will not honor telephone redemptions for Series shares recently
purchased by check unless it is reasonably satisfied that the purchase check has
cleared.
If expedited payment under these procedures could adversely affect a
Series, the Fund may take up to seven days to pay the shareholder.
Neither the Fund nor the Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Series shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Systematic Withdrawal Plans
Shareholders of Class A, Class B 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 Fund does not recommend any specific
amount of withdrawal. This $5,000 minimum does not apply for a Series' prototype
retirement plans. Shares purchased with the initial investment and through
reinvestment of cash dividends and realized securities profits distributions
will be credited to the shareholder's account and sufficient full and fractional
shares will be redeemed at the net asset value calculated on the third business
day preceding the mailing date.
<PAGE>
Checks are dated either the 1st or the 15th of the month, as selected by
the shareholder, (unless such date falls on a holiday or a weekend) and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of a Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
Withdrawals under this plan by the holders of Class A Shares or any
similar plan of any other investment company charging a front-end sales charge
made concurrently with the purchases of Class A Shares of this or the shares of
any other investment company will ordinarily be disadvantageous to the
shareholder because of the payment of duplicative sales charges. Shareholders
should not purchase Class A Shares while participating in a Systematic
Withdrawal Plan and a periodic investment program in a fund managed by the
Manager must be terminated before a Systematic Withdrawal Plan can take effect,
except if the shareholder is a participant in one of our retirement plans or is
investing in Delaware Group funds which do not carry a sales charge. Also,
redemptions of Class A Shares pursuant to a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the purchase was made at net asset value and a
dealer's commission has been paid on that purchase. Redemptions of Class B
Shares or Class C Shares pursuant to a Systematic Withdrawal Plan may be subject
to a CDSC, unless the annual amount selected to be withdrawn is less than 12% of
the account balance on the date that the Systematic Withdrawal Plan was
established. See Waiver of CDSC - Class B and Class C Shares and Waiver of
Limited CDSC - Class A Shares under Redemption and Exchange in the Prospectus
for the Fund Classes.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice.
The Systematic Withdrawal Plan is not available for the Institutional
Classes.
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.
<PAGE>
The investment will be made on the 20th day of each month (or, if the
fund selected is not open that day, the next business day) at the public
offering price or net asset value, as applicable, of the fund selected on the
date of investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges.
Shareholders can also use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Group, subject to the conditions and limitations described
in the Fund Classes' Prospectus. Shareholders can terminate their participation
at any time by written notice to the Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans. This option also is not available to shareholders
of the Institutional Classes.
<PAGE>
DIVIDENDS AND REALIZED SECURITIES
PROFITS DISTRIBUTIONS
The Fund will normally make payments from net investment income on a
quarterly basis. Any payments from net realized securities profits will be made
during the first quarter of the next fiscal year. During the fiscal year ended
October 31, 1995, dividends totaling $0.63, $0.51, $0.66, $0.22, $0.18 and $0.24
per share were paid from the net investment income of Delaware Fund A Class,
Delaware Fund B Class, Delaware Fund Institutional Class, Devon Fund A Class,
Devon Fund B Class and Devon Fund Institutional Class, respectively. The amounts
included undistributed net investment income earned by a Series during the
previous fiscal year. During the fiscal year ended October 31, 1995,
distributions totaling $0.25 per share were paid from realized securities
profits of Delaware Fund A Class, Delaware Fund B Class and Delaware Fund
Institutional Class, and distributions totaling $0.32 per share were paid from
realized securities profits of Devon Fund A Class, Devon Fund B Class and Devon
Fund Institutional Class, which included undistributed net investment income and
realized securities profits earned in fiscal year 1994.
Each Class of shares of a Series will share proportionately in the
investment income and expenses of that Series, except that Class A Shares, Class
B Shares and Class C Shares alone will incur distribution fees under their
respective 12b-1 Plans.
Dividends are automatically reinvested in additional shares at the net
asset value of the exdividend date unless, in the case of shareholders in the
Fund Classes, an election to receive dividends in cash has been made. 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
Series may deduct from a shareholder's account the costs of the Series' effort
to locate a shareholder if a shareholder's mail is returned by the Post Office
or the Series is otherwise unable to locate the shareholder or verify the
shareholder's mailing address. These costs may include a percentage of the
account when a search company charges a percentage fee in exchange for their
location services.
<PAGE>
TAXES
It is the policy of each Series to pay out substantially all net
investment income and net realized gains to relieve it of federal income tax
liability on that portion of its income paid to shareholders under the Internal
Revenue Code. The Series have met these requirements in previous years and
intends to meet them this year. Each Series of the Fund is treated as a separate
tax entity, and any capital gains and losses for each Series are calculated
separately.
Distributions representing net investment income or short-term capital
gains are taxable as ordinary income to shareholders. The tax status of
dividends and distributions paid to shareholders will not be affected by whether
they are paid in cash or in additional shares. A portion of these distributions
may be eligible for the dividends-received deduction for corporations. For the
fiscal year ended October 31, 1995, 27% and 31% of dividends paid from net
investment income of Delaware Fund and Devon Fund, respectively, were eligible
for this deduction. The portion of dividends paid by a Series that so qualifies
will be designated each year in a notice to that Series' shareholders, and
cannot exceed the gross amount of dividends received by the Series from domestic
(U.S.) corporations that would have qualified for the dividends-received
deduction in the hands of a Series if that Series was a regular corporation. The
availability of the dividends-received deduction is subject to certain holding
period and debt financing restrictions imposed under the Code on the corporation
claiming the deduction.
Shareholders will be notified annually by the Fund as to the federal
income tax status of dividends and distributions.
Distributions may also be subject to state and local taxes; shareholders
are advised to consult with their tax advisers in this regard.
Prior to purchasing shares of a Series, you should carefully consider the
impact of dividends or realized securities profits distributions which have been
declared but not paid. Any such dividends or realized securities profits paid
shortly after a purchase of shares by an investor will have the effect of
reducing the per share net asset value of such shares by the amount of the
dividends or realized securities profits distributions. All or a portion of such
dividends or realized securities profits distributions, although in effect a
return of capital, are subject to taxes which may be at ordinary income tax
rates. The purchase of shares just prior to the ex-dividend date has an adverse
effect for income tax purposes.
Net long-term gain from the sale of securities when realized and
distributed (actually or constructively) is taxable as capital gain, and these
gains are currently taxed at long-term capital gain rates. If the net asset
value of shares were reduced below a shareholder's cost by distribution of gain
realized on sale of securities, such distribution would be a return of
investment though taxable as stated above. The portfolio securities of the
Delaware Fund and the Devon Fund had a net unrealized appreciation for tax
purposes of $58,520,542 and $1,396,518, respectively, as of October 31, 1995.
<PAGE>
INVESTMENT MANAGEMENT AGREEMENTS
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the supervision
and direction of the Fund's Board of Directors.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. The aggregate assets of these funds on October 31,
1995 were approximately $10,172,570,000. Investment advisory services are also
provided to institutional accounts with assets on October 31, 1995 of
approximately $16,961,505,000.
The Investment Management Agreement for each Series is dated April 3,
1995 and was approved by shareholders on March 29, 1995.
The Agreements have 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, and only if the terms and the renewal
thereof have been approved by the vote of a majority of the directors of the
Fund who are not parties thereto or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval. The
Agreements are terminable without penalty on 60 days' notice by the directors of
the Fund or by the Manager. The Agreements will terminate automatically in the
event of their assignment.
The annual compensation paid by each Series for investment management
services is equal to: for the Delaware Fund, .60% on the first $100 million of
average daily net assets of the Fund, .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 the Series' proportionate share of all directors' fees paid
to the unaffiliated directors of the Fund; and, for the Devon Fund, .60% on the
first $500 million of average daily net assets and .50% on the average daily net
assets in excess of $500 million. On October 31, 1995, the total net assets of
the Delaware Fund were $605,372,815 and the total net assets of the Devon Fund
were $12,579,189. The Manager makes all investment decisions which are
implemented by the Fund. The Manager pays the salaries of all directors,
officers and employees who are affiliated with both the Manager and the Fund.
Investment management fees paid by the Delaware Fund during the past three
fiscal years were $2,785,383 for 1993, $2,913,609 for 1994 and $2,953,762 for
1995. Investment management fees incurred by the Devon Fund during the period
December 29, 1993 (date of initial public offering) through October 31, 1994
were $29,901, and for the fiscal year ended October 31, 1995 were $57,382.
However, no fees were paid by this Series during either year as a result of the
waiver described below.
Except for those expenses borne by the Manager under the Investment
Management Agreements and the Distributor under the Distribution Agreements, the
Fund is responsible for all of its own expenses. Among others, these include the
Fund's proportionate share of rent and certain other administrative expenses;
the investment management fees; transfer and dividend disbursing agent fees and
costs; custodian expenses; federal and state securities registration fees; proxy
costs; and the costs of preparing prospectuses and reports sent to shareholders.
The ratios of expenses to average daily net assets for Delaware Fund A Class,
Delaware Fund B Class and Delaware Fund Institutional Class for the fiscal year
ended October 31, 1995 were 0.97%, 1.79% and 0.79%, respectively. The ratios of
expenses to average daily net assets for Devon Fund A Class, Devon Fund B Class
and Devon Fund Institutional Class for the fiscal year ended October 31, 1995
were 1.25%, 1.95% and 0.95%, respectively, after voluntary fee waivers and
expense reimbursements by the Manager. The expenses for the Class A Shares and
Class B Shares of each Series reflect the impact of their 12b-1 Plans. The Fund
anticipates that the ratio of expenses to average daily net assets of each
Series' Class C Shares will be identical to that of the Class B Shares of the
same Series.
<PAGE>
In connection with the Devon Fund, the Manager had elected voluntarily to
waive that portion, if any, of the annual management fees payable by the Devon
Fund and to reimburse the Series to the extent necessary to ensure that the
Total Operating Expenses of the Series do not exceed .95% (exclusive of taxes,
interest, brokerage commissions, extraordinary expenses and 12b-1 expenses),
through December 31, 1994. This waiver and reimbursement applicable to each
class of Devon Fund has been extended through June 30, 1996.
By California regulation, the Manager is required to waive certain fees
and reimburse the Fund for certain expenses to the extent that the Fund's annual
operating expenses, exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, exceed specified percentages of average daily net
assets. At present, the most restrictive limit is 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 October 31, 1995, no such reimbursement was necessary or paid for the
Delaware Fund or the Devon 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 the shares of each
Series 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 each Series
on behalf of the Class A Shares, Class B Shares and Class C Shares under their
respective 12b-1 Plans. Prior to January 3, 1995, Delaware Distributors, Inc.
("DDI") served as the national distributor of each Series' shares. On that date,
Delaware Distributors, L.P., a newly formed limited partnership, succeeded to
the business of DDI. All officers and employees of DDI became officers and
employees of Delaware Distributors, L.P. DDI is the corporate general partner of
Delaware Distributors, L.P. and both DDI and Delaware Distributors, L.P. are
indirect, wholly-owned subsidiaries of Delaware Management Holdings, Inc.
The Transfer Agent, Delaware Service Company, Inc., another affiliate of
the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as the
Series' shareholder servicing, dividend disbursing and transfer agent of
Delaware Fund shares pursuant to a Shareholders Services Agreement dated June
29, 1988 and of Devon Fund shares pursuant to a Shareholders Services Agreement
dated December 29, 1993. The Transfer Agent is also an indirect, wholly-owned
subsidiary of Delaware Management Holdings, Inc.
<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of the Fund are managed under the direction of
its Board of Directors.
Certain officers and directors of the Fund hold identical positions in
each of the other funds in the Delaware Group. As of November 30, 1995, the
Fund's officers and directors owned less than 1% of the outstanding shares of
the Delaware Fund A Class, Delaware Fund B Class, Delaware Fund C Class and
Delaware Fund Institutional Class. As of the same date, the Fund's officers and
directors held approximately 2.65% of the outstanding shares of the Devon Fund A
Class, less than 1% of the outstanding shares of the Devon Fund B Class and
Devon Fund C Class and 39.34% of the outstanding shares of the Devon Fund
Institutional Class.
As of November 30, 1995, the Fund believes the following accounts
held 5% or more of the outstanding shares of, respectively, Delaware Fund
Institutional Class and the Delaware Fund B Class: As of October 31, 1995, the
Fund believes the following accounts held 5% or more of the outstanding shares
of, respectively, Delaware Fund Institutional Class and the Delaware Fund B
Class: Price Waterhouse, LLP 401(k) Savings Plan, National Administrative
Center, P.O. Box 30004, Tampa, FL 33630 held 3,666,174 shares (66.78%) and South
Trust Bank of Alabama Trust Thompson Tractor, P.O. Box 2554, Birmingham, AL
35290 held 493,026 shares (8.99%) of the outstanding shares of the Delaware Fund
Institutional Class. Kurnby B. Sparr and Pauline Sparr, Trust Kurnby B. and
Pauline Sparr Tr UTD 12/29/93, 838 Gravel Pike, Palm, PA 18070 held 11,222
shares (6.51%) of the outstanding shares of the Delaware Fund B Class.
As of November 30, 1995, the Fund believes the following accounts held 5%
or more of the outstanding shares of, respective, the Devon Fund A Class, Devon
Fund Institutional Class and Devon Fund B Class: ACO Trust Securities Section
2-032 a/c 600108005, c/o Integra Trust Services, 300 Fourth Ave., Pittsburgh, PA
15278 held 61,202 shares (8.62%) of the outstanding shares of the Devon Fund A
Class. Delaware Management Company, Inc. Employee Profit Sharing Trust, 1818
Market Street, Philadelphia, PA 19103 held 183,723 (80.50%); Delaware Management
Company, Inc. Employee Profit Sharing Trust FBO Wayne A. Stork held 53,190
shares (23.90%); Delaware Management Company, Inc. Employee Profit Sharing Trust
FBO J. Michael Pokorny held 21,983 shares (9.63%); and WCSEL Employees Pension
Plan, 2200 Clarendon Blvd. 13th Fl., Arlington, VA 22201 held 40,807 shares
(17.88%); WCSEL Employees Pension Plan FBO Nicholas Malinchak held 13,773 shares
(6.04%) and WCSEL Employees Pension Plan FBO Thomas J. Colucci held 12,389
shares (5.43%) of the outstanding shares of the Devon Fund Institutional Class.
Shares held by Delaware Management Company, Inc. Employee Profit Sharing Trust
and WCSEL Employees Pension Plan are beneficially held by the participants in
those plans, including those named for the benefit of above. Charles Russo and
Stephen J. Russo, Jr. Trust S C J Inc. PSP dtd 10/1/85 3106 Broad Street
Trenton, NJ 08610 held 3,762 shares (5.13%) of the outstanding shares of the
Devon Fund B Class.
<PAGE>
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 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 the Fund on behalf
of each Series 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 the Fund are noted below along with
their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.
<PAGE>
*Wayne A. Stork (58)
Chairman, President, Chief Executive Officer, Director and/or Trustee of
the Fund, 15 other funds in the Delaware Group (which excludes
Delaware Pooled Trust, Inc.) and Delaware Management Holdings, Inc.
Chairman and Director of Delaware 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 DMH Corp., Delaware
International Advisers Ltd., Delaware International Holdings Ltd.
and Founders Holdings, Inc.
Director of Delaware Distributors, Inc. and Delaware Service Company,
Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.
Winthrop S. Jessup (50)
Executive Vice President of the Fund, 15 other funds in the Delaware
Group (which excludes Delaware Pooled Trust, Inc.) and Delaware
Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Investment Counselors, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc., Delaware International Holdings Ltd. and Founders
Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Management Trust Company, Delaware Service Company,
Inc., 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 the Fund and each of the other 16 funds in
the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware organization.
- ------------
*Director affiliated with the investment manager of the Fund and considered an
"interested person" as defined in the Investment Company Act of 1940.
<PAGE>
Walter P. Babich (68)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group. 460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
Anthony D. Knerr (57)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group. 500 Fifth Avenue, New York, NY 10110.
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 the Fund and each of the other 16 funds in the
Delaware Group. 785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of
the Smithsonian Institution, Washington, DC, and from 1975 to 1994,
she was Adjunct Professor of Columbia Business School.
W. Thacher Longstreth (75)
Director and/or Trustee of the Fund and each of the other 16 funds in the
Delaware Group. 1617 John F. Kennedy Boulevard, Philadelphia, PA
19103. Vice Chairman, Packquisition Corp., a financial printing,
commercial printing and information processing firm.
Philadelphia City Councilman.
President, MLW, Associates.
Director, Tasty Baking Company.
Director, Healthcare Services Group.
Charles E. Peck (70)
Director and/or Trustee of the Fund and each of the other 16 funds 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.
<PAGE>
David K. Downes (55)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of the Fund, each of the other 16 funds in the Delaware
Group and Delaware Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
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 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 the Fund, each of the other 16
funds in the Delaware Group, Delaware Management Holdings, Inc.,
Delaware Distributors, L.P. and Delaware Investment Counselors,
Inc.
Executive Vice President, 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. and Delaware Investment & Retirement
Services, Inc.
Corporate Vice President, Secretary and Director of Founders Holdings,
Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware organization.
George H. Burwell (34)
Vice President/Senior Portfolio Manager of each Series of the Fund, of
the seven other equity funds in the Delaware Group and of Delaware
Management Company, Inc.
Before joining the Delaware Group in 1992, Mr. Burwell was a portfolio
manager for Midlantic Bank, New Jersey. In addition, he was a
security analyst for Balis & Zorn, New York and for First Fidelity
Bank, New Jersey.
Gary A. Reed (41)
Vice President/Senior Portfolio Manager of the Delaware Fund, of nine
other income (including tax-exempt) funds in the Delaware Group,
Delaware Investment Counselors, Inc. and Delaware Management
Company, Inc.
During the past five years, Mr. Reed has served in such capacities within
the Delaware organization.
<PAGE>
Joseph H. Hastings (46)
Vice President/Corporate Controller of the Fund, each of the other 16
funds in the Delaware Group, Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Investment Counselors, Inc. and Founders
Holdings, Inc.
Executive Vice President/Treasurer/Chief Financial Officer of Delaware
Management Trust Company.
Vice President/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 the Fund, each of the other 16 funds in the
Delaware Group, Delaware Management Company, Inc., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc. and Founders CBO
Corporation.
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.
The following is a compensation table listing for each director entitled
to receive compensation, the aggregate compensation received from the Fund and
the total compensation received from all Delaware Group funds for the fiscal
year ended October 31, 1995 and an estimate of annual benefits to be received
upon retirement under the Delaware Group Retirement Plan for Directors/Trustees
as of October 31, 1995.
<TABLE>
<CAPTION>
Pension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued Benefits from all 17
Compensation as Part of Upon Delaware
Name from Fund Fund Expenses Retirement* Group Funds
<S> <C> <C> <C> <C>
W. Thacher Longstreth $4,463.08 None $18,100 $58,187.98
Ann R. Leven $5,092.16 None $18,100 $66,323.97
Walter P. Babich $5,175.06 None $18,100 $67,323.89
Anthony D. Knerr $4,274.08 None $18,100 $57,635.25
Charles E. Peck $4,463.08 None $18,100 $58,187.97
</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 seventy years 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 October 31,
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.
<PAGE>
EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes and for
shareholders of classes of other funds in the Delaware Group are set forth in
the relevant prospectuses for such classes. The following supplements that
information. The Fund may modify, terminate or suspend the exchange privilege
upon 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 Fund receives written notice from the shareholder to the
contrary.
Shareholders or their investment dealers of record may contact the
Transfer Agent at 800-523- 1918 or, in the case of shareholders of the
Institutional Classes, their Client Services Representative at 800-828-5052, to
effect an exchange. The shareholder's current Series account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for Retirement Plans.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Group. Telephone exchanges may be subject to limitations
as to amounts or frequency. The Transfer Agent and the Fund reserve the right to
record exchange instructions received by telephone and to reject exchange
requests at any time in the future.
As described in the Fund's Prospectuses, neither the Fund nor the
Transfer Agent is responsible for any shareholder loss incurred in acting upon
written or telephone instructions for redemption or exchange of Series shares
which are reasonably believed to be genuine.
<PAGE>
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Series will refuse any new Timing
Arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Group funds from Timing Firms. The Fund reserves the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a timing pattern who: (i)
makes an exchange request out of the Fund within two weeks 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. The Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow a
time pattern (as described above).
The Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if the
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized brokers of
record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other Delaware
Group funds:
Trend Fund seeks long-term growth by investing in common stock issued by
emerging growth companies exhibiting strong capital appreciation potential.
Value Fund seeks capital appreciation by investing primarily in common
stocks whose market values appear low relative to their underlying value or
future potential.
DelCap Fund seeks long-term capital growth by investing in common stocks
and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return Fund
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.
Delchester Fund seeks as high a current income as possible by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper.
U.S. Government Fund seeks high current income by investing primarily in
long-term debt obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
<PAGE>
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 series available exclusively as
funding vehicles for certain insurance company separate accounts. Equity/Income
Series seeks the highest possible total rate of return by selecting issues that
exhibit the potential for capital appreciation while providing higher than
average dividend income. High Yield Series seeks as high a current income as
possible by investing in rated and unrated corporate bonds, U.S. Government
securities and commercial paper. Capital Reserves Series seeks a high stable
level of current income while minimizing fluctuations in principal by investing
in a diversified portfolio of short-and intermediate-term securities. Money
Market Series seeks the highest level of income consistent with preservation of
capital and liquidity through investments in short-term money market
instruments. Growth Series seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. Multiple Strategy Series seeks a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. International
Equity Series seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers that provide the
potential for capital appreciation and income. Value Series seeks capital
appreciation by investing in small- to mid-cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
Emerging Growth Series seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging and
other growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective.
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus from the Distributor. Read it
carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
<PAGE>
GENERAL INFORMATION
The Manager is the investment manager of the Fund. 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 Series are made
independently from those of the other funds and accounts, they may make
investment decisions at the same time.
Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in SEC Rule 17j-1 under the 1940 Act, who provide
services to the Manager, Delaware International Advisers Ltd. or their
affiliates, are permitted to engage in personal securities transactions subject
to the exceptions set forth in Rule 17j-1 and the following general restrictions
and procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of securities;
(4) opening positions may only be closed-out at a profit after a 60-day holding
period has elapsed; and (5) the Compliance Officer must be informed periodically
of all securities transactions and duplicate copies of brokerage confirmations
and account statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for the Fund and for the
other mutual funds in the Delaware Group. As previously described, prior to
January 3, 1995, DDI served as the national distributor for the Fund. In its
capacity as such, DDI received net commissions, after reallowances to dealers,
as follows:
Delaware Fund
Class A Shares
Total
Amount
of
Fiscal Under- Amounts Net
Year writing Reallowed Commission
Ended Commissions to Dealers to Distributor
- ----- ----------- ---------- --------------
10/31/95 $545,446 $471,630 $73,816
10/31/94 892,170 772,047 120,123
10/31/93 1,714,010 1,484,018 229,992
Devon Fund
Class A Shares
Total
Amount
of
Fiscal Under- Amounts Net
Year writing Reallowed Commission
Ended Commissions to Dealers to Distributor
- ----- ----------- ---------- --------------
10/31/95 $79,219 $68,054 $11,165
10/31/94* 90,136 78,370 11,766
* Date of initial public offering was December 29,
1993.
During the fiscal years ended October 31, 1993, 1994 and 1995, no Limited
CDSC payments were received with respect to Delaware Fund A Class. No CDSC
payments were received for the fiscal year ended 1994 with respect to Delaware
Fund B Class. During the fiscal year ended October 31, 1995, the Distributor and
DDI, in its capacity as the Fund's national distributor, received CDSC payments
in the amount of $789 with respect to Delaware Fund B Class.
During the fiscal year ended October 31, 1994, DDI, in its capacity as
the Fund's national distributor, received Limited CDSC payments in the amount of
$1,938 with respect to Devon Fund A Class. During the fiscal year ended October
31, 1995, no Limited CDSC payments were received with respect to Devon Fund A
Class. No CDSC payments were received for the fiscal years ended 1994 and 1995
with respect to Devon Fund B 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 the Fund and for the other
mutual funds in the Delaware Group. The Transfer Agent is paid a fee by each
Series for providing these services consisting of an annual per account charge
of $5.50 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the disinterested directors.
<PAGE>
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of the Fund's advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause the Fund to delete the
words "Delaware Group" from the Fund's name.
Chemical Bank, 450 West 33rd Street, New York, NY 10001, is custodian of
the Fund's securities and cash. As custodian for the Fund, Chemical Bank
maintains a separate account or accounts for the Fund; receives, holds and
releases portfolio securities on account of the Fund; receives and disburses
money on behalf of the Fund; and collects and receives income and other payments
and distributions on account of the Fund's portfolio securities.
Morgan Guaranty Trust Company of New York, located at 60 Wall Street, New
York, New York 10260, provides similar services with respect to each Series'
investments in foreign securities.
The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for the Fund by
Stradley, Ronon, Stevens & Young, Philadelphia, Pennsylvania. In the opinion of
counsel, shares of the Fund are exempt from Pennsylvania personal property taxes
and qualify as an authorized investment for trustees in Pennsylvania if such an
investment is otherwise appropriate.
Capitalization
The Fund has a present authorized capitalization of five hundred million
shares of capital stock with a $1 par value per share. The Fund currently offers
two series of shares, which offer four classes of shares, each representing a
proportionate interest in the assets of a Series, and each having the same
voting and other rights and preferences as the other class of that Series,
except that shares of the Institutional Classes may not vote on any matter
affecting the Fund Classes' Distribution Plans under Rule 12b-1. Similarly, as a
general matter, shareholders of Class A Shares, Class B Shares and Class C
Shares may vote only on matters affecting the 12b-1 Plan that relates to the
class of shares they hold. However, Class B Shares may vote on any proposal to
increase materially the fees to be paid by the respective Series under the Rule
12b-1 Plan relating to Class A Shares. General expenses of a Series will be
allocated on a pro-rata basis to the respective classes according to asset size,
except that expenses of the 12b-1 Plans of Class A, Class B and Class C Shares
will be allocated solely to those classes. While all shares have equal voting
rights on matters affecting the entire Fund, each Series would vote separately
on any matter which affects only that Series, such as any change in its own
investment objective and policy or action to dissolve the Series and as
otherwise prescribed by the 1940 Act. Shares of each Series have a priority in
that Series' assets, and in gains on and income from the portfolio of that
Series. The Board of Directors has allocated one hundred million shares to the
Delaware Fund A Class, twenty-five million shares to the Delaware Fund B Class,
twenty-five million shares to the Delaware Fund C Class, fifty million shares to
the Delaware Fund Institutional Class, fifty million shares to the Devon Fund A
Class, twenty-five million shares to the Devon Fund B Class, twenty-five million
to the Devon Fund C Class, and twenty-five million shares to the Devon Fund
Institutional Class.
Prior to November 9, 1992, the Fund offered only one series, now known as
the Delaware Fund and one class of shares, the Delaware Fund A Class. Beginning
November 9, 1992, the Delaware Fund began offering the Delaware Fund
Institutional Class. Beginning December 29, 1993, the Fund offered the Devon
Fund which offered the Devon Fund A Class and the Devon Fund Institutional
Class. The Class B Shares for each Series were not offered prior to September 6,
1994, and beginning as of November 29, 1995, the Fund began offering the Class C
Shares.
<PAGE>
Prior to September 6, 1994, the Delaware Fund A Class was known as the
Delaware Fund class and the Delaware Fund Institutional Class was known as the
Delaware Fund (Institutional) class, and, prior to the same date, the Dividend
Growth Fund A Class was known as the Dividend Growth Fund class and the Dividend
Growth Fund Institutional Class was known as the Dividend Growth Fund
(Institutional) class. Effective as of the close of business on August 28, 1995,
the name Dividend Growth Fund was changed to Devon Fund and the names of
Dividend Growth Fund A Class, Dividend Growth Fund B Class and Dividend Growth
Fund Institutional Class were changed to Devon Fund A Class, Devon Fund B Class
and Devon Fund Institutional Class, respectively.
All shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable and, except as described above, have
equal voting rights.
Noncumulative Voting
These shares have noncumulative voting rights which means that the
holders of more than 50% of the shares of the Fund voting for the election of
directors can elect all the directors if they choose to do so, and, in such
event, the holders of the remaining shares will not be able to elect any
directors.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the Securities and Exchange
Commission.
<PAGE>
APPENDIX A--DESCRIPTION OF RATINGS
Commercial Paper
Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing the
highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength; P-2--
second highest grade possessing less relative strength than the highest grade.
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be
the best quality. They carry the smallest degree of investment risk; Aa--judged
to be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
<PAGE>
APPENDIX B--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 upfront 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.
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 Series, your bottom line at retirement could be lower--it
could also be much higher.
$2,000 Invested Annually Assuming a 10% Annualized Return
15% Tax Bracket Single - $0-$22,750
--------------- Joint - $0-$38,000
How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5%
(10% less 15%)]
<PAGE>
28% Tax Bracket Single - $22,751-$55,100
--------------- Joint - $38,001-$91,850
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
[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%]
31% Tax Bracket Single - $55,101-$115,000
--------------- Joint - $91,851-$140,000
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
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
[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%]
<PAGE>
36% Tax Bracket* Single - $115,001-$250,000
--------------- Joint - $140,001-$250,000
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
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
[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%]
39.6% Tax Bracket* Single - over $250,000
----------------- Joint - over $250,000
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
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
[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.
<PAGE>
<TABLE>
<CAPTION>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED QUARTERLY
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 34,720 57,831 103,956
</TABLE>
<TABLE>
<CAPTION>
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED QUARTERLY
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 28,226 $ 28,833 $ 29,702 $ 30,239 $ 32,699 $ 35,834
15 50,104 51,753 54,152 55,654 62,755 72,298
20 79,629 83,239 88,573 91,966 108,525 132,049
30 173,245 185,894 205,256 217,971 284,358 390,394
40 343,737 379,596 436,523 475,187 692,097 1,084,066
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $250,000. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
<PAGE>
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on April
15th of the following year--the latest, for each tax year.
After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295
Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.
And it pays to shop around. If you get just 2% more per year, it can make
a big difference when you retire. A constant 8% versus 10% return, both
compounded quarterly, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
8% Return 10% Return
--------- -----------
18 years $ 31,291 $ 35,062
20 years 98,846 126,005
25 yers 244,692 361,887
The statistical exhibits above are for illustration purposes only and do
not reflect the actual performance for either Series of the Fund either in the
past or in the future.
<PAGE>
APPENDIX C - PERFORMANCE OVERVIEW
Delaware Fund Performance Overview
The following table illustrates the total return on one share invested in
the Delaware Fund A Class(1) during the 10-year period ended October 31, 1995.
The results reflect the reinvestment of all dividends and realized securities
profits distributions at the net asset value reported at the time of
distribution. No adjustment has been made for any income taxes payable by
shareholders on income dividends or realized securities profits distributions
accepted in shares.
Delaware Fund A Class
<TABLE>
<CAPTION>
Cumula-
tive net
asset
Net Asset value at
Maximum Value Distributions year-end
offering -------------------- -------------------- with all
Year price at Begin- From From distribu-
ended begin- ning End Invest- realized tions
Oct ning of of of ment securi- rein-
31 year(2) year year income ties profits vested
- ------- -------- ------- ---- ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1986 $21.90 $20.86 $23.20 $0.70 $2.00 $26.46
1987 24.36 23.20 16.85 0.40 4.31 24.04
1988 17.69 16.85 15.25 0.32 4.09 29.34
1989 16.01 15.25 17.48 0.95 --- 35.70
1990 18.35 17.48 16.19 0.78 --- 34.57
1991 17.00 16.19 18.81 0.88 0.29 42.97
1992 19.75 18.81 18.72 0.70 1.54 48.29
1993 19.65 18.72 19.43 0.66 0.77 54.04
1994 20.40 19.43 18.00 0.60 1.16 55.01
1995 18.90 18.00 19.94 0.63 0.25 63.96
----- -----
Total Distributions $6.62 $14.41
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -----------------------------------------------------------------------------------------------------------
Delaware Fund Lipper
- --------------------------------------------- Balanced
Maximum Offering Price Net Asset Value Standard & Dow Jones Consumer Average
to Net Asset Value to Net Asset Value Poor's 500(5) Industrial(5) Price Index(5) Index(5)
- ------------------------------------------------------------------------------------------------------------ -------------------
Annual Cumulative(3) Annual Cumulative(4) Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20.8% 20.8% 26.9% 26.8% 33.2% 33.2% 42.0% 42.0% 1.5% 1.5% 29.5% 29.5%
- -13.5 9.8 -9.1 15.3 6.4 41.7 9.6 55.6 4.5 6.1 2.6 32.8
16.2 34.0 22.0 40.6 14.8 62.6 12.0 74.2 4.3 10.6 13.2 50.3
15.9 63.0 21.7 71.1 26.4 105.5 28.3 123.5 4.5 15.6 16.9 75.7
-7.8 57.8 -3.2 65.7 -7.5 90.1 -4.1 114.4 6.3 22.9 -3.8 69.0
18.4 96.2 24.3 106.0 33.4 153.7 30.0 178.6 2.9 26.5 28.2 116.6
7.0 120.5 12.4 131.5 10.0 178.9 8.4 201.9 3.2 30.5 8.8 135.6
6.6 146.7 11.9 159.0 14.9 220.5 17.4 254.5 2.8 34.1 15.6 172.4
-3.0 151.1 1.8 163.7 3.9 232.9 9.2 287.0 2.6 37.6 -0.7 170.5
10.7 192.0 16.3 206.6 26.4 320.7 25.0 383.6 2.8 41.5 18.0 219.2
</TABLE>
1 The Delaware Fund A Class began paying 12b-1 payments on June 1, 1992 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 $21.90 on October 31, 1985
4 Reflects a net asset value of $20.86 on October 31, 1985.
5 Source: Lipper Analytical Services, Inc.
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 charge 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.
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.
Lipper Analytical Services, Inc. is a performance evaluation service that
maintains statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
<PAGE>
APPENDIX C - PERFORMANCE OVERVIEW
Delaware Fund Performance Overview
The following table illustrates the total return on one share invested in
the Delaware Fund B Class during the period September 6, 1994 (date of initial
public offering) through October 31, 1995. The results reflect the reinvestment
of all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
Delaware Fund B Class
<TABLE>
<CAPTION>
Cumula-
tive net
asset
Net Asset value at
Maximum Value Distributions year-end
offering -------------------- -------------------- with all
Year price at Begin- From From distribu-
ended begin- ning End Invest- realized tions
Oct ning of of of ment securi- rein-
31 period period period income ties profits vested
- ------ --------- -------- ------ ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1994 $18.34 $18.34 $17.98 $0.15 --- $18.13
1995 17.98 17.98 19.90 0.51 $0.25 20.92
----- -----
Total Distributions $0.66 $0.25
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -----------------------------------------------------------------------------------------------------------
Delaware Fund Lipper
- --------------------------------------------- Balanced
Returns Including Returns Excluding Standard & Dow Jones Consumer Average
CDSC CDSC Poor's 500(2) Industrial(2) Price Index(2) Index(2)
- ------------------------------------------------------------------------------------------------------------ -------------------
Annual Cumulative(1) Annual Cumulative(1) Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- -5.1% -- -1.1% -- 0.5% -- 0.7% -- 0.3% -- -1.6%
11.4% 10.1 15.4% 14.1 26.4% 27.1 25.0% 25.8 2.8% 3.2 18.0% 16.1
</TABLE>
- ----------------------
1 Reflects a net asset value of $18.34 on September 2, 1994.
2 Source: Lipper Analytical Services, Inc.
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 charge 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.
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.
Lipper Analytical Services, Inc. is a performance evaluation service that
maintains statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
<PAGE>
APPENDIX C - PERFORMANCE OVERVIEW
Delaware Fund Performance Overview
The following table illustrates the total return on one share invested in
the Delaware Fund Institutional Class(1) during the 10-year period ended October
31, 1995. The results reflect the reinvestment of all dividends and realized
securities profits distributions at the net asset value reported at the time of
distribution. No adjustment has been made for any income taxes payable by
shareholders on income dividends or realized securities profits distributions
accepted in shares.
Delaware Fund Institutional Class
<TABLE>
<CAPTION>
Cumula-
tive net
asset
Net Asset value at
Value Distributions year-end
------------------ -------------------- with all
Year Begin- From From distribu-
ended ning End Invest- realized tions
Oct of of ment securi- rein-
31 year year income ties profits vested
- ------- ------- ---- ------ ------------ -------
<S> <C> <C> <C> <C> <C>
1986 $20.86 $23.20 $0.70 $2.00 $26.47
1987 23.20 16.85 0.40 4.31 24.05
1988 16.85 15.25 0.32 4.09 29.35
1989 15.25 17.48 0.95 --- 35.71
1990 17.48 16.19 0.78 --- 34.68
1991 16.19 18.81 0.88 0.29 42.99
1992 18.81 18.72 0.70 1.54 48.31
1993 18.72 19.46 0.66 0.77 54.44
1994 19.46 18.03 0.63 1.16 55.20
1995 18.03 19.98 0.66 0.25 64.31
----- -----
Total Distributions $6.68 $14.41
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Fund Lipper
- --------------------- Balanced
Net Asset Value Standard & Dow Jones Consumer Average
to Net Asset Value Poor's 500(3) Industrial(3) Price Index(3) Index(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Annual Cumulative(2) Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
26.9% 26.9% 33.2% 33.2% 42.0% 42.0% 1.5% 1.5% 29.5 29.5%
-9.1 15.3 6.4 41.7 9.6 55.6 4.5 6.1 2.6 32.8
22.0 40.7 14.8 62.6 12.0 74.2 4.3 10.6 13.2 50.3
21.7 71.2 26.4 105.5 28.3 123.5 4.5 15.6 16.9 75.7
-3.2 65.8 -7.5 90.1 -4.1 114.4 6.3 22.9 -3.8 69.0
24.3 106.1 33.4 153.7 30.0 178.6 2.9 26.5 28.2 116.6
12.4 131.6 10.0 178.9 8.4 201.9 3.2 30.5 8.8 135.6
12.1 159.4 14.9 220.5 17.4 254.5 2.8 34.1 15.6 172.4
2.0 164.5 3.9 232.9 9.2 287.0 2.6 37.6 -0.7 170.5
16.5 208.1 26.4 320.7 25.0 383.6 2.8 41.5 18.0 219.3
</TABLE>
- ----------
1 Performance for Delaware Fund Institutional Class for periods prior to
November 9, 1992 (date of initial public offering) is calculated by taking the
performance of the Delaware Fund A Class 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 applicable to Delaware
Fund A Class beginning June 1, 1992, and performance would have been affected
had such an adjustment been made.
2 Reflects a net asset value of $20.86 on October 31, 1985.
3 Source: Lipper Analytical Services, Inc.
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 charge 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.
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.
Lipper Analytical Services, Inc. is a performance evaluation service that
maintains statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
<PAGE>
APPENDIX C - PERFORMANCE OVERVIEW
Devon Fund Performance Overview
The following table illustrates the total return on one share invested in
the Devon Fund A Class during the period December 29, 1993 (date of initial
public offering) through October 31, 1995. The results reflect the reinvestment
of all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
Devon Fund A Class
<TABLE>
<CAPTION>
Cumula-
tive net
asset
Net Asset value at
Maximum Value Distributions year-end
offering -------------------- -------------------- with all
Year price at Begin- From From distribu-
ended begin- ning End Invest- realized tions
Oct ning of of of ment securi- rein-
31 year(1) year year income ties profits vested
- ------- -------- ------- ---- ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1994 $10.50 $10.00 $10.83 $0.09 --- $10.93
1995 11.37 10.83 12.55 0.22 $0.32 13.33
----- -----
Total Distributions $0.31 $0.32
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -----------------------------------------------------------------------------------------------------------
Devon Fund Lipper
- --------------------------------------------- Growth &
Maximum Offering Price Net Asset Value Standard & Dow Jones Consumer Income
to Net Asset Value to Net Asset Value Poor's 500(4) Industrial(4) Price Index(4) Index(4)
- ------------------------------------------------------------------------------------------------------------ -------------------
Annual Cumulative(2) Annual Cumulative(3) Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--- 4.1% --- 9.3% --- 2.7% --- 5.4% --- 2.5% --- 2.4%
16.2% 26.9 22.0% 33.3 26.4% 29.8 25.0% 31.7 2.8% 5.4 20.2% 23.1
</TABLE>
- ----------
1 Reflects a maximum sales charge of 4.75%. There are reduced sales charges for
investment of $100,000 or more.
2 Reflects an offering price of $10.50 on December 28, 1993.
3 Reflects a net asset value of $10.00 on December 28, 1993.
4 Source: Lipper Analytical Services, Inc.
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 charge 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.
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.
Lipper Analytical Services, Inc. is a performance evaluation service that
maintains statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
<PAGE>
APPENDIX C - PERFORMANCE OVERVIEW
Devon Fund Performance Overview
The following table illustrates the total return on one share invested in
the Devon Fund B Class during the period September 6, 1994 (date of initial
public offering) through October 31, 1995. The results reflect the reinvestment
of all dividends and realized securities profits distributions at the net asset
value reported at the time of distribution. No adjustment has been made for any
income taxes payable by shareholders on income dividends or realized securities
profits distributions accepted in shares.
Devon Fund B Class
<TABLE>
<CAPTION>
Cumula-
tive net
asset
Net Asset value at
Maximum Value Distributions year-end
offering -------------------- -------------------- with all
Year price at Begin- From From distribu-
ended begin- ning End Invest- realized tions
Oct ning of of of ment securi- rein-
31 period period period income ties profits vested
- ------ --------- -------- ------ ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1994 $10.90 $10.90 $10.82 $0.03 --- $10.85
1995 10.82 10.82 12.50 0.18 $0.32 13.14
----- -----
Total Distributions $0.21 $0.32
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- -----------------------------------------------------------------------------------------------------------
Devon Fund Lipper
- --------------------------------------------- Growth &
Returns Including Returns Excluding Standard & Dow Jones Consumer Income
CDSC CDSC Poor's 500(2) Industrial(2) Price Index(2) Index(2)
- ------------------------------------------------------------------------------------------------------------ -------------------
Annual Cumulative(1) Annual Cumulative(1) Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--- -4.4% --- -0.5% --- 0.5% --- 0.7% --- 0.3% --- 2.4%
17.1% 16.5 21.1% 20.5 26.4% 27.1 25.0% 25.8% 2.8% 3.2 20.2% 23.1
</TABLE>
- ----------
1 Reflects a net asset value of $10.90 on September 2, 1994.
2 Source: Lipper Analytical Services, Inc.
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 charge 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.
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.
Lipper Analytical Services, Inc. is a performance evaluation service that
maintains statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
<PAGE>
APPENDIX C - PERFORMANCE OVERVIEW
Devon Fund Performance Overview
The following table illustrates the total return on one share invested in
the Devon Fund Institutional Class during the period December 29, 1993 (date of
initial public offering) through October 31, 1995. The results reflect the
reinvestment of all dividends and realized securities profits distributions at
the net asset value reported at the time of distribution. No adjustment has been
made for any income taxes payable by shareholders on income dividends or
realized securities profits distributions accepted in shares.
Devon Fund Institutional Class
<TABLE>
<CAPTION>
Cumula-
tive net
asset
Net Asset value at
Value Distributions year-end
------------------ -------------------- with all
Year Begin- From From distribu-
ended ning End Invest- realized tions
Oct of of ment securi- rein-
31 year year income ties profits vested
- ------- ------- ---- ------ ------------ -------
<S> <C> <C> <C> <C> <C>
1994 $10.00 $10.86 $0.09 --- $10.96
1995 10.86 12.59 $0.24 $0.32 13.39
----- -----
Total Distributions $0.33 $0.32
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING YEAR
- ---------------------------------------------------------------------------------------------------------------------------------
Devon Fund Lipper
- --------------------- Growth &
Net Asset Value Standard & Dow Jones Consumer Income
to Net Asset Value Poor's 500(2) Industrial(2) Price Index(2) Index(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Annual Cumulative(1) Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--- 9.6% --- 2.7% --- 5.4% --- 2.5% --- 2.4%
22.3% 33.9 26.4% 29.8 25.0% 31.8 2.8% 5.4 20.2% 23.1%
</TABLE>
- ----------
1 Reflects a net asset value of $10.00 on December 28, 1993.
2 Source: Lipper Analytical Services, Inc.
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 charge 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.
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.
Lipper Analytical Services, Inc. is a performance evaluation service that
maintains statistical performance databases, as reported by a diverse universe
of independently-managed mutual funds.
<PAGE>
APPENDIX D
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 state where sales show more definitive
highs and lows.
The above chart illustrates the path traditionally followed by companies
that successfully survive the growth sequence.
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for the Fund and, in
its capacity as such, audits the financial statements contained in the Series'
Annual Reports. The Delaware Group Delaware Fund, Inc. - Delaware Fund's and the
Delaware Group Delaware Fund, Inc. - Devon Fund's Statements of Net Assets,
Statements of Operations, Statements of Changes in Net Assets, and Notes to
Financial Statements, as well as the reports of Ernst & Young LLP, independent
auditors, for the fiscal year ended October 31, 1995, are included in the Fund's
Annual Reports to shareholders. The financial statements, the notes relating
thereto and the reports of Ernst & Young LLP, listed above are incorporated by
reference from the Annual Reports into this Part B.
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware 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 Report
listed above are incorporated by reference into
Part B from the Registrant's Annual Reports for
Delaware Fund and Devon Fund for the fiscal year
ended October 31, 1995.
(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. 102 filed November 22, 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. 102 filed November 22, 1995.
(3) Voting Trust Agreement. Inapplicable.
i
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware 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
(September 6, 1994), Article Fifth of
Articles Supplementary (November 30,
1993), Article Second of Articles
Supplementary (May 22, 1992), Article
Fifth of 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. 102 filed November 22, 1995.
(ii) Executed Articles Third and Fourth of
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. 102 filed
November 22, 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.
102 filed November 22, 1995.
(6) (a) Distribution Agreements.
(i) Executed Distribution Agreement between
Delaware Distributors, L.P. and the
Registrant on behalf of the Delaware Fund
(April 3, 1995) attached as Exhibit.
(ii) Executed Distribution Agreement between
Delaware Distributors, L.P. and the
Registrant on behalf of the Devon Fund (April
3, 1995) attached as Exhibit.
(iii) Executed Amendment No. 1 to the Delaware
Fund's Distribution Agreement (November 29,
1995) attached as Exhibit.
(iv) Executed Amendment No. 1 to the Devon Fund's
Distribution Agreement (November 29, 1995)
attached as Exhibit.
ii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
(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. 102 filed November 22, 1995.
(c) Dealer's Agreement. Dealer's Agreement (as
amended November 1995) incorporated into this
filing by reference to Post-Effective
Amendment No. 102 filed November 22, 1995.
(d) Mutual Fund Agreement for the Delaware Group
of Funds (November 1995) included as Module.
(7) Bonus, Profit Sharing, Pension Contracts. Amended
and Restated Profit Sharing Plan incorporated into
this filing by reference to Post-Effective Amendment
No. 102 filed November 22, 1995.
(8) Custodian Agreements. Incorporated into this filing
by reference to Post-Effective Amendment No. 90
filed December 28, 1989, Post-Effective Amendment
No. 92 filed October 31, 1991, Post-Effective
Amendment No. 99 filed May 27, 1994 and
Post-Effective Amendment No. 101 filed December 27,
1994.
(9) Other Material Contracts. Shareholders Services
Agreements incorporated into this filing by
reference to Post-Effective Amendment No. 87 filed
October 27, 1988 and Post-Effective Amendment No. 98
filed December 28, 1993.
(10) Opinion of Counsel. To be filed with letter relating
to Rule 24f-2 on or about December 29, 1995.
(11) Consent of Auditors. Attached as Exhibit.
(12-13) Inapplicable.
(14) Model Plans. Incorporated into this filing by
reference to Post-Effective Amendment No. 97 filed
October 28, 1993 and Post-Effective Amendment No.
102 filed November 22, 1995.
iii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
**(15) Plans under Rule 12b-1.
(a) Executed Plan under Rule 12b-1 for Class A
(November 29, 1995) attached as Exhibit.
(b) Executed Plan under Rule 12b-1 for Class B
(November 29, 1995) attached as Exhibit.
(c) Executed Plan under Rule 12b-1 for Class C
(November 29, 1995) attached as Exhibit.
(16) Schedules of Computation for each Performance
Quotation. Incorporated into this filing by
reference to Post-Effective Amendment No. 102 filed
November 22, 1995.
(a) Schedules of Computation for new periods
shown in Part B attached as Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Plan under Rule 18f-3. Plan under Rule 18f-3
(November 1995) included as Module.
(19) Other: Directors' Power of Attorney. Incorporated
into this filing by reference to Post-Effective
Amendment No. 102 filed November 22, 1995.
Item 25. Persons Controlled by or under Common Control with Registrant. None.
**Relates to the Class A, B and C Shares of each Series of the Registrant.
iv
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Item 26. Number of Holders of Securities.
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Delaware Group Delaware Fund, Inc.'s
Delaware Fund series:
Delaware Fund A Class
Common Stock Par Value 26,042 Accounts as of
$1.00 Per Share November 30, 1995
Delaware Fund B Class
Common Stock Par Value 299 Accounts as of
$1.00 Per Share November 30, 1995
Delaware Fund C Class
Common Stock Par Value 1 Account as of
$1.00 Per Share November 30, 1995
Delaware Fund Institutional Class
Common Stock Par Value 47 Accounts as of
$1.00 Per Share November 30, 1995
Delaware Group Delaware Fund, Inc.'s
Devon Fund series:
Devon Fund A Class
Common Stock Par Value 835 Accounts as of
$1.00 Per Share November 30, 1995
Devon Fund B Class
Common Stock Par Value 126 Accounts as of
$1.00 Per Share November 30, 1995
Devon Fund C Class
Common Stock Par Value 1 Account as of
$1.00 Per Share November 30, 1995
Devon Fund Institutional Class
Common Stock Par Value 4 Accounts as of
$1.00 Per Share November 30, 1995
v
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Item 27. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 78 filed October 26, 1983 and
Post-Effective Amendment No. 102 filed November 22, 1995.
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 Trend Fund,
Inc., Delaware Group Value Fund, Inc., Delaware Group DelCap Fund, Inc.,
Delaware Group Decatur Fund, Inc., Delaware Group Delchester High-Yield Bond
Fund, Inc., Delaware Group Government Fund, Inc., Delaware Group Limited-Term
Government Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware Group
Tax-Free Fund, Inc., DMC Tax-Free Income Trust-Pennsylvania, Delaware Group
Tax-Free Money Fund, Inc., Delaware Group Premium Fund, Inc., Delaware Group
Global & International Funds, Inc., Delaware Pooled Trust, Inc., Delaware Group
Dividend and Income Fund, Inc. and Delaware Group Global Dividend and Income
Fund, Inc.) and provides investment advisory services to institutional accounts,
primarily retirement plans and endowment funds. In addition, certain directors
of the Manager also serve as directors/trustees of the other Delaware Group
funds, and certain officers are also officers of these other funds. A company
owned by the Manager's parent company acts as principal underwriter to the
mutual funds in the Delaware Group (see Item 29 below) and another such company
acts as the shareholder servicing, dividend disbursing and transfer agent for
all of the mutual funds in the Delaware Group.
The following persons serving as directors or officers of the
Manager have held the following positions during the past two years:
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
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.
and Delaware Investment & Retirement Services, Inc.;
Chairman of the Board and Director of Delaware
Pooled Trust, Inc. and Delaware Investment
Counselors, Inc.; Chairman, Chief Executive Officer
and Director of DMH Corp., Delaware International
Advisers Ltd., Delaware International Holdings Ltd.
and Founders Holdings, Inc.; and Director of
Delaware Distributors, Inc. and Delaware Service
Company, Inc.
vi
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
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
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
vii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
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, Chief Financial Officer and Director of
Delaware Distributors, Inc.; and Delaware Service
Company, Inc.; Chief Financial Officer and Director
of Delaware International Holdings Ltd.; Senior Vice
President, Chief Financial Officer and Treasurer of
Delaware Investment Counselors, Inc.; Senior Vice
President and Director of Founders Holdings, Inc.;
Chief Executive Officer and Director of Delaware
Investment & Retirement Services, Inc.; and Director
of Delaware International Advisers Ltd.
Chief Executive Officer/Chief Financial
Officer/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. 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; Corporate Vice President, Secretary and
Director of Founders Holdings, Inc.; Secretary and
Director of Delaware International Holdings Ltd.;
and Director of Delaware International Advisers Ltd.
Director of ICI Mutual Insurance Co. since 1992,
P.O. Box 730, Burlington, VT
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
viii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
Richard J. Flannery Managing Director/Corporate Tax & Affairs of
Delaware Management Company, Inc., Delaware
Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Delaware Management
Trust Company, Delaware International Holdings Ltd.,
Delaware Investment Counselors, Inc., Delaware
Investment & Retirement Services, Inc. and Founders
CBO Corporation; Vice President of the Registrant
and each of the other funds in the Delaware Group;
Managing Director/Corporate Tax & Affairs and
Director of Founders Holdings, Inc.; and Director of
Delaware International Advisers Ltd.
Limited Partner of Stonewall Links, L.P. since 1991,
Bulltown Rd., Elverton, PA; Director and Member of
Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA
Michael P. Bishof(1) Vice President and Treasurer of Delaware Management
Company, Inc., the Registrant, each of the other
funds in the Delaware Group, Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc. and Founders
CBO Corporation; and Vice President and Manager of
Investment Accounting 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.
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
General Partner of Tri-R Associates since 1989,
10001 Sandmeyer Ln., Philadelphia, PA
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
ix
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
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. and Founders Holdings, Inc.;
Executive Vice President, Chief Financial Officer
and Treasurer of Delaware Management Trust Company;
Vice President/Chief Financial Officer/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.
Lisa O. Brinkley(3) 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.
Steven T. Lampe(4) 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 CBO Corporation and Delaware Investment
Counselors, Inc.
x
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
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(6) 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., the Registrant, each of
the tax-exempt funds and the fixed income funds in
the Delaware Group and Delaware Investment
Counselors, Inc.
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt
funds, the fixed income funds and the closed-end
funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and Secretary and Director
of Founders CBO Corporation
James R. Raith, Jr. Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt
funds, the fixed income funds and the closed-end
funds in the Delaware Group; Vice President of
Founders Holdings, Inc.; and President and Director
of Founders CBO Corporation
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., each of the tax-exempt
funds and the fixed income funds in the Delaware
Group
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xi
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ----------------- -----------------------------------------------
Roger A. Early(7) 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
Faye P. Staples(8) Vice President/Human Resources of Delaware
Management Company, Inc., Delaware Distributors,
L.P. and Delaware Distributors, Inc.; and Vice
President/Director of Human Resources of Delaware
Service Company, Inc.
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 & Ingersoll prior to July 1995.
3 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.
4 TAX MANAGER, Price Waterhouse prior to October 1995.
5 VICE PRESIDENT OF OPERATIONS, Supervised Service Company prior to
March 1994.
6 ASSISTANT VICE PRESIDENT/ADMINISTRATIVE SERVICES, United Pacific Life
Insurance prior to January 1994.
7 SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER, Federated Investors prior
to July 1994.
8 VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
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/ Senior Vice President/Chief
Chief Administrative Financial Officer/Chief
Officer Administrative Officer
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary
J. Lee Cook Senior Vice President/ None
National Sales Manager
Stephen H. Slack Senior Vice President/ None
Wholesaler
William F. Hostler Senior Vice President/ None
Marketing Services
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiii
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- --------------------- ---------------------
<S> <C> <C>
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
Steven T. Lampe Vice President/Taxation Vice President/Taxation
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
Rosemary E. Milner Vice President/Legal Vice President/Legal
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
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 A. Alrutz Vice President/ None
Retirement Services
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xiv
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- --------------------- ---------------------
<S> <C> <C>
Martin J. Cole Vice President/ None
Retirement Services
Joanne A. Mettenheimer Vice President/ None
National Accounts
Christopher H. Price Vice President/Annuity None
Marketing and Administration
Thomas S. Butler Vice President/ None
DDI Administration
Frank Albanese Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. 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
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
xv
<PAGE>
Form N-1A
File No. 2-10765
Delaware Group Delaware Fund, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ----------------- --------------------- ---------------------
<S> <C> <C>
Dion D. Rooney Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Thomas E. Sawyer Vice President/Wholesaler None
Sanford G. Simmons, Jr. Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
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>
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 28th day of December, 1995.
DELAWARE GROUP DELAWARE 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 December 28, 1995
- ---------------------------------------------
Wayne A. Stork
Senior Vice President/Chief Financial Officer/
Chief Administrative Officer (Principal
Financial Officer and Principal
/s/ David K. Downes Accounting Officer) December 28, 1995
- --------------------------------------------
David K. Downes
/s/Walter P. Babich * Director
- -------------------------------------------- December 28, 1995
Walter P. Babich
/s/Anthony D. Knerr * Director December 28, 1995
- --------------------------------------------
Anthony D. Knerr
/s/Ann R. Leven * Director December 28, 1995
- --------------------------------------------
Ann R. Leven
/s/W. Thacher Longstreth * Director December 28, 1995
- --------------------------------------------
W. Thacher Longstreth
/s/Charles E. Peck * Director December 28, 1995
- --------------------------------------------
Charles E. Peck
*By /s/ Wayne A. Stork
----------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
EX-99.B1B Executed Articles Supplementary (November 28, 1995)
EX-99.B6AI Executed Distribution Agreement for Delaware Fund (April 3,
1995)
EX-99.B6AII Executed Distribution Agreement for Devon Fund (April 3,
1995)
EX-99.B6AIII Executed Amendment No. 1 to Delaware Fund's Distribution
Agreement (November 29, 1995)
EX-99.B6AIV Executed Amendment No. 1 to Devon Fund's Distribution
Agreement (November 29, 1995)
EX-99.B6D Mutual Fund Agreement
(Module Name
MFAGMT95)
EX-99.B11 Consents of Auditors
EX-99.B15A Executed Plan under Rule 12b-1 for Class A (November 29, 1995)
EX-99.B15B Executed Plan under Rule 12b-1 for Class B (November 29, 1995)
EX-99.B15C Executed Plan under Rule 12b-1 for Class C (November 29, 1995)
EX-99.B16 Schedules of Computation
EX-27 Financial Data Schedules
EX-99.B18 Plan under Rule 18f-3 (November 1995)
(Module Name
MOD18F3)
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Delaware 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 Five Hundred
Million (500,000,000) 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 Five Hundred Million Dollars ($500,000,000). Of such Five Hundred
Million (500,000,000) shares of Common Stock, Two Hundred Million (200,000,000)
shares have been allocated to the Common Stock series of the Common Stock and
One Hundred Twenty-Five Million (125,000,000) shares have been allocated to the
Devon Fund series of the Common Stock. The Two Hundred Million (200,000,000)
shares of the Common Stock 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 Delaware Fund class and (2) Fifty Million (50,000,000) shares
have been allocated to each of the Delaware Fund (Institutional) class and the
Delaware Fund B Class. The One Hundred Twenty-Five Million (125,000,000) shares
of the Devon Fund series of the Common Stock have been allocated among three
classes as follows: (1) Fifty Million (50,000,000) shares have been allocated to
each of the Devon Fund A Class and the Devon Fund B Class and (2) Twenty-Five
Million (25,000,000) shares have been allocated to the Devon Fund Institutional
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 Common Stock series of
the Common Stock as the Delaware Fund C Class (the "Delaware C Class")
and reclassifying and allocating Twenty-Five Million (25,000,000)
shares of the authorized and unissued Common Stock, previously
classified and allocated to the Delaware Fund B Class of the Common
Stock series of the Common Stock, to the Delaware C Class.
2. Classifying a fourth class of shares of the Devon Fund series of
the Common Stock as the Devon Fund C Class (the "Devon C Class") and
reclassifying and allocating Twenty-Five Million (25,000,000) shares
of authorized and unissued Common Stock, previously classified and
allocated to the Devon Fund B Class of Devon Fund series of the Common
Stock, to the Devon C Class.
<PAGE>
THIRD: The shares of the Delaware C Class shall represent
proportionate interests in the same portfolio of investments as the shares of
the Delaware Fund (Institutional) class, Delaware Fund B Class and Delaware Fund
class of the Common Stock series of the Common Stock. The shares of the Delaware
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 Delaware Fund (Institutional)
class, Delaware Fund B Class and Delaware Fund class of the Common Stock 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 Delaware 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 the other classes
of the Common Stock 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 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 Common
Stock 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
Delaware 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 Delaware 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 Delaware C Class, and
(ii) no voting rights with respect to the provisions of any
Distribution Plan applicable to shares of 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 shares of the Delaware C
Class.
3. The shares of the Delaware C Class shall not automatically convert
into shares of the Delaware Fund class of the Common Stock series of
the Common Stock as do the shares of the Delaware Fund B Class of the
Common Stock series of the Common Stock.
<PAGE>
FOURTH: The shares of the Devon C Class shall represent proportionate
interests in the same portfolio of investments as the shares of the Devon Fund
Institutional Class, Devon Fund B Class and Devon Fund A Class of the Devon Fund
series of the Common Stock. The shares of the Devon 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 Devon Fund Institutional Class, Devon Fund B
Class and Devon Fund A Class of the Devon 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 Devon 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 the other classes
of the Devon 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 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 Devon
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 Devon
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 Devon C Class, including without limitation the
provisions of any Distribution Plan applicable to shares of the Devon
C Class, and (ii) no voting rights with respect to the provisions of
any Distribution Plan applicable to shares of 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 shares of the Devon C
Class.
3. The shares of the Devon C Class shall not automatically convert
into shares of the Devon Fund A Class of the Devon Fund series of the
Common Stock as do the shares of the Devon Fund B Class of the Devon
Fund series of the Common Stock.
-5-
<PAGE>
FIFTH: The shares of the Delaware Fund B Class of the Common Stock
series of the Common Stock and Devon Fund B Class of the Devon Fund series of
the Common Stock reclassified as shares of the Delaware C Class and Devon 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.
-6-
<PAGE>
IN WITNESS WHEREOF, Delaware Group Delaware Fund, Inc. has caused
these Articles Supplementary to be signed in its name and on its behalf this
14th day of November, 1995.
DELAWARE GROUP DELAWARE FUND, INC.
By:/s/George M. Chamberlain, Jr.
---------------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/Richelle S. Maestro
- -------------------------
Assistant Secretary
-7-
<PAGE>
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP DELAWARE
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>
DELAWARE GROUP DELAWARE FUND, INC.
COMMON STOCK SERIES
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 3rd day of
April, 1995 by and between DELAWARE GROUP DELAWARE FUND, INC., a Maryland
corporation (the "Fund"), for the COMMON STOCK series (the "Series") and
DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware limited partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by Federal and
State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of the securities of investment companies and, in connection
therewith and acting solely as agent for such investment companies and not as
principal, advertising, promoting, offering and selling their securities to the
public, and
WHEREAS, the Fund and the Distributor (or its predecessor) were the
parties to a contract under which the Distributor acted as the national
distributor of the Series, which contract was amended and restated as of the 6th
day of September, 1994 and subsequently readopted as of January 3, 1995 (the
"Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"), the indirect
parent company of the Distributor completed on the date of this Agreement a
merger transaction with a newly-formed subsidiary of Lincoln National
Corporation, pursuant to which Holdings became a wholly-owned subsidiary of
Lincoln National Corporation, and
WHEREAS, the merger transaction resulted in a change of control of the
Distributor and an automatic termination of the Prior Distribution Agreement,
and
-9-
<PAGE>
WHEREAS, the Board of Directors of the Fund has determined to enter
into a new agreement with the Distributor as of the date hereof, pursuant to
which the Distributor shall continue to be the national distributor of the
Series' Delaware Fund class (now doing business as Delaware Fund A Class and
hereinafter referred to as the "Class A Shares"), the Series' Delaware Fund B
Class (the "Class B Shares") and the Series' Delaware Fund (Institutional) class
(now doing business as Delaware Fund Institutional Class and hereinafter
referred to as the "Institutional Class Shares"), which classes may do business
under these or such other names as the Board of Directors may designate from
time to time, on the terms and conditions set forth below,
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of the
Series' shares and, in connection therewith and as agent for the Fund and
not as principal, to advertise, promote, offer and sell the Series' shares
to the public.
2. (a) The Distributor agrees to serve as distributor of the Series' shares
and, as agent for the Fund and not as principal, to advertise, promote
and use its best efforts to sell the Series' shares wherever their sale
is legal, either through dealers or otherwise, in such places and in
such manner, not inconsistent with the law and the provisions of this
Agreement and the Fund's Registration Statement under the Securities
Act of 1933, including the Prospectus contained therein and the
Statement of Additional Information contained therein, as may be
mutually determined by the Fund and the Distributor from time to time.
-10-
<PAGE>
(b) For the Institutional Class Shares, the Distributor will bear all
costs of financing any activity which is primarily intended to result
in the sale of that class of shares, including, but not necessarily
limited to, advertising, compensation of underwriters, dealers and
sales personnel, the printing and mailing of sales literature and
distribution of that class of shares.
(c) For its services as agent for the Class A Shares and Class B
Shares, the Distributor shall be entitled to compensation on each sale
or redemption, as appropriate, of shares of such classes equal to any
front-end or deferred sales charge described in the Prospectus from
time to time and may allow concessions to dealers in such amounts and
on such terms as are therein set forth.
(d) For the Class A Shares and Class B Shares, the Fund shall, in addition,
compensate the Distributor for its services as such is provided in the
Distribution Plan as adopted on behalf of the Class A Shares and Class
B Shares, respectively, pursuant to Investment Company Act Rule 12b-1
(the "Plans"), copies of which as presently in force are attached
hereto as, respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund through the
Distributor all or such part of the authorized but unissued shares of
the Series as the Distributor shall require from time to time, and
except as provided in Paragraph 3(b) hereof, the Fund will not sell
Series' shares other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell and issue
shares other than for cash; (2) to issue shares in exchange for
substantially all of the assets of any corporation or trust, or in
exchange of shares of any corporation or trust; (3) to pay stock
dividends to its shareholders, or to pay dividends in cash or stock at
the option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to time in
-11-
<PAGE>
cash, or to split up or combine its outstanding shares of common stock;
(4) to offer shares for cash to its stockholders as a whole, by the use
of transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment company, and
any and all Series' shares which it will sell through the Distributor
are, or will be, properly registered with the Securities and Exchange
Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of any
instrument by which the Fund is bound, nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its
property.
5. (a) The Fund will supply to the Distributor a conformed copy of the
Registration Statement, all amendments thereto, all exhibits, and each
Prospectus and Statement of Additional Information.
(b) The Fund will register or qualify the Series' shares for sale in such
states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial statements and other
information as may be required by the SEC or the proper public
bodies of the states in which the Series' shares may be qualified;
(2) from time to time, will furnish Distributor as soon as reasonably
practicable true copies of its periodic reports to stockholders;
(3) will promptly advise Distributor in person or by telephone or
telegraph, and promptly confirm such advice in writing, (a) when
any amendment or supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, and (c) of the issuance by the SEC of any
-12-
<PAGE>
Stop Order suspending the effectiveness of the Registration
Statement, or the initiation of any proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order suspending the
effectiveness of the Registration Statement, will make every
reasonable effort to obtain the lifting of such order at the
earliest possible moment;
(5) will from time to time, use its best efforts to keep a sufficient
supply of Series' shares authorized, any increases being subject
to approval of the Fund's shareholders as may be required;
(6) before filing any further amendment to the Registration Statement
or to the Prospectus, will furnish Distributor copies of the
proposed amendment and will not, at any time, whether before or
after the effective date of the Registration Statement, file any
amendment to the Registration Statement or supplement to the
Prospectus of which Distributor shall not previously have been
advised or to which Distributor shall reasonably object (based
upon the accuracy or completeness thereof) in writing;
(7) will continue to make available to its stockholders (and forward
copies to Distributor) of such periodic, interim and any other
reports as are now, or as hereafter may be, required by the
provisions of the Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price of the
Series' shares, advise Distributor within one hour after the close
of the New York Stock Exchange (or as soon as practicable
thereafter) on each business day upon which the New York Stock
Exchange may be open of the net asset value per share of the
Series' shares of common stock outstanding, determined in
accordance with any applicable provisions of law and the
provisions of the Articles of Incorporation, as amended, of the
Fund as of the close of business on such business day. In the
event that prices are to be calculated more than once daily, the
Fund will promptly advise the Distributor of the time of each
calculation and the price computed at each such time.
6. The Distributor agrees to submit to the Fund, prior to its use, the
form of all sales literature proposed to be generally disseminated by
or for the Distributor, all advertisements proposed to be used by the
Distributor, all sales literature or advertisements prepared by or for
the Distributor for such dissemination or for use by others in
connection with the sale of the Series' shares, and the form of
dealers' sales contract the Distributor intends to use in connection
with sales of the Series' shares. The Distributor also agrees that the
Distributor will submit such sales literature and advertisements to the
NASD, SEC or other regulatory agency as from time to time may be
appropriate, considering practices then current in the industry. The
-13-
<PAGE>
Distributor agrees not to use such form of dealers' sales contract or
to use or to permit others to use such sales literature or
advertisements without the written consent of the Fund if any
regulatory agency expresses objection thereto or if the Fund delivers
to the Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as
described in the Fund's Prospectus, as amended from time to time,
determined in accordance with any applicable provision of law, the
provisions of its Articles of Incorporation and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake
to promote such sales solely as agent of the Fund, and shall not
purchase or sell such shares as principal. Orders for Series' shares
and payment for such orders shall be directed to the Fund's agent,
Delaware Service Company, Inc. for acceptance on behalf of the Fund.
The Distributor is not empowered to approve orders for sales of Series'
shares or accept payment for such orders. Sales of Series' shares shall
be deemed to be made when and where accepted by Delaware Service
Company, Inc. on behalf of the Fund.
9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following
will apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectus, the Statement of Additional
Information, and all amendments, supplements and replacements thereto.
The Fund will pay all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs incurred in
-14-
<PAGE>
printing and mailing Prospectuses and Annual, Semi-Annual and other
financial reports to its own shareholders and fees and expenses of
counsel and accountants.
(b) The Distributor will pay the costs incurred in printing and mailing
copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses,
including the costs of printing and mailing literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in registering or
qualifying the Series' shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of Fund
financial and other reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other business
does not interfere with the performance by the Distributor of its
obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless from the assets of
the Series, the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities Act of 1933,
from and against any and all losses, damages, or liabilities to which,
jointly or severally, the Distributor or such controlling person may become
subject, insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder except that the Fund shall not be liable
for indemnification of the Distributor or any controlling person thereof for
any liability to the Fund or its security holders to which they would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of their duties under this Agreement.
-15-
<PAGE>
12. Copies of financial reports, Registration Statements and Prospectuses, as
well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for either
party to deliver or furnish to the other will be duly delivered or
furnished, if delivered to such party at its address shown below during
regular business hours, or if sent to that party by registered mail or by
prepaid telegram filed with an office or with an agent of Western Union or
another nationally recognized telegraph service, in all cases within the
time or times herein prescribed, addressed to the recipient at 1818 Market
Street, Philadelphia, Pennsylvania 19103, or at such other address as the
Fund or the Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the Distributor.
This Agreement shall not be assigned by the Fund without the written consent
of the Distributor signed by its duly authorized officers and delivered to
the Fund. Except as specifically provided in the indemnification provision
contained in Paragraph 11 herein, this Agreement and all conditions and
provisions hereof are for the sole and exclusive benefit of the parties
hereto and their legal successors and no express or implied provision of
this Agreement is intended or shall be construed to give any person other
than the parties hereto and their legal successors any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two years from the
date hereof and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities of
-16-
<PAGE>
the Series and only if the terms and the renewal thereof have been approved
by the vote of a majority of the Directors of the Fund, who are not parties
hereto or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(b) The Distributor may terminate this Agreement on written notice to the Fund
at any time in case the effectiveness of the Registration Statement shall be
suspended, or in case Stop Order proceedings are initiated by the SEC in
respect of the Registration Statement and such proceedings are not withdrawn
or terminated within thirty days. The Distributor may also terminate this
Agreement at any time by giving the Fund written notice of its intention to
terminate the Agreement at the expiration of three months from the date of
delivery of such written notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at least thirty days
prior written notice to the Distributor (1) if proceedings are commenced by
the Distributor or any of its stockholders for Distributor's liquidation or
dissolution or the winding up of Distributor's affairs; (2) if a receiver or
trustee of the Distributor or any of its property is appointed and such
appointment is not vacated within thirty days thereafter; (3) if, due to any
action by or before any court or any federal or state commission, regulatory
body, or administrative agency or other governmental body, the Distributor
shall be prevented from selling securities in the United States or because
of any action or conduct on Distributor's part, sales of the Series' shares
are not qualified for sale. The Fund may also terminate this Agreement at
any time upon prior written notice to the Distributor of its intention to so
terminate at the expiration of three months from the date of the delivery of
such written notice to the Distributor.
-17-
<PAGE>
15. The validity, interpretation and construction of this Agreement, and of each
part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.
16. In the event any provisions of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of the
Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:
/s/ Eric E. Miller By:/s/ Keith E. Mitchell
- -------------------------- --------------------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President Title: President/Chief
Assistant Secretary Executive Officer
DELAWARE GROUP DELAWARE FUND, INC. for the COMMON
STOCK series
Attest:
/s/ John M. Zerr By:/s/ David K. Downes
- ---------------------------- --------------------------------
Name: John M. Zerr Name: David K. Downes
Title: Vice President Title: Senior Vice President/
Assistant Secretary Chief Administrative
Officer/Chief Financial
Officer
-18-
<PAGE>
Exhibit A
l2b-1 PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Common Stock Series (the
"Series") on behalf of the Delaware Fund class (now doing business as Delaware
Fund A Class and hereinafter referred to as the "Class"), which Fund, Series and
Class may do business under these or such other names as the Board of Directors
of the Fund may designate from time to time. The Plan has been approved by a
majority of the Board of Directors, including a majority of the Directors who
are not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto, cast in person at a meeting called for the purpose of voting on such
Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. If the Plan has not yet been approved by a majority of the
outstanding voting securities as required in the Act, the Plan will be presented
to the public shareholders at the next regular annual or special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. ("DMC") serves as the Series' investment adviser and
manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund for the Series ("Distribution Agreement").
A-1
<PAGE>
The Distributor may enter into agreements with other registered
broker-dealers substantially in the form of the Dealer Agreement approved by the
Fund in the implementation of this Plan and of the Distribution Agreement
between it and the Fund. The Fund may, in addition, enter into arrangements with
persons other than broker-dealers which are not "affiliated persons" or
"interested persons" of the Fund, DMC or the Distributor to provide to the Fund
services in the Fund's marketing of the shares of the Class, such arrangements
to be reflected by Service Agreements.
The Plan provides that:
l. The Fund shall pay a monthly fee not to exceed 0.3% (3/l0 of l%) per
annum of the Series' average daily net assets represented by shares of the Class
(the "Maximum Amount") as may be determined by the Fund's Board of Directors
from time to time. Such monthly fee shall be reduced by the aggregate sums paid
by the Fund on behalf of the Series to persons other than broker-dealers (the
"Service Providers") pursuant to Service Agreements referred to above.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreement and the Plan; both the Distributor and the
A-2
<PAGE>
Service Providers shall furnish the Board of Directors of the Fund with such
other information as the Board may reasonably request in connection with the
payments made under the Plan and the use thereof by the Distributor and the
Service Providers, respectively, in order to enable the Board to make an
informed determination of the amount of the Fund's payments and whether the Plan
should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the
Directors who are not interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested Directors"), cast in person at a meeting
called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to be
spent for distribution pursuant to paragraph l thereof without approval by the
shareholders of the Class.
A-3
<PAGE>
7. The Distribution Agreement between the Fund on behalf of the Series
and the Distributor, and the Service Agreements between the Fund on behalf of
the Series and the Service Providers, shall specifically have a copy of this
Plan attached to, and its terms and provisions incorporated respectively by
reference in, such agreements.
8. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4), 2(a)(l9)
and 2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"assignment," "interested person(s)" and "vote of a majority of the outstanding
voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-4
<PAGE>
Exhibit B
12b-1 Plan
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Common Stock series (the
"Series") on behalf of the Delaware Fund B Class (the "Class"), which Fund,
Series and Class may do business under these or such other names as the Board of
Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund for the Series ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
B-1
<PAGE>
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements, the forms of which have
been approved from time to time by the Fund's Board of Directors.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
B-2
<PAGE>
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the Directors who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested Directors"), cast in person at a meeting
called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. The Distribution Agreement between the Fund on behalf of the Series
and the Distributor, and any dealers or servicing agreements between the
Distributor and brokers or others or between the Fund on behalf of the Series
and others receiving a servicing fee, shall specifically have a copy of this
Plan attached to, and its terms and provisions incorporated respectively by
reference in, such agreements.
8. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
B-3
<PAGE>
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4), 2(a)(19)
and 2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"assignment," "interested person(s)" and "vote of a majority of the outstanding
voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
B-4
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
DIVIDEND GROWTH FUND SERIES
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 3rd day of
April, 1995 by and between DELAWARE GROUP DELAWARE FUND, INC., a Maryland
corporation (the "Fund"), for the DIVIDEND GROWTH FUND series (the "Series") and
DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware limited partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by Federal and
State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of promoting the
distribution of the securities of investment companies and, in connection
therewith and acting solely as agent for such investment companies and not as
principal, advertising, promoting, offering and selling their securities to the
public, and
WHEREAS, the Fund and the Distributor (or its predecessor) were the
parties to a contract under which the Distributor acted as the national
distributor of the Series, which contract was amended and restated as of the 6th
day of September, 1994 and subsequently readopted as of January 3, 1995 (the
"Prior Distribution Agreement"), and
WHEREAS, Delaware Management Holdings, Inc. ("Holdings"), the indirect
parent company of the Distributor completed on the date of this Agreement a
merger transaction with a newly-formed subsidiary of Lincoln National
Corporation, pursuant to which Holdings became a wholly-owned subsidiary of
Lincoln National Corporation, and
WHEREAS, the merger transaction resulted in a change of control of the
Distributor and an automatic termination of the Prior Distribution Agreement,
and
B-5
<PAGE>
WHEREAS, the Board of Directors of the Fund has determined to enter
into a new agreement with the Distributor as of the date hereof, pursuant to
which the Distributor shall continue to be the national distributor of the
Series' Dividend Growth Fund class (now doing business as Dividend Growth Fund A
Class and hereinafter referred to as the "Class A Shares"), the Series' Dividend
Growth Fund B Class (the "Class B Shares") and the Series' Dividend Growth Fund
(Institutional) class (now doing business as Dividend Growth Fund Institutional
Class and hereinafter referred to as the "Institutional Class Shares"), which
classes may do business under these or such other names as the Board of
Directors may designate from time to time, on the terms and conditions set forth
below,
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of the
Series' shares and, in connection therewith and as agent for the Fund and
not as principal, to advertise, promote, offer and sell the Series' shares
to the public.
2. (a) The Distributor agrees to serve as distributor of the Series'
shares and, as agent for the Fund and not as principal, to advertise,
promote and use its best efforts to sell the Series' shares wherever
their sale is legal, either through dealers or otherwise, in such
places and in such manner, not inconsistent with the law and the
provisions of this Agreement and the Fund's Registration Statement
under the Securities Act of 1933, including the Prospectus contained
therein and the Statement of Additional Information contained therein,
as may be mutually determined by the Fund and the Distributor from time
to time.
(b) For the Institutional Class Shares, the Distributor will bear all costs
of financing any activity which is primarily intended to result in the
sale of that class of shares, including, but not necessarily limited
-6-
<PAGE>
to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of sales literature and
distribution of that class of shares.
(c) For its services as agent for the Class A Shares and Class B Shares,
the Distributor shall be entitled to compensation on each sale or
redemption, as appropriate, of shares of such classes equal to any
front-end or deferred sales charge described in the Prospectus from
time to time and may allow concessions to dealers in such amounts and
on such terms as are therein set forth.
(d) For the Class A Shares and Class B Shares, the Fund shall, in addition,
compensate the Distributor for its services as such is provided in the
Distribution Plan as adopted on behalf of the Class A Shares and Class
B Shares, respectively, pursuant to Investment Company Act Rule 12b-1
(the "Plans"), copies of which as presently in force are attached
hereto as, respectively, Exhibit "A" and "B".
3. (a) The Fund agrees to make available for sale by the Fund through the
Distributor all or such part of the authorized but unissued Series'
shares as the Distributor shall require from time to time, and except
as provided in Paragraph 3(b) hereof, the Fund will not sell Series'
shares other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell and issue
shares other than for cash; (2) to issue shares in exchange for
substantially all of the assets of any corporation or trust, or in
exchange of shares of any corporation or trust; (3) to pay stock
dividends to its shareholders, or to pay dividends in cash or stock at
the option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to time in
cash, or to split up or combine its outstanding shares of common stock;
(4) to offer shares for cash to its stockholders as a whole, by the use
of transferable rights or otherwise, and to sell and issue shares
-7-
<PAGE>
pursuant to such offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment company, and
any and all Series' shares which it will sell through the Distributor
are, or will be, properly registered with the Securities and Exchange
Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of any
instrument by which the Fund is bound, nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its
property.
5. (a) The Fund will supply to the Distributor a conformed copy of the
Registration Statement, all amendments thereto, all exhibits, and each
Prospectus and Statement of Additional Information.
(b) The Fund will register or qualify the Series' shares for sale in such
states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial statements and other
information as may be required by the SEC or the proper public
bodies of the states in which the Series' shares may be qualified;
(2) from time to time, will furnish the Distributor as soon as
reasonably practicable true copies of its periodic reports to
stockholders;
(3) will promptly advise the Distributor in person or by telephone or
telegraph, and promptly confirm such advice in writing, (a) when
any amendment or supplement to the Registration Statement becomes
effective, (b) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, and (c) of the issuance by the SEC of any
Stop Order suspending the effectiveness of the Registration
Statement, or the initiation of any proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order suspending the
effectiveness of the Registration Statement, will make every
reasonable effort to obtain the lifting of such order at the
earliest possible moment;
-8-
<PAGE>
(5) will from time to time, use its best efforts to keep a sufficient
supply of Series' shares authorized, any increases being subject
to approval of the Fund's shareholders as may be required;
(6) before filing any further amendment to the Registration Statement
or to the Prospectus, will furnish the Distributor copies of the
proposed amendment and will not, at any time, whether before or
after the effective date of the Registration Statement, file any
amendment to the Registration Statement or supplement to the
Prospectus of which the Distributor shall not previously have been
advised or to which the Distributor shall reasonably object (based
upon the accuracy or completeness thereof) in writing;
(7) will continue to make available to its stockholders (and forward
copies to the Distributor) of such periodic, interim and any other
reports as are now, or as hereafter may be, required by the
provisions of the Investment Company Act of 1940; and
(8) will, for the purpose of computing the offering price of the
Series' shares, advise the Distributor within one hour after the
close of the New York Stock Exchange (or as soon as practicable
thereafter) on each business day upon which the New York Stock
Exchange may be open of the net asset value per share of the
Series' shares of common stock outstanding, determined in
accordance with any applicable provisions of law and the
provisions of the Articles of Incorporation, as amended, of the
Fund as of the close of business on such business day. In the
event that prices are to be calculated more than once daily, the
Fund will promptly advise the Distributor of the time of each
calculation and the price computed at each such time.
6. The Distributor agrees to submit to the Fund, prior to its use, the form of
all sales literature proposed to be generally disseminated by or for the
Distributor, all advertisements proposed to be used by the Distributor, all
sales literature or advertisements prepared by or for the Distributor for
such dissemination or for use by others in connection with the sale of the
Series' shares, and the form of dealers' sales contract the Distributor
intends to use in connection with sales of the Fund's shares. The
Distributor also agrees that the Distributor will submit such sales
literature and advertisements to the NASD, SEC or other regulatory agency as
from time to time may be appropriate, considering practices then current in
the industry. The Distributor agrees not to use such form of dealers' sales
contract or to use or to permit others to use such sales literature or
advertisements without the written consent of the Fund if any regulatory
-9-
<PAGE>
agency expresses objection thereto or if the Fund delivers to the
Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering price
per share mutually agreed upon by the parties hereto, and as described in
the Fund's Prospectus, as amended from time to time, determined in
accordance with any applicable provision of law, the provisions of its
Articles of Incorporation and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake to
promote such sales solely as agent of the Fund, and shall not purchase or
sell such shares as principal. Orders for Series' shares and payment for
such orders shall be directed to the Fund's agent, Delaware Service Company,
Inc. for acceptance on behalf of the Fund. The Distributor is not empowered
to approve orders for sales of Series' shares or accept payment for such
orders. Sales of Series' shares shall be deemed to be made when and where
accepted by Delaware Service Company, Inc. on behalf of the Fund.
9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following will
apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectus, the Statement of Additional
Information, and all amendments, supplements and replacements thereto.
The Fund will pay all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs incurred in
printing and mailing Prospectuses and Annual, SemiAnnual and other
financial reports to its own shareholders and fees and expenses of
counsel and accountants.
-10-
<PAGE>
(b) The Distributor will pay the costs incurred in printing and mailing
copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses,
including the costs of printing and mailing literature sent to
prospective investors.
(d) The Fund will pay the costs and fees incurred in registering or
qualifying the Series' shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of Fund
financial and other reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.
10. The Distributor may engage in other business, provided such other business
does not interfere with the performance by the Distributor of its
obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless from the assets of
the Series, the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities Act of 1933,
from and against any and all losses, damages, or liabilities to which,
jointly or severally, the Distributor or such controlling person may become
subject, insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder except that the Fund shall not be liable
for indemnification of the Distributor or any controlling person thereof for
any liability to the Fund or its security holders to which they would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of their duties under this Agreement.
12. Copies of financial reports, Registration Statements and Prospectuses, as
well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for either
party to deliver or furnish to the other will be duly delivered or
furnished, if delivered to such party at its address shown below during
regular business hours, or if sent to that party by registered mail or by
-11-
<PAGE>
prepaid telegram filed with an office or with an agent of Western Union or
another nationally recognized telegraph service, in all cases within the
time or times herein prescribed, addressed to the recipient at 1818 Market
Street, Philadelphia, Pennsylvania 19103, or at such other address as the
Fund or the Distributor may designate in writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the Distributor.
This Agreement shall not be assigned by the Fund without the written consent
of the Distributor signed by its duly authorized officers and delivered to
the Fund. Except as specifically provided in the indemnification provision
contained in Paragraph 11 herein, this Agreement and all conditions and
provisions hereof are for the sole and exclusive benefit of the parties
hereto and their legal successors and no express or implied provision of
this Agreement is intended or shall be construed to give any person other
than the parties hereto and their legal successors any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two years from
the date hereof and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the
Board of Directors or by vote of a majority of the outstanding voting
securities of the Series and only if the terms and the renewal thereof
have been approved by the vote of a majority of the Directors of the
Fund, who are not parties hereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on
such approval.
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<PAGE>
(b) The Distributor may terminate this Agreement on written notice to the
Fund at any time in case the effectiveness of the Registration
Statement shall be suspended, or in case Stop Order proceedings are
initiated by the SEC in respect of the Registration Statement and such
proceedings are not withdrawn or terminated within thirty days. The
Distributor may also terminate this Agreement at any time by giving the
Fund written notice of its intention to terminate the Agreement at the
expiration of three months from the date of delivery of such written
notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at least thirty
days prior written notice to the Distributor (1) if proceedings are
commenced by the Distributor or any of its stockholders for the
Distributor's liquidation or dissolution or the winding up of the
Distributor's affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment is not vacated
within thirty days thereafter; (3) if, due to any action by or before
any court or any federal or state commission, regulatory body, or
administrative agency or other governmental body, the Distributor shall
be prevented from selling securities in the United States or because of
any action or conduct on the Distributor's part, sales of the Series'
shares are not qualified for sale. The Fund may also terminate this
Agreement at any time upon prior written notice to the Distributor of
its intention to so terminate at the expiration of three months from
the date of the delivery of such written notice to the Distributor.
15. The validity, interpretation and construction of this Agreement, and of each
part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.
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<PAGE>
16. In the event any provisions of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of the
Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:
/s/ Eric E. Miller By:/s/ Keith E. Mitchell
- ------------------------- --------------------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President Title: President/Chief
Assistant Secretary Executive Officer
DELAWARE GROUP DELAWARE FUND, INC. for the DIVIDEND
GROWTH FUND series
Attest:
/s/ John M. Zerr By:/s/ David K. Downes
- -------------------------- -----------------------
Name: John M. Zerr Name: David K. Downes
Title: Vice President/ Title: Senior Vice
Asistant Secretary President/Chief
Administrative
Officer/Chief
Financial Officer
-14-
<PAGE>
Exhibit A
12b-1 PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Dividend Growth Fund series (the
"Series") on behalf of the Dividend Growth Fund class (now doing business as
Dividend Growth Fund A Class and hereinafter referred to as the "Class"), which
Fund, Series and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. ("DMC") serves as the Fund's investment adviser and
manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Fund's shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Fund's shares, including
A-1
<PAGE>
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series (the "Distribution Agreement").
The Distributor may enter into agreements with other registered
broker-dealers substantially in the form of the Dealer Agreement approved by the
Fund in the implementation of this Plan and of the Distribution Agreement
between it and the Fund. The Fund may, in addition, enter into arrangements with
persons other than broker-dealers which are not "affiliated persons" or
"interested persons" of the Fund, DMC or the Distributor to provide to the Fund
services in the Fund's marketing of the shares of the Class, such arrangements
to be reflected by Service Agreements.
The Plan provides that:
1. The Fund shall pay a monthly fee not to exceed 0.3% (3/10 of 1%) per
annum of the Series' average daily net assets represented by shares of the Class
(the "Maximum Amount") as may be determined by the Fund's Board of Directors
from time to time. Such monthly fee shall be reduced by the aggregate sums paid
by the Fund to persons other than broker-dealers (the "Service Providers")
pursuant to Service Agreements referred to above.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1 above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (1) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
A-2
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Service Agreement and the Plan; both the Distributor and the
Service Providers shall furnish the Board of Directors of the Fund with such
other information as the Board may reasonably request in connection with the
payments made under the Plan and the use thereof by DDS and the Service
Providers, respectively, in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the
Directors who are not interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested Directors"), cast in person at a meeting
called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
A-3
<PAGE>
(b) The Plan may not be amended to increase materially the amount to be
spent for distribution pursuant to paragraph 1 thereof without approval by the
shareholders of the Class.
7. The Distribution Agreement between the Fund on behalf of the Series
and the Distributor, and the Service Agreements between the Fund on behalf of
the Series and the Service Providers, shall specifically have a copy of this
Plan attached to, and its terms and provisions incorporated respectively by
reference in, such agreements.
8. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
10. The definitions contained in Sections 2(a)(3), 2(a)(4), 2(a)(19)
and 2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"assignment," "interested person(s)" and "vote of a majority of the outstanding
voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-4
<PAGE>
Exhibit B
12b-1 PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Dividend Growth Fund series (the
"Series") on behalf of the Dividend Growth Fund B Class (the "Class"), which
Fund, Series and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting on
such Plan. Such approval by the Directors included a determination that in the
exercise of reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Class and its
shareholders. The Plan has been approved by a vote of the holders of a majority
of the outstanding voting securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Fund's shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. ("the Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund for the Series ("Distribution Agreement").
The Plan provides that:
B-1
<PAGE>
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0. 75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements, the forms of which have
been approved from time to time by the Fund's Board of Directors.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for;
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing Personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
B-2
<PAGE>
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the Directors who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("non-interested Directors"), cast in person at a meeting
called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. The Distribution Agreement between the Fund on behalf of the Series
and the Distributor, and any dealers or servicing agreements between the
Distributor and brokers or others or between the Fund on behalf of the Series
and others receiving a servicing fee, shall specifically have a copy of this
B-3
<PAGE>
Plan attached to, and its terms and provisions incorporated respectively by
reference in, such agreements.
8. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
10. The definitions contained in Sections 2 (a)(3), 2(a)(4), 2(a)(19)
and 2(a)(42) of the Act shall govern the meaning of "affiliated person,"
"assignment," "interested person(s)" and "vote of a majority of the outstanding
voting securities," respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
B-4
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
COMMON STOCK SERIES
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the 29th day of November, 1995, by and between DELAWARE GROUP
DELAWARE FUND, INC. (the "Fund"), for the COMMON STOCK series (the "Series"),
and DELAWARE DISTRIBUTORS, L.P. (the "Distributor").
WITNESSETH
WHEREAS, the Fund, for the Series, and the Distributor are parties to
that certain Distribution Agreement made as of the 3rd day of April, 1995 (the
"Distribution Agreement"); and
WHEREAS, the Board of Directors of the Fund has established the
Delaware Fund C Class (the "Class C Shares") as an additional class of the
Series, and the Fund and the Distributor desire to amend the Distribution
Agreement to provide that the Distributor shall act as the national distributor
of the Class C Shares pursuant thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Class C Shares are hereby included among the shares to which the
Distribution Agreement relates and the Distributor shall act as distributor for
the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.
2. Hereafter, each reference to "Class A Shares and Class B Shares" in
Section 2 (c) and (d) of the Distribution Agreement shall be deemed to include
the Class C Shares, provided that the Distribution Plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940 for the Class C Shares and
presently in force is attached hereto as Exhibit "A."
<PAGE>
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:
/s/Eric E. Miller By: /s/Keith E. Mitchell
- -------------------------- -----------------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President/ Title: President/Chief
Assistant Secretary Executive Officer
DELAWARE GROUP DELAWARE FUND, INC., ATTEST:
for the COMMON STOCK SERIES
/s/John M. Zerr By: /s/David K. Downes
- --------------------------- ------------------------------
Name: John M. Zerr Name: David K. Downes
Title: Vice President/ Title: Senior Vice President/
Assistant Secretary Chief Administrative
Officer/Chief
Financial Officer
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Common Stock series (the
"Series) on behalf of the Delaware Fund C Class (the "Class"), which Fund,
Series and Class may do business under these or such other names as the Board of
Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Class and its shareholders. The Plan has been approved by a
vote of the holders of a majority of the outstanding voting securities of the
Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
A-2
<PAGE>
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above,
the Fund shall pay: (i) to the Distributor for payment to dealers or others or
(ii) directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of
the Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
A-3
<PAGE>
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to be
spent for distribution pursuant to paragraph 1 thereof without approval by the
shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
A-4
<PAGE>
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
A-5
<PAGE>
DELAWARE GROUP DELAWARE FUND, INC.
DEVON FUND SERIES
AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT
This Amendment No. 1 to Distribution Agreement (this "Agreement") is
made as of the 29th day of November, 1995, by and between DELAWARE GROUP
DELAWARE FUND, INC. (the "Fund"), for the DEVON FUND series (the "Series"), and
DELAWARE DISTRIBUTORS, L.P. (the "Distributor").
WITNESSETH
WHEREAS, the Fund, for the Series, and the Distributor are parties to
that certain Distribution Agreement made as of the 3rd day of April, 1995 (the
"Distribution Agreement"); and
WHEREAS, the Board of Directors of the Fund has established the Devon
Fund C Class (the "Class C Shares") as an additional class of the Series, and
the Fund and the Distributor desire to amend the Distribution Agreement to
provide that the Distributor shall act as the national distributor of the Class
C Shares pursuant thereto;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. The Class C Shares are hereby included among the shares to which the
Distribution Agreement relates and the Distributor shall act as distributor for
the Class C Shares pursuant to and in accordance with the Distribution
Agreement, as amended hereby.
2. Hereafter, each reference to "Class A Shares and Class B Shares" in
Section 2 (c) and (d) of the Distribution Agreement shall be deemed to include
the Class C Shares, provided that the Distribution Plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940 for the Class C Shares and
presently in force is attached hereto as Exhibit "A."
<PAGE>
DELAWARE DISTRIBUTORS, L.P.
By: Delaware Distributors, Inc.,
General Partner
ATTEST:
/s/Eric E. Miller By: /s/Keith E. Mitchell
- -------------------------- -------------------------------
Name: Eric E. Miller Name: Keith E. Mitchell
Title: Vice President/ Title: President/Chief
Assistant Secretary Executive Officer
DELAWARE GROUP DELAWARE FUND, INC.,
ATTEST: for the DEVON FUND SERIES
/s/John M. Zerr By: /s/David K. Downes
- -------------------------- -------------------------------
Name: John M. Zerr Name: David K. Downes
Title: Vice President/ Title: Senior Vice President/
Assistant Secretary Chief Administrative
Officer/Chief
Financial Officer
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Devon Fund series (the "Series)
on behalf of the Devon Fund C Class (the "Class"), which Fund, Series and Class
may do business under these or such other names as the Board of Directors of the
Fund may designate from time to time. The Plan has been approved by a majority
of the Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto
("non-interested Directors"), cast in person at a meeting called for the purpose
of voting on such Plan. Such approval by the Directors included a determination
that in the exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Class and its shareholders. The Plan has been approved by a vote of the
holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
A-2
<PAGE>
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above,
the Fund shall pay: (i) to the Distributor for payment to dealers or others or
(ii) directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of
the Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
A-3
<PAGE>
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
A-4
<PAGE>
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
A-5
<PAGE>
<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>
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses of Delaware Group Delaware Fund, Inc. - Delaware
Fund and Delaware Group Delaware Fund, Inc. - Devon Fund for the A Class, B
Class, and C Class and for the Institutional Class and "Financial Statements" in
the Statement of Additional Information of Delaware Group Delaware Fund, Inc.
and to the incorporation by reference in this Post-Effective Amendment No. 103
to the Registration Statement (Form N-1A) (No. 2-10765), of Delaware Group
Delaware Fund, Inc. of our reports dated December 1, 1995, included in the 1995
Annual Reports to Shareholders of the Delaware Group Delaware Fund, Inc. -
Delaware Fund and Delaware Group Delaware Fund, Inc. - Devon Fund.
/s/ Ernst & Young LLP
--------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
December 26, 1995
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Delaware Fund, Inc. - Delaware Fund
We have audited the accompanying statement of net assets of Delaware Group
Delaware Fund, Inc. - Delaware Fund as of October 31, 1995, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 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 Delaware Fund, Inc. - Delaware Fund at October 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
/s/Ernst & Young LLP
--------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
December 1, 1995
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Delaware Fund, Inc. - Devon Fund
We have audited the accompanying statement of net assets of Delaware Group
Delaware Fund, Inc. - Devon Fund (formerly Delaware Group Delaware Fund, Inc. -
Dividend Growth Fund) as of October 31, 1995, and the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights for the year then ended and for the period from
December 29, 1993 (date of initial public offering) to October 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 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 Delaware Fund, Inc. - Devon Fund (formerly Delaware Group
Delaware Fund, Inc. - Dividend Growth Fund) at October 31, 1995, the results of
its operations for the year then ended, the changes in its net assets and the
financial highlights for the year then ended and for the period from December
29, 1993 (date of initial public offering) to October 31, 1994, in conformity
with generally accepted accounting principles.
/s/Ernst & Young LLP
----------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
December 1, 1995
<PAGE>
DISTRIBUTION PLAN
CLASS A
The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Group Delaware Fund, Inc. (the "Fund"), for the Common Stock series
(the "Series") on behalf of the Delaware Fund class, now doing business as the
Delaware Fund A Class (hereinafter referred to as the "Class"), which Fund,
Series and Class may do business under these or such other names as the Board of
Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Class and its shareholders. If the Plan has not yet been
approved by a majority of the outstanding voting securities as required in the
Act, the Plan will be presented to the public shareholders at the next regular
annual or special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
A-8
<PAGE>
underwriter and national distributor for the Series' shares, including shares of
the Class pursuant to the Distribution Agreement between the Distributor and the
Series ("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to exceed
0.3% (3/10 of l%) per annum of the Series' average daily net assets represented
by shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of Directors from time to time. Such monthly fee shall be reduced by the
aggregate sums paid by the Fund on behalf of the Series to persons other than
broker-dealers (the "Service Providers") who may, pursuant to servicing
agreements, provide to the Series services in the Series' marketing of shares of
the Class.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
A-9
<PAGE>
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the
non-interested Directors, cast in person at a meeting called for the purpose of
voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non- interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of
such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
A-10
<PAGE>
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-11
<PAGE>
DISTRIBUTION PLAN
CLASS A
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule l2b-l under the Investment Company Act of l940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Devon Fund series (the "Series")
on behalf of the Devon Fund A Class (hereinafter referred to as the "Class"),
which Fund, Series and Class may do business under these or such other names as
the Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Class and its shareholders. If the Plan has not yet been
approved by a majority of the outstanding voting securities as required in the
Act, the Plan will be presented to the public shareholders at the next regular
annual or special meeting.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
A-12
<PAGE>
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class pursuant to the Distribution Agreement between the Distributor and the
Series ("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to exceed
0.3% (3/10 of l%) per annum of the Series' average daily net assets represented
by shares of the Class (the "Maximum Amount") as may be determined by the Fund's
Board of Directors from time to time. Such monthly fee shall be reduced by the
aggregate sums paid by the Fund on behalf of the Series to persons other than
broker-dealers (the "Service Providers") who may, pursuant to servicing
agreements, provide to the Series services in the Series' marketing of shares of
the Class.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph l above to furnish, or cause or encourage others to furnish, services
and incentives in connection with the promotion, offering and sale of Class
shares and, where suitable and appropriate, the retention of Class shares by
shareholders.
(b) The Service Providers shall use the monies paid respectively to
them to reimburse themselves for the actual costs they have incurred in
confirming that their customers have received the Prospectus and Statement of
Additional Information, if applicable, and as a fee for (l) assisting such
customers in maintaining proper records with the Fund (2) answering questions
relating to their respective accounts and (3) aiding in maintaining the
investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
A-13
<PAGE>
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund in writing of the commencement of the Plan, which time shall not
be before the first annual or special meeting of the public shareholders at
which the Plan is or was approved by the vote of a majority of the outstanding
voting securities as required in the Act (the "Commencement Date"); thereafter,
the Plan shall continue in effect for a period of more than one year from the
Commencement Date only so long as such continuance is specifically approved at
least annually by a vote of the Board of Directors of the Fund, and of the
non-interested Directors, cast in person at a meeting called for the purpose of
voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non- interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph l thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of
such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
A-14
<PAGE>
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-15
<PAGE>
DISTRIBUTION PLAN
CLASS B
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Common Stock series (the
"Series") on behalf of the Delaware Fund B Class (the "Class"), which Fund,
Series and Class may do business under these or such other names as the Board of
Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Class and its shareholders. The Plan has been approved by a
vote of the holders of a majority of the outstanding voting securities of the
Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Series ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
A-16
<PAGE>
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of
such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-17
<PAGE>
DISTRIBUTION PLAN
CLASS B
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Devon Fund series (the "Series")
on behalf of the Devon Fund B Class (the "Class"), which Fund, Series and Class
may do business under these or such other names as the Board of Directors of the
Fund may designate from time to time. The Plan has been approved by a majority
of the Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto
("non-interested Directors"), cast in person at a meeting called for the purpose
of voting on such Plan. Such approval by the Directors included a determination
that in the exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Class and its shareholders. The Plan has been approved by a vote of the
holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Series ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
A-18
<PAGE>
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non- interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of
such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
A-19
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Common Stock series (the
"Series) on behalf of the Delaware Fund C Class (the "Class"), which Fund,
Series and Class may do business under these or such other names as the Board of
Directors of the Fund may designate from time to time. The Plan has been
approved by a majority of the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Class and its shareholders. The Plan has been approved by a
vote of the holders of a majority of the outstanding voting securities of the
Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
A-20
<PAGE>
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above,
the Fund shall pay: (i) to the Distributor for payment to dealers or others or
(ii) directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of
the Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
A-21
<PAGE>
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
A-22
<PAGE>
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of
such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
A-23
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
CLASS C
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Delaware Fund, Inc. (the "Fund"), for the Devon Fund series (the "Series)
on behalf of the Devon Fund C Class (the "Class"), which Fund, Series and Class
may do business under these or such other names as the Board of Directors of the
Fund may designate from time to time. The Plan has been approved by a majority
of the Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related thereto
("non-interested Directors"), cast in person at a meeting called for the purpose
of voting on such Plan. Such approval by the Directors included a determination
that in the exercise of reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Class and its shareholders. The Plan has been approved by a vote of the
holders of a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
A-24
<PAGE>
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund ("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above,
the Fund shall pay: (i) to the Distributor for payment to dealers or others or
(ii) directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of
the Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation related to sales and marketing personnel, and holding special
promotions. In addition, such fees may be used to pay for advancing the
commission costs to dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
A-25
<PAGE>
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of
such non-interested Directors.
A-26
<PAGE>
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1995
A-27
<PAGE>
DELAWARE GROUP DELAWARE 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) = $1,113.58
T = 11.36%
LIFE OF
FUND
- -------
1.15342466
$1000(1 - T) = $1,100.45
T = 8.65%
<PAGE>
DELAWARE GROUP DELAWARE 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) = $1,153.58
T = 15.36%
LIFE OF
FUND
- -------
1.15342466
$1000(1 - T) = $1,140.45
T = 12.07%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (including CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $17.98
Initial Shares 55.617
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 55.617 $0.760 2.381 57.998
- -------------------------------------------------------------------
Ending Shares 57.998
Ending NAV x $19.89
-----------
$1,153.58
Less CDSC $40.00
-----------
Investment Return $1,113.58
Total Return Performance
- -----------------
Investment Return $1,113.58
Less Initial Investment $1,000.00
-----------
$113.58 / $1,000.00 x 100
Total Return: 11.36%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (excluding CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $17.98
Initial Shares 55.617
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 55.617 $0.760 2.381 57.998
- -------------------------------------------------------------------
Ending Shares 57.998
Ending NAV x $19.89
-----------
Investment Return $1,153.58
Total Return Performance
- -----------------
Investment Return $1,153.58
Less Initial Investment $1,000.00
-----------
$153.58 / $1,000.00 x 100
Total Returns: 15.36%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
NINE MONTHS (including CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $17.29
Initial Shares 57.837
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 57.837 $0.360 1.103 58.940
- -------------------------------------------------------------------
Ending Shares 58.940
Ending NAV x $19.89
-----------
$1,172.32
Less CDSC $40.00
-----------
Investment Return $1,132.32
Total Return Performance
- -----------------
Investment Return $1,132.32
Less Initial Investment $1,000.00
-----------
$132.32 / $1,000.00 x 100
Total Return: 13.23%
<PAGE>
DELAWARE GROUP DELAWARE FUND B
TOTAL RETURN PERFORMANCE
NINE MONTHS (excluding CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $17.29
Initial Shares 57.837
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 57.837 $0.360 1.103 58.940
- -------------------------------------------------------------------
Ending Shares 58.940
Ending NAV x $19.89
-----------
Investment Return $1,172.32
Total Return Performance
- -----------------
Investment Return $1,172.32
Less Initial Investment $1,000.00
-----------
$172.32 / $1,000.00 x 100
Total Return: 17.23%
<PAGE>
DELAWARE GROUP DEVON 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) = $1,170.92
T = 17.09%
LIFE OF
FUND
- -------
1.15342466
$1000(1 - T) = $1,165.38
T = 14.19%
<PAGE>
DELAWARE GROUP DEVON 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) = $1,210.92
T = 21.09%
LIFE OF
FUND
- -------
1.15342466
$1000(1 - T) = $1,205.38
T = 17.58%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
NINE MONTHS (including CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.08
Initial Shares 99.206
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 99.206 $0.090 0.769 99.975
- -------------------------------------------------------------------
Ending Shares 99.975
Ending NAV x $12.49
-----------
$1,248,69
Less CDSC $40.00
-----------
Investment Return $1,208.69
Total Return Performance
- -----------------
Investment Return $1,208.69
Less Initial Investment $1,000.00
-----------
$208.69 / $1,000.00 x 100
Total Return: 20.87%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
NINE MONTHS (excluding CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.08
Initial Shares 99.206
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 99.206 $0.090 0.769 99.975
- -------------------------------------------------------------------
Ending Shares 99.975
Ending NAV x $12.49
-----------
Investment Return $1,248.69
Total Return Performance
- -----------------
Investment Return $1,248.69
Less Initial Investment $1,000.00
-----------
$248.69 / $1,000.00 x 100
Total Return: 24.87%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (including CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.82
Initial Shares 92.421
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 92.421 $0.500 4.530 96.951
- -------------------------------------------------------------------
Ending Shares 96.951
Ending NAV x $12.49
-----------
$1,210.92
Less CDSC $40.00
-----------
Investment Return $1,170.92
Total Return Performance
- -----------------
Investment Return $1,170.92
Less Initial Investment $1,000.00
-----------
$170.92 / $1,000.00 x 100
Total Return: 17.09%
<PAGE>
DELAWARE GROUP DEVON FUND B
TOTAL RETURN PERFORMANCE
ONE YEAR (excluding CDSC)
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.82
Initial Shares 92.421
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 92.421 $0.500 4.530 96.951
- -------------------------------------------------------------------
Ending Shares 96.951
Ending NAV x $12.49
-----------
Investment Return $1,210.92
Total Return Performance
- -----------------
Investment Return $1,210.92
Less Initial Investment $1,000.00
-----------
$210.92 / $1,000.00 x 100
Total Return: 21.09%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $11.49
Initial Shares 87.032
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 87.032 $0.540 4.583 91.615
- -------------------------------------------------------------------
Ending Shares 91.615
Ending NAV x $12.55
-----------
Investment Return $1,149.77
Total Return Performance
- -----------------
Investment Return $1,149.77
Less Initial Investment $1,000.00
-----------
$149.77 / $1,000.00 x 100
Total Return: 14.98%
<PAGE>
DELAWARE GROUP DEVON FUND INSTITUTIONAL
TOTAL RETURN PERFORMANCE
ONE YEAR
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $10.86
Initial Shares 92.081
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 92.081 $0.560 5.028 97.109
- -------------------------------------------------------------------
Ending Shares 97.109
Ending NAV x $12.59
-----------
Investment Return $1,222.60
Total Return Performance
- -----------------
Investment Return $1,222.60
Less Initial Investment $1,000.00
-----------
$222.60 / $1,000.00 x 100
Total Return: 22.26%
<PAGE>
DELAWARE GROUP DEVON FUND A
TOTAL RETURN PERFORMANCE
ONE YEAR
- -----------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $11.37
Initial Shares 87.951
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- ------ --------- ---------- ---------- ----------
1995 87.951 $0.540 4.631 92.582
- -------------------------------------------------------------------
Ending Shares 92.582
Ending NAV x $12.55
-----------
Investment Return $1,161.90
Total Return Performance
- -----------------
Investment Return $1,161.90
Less Initial Investment $1,000.00
-----------
$161.90 / $1,000.00 x 100
Total Return: 16.19%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 011
<NAME> DELAWARE FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 542,536,480
<INVESTMENTS-AT-VALUE> 601,102,541
<RECEIVABLES> 9,622,515
<ASSETS-OTHER> 308,351
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 611,033,407
<PAYABLE-FOR-SECURITIES> 4,001,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,658,842
<TOTAL-LIABILITIES> 5,660,592
<SENIOR-EQUITY> 30,344,833
<PAID-IN-CAPITAL-COMMON> 480,441,954
<SHARES-COMMON-STOCK> 24,730,846
<SHARES-COMMON-PRIOR> 25,339,619
<ACCUMULATED-NII-CURRENT> 3,693,045
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 32,326,922
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 58,566,061
<NET-ASSETS> 493,242,561
<DIVIDEND-INCOME> 10,036,736
<INTEREST-INCOME> 15,717,149
<OTHER-INCOME> 0
<EXPENSES-NET> 5,383,051
<NET-INVESTMENT-INCOME> 20,370,834
<REALIZED-GAINS-CURRENT> 33,206,692
<APPREC-INCREASE-CURRENT> 33,674,467
<NET-CHANGE-FROM-OPS> 87,251,993
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,844,023
<DISTRIBUTIONS-OF-GAINS> 6,294,837
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,589,185
<NUMBER-OF-SHARES-REDEEMED> 3,123,004
<SHARES-REINVESTED> 925,046
<NET-CHANGE-IN-ASSETS> 54,741,025
<ACCUMULATED-NII-PRIOR> 2,742,632
<ACCUMULATED-GAINS-PRIOR> 6,759,346
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,953,762
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,383,051
<AVERAGE-NET-ASSETS> 469,166,569
<PER-SHARE-NAV-BEGIN> 18.000
<PER-SHARE-NII> 0.664
<PER-SHARE-GAIN-APPREC> 2.156
<PER-SHARE-DIVIDEND> 0.630
<PER-SHARE-DISTRIBUTIONS> 0.250
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.940
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 012
<NAME> DELAWARE FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 542,536,480
<INVESTMENTS-AT-VALUE> 601,102,541
<RECEIVABLES> 9,622,515
<ASSETS-OTHER> 308,351
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 611,033,407
<PAYABLE-FOR-SECURITIES> 4,001,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,658,842
<TOTAL-LIABILITIES> 5,660,592
<SENIOR-EQUITY> 30,344,833
<PAID-IN-CAPITAL-COMMON> 480,441,954
<SHARES-COMMON-STOCK> 170,037
<SHARES-COMMON-PRIOR> 31,575
<ACCUMULATED-NII-CURRENT> 3,693,045
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 32,326,922
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 58,566,061
<NET-ASSETS> 3,382,975
<DIVIDEND-INCOME> 10,036,736
<INTEREST-INCOME> 15,717,149
<OTHER-INCOME> 0
<EXPENSES-NET> 5,383,051
<NET-INVESTMENT-INCOME> 20,370,834
<REALIZED-GAINS-CURRENT> 33,206,692
<APPREC-INCREASE-CURRENT> 33,674,467
<NET-CHANGE-FROM-OPS> 87,251,993
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 47,613
<DISTRIBUTIONS-OF-GAINS> 11,657
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141,318
<NUMBER-OF-SHARES-REDEEMED> 5,983
<SHARES-REINVESTED> 3,127
<NET-CHANGE-IN-ASSETS> 54,741,025
<ACCUMULATED-NII-PRIOR> 2,742,632
<ACCUMULATED-GAINS-PRIOR> 6,759,346
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,953,762
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,383,051
<AVERAGE-NET-ASSETS> 1,725,646
<PER-SHARE-NAV-BEGIN> 17.980
<PER-SHARE-NII> 0.567
<PER-SHARE-GAIN-APPREC> 2.113
<PER-SHARE-DIVIDEND> 0.510
<PER-SHARE-DISTRIBUTIONS> 0.250
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.900
<EXPENSE-RATIO> 1.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 013
<NAME> DELAWARE FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 542,536,480
<INVESTMENTS-AT-VALUE> 601,102,541
<RECEIVABLES> 9,622,515
<ASSETS-OTHER> 308,351
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 611,033,407
<PAYABLE-FOR-SECURITIES> 4,001,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,658,842
<TOTAL-LIABILITIES> 5,660,592
<SENIOR-EQUITY> 30,344,833
<PAID-IN-CAPITAL-COMMON> 480,441,954
<SHARES-COMMON-STOCK> 5,443,950
<SHARES-COMMON-PRIOR> 5,214,057
<ACCUMULATED-NII-CURRENT> 3,693,045
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 32,326,922
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 58,566,061
<NET-ASSETS> 108,747,279
<DIVIDEND-INCOME> 10,036,736
<INTEREST-INCOME> 15,717,149
<OTHER-INCOME> 0
<EXPENSES-NET> 5,383,051
<NET-INVESTMENT-INCOME> 20,370,834
<REALIZED-GAINS-CURRENT> 33,206,692
<APPREC-INCREASE-CURRENT> 33,674,467
<NET-CHANGE-FROM-OPS> 87,251,993
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,528,785
<DISTRIBUTIONS-OF-GAINS> 1,332,622
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,324,391
<NUMBER-OF-SHARES-REDEEMED> 1,363,009
<SHARES-REINVESTED> 268,511
<NET-CHANGE-IN-ASSETS> 54,741,025
<ACCUMULATED-NII-PRIOR> 2,742,632
<ACCUMULATED-GAINS-PRIOR> 6,759,346
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,953,762
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,383,051
<AVERAGE-NET-ASSETS> 99,215,025
<PER-SHARE-NAV-BEGIN> 18.030
<PER-SHARE-NII> 0.694
<PER-SHARE-GAIN-APPREC> 2.166
<PER-SHARE-DIVIDEND> 0.660
<PER-SHARE-DISTRIBUTIONS> 0.250
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.980
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> DEVON FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 10,963,776
<INVESTMENTS-AT-VALUE> 12,360,294
<RECEIVABLES> 372,537
<ASSETS-OTHER> 17,600
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,750,431
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171,242
<TOTAL-LIABILITIES> 171,242
<SENIOR-EQUITY> 1,001,997
<PAID-IN-CAPITAL-COMMON> 9,465,178
<SHARES-COMMON-STOCK> 705,003
<SHARES-COMMON-PRIOR> 424,790
<ACCUMULATED-NII-CURRENT> 46,731
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 668,765
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,396,518
<NET-ASSETS> 8,845,587
<DIVIDEND-INCOME> 233,638
<INTEREST-INCOME> 59,771
<OTHER-INCOME> 0
<EXPENSES-NET> 115,791
<NET-INVESTMENT-INCOME> 177,618
<REALIZED-GAINS-CURRENT> 671,745
<APPREC-INCREASE-CURRENT> 1,214,843
<NET-CHANGE-FROM-OPS> 2,064,206
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 124,083
<DISTRIBUTIONS-OF-GAINS> 144,950
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 437,494
<NUMBER-OF-SHARES-REDEEMED> 182,731
<SHARES-REINVESTED> 25,450
<NET-CHANGE-IN-ASSETS> 5,348,047
<ACCUMULATED-NII-PRIOR> 45,438
<ACCUMULATED-GAINS-PRIOR> 196,985
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 57,382
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 215,170
<AVERAGE-NET-ASSETS> 6,773,162
<PER-SHARE-NAV-BEGIN> 10.830
<PER-SHARE-NII> 0.207
<PER-SHARE-GAIN-APPREC> 2.053
<PER-SHARE-DIVIDEND> 0.220
<PER-SHARE-DISTRIBUTIONS> 0.320
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.550
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 022
<NAME> DEVON FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 10,963,776
<INVESTMENTS-AT-VALUE> 12,360,294
<RECEIVABLES> 372,537
<ASSETS-OTHER> 17,600
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,750,431
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171,242
<TOTAL-LIABILITIES> 171,242
<SENIOR-EQUITY> 1,001,997
<PAID-IN-CAPITAL-COMMON> 9,465,178
<SHARES-COMMON-STOCK> 69,084
<SHARES-COMMON-PRIOR> 10,593
<ACCUMULATED-NII-CURRENT> 46,731
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 668,765
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,396,518
<NET-ASSETS> 863,217
<DIVIDEND-INCOME> 233,638
<INTEREST-INCOME> 59,771
<OTHER-INCOME> 0
<EXPENSES-NET> 115,791
<NET-INVESTMENT-INCOME> 177,618
<REALIZED-GAINS-CURRENT> 671,745
<APPREC-INCREASE-CURRENT> 1,214,843
<NET-CHANGE-FROM-OPS> 2,064,206
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,520
<DISTRIBUTIONS-OF-GAINS> 7,068
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 59,748
<NUMBER-OF-SHARES-REDEEMED> 2,452
<SHARES-REINVESTED> 1,195
<NET-CHANGE-IN-ASSETS> 5,348,047
<ACCUMULATED-NII-PRIOR> 45,438
<ACCUMULATED-GAINS-PRIOR> 196,985
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 57,382
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 215,170
<AVERAGE-NET-ASSETS> 478,103
<PER-SHARE-NAV-BEGIN> 10.820
<PER-SHARE-NII> 0.127
<PER-SHARE-GAIN-APPREC> 2.053
<PER-SHARE-DIVIDEND> 0.180
<PER-SHARE-DISTRIBUTIONS> 0.320
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.500
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000027801
<NAME> DELAWARE GROUP DELAWARE FUND, INC.
<SERIES>
<NUMBER> 023
<NAME> DEVON FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 10,963,776
<INVESTMENTS-AT-VALUE> 12,360,294
<RECEIVABLES> 372,537
<ASSETS-OTHER> 17,600
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,750,431
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171,242
<TOTAL-LIABILITIES> 171,242
<SENIOR-EQUITY> 1,001,997
<PAID-IN-CAPITAL-COMMON> 9,465,178
<SHARES-COMMON-STOCK> 227,910
<SHARES-COMMON-PRIOR> 231,780
<ACCUMULATED-NII-CURRENT> 46,731
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 668,765
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,396,518
<NET-ASSETS> 2,870,385
<DIVIDEND-INCOME> 233,638
<INTEREST-INCOME> 59,771
<OTHER-INCOME> 0
<EXPENSES-NET> 115,791
<NET-INVESTMENT-INCOME> 177,618
<REALIZED-GAINS-CURRENT> 671,745
<APPREC-INCREASE-CURRENT> 1,214,843
<NET-CHANGE-FROM-OPS> 2,064,206
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 45,722
<DISTRIBUTIONS-OF-GAINS> 47,947
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 125,933
<NUMBER-OF-SHARES-REDEEMED> 138,734
<SHARES-REINVESTED> 8,931
<NET-CHANGE-IN-ASSETS> 5,348,047
<ACCUMULATED-NII-PRIOR> 45,438
<ACCUMULATED-GAINS-PRIOR> 196,985
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 57,382
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 215,170
<AVERAGE-NET-ASSETS> 2,327,881
<PER-SHARE-NAV-BEGIN> 10.860
<PER-SHARE-NII> 0.241
<PER-SHARE-GAIN-APPREC> 2.049
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0.320
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.590
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
<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-
